Federal Court Decisions

     T-966-97

B E T W E E N:

     NAVI-MONT INC.

     - and -

     PETRO-NAV INC.

     Applicants

AND:

     RIGEL SHIPPING CANADA INC.

     Respondent

AND:

     T-961-97

B E T W E E N:

     ULTRAMAR LTD.

     Applicant

AND:

     RIGEL SHIPPING CANADA INC.

     Respondent

     REASONS FOR ORDER

NADON J.:

     The applicants, Ultramar Ltd. ("Ultramar") (in T-961-97), Navi-Mont Inc. ("Navi-Mont") and Petro-Nav Inc. ("Petro-Nav") (in T-966-97), seek an order in the nature of an interlocutory injunction directing the respondent Rigel Shipping Canada Inc. ("Rigel") to continue to operate the ships EMERALD STAR, DIAMOND STAR and JADE STAR in accordance with the terms and conditions of a contract of affreightment entered into between the applicant Ultramar and Rigel.

     The relevant facts can be summarized as follows:

     On December 28, 1995 Ultramar and Rigel entered into a "contract of affreightment" pursuant to which Rigel undertook to place at the disposal of Ultramar the three aforementioned ships for the period from December 28, 1995 to April 14, 1999. In consideration thereof, Ultramar agreed and undertook to pay to Rigel freight and hire. Payment of the freight and hire to Rigel was to be made by Ultramar irrespective of whether Ultramar had a need for the ships. On or about June 15, 1996, the period of application of the contract of affreightment was extended to April 14, 2004.

     Because it did not need the three Rigel ships at all times, Ultramar, from time to time, chartered one or more of the ships to other companies in order to alleviate its financial burden. According to the evidence of Louis Guévremont, Vice-President, Product, Supply and Wholesale for Ultramar, his company lost approximately $2,000,000.00 in 1995 and $1,300,000.00 in 1996 because it did not have sufficient employment for the Rigel ships.

     As a result, Ultramar approached Rigel in order to obtain its consent to amend the contract of affreightment. Rigel refused to give its consent.

     On April 22, 1997 the applicant Navi-Mont was duly constituted pursuant to the Canada Business Corporations Act, R.S.C. 1985, c. C-44. Its principal place of business is situated at 204 Saint-Sacrement Street, Suite 601, in Montreal. This business address is also the business address and principal place of business of the applicant Petro-Nav.

     On April 23, 1997 Ultramar assigned its rights and obligations under the contract of affreightment to Navi-Mont. However, Ultramar"s obligations to pay freight and hire to Rigel under clauses 10(a) to 10(d) of the contract of affreightment were not assigned to Navi-Mont. On April 23, 1997, notice of the assignment was given to Rigel.

     Also on April 23, 1997, Navi-Mont advised Rigel that "all operational notices, instructions, etc. contemplated to be given to you under the c.o.a. by Ultramar Canada Inc. will henceforth be given to you by Navi-Mont Inc.". On April 24, 1997, Rigel"s lawyers acknowledged receipt of the notice of assignment and of Navi-Mont"s notice regarding operational instructions. Rigel"s lawyers advised Ultramar and Navi-Mont that Rigel considered the assignment and any notices given thereunder to be null and void.

     On April 25, 1997, Rigel wrote to Ultramar to advise that it would only accept instructions regarding vessel employment from Ultramar. Rigel further advised Ultramar that it would appoint by May 15, 1997, its arbitrator pursuant to the arbitration clause contained in the contract of affreightment.

     In order to properly understand the dispute between Ultramar, Navi-Mont and Rigel, a few words must be said regarding the other applicant, Petro-Nav. As I indicated earlier, Petro-Nav and Navi-Mont operate from the same business premises. Further, the two corporations have the same directors, namely Louis-Marie Beaulieu, Richard P. Carson and Nicolas R. Gravino. One hundred percent of the shares in Navi-Mont are owned by Petro-Nav, a subsidiary of Groupe Desgagnés Inc., a shipping company based in the City of Quebec. On April 23, 1997, Petro-Nav granted to Ultramar an irrevocable option, exercisable at any time prior to April 15, 1999, to purchase at least eleven percent of Navi-Mont"s voting shares.

