Judgments

[1997] 2 F.C. 1001

T-2418-96

Margem Chartering Co. Inc. (Plaintiff)

v.

Cosena, S.R.L. and the Owners and All Others Interested in the Vessel Bocsa and the Vessel Bocsa (Defendants)

Indexed as: Margem Chartering Co. Inc. v. Bocsa (The) (T.D.)

Trial Division, Hargrave P.—Vancouver, January 24 and March 5, 1997.

Maritime law — Contracts — Application to set aside statement of claim, strike out in rem portion of statement of claim, set aside arrest warrant — Agreement for carriage of coal from Vancouver to Turkey on Bocsa embodied in Americanized Welsh Coal Charter between International Broking Agency, disponent owner, and plaintiff — Upon arrival in Vancouver, ship detained by Coast Guard because of deficiencies — Unable to load cargo — Action in contract, tort commenced — Arrest warrant based on claim for breach of contract — Application allowed with respect to portions of statement of claim relating to breach of contract — Must be in personam claim against shipowner to give rise to in rem claim against ship — Abuse of process, scandalous, frivolous, vexatious for plaintiff subcharterer to claim against owner, arrest ship when no privity of contract with owner — Claim in contract abusive, futile — Arrest warrant not set aside as inaccuracy, failure to refer to tort claim not enabling plaintiff to obtain relief not available had correct relief been set out in affidavit to lead warrant.

Federal Court jurisdiction — Trial Division — Federal Court Act, s. 43(2) allowing exercise of Court’s jurisdiction under s. 22 in rem against ship that is subject of action — S. 22(2)(i) giving Court jurisdiction over claim arising out of agreement relating to use, hire of ship — When Bocsa unable to load cargo because detained by Coast Guard due to deficiencies, action for breach of contract and in tort commenced — Vessel arrested based on breach of contract — Sufficient connection between plaintiff, Bocsa, including delivery of ship to Vancouver, provision of cargo to preclude finding tort action futile — Agreement for use of ship bringing matter within s. 22(2)(i), enforceable in contract, tort.

This was an application to strike out the statement of claim or the in rem portion thereof and to have the arrest warrant set aside because the affidavit to lead warrant failed to properly disclose the nature of the claim. The Bocsa was a bulk carrier which was under hire to the plaintiff. An Americanized Welsh Coal Charter, with amendments and various attached additional clauses, governed the agreement for the use of the Bocsa for the carriage of coal from Vancouver to Turkey. When the Bocsa arrived in Vancouver she was detained by the Canadian Coast Guard as a result of a number of deficiencies and thus was unable to load the cargo. The plaintiff commenced this action and applied for a warrant to arrest the ship. The affidavit to lead warrant alleged a breach of charter. The statement of claim alleged breach of the charter party and tort liability. The ship was arrested but after the defendant owner posted security departed in ballast.

Held, the application should be allowed with respect to the portions of the statement of claim relating to breach of contract.

Accepting the statement of claim as if proven, it appeared to disclose a cause of action.

Paragraphs 419(1)(c) and (f) of the Rules provides relief only in respect of pleadings. The arrest warrant could not be struck out or set aside under Rule 419 as an abuse of process as neither the affidavit to lead warrant nor the warrant were pleadings within the definition thereof. However, the Court had an inherent procedural or implied jurisdiction to set aside a warrant that is an abuse of process.

The contract for the use of the Bocsa was with the disponent owner International Broking Agency. International Broking Agency was clearly described as the disponent owner and signed without qualifications, although it would have been easy to indicate that it signed in a representative capacity. There is a strong prima facie presumption that a person who signs a contract in his own name contracts personally. Nothing in the Welsh Coal Charter displaced the presumption that International Broking Agency, as disponent owner, contracted as principal. There was every indication in the fixture recap (an earlier document relied upon by the plaintiff as the agreement for the use of the ship) that International Broking Agency was intended to be a contracting party in its own right and in the Welsh Coal Charter that it was in fact disponent owner taking its position from Cosena, S.R.L. as head owner. Plaintiffs submission, that International Broking Agency was inserted as a mere sham and not for any genuine commercial purpose, could not be accepted.

There must be an in personam claim against a shipowner to give rise to an in rem claim against the ship. The contract with International Broking Agency did not give rise to any right to arrest Cosena’s ship Bocsa in contract. The affidavit to lead warrant was clear that the plaintiff relied upon breach of the charter party by Cosena, S.R.L. to arrest the Bocsa. The affidavit did not mention any other cause of action, although it has been held that an affidavit to lead warrant ought to show a proper case of circumstances justifying arrest of a vessel. It is an abuse of process and scandalous, frivolous and vexatious for a plaintiff subcharterer to claim against an owner and to arrest a ship when it had no privity of contract with the owner. The claim in contract was abusive, futile and should not be allowed to proceed.

Failure to disclose material facts in an affidavit for arrest would be an abuse of process, but the warrant for arrest should not be set aside because the inaccuracy and failure to refer to any claim in tort therein did not enable the plaintiff to obtain relief which would not have been theirs had the correct claim in tort been set out in the affidavit to lead warrant. Although not clearly pleaded in the statement of claim, the tort liability claim was not so futile that plainly, obviously and beyond doubt it would not succeed. Thus, had the plaintiff set out the tort claim in the affidavit to lead warrant, the warrant would properly have been issued.

The defendant submitted that the tort claim could not be pursued in rem under either Federal Court Act, sections 22 or 43. Subsection 43(2) allows the exercise in rem of the Court’s jurisdiction against a ship “that is the subject of the action”. Paragraph 22(2)(i) gives the Court jurisdiction over any claim arising out of any agreement relating to the use or hire of a ship. The defendant submitted that there must be a connection to the defendant ship for an in rem proceeding to lie i.e. the jurisdiction must be exercised against the ship by whose conduct the damage arose. There was a sufficient connection between the plaintiff and the Bocsa, including the delivery of the ship to Vancouver and the provision of a cargo, to preclude a finding that the action was futile and would obviously be unsuccessful. Additionally there was an agreement for the use of a ship, all of which brought the matter within Federal Court Act, paragraph 22(2)(i) which the Supreme Court of Canada has found to be enforceable both in contract and in tort.

The costs of this motion should be awarded to defendant as it resulted from plaintiff having overreached its case by pleading breach of charter and there being defects in the affidavit to lead warrant.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Administration of Justice Act, 1956 (U.K.), 1956, c. 46, s. 1(1)(h).

Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 22(2)(e).

Federal Court Act, R.S.C., 1985, c. F-7, ss. 22(2)(e),(g),(i),(k), 43(2).

Federal Court Rules, C.R.C., c. 663, RR. 2 “pleading”, 407(2), 415(3), 419(1)(a ),(c),(f),(2), 1003(2), Tariff B (as am. by SOR/95-282, s. 5).

Supreme Court Act 1981 (U.K.), 1981, c. 54, s. 20(2)(h).

