Date: 19990907
Docket: T-1261-98
ADMIRALTY ACTION IN REM
BETWEEN:
ANNACIS AUTO TERMINALS (1997) LTD.,
Plaintiff,
-and-
THE OWNERS AND ALL OTHERS
INTERESTED IN THE SHIP "CALI",
Defendants.
REASONS FOR ORDER
JOHN A. HARGRAVE,
PROTHONOTARY
[1] These motions arise out of the sale of the Cali, the outstanding moorage claim of the Plaintiff terminal company and the concern of the mortgagee that the sale proceeds, to which it looks to go toward satisfaction of its mortgage, will be absorbed to an unreasonable degree by ongoing moorage.
[2] More specifically, the Plaintiff seeks an order directing the setting aside of $58,252.80 in Canadian funds, to pay the balance of moorage to date, from the proceeds of the sale of the"Cali", now held in an interest-bearing trust account, and an order directing the payment of that amount to the Plaintiff. International Trust and Finance Corporation ("ITFC"), the mortgagee of the ship, now with an interest in the sale proceeds, seeks a Rule 399(2) variation of earlier orders which in effect gave priority to the ongoing moorage claim of Annacis Terminals.
BACKGROUND
[3] The Plaintiff, Annacis Auto Terminals (1997) Ltd. ("Annacis Terminals"), is the owner of a terminal and dock facility on the Fraser River at Annacis Island, taking over the facility from a predecessor of the same name in 1997 and thus inheriting the Cali at berth.
[4] The Cali is a bulk carrier registered in the port of Limassol, Cyprus, initially owned by the Califa Shipping Company Limited of Cyprus ("Califa") and mortgaged to ITFC to secure a loan of $5 Million (US).
[5] On December 4, 1996, Califa entered into a contract, with the predecessor of Annacis Terminals, for an unspecified period of berthage at the Annacis Terminals facility in order to conduct apparently minor repairs on the ship, at the rate of $0.20 per metre of the ship"s length per hour. The next day the Cali arrived at the Annacis Terminals berth: it stayed for a considerable length of time.
[6] Annacis Terminals began this action 19 June 1998 seeking both $299,770.18 for outstanding moorage and an order for sale.
[7] Subsequently Annacis Terminals brought a motion for a Court ordered sale of the Cali, and for an order that its claim for berthage be ranked as equivalent to that for sheriff"s expenses. In the result an Order for Sale and the Commission of Appraisal and Sale were issued on August 5, 1998. However, I allowed Califa until October 31, 1998 to accomplish a private sale of the ship, failing which there would be a sale of the ship under the Order for Sale and the Commission. As to priority, I allowed future berthage at 16 cents per metre per hour, after July 22, 1998 (the date of Annacis Terminal"s motion) to be ranked as equivalent to a sheriff"s expense, but refused to determine the ranking of the past berthage since it would affect all the claims involved: the question of the priority of earlier in rem claims could only be properly decided by taking all such claims into account.
[8] On October 13, 1998, ITFC brought a motion for an order allowing the sale of the Cali to Chenco Marine at $235,000.00 (US). As a term of the sale Chenco Marine was to use best efforts to remove the vessel from the Annacis Terminal berth within 45 days of the payment of the balance of the purchase price. This 45 day holdover was a term requested by ITFC in order to allow Chenco Marine some flexibility in arranging towage to breakers. By reason of an error in the advertised tonnage, the sale price of the ship was later reduced, on 1 December 1998, to $210,000.00 (US).
[9] Soon after the sale was completed Annacis Terminals, by motion, requested payment of outstanding moorage, incurred after July 22, 1998, out of the sale proceeds. The motion was successful with the sum of $116,505.60 (Cdn.) being paid out to cover moorage to 16 December 1998.
[10] It appears that ITFC felt its claim, as mortgagee, to ship sales proceeds was threatened by the ongoing accumulating moorage claim of Annacis Terminals. To exacerbate the issue, there was no sign of the Cali being about to leave the terminal. The ship remained at the Annacis Terminals" berth for a considerably longer period of time than anticipated, owing to a number of factors, including a failure by Califa to supply Chenco Marine, in a timely manner, with a certificate confirming deletion of the Cali from the Limassol Ships Registry and the condition of the Cali, a dead-ship, which prevented it being placed at anchor. Thus ITFC brought a motion earlier this year requesting that Annacis Terminals" ongoing moorage claim rank behind any valid claim of ITFC as mortgagee. I denied the motion on the premise that the order giving Annacis Terminals a priority was a final order.
