Date: 19981020
Docket: T-2178-96
ACTION IN REM AGAINST THE DEFENDANT
SHIPS "STAR DOVER", "STAR GRAN",
"VERITAS" and "STEPHANIE"
BETWEEN:
FIBRECO PULP INC., FIBRECO EXPORT INC.,
373877 B.C. LTD., EKMAN LEIBIG AB,
ENSO-GUTZEIT OY,
Plaintiffs,
- and -
STAR SHIPPING A/S,
SQUAMISH TERMINALS LTD.,
FURNESS NEOBULK SERVICES b.v.,
DOVER INC., KRAFT LINE AS,
KG STEPHANIEBETEILIGUNGSGES mbH & CO.,
F.S. SWITYNK, and the owners and others interested in the ships
"STAR DOVER", "STAR GRAN", "VERITAS", and "STEPHANIE",
Defendants.
REASONS FOR ORDER
ROULEAU, J.
[1] This matter came before me at Vancouver, British Columbia, on Monday, October 5, 1998 and was adjourned for hearing to Thursday the 8th of October 1998. The Plaintiff's motion was for an Order pursuant to Rule 336(5) to set aside the order of the Prothonotary dated February 26, 1998, wherein he ordered that the action be stayed pending arbitration and that the in rem claim against the ship "Star Gran" be struck out for want of jurisdiction and the security provided to secure that in rem claim be returned.
[2] The Plaintiffs (Fibreco Pulp Inc., Fibreco Export Inc. and 373877 B.C. Ltd., referred to as "Fibreco") are corporations incorporated pursuant to British Columbia laws. They are joint venturers under the name Fibreco Pulp situated in Taylor, British Columbia. They manufacture and export pulp and paper products.
[3] Fibreco provided 13,000 bales of pulp to the Plaintiff Ekman Leibig AB ("Ekman") of Sweden. Ekman is an exporter and importer of pulp and paper products. The bales in question were assembled and stored at the Squamish, British Columbia facility ("Squamish Terminals"). Ekman upon receipt, shipped the pulp to buyer and Plaintiff Enso-Gutzeit Oy ("Enso"), a manufacturer of food packaging paper products in Finland. The pulp in question was shipped by Ekman in two lots (7,052 bales aboard the "Star Gran" on or about December 3, 4 and 5, 1995 and 6,024 aboard the "Star Dover" on or about November 6 and 7, 1995) from the Squamish Terminals. Both vessels were to discharge at Rotterdam.
[4] The registered owner of the "Star Dover" is Dover Inc. ("Dover"), a corporation of unknown jurisdiction of incorporation. Kraft Line S.A. ("Kraft Line") is the corporation of unknown jurisdiction of incorporation which owns "Star Gran ".
[5] The transportation from the Squamish Terminals to Rotterdam was pursuant to a contract of affreightment between Ekman and the Defendant Star Shipping A/S ("Star Shipping"), which contract was dated November 13, 1994. In order to complete its promise to carry the pulp to Finland, Star Shipping chartered from Echoship ApS of Denmark, two vessels, the "Stephanie " and the "Veritas", owned by KG Stephaniebeteiligungsges mbH & Co. ("Stephanie Co.") and F.S. Switynk.
[6] On or about December 17 and 18, 1995 the 6,024 bales of pulp were transferred from the "Star Dover", into the care and custody of Furness Neobulk Services b.v. at Seaport Terminal, Rotterdam, for storage and subsequent loading on board the vessel "Stephanie". As for the bales of pulp aboard the "Star Gran", they were transferred into the care of the same company, on or about January 19 and 20, 1996, at Rotterdam. These bales were to be loaded on board the vessel Veritas for carriage from Rotterdam to Finland. All bales were said to be in good condition for storage and subsequent loading.
