Date: 19980501
Docket: T-521-98
| Action in rem against The Ship M.V. "Prince Nova" and in personam |
| against NFL Holdings Ltd., a body corporate and |
| C. Mitchell McLean |
BETWEEN:
JOHN AMIRAULT and
WILLIAM COXON
Plaintiffs
- and -
THE OWNERS AND ALL OTHERS INTERESTED IN THE
SHIP M.V. "PRINCE NOVA", NFL HOLDINGS LTD., a body
corporate (in personam), and C. MITCHELL McLEAN (in personam)
Defendants
REASONS FOR ORDER
MacKAY J.:
[1] The defendants move for preliminary orders, in the alternative, that would terminate the plaintiffs' claims and free the defendant ship from arrest. They seek first an order that the plaintiffs' action be struck on the ground that the action does not fall within the jurisdiction of this Court, pursuant to Rule 419, or is an abuse of the Court's process. In the alternative, if the Court finds it does have jurisdiction in the matter of the plaintiffs' claims, the defendants seek an order for summary judgment pursuant to Rule 432.1, dismissing the plaintiffs' action on the ground that the pleadings and evidence do not raise a genuine issue for trial.
[2] Determination in favour of the defendants on either of their alternative motions disposes of the matter. My primary determination is that the nature of the plaintiffs' claim against the defendant NFL Holdings Ltd ("NFL") and the ship is within the Court's jurisdiction but the claim against the defendant C. Mitchell McLean in personam is not. Thus the motion to strike the action is allowed but only in part, i.e., only in relation to the latter claim. The plaintiffs' action, therefore, would not be barred as an abuse of the Court's process. Further, in my opinion the plaintiffs' remaining claim in relation to the defendant NFL is not so lacking in merit that summary judgment pursuant to Rule 432.1 would be warranted at this stage.
[3] Before turning to reasons for these conclusions a brief description of the background is essential. I then turn to the issue of the Court's jurisdiction and the suggestion of abuse of process, and finally, to the application for summary judgment.
The Background
[4] The defendant NFL is the registered owner of the vessel "Prince Nova" (the "ship"), and C. Mitchell McLean is the President and C.E.O. of NFL, a body corporate, incorporated under the laws of Prince Edward Island with its principal office in Charlottetown.
[5] The ship is a Canadian ship registered under the Canada Shipping Act, R.S.C. 1985, c. S-9. The ship is currently under arrest by warrant of this Court, issued on the plaintiffs' application at the same time as their statement of claim in this matter was filed at Halifax on March 26, 1998.
[6] In the spring of 1997, NFL formed the intention to sell the ship and contacted a number of ship brokers to assist in identifying a purchaser of the "Prince Nova". One of those brokers introduced the plaintiff, John Amirault, a business person residing in the Halifax region, who was later joined by the plaintiff William Coxon, a business person residing in Colchester, Ontario, in negotiations with NFL about sale of the ship.
[7] Initial negotiations included a proposal by Amirault to McLean for an assignment to Amirault and Coxon of an exclusive brokerage agreement that Amirault assumed existed. That led McLean to respond by fax message, on or soon after April 18, that "We [NFL] are not interested in giving you exclusive rights to such ferries. M.V. Prince Nova is already offered out to other parties."
[8] On April 23, 1997 Amirault wrote to McLean, confirming telephone conversations and "our verbal understanding", inter alia, that the M.V. Prince Nova was offered for sale, at an asking price of $1 million US and that NFL confirmed payment of a 5% commission on the final sale price if a successful sale were to be concluded to a buyer introduced by Amirault.
[9] Continuing discussions between Amirault and McLean led the former to write a letter dated May 21, 1997, setting out arrangements for an option to purchase the ship to be granted to "Amirault/Coxon/Palmeter interests", at the stated price of $1 million US. The letter indicated that the Amirault group had an excellent sales prospect, that they would arrange for inspection of the ship with NFL's cooperation, and that following a successful inspection Amirault et al. would negotiate and conclude sales arrangements with the final buyer. Final payment to NFL would be at the price as stated in the letter of May 21, less a 5% sales commission to Amirault et al. That letter was subsequently signed by McLean on behalf of NFL, indicating acceptance of its terms, but subject to the term added by hand by McLean that "Agreement to be completed in 30 days effective May 22/97".