[11] The Plaintiff now brings a motion for another sum of accrued moorage running from 17 December 1998 to 28 February 1999. ITFC, not surprisingly, seeks to vary the Order for Sale in order to give ITFC some priority, over Annacis Terminals, to the sale proceeds.
ISSUES
[12] The issues in these motions are whether Annacis Terminals is entitled to an order, for outstanding moorage accrued since December 16, 1998, and whether ITFC may obtain a variance of the Order of 5 August (amended 11 December 1998) giving Annacis Terminals priority for moorage until the departure of the Cali on the basis that a new matter has arisen or was subsequently discovered. Specifically ITFC seeks to have the ongoing moorage claim of Annacis Terminals rank behind any valid mortgage claim of ITFC since neither the August 5 Order nor the October14 Order anticipated that the ship would remain at the Annacis Terminals berth for more than 45 days after the completion of the sale.
ANALYSIS
Annacis Terminals Motion for Moorage
[13] The present motion by Annacis Terminals is not unlike the motion it brought in December of last year to obtain payment of moorage incurred after July 22, 1998. The heart of that motion was paragraph 3 of the 5 August 1998 Order for Sale.
3. Berthage, provided by the Plaintiff, from midnight 21/22 July, 1998, until the "Cali" departs the Plaintiff"s berth, shall have a priority as if it were a sheriff"s expense at 0.16"/metre per hour on a deemed length of 205 metres;
Also pertinent are portions of the Order of 14 October approving the sale of the ship to Chenco Marine:
2.(g) that the gross proceeds from the sale shall be paid into an interest-bearing trust account administered by Bromley, Chapelski in U.S. dollars. The Applicant [ITFC] shall be at liberty to seek payment out after 18, December 1998, from the proceeds of sale of its costs of sale, including its expenses incurred in advertising for creditors in rem of the ship "Cali", either in an amount as agreed by the parties and any in rem claimants, or as ordered by the Court. Annacis Auto may in a similar manner, after 18 December 1998, seek payment of its berthage charges as set out in the order of 5 August 1998;
and:
2.(c) the sale price shall be paid and the vessel transferred to the purchaser as provided for in the Memorandum of Agreement between Chenco Marine and the owners of the Defendant Ship dated September 25, 1998, ... Chenco Marine shall use all best efforts to remove the "Cali" from the Annacis Auto Terminals (1997) Ltd. ("Annacis Auto") berth within 45 days of payment of the balance of the purchase money ...
Paragraph 2(c) of the 14 October 1998 Order does not confer any third party benefit in the nature of free moorage on Chenco Marine. These provisions as to priority of berthage, payment out of Court of sale proceeds to satisfy berthage and removal of the Cali from the berth are similarly relevant in the present instance. Also relevant to the present motion is a provision of a certificate attesting to the deletion of the Cali"s Limassol registration:
17. The purchase price referred to ... shall be paid against presentation to the buyers ... of the following documents ...
| (E) a deletion Certificate from the vessel"s Registry or, in the absence of the same, the Sellers written undertaking addressed to the Buyers confirming that they shall apply for and deliver said deletion certificate to the Buyers within latest four (4) weeks from the time of physical delivery of the vessel. (Additional Clauses to Saleform Memorandum of Agreement for the sale of the Cali dated 25 September 1998) |
[1] The above orders, as they stand, allow Annacis Terminals to claim post 22 July 1998 moorage for an indefinite period of time, with a high priority. The Plaintiff must succeed in its motion for yet another sum of outstanding moorage, running from 17 December 1998 to 28 February 1999, for while I have given some relief to ITFC I am not about to give retroactive relief so as to unreasonable prejudice Annacis Terminals.
ITFC"s Motion under Rule 399(2)(a)
[2] ITFC, in its initial motion, sought an adjournment of the Annacis Terminals motion for further moorage and proposed to bring a motion under the Rule 399(2)(a) for variance of the previous orders granting Annacis Terminals ongoing priority for moorage. However, ITFC included in its motion record written representations in respect of the Rule 399 motion. Annacis Terminals responded as if such motion were separately set down. Both counsel being ready to proceed there was no point in further delay.
[3] In part Rule 399(2) allows variance of an existing order, or issuance of a supplemental order that would qualify a previous order, on the basis of a new matter coming to light after the order has been made:
| 399. (2) Setting aside or variance - On motion, the court may set aside or vary an order |
| (a) by reason of a matter that arose or was discovered subsequent to the making of the order; or ... |
| (3) Effect of order - Unless the Court orders otherwise, the setting aside or variance of an order under subsection (1) or (2) does not affect the validity or character of anything done or not done before the order was set aside or varied. |
Its predecessor, Rule 1733, provided a similar relief:
| Setting Aside judgments for New Matter or Fraud |
| Rule 1733 |
| 1733. A party entitled to maintain an action for the reversal or variation of a judgment or order upon the ground of matter arising subsequent to the making thereof or subsequently discovered, or to impeach a judgment or order on the ground of fraud, may make an application in the action or other proceeding in which such judgment or order was delivered or made for the relief claimed. |
I quote Rule 1733 to establish that it is similar to new Rule 399(2), for established case law pre-dates new Rule 399.
