Judgments

[1996] 3 F.C. 422

T-152-95

Elecnor S.A. (Plaintiff)

v.

The Owners and All Others Interested in the Ship Soren Toubro, Larsen & Toubro Limited, Canadian Forest Navigation Company Limited and Vasco Gallega de Consignaciones S.A. (Defendants)

Indexed as: Elecnor S.A. v. Soren Toubro (The) (T.D.)

Trial Division, Hargrave P.—Vancouver, April 15 and May 30, 1996.

Maritime law — Practice — Motion to set aside ex parte extension of time for in rem service of statement of claim on ground sistership in jurisdiction during initial currency of statement of claim — Plaintiff not required to name, watch for all possible sisterships appearing on horizon with view to serving, arresting first ship in jurisdiction — General rule plaintiff not forced to sue party not wanting to sue — R. 1716 modifying general rule only to extent Court may order person joined who ought to have been joined, or whose presence necessary to completely, effectively adjudicate action, neither of which applicable herein — Federal Court Act, s. 43(8), providing s. 22 jurisdiction may be exercised in rem against ship, indicating naming of sisterships permissive.

This was a motion to set aside an ex parte extension of time for in rem service of the statement of claim on the ground that a sistership had been in the jurisdiction during the initial currency of the statement of claim. The defendant shipowner submitted that the plaintiff had only to look at the Lloyd’s Register of Shipowners to establish that it owned several bulk carriers and that the “Ship’s Calendar”, published daily in a local newspaper disclosed that the sistership had been at anchor for several days in Vancouver.

The issue was whether a plaintiff is required to name and watch for all possible sisterships, with a view to serving and arresting the first ship coming into the jurisdiction, in order to be able to renew an in rem statement of claim.

Held, the motion should be dismissed.

Nothing requires a plaintiff to proceed against sisterships concurrently.

A plaintiff cannot be forced to sue a party which it does not want to sue. Rule 1716 has modified this general rule only to the extent that the Court may order a person joined who ought to have been joined or whose presence before the Court is necessary to ensure the action may be effectively and completely adjudicated upon. Neither of those situations is involved when a sistership is looked to in order to provide or force security for a claim involving another vessel. Federal Court Act, subsection 43(8) (which provides that the jurisdiction conferred by section 22 may be exercised in rem against the ship) makes it clear that the naming of a sistership is permissive. Under Rule 1002(2.1) the naming of a sistership as a defendant in the statement of claim is mandatory only where an action is commenced against one or more ships in accordance with the sistership provision of the Federal Court Act.

Sistership proceedings are a security device which a plaintiff may utilize if it desires. There are risks in proceeding against sisterships, including that a sistership may not provide the appropriate amount of security, or that the arrested ship may not be a sistership at all, thus leaving the plaintiff open to a claim for damages for wrongful arrest. The entries in Lloyd’s List of Shipowners are not always clear or current. A plaintiff ought to have the choice to either sue the wrongdoing vessel, at minimal risk, or to balance the risk and benefit of a sistership action.

To require a plaintiff to apply to have a sistership added to the style of cause whenever one appeared on the horizon would result in chaos, be absurd and expensive in the case of a large shipowner with scores of vessels, or a state operated shipping concern which might have hundreds of vessels. It might also be unrealistic if a time limit for suit had intervened. A plaintiff need not provide a reasonable explanation why it did not find and proceed against a sistership in light of the permissive aspect of subsection 43(8).

As there is no obligation to name or proceed against a sistership, failure to advise the Court of the presence of a sistership not named in the action is irrelevant.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Canada Shipping Act, R.S.C., 1985, c. S-9, s. 572(3).

Federal Court Act, R.S.C., 1985, c. F-7, s. 43(8) (as am. by S.C. 1990, c. 8, s. 12).

Federal Court Rules, C.R.C., c. 663, RR. 306, 1002(2.1) (as enacted by SOR/92-726, s. 11), 1716.

International Conventions on Maritime Law. International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-going Ships, Brussels, May 10, 1952, Art. 3,1o.

Supreme Court Act 1981, (U.K.), 1981, c. 54, s. 21(4).

CASES JUDICIALLY CONSIDERED

APPLIED:

The Berny, [1977] 2 Lloyd’s Rep. 533 (Q.B. Adm. Ct.).

DISTINGUISHED:

Voest Alpine Canada Corp. et al. v. Pan Ocean Shipping Co. et al. (1992), 55 F.T.R. 113 (F.C.T.D.).

