Federal Court Decisions

     T-738-96

B E T W E E N :

     HOLT CARGO SYSTEMS INC.

     Plaintiff

     - and -

MESSRS. T. VAN DOOSSELARE AND

F. DE ROY AS TRUSTEES IN BANKRUPTCY

OF ABC CONTAINERLINE N.V., THE OWNERS,

CHARTERERS AND ALL OTHERS INTERESTED

IN THE SHIP "BRUSSEL", AND THE SHIP "BRUSSEL"

     Defendants

AND:

     SOCIÉTÉ NATIONALE DE CRÉDIT A L'INDUSTRIE S.A.

     Intervenor

     REASONS FOR ORDER

MacKAY J.:

     Halterm Limited, the applicant, applied by motion for an order that unpaid charges claimed as owed to it in relation to the movement and storage of containers of abandoned cargo from the defendant ship "Brussel" be recoverable from proceeds of the sale of the ship as if those charges had been a marshall's expense of arrest of the defendant ship. The motion was heard on September 19, 1996, at a special hearing when a motion on behalf of the defendant trustees for payment out of the proceeds of sale to them was heard. At the conclusion of the hearing decision was reserved.

     The motion on behalf of the trustees having been dealt with, I now turn to the motion on behalf of Halterm. Its disposition has taken longer than anticipated.

     Halterm is a corporation incorporated pursuant to the laws of Nova Scotia with its head office in Halifax where it carries on business as the operator of a marine container terminal with vessel berths and container storage facilities.

     The defendant ship "Brussel" was arrested at Halifax on March 30, 1996. Shortly thereafter, on April 5, 1996, the Belgian corporations owning and operating the ship were declared bankrupt by a Belgian Court and the defendant trustees, Messrs. T. Van Doosselare and F. de Roy were appointed as trustees in bankruptcy of the owners and the operating corporation.

     By Order of this Court on April 24, 1996, the cargo aboard the Brussel, in some 1,100 containers, was ordered to be, and all the containers were, offloaded. That order (the "discharge order"), made on motion of certain cargo owners, included provision for payment of the immediate costs of discharge by those owners with recovery of their costs and costs of storage and handling to be paid by cargo or container owners, or to be recovered from the proceeds of sale of any abandoned cargo.

     Arrangements for offloading the containers were made by the shippers concerned, acting under the Court Order in the interests of all cargo owners, with Halterm Limited. The containers were discharged at Halterm's facility and there stored until arrangements were made by cargo owners for their onward shipment. Some cargo in containers was abandoned and simply left by the owners at Halterm's facilities. Some of that abandoned cargo was sold in accord with further orders of the Court. Costs of the shippers who arranged for offloading from the "Brussel" and charges of Halterm in relation to handling and storage of some containers with abandoned cargo were recoverable from sales of that cargo.

     The motion before the Court concerns Halterm's claims for charges for terminal charges and storage of containers with abandoned cargo, which claims were not recovered from sales of abandoned cargo. Those claims are at the same rates as were charged by Halterm to owners who claimed their cargo and arranged for its onward shipment. The basis of Halterm's claims is set out in the affidavit of Murray W. Graves, Administrative Manager of the company, as follows:

4.          Halterm's charges in connection with the discharge of the containers were paid by Rice Growers Co-Operative Ltd., Seatide Pty. Ltd. and Adchem Australia Pty. Ltd. pursuant to the terms of the Discharge Order. However, since the containers were discharged from the "Brussel" at the end of April, 1996, additional charges payable to Halterm have accrued in respect of the containers, consisting of $175 per container for movements of the containers ("terminal charges"), and storage charges of $3.00 per day for 203 containers and $6.00 for 403 containers. Halterm charges $35 per movement of each container, subsequent to the actual discharge of the container from a vessel, and Halterm's assessment of $175 per container for terminal charges represents its estimate that each container has had to be moved five times in the course of gradually returning the containers to the persons claiming to be the owners of the cargo therein. $175 per container for terminal charges has been assessed against every container that was discharged from the "Brussel", with the exception of a group of containers that were stored at the terminal facility in a block immediately upon discharge, in anticipation that they would be claimed in a block. In respect of all containers containing cargo that has been claimed by its owners, assessed terminal charges and storage charges have been paid to Halterm by the cargo owners and, in the case of empty containers, these charges have been paid to Halterm by the owners of the containers.

5.          As of September 16, 1996, a total of 73 containers containing cargo remain unclaimed at Halterm's facility. Attached as Exhibit "A" hereto is a list of these containers and a breakdown of the terminal and storage charges which Halterm is owed in respect of them. The total owing to Halterm as of September 16, 1996 in respect of these containers is $67,039.00.

[Paragraphs 6 and 7 then set out details of amounts expected to be recovered from sale of abandoned cargo and from owners of nine containers of cargo who were still expected to pay Halterm's charges. The balance expected to be outstanding and unpaid to Halterm is calculated at $45,380.]