[4] The general rule is that once the order is endorsed and signed, or given orally from the bench (see Rule 392(2)) it is final, subject to an appeal. However, there are exceptions under certain circumstances.
[5] The concept of carving out an exception to the principle of the finality of an order was touched upon as early as the decision of English Court of Appeal in Scowby v. Scowby, [1897] 1 Ch. 741. In that decision, the trustees, who had taken advantage of an estate by means of initiating valueless legal work, had been ordered by the trial court to raise a sum of money and to pay it into court, but instead paid it to solicitors. Subsequently the trustees obtained a final order directing the costs of the trustees be paid. The court, on discovery of the default of the trustees, issued a supplemental order compelling the trustees to comply with those terms of the initial order for payment into court before they might benefit under the second order. The Court of Appeal approved the actions of the trial judge.
[6] Although the decisions to issue and to approve the issuance of the supplemental order were no doubt influenced by the explicit default on the part of the trustees who benefited or were to benefit from the second order, the decision has a wider import. The decision stands for the proposition that when certain unanticipated circumstances arise, after an order is issued, the court may step in and either vary the order or make a supplemental order as appropriate.
[7] As counsel for Annacis Terminals points out, the courts have been reluctant to vary an order or a judgment because of its finality: See for example Rostamian v. M.E.I., (1992), 129 N.R. 394 (F.C.A.). Although the Rule 399 provides an exception, a moving party must meet a stringent test in order to vary an order or to set it aside. The test is three-fold: First, there must be new matter arising or discovered subsequent to the order; second, the moving party must establish that it could not with reasonable diligence have discovered the new matter sooner; and third, that if the new matter had initially been brought forward it would probably have resulted in a different original order: see Re Saywack v. Canada (M.E.I.), [1986] 3 F.C. 189 (F.C.A.), at page 201 and following, approving Dumble v. Cobourg and Peterbrough R.W. Co. (1881), 29 Gr. 121 (Ont. Ch.) and Canada v. Palmier (1998), 137 F.T.R. 71 at 73.
[8] What then is the scope of "new matter"? In Re Saywack (supra), the Court of Appeal accepted the view that "matter" may encompass something broader than fresh evidence. In reviewing its previous order dismissing the application for leave to appeal, the Federal Court of Appeal considered whether newly available reasons of the Immigration Appeals Board constituted a "new matter" for the purpose of Rule 1733 (now Rule 399):
| I am of the view that the board"s reasons fall within the word "matter". It is a word of broad import. In the Shorter Oxford English Dictionary, 3rd ed., it is defined, inter alia, as: "Ground, reason or cause for doing or being something." That word has been invoked in Ontario to cover "matter" other than fresh evidence. |
[9] It is fair to say that neither Annacis Terminals, which wanted to use its berth for purposes other than the moorage of the Cali, nor ITFC, which would have a substantial priority to the sale proceeds once moorage was paid to Annacis Terminals, contemplated such a lengthy delay in the Cali departing the Annacis Terminals berth. The delay was partly due to Califa withholding production or delivery of the deletion certificate in order to obtain an improper benefit and partly due to the fact that no owner of any suitable alternative berth would welcome the Cali, but no one could reasonably have expected such a prolonged delay. Now the balance of convenience might be in favour of Annacis Terminals since it has an order allowing it to receive moorage from the sale proceeds as long as the ship stays there. However, Annacis Terminals is, among other things, in the business of providing moorage. It must, having accepted a ship, take the good with the bad. An impecunious owner and a ship that cannot be moved off the berth in a timely manner by reason of factors that become apparent fairly late in the day are unfortunate occurrences, but they are also a fact and a risk of doing business, and may be addressed through a proceeding in rem by a berth owner. The buyer of the Cali being unable to move the ship off the berth, as quickly as everyone expected, by reason of lack of both a deletion certificate and an alternate berth, both factors becoming apparent late in the day, this delay is a new matter.
[10] The counsel for Annacis Terminals argues that Saywack stands for a proposition that only in exceptional circumstances can the court grant a variance of order. I agree with counsel only if he means that when a new matter arises, one not discoverable through the exercise of due diligence which, in turn, would have affected the previous order had that matter been evident initially, then there is an exceptional circumstance and Rule 399 will be applicable.