CASES JUDICIALLY CONSIDERED

APPLIED:

Swan, The, [1968] 1 Lloyd’s Rep. 5 (Adm.); Joint Stock Society “Oceangeotechnology” v. 1201 (The), [1994] 2 F.C. 265 (1994), 72 F.T.R. 211 (T.D.); Antonis P. Lemos, The, [1985] 1 Lloyd’s Rep. 283 (H.L.); Nordglimt, The, [1987] 2 Lloyd’s Rep. 470 (Adm. Ct.); Tropwood A.G. et al. v. Sivaco Wire & Nail Co. et al., [1979] 2 S.C.R. 157; (1979), 99 D.L.R. (3d) 235; 10 C.P.C. 9; 26 N.R. 313; Waterside Ocean Navigation Co., Inc. v. International Navigation Ltd., [1977] 2 F.C. 257(T.D.); Armada Lines Ltd. v. Chaleur Fertilizers Ltd., [1995] 1 F.C. 3 (1994), 170 N.R. 372 (C.A.); Brandt & Co. v. Morris & Co., [1917] K.B. 784 (C.A.); New Brunswick Electric Power Commission v. Maritime Electric Company Limited, [1985] 2 F.C. 13 (1985), 60 N.R. 203 (C.A.); Nisshin Kisen Kaisha Ltd. v. Canadian National Railway Co., [1981] 1 F.C. 293 (1980), 11 D.L.R. (3d) 360 (T.D.); Bandag Inc. v. Vulcan Equipment Co. Ltd., [1977] 2 F.C. 397 (1977), 32 C.P.R. (2d) 1 (T.D.); Vasso, The, [1984] 1 Lloyd’s Rep. 235 (C.A.).

CONSIDERED:

Virgo, The, [1976] 2 Lloyd’s Rep. 135 (C.A.); Nissos Samos, The, [1985] 1 Lloyd’s Rep. 378 (Q.B. Com. Ct.); Junior K, The, [1988] 2 Lloyd’s Rep. 583 (Q.B. Com. Ct.); Astyanax, The, [1985] 2 Lloyd’s Rep. 109 (C.A.); O/Y Wasa Steamship Company Ltd., and Another v. Newspaper Pulp& Wood Export, Ltd. (1949), 82 Ll.L.Rep. 936 (K.B.); Zien v. The Queen (1986), 26 D.L.R. (4th) 121; 64 N.R. 282 (C.A.); Evans v. Canada (Government of) (1986), 4 F.T.R. 247 (F.C.T.D.); Westview Sable Fish Co. et al. v. The Ship “Neekis” (1986), 31 D.L.R. (4th) 709; 6 F.T.R. 235 (F.C.T.D.); Moschanthy, The , [1971] 1 Lloyd’s Rep. 37 (Adm.); Canastrand Industries Ltd. v. Lara S (The), [1993] 2 F.C. 553 (1993), 60 F.T.R. 1; Milbank v. Milbank, [1990] 1 Ch. 376 (C.A.); Hot Spot Fishing & Lures Ltd. v. O’Ki Tackle Mfg. Ltd. (1989), 27 C.P.R. (3d) 575 (F.C.T.D.); John Labatt Ltd. v. Molson Breweries, A Partnership (1993), 51 C.P.R. (3d) 502; 69 F.T.R. 235 (F.C.T.D.).

REFERRED TO:

Attorney General of Canada v. Inuit Tapirisat of Canada et al., [1980] 2 S.C.R. 735; (1980), 115 D.L.R. (3d) 1; 33 N.R. 304; Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959; (1990), 74 D.L.R. (4th) 321; [1990] 6 W.W.R. 385; 49 B.C.L.R. (2d) 273; 4 C.C.L.T. (2d) 1; 43 C.P.C. (2d) 105; 117 N.R. 321; McCain Produce Co. Ltd. v. The Rea, [1978] 1 F.C. 686 (1977), 80 D.L.R. (3d) 105 (T.D.); Cooke v. Wilson (1856), 1 C.B. (N.S.) 153; 140 E.R. 65 (C.P.); Sextum, The, [1982] 2 Lloyd’s Rep. 532 (H.K.S.C.); Genie, The, [1979] 2 Lloyd’s Rep. 184 (C.A.); Solholt, The, [1981] 2 Lloyd’s Rep. 574 (Q.B. Com. Ct.); Schwarz & Co. (Grain), Ltd. v. St. Elefterio (Owners), [1957] 1 Lloyd’s Rep. 283 (Adm.).

AUTHORS CITED

Carver, Thomas Gilbert. Carver’s Carriage by Sea, 13th ed. by Raoul Colinvaux. London: Stevens & Sons, 1982.

Jacob, I. H. “The Inherent Jurisdiction of the Court” (1970), 23 Current Legal Problems 23.

Supreme Court Practice 1993. London: Sweet & Maxwell, 1992.

APPLICATION to strike out the statement of claim or the in rem portion thereof as an abuse of process and to have the arrest warrant set aside because the affidavit to lead warrant failed to properly disclose the nature of the claim. Application allowed with respect to the claim for breach of contract.

COUNSEL:

J. Kenrick Sproule for plaintiff.

Peter G. Bernard for defendants.

SOLICITORS:

Sproule, Castonguay, Pollack, Montréal, for plaintiff.

Campney & Murphy, Vancouver, for defendants.

The following are the reasons for order rendered in English by

Hargrave P.: In November of 1996 the plaintiff arrested the Bocsa at Vancouver alleging, in the affidavit to lead warrant, a breach of charter. The defendant, the vessel owner, while questioning the propriety of the arrest, gave security which was agreed to be without prejudice to the defendant moving to set aside the arrest.

The defendant now seeks to have the statement of claim or alternatively portions of the statement of claim in rem struck out on various grounds and to have the warrant for the arrest of the Bocsa set aside.

BACKGROUND

The Bocsa is a thirty-two thousand ton ice-strengthened bulk carrier built some 20 years ago, owned by Cosena, S.R.L. of Constanţa, Romania. At material times the Bocsa was under hire to the plaintiff. At issue is the identity of the entity letting the ship.

Two documents for the letting and hiring of the ship are referred to by the parties. The first is an unsigned fixture recapitulation of August 27, 1996, referred to as “fixture recap”, which is subject to details, for the carriage of coal from Vancouver to Eregli on the North Coast of Turkey, part of an exchange between the charter brokers, relied upon by the plaintiff as the agreement for the use of the ship. The second is an unsigned Americanized Welsh Coal Charter (also referred to as the Welsh Coal Charter), with amendments and various attached additional clauses, of August 29, 1996, again apparently part of the exchange between the charter brokers, relied upon by the defendant owner. Both the fixture recap and the Welsh Coal Charter refer to a disponent owner,[1] International Broking Agency of “Kingstown” Jamaica: I will comment later on this misnomer. From the copies of faxes which appear in the affidavit material, it is clear the fixture recap was prepared by Margem Shipping ApS of Copenhagen, apparently as agents for the plaintiff, who negotiated the charter with Genoa Seabrokers SRL, agents for the party letting the ship. There is no absolute indication as to which of the charter brokers prepared the Welsh Coal Charter, however, the name of Genoa Seabrokers SRL is not set out properly in the charter, which would logically lead one to suspect it was prepared by Margem Shipping ApS following their preparation of the fixture recap.

