Date: 19971205
File: T-2472-97
MONTRÉAL, QUEBEC, THIS 5th DAY OF DECEMBER 1997
Present: RICHARD MORNEAU, ESQ., PROTHONOTARY
ACTION IN REM AGAINST THE BUNKERS AND
FREIGHT OF THE SHIP "ALAM VERACRUZ"
AND IN PERSONAM AGAINST PACNAV S.A.
Between:
SCANDIA SHIPPING AGENCIES INC.,
Plaintiff,
AND
THE OWNERS AND ALL OTHERS INTERESTED
IN THE BUNKERS AND FREIGHT
OF THE SHIP "ALAM VERACRUZ"
and
PACNAV S.A.,
Defendants.
ORDER
The in rem portion of the plaintiff's statement of claim is struck out on the ground that it discloses no reasonable cause of action within the meaning of paragraph 419(1)(a) of the Federal Court Rules;
Accordingly, the arrest of the bunkers and freight on board the ship ALAM VERACRUZ, which freight is being held by James Richardson International Ltd., is set aside;
The plaintiff's oral motion under Rule 341A is dismissed;
The remainder of the defendant's motion is dismissed;
Costs in the cause.
Richard Morneau
Prothonotary
Certified true translation
C. Delon, LL.L.
Date: 19971205
File: T-2472-97
ACTION IN REM AGAINST THE BUNKERS AND
FREIGHT OF THE SHIP "ALAM VERACRUZ"
AND IN PERSONAM AGAINST PACNAV S.A.
Between:
SCANDIA SHIPPING AGENCIES INC.,
Plaintiff,
AND
THE OWNERS AND ALL OTHERS INTERESTED
IN THE BUNKERS AND FREIGHT
OF THE SHIP "ALAM VERACRUZ"
and
PACNAV S.A.,
Defendants.
REASONS FOR ORDER
RICHARD MORNEAU, ESQ., PROTHONOTARY
[1] This is a motion to strike made by the defendant Pacnav S.A. (Pacnav) under paragraph 419(1)(a) of the Federal Court Rules (the Rules) on the ground that the statement of claim in the action in personam and in rem (the statement of claim) of the plaintiff Scandia Shipping Agencies Inc. (Scandia) discloses no reasonable cause of action falling within the jurisdiction rationae materiae of this Court as provided in subsection 22(1) of the Federal Court Act, R.S.C. 1985, c. F-7 (the Act). In the alternative, the defendant contends that the statement of claim discloses no reasonable cause of action in rem within the meaning of subsection 43(2) of the Act.
Context
[2] The material facts involved for the purposes of this motion are relatively simple.
[3] Pacnav is engaged in the marine shipping of goods. Scandia is of the view that over the years it has enjoyed a contractual relationship with Pacnav pursuant to which it handled the procurement for Pacnav of various cargoes to be shipped by Pacnav. Its position is that this contractual agreement (the agreement), which was made orally, falls within the field of marine brokerage, and therefore of mandate.
[4] The impugned action in damages was commenced on the grounds that Pacnav terminated the agreement without cause and also, even while the parties were still bound by the agreement, was doing business with third parties engaged in the same field as Scandia, all of which was contrary to the agreement.
[5] On November 14 and 17, 1997, in addition to instituting its action, Scandia arrested the bunkers on board the ship ALAM VERACRUZ and the freight owing to Pacnav by a third party.
[6] It is common ground that Scandia's action is not based on any claim by it in respect of the bunkers or of the commission on the freight it should have received from Pacnav in relation to any particular marine voyage. Scandia's action is solely the result of violations of the aforementioned agreement.
Analysis
[7] If the allegations in the statement of claim are assumed to be true, as must be done in a motion such as this one, it is plain that we must conclude that the agreement put Scandia in the position of a mandatary or broker in relation to maritime activities. The agreement is therefore a maritime agreement. The situation in the instant case is thus different from the one found in Pakistan National Shipping Corp. v. Canada et al. (1991), 50 F.T.R. 24, in which the Court concluded that the contract in question was simply a contract for the sale of goods with no maritime ramifications, unlike the situation before the Supreme Court in Monk Corp. v. Island Fertilizers Ltd., [1991] 1 S.C.R. 779.
[8] It should also be noted that it appears to be settled that maritime mandate is covered by the expression "Canadian maritime law" (see Q.N.S. Paper Co. v. Chartwell Shipping Ltd., [1989] 2 S.C.R. 683, at 696).
[9] Scandia's claim is for damages for non-performance and termination of the agreement. Scandia's claim is therefore necessarily based on the agreement, which falls within the jurisdiction of this Court under subsection 22(1) of the Act, which reads:
| 22.(1) The Trial Division has concurrent original jurisdiction, between subject and subject as well as otherwise, in all cases in which a claim for relief is made or a remedy is sought under or by virtue of Canadian maritime law or any other law of Canada relating to any matter coming within the class of subject of navigation and shipping, except to the extent that that jurisdiction has been otherwise specially assigned. |
[10] In this respect, the instant case may be distinguished from the conclusions of the Federal Court of Appeal in Transports Insurance Co. Inc. v. Ship "Ondine" (The) (1982), 138 D.L.R. (3d) 745 or from the circumstances prevailing in respect of the insurance brokerage Reed, Shaw, Stenhouse Ltd. in Intermunicipal Realty Corp. v. Gore Mutual Insurance Co. et al., [1978] 2 F.C. 691. In both of those cases, the claims were based on contracts that had no connection with maritime law. The statements of claim or portions thereof containing such claims were therefore struck out.
