Judgments

[1995] 3 F.C. 68

A-215-95

Feoso Oil Limited (Plaintiff) (Appellant)

v.

The Owners and All Others Interested in the Ship “Sarla” (Defendants) (Respondents)

Indexed as: Feoso Oil Ltd. v. Sarla (The) (C.A.)

Court of Appeal, Marceau, Stone and Linden JJ.A.—Vancouver, May 23; Ottawa, June 5, 1995.

Practice — Judgments and orders — Summary judgment — Appeal from Motions Judge’s decision allowing to proceed application for summary judgment dismissing claim in admiralty action in rem on ground no genuine issue of fact — RR. 432.1 to 432.7, governing procedure for obtaining summary judgment, intended to save time, expense of trial where claims or defences without foundation — Moving party required to satisfy Court no genuine issue for trial — Responding party to file evidence setting out facts showing genuine issue — Both sides to file evidence reasonably available on issues raised by pleadings and from which Court can determine whether genuine issue for trial — Respondents’ evidence not disproving appellant’s assertion fuel for ship’s operation ordered by owners, agents — Genuine issue of fact.

Maritime law — Contracts — Whether contractual relationship — Appeal from decision to allow to proceed application for summary judgment dismissing claim in admiralty action in rem — Action in rem sustainable only where goods or services provided to defendant ship at request of owners or someone acting on their behalf — Respondents providing marine gas oil, bunkers to ship for its operation — As unclear whether ordered by owners or agent, or out of necessity by master acting with actual or apparent authority, motion for summary judgment should not proceed as genuine issue of fact to be resolved at trial.

This was an appeal from the Motions Judge’s decision to allow the respondents’ motion for summary judgment dismissing the plaintiff’s claim in this admiralty action in rem to proceed on the ground that there were no genuine issues of fact. The defendant ship was arrested on the strength of an affidavit deposing that marine gas oil and fuel oil (bunkers) had been delivered to the defendant ship for its operation. The bunkers had been ordered by a broker. The plaintiff/appellant alleged, and the defendants/respondents denied, that the bunkers were ordered by or on behalf of the owners.

Rules 432.1 to 432.7 govern the procedure for obtaining summary judgment. Rule 432.3(1) provides that where a judge is satisfied that there is no genuine issue for trial, the judge shall grant summary judgment. Rule 432.3(4) provides that the judge may grant summary judgment where there is a genuine issue unless the judge is unable to find the facts necessary to decide the questions of fact or law or the judge considers that it would be unjust to decide the issues on the motion for summary judgment. Rule 432.2(1) provides that a responding party may not rest on the mere allegations or denials of the party’s pleadings, but must set out in affidavit material or other evidence, specific facts showing there is a genuine issue for trial.

According to Federal Court Act, paragraph 22(2)(m) and subsections 43(2) and (3), the right to proceed in rem for a claim falling within paragraph 22(2)(m) exists only if at the time the action is commenced the ship is beneficially owned by the person who was the beneficial owner at the time the cause of action arose. Only where the owners of a ship have incurred a debt for necessaries supplied does the creditor acquire a right to proceed in rem against the ship. The appellant cannot sustain an action in rem in the absence of proof that the bunkers were supplied to the defendant ship at the request of the owners or someone acting on their behalf and in a position to bind them.

Held, the appeal should be allowed.

Rules 432.1 to 432.7 were intended to save the time and expense of a trial where the claims or defences are clearly without foundation. Both sides are required to file such evidence as is reasonably available to them on the issues raised by the pleadings and from which the Court can determine whether there is a genuine issue for trial. Subsection 432.2(1) of the Rules places upon the responding party an obligation not to rest on the pleadings, but to file evidence setting out “specific facts showing that there is a genuine issue for trial”. The moving party is required to satisfy the Court that no such issue existed. Thus the appellant was obligated to bring forth evidence, if so available, showing that there was a genuine issue for trial.

It was not clear whether the owners ordered the bunkers through their agents or whether they were ordered out of some necessity by the master who remained in charge of the ship, with actual or apparent authority of owners. The respondents’ evidence did not disprove the assertion in the appellant’s evidence that the bunkers were ordered “in accordance with instructions received from purchaser M/V SARLA and owners”. This was a genuine issue of fact which could only be resolved at trial.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

An Act to improve the Practice and extend the Jurisdiction of the High Court of Admiralty of England (U.K.), 1840, 3 & 4 Vict. c. 65, s. 6.