CONSIDERED:

Noranda Forest Sales Inc. et al. v. PLC European Service Ltd. et al. (1994), 82 F.T.R. 45 (F.C.T.D.); Chemainus Towing Co. Ltd. v. The Ship Capetan Yiannis et al., [1966] Ex. C.R. 717; Atl. Gypsum Ltd. v. The Frines (1982), 30 C.P.C. 86 (F.C.T.D.); Armada Lines Ltd. v. Chaleur Fertilizers Ltd., [1995] 1 F.C. 3 (1994), 170 N.R. 372 (C.A.); The Banco, [1971] 1 Lloyd’s Rep. 49 (C.A.).

REFERRED TO:

CIP Inc. v. Canada, [1988] F.C.J. No. 595 (T.D.) (QL).

MOTION to set aside an ex parte extension of time for in rem service of the statement of claim on the ground that a sistership had been in the jurisdiction during the initial currency of the statement of claim. Motion dismissed.

COUNSEL:

John W. Bromley for plaintiff.

Peter G. Bernard for defendants.

SOLICITORS:

Connell Lightbody, Vancouver, for plaintiff.

Campney & Murphy, Vancouver, for defendants.

The following are the reasons for order rendered in English by

Hargrave P.: The defendant owner of the Soren Toubro, Larsen & Toubro Limited, brings this motion to set aside an ex parte extension of time for in rem service of the statement of claim in an action for loss of and damage to cargo carried from Bilbao, Spain, to Manila in the Philippines. The motion raises the interesting question of whether a plaintiff is required to name and watch for all possible sisterships, with a view to serving and arresting the first ship into the jurisdiction, in order to be able to renew an in rem statement of claim.

IN REM RENEWAL OF THE STATEMENT OF CLAIM

The action was commenced January 25, 1995. The plaintiff applied for and obtained the extension on January 15, 1996, on the basis that the Soren Toubro had not been within the jurisdiction since the issuance of the statement of claim, a fact not now disputed by the owners of the ship. I granted the extension on terms:

The time within which the Statement of Claim may be served on the vessel “Soren Toubro” is extended for 12 months, provided that if the “Soren Toubro” has been within the Canadian jurisdiction, unknown to the Plaintiff, the ex parte Order may be set aside as set out in the “Florida Rainbow” (1994), 82 F.T.R. 45.

While service in personam had been effected on the owners of the vessel, Larsen & Toubro Limited, in India, while the statement of claim was still current, this matter apparently came to a head in late February and early March of this year when the vessel arrived at Vancouver and the plaintiff was able to force security in the form of a P & I letter of undertaking.

POSITION OF THE DEFENDANT OWNER

Counsel for the defendant owner submits that the extension ought to be set aside for two reasons: first, a sistership of the Soren Toubro, the LT Pragati was in Vancouver between May 25, 1995, and June 3, 1995; and second, the plaintiff, on its ex parte application to extend the statement of claim, did not disclose the presence of the LT Pragati, in Vancouver during the initial currency of the statement of claim.

In a factual context counsel for the defendant shipowner begins by pointing out that one had only to look at the Lloyd’s List of Shipowners, for 1994-1995, to establish that Larsen & Toubro owned half a dozen bulk carriers of modest tonnage, including the Soren Toubro and the LT Pragati. In addition, it would have been readily apparent to anyone looking at the “Ships Calendar”, published daily in the Vancouver Sun newspaper, that the LT Pragati was at anchor for several days at Vancouver and subsequently at berth, at Robert’s Bank, loading coal.

Counsel then refers generally to Noranda Forest Sales Inc. et al. v. PLC European Service Ltd. et al. (1994), 82 F.T.R. 45 (F.C.T.D.), which is a brief summary and canvassing of the cases for granting an extension of time for service of a statement of claim and for setting it aside in the event that, unknown to the plaintiff, a vessel has in fact been within the jurisdiction.