The fixture recap, which is typed in point form on undated Margem Shipping ApS letterhead, for the account of Margem Chartering Co. Inc. of Istanbul, identifies the “head owners” as Cosena, S.R.L. and the “disponent owners” as International Broking Agency of “Kingstown [sic]” Jamaica. It also identifies the Italian managers of the vessel, however, that is not relevant at this point. This is the document produced to the defendant when it applied to the plaintiff under subsection 407(2) [of the Federal Court Rules, C.R.C., c. 663] for production of the chartering document referred to in the statement of claim. It concludes as follows:

— sub dets executed amwelsh cp 3.75 ttl here incl 2.5 add

— end recap mainterms//

Expanded slightly these two short concluding lines provide that the fixture recap is subject to whatever details might be agreed to and set out in an Americanized Welsh Coal Charter, commissions to the brokers to total 3.75 percent of the gross freight, dead freight and demurrage, 2.5 percent of which is an address commission by which is meant remuneration allowed to the charterer after the bills of lading are signed, thus resulting in a reduction in the rate of freight. The final line makes it clear that the fixture recap is of the principle terms that will appear in the Welsh Coal Charter once it is prepared.

The fixture recap, set out in point form and which takes up part of two pages of letter paper, next appears, two days later, as a fairly heavily amended Americanized Welsh Coal Charter, a copyright widely used printed form of some 145 lines, to which are attached seven pages containing 18 single-spaced additional clauses. The charter party is headed as between International Broking Agency “Kingstown [sic]” Jamaica and Margem Chartering Co. Inc. of Istanbul, with the former being styled, by amendment, as the disponent owner and the latter as charterer. Thereafter the printed charter form and the typed additional clauses refer merely to “Owner” and to “Owners”, except that the charter is set up to be signed by “The Owners” and “For and on behalf of The Charterers”. Clause 30 of the additional typed clauses to the charter party, identifies Cosena S.R.L. as “head-owners” and International Broking Agency as “disponent owners”. Counsel for the plaintiff charterer says the Welsh Coal Charter is irrelevant, but that if it is relevant it is an agreement with the owner, not with the disponent owner or time charterer, International Broking Agency. For reasons which I will come to in due course, the Welsh Coal Charter is the relevant document and further it is an agreement between International Broking Agency, as disponent owner and Margem Chartering Co. Inc. as a sub-charterer: there is no real or sensible reason to interpret the Welsh Coal Charter as an agreement between the owner Cosena, S.R.L. and Margem Chartering Co. Inc. as a head charterer.

To continue with the narrative of events, the Bocsa on arrival at Vancouver, on September 26, 1996, was detained by the Canadian Coast Guard, Ship Safety Branch, as a result of a number of deficiencies and thus was unable to load the coal cargo. The ship was arrested by the plaintiff and, after the defendant owner posted security by way of a bank guarantee, eventually departed in ballast. I now turn to the plaintiff’s proceedings which resulted in the arrest.

THE PLAINTIFFS’ PROCEEDINGS

On November 1, 1996, Margem Chartering Co. Inc. the plaintiff, commenced an action as against Cosena S.R.L., the owners and all others interested in the Bocsa and the vessel Bocsa and applied for a warrant to arrest the vessel. The affidavit to lead warrant, sworn by a solicitor in part upon information provided by one Captain Semih, of Margem Chartering Co. Inc., contains several paragraphs which are pertinent to the present application:

3. The nature of Plaintiff’s claim is as described in the Statement of Claim In Rem and In Personam and is namely for the breach of a charterparty relating to carriage of goods in a ship from Vancouver to Eregli;

4. At the time of this my Affidavit, I am informed by Capt. Semih of Margem Chartering Co. Inc. that the cargo of black coal will not be carried by the M.V. BOCSA contrary to the terms of the charterparty recap and that the present claim for breach of the charterparty agreement has not been satisfied;

5. I am informed after having consulted the Lloyd’s Registry of Shipping and Lloyd’s List of Shipowners and do verily believe that the said M.V. BOCSA was at all material times and is still owned or beneficially owned by Defendant Cosena S.r.l. [Emphasis added.]

The deponent of the affidavit to lead warrant refers to the agreement for the use of the Bocsa as both a “charterparty” and as a “charterparty agreement”. The statement of claim refers to it as a “charterparty recap”, a “Charter Party” and a “charterparty contract”. One of the plaintiff’s solicitors, in a subsequent affidavit in reply in the present application, refers to it as a “fixture recap”: “fixture recapitulation”, or as it is referred to in the trade, a “fixture recap”, best characterizes the document and that is how I have referred to it in these reasons.

The statement of claim, which is referred to but not incorporated into the affidavit to lead warrant, contains the following relevant paragraphs:

1. At all material times, Plaintiff was the charterer of the vessel BOCSA which had been chartered from her owners to carry a cargo of black coal (the “Cargo”), the whole of which was to be carried from the Port of Vancouver to Eregli, Turkey, the whole as appears from the charterparty recap dated on or about August 27, 1996;

2. At all material times, Defendants were the Owners and/or the parties interested in the vessel BOCSA who had agreed to perform the carriage of the Cargo from Vancouver to Eregli;

3. Upon her arrival in the Port of Vancouver, the M.V. BOCSA was detained by the Canadian Coast Guard in order to anchor at English Bay while the condition of the vessel was being investigated;

4. The Canadian Coast Guard upon inspection ordered that a number of deficiencies had to be rectified before the M.V. BOCSA could be released to load her Cargo;

5. In breach of the Charter party, owners are unable to load the Cargo on board the M.V. BOCSA, considering the fact that she is a substandard vessel and unfit to carry the designated cargo;

…

7. Defendants are in breach of the charterparty contract and they have failed to carry the cargo from Vancouver to Eregli;

8. Defendants are also negligent and are liable to Plaintiff in delict and in tort;

and seeks some $325,000 in damages.

THE DEFENDANT’S MOTION

The motion of the defendant owner seeks first, that the statement of claim, or alternatively the in rem portion of the statement of claim, be struck out as disclosing no reasonable cause of action and no reasonable in rem cause of action. Alternatively, the statement of claim is said to be scandalous, frivolous or vexatious, an abuse of process and a proceeding in rem beyond the Court’s jurisdiction.

Second, the defendant seeks to have the arrest warrant set aside as the Court is said to be without an in rem jurisdiction in this instance and on the basis that the affidavit to lead warrant fails to properly disclose the nature of the claim as is required by subsection 1003(2) of the Rules.

Nothing is said as to the right of International Broking Agency, who are not a party and who are not represented in these proceedings, to have the dispute arbitrated as provided for in clause 44 of the Welsh Coal Charter, other than that they specifically reserve their right to proceed by way of arbitration.

ANALYSIS

An application to strike out a pleading or a portion of a pleading under paragaph 419(1)(a) of the Rules, as without a reasonable cause of action, being an action that plainly, obviously and beyond doubt will not succeed,[2] may not be supported by an affidavit and thus, so far as this aspect of the motion is concerned, the Welsh Coal Charter may not be considered. However, the fixture recap has been produced, on the request of the defendant to the plaintiff, pursuant to subsection 407(2) of the Rules.