[11] Annacis Terminals also submits that ITFC has not shown due diligence in pursuing the present motion. This submission hinges upon, inter alia, delay on the part of ITFC in bringing a motion under the Rule 399 since the original priority order was issued some months ago. Annacis Terminals submits that such delay does not show the exercise of due diligence for ITFC is required to proceed in a timely fashion under Rule 399. This argument is said to deprive ITFC of its right to bring a motion under the Rule. I must disagree with the Plaintiff, not necessarily on the point of law, but on the point of factual circumstance. When the 5 August 1998 and the 14 October 1998 Orders were issued, ITFC was not in a position to bring a motion under this Rule for there was no problem at that point. Indeed, it would seem that the sale did not become final until the Order of 1 December 1998, when the price of the ship was dropped by reason of a mis-description as to tonnage in the sale advertising. The offer, at $25,000 (U.S.) less, was accepted on the first of December because, on the evidence tendered, the ship would not fetch more on a re-tendering for sale. As of 1 December 1998, if Califa were unable to produce a certificate of deletion, which was the case, they still had four weeks within which to do so under the terms of the Saleform Sale and Purchase Agreement. The deletion certificate should thus have been produced about the end of December. Moreover, given that Chenco Marine were to endeavour to move the vessel within 45 days, ITFC were not in a position to bring their motion under Rule 399 until mid January. Further, there was no adequate way to advance the situation for the Cali could not be taken in tow to the ship-breakers until the certificate of deletion had actually been received by Chenco Marine, which did not occur until the 4th of February 1999. ITFC did not then sit long on its hands, but on 10 February 1999 brought a motion to vary priorities. That motion was dismissed, but without prejudice to bring the present motion under Rule 399(2)(a). Taking all of the circumstances, ITFC moved with reasonable diligence.
[12] As to the third branch of the test, whether the facts, if they had been known at the time of the initial sale order, would probably have made a difference, that is certainly the case. Here I acknowledge that counsel for Annacis Terminals did raise concern about the Cali over-holding. Yet it was a speculative concern. Had there been a way to forecast, in October 0f 1998, that the actual sale would not take place until the first of December, that Califa would withhold the necessary certificate of deletion and that the end result would be delay in obtaining the services of a tug, in all likelihood those factors would have made a difference. Thus Rule 399 is applicable. Yet there must be some equitable tempering of the outcome for while ITFC watched a shrinking sale proceeds fund, Annacis Terminals continued, at the time this motion was brought, to be deprived of the use of its berth for other purposes.
Res Judicata and Rule 399
[13] Annacis Terminals, in oral argument, raised another objection to ITFC"s Rule 399 motion, being the doctrine of res judicata. It argues that the Rule, although an exception to the doctrine of res judicata, should not derogate from the well-established legal principle that the re-adjudication of a matter already decided is prohibited, for litigation must come to an end at some point. This contention of Annacis Terminals is based on my denial of the ITFC"s February motion, under Rules 491 and 492, seeking, in essence, to set the priority of the two competing claims, a matter already decided on 5 August 1998.
[14] Annacis Terminals submits that ITFC"s present motion, although under a different provision of the Federal Court Rules , appears to be a motion identical to the February 1998 motion of ITFC which sought a similar outcome. In that respect, the counsel for the Plaintiff cites the decision of Mr. Justice Rothstein (as he then was) in Jhajj v. Canada (M.E.I.) et al, [1995] 2 F.C. 369 at 380 and following in which he indicated that Rule 1733 (now Rule 399) should be as reconcilable as possible with the general doctrine of res judicata, and that a hearing of any application to the effect of re-adjudicating matters already decided is frowned upon.
[15] The first comment that I have on this res judicata argument is that both counsel would have been embarrassed if, on the February motion of ITFC, I had insisted that they argue the application of Rule 399(2)(a) to the facts. It was for that reason that the Order specifically left it open for ITFC to bring a motion under Rule 399(2)(a), when both counsel might be prepared. Leaving that aside there is yet another answer.
[16] I disagree with the Plaintiff"s position that it is a same application seeking an identical remedy. A motion under Rule 399 is an exception to the doctrine of res judicata . The present motion, although seeking a fairly similar remedy as in the previous motion, is grounded differently, there being a new matter thereby rendering a previous order inapt or even unjust.