     On February 28, 1997, Petro-Nav was advised by Shell Canada Products Ltd. ("Shell") that it was Shell"s intention to enter into a contract of affreightment (the "Shell contract") with Petro-Nav commencing on April 1, 1997, for a minimum term of three years. Subsequently, a formal contract was entered into between Shell and Petro-Nav. However, Petro-Nav and Shell have refused to produce the formal contract on the ground that it contains confidential business information. Pursuant to the Shell contract, Petro-Nav undertook to transport Shell"s petroleum products from Montreal and Sarnia to ports situated on the eastern coast of Canada and also to the Canadian Arctic.

     The Arctic voyages are to be carried out from July to mid-October of every year. Based on the present tonnage forecast, five voyages shall be necessary to transport Shell"s products to the Arctic. According to the evidence adduced by Petro-Nav, a minimum of two tankers must be assigned to carry out these voyages. It is Petro-Nav"s intention to perform the voyages in question with the Rigel ships. These ships, assuming the assignment is valid, are under the control of Navi-Mont.

     The applicants seek an injunction until such time as the dispute concerning the assignment has been resolved pursuant to the arbitration clause. The parties to the dispute have appointed their arbitrators and it is expected that the two arbitrators shall shortly choose the third member of the panel. The parties are hopeful that the dispute will be decided before the end of the year.

     The dispute concerns clause 51 of the contract of affreightment which provides as follows:

51. SUCCESSORS AND ASSIGNS:

This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns and administrators.

Neither Party hereto may assign any benefit or obligation under this Agreement without the written consent of the other Party, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, and without in any way reducing its obligations to Carrier hereunder, Shipper may assign any of its rights or obligations to any associate or affiliate or to any parent or subsidiary corporation of Shipper.

     Ultramar, supported by Navi-Mont and Petro-Nav, takes the position that Navi-Mont is an associate of Ultramar according to the Canada Business Corporations Act and hence that the assignment of the contract of affreightment between Rigel and Ultramar to Navi-Mont is valid. Rigel, on the other hand, takes the position that the assignment to Navi-Mont does not fall within the ambit of clause 51 of the contract.

ANALYSIS

     In RJR-MacDonald Inc. v. Canada, [1994] 1 S.C.R. 311, the Supreme Court of Canada held that the test enunciated by the House of Lords in American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 should be applied in dealing with applications for interlocutory injunctions. Prior to the RJR-MacDonald decision, the Supreme Court had accepted in Canada the American Cyanamid test insofar as constitutional cases were concerned. In Manitoba (Attorney General) v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110 at 128, Beetz J. stated:

In the case at bar, it is neither necessary nor advisable to choose, for all purposes, between the traditional formulation and the American Cyanamid description of the first test: the British case law illustrates that the formulation of a rigid test for all types of cases,without considering their nature, is not to be favoured (see Hanbury and Maudsley, Modern Equity (12th ed. 1960), pp. 736-43). In my view, however, the American Cyanamid "serious question" formulation is sufficient in a constitutional case where, as indicated below in these reasons, the public interest is taken into consideration in the balance of convenience. But I refrain from expressing any view with respect to the sufficiency or adequacy of this formulation in any other type of case.

     In RJR-MacDonald, the Supreme Court made it clear that the American Cyanamid test would not be restricted to constitutional cases. At 334, Sopinka and Cory JJ. state:

Metropolitan Stores adopted a three-stage test for courts to apply when considering an application for either a stay or an interlocutory injunction. First, a preliminary assessment must be made of the merits of the case to insure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits. It may be helpful to consider each aspect of the test and then apply it to the facts presented in these cases.

     Dealing with the first part of the test, the learned judges state at 335:

Prior to the decision of the House of Lords in American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396, an applicant for interlocutory relief was required to demonstrate a "strong prima facie case" on the merits in order to satisfy the first test. In American Cyanamid , however, Lord Diplock stated that an applicant need no longer demonstrate a strong prima facie case. Rather it would suffice if he or she could satisfy the court that "the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried". The American Cyanamid standard is now generally accepted by the Canadian courts, subject to the occasional reversion to a stricter standard: see Robert J. Sharpe, Injunctions and Specific Performance (2nd ed. 1992) at pp. 2-13 to 2-20.

