Federal Court Decisions

     T-1457-93

Between:

     SCOTT STEEL LTD.,

     Plaintiff,

     - and -

     THE SHIP RECORDED IN THE PORT OF EDMONTON

     UNDER THE NAME "THE ALARISSA" BEARING RECORD

     NO. 420, AND COMMONLY KNOWN AS "THE EDMONTON

     QUEEN" and, NORTH SASKATCHEWAN RIVER BOAT LTD.

     OPERATING UNDER THE NAME AND STYLE "NORTH

     SASKATCHEWAN RIVERBOAT CO." and THE OWNERS AND

     ALL OTHERS INTERESTED IN THE SHIP,

     Defendants,

     - and -

     PROVINCE OF ALBERTA TREASURY BRANCHES,

     Intervenor.

     REASONS FOR ORDER

JOHN A. HARGRAVE

PROTHONOTARY

     The motion giving rise to these reasons is for an Order that the Admiralty Marshal's agent, Coopers & Lybrand, and its counsel produce documents relating to the Court ordered sale of the "Edmonton Queen".

     On February 17, 1995, the sale of the Riverboat, "Edmonton Queen" was approved by this Court. The structure of the sale process, leading up to that Order, was outside of the permissive terms of sale set out in Rule 1007(2)(a), for the traditional sealed bid approach, particularly in the case of a somewhat unique vessel, often tends to bring out bargain hunters, rather than serious purchasers who have given thought as to what the vessel might realistically be worth to them. Indeed, Rule 1007(2) allows broad latitude in structuring a sale, so long as the sale is on terms prescribed by the Court in advance in order to give proper protection to all of the interests involved and is not merely an attempt to have the Court adopt and sanction a sale already arranged to suit the Plaintiff: see for example The "Dora", [1977] 1 F.C. 603.

     In the present instance, the sale was structured so that the Sheriff in Edmonton, wearing the hat of Admiralty Marshal, turned the selling process over to his agent, Coopers & Lybrand. That act, perhaps symbolically represented by the Marshal forwarding the Commission for Sale to his agent, Coopers & Lybrand, and subsequently the Marshal signing the Bill of Sale, apparently constituted his total involvement with the process.

     The role of Coopers & Lybrand went beyond that of a broker, endeavouring to find the best price in order to safeguard the interests of the vessel's in rem creditors, for it also extended to an economic study. As set out in the Order for the appraisal of the vessel, Coopers & Lybrand was to be paid its reasonable fees and expenses incurred in advising and in appraising the vessel, including appraisal and study costs, up to $20,000.00, which would form a charge on the proceeds of any sale ranking subject only to the Marshal's fees and poundage. The subsequent sale Order provided that the Marshal's fees and disbursements, including the fees of Coopers & Lybrand, would be the usual first charge on the proceeds, of course subject to their being reasonable.

     By an Amended Motion filed May 10, 1996, Scott Steel Ltd., the Plaintiff, sought an Order directing the Marshal's agent, Coopers & Lybrand Limited, and its counsel, to make available notes, correspondence and files relating to the performance by Coopers & Lybrand of its duties as agent; requiring Coopers & Lybrand and its counsel to make available various documents for which privilege is claimed by Coopers & Lybrand; and requiring Coopers & Lybrand file its accounts and vouchers in support of the taxation of the Marshal's account.

     At about the time that the motion was heard, Coopers & Lybrand, as agent for the Marshal, filed its accounts in affidavit form. Given the reported minimal participation in the whole affair by the Marshal himself, it is reasonable that the affidavit be sworn by a knowledgeable person at Coopers & Lybrand, of course without prejudice to a taxation officer requiring material of the Marshal in the event his involvement was greater than indicated.

     While Rule 1007(7) requires the Marshal to file his accounts and the vouchers in support of the account as soon as possible after the execution of the Commission of Sale, the present delay of some fifteen months, while not within the spirit of the Rule has, I think, not prejudiced anyone, for the issue of priorities and the entitlement to sale proceeds is still under appeal.

