Date: 20030618
Docket: T-890-02
Citation: 2003 FCT 756
ADMIRALTY ACTION IN PERSONAM
BETWEEN:
VILHENA SHIPPING LTD.
Plaintiff
and
AGRO-HALL LTD.
Defendant
REASONS FOR ORDER
RICHARD MORNEAU, PROTHONOTARY:
[1] This is a motion by the defendant (Agro) for an order dismissing the action by the plaintiff (Vilhena) under subsection 221(1) of the Federal Court Rules, 1998 (the Rules) or, in the alternative, staying Vilhena's action under subsection 50(1) of the Federal Court Act, R.S.C., 1985, c. F-7.
The Facts
[2] On July 27, 2001, the ship Zodio, owned by Vilhena and chartered by the Afrocean Corporation, broke its moorings while a cargo of wheat was being loaded on board. Both the ship and the cargo were damaged.
[3] This action against Agro is based essentially on the following facts.
[4] Agro's primary commercial activity is trading in food products, particularly wheat, which it generally buys in Canada from the Canadian Wheat Board (CWB) and resells abroad.
[5] On May 23, 2001, a contract was entered into between Agro and the Société d'Études et de Réalisations Agro-industrielles (SERAIN), a company whose principal place of business is in Paris, France. The contract provided that Agro would sell to SERAIN 28,000 metric tons, or 10% more or less of that quantity, of wheat from the CWB.
[6] SERAIN re-sold the same cargo to two Nigerian buyers, Ideal Flour Mills Ltd. (Ideal) and Nigerian Eagle Flour Mills Ltd. (Eagle).
[7] The cargo of wheat was to be carried by the Zodio, which had been chartered by Afrocean, from Churchill to Nigeria for delivery to the Nigerian buyers.
[8] Earlier, on July 3, 2001, a charter party was entered into between the plaintiff and Afrocean to charter the Zodio.
[9] On September 10, 2001, Vilhena commenced a proceeding before the Tribunal de Commerce de Paris (the TCP) against several defendants interested in the cargo of wheat carried by the Zodio-SERAIN, Lerbret & Cie S.A., Agro, Ideal, Eagle, Agratrade S.A., Assuranceforeningen Skuld et Groupama Transport-jointly and severally.
[10] The main cause of action, at least with respect to Agro, is that it breached its obligations set out in clause 1 of the charter party entered into on July 3, 2001, between Vilhena and Afrocean.
[11] On October 9, 2001, another proceeding before the TCP was commenced by Vilhena against the parties already named in the first proceeding. However, Vilhena added two defendants: Hudson and Omnitrax Port Authority. The same cause of action was pleaded and the same damages claimed against all the defendants, jointly and severally.
[12] Agro filed argument and a counterclaim in the two proceedings filed against it before the TCP. Those two proceedings have since been joined into one action.
[13] The proceeding in this Court was served on June 11, 2002, two days before Agro was informed that Vilhena had filed a notice of discontinuance before the TCP.
[14] On a similar motion, Mr. Justice Pinard of this Court made the following decision on September 20, 2002:
[1] This is a motion by counsel for the defendant for an order to dismiss the plaintiff's action pursuant to Rule 221(1)(b), (c), (d), (e) and (f) of the Federal Court Rules (1998), SOR/98-106, or alternatively, to stay the plaintiff's action pursuant to s. 50 of the Federal Court Act, R.S.C. 1985, c. F-7, and award the defendant costs on a solicitor-client basis.
[2] In view of the written and oral submissions of counsel for the parties;
[3] In view of the pleadings and evidence in the record;
[4] Whereas there is a genuine relationship between the action at bar and the action initiated by the plaintiff before the Tribunal de commerce in Paris;
[5] Whereas the latter remedy involves additional parties sued jointly and severally with the defendant;
[6] In view of the application to discontinue the latter action, in respect of the defendant only, made by the plaintiff in the Tribunal de commerce in Paris;
[7] In view of the apparently contentious nature of this application to discontinue, which is to be considered by the latter tribunal in November 2002;
[8] Whereas, though recognizing that the pending proceeding is not still a bar to prosecuting an action in this Court, it would be more appropriate, fair, equitable and practical to consider such a motion to dismiss the action or for a stay once the defendant's status before the Tribunal de commerce in Paris has been clarified and determined by the outcome of the application to discontinue now pending;
[9] Accordingly, it is ordered that:
A. the action at bar is stayed pending the disposition by the Tribunal de commerce in Paris of the application made by the plaintiff to discontinue its action against the defendant;
B. the motion at bar as filed is otherwise dismissed; and
C. The defendant's right to file another motion of the same type in this Court, once the fate of the application to discontinue made by the plaintiff in the Tribunal de commerce of Paris has been determined or decided, is reserved.
[10] The whole with costs to follow.
[15] By decision dated April 23, 2003, the TCP dismissed Vilhena's notice of withdrawal against Agro.
[16] With respect to the decision of April 23, 2003, the evidence filed by each party indicates that, at the very least, the decision is appealable within the context of the judgment that will be granted on the merits in France.