8.          When Halterm undertook the discharge, handling and storage of the containers from the "Brussel", I did not anticipate that there would be containers that would be both abandoned and of no resale value, such that Halterm would be left with unpaid charges unrecoverable from either the owners of those containers' contents or from the value of the contents themselves.

     On behalf of Halterm it is urged that the purpose of the discharge order was to provide a means by which the containerized cargo on board the vessel could be discharged and returned to the various owners of cargo at the earliest possible opportunity. The Order, it is urged, was made for the benefit of all cargo owners, and indeed of all those with claims in relation to the ship, and further, that in the long run the order for discharge facilitated sale of the vessel by the Court.

     The discharge order did provide that costs of the initial discharge of containers from the vessel were paid under arrangements which permitted the interested cargo owners who arranged for discharge to recover those costs from cargo owners generally. The order also contemplated storage and other fees associated with storage of the containers would be recoverable by Halterm from cargo owners and further, that costs incurred would be recoverable from the proceeds of sale of any abandoned cargo ordered to be sold by the Court. The one matter not contemplated at the time of the Order was the possibility that terminal and storage charges would not be recoverable from the owners of abandoned cargo or from the proceeds of sale of that cargo.

     The discharge order does provide that in the event disposal or sale of abandoned cargo results in net costs to the person disposing or selling it, that person should recover the amount of that net cost from the vessel as if it had been a marshall's expense. It also provided for further order in the event any interested party might apply to determine priority of any claim against proceeds of sale of the vessel for unrecovered costs and expenses incurred with respect to, inter alia, the discharge, storage or maintenance of containers or the provision of any services to such containers or cargo in them. On behalf of Halterm it is urged that recovery of its charges ought to be allowed as an expense for the benefit of all cargo interests and an expense facilitating sale of the vessel, and further that it ought to be allowed as marshall's expenses.

     Relevant terms of the discharge order are appended to these Reasons as Annex A.

     Three objections were raised to the application by Halterm. For the trustees and the intervenor it was urged that the claim like any other claim for long-term storage charges against unclaimed cargo is not a maritime claim against the "Brussel", though there might well be a claim to be made against the trustees, though even that is uncertain. It was urged the claim does not fall within the accepted definition of a maritime claim, for purposes of the Federal Court Act, as defined by Mr. Justice MacIntyre for the Supreme Court in ITO-Int'l Terminal Operators Ltd. v. Miida Electronics Inc., [1986] 1 S.C.R. 752 at 775-76.

...I would stress that the maritime nature of this case depends upon three significant factors. The first is the proximity of the terminal operation to the sea; that is, it is within the area which constitutes the Port of Montreal. The second is the connection between the terminal operator's activities within the port area and the contract of carriage by sea. The third is the fact that the storage at issue was short-term pending final delivery to the consignee. In my view, it is these factors, taken together, which characterize this case as one involving Canadian maritime law.

Here it is said the claim of Halterm does not relate to short-term storage. Rather, it is a normal claim for long-term storage, not within Canadian maritime law, and thus, beyond this Court's jurisdiction.

     I am persuaded that the claim is within the jurisdiction of this Court, as a claim within its maritime law jurisdiction. It arose from arrangements made to implement an order of the Court, to facilitate minimizing costs to cargo owners and their potential claims against the ship and other defendants, and to facilitate discharge of all cargo and sale of the vessel.

     The second objection, particularly of the intervenor, and one other claimant is that the basis of the claim is not expressed as a cost to Halterm. Rather, it is based on Halterm's estimates of the average movement of containers during the time they were at Halterm's facilities, and a per diem claim for storage for each container, less the portion of the total claim expected to be recovered from sale of certain abandoned cargo. It was suggested the claim might be based on estimates higher than the charges normally assessed by Halterm but there is no evidence of this, rather, Mr. Graves' evidence is that the same basis was used in calculation of charges to cargo owners who recovered their cargo, and it was paid by them. There is no basis to find the claim excessive, in my view, and I am prepared to accept that Halterm's claim is a cost to its operations, and a loss if not recovered.

     The third objection is that there is no evidence before the Court of the arrangement made by the applicants for the discharge order and Halterm which might have a bearing on the claim now before the Court. It is urged that a sophisticated operator of an ocean terminal, like Halterm, should have looked after its interests in the arrangement for handling the cargo off loaded from the "Brussel". Yet the only evidence before the Court, in paragraph 8 of the affidavit of Mr. Graves, is that the possibility of not recovering the charges here claimed was simply overlooked when Halterm undertook discharge and handling of the cargo. The Order of April 24, 1996, by its final term, provided for anyone claiming to recover "any unrecovered costs and expense...with respect to such movement of the Defendant Vessel, the discharge of containers therefrom, the storage or maintenance of or provisions of any services to any such container or of cargo therein,...". The claim by Halterm falls within that term of the Order.