[10] No agreement for sale of the ship and no prospective purchaser was introduced by Amirault et al. within the period limited by McLean's term, added to the letter of May 21. Thereafter, on July 2, 1997 McLean, on behalf of NFL, wrote to Amirault indicating that the 30-day option on the M.V. Prince Nova was considered to have run out on June 21, that up to July 2 there had been no proposal from Amirault for a visit to the vessel by prospective buyers or any other indication that Amirault had "a live buyer", and that NFL would not give "exclusivity on the vessel" to Amirault, though it would "gladly entertain any buy you have" but the ship would be sold on a first come, first served basis.
[11] In response to that letter Amirault wrote to McLean on July 10, 1997 indicating there was serious interest on the part of three groups who were interested in visiting the vessel. On July 24, McLean, for NFL, wrote confirming arrangements made by telephone for a prospective purchaser to view the ship at Caribou, N.S. on July 29. The letter also confirmed that
| It is mutually understood that we are open to negotiation on the $1 million price and that you are protected for a minimum of 5% commission and any bonus relative to the price negotiated that you and I discuss after their visit. |
[12] Following the visit of the prospective purchaser to view the ship, the prospective purchaser, Cross Sound Ferry Services, Inc. ("Cross Sound"), a company incorporated in the United States, contacted NFL in mid-August 1997, and indicated interest in the possibility of purchasing the ship, offering $1.4 million U.S. for the purchase, conditional upon certain conditions being met. Cross Sound indicated, that while it recognized Amirault et al. as brokers for NFL, it preferred to deal directly with NFL.
[13] In late August McLean advised Amirault of direct negotiations with Cross Sound and that those were proceeding slowly. Amirault was concerned about the direct negotiations and on September 6, 1997 he wrote to McLean enclosing a draft agreement of purchase and sale of the ship from NFL to Coxon Service Ltd., a company with its office at Windsor, Ontario, that sale being conditional upon Coxon Services entering upon an agreement for sale of the vessel to a third party purchaser. That is the form of the transactions contemplated by Amirault et al. for sale of the ship. The proposed agreement was not of interest to NFL. Except for the period provided by the agreement by letter of May 21, 1997, i.e., one month, NFL denies there was any such arrangement contemplated, and it is said no option to purchase was extended to Amirault et al. after June 21, 1997.
[14] On October 17, 1997 Amirault wrote to NFL referring to two further prospective purchasers for the ship and requesting confirmation that it remained available for sale. He was advised by telephone and later by letter of October 27 from McLean that NFL had signed a firm and irrevocable option with a substantial deposit to sell the ship at a price of $1.4 million US on which NFL would pay to Amirault et al. the 5% agreed commission on the total amount, subject to completing the agreement of sale. The option referred to, was to Cross Sound, and it was actually signed on October 28, 1997, providing to Cross Sound a formal option to purchase the ship.
[15] Amirault wrote to NFL on October 29, 1997 indicating concern about the direct dealings between NFL and Cross Sound, an arrangement he said which was not consistent with the sale arrangements through Coxon "as we had arranged with you". The following day he wrote again to remind NFL of other potential purchasers in the offing if the option agreement with Cross Sound was not fulfilled.
