Date: 19990528
Docket: T-1303-98
ADMIRALTY ACTION IN REM
BETWEEN:
COLD OCEAN INC.
Plaintiff
- and -
THE OWNERS AND ALL OTHERS INTERESTED IN THE
SHIP "GORNOSTAEVKA" AND HER CARGO, THE OWNERS
AND ALL OTHERS INTERESTED IN THE SHIP
"VINOGRADNOE", INCLUDING AS TO BOTH SHIPS
JOINT-STOCK COMPANY G.M.K. CO. LTD.
Defendants
REASONS FOR ORDER
MacKAY J.:
[1] These reasons relate to two orders issued on July 10, 1998 allowing two motions filed in this proceeding on July 3, 1998 and heard in St. John"s, Newfoundland, on July 9, 1998. Both motions were brought by Arctic United Seafood A.P.S. (hereinafter "Arctic"), a Danish corporation, as Demise Charterer of the defendant ships "GORNOSTAEVKA" and "VINOGRADNOE", and as owner/vendor of the cargo of the ship "GORNOSTAEVKA". The motions, one concerning the ship "GORNOSTAEVKA" and her cargo, and the other concerning the ship "VINOGRADNOE", sought orders to quash and set aside warrants to arrest the two ships and the cargo, issued in response to an affidavit to lead warrant filed by the plaintiff corporation, a Newfoundland company, in an action in rem commenced by the plaintiff"s statement of claim filed on June 25, 1998.
[2] The basis of the plaintiff"s claim is that by an agreement in writing dated December 12, 1995, G.M.K. Co. Ltd., a body corporate under the laws of Lithuania, with its head office there, agreed with the plaintiff to fish for shrimp with three or more vessels, including the defendant ship "GORNOSTAEVKA", and to deliver all the catches of shrimp from such vessels to the plaintiff for a period ending on December 31, 1998. From April to November 1996 the plaintiff provided to the ships "GORNOSTAEVKA" and "MERAK", both operated by G.M.K., advances, goods and services for the operation of the vessels, and the plaintiff received the shrimp catches of the vessels in accordance with the agreement. From January to September 1997, the agreement was suspended on terms agreed by the plaintiff and G.M.K. but those terms were breached and the plaintiff remained unpaid in an amount of some US $260,400, for which the plaintiff claimed, plus interest, damages for breach of contract and costs, by its statement of claim.
[3] The affidavit to lead warrant seeks an order, in default of payment, for appraisement and sale of the defendant ships, with their tackle, equipment, furnishings, and appurtenances and for sale of the cargo of the ship "GORNOSTAEVKA". It also sets out that certificates of temporary registry from the Lithuanian Republic indicate that G.M.K. Co. Ltd. is "the registered owner (bareboat charter)" from November 1995 to November 2000 of the ships "GORNOSTAEVKA" and "MERAK" to which the goods and services were provided, and also of the ship "VINOGRADNOE". The affiant for the plaintiff further states that he has reasonable grounds to believe that G.M.K., described as the "registered owner (bareboat charter)", is the beneficial owner of the three vessels.
[4] Arctic, not specifically named in the style of cause as a defendant, is clearly an interested party, claiming under bareboat charters of the ship "GORNOSTAEVKA" and the ship "VINOGRADNOE", both dated April 10, 1998, for charter periods to December 30, 1998. Arctic has operated the ships under demise charters with crew members who are its servants, engaged in the shrimp fishery in international waters in the Northwest Atlantic Ocean area known as the Flemish Cap. The cargo of both vessels, the shrimp catch, was claimed by Arctic as owner and the total catch of the "GORNOSTAEVKA" was sold by Arctic to third parties on June 24 and June 25, 1998.
[5] The evidence is clear that the two vessels in question were owned at all material times by PPO "JUGRYBPOISK" (or Trawling Fleet Corp "Yugrybpoisk", of Kerch, Ukraine). At one time prior to early in 1998, the two ships were operated under demise charters held by G.M.K. By agreement of March 10, 1998, between Jugrybpoisk, G.M.K. and Vigomeras Co. Ltd., made because G.M.K. had defaulted in payments due under the charters in the third and fourth quarters of 1998, the two ships "GORNOSTAEVKA" and "VINOGRADNOE" were sub-chartered to Vigomeras Co. Ltd. from February 18, and G.M.K. no longer had possession of the ships, which on that same date were sub-chartered by G.M.K. to Vigomeras. In turn, by bareboat charters, dated April 10, 1998 Vigomeras chartered the two ships to Arctic which then engaged crews, and carried on the operation of the vessels.
[6] When the "GORNOSTAEVKA" put into port in Trepassey, Newfoundland, the ship and its cargo were arrested and the "VINAGRADNOE" was arrested after it had arrived in port in Nova Scotia.
