Date: 20000721
Docket: T-926-00
Action in rem against the ships "MERAK" and "GORNOSTAEVKA"
BETWEEN:
CAMPBELL'S MEAT MARKET LIMITED
Plaintiff
- and -
THE SHIP "MERAK"
First Defendant
- and -
THE SHIP "GORNOSTAEVKA"
Second Defendant
- and -
ZAO BAZA FLOTA
Third Defendant
REASONS FOR ORDER
[1] The plaintiff applies to the Court for declaratory relief. It seeks declarations that:
| A ...The cargo of frozen shrimp in cartons ex the M.V. "Merak" (the "cargo") was not sold to and the property of F. Uhrenholt Seafood at the time of the arrest of the vessels the "Merak" and the Gornostaevka" and the cargo of the "Merak"; and |
| B further to A, the cargo was properly the object of arrest and that any proceeds resulting from sale of said cargo should be applied against the claims of any bona fide claimant in accordance with the priorities under maritime law. |
[2] When the application came on for hearing in St. John's, Newfoundland, on July 6, 2000, a second motion, to intervene and requesting similar declaratory relief, was heard at the same time. The motion to intervene was allowed upon consent of the plaintiff and without objection on behalf of other parties represented at the hearing. The second motion, to intervene and for relief similar to that sought by the plaintiff, was brought by Alexandr Petrenko and 20 other persons, who were the crew of the M.V. "Merak" and who are plaintiffs in a second action (T-1010-00) whereby a warrant was issued for arrest of the M.V. "Merak" and her cargo, and for arrest of the ship "Gornostaevka" based on a claim for unpaid seamen's wages. After this action by the crew was commenced in June, the ships were arrested and attempts were said to be made, unsuccessfully, to serve the statement of claim in this second action in relation to the proceeds of the sale of the frozen shrimp cargo of the "Merak".
[3] Also represented at the hearing of the plaintiffs' motion were Electro Mechanical Services Ltd., Icedan (Canada) Inc. and O.W. Uthasfolia EHF/O.W. Bunker & Trading, plaintiffs in other actions against the vessels "Merak" and Gornostaevka" (respectively, Court files T-1018-00, T-1019-00, T-1073-00 and T-1074-00), which claim to have provided goods and/or services to the ships for which they say they have not been paid. Finally, O.K. Enterprises Ltd., was represented as a respondent in this application. It was the successful applicant early in June, 2000, for an order releasing the shrimp cargo in issue, on certain conditions.
[4] The background requires brief explanation. The plaintiff Campbell's action (T-926-00) was initiated by statement of claim and warrant of arrest issued on May 25, 2000 in relation to the two ships, then at Holyrood, Newfoundland. The vessels were served on May 25 with the warrant and statement of claim, effecting their arrest. The frozen shrimp cargo on board the "Merak" was in process of being unloaded on May 25, when the ships were arrested at approximately 6 p.m. Thereafter, the balance of the cargo was unloaded and on the following day, May 26, shortly before noon, that cargo, then in cold storage facilities of Seaxx Ltd. at Holyrood, was arrested.
[5] O.K. Enterprises Ltd. then brought an application for an order to release "a portion" of the arrested property consisting of 97,929 kg. (97,929 m.t.) of frozen shrimp in cartons ex the M.V. "Merak" for delivery to the buyer of the cargo. O.K. Enterprises Ltd., a body corporate with its address in Nassau, Bahamas, is said by the supporting affidavit sworn by Nicholas Ogransky, of New York, USA, a director of the company, to be the charterer of "Merak" and the "Gornostaevka" under bareboat charters from "Zoa Baza Flota (the owners)" of the two vessels. The basis of the claim by O.K. Enterprises Ltd. was that it was the owner of the cargo produced by the fishing vessel "Merak" which it had sold to a Danish company on May 24th, 2000, prior to the arrest of the ship. The order sought by O.K. Enterprises was for release of the cargo for delivery to the Danish buyer.