Production of a Document Referred to in a Pleading

Counsel for the defendant acknowledges that no evidence is admissible on an application to strike out for want of a cause of action, but submits that the fixture recap, a document produced pursuant to subsection 407(2) of the Rules, becomes a pleading and thus may be considered on a motion to strike out a pleading as disclosing no reasonable cause of action.

Particulars which are produced pursuant to a demand are clearly pleadings: see for example Milbank v. Milbank, [1900] 1 Ch. 376 (C.A.), at page 385 where Lord Justice Vaughan Williams characterizes particulars as an amendment of the pleadings and Hot Spot Fishing & Lures Ltd. v. O’Ki Tackle Mfg. Ltd. (1989), 27 C.P.R. (3d) 575 (F.C.T.D.) in which pleadings were held not to be closed because of an outstanding demand for particulars. In contrast, subsection 407(2) of the Rules merely requires a party “to serve a document referred to in its pleadings: no more, no less.”: John Labatt Ltd. v. Molson Breweries, A Partnership (1993), 51 C.P.R. (3d) 502 (F.C.T.D.), at page 506.

There is no requirement that a document produced pursuant to subsection 407(2) of the Rules be filed and served as though it were a particular as is provided for in subsection 415(3). I do not agree that a document merely by being produced and served under subsection 407(2) becomes a pleading. Rule 2 of the Federal Court Rules defines a pleading as “any document whereby an action in the Trial Division was initiated or a claim in such an action was defined, and any document, whereby a claim was defended or answered, and includes a confession of judgment and a discontinuance”. While this is a broad definition, to call a document referred to in a pleading, of which there may be many, a “pleading” would allow matters to get completely out-of-hand. In the present instance the fixture recap does not factually define, defend or answer the claim: it is merely a document that may be relevant as evidence of the nature of the claim. Thus, even if I considered the fixture recap to be the governing contractual document, it is still only evidence which, by subsection 419(2) of the Rules, is not admissible on a motion to strike out for want of a reasonable cause of action. As I must, for the purposes of an application to strike out for want of a reasonable cause of action, accept the statement of claim as if proven, it appears to disclose a cause of action. However, the matter does not end there, for the defendant also submits the proceeding is frivolous, vexatious and an abuse of process.

Abuse of Process

The terms “frivolous” and “vexatious” are often used interchangeably with the term “abuse of the process of the Court”. The term abuse of process “connotes that the process of the Court must be used bona fide and properly and must not be abused”: see the Supreme Court Practice 1993 (hereinafter the White Book), at page 345 and “The Inherent Jurisdiction of the Court” by I. H. Jacob (1970) 23 Current Legal Problems 23, at page 40. It means that:

The Court will prevent the improper use of its machinery, and will, in a proper case, summarily prevent its machinery from being used as a means of vexation and oppression in the process of litigation (White Book, loc. cit.)

The editors of the White Book point out that the categories of frivolous and vexatious claims and abuse of process are never closed (loc. cit.). It is for the Court to summarily intervene to prevent its process from being misused and subverted.

Our paragraphs 419(1)(c) and (f) of the Rules provide relief in the case of scandalous, vexatious, frivolous or abusive pleadings. But the defendant also says the procedure leading to the arrest of the Bocsa was an abuse of process, referring to the affidavit to lead warrant and to the obtaining of the warrant itself: counsel for the owner of the Bocsa submits the warrant ought to be set aside.

Neither the affidavit to lead warrant nor the warrant fall within the Rule 2 definition of a pleading and thus Rule 419 is of no assistance in striking out or setting aside the warrant as an abuse. However, the Court has an inherent jurisdiction, not in the sense of substantive law, or of an antithesis to the Court’s statutory jurisdiction, but rather an inherent procedural jurisdiction to control its own process from abuse, notwithstanding its rules and limiting statutory jurisdiction.[3] The Federal Court of Appeal, in New Brunswick Electric Power Commission v. Maritime Electric Company Limited, [1985] 2 F.C. 13 at page 26 et seq., refers to this sort of a jurisdiction as an implied jurisdiction I think with the idea that, where Parliament has conferred a power on the Court, there is the implication that there must also exist the necessary power to control and make the conferred jurisdiction work. Mr. Justice Addy touches on this concept in Nisshin Kisen Kaisha Ltd. v. Canadian National Railway Co., [1981] 1 F.C. 293 (T.D.), at page 301 where he writes “every Court of superior jurisdiction … must possess the innate right of controlling its own process and, subject to the requirements of justice, to control the actions before it of those wishing to avail themselves of its jurisdiction”. Mr. Justice Mahoney in Bandag Inc. v. Vulcan Equipment Co. Ltd., [1977] 2 F.C. 397 (T.D.) puts it more bluntly, at page 402: “this Court has an inherent jurisdiction over its own process to enable it to carry out the basic raison d’être it shares with every court of civil jurisdiction”. Thus, the Court having the statutory jurisdiction to issue a warrant, it must also have an inherent procedural or implied jurisdiction to set aside a warrant that is an abuse of process.

The abuse referred to by the owner is that the plaintiff claims a right to arrest the Bocsa on the basis of a contract with the vessel owner, thus giving rise to an in rem claim. Such an arrest is only proper if there is in fact an in personam contractual liability by the defendant owner to the plaintiff.[4] Both the fixture recap and the Welsh Coal Charter refer to Cosena, S.R.L. as owner and to International Broking Agency as disponent owner. Neither document particularly favours the plaintiff’s interpretation that the plaintiff’s contract is with Cosena, S.R.L., however, for the sake of order I believe the Welsh Coal Charter, not the fixture recap, to be the governing document. While there could conceivably be a situation in which, by special circumstances, a fixture recap is the chartering agreement, that is not the usual case.

Status of the Welsh Coal Charter

Generally, no contract exists when an arrangement between the parties is “subject to details”: see for example Solholt, The, [1981] 2 Lloyd’s Rep. 574 (Q.B. Com. Ct.), at page 576. Indeed, the meaning of “subject to details” is well known in marine brokering practice:

“Subject details” is a well-known expression in broking practice which is intended to entitle either party to resile from the contract if in good faith either party is not satisfied with any of the details as discussed between them. [Nissos Samos, The, [1985] 1 Lloyd’s Rep. 378 (Q.B. Com. Ct.) at p. 385.]

In Nissos Samos the Court was dealing with the sale of a vessel for scrap and the detail upon which the sale foundered was the light displacement tonnage, which the vendor was unable to confirm. However, the same principle has also been applied to charter-parties.

In Junior K, The, [1988] 2 Lloyd’s Rep. 583 (Q.B. Com. Ct.), negotiations for the chartering of the ship took place between intermediaries, brokers who acted on behalf of the parties. The last exchange between the brokers was telex recap fixture which concluded with the words “sub dets Gencon CP”. The Court specifically rejected the American approach that once there had been a recap telex setting the main terms of the fixture of a vessel, there was a contract in place and if details were not agreed upon the parties were left with the printed form. Mr. Justice Steyn, who decided the Junior K, referred to a bulletin sent out by the Federation of National Associations of Shipbrokers and Agents which he quoted in part, at page 588:

As we are all aware, several court decisions in the United States have recently determined that a fixture has resulted when the main terms have been agreed, despite the fact that it was still “subject to details”. The US court’s view is not shared by the rest of the shipping world and is being severely criticised by the entire market, including US ship-owners, charterers and shipbrokers alike.