[16] By letter dated March 26, 1998 Cross Sound wrote to NFL indicating it was exercising its option to purchase the ship. On that same day the plaintiffs commenced this action by filing their statement of claim and that same day, on their initiative, the ship was arrested. The statement of claim includes the following paragraphs:
| 9. On or about May 21, 1997, the Defendant, NFL Holdings Ltd., granted the Plaintiffs a 30 day option to purchase the Ship mv Prince Nova for $1,000,000.00 (US) less a 5% reduction which was to have been the sales commission had the vessel been sold by an agent. |
| 10. It was understood by the parties, however, and stated in an agreement dated May 21, 1997, that the Plaintiffs would only exercise their option to purchase at the stated price when they had entered into an agreement for subsequent resale of the ship to another party, with whom the Plaintiffs would negotiate and conclude a sales contract directly. To be clear, it was understood that the Plaintiffs would enter into this subsequent sales contract on their own behalf, and not as agents for NFL Holdings Ltd. |
| 11. Eventually the 30 day option to purchase lapsed, though NFL Holdings Ltd. advised that it would still entertain an offer to purchase from the Plaintiffs, though could not do so on an exclusive basis and that The Defendant Ship would be sold on a first come, first served basis. |
| 12. Through their efforts and contacts, the Plaintiffs identified a prospective third party buyer for The Defendant Ship and made arrangements with NFL Holdings Ltd. to permit the Third Party buyer to inspect the ship. |
| 13. If, after the inspection, the third party buyers found The Defendant Ship to be satisfactory, they were prepared to formalize agreements of purchase and sale for The Defendant Ship in the amount of $l.85 million (US). |
| 14. The third party buyers found The Defendant Ship to be satisfactory, but after the inspection, for reasons that have only become apparent in hindsight, kept delaying the arrangements to sign a formal agreement for purchase and sale of The Defendant Ship with the Plaintiffs, on the terms that had been discussed. |
| 15. The Plaintiffs subsequently discovered that after the third party buyer inspected The Defendant Ship, NFL Holdings Ltd. began discussions with them for the purchase of The Defendant Ship directly from NFL Holdings Ltd. |
| 16. Shortly after being made aware of the discussions between the third party buyer and NFL Holdings Ltd., the Plaintiffs were advised by NFL Holdings Ltd. that, notwithstanding the intentions of the parties that the vessel was to be sold to the Plaintiffs for the asking price and subsequently resold to the third party buyer, it had signed a firm and irrevocable option with the third party, with a substantial down payment, to sell The Defendant Ship mv Prince Nova for the price of $1.4 million (US). NFL Holdings advised the Plaintiffs that it would be paying them a 5% commission on the full purchase price, subject only to the exercise of the option. |
| 17. When the Plaintiffs objected to the fact that NFL Holdings Ltd. had concluded an agreement with the third party buyers directly, thereby causing them financial loss, NFL responded by advising the Plaintiffs that it was then no longer even prepared to pay to them the sales commission which it had offered. |
| 18. The Plaintiffs state that the Defendant C. Mitchell McLean wrongfully interfered with their economic relations with the third party buyer by negotiating with them directly and that he wrongfully induced the third party buyer, NFL Holdings Ltd., or both of them to breach their agreements with the Plaintiffs. |
| 19. The Plaintiffs state that the actions of NFL Holdings Ltd. and C. Mitchell McLean have resulted in the loss of anticipated profits from the sale of The Defendant Ship, mv Prince Nova. |
| 20. The Plaintiffs repeat the foregoing and state that they have an interest in the proceeds of the sale of The Defendant Ship. |
| 21. The Plaintiffs repeat the foregoing and claim, as against the Defendants, jointly and severally, the following: |
| (a) the sum of $900,000.00(US), being the difference between the anticipated sale price between the Plaintiffs and the third party buyer for The Defendant Ship mv Prince Nova, and the purchase price of that ship as between the Plaintiffs and the Defendant, NFL Holdings Ltd. (less 5%); |
| (b) special damages, particulars of which will be provided at or before the time of trial; |
| (c) pre-judgment interest; |
| (d) any applicable taxes; |
| (e) costs; and |
| (f) such further and other relief as this Honourable Court deems just. |
[17] By their statement of defence filed April 1, 1998, the defendants deny all of the above quoted allegations as if each were set out, traversed and denied seriatim. Further, the defendants plead, in part,
| 6. For a 30 day period between May 22, 1997 and June 21, 1997, NFL granted to interests represented by Mr. Amirault and Mr. Coxon an option to purchase the Vessel. This option expired without being exercised and without Mr. Amirault or Mr. Coxon introducing any prospective purchasers to NFL. |
