Date: 19990915
Docket: T-1350-99
MONTRÉAL, QUEBEC, SEPTEMBER 15, 1999
| Before: RICHARD MORNEAU, PROTHONOTARY |
ACTION IN REM AND IN PERSONAM IN ADMIRALTY
Between:
SET-HA (DIVISION INTERNATIONALE) INC.,
Plaintiff,
AND
SYLVIO THIBEAULT and
JULIEN CLOUTIER and
THE SHIP "EXPLORATHOR II" and
THE OWNERS AND ALL OTHER PERSONS
HAVING ANY RIGHT IN THE SHIP
"EXPLORATHOR II",
Defendants.
ORDER
This motion by the defendants is dismissed with costs. As requested by the defendants as an alternative remedy, the Court sets $130,000 as the amount of the bail to be given by the defendants pursuant to the Rules in order to obtain release of the ship Explorathor II.
| Richard Morneau Prothonotary |
Certified true translation
Bernard Olivier, LL. B.
Date: 19990915
Docket: T-1350-99
ACTION IN REM AND IN PERSONAM IN ADMIRALTY
Between:
SET-HA (DIVISION INTERNATIONALE) INC.,
Plaintiff,
AND
SYLVIO THIBEAULT and
JULIEN CLOUTIER and
THE SHIP "EXPLORATHOR II" and
THE OWNERS AND ALL OTHER PERSONS
HAVING ANY RIGHT IN THE SHIP
"EXPLORATHOR II",
Defendants.
REASONS FOR ORDER
RICHARD MORNEAU, PROTHONOTARY:
Introduction
[1] The case at bar concerns a motion by the defendants to strike out pursuant to Rule 221(1) of the Federal Court Rules (1998) ("the Rules").
[2] Essentially, the defendants under para. (a) of that rule are asking the Court to strike out the in rem portion of the plaintiff's statement of claim on the ground that the latter discloses no reasonable cause of action pursuant to s. 43(2) of the Federal Court Act, R.S.C. 1985, c. F-7 ("the Act").
[3] The defendants are also seeking pursuant to s. 221(1)(a), (c) and (f) the quashing of the warrant of seizure issued against the ship in question on July 29, 1999, on the ground that under s. 481(2)(b) of the Rules the said warrant does not disclose "the nature of the claim and the basis for invoking the in rem jurisdiction of the Court".
[4] Finally, the defendants are seeking as a further remedy the striking out of the in personam action against the defendant Sylvio Thibeault pursuant to s. 221(1)(c) and (f) of the Rules, further to a verbal amendment of their notice of motion which the defendants sought during the hearing, an amendment to which the plaintiff did not object.
Relevant facts
[5] In the plaintiff's statement of claim it was alleged that on or about June 2, 1996 a contract for the building and purchase of an "EXPLORATHOR" type ship to be named the "EXPLORATHOR CAPITAINE DUVAL III" was made between Set-Ha and the defendant Sylvio Thibeault (hereinafter "the contract of purchase"). It was also a vessel of the "EXPLORATHOR" type.
[6] This contract of purchase contained inter alia the following clause (hereinafter "the clause"):
| [TRANSLATION] |
| The seller confirms the exclusive right of the EXPLORATHOR for four years within a radius of _____ kilometres from the principal point of operation. |
| It is agreed between the buyer and the seller that the ship shall be operated in its exclusive territory, namely Parc Forillon, along the coast to Percé. Any change in territory shall be consistent with the territories already granted and shall require initial approval from the buyer concerned and the seller. |
| The seller undertakes to include this clause in all its EXPLORATHOR contracts of sale. |
[7] It was further alleged in the statement of claim that from the start of the 1999 tourist season the ship EXPLORATHOR II was operated and used by the defendants in personam unlawfully from the port of Percé for whale excursions, that is, inside the exclusive territory reserved for the Set-Ha ship.
[8] This is why the plaintiff contended that the EXPLORATHOR II caused the plaintiff damage, in that the defendants had unlawfully appropriated or illegally deprived the plaintiff of over $75,000 in net anticipated income for the 1999 tourist season alone, that is, $120,000 in the sale of excursion tickets less $45,000 of operating costs not incurred.
[9] The plaintiff accordingly argued that the defendants and the ship EXPLORATHOR II were jointly and severally liable, both contractually and in tort, for damages in a total amount currently assessed at $85,000, and broken down as follows:
Loss of net revenue $75,000
Injury to reputation, hardship and inconvenience $10,000
Total $85,000
[10] The parties also entered in evidence in connection with the motion at bar " with respect to the paragraphs of Rule 221(1) other than para. (a ) " affidavits and transcripts of examinations dealing inter alia with a possible waiver of the clause by the plaintiff in January 1998 and the true identity of the person who should be regarded as having signed the contract of purchase on the seller's behalf.