     At 340 and 341, Sopinka and Cory JJ. explain the second part of the American Cyanamid test as follows:

Beetz J. determined in Metropolitan Stores, at p. 128, that "[t]he second test consists in deciding whether the litigant who seeks the interlocutory injunction would, unless the injunction is granted, suffer irreparable harm". The harm which might be suffered by the respondent, should the relief sought be granted, has been considered by some courts at this stage. We are of the opinion that this is more appropriately dealt with in the third part of the analysis. Any alleged harm to the public interest should also be considered at that stage.

At this stage the only issue to be decided is whether a refusal to grant relief could so adversely affect the applicants" own interests that the harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application.

"Irreparable" refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. Examples of the former include instances where one party will be put out of business by the court"s decision (R.L.Crain Inc. v. Hendry (1988), 48 D.L.R. (4th) 228 (Sask. Q.C.)); where one party will suffer permanent market loss or irrevocable damage to its business reputation (American Cyanamid, supra); or where a permanent loss of natural resources will be the result when a challenged activity is not enjoined (MacMillan Bloedel Ltd. v. Mullin, [1985] 3 W.W.R. 577 (B.C.C.A.)). The fact that one party may be impecunious does not automatically determine the application in favour of the other party who will not ultimately be able to collect damages, although it may be a relevant consideration (Hubbard v. Pitt, [1976] Q.B. 142 (C.A.)).

     Finally, at 342 and 343, Sopinka and Cory JJ. explain the third part of the test:

The third test to be applied in an application for interlocutory relief was described by Beetz J. in Metropolitan Stores at p. 129 as: "a determination of which of the two parties will suffer the greater harm from the granting or refusal of an interlocutory injunction, pending a decision on the merits". In light of the relatively low threshold of the first test and the difficulties in applying the test of irreparable harm in Charter cases, many interlocutory proceedings will be determined at this stage.

The factors which must be considered in assessing the "balance of inconvenience" are numerous and will vary in each individual case. In American Cyanamid , Lord Diplock cautioned, at p. 408, that:

[i]t would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case.

He added, at p. 409, that "there may be many other special factors to be taken into consideration in the particular circumstances of individual cases."

     I now turn to the facts of this case in order to determine whether the applicants have met the American Cyanamid test.

     I begin with the applicant Ultramar. Ultramar entered into a contract of affreightment with Rigel on December 28, 1995. Ultramar argues that there is a serious issue to be tried. That issue is whether the assignment of its rights and obligations to Navi-Mont is valid under clause 51 of the contract of affreightment. That issue, without doubt, constitutes a serious issue to be tried and, consequently, Ultramar meets the first part of the American Cyanamid test.

     I now turn to the second part of that test and that is whether Ultramar will suffer irreparable harm if I do not make the order which it seeks. The evidence adduced by Ultramar is that of Louis Guévremont, one of its Vice-Presidents. In his affidavit, dated May 12, 1997 (in T-961-97), Mr. Guévremont states at paragraphs 14, 15 and 16:

14. Ultramar will suffer serious and irreparable harm should the Order sought not be obtained. Operation of the ships would revert to Ultramar. While Ultramar could seek to obtain charters, as it previously did, that in order to cover the unused capacity of the ships, there would be absolutely no guarantee that it would be able to do so and, even if it did, Ultramar would not lose financially, as it did before, (as described above). It is indicative of the serious risk, and even virtual certainty, that Ultramar would lose in financial terms, that during its discussions with Rigel referred to above at paragraph 3, Ultramar offered to Rigel to revise the Rigel agreement on the footing that Rigel would share financially in the risks of these losses, but Rigel never accepted to participate in any way.

15. There should be further prejudice in that a whole series of contracts depends on the Assignment, notably Navi-Mont"s contracts with third parties, including Shell Canada, and any other business.

16. Furthermore, reversion of the ships" operations to Ultramar would create serious and even unsurmountable practical problems for Ultramar, which, as described above, is not in the shipping business. There have been internal organisational changes at Ultramar, following a merger with Diamond Shamrock last fall, that have meant that Ultramar no longer has any in-house technical shipping expertise. This also impacts on the safety of marine operations from my point of view. These organisational changes provided additional reasons to outsource Ultramar"s shipping needs. It would therefore be virtually impossible for Ultramar to operate as before.