[6] The application for release of the cargo was heard as an urgent matter, by telephone conference by Mr. Justice Dubé, presiding at Ottawa, on June 2, 2000. In a written reply to the motion by O.K. Enterprises Ltd. the plaintiff Campbell's asserted that there was a factual dispute as to the timing of the sale of the frozen shrimp cargo which in its view required a full hearing, but it agreed that the cargo be delivered to the purchasers on condition that proceeds of the sale of the cargo be held by the Court or at its direction, pending resolution of the dispute regarding timing of the sale.
[7] In the result Mr. Justice Dubé ordered on June 2, 2000 that
| The motion for release is granted but the proceeds of the sale will be remitted to the Federal Court for remittance to O.K. Enterprises Ltd. in ten (10) days unless the plaintiff has informed the Court within that period that it intends to challenge the validity and the timing of the sale. The Registry is hereby instructed to forward a copy of these Reasons and Order forthwith to all interested parties including the purchaser F. Uhrenholt Seafood A/S of Middlefart, Denmark. |
In Reasons for Order issued June 2 with the Order, Dubé, J. commented, in part:
| (3) The applicant O.K. Enterprises Ltd. claims that shortly before the vessels were arrested the cargo of frozen shrimps was discharged and sold to F. Uhrenholt Seafood A/S of Middlefart, Denmark. Obviously, if the sale was completed before the arrest of the vessel, that cargo should be released and I intend to order such a release. |
| (4) However, should the plaintiff, now having heard counsel for the applicant at this hearing, still claim that the sale was invalid, it is entitled to pursue the matter in Court other than by this urgent telephone conference. Consequently, I will order that the shrimp cargo be released forthwith and delivered to the purchasers in Denmark, but that all proceeds from the sale be deposited in Court pending the resolution of the dispute regarding the timing and the validity of the sale. Should the plaintiff intend to pursue this matter it will so inform the Court within 10 days and seek for directions. If the plaintiff fails to do so within that period, the proceeds of the sale will be remitted to the applicant O. K. Enterprises Ltd. |
(5) Consequently, the motion for release is granted under these conditions.
[8] In the course of the telephone conference on June 2, 2000, and subsequently by written order, Mr. Justice Dubé allowed a second motion by O.K. enterprises Ltd., the "Charterer", with consent of the plaintiff, to permit the "Gornostaevka" to be moved from Holyrood to Bay Roberts, Newfoundland, to enable necessary mechanical repairs to be made to the vessel.
[9] Release of the frozen shrimp cargo was effected in accord with the order of June 2, but thereafter the proceeds of the sale were not paid into Court. Upon further inquiry of the court, on June 8 Mr. Justice Dubé directed to all parties interested in this action:
| "My Order of June 2, 2000 states very clearly that the cargo of shrimps sold before the arrest of the vessel is to be released and the proceeds of the sale to be deposited in the Federal Court. |
| That Order was forwarded to all parties, including the purchaser of said cargo. should the Plaintiff intend to challenge the validity or the timing of the sale he must do so within ten (10) days of the Order, otherwise the proceeds of the sale shall be released to O.K. Enterprises Ltd. |
| Of course, the two vessels are still under arrest and will not be released until all valid claims are satisfied. |
| There is no need for an emergency teleconference to clarify my Order." |
[10] On June 9, the plaintiff, by writing, informed the Court of its intention to challenge the timing and validity of the sale of the cargo of the "Merak". By further direction, on June 9, Mr. Justice Blais directed that this matter should be brought before the Court by motion. When filed, the plaintiff's motion was set down for hearing on July 6, 2000 and, as indicated earlier in these Reasons, also set for hearing was the motion on behalf of the crew, plaintiffs in Court action T-1010-00, to intervene in this matter and for declaratory relief similar to that sought by the plaintiff.
[11] Also brought forward for hearing on July 6 was a motion, filed July 4, 2000, but not then served, by Natco Seafood Trade Company Limited, to intervene in this action as it relates to the arrest of the M.V. "Gornostaevka". Notice was also given to the Court that similar motions would be filed in relation to the other actions which related to that vessel. The applicant, claims to be the bareboat charterer of the "Gornostaevka" from the charterer Zoa Baza Flota, a body corporate, which had chartered the vessel from its owner, said to be PPP Yugrybpoisk, based at Kerch in the Crimea, Ukraine.
