Date: 20030416
Docket: T-2182-01
Citation: 2003 FCT 444
Admiralty action in rem and in personam
BETWEEN:
NORGATE MARINE MANAGEMENT INC.
Plaintiff
and
GENFREIGHT LIMITED,
THE OWNERS AND ALL THOSE INTERESTED
IN THE VESSEL "CONTI WILL"
Defendants
REASONS FOR ORDER
RICHARD MORNEAU, PROTHONOTARY
[1] This is a motion by the defendant Genfreight Limited as owner of the vessel "Conti Will" for dismissal of the action undertaken by the plaintiff, the consequent return of the performance bond supplied for the release of the arrested vessel, or, in the alternative, for determination of the appropriate amount of the performance bond now held in trust by counsel for the defendant. The performance bond in question is at present in the amount of US$120,000.00.
[2] If the defendant is seeking the dismissal of the plaintiff's action, it is because it considers that on two occasions it has been unable to validly and sufficiently proceed with the cross-examination of the plaintiff's president on the affidavit in respect of an application for a warrant that he signed on December 13, 2001 (Hage's affidavit).
[3] I do not think the Court is obliged in the circumstances of this case to resort to this drastic remedy, for two reasons.
[4] Firstly, concerning the examination of Mr. Hage of July 15, 2002, any difficulty encountered during the examination was for all useful purposes covered by the order of this Court dated October 29, 2002, which allows the continuation of Mr. Hage's examination within a special framework.
[5] Secondly, concerning the examination of January 23, 2003, the difficulties encountered are due in part to a misunderstanding between counsel as to the appropriate limits to be imposed on the examination; counsel for the plaintiff not wanting this examination on affidavit to be used by the defendant as an examination for discovery in the context of the arbitration undertaken by the defendant in London.
[6] The wrongs are thus divided as to the circumstances, which means that this examination was not one of the most satisfying.
[7] This part of the defendant's motion is therefore dismissed.
[8] Concerning the alternative conclusion cited by the defendant, the determination of the appropriate amount of the performance bond, we ought to be governed by the following statements in the decision of this Court dated January 21, 2003, in Pan Ocean Shipping Co. Ltd. v. Breeze Navigation Ltd. and the "Tuloma", 2003 FCT 56, at paragraphs 13 to 15:
[13] The general rule which governs the amount of bail which must be provided has been stated recently as follows by my brother Hargrave in Mr. and Mrs. Stephen Striebel v. Sovereign Yachts (Canada) Inc. and "The Chairman", 2002 F.C.T. 925 ("The Chairman") at paragraph [14]:
[14] The general rule which governs the amount of bail which must be provided, in order to obtain the release of a properly arrested ship, is that it be equal to the secured party's reasonably arguable best case, interest and costs, limited by the value of the arrested vessel: see The Moschanthy, [1971] 1 Lloyd's Rep. 37 (Q.B.) at 44 and Brotchie v. The Karey T (1994), 77 F.T.R. 71 (F.C.T.D.) at 72.
[14] In The Chairman my brother Hargrave also made reference to three other useful cases as follows at paragraphs 19 and following:
[19] In The Gulf Venture, [1984] 2 Lloyd's Rep. 445 (Q.B.) Mr. Justice Sheen applied a similar rough and ready approach to setting security: he felt the evidence was incomplete, but was satisfied that the claim would not succeed in full and therefore, while the claim endorsed on the writ exceeded £ 400,000, he set security at £ 250,000:
When plaintiffs are entitled to keep a ship under arrest until her owners provide security for their claim, that security must be for such sum of money as represents their reasonably arguable best case, including interest, and their costs of the action. There is plenty of scope for debate as to what sum should be secured in respect of this claim. I do not propose to analyse the evidence: it is incomplete. Such a procedure would be entirely inappropriate on a motion such as this. Although the claim endorsed on the writ is, as I have already said, for a sum in excess of £ 400,000, I was satisfied that the claim will not succeed in full. After some discussion with Counsel, the plaintiffs expressed their willingness to accept security in the sum of £ 300,000. I reached the conclusion that a lesser sum would be adequate and fixed the amount in the round sum of £ 250,000.
[20] In The Tribels, [1985] 1 Lloyd's Rep. 128 Mr. Justice Sheen, while allowing that the salvors were entitled to demand security up to what might be anticipated, on the basis of a reasonably arguable best case, interest and costs, looked upon the demand for security of £ 3.323 million as exorbitant, noting that counsel for the plaintiff conceded the point. He went on to set security at £ 1 million, adding that it might be that even £ 1 million was excessive.