Federal Court Act, R.S.C., 1985, c. F-7, ss. 22(2)(m), 43(2),(3).

Federal Court Rules, C.R.C., c. 663, RR. 2(2), 6 (as enacted by SOR/90-846, s. 2), 302, 332(1), 344 (as am. by SOR/87-221, s. 2), 432.1 (as enacted by SOR/94-41, s. 5), 432.2 (as enacted idem), 432.3 (as enacted idem), 432.4 (as enacted idem), 432.5 (as enacted idem), 432.6 (as enacted idem), 432.7 (as enacted idem).

Rules of Civil Procedure, O. Reg. 560/84, RR. 1.04(1), 20.

Rules of the Supreme Court, SI 1965/1776 (U.K.), Ord. 14, r. 1.

The Admiralty Court Act, 1861 (U.K.), 24 Vict., c. 10, s. 5.

CASES JUDICIALLY CONSIDERED

APPLIED:

The Tolla, [1921] P. 22 (Adm.); The Mogileff, [1921] P. 236 (Adm.); Mount Royal/Walsh Inc. v. Jensen Star (The), [1990] 1 F.C. 199 (1989), 99 N.R. 42 (C.A.); Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 225; 45 C.P.C. (2d) 168; 33 C.P.R. (3d) 515 (Gen. Div.); Irving Ungerman Ltd. v. Galanis (1991), 4 O.R. (3d) 545; 83 D.L.R. (4th) 734; 1 C.P.C. (3d) 248; 50 O.A.C. 176 (C.A.).

DISTINGUISHED:

Marine Atlantic Inc. v. Blyth (1994), 77 F.T.R. 97 (F.C.T.D.); Nova Scotia Barristers’ Liability Claims Fund v. Ship Ashley Lynn (1994), 80 F.T.R. 141 (F.C.T.D.); Penthouse International Ltd. v. 163564 Canada Inc. (1994), 86 F.T.R. 95 (F.C.T.D.).

REFERRED TO:

Westcan Stevedoring Ltd. v. The Armar, [1973] F.C. 1232 (T.D.).

APPEAL from Motion Judge’s decision allowing to proceed a motion for summary judgment dismissing the claim in an admiralty action in rem. Appeal allowed.

COUNSEL:

John W. Bromley for plaintiff (appellant).

H. Peter Swanson for defendants (respondents).

SOLICITORS:

Connell Lightbody, Vancouver, for plaintiff (appellant).

Campney & Murphy, Vancouver, for defendants (respondents).

The following are the reasons for judgment rendered in English by

Stone, J.A.: The only issue in this appeal is whether the learned Motions Judge erred in allowing the respondents’ motion for summary judgment to proceed in this admiralty action in rem.

The motion in the Trial Division is “for Summary Judgment dismissing the Plaintiff’s claim in whole and for an order that the Defendant be awarded costs” on the ground “that there is no privity of contract between the Plaintiff and Defendant, or any obligation at law, by the Defendant to the Plaintiff”. Rules [Federal Court Rules, C.R.C., c. 663] 344 [as am. by SOR/87-221, s. 2] and 432.1 [as enacted by SOR/94-41, s. 5] are invoked. It is to be noted that the order under attack does not grant relief in terms of that specifically requested, but simply allowed the motion for summary judgment to proceed on the ground that “there are no genuine issues of fact” and adjourned the motion to be argued on a fixed date or on such other date as the Motions Judge fixed. In so proceeding, it appears the Motions Judge acted upon the express agreement of the parties. At the opening of oral argument, this Court suggested that this way of proceeding might well be irregular in that subsections 432.1(2) and 432.3(1) [as enacted idem] of the Rules appear to contemplate the disposition of the entire motion for summary judgment by a motions judge, rather than of a ruling or rulings on a preliminary point or points and the subsequent disposition of the motion as such. Otherwise, the possibility could arise of a series of appeals instead of a single appeal from the order or judgment disposing of the entire matter. Nevertheless, the Court heard full argument on both sides on the issue raised for determination but made it clear that it did not necessarily approve of the procedure followed in this case.

The defendant/respondent ship (hereinafter the “defendant ship”) was arrested under a warrant which was issued on the strength of an affidavit to lead warrant sworn September 20, 1994, in which it was deposed:

2. That I am informed by Brandon Tieh Ching Liu of 9-11th Floors Chia Chi Building, 877 Laichi Kok Rd., Kowloon, Hong Kong, Managing Director of Feoso Oil Limited, (Feoso) that marine gas oil and fuel oil (“bunkers”) were supplied to the motor vessel “SARLA” for the vessel’s operation on or about July 6, 1994 in Hong Kong.

