Date: 20000828
Docket: T-627-00
BETWEEN:
ED WAHL BOAT BUILDERS
AND REPAIRS LTD.,
Plaintiff,
- and -
PAUL HOLM AND ANTOINETTE HOLM,
THE OWNERS AND ALL OTHERS INTERSTED
IN THE SHIP "NORSE-POL" OFFICIAL NUMBER 1058601,
Defendants,
AND BETWEEN:
PAUL HOLM AND ANTOINETTE HOLM,
Plaintiffs by Counterclaim,
- and -
ED WAHL BOAT BUILDERS AND REPAIRS LTD.,
and SHELTER ISLAND MARINA INC.,
Defendants by Counterclaim.
REASONS FOR ORDER
MR. JOHN A. HARGRAVE,
PROTHONOTARY
[1] The Defendants, Paul and Antoinette Holm, owners of the Norse-Pol, who are also Plaintiffs by counterclaim, by the present motion seek various remedies. Principal among the remedies are the release from arrest of the Norse-Pol, presently abandoned by the builder and sitting on blocks on land owned by Shelter Island Marina Inc., without bail and security for costs. Notice of this motion was served on the Plaintiff as provided in an Order of 22 August 2000.
[2] The facts relevant on this motion are that the Norse-Pol, a partially constructed yacht, was arrested by her builder 12 April 2000 on allegations of money owed on her construction. The owners of the Norse-Pol say, to the contrary, that they have already put into the vessel an amount in excess of the contract price. Moreover the Defendants believe construction was defective and that to remedy the defects and complete construction will costs many hundreds of thousands of dollars.
[3] The Plaintiff builder currently seems to have many problems, including with creditors, with its landlord, with its solicitors, with its counsel and with its sole officer and director, Mr. Ed Wahl.
[4] To touch on just a few of the problems, the Plaintiff abandoned its rental shipyard facility at Graybar Road some two months ago, with rent owing. The corporate solicitors for the Plaintiff somehow had the registered office changed from their law office to the place of business of the Plaintiff's landlord, a landlord who has no other connection to or interest in the Plaintiff, other than as a creditor. Plaintiff's counsel had herself removed from the record, both because she was unable to obtain instructions and because her firm's account remained unpaid. Finally, the evidence is that Mr. Ed Wahl, of an unknown address, the sole officer and director of the Plaintiff, has tried to have himself removed as an officer and director of the company.
[5] The effect of all of this is to leave the Defendants not only without opposing counsel, with whom their counsel might deal, but also without any effective way of reaching the company or its officer and director. Here I would note that in an effort to bring the present motion to the attention of the Plaintiff and Mr. Wahl, who is not listed in the telephone directory, other than through the now de facto defunct Plaintiff, the motion was served upon the former corporate solicitors and at the address of a friend, with whom it is possible that Mr. Wahl might be staying.
[6] In short, the Defendants are concerned that they have no one with whom to deal either generally, as to proceeding with the action or particularly in order to obtain the release of their vessel.
[7] The process of arresting a ship in the Federal Court, in an action in which liability is only alleged, is simple and inexpensive. However, the arrest procedure is, in many ways, an extraordinary remedy of great weight, granted in a summary manner, indeed, in the Federal Court almost as a right to any Plaintiff who claims an in rem right. This leads to the concept of balancing the rights of the creditor and of the ship owner.
[8] The balancing of the rights of the shipowner and of the creditor has not received as much emphasis in Canada as it has in the United States, where there has been much debate on the difficult aspect of safeguarding the reasonable rights of the shipowner and the reasonable rights of creditors, a balancing of interests in order to obtain fairness and substantial justice, given the circumstances.
[9] Certainly in Canada there is the concept of wrongful arrest and the damages that may flow, however this presupposes a live plaintiff as someone to deal with and penalize if the arrest is in fact improper. Indeed, given the extraordinary and summary nature of the arrest procedure it is incumbent upon a plaintiff, or the plaintiff's counsel, to be available on reasonable notice, which may mean short notice, so that the shipowner may move to protect its rights, including to obtain the release of the ship from arrest. Here the arrest has occurred, yet there is no entity behind the arrest which evidences any sign of life, either corporate or by way of an officer, director, receiver or trustee, with whom to deal and with no apparent prospect of such.
[10] The Federal Court by present Rule 488 has the jurisdiction to release a ship. As to the release of a ship without security being provided: see for example Atlantic Lines & Navigation Co. v. The Didymi, [1985] 1 F.C. 240, in which Madame Justice Reed notes, at page 244, that the issue was whether or not the Court's discretion should be exercised in order to release the ship in the absence of security.
[11] In the present instance, to maintain the arrest of the ship, in the absence of a live plaintiff with whom to negotiate a release, would be perverse and contrary to the reasonable rights of the shipowners. The Norse-Pol is released from arrest without the necessity of providing bail.
[12] As to security for costs, the Defendants must have some way of bringing this proceeding to an end, in the absence of a plaintiff capable of pursuing the action. That may be done by requiring the Plaintiff to provide security for costs, within a set time.
[13] The Plaintiff shall provide security for costs, in the amount of $40,000 within 60 days, failing which the Defendants may move to have the action dismissed. In setting security for costs at $40,000, I have taken into account both the much more substantial figure suggested by the Defendants, approximately $90,000, and the fact that much litigation is resolved well before trial. However, in the event that this matter does proceed, the Defendants may, on completion of examinations for discovery, seek further security for costs.
[14] I have considered the balance of the requests set out in the Defendants' motion. A modest abridgement of time for the filing of a Defence to the Counterclaim of the Defendants, and for the filing by the Plaintiff of a reply to the Defendants' defence, to 1 September 2000, is appropriate.
[15] The Defendants shall have the costs and disbursements related to this motion, taking into account Tariff B, and which shall be in the lump sum of $1,000, payable forthwith.
(Sgd.) "John A. Hargrave"
Prothonotary
August 28, 2000
Vancouver, British Columbia
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-627-00
STYLE OF CAUSE: ED WAHL BOAT BUILDERS AND REPAIRS LTD.
v.
| PAUL HOLD AND ANTOINETTE HOLM, THE OWNERS AND ALL OTHERS INTERESTED IN THE SHIP "NORSE-POL" OFFICIAL NUMBER 1058601 |
PLACE OF HEARING: VANCOUVER, BC
DATE OF HEARING: August 28, 2000
REASONS FOR ORDER OF HARGRAVE P.
DATED: August 28, 2000
APPEARANCES:
| Mr. Glenn Morgan FOR DEFENDANTS, PAUL AND ANTOINETTE HOLM |
| Mr. James Hall FOR DEFENDANT BY COUNTERCLAIM SHELTER ISLAND MARINA INC. |
SOLICITORS OF RECORD:
Davis & Co.
| Vancouver, BC FOR DEFENDANTS, PAUL AND ANTOINETTE HOLM |
Owen, Bird
| Vancouver, BC FOR DEFENDANT BY COUNTERCLAIM SHELTER ISLAND MARINA INC. |
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