[12] I note this motion is supported by the affidavit of Nicholas Ogransky, sworn June 27, 2000, who claims to be a director of Natco. This would appear to be the same Nicholas Ogransky, whose first affidavit, sworn May 29, 2000, was in support of the motion for release of the cargo, and who has filed a supplementary affidavit, sworn June 15, 2000, in support of the response by O.K. Enterprises to the plaintiff's motion, urging that the arrest of the cargo is void. That supplementary affidavit reiterated all the averments in the earlier affidavit, in which he had sworn he was a Director of O.K. Enterprises Ltd., a corporation with an address that appears the same as that of Natco, and that O.K. Enterprises Ltd. was the bareboat charterer of the two fishing vessels, "Merak" and "Gornostaevka" under charters entered into with "Zoa Baza Flota (the 'owners')" of the vessels.
[13] None of the plaintiff, the crew of the "Merak" as intervener, nor counsel for other claimants against the vessels, were prepared to deal with the motion of Natco, which was brought forward on short notice. Any discussion of the Natco motion was adjourned, to be heard by personal appearance or by telephone, as may be scheduled by the office of the Associate Chief Justice.
[14] I turn to the issues concerning the alleged sale of the cargo of frozen shrimp on board the "Merak" which was off-loaded at Holyrood and placed in cold storage on May 25, 2000, the cargo released to the purchaser by order of Dubé J. on June 2.
[15] When the application for release of the cargo was heard by Dubé J. evidence in support of that motion, by sworn affidavit of Nicholas Ogransky, was that after arrival of the two ships at Holyrood on or around May 14, 2000, on behalf of O.K. Enterprises Ltd., the charterers, and owners of the ships' cargoes, he had arranged for sale of the cargo of frozen shrimp on board the "Gornostaevka" to F. Uhrenholt Seafood A/S, of Denmark. Subsequently, at the request of the same purchaser, he arranged for an inspection by sampling of the cargo on board the "Merak", which was undertaken on May 24th by an independent inspector. Later on that same day he was advised the frozen shrimp were acceptable, and an offer to purchase was made by the same purchaser, F. Uhrenholt Seafood A/S. Ogransky authorized sale of the entire cargo of the "Merak", a specified amount for a unit price, and a total price, with arrangements being concluded for him, with the buyer, by Harbour International Ltd., of Bay Roberts, Newfoundland. Ogransky avers that on May 24th, upon his direction and with his authority the cargo was discharged from the "Merak" and placed in cold storage at Holyrood. That date would appear to be in error.
[16] On June 2, before Mr. Justice Dubé, the plaintiff"s position supported by the affidavit of a company representative, was that the "Merak" was not unloaded until May 25, when the ship was arrested late in the afternoon and the off-loading activity was suspended, to be completed later that evening. The plaintiff disputed the timing and validity of the alleged sale, in part on this factual error and in part on the form of some documents advanced to the Court by Mr. Ogransky's affidavit for O.K. Enterprises.
[17] At the hearing on July 6 the plaintiff's motion was supported by the affidavit of Paul Campbell, a director of the plaintiff company, whose evidence was that his company had dealt with Nicholas Ogransky and his partner, Leonid Kaminsky, who indicated they were the owners of the two vessels and whom he believed also owned the cargoes. He had not heard of O.K. Enterprises Ltd. or that the vessels were subject to any charter arrangements prior to learning of the motion to release the cargo. Further on May 25, 2000 when the vessels were arrested he spoke with Ogransky who told him that he was seeking funding to pay the plaintiff's account and was trying to find a buyer for the cargo of shrimp on the M.V. "Merak". By his affidavit in response Ogransky denies he told Campbell on May 25 that he was trying to find a buyer for the cargo and he further denies any discussion with Campbell about sale of the shrimp.