Next, counsel refers to Chemainus Towing Co. Ltd. v. The Ship Capetan Yiannis et al., [1966] Ex. C.R. 717, in which District Judge Sheppard (also of the B.C. Court of Appeal) dealt with a situation in which the plaintiff’s solicitors had obtained an extension of time being ignorant of the fact that the Capetan Yiannis had been in Vancouver, for the vessel’s call had been omitted from the Shipping Guide. Judge Sheppard referred to what is now subsection 572(3) of the Canada Shipping Act [R.S.C., 1985, c. S-9], which is in two parts. First, it grants the Court the discretion to extend limitation periods, but then goes on to provide that the Court “shall, if satisfied that there has not during such period been any reasonable opportunity of arresting the defendant vessel within the jurisdiction of the court … extend any period to an extent sufficient to give that reasonable opportunity”. Mr. Justice Sheppard pointed out that the “shall” should be regarded as obligatory and “[h]ence, the decisive question is whether there has been ‘during such period’ a reasonable opportunity for arresting the defendant ship” (at page 723). He went on to say that the test is not one of actual knowledge that a ship might be served, but whether an alert plaintiff might have served the vessel (loc. cit.).

Following in this line of argument is Atl. Gypsum Ltd. v. The Frines (1982), 30 C.P.C. 86 (F.C.T.D.) in which Mr. Justice Cattanach dealt with an application to set aside an ex parte extension of time within which to serve the statement of claim upon the vessel, in terms of Rule 306 of the Federal Court Rules [C.R.C., c. 663] and whether there was any sufficient reason for failure to serve the ship during the initial twelve-month currency of the statement of claim. In that instance the Frines had been in various Canadian ports for a total of seventeen days during the seven months following the issuance of the statement of claim. Mr. Justice Cattanach concluded that the plaintiff had failed to exercise due diligence to effect the service of the statement of claim and had failed to adequately explain the delay in effecting service. As a result, the ex parte order extending the time for service of the statement of claim was set aside (idem, at pages 90-91).

By extension counsel for the shipowner submits that the due diligence obligation is not only with regard to the defendant vessel, but also extends to any sisterships, even those not named in the style of cause and that if the plaintiff fails to find or serve a sistership the plaintiff must offer a sufficient reason.

Finally, counsel turns to Voest Alpine Canada Corp. et al. v. Pan Ocean Shipping Co. et al. (1992), 55 F.T.R. 113 (F.C.T.D.) in which Mr. Justice Teitelbaum pointed out that an applicant for an extension of time within which to serve a statement of claim needed to show sufficient reason and then went on to note that such an extension should not easily be granted. That case does not apply in the present instance, for at issue was an in personam extension of time within which to serve the owners of the vessel. Service of the vessel itself was a peripheral matter, in that the absence of the vessel from the jurisdiction, during the initial currency of the statement of claim, was given as a reason for the need of an extension to serve in personam. In short, it was always open for the plaintiff in Voest Alpine to serve the statement of claim ex juris on the defendant shipowner. However, this case does not detract from the basic argument of the defendant, Larsen & Toubro Limited, that a duly diligent plaintiff ought to seek out sisterships, whether or not named in the style of cause.

ANALYSIS

I have a number of difficulties with the defendant’s argument which would make it mandatory for a plaintiff to seek out sisterships and to add them either initially or from time to time to the style of cause.

To begin, “The general rule is, a Plaintiff cannot be forced to sue a party which it does not want to sue.”: CIP Inc. v. Canada , [1988] F.C.J. No. 595 (T.D.) (QL), at page 2. This general rule has been modified in Rule 1716 of the Federal Court Rules, but only to the extent that the Court may order a person joined who ought to have been joined or whose presence before the Court is necessary to ensure the action may be effectively and completely adjudicated upon: neither is the situation where a sistership is looked to in order to provide or force security for a claim involving another vessel. To extend this a little further, subsection 43(8) of the Federal Court Act [R.S.C., 1985, c. F-7 (as am. by S.C. 1990, c. 8, s. 12)], which provides for sistership jurisdiction, merely sets out that:

43. …

(8) The jurisdiction conferred on the Court by section 22 may be exercised in rem against any ship that, at the time the action is brought, is beneficially owned by the person who is the owner of the ship that is the subject of the action. [Emphasis added.]

This section makes clear the naming of a sistership is permissive, not mandatory.

Section 43 of the Federal Court Act parallels provisions in the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-going Ships of 1952, to which I will refer as the “Brussels Convention”. Article 3, 1^o of the Brussels Convention provides in part, and I paraphrase, that a claimant “may” arrest either the wrongdoing ship or a sistership in respect of certain maritime claims. Again, the arrest of a sistership is permissive, not mandatory.

Counsel for the plaintiff referred to section 21 of the British Supreme Court Act 1981 [(U.K.), 1981, c. 54], which is an enactment of the Brussels Convention. The sistership provisions in the United Kingdom do differ in some respects from our own, however, the sistership provision in subsection 21(4) of the Supreme Court Act 1981 is still in permissive terms.