     In RJR-MacDonald, Sopinka and Cory JJ. explained that irreparable harm meant harm that could not be compensated by an award of damages. With respect to paragraph 14 of Mr. Guévremont"s affidavit, the irreparable harm is obviously compensable by an award of damages. With respect to paragraph 15, the irreparable harm which Navi-Mont and third parties, including Shell, might suffer, is not irreparable harm which would be suffered by Ultramar. With respect to paragraph 16, the lack of "in-house technical shipping expertise" existed prior to the assignment of April 23, 1997. Nothing prevented nor prevents Ultramar from hiring competent people to manage the Rigel ships. The expense incurred in so doing would be compensable by an award of damages should Ultramar"s arguments regarding clause 51 prevail. Thus, insofar as Ultramar is concerned, I have not been persuaded that Ultramar will suffer irreparable harm should I not grant the injunction that it seeks.

     I now turn to the applicant Petro-Nav. Its application is brought pursuant to s. 44 of the Federal Court Act, R.S.C. 1985, c. F-7.¹ The other applicants bring their applications pursuant to article 9 of the Commercial Arbitration Code, R.S.C. 1985 (2nd Supp.) c. 17, Schedule.²

     With respect to the applications of Ultramar and Navi-Mont, the serious question to be tried is whether the assignment made by Ultramar to Navi-Mont is valid under clause 51 of the contract of affreightment. However, Petro-Nav is not a party to the assignment and therefore cannot assert that question as being a serious question to be tried. During the hearing, I asked counsel what the serious question was insofar as Petro-Nav"s application was concerned and counsel responded that Petro-Nav"s recourse³ was one in tort. Counsel submitted that Rigel was refusing to execute Navi-Mont"s instructions in the hope that Petro-Nav would be unable to perform its contractual obligations towards Shell. There is no evidence whatsoever before me to support this position.

     On the evidence, I cannot conclude that Rigel"s refusal to obey Navi-Mont"s instructions is anything other than the legitimate pursuit of its rights under the contract of affreightment. There is no evidence to support Petro-Nav"s agreement that Rigel is acting in bad faith.

     Petro-Nav is in the same position as Shell and Shell"s clients in the Arctic in that it will probably suffer a loss if the Rigel ships are not made available. A loss may be suffered because other ships will have to be found and the freight rate will be higher than that which was agreed to between Shell and Petro-Nav in their agreement. The loss may be higher if no suitable ships can be found and therefore the transport has to be effected by air carriers. Be that as it may, neither Shell nor its clients have asserted a cause of action against Rigel and it is unlikely that, in any event, such action would succeed. Should Rigel"s position regarding clause 51 be found to be wrong, Ultramar and Navi-Mont will have a recourse against Rigel in damages but, on the evidence before me, Petro-Nav would not. I am therefore of the view that Petro-Nav does not meet the first part of the test enunciated in American Cyanamid .

     Even though I have found against Petro-Nav regarding the first part of the test, I will nonetheless proceed to examine whether Petro-Nav has met the second part of the test which deals with irreparable harm. Before I proceed, I should point out that both Shell and Petro-Nav have refused to produce the contractual agreement between them. Mr. Robert Baird, the Manager, distribution - east, of Shell Canada Products Limited, filed an affidavit dated May 12, 1997. At paragraph 9 of his affidavit, Mr. Baird states that the contract between Shell and Petro-Nav will be executed by Shell"s President in a few days and that the parties thereto have agreed to keep the contract confidential "since it contains confidential business information". A similar statement can be found in paragraph 14 of the affidavit dated May 12, 1997 of Nicolas Gravino, the president and chief-executive officer of both Petro-Nav and Navi-Mont.

     As a result of Shell and Navi-Mont"s refusal to disclose their agreement, Rigel was unable to cross-examine Mr. Gravino on this document. Petro-Nav would like me to simply accept its statement regarding the Shell contract without the opportunity of reading it. In the circumstances, I am not satisfied with the evidence adduced regarding the Shell contract.

