Trade Arbed Inc. v. Macado (The), docket T-636-99

Date: 19991020

Docket: T-636-99

MONTREAL, QUEBEC, THIS 20^th DAY OF OCTOBER 1999

PRESENT:      RICHARD MORNEAU, ESQ., PROTHONOTARY

     Admiralty Action In Rem and In Personam

BETWEEN:

     TRADE ARBED INC.

     Plaintiff

     AND

     TOLES LIMITED

     and

     RONLY HOLDINGS UK LIMITED

     and

     THE CARGO OF APPROXIMATELY 3,882 METRIC TONS

     OF SILICO MANGANESE EX THE SHIP MACADO

     Defendants

     ORDER

     The in rem Defendant's motion for the following reliefs is granted with costs:

1.      An Order quashing the arrest of the in rem defendant "The cargo of approximately 3,882 metric tons of silico manganese ex the ship MACADO", at Contrecoeur Marine Terminal, Port of Montreal, exercised pursuant to a Warrant issued by this Court on April 9, 1999;

2.      An Order striking from the style of cause the in rem defendant "The cargo of approximately 3,882 metric tons of silico manganese ex the ship MACADO";

3.      An order striking out the following paragraphs in their entirety from the Statement of Claim, being the paragraphs which concern themselves with the cargo referred to in paragraph 1 hereof: paragraphs 1(d), 3, 7 and 14;

4.      An Order in respect of paragraph 8 of the Statement of Claim requiring that the word "cargos" be substituted by the word "cargo" and that the words "and Defendant Ronly Holdings Limited" be struck.

     The in rem Defendant's motion is otherwise dismissed.

Richard Morneau

     Prothonotary

     Date: 19991020

     Docket: T-636-99

     Admiralty Action In Rem and In Personam

Between:

     TRADE ARBED INC.

     Plaintiff

     AND

     TOLES LIMITED

     and

     RONLY HOLDINGS UK LIMITED

     and

     THE CARGO OF APPROXIMATELY 3,882 METRIC TONS

     OF SILICO MANGANESE EX THE SHIP MACADO

     Defendants

     REASONS FOR ORDER

RICHARD MORNEAU, ESQ., PROTHONOTARY:

[1]      This is a motion by the in rem Defendant "a cargo of approximately 3,882 metric tons of silico manganese ex the ship MACADO" (hereinafter the cargo) pursuant to subsections 43(2) and (3) of the Federal Court Act (the Act) and rule 221 of the Federal Court Rules, 1998 (the rules) for an order quashing the arrest of the cargo on the basis that it cannot be considered the subject of the Plaintiff's action within the meaning of subsection 43(2) of the Act.

The Relevant Facts

[2]      From a reading of the Plaintiff's Statement of Claim, the following facts can be gathered.

[3]      At all material times, the Plaintiff carried on business as a steel trader and purchased a cargo consisting of 982 bundles of used axles having a gross weight of 3,305.305 metric tons (see paragraph 2 of Statement of Claim).

[4]      In order to carry its cargo from Kerch to Newark, the Plaintiff chartered a ship, the M.V. IDEAL, from Toles Limited (hereinafter "Toles") under a Gencon charterparty (hereinafter the "charterparty") dated at New York on November 19, 1998 (see paragraph 5 of the Statement of Claim).

[5]      Pursuant to the terms of the charterparty, Ronly Holdings Limited (hereinafter "Ronly") undertook to guarantee the performance by Toles of the charterparty (see paragraph 6 of the Statement of Claim).

[6]      Plaintiff's cargo was loaded on board the M.V. IDEAL at the port of Kerch for delivery to Newark (see paragraph 4 of the Statement of Claim).

[7]      In early January 1999, the Plaintiff was informed that the M.V. IDEAL had called, en route, at Malta to effect substantial repairs to her engines. The extent of the mechanical breakdown was such that the M.V. IDEAL could not complete her voyage to Newark and the Plaintiff, therefore, chartered another vessel to carry its cargo to destination at significant cost (see paragraph 9 of the Statement of Claim).

[8]      Plaintiff called Toles and Ronly to arbitration in New York pursuant to section 64 of the charterparty, Plaintiff's exclusive purpose in initiating this action having been to obtain security (see paragraph 15 of the Statement of Claim).

[9]      The security was obtained by seizing at Contrecoeur a cargo belonging to the guarantor Ronly, a cargo which was also carried on the M.V. IDEAL to the point of her breakdown and thereafter on the vessel M.V. MACADO to Contrecoeur (see paragraphs 7 and 11 of the Statement of Claim).

Analysis

[10]      The Plaintiff's Statement of Claim describes damages arising out of an alleged failure of a vessel, the M.V. IDEAL, to perform and complete a voyage which had been contracted for by the Plaintiff pursuant to a charterparty with that vessel's owner (Toles) for the carriage of the Plaintiff's cargo (not the arrested cargo) from the Ukraine to the United States.

[11]      As alleged in paragraph 6 of the Statement of Claim, the link to the matter of the alleged owner of the seized cargo, Ronly, is restricted to the fact that Ronly guaranteed the performance of the owner of the M.V. IDEAL, Toles.

