Date: 19990224
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
BACKGROUND
[1] On 5 August 1998, I Ordered the Cali, a run down ship which owners could no longer afford to sail, sold pendente lite, in an action commenced by Annacis Auto Terminals (1997) Ltd. ("Annacis Auto"), the owner of the berth at which the Cali then lay. Annacis Auto had inherited the Cali-in-berth from a predecessor which had been feckless enough to agree to let the Cali use the berth for a few days. By August of 1998 there was some $300,000 in berthage owing, with no end in sight. Annacis Auto wanted, at least, to obtain the use of its berth.
[2] The Cali was sold 8 December 1998. The order approving the sale, 14 October 1998, by which the Cali was ordered sold at the scrap price of $235,000 (US), later reduced to $210,000 by reason of a misdescription of the ship, including as to tonnage, was in favour of Chenko Marine Inc., who intended to tow the Cali to China for scraping.
[3] By reason of the deteriorated and deteriorating condition, the Cali could not be moved to an anchorage. No owner of any suitable berth would take the ship. Thus, one of the terms of the 5 August 1998 Order for the Appraisal and Sale of the ship, in an effort to protect Annacis Auto, a by-stander who had inherited the ship in berth from its predecessor, was that berthage, from the date the sale motion was originally set, 22 July 1998, until the ship departed, was to be treated as and given the priority of Sheriff's costs. With such priority moorage comes off the top of the sale proceeds. Owing to a number of factors, she remains at the Annacis Auto berth.
[4] According to the mortgagee of the Cali, International Trust & Finance Corporation ("International Trust"), which was instrumental in the sale, Chenko Marine was uncertain as to when all clearances and approvals to sail might be obtained and a tug organized for the voyage: thus, International Trust would have preferred an open-ended time frame for moving the Cali off the berth. Annacis Auto, even though secured as to moorage, wished the Cali off the berth quickly. The general view at the time was that there would be only reasonable delay, past the 8 December 1998 closing date for the sale. In the result Chenko Marine was to use best efforts to remove the Cali within 45 days of the sale. In hindsight this proved an unfortunate compromise, for the Cali remains at berth some 75 days after the sale, caught up by market forces, paper work and a towage problem which I will touch upon in due course.
[5] Chenko Marine seems to feel it has the benefit of indefinite free moorage at the Annacis Auto berth: that is certainly not so on the plain wording of any of the Court's Orders. This brings us to the present motion.
THE MOTION
[6] The mortgagee, International Trust, is concerned that moorage, with a preferred priority, is accruing against sale proceeds at $787.20 per day. Thus the present motion, by which International Trust seeks an order than any moorage reimbursement claim by Annacis Auto, after the 8 December 1998 sale date, rank not as a Sheriff's cost, but rather rank behind the International Trust mortgage.
[7] Counsel for International Trust points out that it was not intended that the Cali remain at the Annacis Auto berth for any substantial period after the sale was completed. Counsel also submits that by the sale order not only were matters of priority reserved until after the sale, but also there was liberty to apply "... granted to all interested parties, including as to any over-holding of the berth by the Cali ...".
ANALYSIS
Documentation to move the Cali
[8] Before looking at the law on all of this there is a pertinent area to touch upon, being the documentation needed to allow the Cali to leave berth and undertake a voyage through Canadian waters on her way to the orient. Chenko Marine, experienced in moving hulks across the Pacific for scraping, specified in the sale and purchase agreement that it needed, on closing, or alternately within 4 weeks of closing, a certificate showing the deletion of the Cali from the Cypress Ship's Registry. Apparently it is less costly to tow a de-registered un-manned hulk, for it does not require all of the certificates and inspections needed by an operating deep-sea ship. The vendor of the Cali, Califa Shipping Company Limited ("Califa Shipping"), the owner and mortgagee of the Cali, signed the bill of sale in order to facilitate the sale of the ship. Califa Shipping undertook to provide the Deletion Certificate, however it did not do so until 4 February 1999, some 7 weeks after the sale. Moreover, while it may be that Califa Shipping was dragging its feet in providing the Deletion Certificate, Califa Shipping was certainly holding the Deletion Certificate for ransom. Obviously the mortgagee, International Trust, must have lost control of its mortgagor and shipowner/client. The result of this delay was that Chenko Marine could not move the Cali. That difficulty, through the excellent assistance of the Department of Transport, has now been resolved, with the Department of Transport to deliver a Permission to Pass through Canadian waters, that document to be issued on request. But in the mean time the scrap market has fallen and Chenko Marine does not have a tug ready to take the Cali.
Liberty to Apply
[9] I will deal first with the phrase "Liberty to apply", which appears in the Appraisal and Sale Order. International Trust submits that this phrase should allow the Court to amend or to rework the Order.