     At paragraph 20 of his affidavit, Mr. Gravino states:

20.      In the event that the Arctic voyages cannot be successfully completed by vessel, in whole or in part, according to the agreed schedule, Shell shall attempt to transport its cargo by other means at the expense of Petro-Nav, as is provided in the confidential agreement between Petro-Nav and Shell Canada. The agreement provides that Petro-Nav shall be responsible for all additional costs incurred by Shell, as a direct result of Petro-Nav"s inability to nominate a vessel. For voyages within the Great Lakes, St.Lawrence River and the Maritimes, Petro-Nav"s responsibility for additional costs will be limited to a small percentage above the freight rates covered by the agreement. For Arctic voyages no limit will apply. Transportation by airplane or helicopter would be totally out of proportion in term of freight and practically impossible to organize.

     On the evidence, it is clear that Petro-Nav has not fully investigated whether any substitute vessel is available. It is my view that it was incumbent on Petro-Nav to establish that it would be unable to secure a replacement vessel. For example, at pages 21 and 22 of the transcript, Mr. Gravino is questioned regarding the availability of ships owned by a company called Enerchem.

Q.      Est-ce qu"il n"est pas exact de dire, Monsieur Gravino, qu"il y a deux autres navires en ce moment, deux navires pétroliers, qui sont disponibles pour faire les voyages en Arctique, c"est-à-dire: l"Enerchem Trader et l"Enerchem Catalyst. Est-ce que, Monsieur Gravino, est-ce exact que ces deux navires-là, l"Enerchem Trader et l"Enerchem Catalyst, sont disponibles pour faire les voyages en Arctique dont vous parlez à votre paragraphe 20 de votre affidavit?

R.      S"ils sont disponibles? Je ne le sais pas, Maître Côté.

     Although Mr. Gravino is questioned only with respect to three vessels, it is clear to me that Mr. Gravino"s affidavit is based on the mere assumption that no substitute vessels are available. I must reiterate that this is inadequate evidence. The burden was on Petro-Nav to demonstrate, to my satisfaction, that other ships were not available to perform its obligations under the Shell contract.

     In paragraph 53 of his affidavit, Mr. Gravino asserts that Navi-Mont and Petro-Nav will suffer the following irreparable harm if the injunction is not granted:

53.      On the contrary, Rigel"s attitude would cause irreparable damages not only to Navi-Mont and to Petro-Nav but also to Ultramar, Shell and the Arctic communities in that:

a)      Petro-Nav will not be able to abide by its contractual obligations.

b)      Only one vessel and a half are needed to fulfil Ultramar"s needs in terms of transportation. when Petro-Nav was awarded the Shell contract, Navi-Mont began intensively working with Ultramar for the obtention of its transportation contract and on the assignment of the Rigel contract of affreightment disregarding at the same time the possibility of using alternate vessels.

c)      The loss of the Shell contract will necessarily entail the impossibility financially and operationally for Navi-Mont to execute the Ultramar transportation contract.

d)      The loss of either the Shell or the Ultramar contract or both of them will drive Petro-Nav and Navi-Mont to bankruptcy in view of their tremendous financial exposure.

e)      Navi-Mont will be unable to continue paying Ultramar for the use of the Rigel vessels.

f)      Shell and Ultramar will sustain important damages that I am unable to assess.

g)      The Arctic communities will necessarily suffer financially and otherwise. These products are vital and are essential commodities for such communities. I am unable to assess the importance of their damages.

h)      The non-performance of the Arctic voyages for Shell will carry with it the non-performance of the other transportation needs of Shell. This will carry with it the non-performance of the Ultramar contract of transportation with Navi-Mont.

i)      Shell had the right to award its contract to Petro-Nav and not to Rigel/Enerchem and Rigel has no right to manoeuvre in such a way that that contract will not be executed.

j)      Rigel has no right to decide by itself that Ultramar could not assign its contract to Navi-Mont Inc.

