Federal Court Decisions

     T-1090-95

     ACTION IN REM AGAINST THE VESSEL "M/V CORAL"

     AND IN PERSONAM AGAINST ANGEL MARITIME INC.,

     AFALONA SHIPPING CO. LTD., PEGASUS LINE LTD. S.A..,

     THE OWNERS AND ALL OTHERS INTERESTED IN THE

     VESSEL "M/V CORAL".

BETWEEN:

ABIES CANADA INC.

     - and -

     ALI + ABDULLATIF HASSAN ALSARRAF CO.,

     Plaintiffs,

     - AND -

     ANGEL MARITIME INC.

     - and -

     AFALONA SHIPPING CO. LTD.

     - and -

     PEGASUS LINE LTD. S.A.

     - and -

     VESSEL M/V CORAL,

     Defendants.

         Motion on behalf of the defendant Afalona Shipping Co. Ltd. for:

1.      An Order setting aside or quashing the Order rendered ex parte by the Honourable Mr. Justice Joyal on May 13th, 1996, extending the time for service of the Statement of Claim upon Afalona Shipping Co. Ltd. and the vessel M/V CORAL;

2.      An Order setting aside or quashing the purported service of the Statement of Claim in personam upon Afalona Shipping Co. Ltd.;

3.      An Order dismissing the Statement of Claim in personam against Afalona Shipping Co. Ltd. with costs;

4.      Alternatively, but without prejudice to the foregoing, an Order staying the proceedings in personam insofar as Afalona Shipping Co. Ltd. is concerned pursuant to the jurisdiction clause in the Bill of Lading and Section 50 of the Federal Court Act;

5.      Costs of this Motion on a solicitor and client basis;

---

6.      Such further and other relief as counsel may advise and which this Honourable Court deems just.

     [Rules 306, 308, 309 (2) of the Federal Court Rules

     and Section 50 of the Federal Court Act]

     REASONS FOR ORDER

PINARD J.:

         The remedies sought in 1. and 3. above are granted for the following reasons:

         It was incumbent upon the Plaintiffs, before Joyal J., to show "sufficient reason" for having failed to serve the Statement of Claim within the time requirements (see Voest Alpine Canadian Corporation v. Pan Ocean Shipping Co. (1992), 55 F.T.R. 113; All Transport Inc. v. The Rumba (1980), 19 C.P.C. 72 (F.C.T.D.); and Keanrs v. Chrysler Corporation (1989), 23 F.T.R. 291).

         Had all facts, and more specifically those stated in the Affidavit of Andrew Ness and the documents attached thereto, filed in support of this motion, been brought to the attention of Joyal J., I am convinced the extension would not have been granted (see Rule 330 and Softkey Software Products Inc., Re (1994), 84 F.T.R. 153). There is an obligation on counsel to exercise diligence in serving the Statement of Claim, all the more so when the Statement of Claim must be served ex juris. As stated in Noranda Forest Sales Inc. v. P.C.L. European Service Ltd. (1985), 82 F.T.R. 45 at p. 47:

...when the defendant was available for service and the plaintiff was not inhibited from serving or induced by the defendant not to serve, it is almost impossible to think of a 'sufficient reason' for not serving within the time fixed for serving.

Keeping in mind that an extension of the delay to serve a Statement of Claim should be the exception to the rule and not easily granted (see May & Baker v. The Oak, [1979] 1 F.C. 401 (F.C.A.); Kearns, supra; and All Transport Inc., supra), it is very important to stress that the Ness affidavit and the correspondence attached thereto clearly contradict the crucial allegation contained in paragraph 6 of the affidavit of Yves Tourangeau, which was the only affidavit filed before Joyal J. The complete evidence, therefore, cannot support the proposition that the Plaintiffs have met the burden of showing that at any time they were induced by the Defendants not to serve the Statement of Claim.

         The Plaintiffs' argument that settlement discussions justified their delay in attempting to serve the Statement of Claim is not supported by the case law which rather supports the proposition that settlement discussions with another Defendant or anticipation of some "future development" do not constitute "sufficient reason" (see Atlantic Gypsum Ltd. v. The Frines (1982), 30 C.P.C. 86 (F.C.T.D.); All Transport Inc., supra; Noranda Forest Sales Inc., supra; and Companhia Siderurgica Nacional & al. v. Welsen Shipping Co. et al. (1996), 111 F.T.R. 76). Furthermore, there being no evidence that the Defendant Afalona Shipping Co. Ltd. was ever unavailable for service, the Plaintiffs' lack of diligence constitutes an additional reason not to allow them an extension of the delay to serve the Statement of Claim upon it.

         The remedies sought in 1. and 3. above being granted, it is not necessary to deal with 2. above.

         Had I not granted the remedies sought in 1. and 3. above, I would have granted an Order staying the proceedings as sought in 4. above, by reason of the jurisdiction clause numbered "3" in the relevant bills of lading, which states:

3. Jurisdiction.

Any dispute arising under this Bill of Lading shall be decided in the country where the Carrier has his principal place of business, and the law of such country shall apply except as provided elsewhere herein.";

         The evidence shows that Afalona Shipping Co. Ltd. has its head office and principal business operations in Malta. The Plaintiffs have not shown "strong reasons" justifying departure from the prima facie rule that contractual undertakings must be honoured (see The "Seapearl" v. Seven Seas Corp. (1983), 2 F.C. 161 (F.C.A.) at 176-77).

         For all the above reasons, the impugned Order rendered ex parte by Joyal J., on May 13, 1996, will be set aside and the Statement of Claim in personam against Afalona Shipping Co. Ltd. will be dismissed with costs. Costs of this motion will be adjudicated on a party to party basis to the Defendant Afalona Shipping Co. Ltd.

OTTAWA (ONTARIO)

January 31, 1997

                                                                      JUDGE