[11] Accordingly, the statement of claim here should not be struck out on the ground that it does not fall within the jurisdiction rationae materiae of this Court within the meaning of subsection 22(1) of the Act.
[12] However, our examination does not end there; we must now consider the other proposition submitted by the defendant: that the statement of claim discloses no reasonable cause of action in rem.
[13] Subsection 43(2) of the Act provides that the fundamental jurisdiction of this Court may be exercised in rem in maritime matters. That subsection reads as follows:
| 43.(2) Subject to subsection (3), the jurisdiction conferred on the Court by section 22 may be exercised in rem against the ship, aircraft or other property that is the subject of the action, or against any proceeds of sale thereof that have been paid into court. |
[14] It appears to me that subsections 22(1) and 43(2) of the Act must be read together, and accordingly that, for the purposes of subsection 43(2), an action in rem may not be brought against just any property of a defendant, but must be limited to the property of the defendant on which the action is based. Incidentally, in my view, these are the only sections of the Act that need to be considered in order to answer the defendant's attack.
[15] To conclude that an action is based on property, some connection between the property seized and the cause of action must be apparent from the facts (on this point, see, inter alia, Industrie Chimique Italia Centrale S.P.A. v. Ship "Choko Star" et al. (1987), 10 F.T.R. 258 and Joint Stock Society Oceangeotechnology v. Ship 1201 et al. (1994), 72 F.T.R. 211).
[16] In the case before us, counsel for Scandia himself admitted that the property seized, the bunkers of the ship ALAM VERACRUZ and the freight owing to Pacnav, has no connection to Scandia's cause of action.
[17] In his view, his client's action must be regarded as nonetheless based on that property, since the property was seized in the course of this action. That argument seems to me to be a case of circular reasoning. In order to be able to seize property under subsection 43(2) of the Act, it must first be established that the action is based on that property. If that is the case, the seizure will be permitted. If we follow the reasoning of counsel for Scandia, an action in rem in this Court could be based on any property owned by a defendant as long as it has been seized. This approach cannot be followed.
[18] Accordingly, an order will issue for the in rem portion of the statement of claim to be struck out on the ground that it discloses no reasonable cause of action. Obviously, the corollary of that order is that the arrest of the bunkers and freight on board the ALAM VERACRUZ will be set aside.
[19] At the end of his argument, counsel for Scandia requested orally that if all or part of the statement of claim were struck out the Court suspend the operation of this judgment pending appeal, under Rule 341A.
[20] Unfortunately, counsel did not submit any affidavit in evidence that would justify such an extraordinary measure in the circumstances. Inter alia, it was not shown to me that Pacnav's situation is such that in the event that Scandia succeeds on an appeal of my decision it would suffer irreparable harm by virtue of the property seized having been released. In reaching that conclusion, I rely on the decision of Teitelbaum J. of this Court dated August 25, 1997 (since it deals with Rule 1909) in Amican Navigation Inc. v. Densan Shipping Co. Inc. et al., unreported decision, file no. T-1357-97.
[21] Costs of this motion will be in the cause.
Richard Morneau
Prothonotary
MONTRÉAL, QUEBEC
December 5, 1997
Certified true translation
C. Delon, LL.L.
Federal Court of Canada
Court file No. T-2472-97
between
| ACTION IN REM AGAINST THE BUNKERS AND FREIGHT OF THE SHIP "ALAM VERACRUZ" AND IN PERSONAM AGAINST PACNAV S.A. |
Between:
SCANDIA SHIPPING AGENCIES INC.,
Plaintiff,
" and "
| THE OWNERS AND ALL OTHERS INTERESTED IN THE BUNKERS AND FREIGHT OF THE SHIP "ALAM VERACRUZ" and PACNAV S.A., |
Defendants.
REASONS FOR ORDER
FEDERAL COURT OF CANADA
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT FILE NO: T-2472-97
| STYLE OF CAUSE: ACTION IN REM AGAINST THE BUNKERS AND FREIGHT OF THE SHIP "ALAM VERACRUZ" AND IN PERSONAM AGAINST PACNAV S.A. |
Between:
SCANDIA SHIPPING AGENCIES INC.,
Plaintiff,
AND
| THE OWNERS AND ALL OTHERS INTERESTED IN THE BUNKERS AND FREIGHT OF THE SHIP "ALAM VERACRUZ" and PACNAV S.A., |
Defendants.
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: November 26, 1997
REASONS FOR ORDER OF RICHARD MORNEAU, ESQ., PROTHONOTARY
DATE OF REASONS FOR ORDER: December 5, 1997
APPEARANCES:
Edouard Baudry/François Touchette for the plaintiff
George J. Pollack/Caroline Jacques for the defendants
SOLICITORS OF RECORD:
Edouard Baudry/François Touchette for the plaintiff
Lavery, De Billy
Montréal, Quebec
George J. Pollack/Caroline Jacques for the defendants
Sproule, Castonguay, Pollack
Montréal, Quebec