Under our Federal Court Rules the naming of a sistership as a defendant in the statement of claim only becomes mandatory where an action is commenced against one or more ships in accordance with the sistership provision of the Federal Court Act: see subsection 1002(2.1) of the Rules [as enacted by SOR/92-726, s. 11].

It is important, in the case of sistership proceedings, to realize that it is a security device which the plaintiff may utilize, if it desires. However, there are also risks in proceeding against sisterships including that a sistership, as opposed to the wrongdoing ship, may not provide the appropriate amount of security, or that the supposed sistership arrested may not be a sistership at all and thus leave open the plaintiff to damages for wrongful arrest and here I would refer to Armada Lines Ltd. v. Chaleur Fertilizers Ltd., [1995] 1 F.C. 3(C.A.). This latter possibility, arrest of a vessel that is not a sistership, is very real: one need only look at the volume of litigation over whether a given vessel is in fact a sistership. A plaintiff ought to have the choice to either sue the wrongdoing vessel, at minimal risk, or to balance the risk and benefit of a sistership action.

Counsel for the defendants submits that in the present instance it is quite clear, from a perusal of Lloyd’s List of Shipowners, that Larsen & Toubro Ltd. was the owner of six ships. However, the entries in the Shipowners’ volume are not always so clear, nor are they necessarily current. To give some certainty the courts ought to avoid a regime which would require a plaintiff, who may not wish to name a sistership, to make a judgment as to whether a given vessel is a sistership, with penalties for an unlucky guess, on the one hand, for failing to name a sistership, and on the other hand, for naming a ship that is not a sistership. Such penalties could happen all too often if it became mandatory, in an in rem proceeding, to name every sistership.

The plaintiff submitted, in passing, that to require every sistership to be named would be absurd and expensive, for example, in the case of a large shipowner with scores of vessels, or a state operated shipping concern which might have hundreds of vessels. This is a practical reason, and may well be a rationale for the permissive approach to naming sisterships.[1]

Counsel for the defendant shipowner suggests that it would not be necessary to initially name all sisterships: when one appeared on the horizon, headed in the general direction of our jurisdiction, a plaintiff could then apply to have that sistership added to the style of cause and to make the necessary amendments to the statement of claim. Sometimes a plaintiff will take the step of bringing on a motion to add a sistership in anticipation of the arrival of a vessel. However, to require it in all instances, again, for example, where the owner is large or even has a large fluctuating fleet, would result in chaos. To say that a plaintiff must add a sistership to an in rem action, from time to time, when such a vessel comes into the jurisdiction, might also be unrealistic if a time for suit limit has intervened; see The Banco, [1971] 1 Lloyd’s Rep. 49 (C.A.), at page 53. I do not take the suggestion of requiring a plaintiff to add sisterships as they appear on the horizon as a practical approach.

In The Banco, supra, Lord Denning, M.R., noted that a plaintiff, having named the offending ship and various sisterships, need not arrest the first one within the jurisdiction, but might wait for the ship that the plaintiff thinks most suitable to arrest (at page 53 and see also Lord Justice Megaw, at page 57). This is dicta, however, it seems to me to have its basis in the permissive nature of proceedings against sisterships.

Both counsel referred to The Berny, [1977] 2 Lloyd’s Rep. 533 (Q.B. Adm. Ct.), a decision of Mr. Justice Brandon, which involved the right of a plaintiff to institute in rem proceedings against more than one ship in respect of the same cause of action and the renewal of the writ or writs. One action was against the wrongdoing vessel and the other against a number of sisterships. The latter had been renewed twice, ex parte, but had not been served.

The motion was, first, that the action against the wrongdoing vessel be stayed or dismissed, on the grounds that the Court’s in rem jurisdiction had already been invoked by bringing the sistership action, and second, that the renewal of the sistership writ was wrongly allowed as several sisterships had been within the jurisdiction. In passing, I would note the great confusion in keeping track of eighteen named sisterships subject to name changes, deletion of sisterships gone to the shipbreakers, omission of ships from Lloyd’s Register of Shipping and incomplete vessel position information reported on the part of Lloyd’s Intelligence Services as good reason not to make the naming of all sisterships mandatory.

It is interesting to note that the renewal procedure in the Queen’s Bench Division Admiralty Court for sistership writs is apparently that if a sistership has been within the jurisdiction and for some reason was not served, on any renewal of the writ that particular vessel is deleted.

