Date: 19990312
Docket: A-307-97
CORAM: DESJARDINS J.A.
LÉTOURNEAU J.A.
NOËL J.A.
BETWEEN:
| THIERRY VAN DOOSELAERE and FRANS G.A. 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" |
Appellants
| AND: |
| HOLT CARGO SYSTEMS INC. |
Respondent
| AND: |
| SOCIETE NATIONALE DE CREDIT A L"INDUSTRIE S.A. |
Intervenor
Heard at Halifax, Nova Scotia, on Monday, March 8, 1999 and
on Friday, March 12, 1999
Judgment delivered from the Bench at Halifax, Nova Scotia,
on Friday, March 12, 1999
| REASONS FOR JUDGMENT OF THE COURT BY: NOËL J.A. |
Date: 19990312
Docket: A-307-97
CORAM: DESJARDINS J.A.
LÉTOURNEAU J.A.
NOËL J.A.
BETWEEN:
| THIERRY VAN DOOSELAERE and FRANS G.A. 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" |
Appellants
| AND: |
| HOLT CARGO SYSTEMS INC. |
Respondent
| AND: |
| SOCIETE NATIONALE DE CREDIT A L"INDUSTRIE S.A. |
Intervenor
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Halifax, Nova Scotia
on Friday, March 12, 1999)
NOËL J.A.
[1] This is an appeal from a decision of MacKay J.1 wherein he refused to forgo the exercise of his jurisdiction to enforce a maritime lien on the ship "Brussel" which had been arrested by the respondent in Canadian waters. According to the appellants, the duty to act in comity and the doctrine of forum non conveniens compelled MacKay J. to stay the matter before him so as to allow the Belgian Commercial Court to dispose of the respondent"s claim in the context of the bankruptcy proceedings initiated under Belgian law against the owners of the "Brussel."2
[2] In our view, it has not been shown that MacKay J. erred in law in exercising his discretion to enforce the respondent"s lien despite the pending bankruptcy proceedings in Belgium.
[3] Amchem Products Inc. v. B.C. (W.C.B.)3 is the leading case on comity. In it, the Supreme Court adopts the definition of comity approved by La Forest J. in Morguard Investments Ltd. v. De Savoye:4
| "Comity" in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws ... [my emphasis] |
[4] It is clear on the basis of the evidence before the trial judge that the respondent stands to derive a distinct legal advantage if its claim is determined by the Trial Division of this Court under its maritime law jurisdiction.5 Legal advantage accruing under Canadian law but not under the laws of the proposed forum is one factor amongst others to consider in determining whether a Canadian court should defer to a foreign court.6 Where, however, legal advantage arises in the normal course, otherwise than as a result of forum shopping, this factor takes on considerable significance. As was stated by the Supreme Court in Amchem:7
| The weight to be given to juridical advantage is very much a function of the parties' connection to the particular jurisdiction in question. If a party seeks out a jurisdiction simply to gain a juridical advantage rather than by reason of a real and substantial connection of the case to the jurisdiction, that is ordinarily condemned as "forum shopping". On the other hand, a party whose case has a real and substantial connection with a forum has a legitimate claim to the advantages that that forum provides. The legitimacy of this claim is based on a reasonable expectation that in the event of litigation arising out of the transaction in question, those advantages will be available. [my emphasis] |
[5] While in rem actions by their nature invite forum shopping,8 this was not found to be the case in this instance. The arrest of the ship took place in Canadian waters before the bankruptcy proceedings had been initiated because that is where the ship happened to be at the time.9 Having arrested the ship where it was found, the respondent could legitimately expect that Canadian maritime law would apply. In the words of the Supreme Court, the respondent"s claim had a "real and substantial connection" with Canadian maritime law and there was a "reasonable expectation" that the rights arising thereunder would be enforced.
[6] After recognizing and adhering to the notion of judicial comity with respect to the proceedings before him,10 but after finding as a fact that the respondent"s claim to the benefits of Canadian law did not result from forum shopping,11 the trial judge held that there were:
| ... no persuasive grounds that would warrant the action proposed by the [appellants], that is, to stay its own processes which were then underway, and to permit determination of the outcome to be effectively left to the bankruptcy proceedings of the Commercial Court at Antwerp, ... 12 |
[7] In the course of his judgment, the trial judge also noted that he had no evidence about the likely fate of the respondent"s claim under Belgian law. While a loss of preference had to be inferred, there was no indiction whatsoever as to the rank of the claim or the pro-rata recovery which the respondent could expect and hence no basis upon which the trial judge could evaluate the impact of his decision.13
[8] Having regard to the evidence which was before the Court, including the uncontested finding that the respondent"s heightened rights under Canadian law accrued to it in the normal course,14 it has not been shown that MacKay J. erred in law or misconstrued the teachings of the Supreme Court in exercising his discretion in favour of the respondent.
