Date: 19990416
Docket: T-1944-98
BETWEEN:
RICHARDSON INTERNATIONAL, LTD.,
Plaintiff,
- and -
ZAO RPK "STARODUBSKOE", J.S.K. SAKHALIN
LEASING CO. AND THE OWNERS AND
ALL OTHERS INTERESTED IN THE SHIP
"MYS CHIKHACHEVA" AND HER CARGO,
Defendants.
REASONS FOR ORDER AND ORDER
MR. JOHN A. HARGRAVE,
PROTHONOTARY
[1] These brief reasons arise out of an application by the Defendant, Bering Trawlers Ltd. ("Bering"), owner of the MYS Chikhacheva, to require the Plaintiff, an American company, post security for costs. The security sought includes the cost of bail which was posted to release the MYS Chikhacheva from arrest. In these reasons I have referred to the security given to release the MYS Chikhacheva as bail, rather than as security, for the latter term is confusing in the context of security for costs. In fact, the bail is in the form of an irrevocable bank guarantee.
[2] While security for costs is discretionary, I am not convinced as to the substance of the American Plaintiff and therefore the Bering ought to be secured at this point for its costs. Security for costs, in favour of Bering, through to completion of examinations for discovery, shall be $20,000.
[3] There is, in the Federal Court, no set current rule or practice, nor should there be, as to the appropriate amount of or limit on security to cover the expense of providing bail to release a ship from arrest, although local bonding costs may be a guide. Rather, the reasonableness of the cost of providing bail to obtain release from arrest ought to be considered, in each instance, on its own circumstances.
[4] In the Federal Court the cost of bail is an element in security for costs. Mr. Justice LeDain points out in Antares Shipping Corporation v. The "Capricorn", [1977] 2 F.C. 274 (F.C.A.) that there is a practice, in the Trial Division, "... to include the expense of providing bail in security for costs." (page 276) and goes on to note that this allowance of the expense of providing bail is appropriate even though the rules at the time did not make specific provision. Mr. Justice LeDain felt that the expense of providing bail was within what was then section 2(2)(b) of Tariff B, as a disbursement essential for the conduct of the action.
[5] Mr. Justice LeDain implicitly rejects the one percent cap set out in The Chinook v. The Dagmar Salem, [1955] Ex.C.R. 210, for when the Dagmar Salem was decided security for costs was governed by English Supreme Court Order 12, Rule 21, which placed a one percent cap on bail. Indeed, in The Capricorn security for costs was one percent, together with a substantial premium.
[6] In the present instance, the authority for security for the cost of providing bail may be found in item 1(4) of Tariff B, which allows a reasonable disbursement provided it is properly established. Bail, in an admiralty action, is a normal step in any proceeding involving an arrest and is clearly authorized by Rules 485 and 486. Thus the cost of bail is an appropriate item to factor into security for costs.
[7] In the present instance the evidence of the cost of bail is not completely satisfactory, however it appears that there were three tiers in providing bail for the Mys Chikhecheva. First, Bering, unable to raise bail directly, went to their managers FRIGO Fischtechnik GmbH & Co., who agreed to organize bail in return for 20% per year. FRIGO Fischtechnik then went to Deutsche Bank of Bremerhaven who undertook to issue a guarantee, on which bail in Canada might be based, at 2.25% per annum: see the Affidavit of Peter Swanson sworn 13 January 1999. Bail was in fact issued here in Canada, in the form of a guarantee, by the Royal Bank of Canada at 0.875% per annum. The total cost of these two tiers is 3.125% per annum. This two tier organization of bail, that of a foreign ship-owner working through a foreign bank and requiring a bank in Canada to issue the actual bail bond, or guarantee is, in the circumstances, appropriate and reasonable.
[8] I do not find the 20% charge, apparently charged by the managers of Bering, in essence for the guaranteeing of the liability of Bering to Deutsche Bank to be reasonable. It smacks of an impecunious Defendant. The 20% per year amount is disallowed on the basis of The Liesbosch, [1933] A.C. 449.
ORDER
| 1. The Plaintiff shall give the Defendant, Bering Trawlers Ltd., security for costs in the amount of $20,000 to cover costs through until completion of examinations for discovery. Bering Trawlers Ltd. may thereafter apply, or from time to time apply, for further security for costs. |
| 2. Security for the cost of providing bail shall be 3.125% of the bail for each of two years, thus being 6.250% of the bail. |
| 3. Costs shall be in the cause. |
(Sgd.) "John A. Hargrave"
Prothonotary
Vancouver, British Columbia
April 16, 1999
FEDERAL COURT TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
HEARING DATED: April 12, 1999
COURT NO.: T-1944-98
STYLE OF CAUSE: RICHARDSON INTERNATIONAL LTD.
v.
| ZAO RPK "STARODUBSKOE", J.S.K. SAKHALIN LEASING CO. AND THE OWNERS AND ALL OTHERS INTERESTED IN THE SHIP "MYS CHIKHACHEVA" AND HER CARGO, |
PLACE OF HEARING: Vancouver, BC
REASONS FOR ORDER AND ORDER OF
MR. JOHN A. HARGRAVE, PROTHONOTARY
dated April 16, 1999
APPEARANCES:
Mr. David McEwen for Plaintiff
Mr. Peter Swanson for Defendants
SOLICITORS OF RECORD:
McEwen Schmitt & Co.
Vancouver, BC for Plaintiff
Campney & Murphy
Vancouver, BC for Defendants