     I again wish to state that the damage which Shell and its clients might suffer does not constitute irreparable harm to Petro-Nav. Mr. Gravino"s statement that Petro-Nav and Navi-Mont will go bankrupt constitutes a bald statement but there is no evidence to support it. Mr. Gravino testified that Petro-Nav had no debts and he refused, during his examination on discovery, to produce the agreement between Petro-Nav and Shell. On the evidence before me Petro-Nav has not proven that it will suffer irreparable harm if the injunction it seeks is not granted. Petro-Nav seems to have taken for granted that if the injunction is not allowed, it will become bankrupt, but it has failed to provide any real evidence in support of that assertion. Thus, on the evidence, any loss which Petro-Nav may suffer, will be compensable by an award of damages.

     This leaves only the application of Navi-Mont of which to dispose. There is, without doubt, a serious question to be tried as far as this applicant is concerned. I therefore turn to the issue of irreparable harm. The irreparable harm claimed by Navi-Mont appears from paragraph 53 of Mr. Gravino"s affidavit, specifically paragraphs 53(c), (d) and (e). In paragraph 53(e), Mr. Gravino states that Navi-Mont will be unable to continue paying Ultramar for the use of the Rigel ships. There is no evidence in the record that Navi-Mont is obliged to pay anything to Ultramar. The only evidence before me regarding payments to be made to Ultramar is a letter dated January 28, 1997 from Ultramar to Mr. Gravino, as president of Petro-Nav, produced during Mr. Gravino"s examination on discovery. That letter sets forth the terms of an agreement between Ultramar and Petro-Nav regarding the use by Petro-Nav of the Rigel ships. The letter reads as follows:

This letter is sent in reference to your proposal of September 20, 1996, addressed to Bruce Tremblay. In that proposal, you have advised us that you are tendering to supply Shell Canada"s shipping requirements in Eastern Canada, and that as part of your bid, you are proposing to Shell the use of our Star ships, currently under charter from Rigel Shipping. You have requested that we advise you whether or not our ships will be available to you for the Shell contract.

Although final terms and conditions will need to be negotiated and finalized, Ultramar is willing to subcharter the three Star ships to you on the following general terms and conditions:

1. The daily rate for each Star ship will be the same as Ultramar"s current payment to Rigel for each ship, plus a fair value for the duty payment incurred by Ultramar at the time the ship was imported into Canada.

2. Ultramar will require a corporate guarantee from Groupe Desgagnes, your major shareholder, committing Desgagnes to assume full responsibility for all contractual obligations of Petro-Nav in the event of a failure to perform.

3. In the event that Rigel opposes and/or takes legal action to prevent or terminate the subchartering of any or all of the ships, Petro-Nav will have the obligation to indemnify and hold Ultramar harmless. In addition, in the event that Petro-Nav is unable to supply Ultramar with required shipping services through the use of the Star ships, Petro-Nav will have the obligation to provide service by ships of similar quality. If Petro-Nav is unable to do so, the agreement will automatically terminate.

4. This proposal is contingent upon Petro-Nav being awarded the Shell contract.

These are the main conditions under which Ultramar would be willing to negotiate a subcharter contract with you. We are available to meet with you to discuss other terms, at your convenience.

     As of January 28, 1997, Navi-Mont had not yet been incorporated. It was incorporated on April 22, 1997. However, no evidence was adduced with respect to whether the agreement contained in the January 28, 1997 letter was modified. In other words, was an agreement concluded between Ultramar and Navi-Mont other than the assignment of April 23, 1997? The assignment agreement provides that the consideration flowing from Navi-Mont to Ultramar is nil. If another agreement was reached, what were the terms and conditions of that agreement? With respect to an agreement between Navi-Mont and Petro-Nav, Mr. Gravino, during his examination on discovery, stated that Petro-Nav had an agreement with Navi-Mont. At pages 7 and 8 of his examination, we find the following questions and answers:

Q. Non, Est-ce que Petro-Nav, en ce moment, a un contract d"affrètement avec une compagnie pour la location ou l"affrètement d"un navire pétrolier?

R. Oui, avec Navi-Mont.

Q. Vous avez un contract avec Navi-Mont?

R. On a ... c"est-à-dire qu"on n"a pas un contrat global, mais on fait le voyage "charter" entre Navi-Mont et Petro-Nav.

     That is the extent of the evidence regarding that agreement.

