T-1903-96
ACTION IN REM against The Ship DAWN LIGHT
Between:
ROBERT GLEASON
Plaintiff
- and -
The Ship DAWN LIGHT (in rem) and
CAROL NANCY BAKER (in personam)
Defendants
REASONS FOR ORDER AND ORDER
GILES, A.S.P.:
The motion before me on September 16th, 1996, upon which I reserved a decision, sought an Order setting aside the arrest warrant against the ship "Dawn Light" ("the Ship") and an Order granting Raymond Michael Davis ("Davis") status to intervene in the action.
The circumstances are alleged to be as follows:
The plaintiff alleges he entered into a binding agreement of purchase of sale of the Ship with the defendant Carol Nancy Baker ("Baker") on July 31st this year.
The defendant Baker, alleges that there was no acceptance of her counter-offer, and that she was therefore free to sell and did agree to sell the Ship on August 15th to Davis. Baker further alleges that a bill of sale was executed on August 20th. The file reveals that a statement of claim was filed on August 21st, and the warrant for the arrest of the Ship issued on that date. The statement of claim seeks specific performance or in the alternative damages. There is evidence that the warrant and the claim were served on the Ship in the late morning of August 22nd, and that Davis was registered as owner of the Ship in the early afternoon of that day. A mortgage of the Ship from Davis to Baker was registered at the same time.
One of the principal grounds on which Davis relies to assert his right to the order is that he is a beneficial purchaser for value without notice. This fact was not disputed before me. I note that no attempt was made to obtain an order under section 44 of Canada Shipping Act R.S.C. 1985, c. S-9, s. 43 to restrain the sale.
In my view, the arrest of a Ship has no effect on the title. Arrest retains the Ship within the jurisdiction until any title dispute is settled.
Section 20(2)(a) of Federal Court Act, gives jurisdiction to the Court with respect to any claim, with respect to title, possession or ownership of a ship. Section 43(2) of Federal Court Act, provides a right to proceed in rem. An exception to the right to proceed in rem is found in s. 43(3), where it is provided that to be entitled to proceed in rem under certain paragraphs in s. 22(2), the beneficial owner at the time the action is commenced must be the same as the beneficial owner when the cause of action arose. The claim here is not under one of the paragraphs mentioned in s. 43(3). Therefore, beneficial ownership is irrelevant to the right to proceed in rem. This would appear to be born out by the cases. In Cahoon v. Morrow, decided in 1862 by the Supreme Court of Nova Scotia sitting en banc, it was decided that a ship, or shares in a ship could be sold when the ship was subject to execution.
Giovanni Dapueto v. James Wyllie & Co., L.R. 5 P.C. 491, contains dicta to the effect that an arrest would not avail against a subsequent purchaser. From the facts of the case, I believe the dicta was intended to apply to the case where the purchase was subsequent to the cause of action arising, but prior to the arrest, which might be the case here. The James Wyllie case appears to have involved a statutory claim for lien. Today s. 43(3) could have been applicable. Wyllie did not involve a claim to title.
Nowhere it is suggested that arrest creates a title interest. As previously stated, arrest retains the res so that there may be something for the action to apply to when concluded.
Except in a case where there is no jurisdiction or no right to an action in rem, it is not usual to release a ship from arrest in an interlocutory motion.
I note that in the consideration proceeding the drafting of the international convention on arrest to which Canada is not a party, it was felt that release from arrest should normally be permitted on the posting of bail, but where the claim was to the ship itself, release might not be appropriate. See, Berlingiere on Arrest of Ships, Second Edition, LLP Ltd., Colchester at p. 127 at seq.
There was nothing to prevent the sale of this Ship while under arrest. There is also nothing which would have prevented the arrest of the Ship after it had been sold because s. 43(3) is not applicable.
The possibility that the Ship might have been arrested after its sale to Davis and the possibility that Davis may have a very substantial claim for damages, in my view makes it imperative that Davis who was allowed to intervene to seek the release from arrest, should be allowed to intervene in such a manner that he has a right to assert his claim to title to the ship by resisting the plaintiff's claim and to counterclaim, claim over or make an admiralty claim without counterclaim for damages for the losses he may have suffered before judgment.
In deciding he should be allowed to intervene rather be added as a defendant, I found most helpful the discussion following page 335 in D.C. Jackson, Enforcement of Maritime Claims, Second Edition, LLP Ltd., Colchester, 1996.
ORDER
The motion to be allowed to intervene is granted. The intervenor to have the right within 30 days to file an intervener's statement asserting his title claim, and such counterclaims or claims over or damage claims has he may be advised within such 30 days.
The Style of Cause is to be changed to read:
ROBERT GLEASON
Plaintiff
- and -
The Ship DAWN LIGHT (in rem) and
CAROL NANCY BAKER (in personam)
Defendants
- and -
RAYMOND MICHAEL DAVIS
Intervenor
The motion for an order setting aside the arrest warrant is dismissed.
Costs of this motion and their nature are to be determined when the success of the intervention is determined.
"Peter A.K. Giles"
A.S.P.
Toronto, Ontario
September, 19, 1996
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
COURT NO: T-1903-96
STYLE OF CAUSE: ROBERT GLEASON
- and -
The Ship DAWN LIGHT (in rem) and
CAROL NANCY BAKER (in personam)
DATE OF HEARING: SEPTEMBER 16, 1996
PLACE OF HEARING: TORONTO, ONTARIO
REASONS FOR ORDER BY: GILES, A.S.P.
DATED: SEPTEMBER 19, 1996
APPEARANCES:
Mr. Alexander K. Scott
For the Plaintiff
Mr. Peter Chin
For the Defendant
(Carol Nancy Baker)
Mr. Oliver H. Bremer
Solicitor for Raymond Michael Davis
(Intervenor)
SOLICITORS OF RECORD:
Paterson, MacDougall
Barristers & Solicitors
1 Queen Street East,
Suite 2100, Box 100
Toronto, Ontario
M5C 2W5
For the Plaintiff
Chin & Orr
Barristers & Solicitors
382 King Street,
Midland, Ontario
L4R 3M9
For the Defendant
Oatley, Purser
Barristers & Solicitors
Suite 200, 151 Ferris Lane
Barrie, Ontario
L4M 6C1
For the Intervenor
FEDERAL COURT OF CANADA
Court No.: T-1903-96
Between:
ROBERT GLEASON
Plaintiff
- and -
The Ship DAWN LIGHT (in rem) and
CAROL NANCY BAKER (in personam)
Respondents
REASONS FOR ORDER