Date: 20011204
Docket: T-1999-01
Neutral Citation: 2001 FCT 1328
Admiralty Action in rem
BETWEEN:
BALCAN ehf
Plaintiff
and
The Owners and All Others interested in the ship "ATLAS"
Defendant
REASONS FOR ORDER AND ORDER
BLAIS J.
[1] This is a motion brought by Gjorvi hf et al. [hereinafter referred to as "Gjorvi"] pursuant to Rules 208 and 221(a)(c) and (f) of the Federal Court Rules, 1998.
[2] The parties have agreed to limit the content of this motion to the issues of bail and necessaries; the issue of jurisdiction has been adjourned sine die.
BRIEF SUMMARY OF PERTINENT FACTS
[3] On November 6, 2001, Balcan ehf [hereinafter referred to as "Balcan"] caused to be issued out of the Federal Court of Canada a statement of claim and warrant of arrest which caused the ship "Atlas" to be arrested.
CLAIM UNDER SECTION 22(2)(M) OF THE FEDERAL COURT ACT
[4] Balcan pursues a necessaries claim under section 22(2)(m) of the Federal Court Act [hereinafter referred to as the "Act"] in which it lists seventeen (17) items for reimbursement it paid on necessaries supplied to the ship "Atlas".
[5] In its response to this motion, Balcan has dropped some of the items claimed.
[6] Gjorvi claims that Balcan has not supplied the ship "Atlas" with any such necessaries nor has Balcan paid for any of the necessaries, rather they have been supplied by a series of third party suppliers and payment has been negotiated at Gjorvi's orchestration.
ORDER SOUGHT
[7] Gjorvi seeks an order setting aside the amount of bail required to be posted to effect the release of the ship "Atlas" given that Balcan's claims for necessaries are not valid.
ISSUE
[8] Is Balcan's claim for necessaries a valid claim pursuant to section 22(2)(m) of the Federal Court Act thereby giving the Court jurisdiction to allow an in rem action against the ship "Atlas"?
ANALYSIS
Is Balcan's claim for necessaries a valid claim pursuant to section 22(2)(m) of the Federal Court Act thereby giving the Court jurisdiction to allow an in rem action against the ship "Atlas"?
[9] No, the claim made by Balcan under section 22(2)(m) of the Act does not fall within the in rem jurisdiction of this Court because Balcan is not a necessaries claimant.
[10] Section 22(1) of the Act is a broad provision that reads as follows:
| 22.(1) The Trial Division has concurrent original jurisdiction, between subject and subject as well as otherwise, in all cases in which a claim for relief is made or a remedy is sought under or by virtue of Canadian maritime law or any other law of Canada relating to any matter coming within the class of subject of navigation and shipping, except to the extent that jurisdiction has been otherwise specially assigned.
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22.(1) La Section de première instance a compétence concurrente, en première instance, dans les cas - opposant notamment des administrés - où une demande de réparation ou un recours est présenté en vertu du droit maritime canadien ou d'une loi fédérale concernant la navigation ou la marine marchande, sauf attribution expresse contraire de cette compétence.
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[11] Section 22(2)(m) of the Act reads as follows:
| 22. (2) Without limiting the generality of subsection (1), it is hereby declared for greater certainty that the Trial Division has jurisdiction with respect to any one or more of the following:
m) any claim in respect of goods, materials or services wherever supplied to a ship for the operation or maintenance of the ship, including, without restricting the generality of the foregoing, claims in respect of stevedoring and lighterage;
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22.(2) Il demeure entendu que, sans préjudice de la portée générale du paragraphe (1), la Section de première instance a compétence dans les cas suivants :
m) une demande relative à des marchandises, matériels ou services fournis à un navire pour son fonctionnement ou son entretien, notamment en ce qui concerne l'acconage et le gabarage;
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[12] Gjorvi claims that Balcan has not supplied the ship "Atlas" with any necessaries nor has Balcan paid for any of the necessaries that they seek in their claim, rather they have been supplied by a series of third party suppliers. Therefore Gjorvi submits that Balcan has no claim as it discloses no reasonable cause of action and, because no jurisdiction permitting an in rem right of action with respect to a necessaries claim can arise where the claimant has failed to supply necessaries to a ship. That is, where the claim does not fall within the jurisdiction of this Court pursuant to section 22(2)(m) of the Act. Balcan however submits that this Court has in rem jurisdiction because the Ship Management Agreement is a comprehensive marine contract and therefore, relates to the general concept of Canadian maritime law. I do not agree.
[13] Balcan relies upon the definition of Canadian maritime law found in section 2 of the Act; the cases of ITO International Terminal Operators Limited v. Miida Electronics Inc, [1986] 1 S.C.R. 752 and Bow Valley Husky v. St.John Shipbuilding, [1997] 3 S.C.R. 1210; and the notion that the jurisdiction clause contained in the Ship Management Agreement has no effect on this Court's in rem jurisdiction.