[18] On the basis of Campbell's affidavit the plaintiff urges that the Court find that no sale took place until after May 25, and thus the cargo was subject to the plaintiff's warrant of arrest. The plaintiff also fully supports the submission on behalf of the crew, as outlined below. Further, the plaintiff urges that any evidence purporting to be from the purchaser F. Uhrenholt Seafood A/S, that is, a copy of its offer to purchase the shrimp and of a letter dated June 13, 2000 addressed "To whom it may concern" which are exhibits to the supplementary affidavit of Nicholas Ogransky, dated June 15, 2000, are mere hearsay and are not supported by the sworn affidavit of the purchaser's representative. While this is the case, those documents are before the Court as exhibits to the sworn supplementary affidavit of Ogransky, and there is no evidence that the documents are not authentic, whatever the weight to be assigned to them.
[19] For the crew of the "Merak" it is urged that the sale of the frozen shrimp cargo was not effected until after a warrant of arrest was served on the cargo on May 26. That submission is supported by the affidavit of Gueorgi Skhirtladge, ship's agent with Altamar Atlantic Ltd. of St. John's, who had dealings in respect of the cargo. He avers that in an exchange of correspondence, from him to Mr. Erroll Peddle of Harbour International Ltd. acknowledged by signature of Nicholas Ogransky, and a reply on behalf of Mr. Peddle, both letters dated May 25, 2000, reference is made to payment for off loading the cargo and for its storage to be made after the sale of the cargo and prior to its shipment from cold storage. The Court is urged to infer that on May 25th no contract for sale of the goods was in place.
[20] The major argument on behalf of the crew, supported by the plaintiff is that the discharge report from Harbour International, recording the cargo discharged from the "Merak" as frozen industrial shrimp in cartons, by size of shrimp, number of cartons and weight, is dated May 26, 2000. It is urged that no purchase would be complete until this information was available. The Court is asked to infer, as a rule of good business practice, that parties to the sale, in particular the purchaser, would require assurance of the size of shrimp and the total weight before the contract was complete in order to know the total price calculated by the unit price in the purchaser's offer. It is urged that the contract, subject to the sale of Goods Act, of Newfoundland, is one for specific goods, and pursuant to s. 19 of that Act (RS.N. 1990.c. S-6) it is the intention of the parties to the contract which determines when the sale is complete, ie. when property in the goods passes to the purchaser.
[21] In my opinion, the sale is governed by the Newfoundland Act, but on the evidence it was completed and property in the cargo passed to the purchaser on May 24, 2000, before the ship "Merak" was arrested and before the warrant of arrest was served on the vessels or upon the cargo in question. That evidence is provided by the affidavits of Nicholas Ogransky and Erroll Peddle. The former in his affidavit of May 29, sets out steps undertaken to sell the cargo of frozen shrimp aboard the "Merak", including arrangements for inspection of the cargo on May 24th, and that on the same day he agreed to sell the entire cargo, and arranged for Harbour International to conclude arrangements with the buyer. In his supplementary affidavit sworn June 15, Ogransky exhibits a purchase order, undated, from F. Uhrenholt Seafood A/S of Denmark, to O.K. Enterprises Ltd. which commences "We confirm having bought from you on the 24th of May 2000", and it then sets out the numbers of cartons for each of two sizes of "N. Atl. industrial shrimp" in the same numbers as in the Discharge Report issued on May 26, but with different numbers than appear in the Discharge Report for the quantity or weight for each size of shrimp and for the total weight.
[22] Ogransky's supplementary affidavit also exhibits a letter from the purchaser, dated June 13, 2000, confirming that:
| We F. Uhrenholt Seafood A/S hereby confirm that on May 24th, 2000, we agreed to purchase all the cargo of frozen shrimp from the M.V. Merak" at a price of USA 950/mt. From that point of time it is our understanding that the shrimp was belonging to F. Uhrenholt Seafood A/S. ... |
[23] As I have earlier noted, there is no evidence that the documents signed on behalf of the purchaser i.e. the original offer, the purchase order, and the letter of June 13, are not authentic. They are offered in support of the statement of Ogransky that the contract of sale was completed on May 24. That is the only direct evidence on the issue, it comes from both parties to the transaction.