[17] I do not accept the proposition advanced by Vilhena that in situations of serious defects, such as the failure to observe fundamental principles of French law, a decision such as the one made on April 23, 2003, could be appealed more quickly by a motion to quash the decision. In my view, this statement by Vilhena is purely theoretical, and there is absolutely no evidence to establish that there were such defects in the decision of April 23, 2003.
Analysis
[18] The plaintiff's claim before this Court is based essentially on the same grounds as the proceeding before the TCP, namely, the alleged breach of contractual obligations set out in the charter party, more particuarly in clause 1 of the charter party which reads: "1-2 safe berth(s) Churchill and there load 1/2 safe loading berths in charterers' option always afloat a full and complete cargo of bulk wheat one grade of minimum 28,000 m/t maximum 30,000 m/t exact quantity at owners' option."
[19] Like Pinard J. when he addressed the issue, my own analysis leads me to conclude that there is clearly a lis pendens between this action and the one commenced by Vilhena before the TCP.
[20] However, for the moment, Vilhena's action cannot be struck out, because the lis pendens could disappear if Vilhena's application for discontinuance is allowed on appeal, if indeed there is an appeal on the merits of the case in France.
[21] Nonetheless, the Court should intervene to stay the proceedings in this case until a final judgment has been granted in the proceeding filed by Vilhena against Agro before the TCP; in my view, the stay is warranted because of the lis pendens and the fact that the interests of justice require it.
[22] The proceeding filed before the TCP by the plaintiff is broader and includes everything that can be pleaded, discussed or decided in the proceeding before this Court.
[23] The issue of the breach, if any, of the obligations set out in clause 1 of the charter party will necessarily be decided in the proceeding filed by Vilhena with the TCP.
[24] Not only did Vilhena initiate two proceedings against Agro in France for the same damages and the same cause of action, but it has also implicated Agro in an expert opinion whose very purpose was to collect all the relevant facts and documents and to issue a report to determine, inter alia, the cause of the incident of July 27, 2001, and more specifically, whether the loading docks and the port of Churchill were safe.
[25] If a stay of proceedings is not granted, Agro would probably have to join the other parties interested in the cargo as co-defendants in Canada and possibly Afrocean as well, as a security. Agro would likely have to pay more in legal costs and in expert witness fees.
[26] There would also be a risk of conflicting judgments between the two jurisdictions. It seems to me that this possibility exists even though Vilhena says it is attempting to discontinue its action in France. Vilhena tried to take that step but was denied that possibility by the TCP's decision of April 23, 2003.
[27] Vilhena wanted to proceed against Agro and a number of co-defendants jointly and severally before the TCP. It therefore attorned to the jurisdiction of the tribunal, and Agro accepted the jurisdiction of the tribunal by filing argument and a counterclaim.
[28] It is the action in France filed by Vilhena prior to this one that must proceed, not the reverse.
[29] According to the proceedings filed by Vilhena before the TCP, the presence of parties such as Agro, SERAIN, Afrocean, Eagle and Ideal is necessary to fully resolve the issues, because those parties have been sued jointly and severally.
[30] As stated by counsel for Agro, in order to fully resolve the issues in Canada, if Vilhena's proceedings before the TCP are to be believed, parties such as Agro, SERAIN, Eagle, Ideal and Afrocean would also have to be sued in Canada, so that the dispute could be completely determined before this Court. However, Vilhena cannot sue SERAIN, Afrocean, Eagle and Ideal in Canada because in consideration for the release of the arrests on the Zodio, Vilhena irrevocably attorned to the jurisdiction of the TCP and of the Chambre arbitrale maritime de Paris with respect to any disputes between it, on the one hand, and Afrocean, SERAIN, Ideal and Eagle, on the other hand.
[31] The various cases cited by Vilhena where a stay of proceedings was not granted involve different dynamics than in this case.
[32] For the above-noted reasons, I am of the view that paragraphs 50(1)(a) and (b) of the Federal Court Act,supra, may properly be cited to stay this action until a final judgment is granted in the proceeding filed by Vilhena against Agro before the TCP. Costs are in the cause, as claimed in Agro's notice of motion under this scenario. An order will be made accordingly.
Richard Morneau
Prothonotary
Montréal, Quebec
June 18, 2003
Certified true translation
Mary Jo Egan, LLB
FEDERAL COURT OF CANADA
TRIAL DIVISION
SOLICITORS OF RECORD
DOCKET: T-890-02
STYLE OF CAUSE:
VILHENA SHIPPING LTD.
Plaintiff
and
AGRO-HALL LTD.
Defendant
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: June 9, 2003
REASONS FOR ORDER BY: RICHARD MORNEAU, PROTHONOTARY
DATED: June 18, 2003
APPEARANCES:
George J. Pollack FOR THE PLAINTIFF
Richard Gaudreau FOR THE DEFENDANT
SOLICITORS OF RECORD:
Davies Ward Phillips & Vineberg FOR THE PLAINTIFF
Montréal, Quebec
Langlois Gaudreau O'Connor FOR THE DEFENDANT
Québec, Quebec
FEDERAL COURT OF CANADA
TRIAL DIVISION
Date: 20030618
Docket: T-890-02
ADMIRALTY ACTION IN PERSONAM
Between:
VILHENA SHIPPING LTD.
Plaintiff
and
AGRO-HALL LTD.
Defendant
REASONS FOR ORDER
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