[14] In ITO, supra the issue was the theft of electronic calculators from a warehouse. Balcan argues that even though the calculators were not physically on a ship, they had been on a ship and so, constituted a maritime matter. The Supreme Court of Canada in ITO, supra dealt with several issues namely land-based tort with respect to recently unloaded goods and the extension of limitation of liability to those employed in performance of the contract of carriage. Bow Valley, supra is a case where a fire broke out on an oil rig. Balcan argues that even though an oil rig is not a navigable vessel the tort claim arising from the fire would still be a maritime matter. The Supreme Court therefore was confronted with several issues namely, tort liability specifically contributory negligence and causation, and whether a shipbuilderand system manufacturer had duty to warn the rig owner of the inflammability of the product used in the system.
[15] What Balcan ignores is that the real issue at hand is whether the claim made under section 22(2)(m) of the Act is a valid claim thereby conferring jurisdiction upon this Court. Balcan is relying upon vague concepts of maritime law, rather than focussing upon the real issue in the present case.
[16] The purpose of section 22(2)(m) of the Act is to provide a remedy to a supplier who has provided goods, materials or services to a ship and has not been paid for same. Balcan has not supplied goods, materials or services to the ship "Atlas". Consequently, Gjorvi has no liability toward Balcan for any such supply.
[17] Gjorvi relies on the case of McBride v. "American" [1924], Ex. C.R. 227 (Ex. Ct. of Canada, N.S. Adm. Dist.), to show that in order for any party to have a claim in rem for necessaries they must have actually paid for those necessaries. The Court held:
[para7] It is no doubt established
that the person who pays for necessaries supplied to a ship has, as against that ship and her owners, as good a claim as the person who actually supplied them, and, further, that he who advances money to the person who thus pays, for the purpose of enabling him to pay, stands in the same position as the person to whom the money is advanced. See Foong Tai & Co. v. Bucheister & Co., (1908) A.C. 458 at p. 466.
[18] Balcan has not paid for any of the items listed in its claim under section 22(2)(m) of the Act as per the affidavit of Mr. Helgi Eiriksson. There are letters attached to this affidavit by third party suppliers that indicate payment by Balcan has not been made. This affidavit also makes reference to each and every item Balcan claims from Gjorvi. All of which have not been paid by Balcan and remains owing.
[19] Based on the foregoing, Balcan has failed to supply any necessaries to the ship "Atlas" nor paid for any necessaries and thus, is not in the position of a necessaries claimant.
[20] Pursuant to some of the documents filed, it is possible that Balcan could be forced to pay for some of the amounts as guarantee or pursuant to existing contracts; nevertheless, Balcan has not paid any of these claims as of yet, and none of Gjorvi's creditors have shown any interest in suing Gjorvi or Balcan. Quite to the contrary, they have taken the opposite position in order to dissociate themselves from Balcan's statement of claim.
[21] The claims identified at paragraph 7 of the statement of claim should be struck out as premature.
[22] This claim does not fall within the in rem jurisdiction of this Court and therefore, the portions of Balcan's claim in rem should be struck out on these grounds and as being plainly and obviously beyond this Court's in rem jurisdiction as granted by section 22(2)(m) of the Act.
O R D E R
[23] Therefore, in regards to the claim made by Balcan under section 22(2)(m) of the Act,I find it to be invalid since no necessaries have been supplied to the ship "Atlas" nor have any payments for necessaries been made by Balcan.
[24] Being satisfied that there is no quantified claim against the vessel, there is therefore no reason for bail. The warrant of arrest should also be struck out and the arrest of the ship is hereby declared invalid with costs in favour of the defendant.
Pierre Blais
Judge
OTTAWA, ONTARIO
December 4, 2001
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1999-01
STYLE OF CAUSE: BALCAN ehf v. THE OWNERS AND ALL OTHERS
INTERESTED IN THE SHIP "ATLAS"
PLACE OF HEARING: OTTAWA
DATE OF HEARING: NOVEMBER 30, 2001
REASONS FOR ORDER : BLAIS, J.
DATED: DECEMBER 4, 2001
APPEARANCES:
JOHN SINNOTT FOR THE PLAINTIFF
CECILY STRICKLAND FOR THE MOVING PARTY GJORVI hf
SOLICITORS OF RECORD:
LEWIS, SINNOTT, SHORTALL, HURLEY FOR THE PLAINTIFF
ST. JOHN'S, NEWFOUNDLAND
STEWART McKELVEY STIRLING SCALES FOR THE MOVING PARTY
ST. JOHN'S, NEWFOUNDLAND GJORVI hf
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