| 7. Subsequent to the expiry of the 30 day option, Mr. Amirault and Mr. Coxon continued to act as non-exclusive brokers in connection with efforts to sell the Vessel. In this capacity, Mr. Amirault and/or Mr. Coxon identified Cross Sound Ferry Services, Inc. ("Cross Sound") as a potential purchaser for the Vessel and made arrangements with NFL for representatives of Cross Sound to view the Vessel. Subsequent to this viewing, Cross Sound contacted NFL directly to express further interest in the Vessel and to discuss possibly entering into an Agreement of Purchase and Sale for the Vessel. Cross Sound identified Mr. Amirault as the broker with whom they had been dealing. |
| 8. Discussions between NFL and Cross Sound culminated in the execution of an Option Agreement dated October 28, 1997 between NFL and Cross Sound, providing Cross Sound with a formal option to purchase the Vessel. Cross Sound exercised this option by letter dated March 26, 1998. |
| 9. Other than pursuant to the 30 day option referred to in paragraph 6 above, and the Option Agreement between NFL and Cross Sound dated October 28, 1997 referred to in paragraph 7 above, NFL did not at any time or in any way restrict its right to sell the Vessel to a purchaser of its choice. Except for the right to acquire the Vessel between May 22 and June 21, 1997 pursuant to the option referred to in paragraph 6, which right the Plaintiffs did not exercise, the Plaintiffs had no right to purchase the Vessel, and their role was solely that of broker. |
| 10. NFL did not breach any agreement with the Plaintiffs, and C. Mitchell McLean did not wrongfully interfere with their economic relations with Cross Sound or wrongfully induce either Cross Sound or NFL to breach any agreement with the Plaintiffs. Neither NFL nor Cross Sound formed any agreements with the Plaintiffs other than as expressly described above. |
| 11. The Defendants say that the Plaintiffs have not suffered any loss of anticipated profits, either as alleged in the Statement of Claim or otherwise. |
Jurisdiction of the Court and suggested abuse of process
[18] The defendants urge that the only claim set out in the statement of claim, by paragraphs 18, 19 and 21, is for wrongful interference by the defendant McLean with economic relations between the plaintiffs and the third party buyer and that he wrongfully induced the third party buyer, NFL Holdings or both of them to breach their agreements with the plaintiffs. If this were the plaintiffs' only claim, I would agree that this claim, based in tort, even though it alleges interference with economic relations or with agreements concerning sale of a ship, is not a claim within the maritime law jurisdiction of this Court under s.22 of the Federal Court Act, R.S.C. 1985, c. F-7 as amended (the "Act").
[19] I am persuaded, however, that the nature of the plaintiffs' claim against NFL does fall within the jurisdiction of the Court if the agreement as claimed by the plaintiffs between them and NFL is established at trial, that is, an agreement for the plaintiffs to purchase the ship at the price of $1 million US, which they would then sell to any third party. Any such agreement is denied by the defendants who say the only agreement between the parties after June 21 was an agreement to pay the plaintiffs a commission of 5% of the total price paid by a third party purchaser introduced by the plaintiffs. If the agreement is found to be the latter, a typical brokerage agreement, it may well not fall within the maritime jurisdiction of the Court as the defendants argue, a conclusion the plaintiffs contest.
[20] I need not resolve the latter issue at this stage. It is enough, in my opinion, to note that the nature of the agreement and its terms, relied upon by the plaintiffs, are in dispute and cannot be resolved on the basis of the pleadings and contradictory affidavits upon which there has been no cross-examination at this stage. The basis of the plaintiffs' claim is set out in paragraphs 10, 11, 12, 16, 17, 19 and 21. They do not expressly plead a contract and its breach causing loss, at least in so many words, but it is sufficient in my view that they have pleaded an agreement between themselves and NFL (paragraphs 10, 11, 16 and 17), that the actions alleged of NFL have resulted in loss to the plaintiffs of anticipated profits from sale of the ship (paragraph 19) and that they claim against the defendants, including NFL, jointly and severally (paragraph 21).
[21] A claim for damages arising out of breach of an agreement of sale for a ship has been held to be in this Court's maritime jurisdiction pursuant to s. 22(2) of the Act. (Beauchamp v. Coastal Corporation and the ship Wayward Princess, [1984] 1 F.C. 833 (F.C.T.D.) per Strayer J.; and Gleason v. Ship Dawn Light et al. (1997), 130 F.T.R. 284 per Lutfy J.) Where a claim arises from an agreement for purchase of a ship, arrest of the vessel that is subject of that claim has been maintained in both Beauchamp and in Antares Shipping Corporation v. The Ship "Capricorn" et al., [1980] 1 S.C.R. 553; 111 D.L.R. (3d) 289. In the latter case the Supreme Court of Canada held that a claim for specific performance arising out of an agreement to purchase a ship is within the maritime jurisdiction of this Court. While that remedy is not here claimed, damages are claimed for the loss of anticipated profits as a result of the defendant NFL's sale of the vessel to the third party, an alternative remedy for loss from defendant NFL's failure to fulfil the agreement alleged by the plaintiffs.
