Date: 19981014
Docket: T-1270-97
BETWEEN:
ABITIBI-PRICE SALES CORPORATION
-and-
CORPORACION LA PRENSA S.A.
Plaintiffs
AND:
C.V. SCHEEPV.ONDERNEMINEG "Sambeek"
-and-
CARPULP N.V. & SHIPPING CO. TRANSPULP
-and-
SPLIETHOFF'S BEVRACHTINGSKANTOOR B.V.
-and-
THE OWNERS AND CHARTERERS OF
THE VESSEL "BONTEGRACHT"
-and-
THE OWNERS AND CHARTERERS OF
THE VESSEL "KIELGRACHT"
-and-
THE VESSEL "BONTEGRACHT"
-and-
THE VESSEL "KIELGRACHT"
Defendants
BETWEEN:
C.V. SCHEEPV.ONDERNEMINEG "Sambeek"
-and-
SPLIETHOFF'S BEVRACHTINGSKANTOOR B.V.
Plaintiffs in Counterclaim
AND:
ABITIBI-PRICE SALES CORPORATION
Defendants in Counterclaim
BETWEEN:
C.V. SCHEEPV.ONDERNEMINEG "Sambeek"
-and-
SPLIETHOFF'S BEVRACHTINGSKANTOOR B.V.
Plaintiffs in Third Party Claim
AND:
ABITIBI-CONSOLIDATED INC.
Defendants in Third Party Claim
REASONS FOR ORDER
DUBÉ J:
[1] On September 3, 1998, the Prothonotary issued an order which is now attacked on different grounds by all the parties involved. Firstly, the order granted an extension of six months to the plaintiffs to serve their statement of claim on the defendant vessel Bontegracht ("the Bontegracht"). Secondly, it set aside the warrant of arrest issued against the Bontegracht on August 14, 1998. Thirdly, it ordered the plaintiffs to return to the defendants a Letter of Undertaking issued by them to prevent the arrest of the vessel. Fourthly, it condemned the plaintiffs to pay the costs of the motion at the maximum rate provided under Column IV of Tariff B. Fifthly, otherwise the defendants' motion was dismissed.
1. Facts leading to the Prothonotary's order
[2] The statement of claim in rem for this cargo claim was filed on July 11, 1997, but was not served on the Bontegracht. On August 14, 1998, the plaintiffs threatened to arrest the Bontegracht while the latter was in Baie Comeau, Québec, loading a cargo. At that time the one year delay to serve the statement of claim had expired. The plaintiffs caused a warrant of arrest to be issued on that day. So as not to disrupt the commercial operations of the vessel, the defendants were compelled by the plaintiffs to issue a Letter of Undertaking to prevent her arrest.
[3] The plaintiffs moved for an extension of time under Rule 8 of the Federal Court Rules, 1998 to serve the statement of claim in rem on the vessel and were granted an extension of six months by the Prothonotary. The latter did not accept the arguments of the defendants that the plaintiffs failed to take reasonable means to attempt to serve their action in rem on the Bontegracht within the year. He did not consider that the extension of time would revive a prescribed action against the Bontegracht and cause prejudice to the defendants.
[4] On the other hand, the Prothonotary agreed with the defendants that the arrest under an expired statement of claim was unlawful and set aside the warrant of arrest. He ordered the plaintiffs to return the Letter of Undertaking to the defendants as it was obtained under duress. Relying on Rule 410(2) of the Federal Court Rules, 1998 relating to costs of motion to extend time, he ordered costs to be borne by the plaintiffs who brought that motion. He denounced the use of threat of arrest by the plaintiffs to secure the issue of the Letter of Undertaking and condemned them to maximum costs. The net result of the Prothonotary's order is that the plaintiffs have obtained an extension of six months to serve their statement of claim in rem, but have lost their warrant of arrest and their Letter of Undertaking and are now saddled with high costs. As for the defendants, their vessel is free but may be arrested if she shows up in Canadian waters within the next six months.
2. Validity of the warrant of arrest
[5] The plaintiffs claim that a warrant for the arrest of a vessel can be issued at any time before judgment after the filing of a statement of claim in rem based on Rule 481(1). That Rule stipulates that a designated officer may issue a warrant for the arrest of property in an action in rem at any time after the filing of a statement of claim, but the statement of claim must still be valid at the time of the arrest. Rule 482(1) provides that the warrant issued under subsection 481(1), plus the affidavit to lead warrant and the statement of claim shall be served together upon the vessel. Obviously, that cannot be done when the statement of claim is no longer valid. It follows that the Prothonotary did not err in law when he set aside the warrant of arrest.