Mr. Justice Steyn went on to say, at page 588:

And, I would respectfully suggest, that it is in the interests of the chartering business that the Courts should recognise the efficacy of the maritime variant of the well-known “subject to contract”. The expression “subject to details” enables owners and charterers to know where they are in negotiations and to regulate their business accordingly. It is a device which tends to avoid disputes and the assumption of those in the shipping trade that it is effective to make clear that there is no binding agreement at that stage ought to be respected.

He concluded by pointing out that the telex exchange between the brokers was perfectly clear, setting out that there would be no contract until the details had been agreed.

In the present instance the brokers produced the Welsh Coal Charter with all the details, including many amendments to the printed form and seven pages of additional clauses. The agreement was acted upon: the ship arrived at Vancouver and the plaintiff arranged a cargo. There is no doubt the Welsh Coal Charter governs the fixture of the vessel.

Identity of the Disponent Owner

The ordinary rules for construction of contracts extend to determining the identities of the parties. “The intention for which the Court looks is an objective intention of both parties, based on what two reasonable businessmen making a contract of that nature, in those terms and in those surrounding circumstances, must be taken to have intended.”: Mr. Justice Brandon in Swan, The, [1968] 1 Lloyd’s Rep. 5 (Adm.), at page 12.

The Welsh Coal Charter, on its first page, sets out that it is between International Broking Agency and Margem Chartering Co. Inc. The form is amended by the insertion of the word “disponent” before the word “Owner”, in the second line, describing International Broking Agency. Elsewhere in the form the word “Owner” has not been so qualified, but given the many pages of fine print and the tendency of agents the world over to keep amendments to fine print and the words in typed additional clauses to a minimum, I read nothing into it. The Welsh Coal Charter, in clause 30 of the additional clauses, characterizes Cosena, S.R.L. as “head-owners” and International Broking Agency of “Kingstown [sic]” Jamaica as disponent owners.

In Virgo, The, [1976] 2 Lloyd’s Rep. 135 (C.A), at issue was whether the party signing the charter was a principal or an agent. Lord Justice Megaw, who wrote one of the three concurring judgments for the Court of Appeal, looked to the beginning of the charter party which read, in part, at page 143:

It is this day Mutually Agreed, between Tudor Marine Limited-Liberia Owners of the Panamanian S/S Virgo … [—and then (line 7)—] and Tradax Export, S.A. Charterers, that … [—and so on.—]

He then commented:

So Tradax are described, unambiguously and without qualification, as charterers at this stage, where one would normally expect to find the parties to the charter-party contract defined.

There followed a number of different terms in the charter party which referred to the charterer, both in the printed form and in the typewritten insertions. At the signature page it was clear as to the capacity in which Tradax contracted. The Court of Appeal acknowledged that one must also look at all of the terms of the charter, which included a clause which read, at page 144:

31. This vessel was chartered on behalf and for account of General Organization for Supply Goods Cairo.

buried amongst other typewritten clauses and at the surrounding circumstances. The Court held that even clause 31 was not of enough weight to displace other factors, most notably the description of the party in the first line and the way in which that party had signed the charter. In the present instance, International Broking Agency is clearly described as the disponent owner and, by the form prepared by the agents, was to have signed without any qualifications. It would have been very easy for the brokers to qualify the position of International Broking Agency by typing a qualification on the signature page to show that it is signed in a representative capacity, but they did not do so. Should I read anything into the fact either that there are references in the Welsh Coal Charter to “Owner” and “Owners” or that there is a reference to “Head owners: Cosena, S.R.L. Mamaia Constanţa Romania” in typewritten additional clause 30 describing the ship? I believe not. I would have been surprised that if at each place in the printed form where the owner is referred to, the brokers had amended by inserting the word “disponent”. Similarly I take the reference to “Owner” in the additional clauses to refer to International Broking Agency who, as disponent owner, can equally give warranties as to its time-chartered vessel. The reference to a head owner in clause 30 may be seen as no more than part of the identification of the ship.

Returning to the signature page, I would also observe that a person who signs a contract without qualification will normally be held personally liable on the contract: Brandt & Co. v. Morris & Co., [1917] 2 K.B. 784 (C.A.). That case involved a contract for the sale of aniline oil. Lord Justice Scrutton, noted for his admiralty background, at pages 796-797, referred to a number of authorities including Cooke v. Wilson (1856), 1 C.B. (N.S.) 153; 140 E.R. 65 (C.P.), at page 69 for the proposition that:

Prima facie, when a man signs a contract in his own name, he is a contracting party; and there must be something very strong upon the fact of the instrument to prevent that liability from attaching to him.

Lord Justice Scrutton then, for further confirmation, looked back at the heading of the contract which referred to the party signing the document and concluded there was nothing to displace the strong prima facie presumption that a man who signs in his own name contracts personally (pages 797-798). In the present instance there is nothing in the Welsh Coal Charter sufficient to displace the strong prima facie presumption that International Broking Agency, as disponent owner, contracts as principal.

Looking to circumstances outside of the Welsh Coal Charter the plaintiff says the disponent owner, International Broking Agency of “Kingstown [sic]” Jamaica does not exist and produces a Jamaican company search to that effect. Counsel for the defendant attempted to file an affidavit, served the day before the hearing, to clear up this point: such a last minute production of an affidavit can be prejudicial and I did not allow it to be filed. However I may take notice of the fact that “Kingstown [sic]” Jamaica, or Kingston, as it is properly called, is not a jurisdiction favoured by worldwide shipowners or operators, while Kingstown, capital of St. Vincent in the Grenadines, is home to many deep-sea owners, operators and charterers. That the plaintiff would not find an International Broking Agency in “Kingstown [sic]” Jamaica is not conclusive of anything.

The plaintiff suggests that rather than being a disponent owner, International Broking Agency is in fact the agent of the shipowner and defendant, Cosena, S.R.L. A disponent owner who lets out a vessel on charter is almost invariably a prior charterer. The concept of a charterer should be broadly construed. However, one ought also to give such words the ordinary meaning: see for example Sextum, The, [1982] 2 Lloyd’s Rep. 532 (H.K.S.C.), at page 534. To ignore a reference to a disponent owner, or to give it a meaning other than that of a prior charterer, would be unusual. Indeed, Lord Justice Kerr of the Court of Appeal put it this way in Astyanax, The, [1985] 2 Lloyd’s Rep. 109, at page 113:

With the exception of one reported case to which we refer below, neither Counsel—nor we—could recall any instance in which a person or company had appeared as “disponent owner” in a charter-party otherwise than on the basis that he was himself a charterer of the vessel, usually a time charterer, directly from the registered owners or possibly from a sub-charter from them.