[7] After hearing counsel for the parties in St. John"s on July 9, 1998, on the following day the Court issued orders essentially allowing the applications by Arctic. The orders, one in relation to the ship "GORNOSTAEVKA" and her cargo, and the other in relation to the ship "VINOGRADNOE", set out in their recitals the following conclusions, varied to fit the respective orders appropriately:
| (i) The claim asserted by the plaintiff against G.M.K. Co. Ltd. as "the registered owner by demise" of the defendant ship(s) "GORNOSTAEVKA" [and "VINOGRADNOE" ] is not a claim in personam against the owner of the ship(s). |
| (ii) The claim against the cargo of the defendant ship "GORNOSTAEVKA", based on an agreement dated December 12, 1995 between the plaintiff and G.M.K. Co. Ltd. is not a claim in personam against the owner of the cargo, which was never owned by G.M.K. Co. Ltd. [The catch of shrimp, caught by the crew employed by Arctic to operate the "GORNOSTAEVKA", was the property of Arctic and was sold by it to third parties, but not delivered, before the vessels and the cargo in question were arrested.] |
| (iii) The claims for "advances, goods and services, including agency services" said to have been provided by the plaintiff in the period from April to November 1996, for the operation and maintenance of the defendant ship "GORNOSTAEVKA" and the ship "MERAK", said to be "vessels beneficially owned then and now by G.M.K." is not a claim in personam against the owner of the ships "GORNOSTAEVKA" and "VINOGRADNOE", and any presumption that necessaries were supplied on the credit of those vessels and their owners is not established where the plaintiff had notice before this claim was made that G.M.K. Co. Ltd. was not the beneficial owner of the ship(s) "GORNOSTAEVKA" [and "VINOGRADNOE"], even though such status of G.M.K. is averred in the affidavit to lead warrant. |
| (iv) No claim in personam is made against the owner of the ship(s) "GORNOSTAEVKA" [and "VINOGRADNOE"] and thus no claim in rem is tenable against the ships. |
| (v) No claim in personam is made against the owner of the cargo and thus no claim in rem is tenable against the cargo of the defendant ship "GORNOSTAEVKA". |
| (vi) Since no claim in rem against the ship "GORNOSTAEVKA" or against its cargo, and no claim in rem against the ship "VINOGRADNOE" is made out, the warrants for arrest of the two ships and for arrest of the cargo of the "GORNOSTAEVKA" should be set aside and the statement of claim in relation to the claim against the ship "GORNOSTAEVKA" and in relation to her cargo, and against the ship "VINOGRADNOE" is deemed to be scandalous, frivolous and vexatious. |
[8] The reasons for these conclusions, in brief, are these:
| (a) The plaintiff"s claims in relation to the ships and the cargo in question are not against the owners of either the ships or the cargo. The defendant G.M.K. is described as "the registered owner by demise" which does not describe the owner, and the plaintiff was aware that G.M.K. was not the owner of the vessels. There is no dispute about the owner; at all material times the two ships were owned by PPO Jugrybpoisk, of Kerch, Ukraine. |
| (b) There is no claim in personam in the statement of claim against the owner of the ships, or against the owner of the cargo in issue, and without that there can be no claim in rem (see Mount Royal/Walsh Inc. v. The "Jensen Star", [1990] 1 F.C. 199 at 216 (C.A.)). |
| (c) The style of cause, in pleading "the owners and all others interested in the ship..." accords with the form for a claim in rem under Rule 477 (Federal Court Rules, 1998, SOR/98-106), but that does not, without a specific claim in the statement of claim against the owners of a defendant ship, constitute a claim in personam against the owners (The "Jensen Star", supra, at 219). |
| (d) In circumstances where a statement of claim does not include a claim in personam against the owners of a ship, or of its cargo, the statement of claim does not set out the necessary basis for a claim either in personam against the owners of a ship or in rem against the ships or cargo, and any warrant of arrest or supporting affidavit based on the statement of claim shall be set aside, and the statement of claim shall be struck out as scandalous, frivolous and vexatious pursuant to Rule 221(1)(c). |
[9] Two orders issued, one in relation to the "GORNOSTAEVKA" and her cargo setting aside the warrant of arrest in relation to each, and the other doing the same in relation to the warrant to arrest the "VINOGRADNOE". The statement of claim dated June 25, 1998 was ordered to be struck out, without prejudice to any claim the plaintiff may have in relation to G.M.K. Co. Ltd. The two orders were issued, on a Friday afternoon, July 10, 1998, to facilitate release of the two ships, which at the time were held under arrest in different admiralty districts.
"W. Andrew MacKay"
Judge
Ottawa, Ontario
May 28, 1999