[24] In my opinion, the contract for sale/purchase of the frozen shrimp on board the "Merak", concluded following inspection, was completed on May 24, and it was a contract for sale of the entire cargo of the "Merak" consisting of two specified sizes of industrial shrimp in cartons at a unit price, by weight, for both sizes of shrimp. Whether the numbers of cartons by size of shrimp or the total actual weight of the cargo, were known on May 24 from inventory records of the vessel is not in evidence but completion of the contract, in my opinion, was not dependant upon confirmation of those exact numbers when the cargo was discharged.
[25] This conclusion is supported by the supplementary affidavit of Erroll Peddle, Director of Operations of Harbour International Limited, of Bay Roberts, who, acting for his company at the request of Nicholas Ogransky of O.K. Enterprises Ltd. to assist in selling the cargo, arranged for the independent inspection of the cargo on May 23 and 24. Thereafter, he was advised by F. Uhrenholt Seafood Ltd. that the inspection was satisfactory. He subsequently made arrangements on behalf of the purchaser for temporary storage at Holyrood, and later for onward transport of the cargo to a processing plant in Nova Scotia. Mr. Peddle affirms by his affidavits, that the services rendered by his company are a matter of common practice in the industry and the procedure followed in connection with the sale of shrimp ex. "Merak" to F. Uhrenholt Seafood A/S Ltd. concluded the purchase from O.K. Enterprises and thereafter the Danish purchaser was the owner of the shrimp cargo.
[26] I conclude that the intent of the parties to the sale, consistent with industry practice, was that the contract was completed, and property in the shrimp cargo passed to the purchaser on May 24, 2000. After that it was not the property of the vessel owner, or its charterer whoever that might be, or of O.K. Enterprises Ltd., whatever its relation to the vessel may have been.
[27] For these reasons I dismiss the application of the plaintiff for particular declaratory relief and of the crew of the "Merak", as Intervenors, for similar relief.
[28] I note that there was no argument at the hearing of these matters that in the circumstances of this case the claims of the crew should be given priority against the cargo, which was the product of the crew's labour, regardless of ownership of the shrimp. Further, there was no argument about the failure of O.K. Enterprises Ltd., to pay the proceeds of the sale of the cargo into Court pursuant to the Order of Dubé, J. The Respondent, O.K. Enterprises Ltd. did ask in its written response that the Court declare the arrest of the cargo by the plaintiff void, but this was not raised directly at the hearing, and I decline to so declare without having heard argument. These matters are left, possibly to be raised another day.
[29] None of the parties in attendance asked for costs. No costs are awarded and each party will bear its own costs. Separate orders go, dismissing the plaintiffs' application; allowing the application to intervene by the crew members but dismissing their application for declaratory orders similar to those sought by the plaintiffs; and adjourning the application by Natco for leave to intervene and for an Order vacating the arrest of the M.V. "Gornostaevka".
"W. Andrew MacKay"
Judge
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
| DOCKET: T-926-00 |
| STYLE OF CAUSE: Campbell"s Meat Market Ltd. v. Ships |
"Merak" and "Gornostaevka" et al
| PLACE OF HEARING: St. John"s, Newfoundland |
| DATE OF HEARING: July 6, 2000 |
| REASONS FOR ORDER: MacKay, J. |
| DATED: July 21, 2000 |
APPEARANCES:
Kimberley M. McLennan for Plaintiff
V. Randell J. Earle for Intervenor
C. Strickland for Interested Party(1)
D. Moores for Defendant
F. Layte for Interested Party (2)
SOLICITORS OF RECORD:
Chalker and Company
Kelligrews Professional Building
P.O. Box 237
Kelligrews, NF
AOA 2TO for Plaintiff
O"Dea, Earle
323 Duckworth Street
P.O. Box 5955
St. John"s, NF
A1C 5X4 for Intervenor
Stewart McKelvey Stirling Scales
Cabot Place, 100 New Gower Street
P.O. Box 5038
St. John"s, NF
A1C 1GO for Interested Party (1)
Moores, Andrews
Conception Bay Highway
P.O. Box 806
Bay Roberts, NF
AOA 1GO for Defendant
Patterson Palmer
Scotia Centre
1000 - 235 Water Street
P.O. Box 610, Station C
St. John"s, NF
A1C 5L3 for Interested Party (2)