3. The bunkers were ordered from Feoso by Marine Oil Brokering Co. (S) Pte. Ltd., as broker on behalf of the purchaser M/V “SARLA” and the owners, in accordance with the supplier’s normal terms and conditions. Attached hereto and marked as Exhibit “A” to this my Affidavit is a true copy of a telex sent by Marine Oil Brokering Co. (S) Pte. Ltd. to K. M. Chan at Feoso in that regard.

4. Attached hereto and marked as Exhibit “B” to this my Affidavit is a true copy of a telex from Feoso to Marine Oil Brokering Co. (S) Pte. Ltd. confirming the order and stating that the order is subject to the Feoso Standard Terms March 91.

5. Attached hereto and marked as Exhibit “C” to this my Affidavit is a true copy of a fax from Praxis Maritime Services Ltd. (“Praxis”) to the charterer of the vessel stating that Praxis, acting in accordance with instructions received from the purchaser M/V “SARLA” and the owners, nominated the bunker supply from Feoso in accordance with the bunker supplier’s general terms, conditions and specifications.

6. I am informed by Brandon Tieh Ching Liu that Feoso has been supplying fuels through Marine Oil Brokering Co. (S) Pte. Ltd. for about the past five years and that Marine Oil Brokering Co. (S) Pte. Ltd. would have been familiar with Feoso Standard Terms March 91.

7. Attached hereto and marked as Exhibit “D” to this my Affidavit is a true copy of Feoso Standard Terms March 91 which in paragraph 1.2 defines “BUYER” as meaning jointly and severally the party arranging the deliver of the fuel and the owner and/or bareboat charterer of the vessel.

8. Attached hereto and marked as Exhibit “E” to this my Affidavit is a true copy of the invoices that were stamped by the master of the vessel to be to the “Charterer’s Account”.

9. That the claim of the plaintiff for payment for the bunkers delivered has not been satisfied and US $68,797.39 remains owing.

Attached to the affidavit is a copy of a fax dated June 29, 1994, from Praxis Maritime Service Ltd. of Pireus, Greece to the charterers referred to below, advising that they had “stemmed” the bunkers in question in the following terms:

Acting as brokers only and in accordance with instructions received from purchaser M/V “SARLA” and owners we have nominated the following bunker stem in accordance with suppliers normal terms and conditions …

The following day, Marine Oil Brokering Co. (S) Pte. Ltd., of Singapore, sent a telex to the appellant (a copy of which is attached to the affidavit), placing the order for the bunkers “as brokers only and in accordance with instructions received from purchaser M/V SARLA and owners”. The appellant responded by telex the same day, confirming its acceptance “subject to the Feoso Standard Terms March 91”. Also attached to the affidavit as Exhibit “E” are copies of two bunker delivery receipts dated July 6, 1994 which are stamped “M/V SARLA—Pireus Greece”, both of which are receipted by the Chief Engineer of the defendant ship and are stamped with the words “Charterer’s Account”. The true significance of these latter words is not apparent on the face of the two documents or in the other evidence filed.

The statement of claim contains the following allegations:

3. Marine gas oil and fuel oil (“bunkers”) were supplied to the motor vessel “SARLA” by the plaintiff Feoso Oil Limited (“Feoso”) for the vessel’s operation on or about July 6, 1994 in Hong Kong.

4. The bunkers were ordered from Feoso by the owners of the M.V. “SARLA” and in accordance with the supplier’s normal terms and conditions which are known as the Feoso Standard Terms March 91.

5. The claim of the Plaintiff for payment for the bunkers delivered to the vessel has not been satisfied despite demand on the owner and US $68,797.39 remains owing.

The statement of defence, which was filed December 1, 1994, pleads as follows:

3. The Defendant denies each and every allegation of fact contained in paragraph 3 of the Statement of Claim and, without limiting the generality of the foregoing, specifically denies that marine gas, oil and fuel oil (“bunkers”) were supplied to the Ship “SARLA” by the Plaintiff for the vessel’s operation on or about July 6, 1994 in Hong Kong as alleged or at all.