[21] A last case to which I shall refer, in this line of cases which the court has exercised a discretion in determining bail, in particular circumstances, is Amican Navigation Inc. v. Densan Shipping Co. (1997), 137 F.T.R. 132 (F.C.T.D.), a decision of Mr. Justice Lutfy, as he then was. He observed, at page 135, that "arrest is a powerful weapon." and went on to say that the plaintiff had a right to be secured for the full amount of the claim, interest and costs, but that exceptional power which a law attach to arrest and the right to full security must be balanced so as not to be oppressive:
It is important, when considering a motion to alter the bail, to keep in mind the exceptional power the law has attached to arrest and the right to exact security for the full amount of the claim. The proper balance must be struck. The power to arrest should not be exercised oppressively and yet the plaintiff has the right to sufficient security.
(Page 135)
Here I would note that at stake was the variation of bail, however the same principle applies in the case of a determination of bail. He then went on to apply the principle set out in The Moschanthy (supra).
(...)
[24] As I have already made clear, I may not try the case at this point. However, I may, as pointed out by Associate Chief Justice Lutfy, in American Navigation (supra), strike a balance between what might, on the one hand, be an arrest exercised oppressively and, on the other hand, a right to sufficient security. Indeed, as established by Mr. Justice Sheen in The Gulf Venture (supra), on being satisfied that the claim would not succeed in full, he was then able to reduce bail to a lesser but adequate amount.
(my underlinings)
[15] With these principles in mind, I shall now review the different heads of claim raised by the Plaintiff in order to assess what amounts must be retained for each head.
[9] Following the above teaching, I do not think it is necessary to reduce to zero any of the four amounts attacked by the defendant, i.e. the amounts referred to in paragraphs 4(h) to (k) of its re-amended written observations filed March 28, 2003.
[10] The plaintiff should, however, acknowledge that the amounts it advances constitute - especially as of December 13, 2001 - only estimates.
[11] It can be concluded, therefore, that the plaintiff's evidence is incomplete and that it may very well not prevail on the whole. Accordingly, I consider that it is appropriate in this case that I balance the respective rights of the parties.
[12] To do so, I think it is appropriate that I reduce by 20% the total amount of the four amounts that are attacked. I am well aware that such a reduction is in part arbitrary. However, in doing so, I am confident that the plaintiff's rights are nevertheless protected by an adequate bond amount (see Amican Navigation v. Densan Shipping Co. (1997), F.T.R. 132, at page 139, paragraph 23, note 15).
[13] This 20% amount is achieved as follows: $9,500 + $15,000 + $17,325 + $11,742) x 20% = $10,713. I am rounding off the latter amount to $10,720. Consequently, by following the approach adopted so far by the parties to determine the performance bond, the amount of the bond to be maintained is US$105,300, or $88,147,27 - $10,720.00 = $77,427.37 x 1.36 = US$105,301, an amount that I am rounding off to US$105,300.
[14] Incidentally, although the defendant is claiming substantial costs against the plaintiff's motion, it seems to me that in this case this is not appropriate, and, given that success on this motion is divided, when all is said and done, there will be no order as to costs on the motion.
"Richard Morneau"
Prothonotary
Montréal, Quebec
April 16, 2003
Certified true translation
Suzanne Gauthier, C. Tr., LL.L.
FEDERAL COURT OF CANADA
TRIAL DIVISION
Date: 20030416
Docket: T-2182-01
Admiralty action in rem and in personam
Between:
NORGATE MARINE MANAGEMENT INC.
Plaintiff
and
GENFREIGHT LIMITED, THE OWNERS AND ALL THOSE INTERESTED IN THE VESSEL "CONTI WILL"
Defendants
REASONS FOR ORDER
FEDERAL COURT OF CANADA
TRIAL DIVISION
SOLICITORS OF RECORD
DOCKET: T-2182-01
STYLE:
Admiralty action in rem and in personam
Between:
NORGATE MARINE MANAGEMENT INC.
Plaintiff
and
GENFREIGHT LIMITED, THE OWNERS AND ALL THOSE INTERESTED IN THE VESSEL "CONTI WILL"
Defendants
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: April 7, 2003
REASONS FOR ORDER OF MR. RICHARD MORNEAU, PROTHONOTARY
DATED: April 16, 2003
APPEARANCES:
Peter G. Pamel for the plaintiff
Nick J. Spillane for the defendant Genfreight Limited
SOLICITORS OF RECORD:
Borden Ladner Gervais for the plaintiff
Montréal, Quebec
Brisset Bishop for the defendant Genfreight Limited
Montréal, Quebec
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