[10] The words "Liberty to apply", which appear in many orders, are there because it may be necessary to obtain a decision of the Court in order to work out matters provided for in the order. The words "Liberty to apply" do not confer any right to ask a court to vary an order - see for example Cristel v. Cristel, [1951] 2 K.B. 725, a decision of the Court of Appeal, at 728:
| Prima facie, "Liberty to apply" is expressed, and if not expressed will be implied, where the order drawn up is one which requires working out, and the working out involves matters on which it may be necessary to obtain the decision of the court. Prima facie, certainly, it does not entitle people to come and ask that the order itself shall be varied. |
The present Order is not in any way similar, for example, to some consent orders, pendente lite, reserving to either party leave to apply concerning any part of the order at any subsequent time. In the present instance there are no special circumstances which would allow the words "Liberty to apply" to be used to vary the order. All the more so given that the present Order is, as to payment of moorage charges, a final Order.
Relief in the Case of a Final Order
[11] I have, to some degree, sympathy for International Trust, not so much by reason of delay and the resulting moorage to date, which at least in part is the result of International Trust's customer, Califa Shipping, failing to provide a Deletion Certificate, but rather for ongoing moorage, perhaps commencing a reasonable time after the 4 February 1999 delivery to Chenko Marine of the Deletion Certificate. Moreover, there is presently no end in sight to the ongoing moorage and to payment of moorage charges from the sale proceeds, so long as those proceeds last.
[12] In pursuing its motion, which is, in effect, for a re-writing of the Appraisal and Sale Order, International Trust relies on Rules 491 and 492, which allow the Court to determine, in admiralty matters, rights of claimants to money in Court from the sale of an arrested ship. Such a proceeding is usually in the form of a contest to establish priorities to the fund as among various in rem claimants. However, in the present instance, a priority has already been established by the Appraisal and Sale Order of 5 August 1998.
[13] International Trust looks for some amendment to the Appraisal and Sale Order provision as to payment of moorage from the sale proceeds. Orders of the Court, such as the present, are final, subject to some specific exceptions in the Federal Court Rules, whereby the Court may correct its own errors and omissions, but such correction procedure is not appropriate here, for the Order expresses the Court's intention at the time the Order was made. This brings International Trust up against the concept that, generally, once an Order has been signed, it is final. See for example Steward v. Canada, [1988] 3 F.C. 452 at 461 (F.C.A.):
| A perusal of the Rules of this Court [Federal Court Rules, C.R.C., c. 663] reveals the general rule to the effect that an order is final, subject to an appeal, once it is signed by the presiding Judge (Rule 337(4)). Rule 1733 provides an exception to that general rule in cases where a matter arises or is discovered subsequent to the making of the order or on the ground of fraud. Counsel did not rely on Rule 1733 nor was there any possible factual basis shown for the application of that Rule. Rule 337(5) allows the Court to reconsider the terms of a judgment or order to ensure that it accords with the reasons or where there has been an accidental omission. Counsel did not rely, either, on Rule 337(5). |
This passage refers to Rule 1733, which at the time allowed a decision to be set aside "upon the ground of a matter arising subsequent" to the decision. The present equivalent Rule is 399(2), the relevant portion being:
| 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; |
[14] This approach, under Rule 399(2), was neither argued nor referred to either in the motion or in written argument. Yet, and without deciding the point, if a similar motion was argued on the basis of Rule 399(2), that Rule might have application, perhaps not as a means of setting aside the 5 August 1998 Order, but as a vehicle for a variance, or for a supplemental order, on the basis of new facts: see for example Preston Banking Company v. William Allsup & Sons, [1895] 1 Ch. 141, a decision of the Court of Appeal, which was applied by the Court of Appeal in Scowby v. Scowby, [1897] 1 Ch. 742 at 754.
[15] A practical result of a motion on the basis of Rule 399(2) might, for example, be an order requiring assignment by Annacis Auto of any right of action, both in rem and in personam, for moorage, from this point onward, which Annacis Auto might have as against the ship or Chenko Marine. This might be an equitable approach by which, if the assignment were properly arranged, Annacis Auto could remain secured, but International Trust could recover ongoing moorage directly against the ship through an arrest. Perhaps such an outcome would not be disadvantageous to Annacis Auto, who could well be deprived of its berth indefinitely, with the spectre of the fund, from which moorage is being paid, running out in due course.
CONCLUSION
[16] Given the well established state of the law as to the finality of orders there is no relief to International Trust on the motion as present. However, were the motion recast under Rule 399(2), there is the possibility of a remedy. Of course there is nothing to prevent Annacis Auto and International Trust from working out such a resolution themselves.
[17] The motions is dismissed. Costs to Annacis Auto, which shall be off-set, as between Annacis Auto Terminals (1997) Ltd. and International Trust & Finance Corporation, with the costs awarded against the former and in favour of the latter by the Order of 26 August 1998, in which Annacis Auto was unsuccessful on a bid to have an Order reconsidered.
(Sgd.) "John A. Hargrave"
Prothonotary
Vancouver, British Columbia
February 24, 1999
FEDERAL COURT TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
HEARING DATED: February 17, 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 February 24, 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.