     The affidavit of Coopers & Lybrand, as agent for the Marshal, was referred to by both counsel. It sets out, among other things, that there are six letters for which Coopers & Lybrand claims privilege, being letters from counsel for the Intervenor, Alberta Treasury Branches, to his client, of which Coopers & Lybrand has copies, but for which no related fee is claimed by Coopers & Lybrand. It also sets out fifteen additional letters which, if I understand it, are said not to be relevant in that they involve Coopers & Lybrand as trustee under the proposal of the original builder of the "Edmonton Queen", North Saskatchewan Riverboat Co. No fee is claimed with regard to those letters and indeed, counsel for Scott Steel has copies of seven of them. However, all of this is premature for reasons I will turn to shortly.

     In passing, I would note that it is not usual and indeed not required by Rule 1007(7) that the Marshal produce everything in his file. The Rule refers only to accounts and vouchers, that is documents, notes or other material which might serve to attest the correctness of the accounts. While that stops short of requiring everything in the Marshal's file be produced, counsel for Coopers & Lybrand advises that he has all of the Coopers & Lybrand documents relating to its activity as the Marshal's agent in a box in his office: the material, except for the letters not produced, is available for inspection. Counsel for Coopers & Lybrand volunteered that the documents which were not produced might be put into a sealed envelope for the inspection of the Court. Again, this is premature by reason of the usual procedure, at least here in Vancouver, for the taxation of the Marshal's account.

     While the procedure is not carved in stone, in the sense that individual taxation officers may elect to use their own procedures, or procedures tailored to a particular taxation, it is generally as follows:

1.      The Marshal files his accounts and vouchers as exhibits to an affidavit, which may contain more or less narrative;

2.      The Taxation Officer may, on inspection of the Marshal's affidavit, consult with the Marshal and require clarification or additional material, including affidavit material. This is not to derogate from what the Marshal has done or to anticipate what those interested in the taxation might require, but rather to save time and expense for all concerned by clarifying the Marshal's accounts and making certain there are appropriate supporting invoices as the Taxation Officer deems necessary;

3.      The Taxation Officer will then circulate the Marshal's material to all known creditors, often with an attached procedure direction, including as to challenging the amount of the Marshal's poundage as set out below and dates for compliance with that procedure;

4.      Parties planning to attend at the taxation or to cross-examine on the Marshal's affidavit then advise the Taxation Officer. In some instances the Taxation Officer may postpone the taxation to allow for cross-examination or for applications to the Court;

5.      Cross-examination on the Marshal's affidavit may well be as a right under Rule 332.1, in that the Marshal's affidavit is ancillary to the motion or the Sale Commission. In addition, the issue may also one bearing on priorities and the fund available to creditors, for just as interested parties are usually by the Sale Order and Commission allowed to cross-examine on a creditor's affidavit as to claim, so ought an interested party or creditor be able to cross-examine on the Marshal's affidavit. This may come as an inconvenience to the Marshal, however, the Marshal can guard against many challenges to his accounts by taking the usual step of obtaining the leave of the Court for any unusual item of expenditure and can be compensated in costs in the case of a needless challenge: for example see The "Glory of the Seas", a decision of the Exchequer Court of Canada, [1916] Mayers on Admiralty Law and Practice in Canada, 542. In the event that a party or a creditor plans to challenge the Marshal's poundage, or equivalent fee, that should be done before the taxation by application to the Court under section 9 of Tariff A: see for example The "Saturna Maid", [1979] 2 F.C. 342 at 344 (F.C.A.); and

6.      After these preliminary steps the taxation would normally proceed as with any other taxation, subject to the fact that the interested persons attending at the taxation may include others than those named in the style of cause of the proceeding in which the vessel has been sold.

     To require the Marshal, or in this case the Marshal's agent, Coopers & Lybrand and their counsel, to produce material beyond accounts and vouchers, material which they say is either privileged or has no relevance, before cross-examination on the Coopers & Lybrand affidavit, is premature.

     In summary, the Plaintiff now has the equivalent of the Marshal's accounts to examine and in addition has been offered the balance of the underlying file material, with the exception of fourteen letters. A request for anything further, at this point, is premature. Thus the motion is dismissed. However, costs will be in the cause.

                             (Sgd.) "John A. Hargrave"

                                 Prothonotary

May 27, 1996

Vancouver, British Columbia