Ottawa, Ontario, September 1, 2006
PRESENT: The Honourable Mr. Justice Barnes
BETWEEN:
CANADIAN SUB SEA HYDRAULICS LIMITED
and
THE OWNERS AND ALL OTHERS INTERESTED
IN THE SHIP "CORMORANT"
REASONS FOR ORDER AND ORDER
[1] This proceeding concerns a claim by the Plaintiff, Canadian Sub Sea Hydraulics Limited, against the Defendant as owner of the ship “Cormorant”, for unpaid charges arising from the provision of goods, services and materials necessary for the ship’s protection, wharfage and maintenance.
[2] It appears to be the case that the parties entered into an arrangement whereby the Plaintiff was to look after the Cormorant on behalf of the Defendant from early 2002 to late 2004. During most of that time, the Cormorant was berthed at Bridgewater, Nova Scotia at a wharf facility owned by the Artificial Reef Society. The Plaintiff’s Statement of Claim alleges that the Defendant’s outstanding obligation is in the amount of $109,209.47 together with interest of $2,076.95.
[3] On March 31, 2005, the Cormorant was arrested on behalf of the Plaintiff by the Sheriff at Bridgewater, Nova Scotia, under a Warrant issued by this Court on March 23, 2005.
[4] The Defendant brought two motions before the Court. It seeks to amend its Defence by adding a Counterclaim and it requests that the Court set bail to allow for the eventual release of the ship pursuant to Rule 485 of the Federal Courts Rules.
[5] The Plaintiff has advised the Court by letter from its counsel that it takes no position with respect to the Defendant’s motion to amend. I am satisfied that the proposed amendment is appropriate. The Defendant’s new allegations are said to arise from an investigation carried out on its behalf which, it says, gave rise to information that was unknown at the time of filing its Defence. The amendment motion is also brought before the exchange of documents and examinations for discovery and the Plaintiff does not assert any prejudice. The Defendant’s motion to amend by adding a proposed Counterclaim to its Defence is, therefore, allowed without costs.
[6] The Defendant’s motion to fix bail for the release of the Cormorant is challenged by the Plaintiff with respect to quantum. The Defendant asserts that bail should be set at a nominal amount. The Plaintiff says that bail should be fixed for the face amount of its claim plus a provision for costs.
[7] The setting of bail for the release of a ship under arrest should ordinarily be straightforward. That is so because the fixing of bail is based upon the principle that a plaintiff has a right to security measured by its reasonably arguable best case capped at the value of the vessel: see Striebel v. Sovereign Yachts (Canada) Inc., 2002 FCT 995; 225 F.T.R. 146, at para. 14. Because the Court is not in a position on such a motion to try the merits of the case, the Plaintiff’s reasonably arguable best case will often be the amount it asserts to be owing in its Statement of Claim: see Striebel, at para. 15.
[8] All of this is not to say that the Court cannot or should not attempt to assess the reasonableness of the Plaintiff’s claim. In Atlantic Shipping (London) Ltd. v. Ship Captain Forever et al. (1995), 97 F.T.R. 32, Prothonotary John Hargrave canvassed the relevant authorities and concluded that, where special circumstances exist (such as a claim with major uncertainties or which is clearly exorbitant), the amount of bail can be set for a sum that does not correspond with the plaintiff’s stipulated claim.
[9] This Court has, with some frequency, set bail for amounts less than the full face amount of a plaintiff’s pleaded claim based on a preliminary assessment of the evidence and law: see Striebel, above; Pan Ocean Shipping Co. v. Breeze Navigation Ltd., 2003 FCT 56; 120 A.C.W.S. (3d) 7; and Amican Navigation Inc. v. Densan Shipping Co. et al. (1997), 137 F.T.R. 132.