Mr. Justice Brandon touches on the history of in rem proceedings before and after the 1956 enactment in Britain of the Brussels Convention of 1952 (see page 539 et seq.). At page 543 Mr. Justice Brandon comments on the English policy of allowing a plaintiff discretion to elect among sisterships:

It is no doubt desirable that a plaintiff, who has an option to proceed against any one of a number of ships owned by a defendant, should not be compelled to elect irrevocably between them when he issues his writ, but should instead be able to defer such final election until he knows that a suitable ship is about to come, or has come, within the jurisdiction.

The reference to “a suitable ship” is important for just as a plaintiff ought not to be able to arrest a whole fleet, to the detriment of the defendant who would then be forced to put up security far beyond the value of either the wrongdoing vessel or the most valuable vessel in a fleet, a plaintiff ought not to be forced to arrest the first sistership coming into the jurisdiction, if that sistership is of minimal value compared to the wrongdoing ship.

At page 546 of The Berny Mr. Justice Brandon sets out the test for renewal of a writ in terms “of the ships proceeded against in respect of the same claim” having been present within the jurisdiction during the currency of the writ. Counsel for the plaintiff, in The Berny, in order to explain why various vessels had been missed when they came within the jurisdiction, pointed out that it was time consuming and costly to keep track of nineteen ships. Mr. Justice Brandon answered, at page 547:

I do not accept these contentions. I think that it is, in general, the duty of solicitors, who have issued a writ on behalf of plaintiffs, to take all reasonable steps to ensure that it is served during its initial currency. If the plaintiffs choose to proceed against a large number of ships concurrently (there is nothing which requires or compels them to do so), they must accept the disadvantages, as well as the advantages, of doing so. [Emphasis added.]

Clearly, in England, it is for the plaintiff to choose which, if any, sisterships are to be pursued.

The Court in The Berny did not decide whether the presence of one of a number of named sisterships, in the jurisdiction, meant that the writ could not be renewed as against that particular ship, or, alternatively, whether the writ could not be renewed at all. The Court merely accepted that the former was the established practice at the Admiralty Registry. However, The Berny is clearly authority for the proposition that if there are sisterships the plaintiff has the discretion whether or not to proceed against any or all of them.

The defendant shipowner, I think in answer to The Berny, submits that the plaintiff ought to have joined the LT Pragati when she came into the jurisdiction and, in the absence of that step, ought to be required to show a sufficient reason why it did not find and proceed against that sistership. Absent of a reasonable explanation, so goes the submission, the conclusion could only be lack of diligence on the part of the plaintiff. However, this tack returns us to the proposition that, outside of the requirements set out in the Federal Court Rules, a plaintiff cannot be forced to name as a party someone it does not wish to sue. Further, this approach is contrary to the permissive aspect of subsection 43(8) that the jurisdiction of the Court, may be exercised in rem against a sistership.

Counsel for the shipowner also submits that the plaintiff had a duty to advise the Court, on the application for the extension of time within which to serve the statement of claim, of the presence of a sistership in the jurisdiction during the initial currency of the statement of claim. That would be so in the case of a sistership named in an action, for as the Court of Appeal pointed out in the Armada Lines case supra, a party applying for a warrant to arrest a vessel must make full and frank disclosure of material matters within his or her knowledge. However, given that there is no obligation to name or proceed against a sistership, advice of the presence of a sistership not named in the action is irrelevant.

CONCLUSION

In conclusion, I am against any forced broad interpretation of the Federal Court Act and Rules which would require a plaintiff to name all possible sisterships, or which would require a plaintiff to watch for vessels which might or might not be sisterships and bring on motions to add them as they appear over the horizon. Such related vessels are not essential to actions, in the sense that they are not necessary to adjudicate claims. To give the plaintiff the option to seek security through sistership proceedings is one thing, but to mandate that an in rem proceeding must be against all vessels in the same ownership, with all of the attendant confusion and pitfalls it would bring, including the inevitable wrongful arrest claims by innocent shipowners, is quite another. The submission of the defendant shipowner, that the plaintiff need not pursue all possible sisterships, but only those which are certainly sisterships, a narrow approach, would be confusing and unworkable.

I prefer an approach based on Mr. Justice Brandon’s comment in The Berny, supra that there are advantages and disadvantages in proceeding against a number of sisterships concurrently, but there is nothing which requires or compels a plaintiff to do so. The motion is therefore dismissed, with costs in the cause.

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