[22] In considering a preliminary issue questioning the jurisdiction of the Court, the Court assumes that allegations concerning the claim can be proven at trial, unless it is clear from evidence presented on a preliminary motion that there simply is no basis to the claim. That standard is not here met. The agreement alleged by the plaintiffs is clearly disputed by the defendants' defence and affidavits filed in support of their position but at this stage the evidence of both parties is contradictory about the nature of the agreement and its terms for involvement of the plaintiffs in the sale of the ship. If the plaintiffs' case is found to be supported at trial, the alleged actions of the defendants, in breach of the agreement upon which the plaintiffs rely, may be dealt with by the trial judge within the maritime jurisdiction of the Court. If it is found there is no contract between the parties, or that the agreement between them is other than one to sell the ship to the plaintiffs, for example, a mere brokerage agreement to assist in sale of the ship for a commission, the agreement may, or may not, be found to lie within the Court's maritime jurisdiction. That issue awaits determination by the trial judge, if this matter should go to trial.
[23] The plaintiffs claim they have an interest in the proceeds of sale of the defendant ship. That claim, if well founded, falls within the Court's jurisdiction under paragraph 22(2)(a) of the Act which specifies that this Court has jurisdiction with respect to "any claim with respect to title, possession, or ownership of a ship ... or with respect to the proceeds of sale of a ship ...". The defendants urge that the plaintiffs' claim does not fall in that description. However, if the plaintiffs' version of the agreement, as one for purchase and sale of the ship, is upheld at trial, the plaintiffs' claim would be within paragraph 22(2)(a) and one enforceable against the ship by in rem proceedings.
[24] It remains for the Court at trial to determine what agreement, if any, existed between the parties, and that determination, on the evidence then presented, will lead to a decision whether the cause of action against NFL, alleged in the statement of claim, falls within the maritime jurisdiction of the Court. In those circumstances, the Court cannot conclude, at this stage, that the action initiated by the plaintiffs, including arrest of the ship is an abuse of the Court's process.
[25] In the result, the defendants' motion that the plaintiffs' claims are not within the Court's jurisdiction is allowed in part, but only in relation to the claim against the defendant, C. Mitchell McLean, since that claim is one in tort against a private citizen, a matter not within the Court's jurisdiction under the Federal Court Act. That claim against McLean is struck out and the statement of claim should be amended accordingly.
[26] That motion does not succeed in regard to the claim of the plaintiffs against NFL. If that claim be found at trial to be, as the plaintiffs urge, one for purchase of the ship by the plaintiffs which was contravened by NFL's grant of an option to purchase that was exercised by a third party purchaser, then that claim would lie within the Court's jurisdiction in relation to maritime law.
The motion for summary judgment
[27] The principles in relation to considering an application for summary judgment pursuant to rules 432.1 to 432.7, as developed in recent jurisprudence, are usefully set out by Madam Justice Tremblay-Lamer in Granville Shipping v. Pegasus Lines (1996), 111 F.T.R. 189. A fundamental principle is that summary judgment will not issue unless the case is so without merit that it does not deserve consideration by the trier of fact at a future trial. Where there is a genuine issue for trial summary judgment will not be granted (Feoso Oil Limited v. Ship Sarla (1995), 184 N.R. 307 (C.A.)), nor will it be granted if there are significant issues of difference where credibility of witnesses may be important to determining facts.
[28] In my opinion there are genuine issues for trial, the key one being the nature of the agreement between the parties in relation to sale of the ship. There are issues where affidavit evidence conflicts, including evidence as to the agreement alleged by plaintiffs with the third party purchaser. Those allegations are denied by affidavits filed by principals of the third party. Differences in that evidence, in significant part relating to the plaintiffs' claim for damages and their quantum, may be resolved only at trial, and perhaps their resolution will be dependent upon assessment of the credibility of witnesses.
[29] In these circumstances the Court would not be warranted in ordering summary judgment at this stage. On that matter the defendants' motion is dismissed.
Conclusion
[30] For these reasons, the Court, by Order dated April 24, 1998, set out its basic conclusions and ordered that the defendants' motion is allowed in part only. The plaintiffs' claim against the defendant C. Mitchell McLean in personam is to be struck out and the statement of claim shall be amended accordingly. In all other respects the defendants' motion is dismissed, with costs in the cause.
W. Andrew MacKay
Judge
Ottawa, Ontario
May 1, 1998.