     The only issue remaining is whether this claim by Halterm should be recoverable out of the proceeds of sale of the vessel as if they were marshall's expenses. I am prepared to so order, and direct their payment without delay after the elapse of the time fixed for appeal of my Order. I so direct, because I consider the claim to be related to an expense or costs absorbed by Halterm, in a cooperative arrangement directed by Order of the Court which was for the benefit of all cargo owners, of the defendants in the long term, and in the interest of the Court in facilitating sale of the vessel. The circumstances in which the claim arose warrant treating the claim as if it were a marshall's expense. Had the ship not been unloaded when it was, the marshall would have had to arrange for that to be done before the "Brussel" was sold under Court Order.

     _________________________________

     JUDGE

OTTAWA, Ontario

May 15, 1997.

    

     T-738-96

     Annex A to Reasons for Order

Principal terms of the "discharge order", dated April 24, 1996.

Action in rem against the ship "BRUSSEL"

BETWEEN:

     HOLT CARGO SYSTEMS INC., a body corporate

     PLAINTIFF

     - and -

     ABC CONTAINERLINE N.V., a body corporate, THE OWNERS, CHARTERERS AND ALL OTHERS INTERESTED IN THE SHIP

"BRUSSEL" and THE SHIP "BRUSSEL"

     DEFENDANTS

     ORDER

     UPON HAVING READ the Notice of Motion filed on behalf of RICEGROWERS COOPERATIVE LTD., SEATIDE PTY. LTD. and ADCHEM AUSTRALIA PTY. LTD. (the "Applicants")...

...

     IT IS HEREBY ORDERED that the Defendants, at the sole initial expense of the Applicants, forthwith discharge at the Port of Halifax all containers presently on board the Defendant Vessel;

     AND IT IS FURTHER ORDERED that any and all containers so discharged, and all cargo contained therein, shall be deemed to be and continue in the possession and control of the Defendants, notwithstanding that they may in the physical custody of a third party, unless and until delivered or disposed of in accordance with the terms of this Order;

     AND IT IS FURTHER ORDERED that containers so discharged shall be delivered by the Defendants to persons claiming to be the owners of the cargo therein (or, in the case of empty containers, to persons claiming to be the owners thereof) (hereinafter collectively called a "claimant") upon:

(a) Presentation of proof of ownership by such claimant;

(b) Payment by such claimant to the Applicants, or their nominee, of that claimant's pro-rata share of all expenses incurred by the Applicants in the obtaining and execution of this Order, calculated on the basis of the ratio which that claimant's number of twenty (20) foot equivalent containers discharged bears to the total number of twenty-foot equivalent containers discharged from the Defendant Vessel (such expenses to include, without limitation, tugs, berthage, pilotage, stevedoring and linesmen);

(c) Payment of all applicable storage and other fees associated with storage of that claimant's cargo or container (as the case may be) since date of discharge;

     ...

     AND IT IS FURTHER ORDERED that the Defendant, the Ship "BRUSSEL", be moved from her anchorage to berth within the limits of the Port of Halifax, Nova Scotia, where she may lay safely alongside for purposes of discharging such containers, ...

...

     - 2 -

     AND IT IS FURTHER ORDERED that any container or any cargo discharged in accordance with this Order and not claimed by an owner within 30 days following discharge shall be deemed abandoned, and with respect to any such abandoned property, the following provisions shall apply:

(a)      The Defendants shall be at liberty to exercise all remedies (including rights of sale) with respect thereto:

(b)      The Defendants shall, upon being so directed by the Applicants or by any party having physical custody of such property (the "Custodian"), forthwith exercise any such remedies as the direction may stipulate;

(c)      In the event that the Defendants fail to forthwith exercise remedies as directed by the Applicants or by the Custodian, the Applicants or the Custodian may, without further notice, exercise all such remedies;

(d)      The proceeds of any sale of abandoned property shall be applied first on account of storage or similar costs accrued with respect to that property since date of discharge, and second to that property's share of discharge costs payable to the Applicants in accordance with the terms hereof; and

(e)      In the event that disposal or sale of any abandoned property shall result in a net cost to the person performing such disposal or sale, such person shall be entitled to recover the amount of such net cost from the Defendant Vessel as if such cost had been a Marshal's expense of arrest of the Defendant Vessel;

     AND IT IS FURTHER ORDERED that any interested party be and is hereby granted leave to apply to this Honourable Court for a further Order determining the priority in which such party may be entitled to repayment by the Defendant Vessel, or out of proceeds which may be posted as bail for her release or out of proceeds of her sale (as the case may be) of any unrecovered costs and expenses incurred by such party with respect to such movement of the Defendant Vessel, the discharge of containers therefrom, the storage or maintenance of or provisions of any services to any such container or of cargo therein, the delivery of any such container or of the cargo therein to the owners thereof, or of disposal of any such container or of the cargo therein in accordance with the terms of this Order.