4. The Defendant denies each and every allegation of fact contained in paragraph 4 of the Statement of Claim and, without limiting the generality of the foregoing, specifically denies that the bunkers were ordered by the owners of the M.V. “SARLA” and in accordance with the supplier’s normal terms and conditions as alleged or at all.

5. The Defendant denies each and every allegation of fact contained in Paragraph 5 of the Statement of Claim and, without limiting the generality of the foregoing, specifically denies that the sum of US $69,797.39 or any amount is owing by the Defendant to the Plaintiff.

6. In answer to the whole of the Statement of Claim and in the alternative the Defendant says that if bunkers were supplied to the vessel “SARLA” as alleged, which is denied, then such bunkers were supplied on the specific order and credit of the charterers of the vessel and not on the credit of the vessel or her owners or their servants or agents and the Defendant says that there is no contractual relationship whatsoever between the Plaintiff and the Defendant.

According to the record, the defendant/respondent ship was owned at material times by Manley Corporation of the British Virgin Islands which in turn was wholly owned by Norfolk Shipholding Ltd. of the same place.

The record contains additional affidavit evidence which was filed by the respondents in support of their motion for summary judgment. This includes a “Time Charter” (government form, approved by the New York Produce Exchange) dated April 21, 1994 between Manley Corporation and Hanchart Worldwide Shipping B.V. as charterers (the “charter party”); a “shipman” standard ship management agreement of April 4, 1989 between Norfolk Shipholding Ltd. (described as “owners”) and Natalca Shipping Co. S.A. of Pireus, Greece (described as “managers”) with respect to a number of vessels including the defendant ship; and a sub-agency agreement of April 1, 1987 between Natalca Shipping Co. S.A. as “general agent” and Trans-Ocean Steamship Agency, Inc., of New York, as “sub-agent”. By line 39 of the charter party, the charterers agreed to “provide and pay for all the fuel except as otherwise agreed”; and by clause 31 the charterers agreed to supply the ship with about the same quantities of bunkers on redelivery as the owners had supplied on delivery of the ship to the charterers, the bunkers on redelivery “to be deducted from last sufficient hire payment”. Clause 11 of the ship management agreement required the managers to “arrange for the provision of bunker fuel of the quality specified by the Owners as required for the Vessel’s trade.” Under Clause 3(a) of the sub-agency agreement, Trans-Ocean Steamship Agency Inc., agreed to “cause to be furnished to the Vessels … fuel … required for the operation of the Vessels” but that “any contracts for fuel … will be subject to the approval of the General Agent.” The respondents’ affidavits are all to uniform effect, that the bunkers in question were neither ordered by the owners of the defendant ship nor by anyone acting by or with authority of the owners. Indeed one of the affidavits, that of Gregory Seremetis of Trans-Tec Services Inc., a New York corporation, suggests that Praxis Maritime Services Ltd. in sending the fax of June 29, 1994 acted under instructions from the charterers only.[1] It appears from this affidavit that Trans-Tec Services Inc. acted as the exclusive bunker broker for Trans-Ocean Steamship Agency Inc. and Natalca Shipping Co., S.A. According to the final hire statement included in the respondents’ evidence, the ship was redelivered to owners “5 July [1994] at 2342 GMT”, a circumstance which may be of significance in the sequel.

While the Motions Judge did not give separate reasons for the order under appeal, the recitals contained therein cast light on the reasons why she decided as she did. These recitals indicate that the motion was opposed on grounds that according to the evidence neither the shipowners nor any of the managers or employees connected with the defendant ship had ordered the bunkers in issue, that the standard terms of the appellant’s supply contract did not impose liability upon the respondents and, finally, that nothing in the case suggests that the master or chief engineer of the defendant ship had ordered the bunkers. Her order contains the following recitals which no doubt represents her view of the evidence:

AND UPON reviewing the materials and being satisfied that in this case nothing suggests that the master or chief engineer of the “SARLA” in fact placed the bunkers order;

AND UPON concluding that, pursuant to Rule 432.2(1), it is the obligation of the Plaintiff as the party responding to a motion for summary judgment to take the steps necessary to raise genuine issues of fact for trial;

AND UPON concluding that the Plaintiff has not raised genuine issues of fact either in its own affidavit material or by way of cross-examination;

The procedure for obtaining summary judgment is governed by Rules 432.1 to 432.7 [as enacted idem] of the Federal Court Rules, which came into force January 13, 1994. The respondents’ motion is provided for in subsection 432.1(2), which reads:

Rule 432.1 …

(2) A defendant may, after filing and serving a defence and at any time prior to the fixing of the time and date for trial, make a motion to a judge, with supporting affidavit material or other evidence, for summary judgment dismissing all or part of the claim in the statement of claim.