Criteria for striking out
[11] The right to request that pleadings be struck out in an action in whole or in part is now covered by Rule 221.
[12] That Rule reads as follows:
| 221. (1) On motion, the Court may, at any time order that a pleading, or anything contained therein, be struck out, with or without leave to amend, on the ground that it |
| (a) discloses no reasonable cause of action or defence, as the case may be, |
| (b) is immaterial or redundant, |
| (c) is scandalous, frivolous or vexatious, |
| ( d) may prejudice or delay the fair trial of the action, |
| ( e) constitutes a departure from a previous pleading, or |
| ( f) is otherwise an abuse of the process of the Court, |
| and may order the action be dismissed or judgment entered accordingly. |
| (2) No evidence shall be heard on a motion for an order under paragraph (1)(a). |
[13] This rule is the equivalent of Rule 419 of the Federal Court Rules. The precedents developed under the latter rule are therefore applicable to Rule 221.
[14] Consequently, under s. 221(1)(a) it must be plain and obvious (see Canada (A.G.) v. Inuit Tapirisat, [1980] 2 S.C.R. 735, at 740) that the in rem portion of the plaintiff's statement of claim discloses no reasonable cause of action.
[15] Additionally, as to the application of the other paragraphs of Rule 221 here, the disputed allegations must be so abusive and embarrassing that they have to be struck out, in whole or in part. As Teitelbaum J. of this Court mentioned in Copperhead Brewing Co. Ltd. v. John Labatt Ltd. et al. (1995), 61 C.P.R. (3d) 317, at 322:
| . . . the jurisprudence is consistent that under Rules 419(1)(b) through (f) it must be established that the pleading is so clearly immaterial, frivolous, embarrassing or abusive that it is obviously forlorn and futile (Burnaby Machine & Mill Equipment Ltd. v. Berglund Industrial Supply Co. Ltd. (1982), 64 C.P.R. (2d) 206 (F.C.T.D.)) . . . |
Analysis
" Challenges under s. 221(1)(a) of the Rules
[16] The Court must now turn to the first ground of challenge raised by the defendants, namely the striking out pursuant to s. 221(1)(a) of the Rules of the in rem portion of the plaintiff's statement of claim on the ground that it presents no reasonable cause of action under s. 43(2) of the Act. Our finding of this point will include that on the seizure warrant.
[17] According to the defendants the contract of sale between the plaintiff and Recherches et Travaux Maritimes RTM inc. concerns the ship EXPLORATHOR CAPITAINE DUVAL III and so the action can in no way be regarded as dealing with the ship EXPLORATHOR II.
[18] It has to be understood that this argument turns essentially on the interpretation to be given to the clause in the contract of purchase mentioned above, in paragraph 6.
[19] At this stage of the discussion, I cannot agree with the defendants that the clause implies that the action can in no way be regarded as dealing with the ship EXPLORATHOR II. At the present time it cannot be concluded that it is plain and obvious that such a conclusion follows.
[20] Although for purposes of analysing the clause it must be assumed that the EXPLORATHOR mentioned in its first paragraph is actually the EXPLORATHOR CAPITAINE DUVAL III, it can reasonably be argued from a reading of the latter paragraph together with the last paragraph of that clause that the purpose of the exclusive right in question is essentially and in reality to prevent any other EXPLORATHOR coming into the given territory. The clause creates a link, a connection between the territory in question and any other EXPLORATHOR. Since each contract affecting an EXPLORATHOR has to contain a clause similar to the one at issue, it can be said that it creates a certain common ground, a certain interconnection, between the ships. It is possible to argue from this interconnection that the contract of purchase and the plaintiff's action deal with EXPLORATHOR II, namely the ship which allegedly committed the alleged infringement, that is, coming into the territory in question, and which under the terms of the clause must be subject to a similar clause.
[21] It may further be concluded that the EXPLORATHOR II is the property of the defendant Thibeault, that is, for purposes of analysis here the party who concluded the contract of purchase with the plaintiff. On the interconnection which should exist between a seized ship and the cause of action, see Industrie Chimique Italia Centrale S.P.A. v. Ship "Choko Star" et al. (1987), 10 F.T.R. 258, Joint Stock Society Oceangeotechnology v. Ship 1201 et al. (1994), 72 F.T.R. 211, Scandia Shipping Agencies Inc. v. Ship Alam Veracruz et al. (1997, 148 F.T.R. 164, (1997), 148 F.T.R.161 and Paramount Enterprises International Inc. v. Ship An Xin Jiang et al. (1997), 146 F.T.R. 161, a decision reversed in part on appeal to the Trial Division (on the cargo question) (1997), 147 F.T.R. 162. The latter decision has been appealed (case A-929-97 " An Xin Jiang ).