[12]      I am not satisfied that in and by itself, the fact that a party guarantees the performance of the obligations of another makes that guarantor's property "the subject" of a claim that one party to a principal contract may assert against the other.

[13]      I agree with counsel for the cargo that the fact that Ronly was a shipper of its own cargo (the seized cargo) on the same vessel may have made the carriage of the Plaintiff's cargo commercially viable from the Plaintiff's point of view, as alleged in paragraphs 7 and 14 of the Statement of Claim, but this cannot be converted into an assertion that Ronly's cargo was or is "the subject of the action".

[14]      I also agree with the following comments of counsel for the cargo found in his written representations in reply:

Nowhere does Elena Elenev in either of her affidavits [submitted in support of the arrest of the cargo] suggest that the arrested cargo was the subject matter of Trade Arbed's contract of charterparty with Toles. All that she says is that Trade Arbed knew that the applicant would be shipping a cargo upon the same vessel and that this influenced it to ship its own cargo upon that vessel as it would "reduce freight by sharing the available space on-board"; (paragraph 9 of the affidavit of April 9 and paragraph 9(ii) of the affidavit of October 4). Even the new statement (paragraph 9(iii) of the October 4 affidavit) that having "Ronly's" cargo on board gave Trade Arbed "confidence that the voyage would run smoothly" can in no way be extrapolated into a statement that "Ronly's cargo" was either the subject matter of Trade Arbed's contract of affreightment or "the subject matter" of this action within the meaning of Section 43(2) of the Federal Court Act (hereinafter the 'Act'). Thus plaintiff's lawyers' statement in paragraph 14 of the Amended Statement of Claim that the cargo of silico manganese "was the subject matter of Plaintiff's contract of affreightment" is completely unfounded and made simply to give some semblance of legitimacy, however transparent, to the illegality of the arrest.

[15]      Here, clearly and obviously I cannot come to the conclusion that the Statement of Claim and the affidavits filed in support of the arrest exhibit a "connection" as this term is used throughout the applicable jurisprudence referred to by both parties. Therefore, clearly and obviously the cargo cannot be considered the subject of the within action.

[16]      Considering this conclusion, I do not have to decide pursuant to subsection 43(3) of the Act whether at the time of the commencement of the action the cargo was beneficially owned by the person who was the beneficial owner at the time when the cause of action arose.

[17]      Consequently, for the reasons expressed above and pursuant to rule 221(1)(a), (b) and (f), cargo's motion for the following reliefs is granted with costs:

1.      An Order quashing the arrest of the in rem defendant "The cargo of approximately 3,882 metric tons of silico manganese ex the ship MACADO", at Contrecoeur Marine Terminal, Port of Montreal, exercised pursuant to a Warrant issued by this Court on April 9, 1999;

2.      An Order striking from the style of cause the in rem defendant "The cargo of approximately 3,882 metric tons of silico manganese ex the ship MACADO";

3.      An order striking out the following paragraphs in their entirety from the Statement of Claim, being the paragraphs which concern themselves with the cargo referred to in paragraph 1 hereof: paragraphs 1(d), 3, 7 and 14;

4.      An Order in respect of paragraph 8 of the Statement of Claim requiring that the word "cargos" be substituted by the word "cargo" and that the words "and Defendant Ronly Holdings Limited" be struck.

[18]      I am not satisfied, however, that I was presented with enough arguments to grant the following remedies, and therefore I shall not grant them:

5.      An Order requiring the Plaintiff to re-draft paragraphs 10, 11, and 13 to properly reflect, as alleged in paragraph 6 of the Statement of Claim, that Ronly Holdings Limited is a guarantor of the defendant Toles Limited and not a party which can be held, in the first instance, responsible for the alleged breaches of the charterparty by the defendant Toles;

6.      An Order requiring Ronly Holdings UK Limited (or, if the plaintiff prefers, "Ronly Holdings Limited") to be named not as a defendant but as a mise-en-cause.

[19]      An order shall issue accordingly.

Richard Morneau

     Prothonotary

MONTREAL, QUEBEC

October 20, 1999

     FEDERAL COURT OF CANADA

     NAMES OF COUNSEL AND SOLICITORS OF RECORD

COURT NO.:

STYLE OF CAUSE:

T-636-99

Admiralty Action In Rem and In Personam

Between:

TRADE ARBED INC.

     Plaintiff

AND

TOLES LIMITED and

RONLY HOLDINGS UK LIMITED and

THE CARGO OF APPROXIMATELY 3,882 METRIC TONS OF SILICO MANGANESE EX THE SHIP MACADO

     Defendants

PLACE OF HEARING:Montreal, Quebec

DATE OF HEARING:October 14, 1999

REASONS FOR ORDER BY RICHARD MORNEAU, ESQ., PROTHONOTARY

DATE OF REASONS FOR ORDER:October 20, 1999

APPEARANCES:

Mr. J. Kenrick Sproule

for the Plaintiff

Mr. David F.H. Marler

for the Defendants

SOLICITORS OF RECORD:

Sproule, Castonguay, Pollack Mr. J. Kenrick Sproule Montreal, Quebec

for the Plaintiff

Marler & Associates Mr. David F.H. Marler Montreal, Quebec

for the Defendants