[17] The counsel for the Annacis Terminals also submits that only a matter that existed at the time of the original order, but not discovered, can come under the definition of new matter within the scope of Rule 399. The Plaintiff further submits that Jhajj (supra) is evidence of the Court"s reluctance to allow unrestricted retroactive reconsideration of old decisions dating back for a indefinite period of time. On page 384 of the decision, Justice Rothstein stated:
| Moreover, for a court to be faced with the prospect that its decisions could have far reaching retroactive effect and be used to justify reconsideration of an unknown number of cases extending back for an indefinite period of time, could, I think, have the effect of inhibiting the Court from freely making decisions, developing the law, and indeed, acknowledging previous errors. Interpreting Rule 1733 to allow for unrestricted retroactive effect would be detrimental to the proper and desirable performance of the Court"s function. |
[18] In that respect, I would refer the counsel to the decision of the House of Lords in Johnson v. Agnew, [1980] A.C. 367 (H.L.). In that case, the mortgagor as vendor was awarded specific performance in a final judgment against the purchaser. When the purchaser failed to carry out the obligation, the vendor was in fact able to go back to the court to vary the judgment to award damages in lieu of performance, and have the judgment applied retroactively.
[19] Johnson v. Agnew is relevant to the present case in that we also have here a purchaser who was unable to comply with a term of the sale, to attempt to move the Cali within 45 days after closing of the sale. The mortgagee in our instance may, upon the default of Chenco Marine as purchaser, apply to the Court to vary an existing order on the basis of equitable principles.
[20] Finally, Annacis Terminals submits that ITFC contributed in creating the situation that it finds itself in, and thus ITFC does not come to the Court with clean hands. Here, counsel reiterates various portions of factual background in support of the argument. Unfortunately, I do not find those submissions to be convincing and therefore do not deal with them. ITFC having shown due diligence or reasonable diligence in its conduct of the present matter, I would regard the position of Annacis Terminals in that respect as moot.
CONCLUSION
[21] In reaching an equitable conclusion I have also considered whether Annacis Terminals might have put serious pressure on Chenco Marine to move the Cali at an earlier date. Perhaps Annacis Terminals not only felt comfortable doing nothing, but also did not wish to take any steps which might either upset Chenco Marine or result in further delay in having the Cali moved off the berth.
[22] Pursuant to the Orders of 5 August and 14 October 1998, Annacis Terminals is clearly entitled to the moorage incurred from December 17, 1998 to 2400 on 28 February 1999, being the sum of $58,252.90 together with a pro-rata share of the interest accruing on the sale proceeds fund. However, the Certificate of Deletion being issued on February 4, 1999, this allowing Chenco Marine to move the Cali out of Annacis Terminals" berth at that point, I now would allow Annacis Terminals to claim secured moorage for only a reasonable time. Neither the terms of the 5 August 1998 Order, nor any other order or document bestow any benefit of pre-paid moorage on Chenco Marine after it became the owner of the Cali . Moreover, there was never any bar to Annacis Terminals pursuing Chenco Marine in personam or the Cali in rem for moorage after Chenco Marine became the owner of the Cali. Annacis Terminals may have 28 days of further secured moorage, that being a reasonable time within which, with sufficient pressure, Chenco Marine might find a tug to tow the Cali to breakers.
[23] Equitably and in view of having satisfied the requirements of Rule 399(2), ITFC is entitled to a variation of the 5 August 1998 Order as amended 11 December 1998. The variation granted limits the preferred recovery of Annacis Terminals to moorage provided up until 28 March 1999. However, this does not mean that Annacis Terminals is waiving any claim to moorage provided before 22 July 1998 or after 28 March 1999, on the basis of any priority argument outside of the varied orders.
[24] Each party will bear its own costs.
(Sgd.) "John A. Hargrave"
Prothonotary
September 7, 1999
Vancouver, British Columbia
FEDERAL COURT TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
HEARING DATED: March 23, 1999
COURT NO.: T-1261-98
STYLE OF CAUSE: Annacis Auto Terminals (1997) Ltd.
v.
The Ship "Cali" et al.
PLACE OF HEARING: Vancouver, BC
REASONS FOR ORDER OF MR. JOHN A. HARGRAVE, PROTHONOTARY
dated September 7, 1999
APPEARANCES:
Mr. Glenn Morgan for Plaintiff
Mr. John Bromley for International Trust & Finance Co.
SOLICITORS OF RECORD:
Davis & Company
Vancouver, BC for Plaintiff
Bromley, Chapelski
Vancouver, BC for International Trust & Finance Co.
Bull, Housser & Tupper
Vancouver, BC for Defendants, Califa Shipping and the Ship "Cali"
| Ms. Loreen Carroll |
Rivtow Marine on behalf of Rivtow Marine and RVC Holdings Ltd.