[22] Contrary to what was argued by the defendants, An Xin Jiang must be distinguished from the situation in the case at bar in that in the latter case the contract at issue, namely the Conlinebooking charter-party, made no direct or indirect reference to any ship other than the Len Speer, the ship mentioned in the charter-party. In the case at bar and as mentioned above, the clause in the contract of purchase dealing with the exclusive right referred indirectly to the other EXPLORATHORS.
[23] Consequently, it does not seem possible to the Court to argue that it is plain and obvious that the in rem portion of the plaintiff's statement of claim should be struck out pursuant to s. 221(1)(a) on the ground that it presents no reasonable cause of action under s. 43(2) of the Act.
[24] Since the seizure warrant is essentially similar to the statement of claim, it also does not appear to the Court, for the same reasons, that it should be quashed or struck out as not being consistent with s. 481(2)(b) of the Rules.
" Challenges under s. 221(1)(c) and (f) of the Rules
[25] According to the defendants, the striking out of the in personam action against the defendant Sylvio Thibeault should first be ordered pursuant to s. 221(1)(c) and (f) of the Rules on the ground that it is plain and obvious on the evidence in the record that it was not the defendant Thibeault personally who signed the contract of purchase as seller but the corporation Recherches et Travaux maritimes RTM inc., and that further there should be no question of raising the corporate veil in the case at bar.
[26] This may be the conclusion the trial judge will draw at the end of his hearing. However, I concur here in the opinion of counsel for the plaintiff that based on the respective affidavits of the parties, and in particular the cross-examination on affidavit of the defendant Thibeault, these are complex matters raising questions of credibility which it is for the trial judge to resolve.
[27] For example, the plaintiff objected that the defendant Thibeault in the course of their business dealings, inter alia in the written documentation, used several trade names or had recourse to various corporations under the control of the defendant Thibeault. The very identification which counsel for the defendants sought to establish for the document constituting the contract of purchase itself indicates such a use of trade names. Moreover, even taking Exhibit D to the defendant's Thibeault affidavit as constituting the contract of purchase, it has to be said that on the face of the contract the seller is designated by a trade name (Recherches et Travaux maritimes inc.), not a corporation (here the relevant corporation would be Recherches et Travaux maritimes RTM inc. " my emphasis). Is this just a mistake, or is it part of another strategy? " only a more exhaustive hearing can establish this. There is thus no question at this stage of drawing the conclusions referred to in s. 221(1)(c ) and (f) of the Rules.
[28] As their second argument under those paragraphs, the defendants maintained that the evidence clearly shows that the clause was eliminated from the contract of purchase by a subsequent agreement dated January 16, 1998 ("the subsequent agreement"). The context
surrounding the making of this agreement is described in paragraphs 21 to 29 of the defendant Thibeault affidavit as follows:
| [TRANSLATION] |
| 21. from the summer of 1997 onwards, the plaintiff considered operating the ship EXPLORATHOR CAPITAINE DUVAL III in Cuba beginning in winter 1997, for twelve months of the year; |
| 22. Recherches et travaux maritimes RTM inc., for its part, was approached by a company called "Croisière 3D" which was interested in purchasing and operating a ship of the EXPLORATHOR type in the reserved territory; |
| 23. Recherches et travaux maritimes RTM inc. and Set-Ha, represented by Gilles Jean, had discussions at that time regarding the possibility of the other company, Croisière 3D, operating an EXPLORATHOR ship in the reserved territory and the possibility of the plaintiff operating its ship in Cuba; |
| 24. since Set-Ha had to observe the exclusivity clause and could not operate its EXPLORATHOR ship outside the area mentioned in that clause, and Recherches et travaux maritimes RTM inc. wished to sell a ship to Croisière 3D for operation in the area reserved for Set-Ha, the plaintiff and Recherches et travaux maritimes RTM inc. agreed in or about November 1997 to eliminate this exclusivity clause, namely clause No. 30 (xxx) of the deed of sale, already alleged as Appendix D, for the mutual benefit of both parties; |
| 25. before signing a contract with Croisière 3D, Recherches et travaux maritimes RTM inc. thought it advisable to put this agreement in writing: accordingly, on January 16, 1998 the plaintiff and Recherches et travaux maritimes RTM inc. signed a letter of agreement cancelling all the exclusive territory clauses, as appears from the said agreement a copy of which is attached to the instant affidavit as Appendix 1; |
| 26. by cancelling all exclusivity clauses Recherches et travaux maritimes RTM inc. allowed Set-Ha to operate its ship in Cuba and Set-Ha thereby allowed Recherches et travaux maritimes RTM inc. to sell EXPLORATHOR type ships to Set-Ha's competitors, which might also operate them in the reserved territory; |
| 27. accordingly, no exclusivity clause exists between Recherches et travaux maritimes RTM inc. and Set-Ha; |
| 28. further, Recherches et travaux maritimes RTM inc. subsequently concluded an agreement with Croisière 3D which operated and is still operating an EXPLORATHOR type ship in the reserved territory with the full knowledge of Set-Ha, and has been doing so since the beginning of the 1998 season; |
| 29. additionally, Set-Ha operated its ship EXPLORATHOR CAPITAINE DUVAL III in Cuba during the winter of 1998 . . . |
[29] This being the situation, the plaintiff from the outset vigorously denied that this subsequent agreement was authentic. Referring to a series of factual points, it argued that the agreement [TRANSLATION] "was cooked up, backdated and signed after the proceedings at bar were instituted".