[10] The attachment of a standard of reasonableness to the determination of what will constitute a plaintiff’s best day in court requires, to the extent that the evidence allows, that the Court independently evaluate the plaintiff’s claim and set bail accordingly. It is clear from the authorities that it is open to the Court to consider any evidence that is available to the parties and bearing on the merits of the plaintiff’s claim; however, it may be necessary for the Court to adopt a “rough and ready” approach if the evidence available for consideration is incomplete: see Striebel, above at para. 19. On the other hand, the Court should avoid speculation: see Amican, above, at para. 16.
[11] Ordinarily in a case like this one involving allegations of unpaid invoices for the provision of measurable goods and services, bail will be set at or near the full face amount of a plaintiff’s claim. Here, however, the Defendant has placed before the Court a detailed Affidavit from its local Nova Scotia agent, John Kenney, making allegations against the Plaintiff involving overcharging of wharfage and other fees, inadequate protection and maintenance of the ship and its components, damaged and missing equipment, unexplained disappearance of fuel, evidence of an illicit on-board drug laboratory, poor record-keeping and troubling conversations with witnesses bearing on some aspects of the Plaintiff’s conduct. These allegations form the basis of the Defendant’s current Counterclaim against the Plaintiff and, on this motion, they were not challenged or contradicted by any evidence submitted on behalf of the Plaintiff.
[12] The Plaintiff took the position before the Court that it could safely rely upon its pleadings and elected not to confront the Defendant’s factual allegations at this stage of the proceeding. The Plaintiff also failed to file a Brief with the Court to outline its legal position on the motion. This leaves the Court with a number of very serious allegations of misconduct on the part of the Plaintiff which stand unchallenged. Given the specificity of Mr. Kenney’s Affidavit, I have serious reservations about the Plaintiff’s ability to prove its claim to the full extent pleaded. In circumstances where the Plaintiff elected not to confront these allegations, the only evidence I have for consideration is that offered by the Defendant.
[13] In setting bail for the release of the Cormorant, I am not prepared to ignore the Defendant’s allegations in the determination of the Plaintiff’s reasonably arguable best case. Based on the evidence before me, I think it unlikely that the Plaintiff will succeed to the full amount of its asserted claim. I will fix bail for the release of the ship at one half of the amount of the Plaintiff’s claim as pleaded plus $5,000.00 for costs. With an adjustment for interest since the Statement of Claim was filed, the amount of bail in connection with the Plaintiff’s claim against the Defendant is fixed at $65,000.00.
[14] A number of third-party caveats remain outstanding in connection with other claims pertaining to the Cormorant. The vessel remains under arrest in connection with at least one of those third-party claims. Until all of those claims are satisfied or released, the Cormorant obviously cannot be released to the Defendant notwithstanding the posting of bail in conformity with these reasons.
[15] In as much as this is a preliminary determination and both parties achieved some success, I will order costs in the cause.
ORDER
THIS COURT ORDERS that the amount of bail to be posted by the Defendant for the release of the ship “Cormorant” in connection with the Plaintiff’s claim herein is fixed in the amount of $65,000.00
THIS FURTHER COURT ORDERS that the costs of this motion to fix bail shall be costs in the cause.
THIS FURTHER COURT ORDERS that the Defendant shall have leave to file an amended Defence and Counterclaim in the form annexed hereto as Schedule “A”.
FEDERAL COURT
SOLICITORS OF RECORD
DOCKET: T-550-05
STYLE OF CAUSE: CANADIAN SUB SEA HYDRAULICS LIMITED v. THE OWNERS AND ALL OTHERS INTERESTED IN THE SHIP “CORMORANT”
PLACE OF HEARING: Halifax, Nova Scotia
DATE OF HEARING: August 17, 2006
APPEARANCES:
|
Mr. Thomas E. Hart
|
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Mr. Frederick J. Constantine
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SOLICITORS OF RECORD:
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McInnis Cooper Halifax, Nova Scotia
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Patterson Palmer St. John’s, Newfoundland and Labrador |