The disposition of such a motion is, for present purposes, governed by subsection 432.3(1) which reads:

Rule 432.3 (1) Where a judge is satisfied that there is no genuine issue for trial with respect to a claim or defence, the judge shall grant summary judgment accordingly.

Subsection 432.3(4) is applicable in the circumstances therein described. It reads:

Rule 432.3 …

(4) Where a judge decides that there is a genuine issue with respect to a claim or defence, the judge may nevertheless grant summary judgment in favour of any party, either upon an issue or generally, unless

(a) the judge is unable on the whole of the evidence to find the facts necessary to decide the questions of fact or law; or

(b) the judge considers that it would be unjust to decide the issues on the motion for summary judgment.

Rule 432.2 deals with the evidence to be presented by the parties upon a motion for summary judgment. It reads:

Rule 432.2 (1) In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest on the mere allegations or denials of the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue for trial.

(2) An affidavit for use on a motion for summary judgment may be made on information and belief as provided in subsection 332(1), but on the hearing of the motion, an adverse inference may be drawn, if appropriate, from the failure of a party to provide the evidence of persons having personal knowledge of material facts.[2]

Although the issue in this appeal goes to the correctness of the order, it is important to understand the principles of admiralty law upon which the case and its merits must ultimately turn. According to the appellant, the bunkers in question were supplied to the defendant ship upon a request made by or on behalf of owners and therefore that the appellant is entitled to proceed by way of this action in rem. The Court’s jurisdiction over such a claim is conferred by paragraph 22(2)(m) of the Federal Court Act [R.S.C., 1985, c. F-7], which reads:

22. (2) …

(m) any claim in respect of goods, materials or services wherever supplied to a ship for the operation or maintenance of the ship, including, without restricting the generality of the foregoing, claims in respect of stevedoring and lighterage;

The goods and services of the kind referred to in this paragraph are sometimes described as “necessaries”, a term which appeared in former enactments of the United Kingdom.[3] By virtue of subsections 43(2) and (3) of the Act, the jurisdiction conferred by paragraph 22(2)(m) shall not be exercised in rem:

43. …

(3) … unless, at the time of the commencement of the action, the ship, aircraft or other property that is the subject of the action is beneficially owned by the person who was the beneficial owner at the time when the cause of action arose.

What is clear from these provisions is that the right to proceed in rem for a claim falling within paragraph 22(2)(m) exists only if at the time the action is commenced the ship is beneficially owned by the person who was the beneficial owner at the time the cause of action arose. (See Mount Royal/Walsh Inc. v. Jensen Star (The), [1990] 1 F.C. 199(C.A.).) There is a further refinement. It is well established that the fact that beneficial ownership has not changed since the necessaries were supplied is not in itself sufficient to support a statutory right in rem. The cases are all to the same effect, that it is only where the owners of a ship have incurred a debt for necessaries supplied that the creditor acquires a right to proceed in rem against their ship. Thus, in The Tolla, [1921] P. 22 (Adm.), a claim for necessaries was asserted in an action in rem for expenses incurred at the request of the master while the ship was under a time charter. At page 24, Hill J. stated the applicable principle as follows:

Unless there is a liability on the part of the owners there cannot be a remedy in rem against the ship.

See also e.g. Westcan Stevedoring Ltd. v. The Armar, [1973] F.C. 1232 (T.D.) and the Jensen Star, supra.[4] In the case at bar, unless it be exceptional, application of the above principle will mean that the appellant could not sustain an action in rem in the absence of proof that the bunkers were supplied to the defendant ship at the request of owners or by someone acting on their behalf and in a position to bind them.

It is not surprising that very little jurisprudence has yet been generated in the Court under the summary judgment rules since their adoption less than two years ago. None of the reported cases in the Trial Division (Marine Atlantic Inc. v. Blyth (1994), 77 F.T.R. 97; Nova Scotia Barristers’ Liability Claims Fund v. Ship Ashley Lynn (1994), 80 F.T.R. 141; Penthouse International Ltd. v. 163564 Canada Inc. (1994), 86 F.T.R. 95 enunciate any general principle governing the granting or denial of a motion for summary judgment. Those cases appear to have turned on their own facts which is understandable given the novelty of the new process. I respectfully agree with Reed J. in Blyth, supra, [at page 103] that the new Rules “should be interpreted by reference to their own textual framework”. At the same time, I do not think the Court should disregard decisions of a provincial superior court bearing on the interpretation of any similar rules, particularly where those rules are expressed in language which in all material respects is identical with the rules now under consideration.