[30] The plaintiff further argued that the testimony of the defendant Thibeault on the circumstances surrounding this agreement is not exactly clear. Further, it added that in view of the contradiction of this document the defendant should have produced the original of the agreement in connection with this motion, not merely a photocopy. I entirely agree with the plaintiff on the last two points.
[31] Further, in an affidavit by its president the plaintiff gave the following clarifications as to the operation of an EXPLORATHOR by a third party in the territory covered by the clause and the operation of its ship in Cuba:
| [TRANSLATION] |
| 10. It is true that SET-HA used its ship EXPLORATHOR CAPITAINE DUVAL III in Cuba in the 1997-1998 winter season. However, SET-HA never relinquished the right of operating it from the port of Percé |
for the tourist season in that area. The ship in fact returned and was operated from the port of Percé in the 1998 tourist season.
| 11. It is also true that SET-HA allowed Croisière 3D to operate an EXPLORATHOR type ship from the port of Gaspé, as SET-HA did not have either the necessary equipment or the interest in operating a ship from that port. |
| 12. However, it is not true to say that SET-HA relinquished its exclusive right to operate its ship EXPLORATHOR CAPITAINE DUVAL III from the port of Percé, which was the very center of its commercial activities and the port of origin for all its cruises in the area. |
| 13. At no time did SET-HA relinquish its exclusive right to operate a vessel of this type from the port of Percé and until the arrival this season of the defendant ship EXPLORATHOR II at no time was an EXPLORATHOR type ship operated from that port by anyone but SET-HA. |
| 14. The market for whale excursions from the port of Percé is very limited and so the exclusive right to operate an EXPLORATHOR type ship is of crucial importance to the company. |
(My emphasis)
[32] The clarifications provided by the plaintiff are conceivable without it clearly following that elimination of the clause is the only way operations could have been permitted in the territory and in Cuba. These clarifications and the exact purpose of the clause will have to be the subject of a more exhaustive hearing. Accordingly, the Court cannot at this stage draw the conclusions contained in s. 221(1)(c) and (f) regarding the seizure warrant or the statement of claim.
Conclusion
[33] For the foregoing reasons, this motion by the defendants will be dismissed with costs. As requested, the Court sets at $130,000 the amount of the bail to be given by the defendants, as an alternative remedy requested by the defendants pursuant to the Rules to obtain release of the seizure of the ship EXPLORATHOR II.
| Richard Morneau Prothonotary |
MONTRÉAL, QUEBEC
September 15, 1999
Certified true translation
Martine Brunet
| Federal Court of Canada Trial Division Date: 19990915 Docket: T-1350-99 Between: SET-HA (DIVISION INTERNATIONALE) INC., Plaintiff, AND SYLVIO THIBEAULT and JULIEN CLOUTIER and THE SHIP "EXPLORATHOR II" and THE OWNERS AND ALL OTHER PERSONS HAVING ANY RIGHT IN THE SHIP "EXPLORATHOR II", Defendants. REASONS FOR ORDER |
FEDERAL COURT OF CANADA
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT FILE No.: T-1350-99
STYLE OF CAUSE: SET-HA (DIVISION INTERNATIONALE) INC.,
Plaintiff,
AND
SYLVIO THIBEAULT and
JULIEN CLOUTIER and
THE SHIP "EXPLORATHOR II" and
THE OWNERS AND ALL OTHER PERSONS
HAVING ANY RIGHT IN THE SHIP
"EXPLORATHOR II",
Defendants.
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: September 2, 1999
REASONS FOR ORDER BY: RICHARD MORNEAU, PROTHONOTARY
DATE OF REASONS FOR ORDER: September 15, 1999
APPEARANCES:
Louis Buteau for the plaintiff
Yves Derome for othe defendants
SOLICITORS OF RECORD:
Sproule, Castonguay, Pollack for the plaintiff
Louis Buteau
Montréal, Quebec
Langlois, Gaudreau, O'Connor for the defendants
Yves Derome
Québec, Quebec