In Astyanax registered owners, in the presence of a disponent owner, tried to directly enforce a subvoyage charter, saying that the disponent owner had contracted as agent for the owners as undisclosed principals. The Court of Appeal rejected the idea that a disponent owner might be an agent for the registered owner so as to entitle the registered owner to enforce a voyage charter as undisclosed principals. The Court of Appeal conceded that it might be different if the head charter were a mere sham.

In O/Y Wasa Steamship Company, Ltd., and Another v. Newspaper Pulp & Wood Export, Ltd. (1949), 82 Ll.L. Rep. 936 (K.B.), the exceptional case to which Lord Justice Kerr referred to in the Astyanax, a Dutch company signed a charterer in which they were described as “disponent owners” and which they signed as “disponents”. However, a letter was attached to the charter expressly describing the Dutch company as managers for a Finnish company which owned the vessel in question. The Dutch company, due to enemy occupation in 1940, when the charter had been signed, could not enforce the agreement and the Finnish company could also not do so as undisclosed principals because such would be inconsistent with the Dutch company’s description as a disponent owner. The Court found as a fact the Dutch company had contracted as agents and that their description as disponent owners was not necessarily inconsistent with agency. The Court of Appeal in the Astyanax, after again reiterating that the case was unusual went on to point out that had the Dutch company contracted on the basis that they were time charterers under a head charter from the Finnish owner, the decision would obviously have been different. The Court of Appeal did concede that a description as “disponent owner” might in itself be neutral and then went on to look at the surrounding circumstances.

In the present instance there is no sufficient suggestion in the Welsh Coal Charter that International Broking Agency is an agent. The brokers who settled the form of the fixture recap and of the Welsh Coal Charter could have qualified the role of International Broking Agency, but they did not. There is every indication in the fixture recap that International Broking Agency are intended to be a contracting party in their own right and in the Welsh Coal Charter that they are in fact disponent owners taking their position from Cosena, S.R.L. as head owner. It would be artificial and unjust to accept the plaintiff’s view that International Broking Agency was inserted as a mere nominee of the owner, a mere sham, rather than for some genuine intended commercial purpose. I now return to the subject of abuse of process.

The Arrest of the Bocsa

It is a basic proposition that there must be an in personam claim against a shipowner to give rise to an in rem claim against the ship. In the present instance the contract for the use of the Bocsa is with the disponent owner International Broking Agency and does not give rise to any right to arrest Cosena’s ship Bocsa in contract. The defendant Cosena submits the plaintiff has intentionally confused the pleading in the statement of claim to disguise the fact that the plaintiff is a voyage charterer from the disponent owner, International Broking Agency, and thus has no privity of contract with the owner. It is very possible that counsel for the plaintiff was improperly instructed, so I make no finding as to whether the statement of claim was intentionally made confusing. Rather, I will look at the affidavit to lead warrant. The affidavit is very clear that the claim relied upon by the plaintiff in order to arrest the Bocsa is for breach by Cosena, S.R.L. of a charter party. The affidavit makes no mention of any other cause of action. This leads to the question of what reasonably ought to be in an affidavit to lead warrant, that is, the extent of disclosure required.

The Affidavit to Lead Warrant

Associate Chief Justice Thurlow, as he then was, foreshadowed a more recent move by the Court to require appropriate disclosure in an affidavit to lead warrant in Waterside Ocean Navigation Co., Inc. v. International Navigation Ltd., [1977] 2 F.C. 257 (T.D.). In that case at issue was the right of the plaintiff to sue in rem where the defendant was neither the registered owner nor the beneficial owner of the ship, an argument which Mr. Justice Thurlow felt, had it rested there, would be a hard argument to resist. There was a further argument as to beneficial ownership of the vessel, however, the point of citing this case is a view appearing, at page 266, part of it in a footnote, to the effect that unfortunately the affidavit to lead warrant, while complying with subsection 1003(2) of the Rules ought, in modern times, to show more than is presently required: it ought “to show a proper case of circumstances justifying the arrest of a vessel or property.”

The Court of Appeal in Armada Lines Ltd. v. Chaleur Fertilizers Ltd., [1995] 1 F.C. 3points out that a plaintiff (arresting a ship or cargo under Rule 1003) has the burden of showing the arrest is lawfully carried out (at page 20). The Court of Appeal also equated the criteria necessary for the granting of a warrant to arrest a ship with the guidelines for obtaining a Mareva injunction set out by Lord Denning in the Third Chandris Shipping case, Genie, The, [1979] 2 Lloyd’s Rep. 184 (C.A.), at page 189: pertinent here are the requirements first of making full and frank disclosure of all material matters within the plaintiff’s knowledge and second, of providing full particulars of the claim, including fairly stating the points made against the plaintiff by the defendant. Now it may be that in the relatively informal and often hurried process of issuing a statement of claim and obtaining a warrant to arrest a shortly-to-depart ship, a plaintiff need not set out the defendant’s case. But even leaving this point aside, it is clearly an abuse of process and similarly scandalous, frivolous and vexatious for a plaintiff subcharterer to claim against an owner and to arrest a ship when it has no privity of contract with the owner. Such smacks of an attempt to wrongfully force security to be given.

The test to apply when striking out a statement of claim, or a portion of it, as abusive, scandalous, frivolous or vexatious, is at least as stringent as that applied in striking out for want of a cause of action. In this instance the claim in contract is abusive, clearly futile and ought not to be allowed to proceed.

Given this abuse of process, the words “from her owners” are struck out of paragraph 1 and the words “breach of contract and/or” are struck out of paragraph 9 of the statement of claim. Similarly, paragraphs 2, 5 and 7 are struck out as being an abuse, a cause of action that plainly, obviously and beyond doubt will not succeed.

Warrant for Arrest

The way in which I should treat the warrant is a little more complex. This is not, however, to say the courts have been any less severe where a warrant constitutes an abuse of process, as compared with an abuse in a statement of claim, but rather the test of abuse carries a high onus and thus a court will try to salvage a warrant, just as a court will give the benefit of any doubt to a plaintiff so she or he may not be deprived of a day in court.

In Vasso, The, [1984] 1 Lloyd’s Rep. 235 (C.A.), there was a failure by the plaintiff to disclose in its affidavit to lead warrant the fact not only of an arbitration agreement, but also that arbitration was being actively pursued. The only purpose of the arrest was to obtain security to satisfy any award made by the arbitrators. The Court pointed out that as the law then stood in England, the Court’s jurisdiction to arrest should not be exercised merely to provide for an award which might be made in arbitration proceedings. The Court went on to point out that a warrant might unadvisedly be issued where the plaintiff fails to reveal that arbitration proceedings are being actively pursued and that his purpose is to obtain security for an award in those proceedings: such failure to disclose material facts would be vexatious and an abuse of the process of the Court. In such an instance the Court might order the release of the ship from arrest and the discharge of any security. The Court came to this conclusion even though there was no bad faith on the part of the deponent of the affidavit (see page 242). The Court went on to say that a failure to make full and frank disclosure may result in the discharge of an order for the arrest of the vessel even though the facts were such that, with full disclosure, an order for arrest might have been justified. In the result the Court agreed with the Trial Judge and dismissed the appeal from his order that the letter of undertaking, obtained by reason of the arrest, be discharged. But the analysis of this sort of situation does not end with the Vasso.