A number of decisions have arisen under Rule 20 of the Ontario Rules of Civil Procedure [O. Reg. 560/84] from which Rules 432.1 to 432.7 derive. Subrule 20.04(2) of those Rules, like our Rule 432.3(1), provides that where the Court “is satisfied that there is no genuine issue for trial with respect to a claim or defence, the court shall grant summary judgment accordingly.” In Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 225 (Gen. Div.), Henry J. after reviewing several earlier decisions of Ontario courts, had this to say at pages 237-238:

In my opinion, there is a lower threshold that is contemplated by the new Rule 20 and the case law developing. It is that the court, in taking a hard look at the merits, must decide whether the case merits reference to a judge at trial. It will, no doubt, have to go to trial if there are real issues of credibility, the resolution of which is essential to determination of the facts. That aside, however, the rule now contemplates that the motions judge will have before him sworn testimony in the affidavits and other material required by the rule in which the parties put their best foot forward. The motions judge, therefore, is expected to be able to assess the nature and quality of the evidence supporting “a genuine issue for trial”; the test is not whether the plaintiff cannot possibly succeed at trial; the test is whether the court reaches the conclusion that the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial; if so then the parties “should be spared the agony and expense of a long and expensive trial after some indeterminate wait” (per Farley J. in Avery).

In Irving Ungerman Ltd. v. Galanis (1991), 4 O.R. (3d) 545 (C.A.), Morden A.C.J.O. commented on the Ontario rule at pages 550-551 as follows:

A litigant’s “day in court”, in the sense of a trial, may have traditionally been regarded as the essence of procedural justice and its deprivation the mark of procedural injustice. There can, however, be proceedings in which, because they do not involve any genuine issue which requires a trial, the holding of a trial is unnecessary and, accordingly, represents a failure of procedural justice. In such proceedings the successful party has been both unnecessarily delayed in the obtaining of substantive justice and been obliged to incur added expense. Rule 20 exists as a mechanism for avoiding these failures of procedural justice.

It would be convenient if the term “genuine issue” could be expressed in a precise formula for the ease of its application. Having regard, however, to the varied and unpredictable ways in which issues under Rule 20 may arise, it cannot—and the experience with Rule 56(c ) in the United States has shown that it can be harmful to gloss the wording of the rule with expressions that fail to capture its meaning. (See Wright, Miller and Kane, supra, at vol. 10A, pp. 97-107 and 176-77.)

It is safe to say that “genuine” means not spurious and, more specifically, that the words “for trial” assist in showing the meaning of the term. If the evidence on a motion for summary judgment satisfies the court that there is no issue of fact which requires a trial for its resolution, the requirements of the rule have been met. It must be clear that a trial is unnecessary. The burden is on the moving party to satisfy the court that the requirements of the rule have been met. Further, it is important to keep in mind that the court’s function is not to resolve an issue of fact but to determine whether a genuine issue of fact exists. (See 6 Moore’s Federal Practice, 2nd ed. (1987 release), p. 56-391; Wright, Miller and Kane, supra, at vol. 10A, pp. 574-75.)[5]

In my view, the new process available under Rules 432.1 to 432.7 should not be construed as to prevent a motions judge from doing that which it surely envisages—allowing a summary judgment to be rendered in a proper case with consequent savings in time and expense that a trial would otherwise entail. The intention appears to be that claims or defences clearly without foundation should not take up the time and incur the costs of a trial. To this end, as Henry J. stated in Pizza Pizza, supra, both sides are required to “put their best foot forward”. The responding party cannot hold back in the hope that the motion will fall of its own weight because the evidence in support is insufficient. Subsection 432.2(1) of the Rules places upon that party an obligation not to “rest on the … pleadings” but to file evidence setting out “specific facts showing that there is a genuine issue for trial”. The new Rules should be approached with all of this in mind.