3. The Letter of Undertaking
[6] The plaintiffs allege that, based on the conditions stated in the Letter of Undertaking, they are entitled to remain in possession of said letter as a result of the order granting them an extension of time to serve their statement of claim. However, the Letter of Undertaking reserves the defendants' right to challenge the plaintiffs' right to arrest their vessel. It also provides that the undertaking will expire if the plaintiffs' right to arrest the Bontegracht is eventually denied. Thus, the Prothonotary was right in ordering the plaintiffs to return the Letter of Undertaking to the defendants.
4. Special costs against the plaintiffs
[7] It is common ground that a prothonotary's decision may not be reviewed unless it is based on a wrong principle of law or a misapprehension of the facts or unless it raises questions vital to the final issue of the case1. His decision may not be reviewed where it is based on discretion and no error in fact or law is established. It was well within the Prothonotary's discretion to award costs to the defendants at the maximum amount of units under Column IV of Tariff B. These special costs were awarded because the Letter of Undertaking was obtained under duress while the statement of claim had expired.
5. Extension of delay for serving the statement of claim
[8] The defendants attack the Prothonotary's decision to extend the time for serving the statement of claim in rem. They submit that once it is established that the ship was within the jurisdiction of the Court for a sufficient amount of time to allow her to be served, the proper test to be applied is whether the plaintiffs took all reasonable means to ascertain the presence of the Bontegracht in the jurisdiction2. The plaintiffs must have used all reasonable means sufficient to satisfy their legal duty to serve the statement of claim within its original currency. They must convince the Court that the method used by them to track the Bontegracht was sufficient to satisfy the test for granting an extension3.
[9] On that score, the Prothonotary said in his reasons for order that he had considered the arguments advanced by the defendants but had concluded that the plaintiffs had taken all reasonable means during the relevant period to serve their statement of claim on the vessel.
[10] There was before the Prothonotary the affidavit of one of the plaintiffs' solicitors, J. Kenrick Sproule declaring, inter alia, that on June 19, 1997, the defendants' solicitors were prepared to accept service of the statement of claim in personam but refused to provide the plaintiffs with security for their claim. Thereupon, his instructing client resumed his watch of the Bontegracht to verify if she would enter Canadian waters. He used the Lloyd's Seadata service "which is a computerized vessel movement service where information on a vessel consists of estimated time of arrivals at discharge ports which is given by the vessel's agents to Lloyds".
[11] The affiant adds that throughout the duration of these proceedings, his instructing client monitored the vessel so as to arrest her if necessary as soon as she entered Canadian waters. The Bontegracht entered Canadian waters on two occasions. On August 6, 1997, she called at the port of Dalhousie, New Brunswick, but the plaintiffs' local agent (the instructing client) was out of his office. On August 13, 1998, she called at the port of Baie Comeau, at Reynolds berth No. 5. On that second occasion, the statement of claim had expired.
[12] The defendants argue that the plaintiffs could have been more diligent in the tracking of the vessel by making use of a competent tracking service or by making frequent and regular requests to "ECAREG" (the Eastern Canada Vessel Traffic Zone in Halifax, N.S.).
[13] The Prothonotary concluded that the plaintiffs had taken reasonable means to track the vessel. That is a matter of appreciation of fact and it was open for the Prothonotary to come to that decision. He properly held that the costs of that motion for extension of time be borne by the plaintiffs.
6. Disposition
[14] It follows that all these appeals from the Prothonotary's order rendered on September 3, 1998 are dismissed. Each party will bear its own costs.
OTTAWA, Ontario
October 14, 1998
Judge
__________________1 Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 at 462-63.
2 Atlantic Gypsum Ltd. v. The Frines et al. (1982), 30 C.P.C. 86 (F.C.T.D.) [hereinafter Atlantic Gypsum]; Skagway Terminal Co. v. Gayong (The), [1983] F.C.J. no. 430 (T.D.) and The Berney, [1979] 1 Q.B. 80.
3 Voest Alpine Canada Corp. et al. v. Pan Ocean Shipping Co. et al. (1992), 55 F.T.R. 113 (F.C.T.D.).