In a subsequent case, Nordglimt, The, [1987] 2 Lloyd’s Rep. 470 (Adm. Ct.), Mr. Justice Hobhouse dealt with an application to set aside or strike out a warrant for the arrest of the Nordglimt in that the affidavit to lead warrant made inaccurate statements of fact and failed to make full and frank disclosure. He found that the affidavit contained an important misstatement of fact which, if care had been taken, would have been appreciated. He made the point that “The plaintiffs’ legal advisors seemed unconcerned about the mis-statement even after it had been again drawn to their attention by those acting for the defendants” (at page 473) and that:

The affidavit to lead the warrant for arrest made inaccurate statements of fact which ought to have been known to be inaccurate. If their inaccuracy had been disclosed to the Court then, unless additional facts had also been disclosed, the warrant would have been refused.

and that, at page 474

I consider that it must be stated, and stated clearly and unequivocally, that where any person finds he has made a false statement in an affidavit, albeit mistakenly, it is his duty to correct it and to do so promptly and frankly…. It is of the greatest importance to the administration of justice that Courts should be able to rely upon the truthfulness and accuracy of affidavits sworn by solicitors or their employees …. It is also essential that lawyers acting for parties and in particular the deponents of such affidavits, should attach the greatest importance to their oath and that when they find that they have made a false statement on oath they should be at pains to correct it.

Mr. Justice Hobhouse then went on to point out that he did not consider the inaccuracy of the affidavit to lead warrant to justify setting aside the warrant for “it does not automatically follow that the failure to place the proper facts accurately before the Court will invariably lead to the setting aside of the order so obtained” (at page 474). At this juncture in his reasons he pointed out that the inaccuracy was neither deliberate nor did it affect the merits in that it did not enable the plaintiffs to obtain any relief that they would not have been able to obtain if the correct facts had been stated. Thus he did not set aside the warrant, but did penalize the plaintiffs in costs. I am not convinced the warrant ought to be set aside in this instance. This conclusion also has a parallel in the present instance: had the deponent of the plaintiff’s affidavit to lead warrant set out the nature of the claim as a liability in tort, as is required by paragraph 1003(2)(b ) of the Rules, at least part of the present motion might have been avoided and thus costs will be in favour of the defendant.

Plea in Tort

The plaintiff, in paragraph 8 of the statement of claim, pleads as an alternative the liability of the defendant in tort. This arises out of the fact that the vessel had deficiencies and as a result was detained by the Canadian Coast Guard. The deficiencies were such that they could not be rectified in time to load the cargo. This alternative is not clearly pleaded and further it is denied by the defendant owner who points out that all of the vessel’s inspection certificates were current. However, I am not able to say that the claim is so futile that plainly, obviously and beyond doubt it would not succeed. Thus, on the principles set out in the Nordglimt, had the plaintiff set out the tort claim in the affidavit to lead warrant, the warrant would properly have been issued. The arrest, at least at this point, should stand.

In coming to this conclusion I acknowledge both that the defendant is entitled to face a known claim and that to properly plead a tort the plaintiff must set out not only particulars of the negligence, but also the duty of care owed by the defendant to the plaintiff and that the defendant has breached that duty: see for example Zien v. The Queen (1986), 26 D.L.R. (4th) 121 (F.C.A.) and Evans v. Canada (Government of) (1986), 4 F.T.R. 247 (F.C.T.D.). In the Zien case the Trial Judge had found negligence on a fact not pleaded, the negligence of a servant of the defendant. In the Evans case, in the absence of any clear allegation of either breach of contract or of negligence, the Trial Judge struck out the statement of claim, but allowed the plaintiff to amend.

In the present instance, from the point of view of negligence, the statement of claim is clumsy, but it does set out the arrival of the Bocsa in Vancouver in such a state and with such deficiencies that the Coast Guard held up loading until the plaintiff was forced to charter other tonnage to move its coal cargo. This presentation of the ship in a poor state is said to be negligence. As to duty owed, the defendant, who is a commercial shipowner and operator, would know the purpose for which the vessel was required and that a vessel impounded by the Coast Guard would cost the plaintiff money. As I say, this is poorly set out in the pleadings, but I am not prepared to say the draftsman has been so sloppy as to disentitle the plaintiff from at least getting a day in Court. That the plaintiff may proceed should not be taken as an endorsement that there is such a relationship between a voyage charterer and an owner when there is an intervening time charter: that is a question to be determined by the judge at trial.

In Rem Cargo Claim in Tort

The defendant’s submissions do not end with the argument that tort is neither referred to in the affidavit to lead warrant nor properly pleaded, but goes on with the submission that even assuming a duty of care exists, which it says is doubtful, it is not a claim which may be pursued in rem under either section 22 or 43 of the Federal Court Act [R.S.C., 1985, c. F-7].

Subsection 43(2) allows, subject to various exceptions which do not apply in this instance, the jurisdiction conferred on the Court by section 22 of the Act to be exercised in rem against a ship. The portion of subsection 22(2) of the Act, which would apply in the present instance, is paragraph (i):

22. (2) …

(i) any claim arising out of any agreement relating to the carriage of goods in or on a ship or to the use or hire of a ship whether by charter party or otherwise;

The defendant submits the right to exercise an action in rem in maritime matters for damages arising out of negligent conduct is restricted to those situations where the vessel was the instrument of harm, for example damage by negligent navigation. Certainly paragraph (g) of subsection 22(2), dealing with loss of life and personal injury, is phrased in terms which include neglect and wrongful act, but by the same token paragraph (e), which deals among other things with loss of a ship, makes no reference to negligence. Indeed, the Supreme Court of Canada, in Tropwood A.G. et al. v. Sivaco Wire & Nail Co. et al., [1979] 2 S.C.R. 157, pointed out that paragraph 22(2)(e) [of the Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10] was one of the bases for jurisdiction to entertain claims in contract and in tort for damage to inbound cargo.

The defendant goes on to submit that there must be a connection to the defendant vessel in order for an in rem proceeding to lie, for in the words of subsection 43(2) of the Federal Court Act, the Court’s jurisdiction pursuant to section 22 of the Act “may be exercised in rem against the ship … that is the subject of the action”. The defendant takes this to mean that the jurisdiction must be exercised against the ship by whose conduct the damage arose, referring to Westview Sable Fish Co. et al. v. The Ship “Neekis” (1986), 31 D.L.R. (4th) 709 (F.C.T.D.) and Joint Stock Society “Oceangeotechnology” v. 1201 (The), [1994] 2 F.C. 265 (T.D.).