[7] Upon arrival in Finland, the bales of pulp are said to have been damaged (they were apparently crushed, torn, dirty, wet, broken, mouldy and contaminated). As a result of this damage, the Plaintiffs are said to have suffered damages, loss and expenses in excess of $2,000,000.00 (US). The Plaintiffs allege their damages to have been caused by the breach of contract of carriage, the breach of duty, as well as by the negligence of the Defendants. Security for this damage was given in Vancouver against the "Star Dover" and "Star Gran" to satisfy any Canadian judgments. Both vessels were arrested pursuant to a warrant dated October 10, 1996. The right to arbitrate in London, was reserved. Squamish Terminals has filed a third party notice against the vessel interests.
[8] Before the litigation advanced, Prothonotary Hargrave heard motions for stays in favour of arbitration and to cancel security as a result of the change of ownership of one of the four carrying vessels, the "Star Gran". Following a very considered and learned decision of some twenty-four pages, Prothonotary Hargrave concluded that the action should be stayed, with Ekman Leibig AB, Star Shipping A/S, Dover Inc. and Kraft Line AS to arbitrate in London with the understanding that the Defendants will not raise any time bar argument; he further determined that the in rem action against the "Star Gran" should be dismissed because the change of ownership at the time the action was commenced and ordered that the security be returned; he further determined that the claims arising out of the two shipments of pulp from Squamish, British Columbia to Kotka, Finland may proceed in one action.
[9] There has been considerable debate in recent years within the Trial Division of this Court with respect to what standard of review should apply to an appeal from a decision of a prothonotary, and when to interfere with the exercise of his discretion. The judge must be satisfied that there has been an error in law or where he has been satisfied that the decision may be suspect in dealing with a question vital to the final issue of the case: these principles were reiterated in Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425, where the Court at page 463, referring to the case of Godavari wrote as follows:
| "In Canada v. 'Jala Godavari' (The) (1991), 40 C.P.R. (3d) 127 (F.C.A.), this Court in an obiter dictum stated the rule the other way around, seeking to emphasize the necessity for the exercise of the Judge's discretion de novo, in contradistinction to the view that was at that time gaining acceptance in the Trial Division that the prothonotary's discretion should be followed unless he had committed error of law. Jala Godavari should not, I think, be read as meaning that the prothonotary's discretion should never be respected, but rather that it is subject to the overriding discretion by a judge where the question involved is vital to the final issue in the case. (Error of law is, of course, always a reason for intervention by a judge, and is not in any way in controversy). |
|
(My emphasis.)".
[10] Though counsel for the Plaintiffs advanced a very learned argument, I have not been convinced that the Prothonotary's decision should be disturbed. His analysis of very complex issues dealing with the stay and concluding that an arbitration should prevail; his review of the contracts of affreightment and jurisdiction clauses in the bills of lading was detailed and sound; his finding in vacating the security cannot be attacked since the only evidence before him on ownership was produced by the Defendants.
[11] It should be noted that all the evidence relied upon, both before the Prothonotary and during this application, was provided by the Defendants and there was a complete absence of any rebuttal evidence from the Plaintiffs.
[12] I am satisfied that there was no misinterpretation of facts or errors of law in the decision reached by the Prothonotary.
[13] Application is dismissed.
(Sgd.) "P. Rouleau"
Judge
Vancouver, British Columbia
October 20, 1998
FEDERAL COURT TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
HEARING DATED: October 7, 1998
COURT NO.: T-2178-96
STYLE OF CAUSE: Fibreco Pulp Inc. et al
v.
The Ship "Star Dover" et al.
PLACE OF HEARING: Vancouver, BC
REASONS FOR ORDER OF ROULEAU, J.
dated October 20, 1998
APPEARANCES:
Mr. Douglas Schmitt
McEwen, Schmitt & Co. for Plaintiff
Mr. Peter Swanson
Campney & Murphy for Defendants
Mr. Robert Lonergan
Russell & DuMoulin for Defendant, Squamish Terminals Ltd.
SOLICITORS OF RECORD:
McEwen Schmitt & Co.
Vancouver, BC for Plaintiff
Campney & Murphy
Vancouver, BC for Defendants
Russell & DuMoulin
Vancouver, BC for Defendant, Squamish Terminals Ltd.
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