     During his examination on discovery, Mr. Gravino stated that Navi-Mont had been incorporated specifically to manage Ultramar"s contract. At page 18 of his examination, the following question and answer appears:

Q. Parfait. Depuis l"incorporation de Navi-Mont, que je dois comprendre s"est faite le vingt-trois (23) avril mil neuf cent quatre-vingt-dix-sept (1997), selon votre affidavit, est-ce que Navi-Mont a fait d"autres contrats que celui dont vous m"avez parlé, c"est-à-dire la cession avec Ultramar? D"autres contracts d"affrètement, par exemple, avec d"autres compagnies maritimes?

R. Non, Navi-Mont a été incorporée pour gérer le contrat d"Ultramar, c"est juste ça qu"il y a là-dedans.

     Thus, on the evidence before me, if Rigel refuses to make its ships available, either Petro-Nav or its parent, the Groupe Desgagnés, shall be liable to Ultramar. There is no mention anywhere of potential liability on the part of Navi-Mont. That is not surprising since Navi-Mont was created for one purpose only and that was to allow Ultramar to assign to it, pursuant to clause 51 of the contract between Ultramar and Rigel, its rights and obligations thereunder in order to make the ships available to Petro-Nav. Navi-Mont has no assets, no debts and, in effect, no employees. It is a paper company and it is unlikely to go bankrupt.

     The agreement concerning the use of the Rigel ships is one between Ultramar and Petro-Nav with the Groupe Desgagnés assuming "full responsibility for all contractual obligations of Petro-Nav in the event of a failure to perform". Petro-Nav, as I have already indicated, is the designated carrier under the Shell contract. To transport Shell"s products, Petro-Nav concluded an agreement with Ultramar pursuant to which Petro-Nav would have the use of the Rigel ships. In consideration thereof, Petro-Nav agreed to pay to Ultramar the daily rate for each ship, as provided in the contract of affreightment between Ultramar and Rigel, plus a fair value for the duty payment incurred by Ultramar when the ships were imported into Canada.

     Mr. Gravino testified that some agreement had been reached between Petro-Nav and Navi-Mont, but his testimony was vague concerning the exact terms of this agreement. On the whole of the evidence, Navi-Mont has not established, in my view, that it will suffer irreparable harm if I do not issue the injunction.

     As a result, the applications for an interim measure of protection in the nature of an interlocutory injunction in files T-961-97 and T-966-97 shall be denied. Costs shall be in favour of Rigel.

     "MARC NADON"

     Judge

Ottawa, Ontario

May 28, 1997

     T-966-97

OTTAWA, ONTARIO, THIS 27TH DAY OF MAY, 1997

PRESENT: THE HONOURABLE MR. JUSTICE NADON

B E T W E E N:

     NAVI-MONT INC.

     - and -

     PETRO-NAV INC.

     Applicants

AND:

     RIGEL SHIPPING CANADA INC.

     Respondent

     ORDER

     Navi-Mont Inc. and Petro-Nav Inc."s application for an interim measure of protection in the nature of an interlocutory injunction is denied.

     Costs shall be in favour of the Respondent.

    

     JUDGE

     T-961-97

OTTAWA, ONTARIO, THIS 27TH DAY OF MAY, 1997

PRESENT: THE HONOURABLE MR. JUSTICE NADON

B E T W E E N:

     ULTRAMAR LTD.

     Applicant

AND:

     RIGEL SHIPPING CANADA INC.

     Respondent

     ORDER

     Ultramar Ltd."s application for an interim measure of protection in the nature of an interlocutory injunction is denied.

     Costs shall be in favour of the Respondent.

    

     Judge

__________________

     ¹ Section 44 reads as follows:
         44. In addition to any other relief that the Court may grant or award, a mandamus, injunction or order for specific performance may be granted or a receiver appointed by the Court in all cases in which it appears to the Court to be just or convenient to do so, and any such order may be made either unconditionally or on such terms and conditions as the Court deems just.

     ² Article 9 reads as follows:
         It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure.

     ³ Petro-Nav has not yet filed a Statement of Claim. Rule 469(3) of the Federal Court Rules provides that a plaintiff may apply for an injunction before the commencement of an action in cases of urgency.