The reasons in Neekis decided a motion to strike out an action in rem and to set aside the warrant of arrest. The proceedings arose out of rather interesting events. The ships Neekis and Nootka Mariner were fishing in the same area, using strings of traps to catch black cod. The Nootka Mariner left her traps on the fishing grounds and on returning discovered some of the traps were missing. The statement of claim alleged that those aboard the Neekis had intentionally cut the ground line belonging to the Nootka Mariner, thus causing the traps to be lost, and moreover, those aboard the Neekis picked up those traps, used them during the season and then disposed of them overboard. Mr. Justice Rouleau pointed out that there was no damage to a ship, no damage arising out of a collision and no damage related to navigation which might sustain an action in rem. Neither the entanglement of the lines of traps, nor the cutting lines, nor the conversion of gear gave rise to an action in rem, although the plaintiff might have an action, in personam, against those who stole the plaintiff’s fishing gear. In the result, the motion to strike out the action in rem and to set aside the arrest of the ship was granted.

I do not see the Neekis case as standing for more than the proposition that where crew members, not supplied by the owner, engage in a frolic of their own, which may have a criminal aspect, the Court is not about to penalize an innocent owner with an in rem levy on his vessel.

In the 1201 case the defendants moved, among other things, to strike out the proceedings and the warrant on the grounds that the in rem proceedings were improperly constituted. The claim was based on an agreement for towage, however, after the plaintiff dispatched its tug the defendant owner of the 1201 allegedly cancelled the towing agreement and made a new agreement with other tug owners. At issue was whether the plaintiff had only an action in personam, or whether the in rem proceeding might stand. Mr. Justice Teitelbaum pointed out that an in rem proceeding would only lie if there was a connection to the defendant vessel. Had the plaintiff taken no steps to fulfill its obligation under the towing agreement, there would have been no connection to the arrested ship. However, the towing agreement named the tug and provided that the tug be immediately dispatched from the Mediterranean to Halifax. Twelve and a half days after the tug got under way, the defendants cancelled the towing agreement. Mr. Justice Teitelbaum was satisfied that the plaintiff need not have actually started towing and that “any claim for towage”, pursuant to paragraph 22(2)(k) of the Act thus allowed an in rem proceeding, it not being plain and obvious that the plaintiff did not have a reasonable cause for an in rem action.

The 1201 case is a little more involved, for it did allow, on the special circumstances of the case, an in rem proceeding against a vessel that was to be towed, but in fact was not. The defendant refers to this case to show the necessity of a connection between the plaintiff and the defendant vessel in order for an in rem proceeding to lie, for subsection 43(2) of the Federal Court Act allows the exercise in rem of the Court’s jurisdiction against a ship “that is the subject of the action”. The owner of the 1201 was clearly contractually liable in personam. However, there would have been no in rem facet to the claim had the towing company not dispatched a named tug from the Mediterranean to tow the 1201 to India. Such dispatch was compared to escort services provided by a tug which, in the view of the Court, resulted in enough of a connection with the arrested ship that the Judge was not prepared to say an in rem action plainly and obviously would not succeed. Similarly, in the present instance, there is a connection between the plaintiff and the ship Bocsa, including the delivery of the ship to Vancouver and the provision of a cargo, a connection which is sufficient enough that I am not prepared to say the action is futile and would obviously be unsuccessful. However, this type of analysis does not deal positively with whether the Court’s jurisdiction under paragraph 22(2)(i) of the Federal Court Act, to deal with claims arising out of the use or hire of a vessel, may be exercised in tort as well as in contract.

Certainly, a shipowner may be sued in tort in England for failure to provide a seaworthy vessel: see Carver’s Carriage by Sea, Stevens & Sons, 13th ed., 1982, at sections 123 and 420. Further, English case law establishes that such a claim may be enforced in rem by a subcharterer against an owner: see Antonis P. Lemos, The, [1985] 1 Lloyd’s Rep. 283 in which the House of Lords gave a wide interpretation as to the jurisdiction granted by section 20(2)(h) of the Supreme Court Act 1981 [(U.K.), 1981, c. 54], which is the English equivalent to paragraph 22(2)(i) of the Federal Court Act. The House of Lords held that the section gave the Court the jurisdiction to hear the tort action in rem by a subcharterer against a vessel owner, so long as the claim arose out of an agreement of the relevant sort, that is a charter, although the charter need not be between the subcharterer and the defendant owner.[5] This is all quite on point with the present situation.

The defendant submits that neither the Antonis P. Lemos nor the Moschanthy (referred to in note 5) represent the law in Canada. However, in Canastrand Industries Ltd. v. Lara S (The), [1993] 2 F.C. 553 (T.D.), Madam Justice Reed was not persuaded of any barrier to an in rem claim for negligent stowage against a shipowner by a shipper who had contracted with a charterer.

Finally, the Supreme Court of Canada touched on this subject in Tropwood A.G. et al. v. Sivaco Wire & Nail Co. et al., [1979] 2 S.C.R. 157. In the Sivaco case the Supreme Court held that the Federal Court might properly entertain an action arising out of damage to inbound cargo, framed in both contract and tort, under various headings of subsection 22(2) of the Federal Court Act, including paragraph 22(2)(i), the section which is applicable in the present instance.

In summary, the Bocsa was sent to Vancouver, as required by the Welsh Coal Charter, and the plaintiff had a cargo ready; there is an agreement for the use of a ship, part of the test applied by the House of Lords in the Antonis P. Lemos case; and all of this brings the matter within paragraph 22(2)(i) of the Federal Court Act, which the Supreme Court of Canada found in the Tropwood case to be enforceable both in contract and in tort.

CONCLUSION

The plaintiff, a voyage subcharterer, has claimed both in contract and in tort against the defendant shipowner, Cosena, S.R.L. The claim is faulty in contract, for there is no indication of substance that the owners had anything to do with the subcharterer and substantial evidence to the contrary. There is no in personam right of action by the plaintiff in contract against Cosena, S.R.L. and thus no in rem right of action. Such a claim and arrest on that basis are an abuse of process. The words “from her owners” in paragraph 1 and “breach of contract and/or” in paragraph 9 and the whole of paragraphs 2, 5 and 7 of the statement of claim are struck out.

While the affidavit to lead warrant is inaccurate and makes no reference to any claim in tort, that does not necessarily mean the warrant ought to be set aside where, as here, the inaccuracy and omission did not enable the plaintiffs to obtain relief which would not have been theirs if the correct facts, a claim in tort, had been set out in the affidavit to lead warrant in the first instance. This is not to say the remaining tort claim, which in my view gives rise to a right in rem under paragraph 22(2)(i) of the Federal Court Act, will succeed, but rather that it is not forlorn and plainly incapable of succeeding. Thus the warrant and the security to cover the liability, if any, of Cosena, S.R.L., will remain.

This motion has been brought about both by the plaintiff’s overreaching its case by pleading breach of charter, rather than by limiting itself to tort, and by the plaintiff’s inaccuracy and omission in the affidavit to lead warrant. The judicial process requires that the Court, including those who administer the issuance of warrants, may completely rely upon the truthfulness and accuracy of affidavits to lead warrants. For this reason the defendant shall forthwith have the costs of the motion, taxed at the maximum rate under column IV [of Part II of Tariff B of the Federal Court Rules (as am. by SOR/95-282, s. 5)].

The defendant, Cosena, S.R.L., shall have thirty days within which to file a defence.

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