[9] The appellants further alleged during the hearing that the trial judge erred in law when he referred to the process governed by the Canadian Bankruptcy and Insolvency Act to highlight the peaceful co-existence between Canadian Superior Courts exercising their bankruptcy jurisdiction and the Federal Court exercising its jurisdiction in admiralty matters.15 According to the appellants, this ignores the fact that this is a bankruptcy governed by foreign law which calls into play a greater need for comity.
[10] Recognizing that bankruptcy proceedings under foreign law involving Canadian assets invite a coordinated approach, we do not believe that MacKay J. can be said to have erred in law when he drew an analogy with the treatment of domestic bankruptcies. Comity is not restricted to instances involving foreign tribunals. A duty of comity also extends to domestic courts.16 It is therefore significant that domestically at least, the secured nature of maritime liens has always been maintained in the context of bankruptcy proceedings without the need for either of the two jurisdictions to supersede one another.
[11] Indeed, Mr. Justice Guthrie of the Quebec Superior Court in the decision that he delivered, states that he looked for, but was "... unable to find any Canadian jurisprudence where there has been a clash between the jurisdiction of a court sitting in bankruptcy matters and a court sitting in admiralty matters concerning a creditor with a claim in rem against a ship located within Canada."17 This is most telling; it can only mean that a coordinated approach has in fact developed over the years between the two jurisdictions and begs the question as to why this approach has not prevailed in this instance.
[12] It is undisputed that the Trial Division of the Federal Court had jurisdiction to receive and dispose of the claim made by the respondent. Yet, by seeking an ex parte order from Halperin J. of the Quebec Superior Court enjoining the Federal Court to release the arrested ship and, therefore, to cease to exercise its jurisdiction, the appellants launched what is in effect a collateral attack on MacKay J."s decision.
[13] Indeed, the appellants were asking the Quebec Superior Court, which did not have jurisdiction in the pending maritime law proceedings, to issue an order prohibiting another court, acting squarely within its jurisdiction, from exercising it. In our view, the appellants, rather than seeking a stay of proceedings before the Federal Court on the basis of the release order issued by the Quebec Superior Court, should have proceeded as the moving party did in the Soledad Maria case18 which also involved an international bankruptcy and the arrest of a ship in Canadian waters, that is to say, the appellants should have immediately sought the assistance of the Federal Court which is the only Court that had jurisdiction over the arrested ship and the respondent"s in rem claim.19
[14] For these reasons, the appeal will be dismissed with costs against the appellants.
"Marc Noël"
J.A.
__________________1Now reported at [1997] 3 F.C. 187 [hereinafter Holt Cargo].
2The appellants raised other objections against the judgment appealed from in their Memorandum of Fact and Law but these were not pursued during the hearing of the appeal.
4[1990] 3 S.C.R. 1077 at 1096.
5Counsel for both parties concede so much it being unlikely that the respondent"s in rem rights could subsist in one form or another under Belgian bankruptcy laws.
6The ultimate consideration being the identification of the most convenient forum for both "the pursuit of the action" and "for securing the ends of justice." See Antares Shipping v. The Ship "Capricorn" [1977] 2 S.C.R. 422 per Ritchie J. at 448 as quoted in Amchem , supra note 3 at 919.
8See the statement of Lord Simon in The Atlantic Star (1973), 2 All. E.R. 175 as quoted by Ritchie J. in Antares, supra note 3 at 453.
9Holt Cargo, supra note 1 at 215.
13In the words of the trial judge: "... there was simply no evidence of the comparative status of the plaintiff"s claim under Belgian and Canadian laws." Holt Cargo, supra note 1 at 227.
14i.e. otherwise than by forum shopping.
15Holt Cargo, supra note 1 at 228. See for instance Coastal Equipment Agencies Ltd. v. The Ship "Comer" [1970] Ex.C.R. 13, Ultramar Canada Inc. v. Pierson Steamships Limited et al. (1982) 43 C.B.R. (N.S.) 9 (F.C.T.D.).
16Morguard Investments Ltd., supra note 4, involved comity as between the Courts of Alberta and British Columbia.
17Reasons for Judgment, Guthrie J., Appeal Book, p. 252.
18Magnolia Ocean Shipping Corporation v. The Ship "Soledad Maria," [1982] 1 F.C. 205 (T.D.).