I cannot agree with the Motions Judge that subsection 432.2(1) of the Rules placed any obligation on the appellant to raise a genuine issue for trial. Rather, as the moving parties the respondents were required to satisfy the Court that no such issue existed (see Irving Ungerman Ltd., supra, at page 551). What the new Rules appear to require is that both sides file such evidence as is reasonably available to them on the issues raised by the pleadings and from which the Court can determine whether there is a genuine issue for trial. The appellant was thus obligated by subsection 432.2(1) of the Rules to bring forth evidence, if so available, showing that there is a genuine issue for trial. This Rule, as I see it, imposes an evidentiary burden only.

The appellant contends that the Motions Judge erred in allowing the motion for summary judgment to proceed on the ground that “there are no genuine issues of fact”. This, of course, is a claim in an admiralty action in rem but that is not of itself a reason for refusing the relief sought. The applicable Rules are not restricted to actions other than actions of this kind.[6]

It is indisputable that the appellant had ample time to cross-examine on the respondents’ affidavit evidence if it had cared to do so. On the other hand, the right to so cross-examine, while fundamental, lacks the advantages available on full examination for discovery after production of documents. In the case at bar neither side elected to cross-examine on the other’s affidavit evidence. I do not read the new Rules as placing an absolute obligation on either side to cross-examine, although the failure of a party to do so might perhaps militate against that party’s position on the issues because of lack of evidence. It would not mean any non-compliance with the Rules, nor in itself justify the drawing of any adverse inference.

The appellant, who was expected by the Rules to file its own evidence in response to that of the respondents, filed only the affidavit of an officer of the appellant, but it does not go much beyond that which was already set forth in the affidavit to lead warrant. I acknowledge that the appellant probably had no control over possible sources of evidence to buttress its assertion that the bunkers were ordered by or on the authority of owners and on the credit of the ship. These sources are located in various countries around the world—a not uncommon situation in admiralty cases in the Court whose jurisdiction in rem is world wide provided the res is within its territorial jurisdiction at the time an action is commenced. I am unable to see from the record that the appellant held back evidence which should have been filed in response to the motion or, indeed, that the appellant was in a position to say more than that which is set forth in the affidavits filed—that the bunkers were supplied on the strength of the representation contained in the Marine Oil Brokering Co. telex of June 30, 1994.

The question remains whether there was any “genuine issue for trial”. The respondents are undoubtedly correct in asserting that their evidence is to the effect that the bunkers were not ordered by the shipowners or by anyone acting on their behalf. But that evidence, it seems to me, does no more than put in conflict the equally clear evidence set forth in the appellant’s affidavits that the bunkers were ordered “in accordance with instructions received from purchaser M/V SARLA and owners”. The respondents’ evidence falls short of establishing the truth of the matter even though it disputes in no uncertain terms the truth of the appellant’s evidence. It remains to be resolved, however, just where in fact the truth really lies. Credibility is very much involved in that determination, which cannot be made by a motions judge or by this Court.

Looked at in isolation, the contracts contained in the charter party and related documents may well suggest that responsibility for bunkering the defendant ship and the cost thereof fell on the charterers and not on the owners. However, that owners may have authorized the particular purchase despite the language of the charter party and related documents cannot be entirely ruled out. In the Jensen Star, supra (a case involving claims for materials supplied and repairs to a ship), at page 216, Marceau J.A. reaffirmed the principle enshrined in a line of cases in the Exchequer Court of Canada and in the Trial Division of this Court, that “an action in rem is sustainable only if the owner is personally liable for the amount claimed”. He then went on to sketch three possible scenarios out of which a shipowner’s liability may arise [at pages 216-217]:

… the owner may have contracted himself, or he may have authorized someone to contract on his personal credit, or he may have expressly or implicitly authorized a person, in possession and control of a ship, to contract on the credit of the ship (rather than on the entirety of his personal assets).

What is not clear in the present case is whether owners ordered the bunkers through their agents or whether they were ordered out of some necessity by the master, who remained in charge of the ship, with actual or apparent authority of owners.

In my opinion, the respondents’ evidence does not disprove the assertion in the appellant’s evidence that the bunkers were ordered “in accordance with instructions received from purchaser M/V SARLA and owners”. That statement must not be removed from its factual matrix which includes that at the time the bunkers were supplied the defendant ship may have been already redelivered to owners pursuant to the charter party.

I have concluded that there is here a “genuine issue” of fact which can only be resolved at trial. Accordingly, I would allow the appeal with costs and set aside the order of the Trial Division.

Marceau J.A.: I agree.

Linden J.A.: I agree.

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