Date: 19981113
Docket: T-111-98
ACTION IN REM AGAINST THE DEFENDANT SHIP "ATLANTIS TWO"
BETWEEN:
FRASER SHIPYARD AND INDUSTRIAL CENTRE LTD.,
Plaintiff
- and -
EXPEDIENT MARITIME COMPANY LIMITED
EXPEDIENT MARITIME CO. (CYPRESS) LTD.
and the owners and others interested in the ship "ATLANTIS TWO"
Defendants
- and -
THE OFFICERS AND CREW OF THE SHIP
"ATLANTIS TWO"
Intervenors
ASSESSMENT OF SHERIFF'S COSTS - REASONS
Charles E. Stinson,
Assessment Officer
[1] By Order dated May 27, 1998, the Prothonotary, John A. Hargrave, directed that Mr. Bernard T. Jones, a Ship Broker of C.T.L. Westrans, be appointed as Acting Sheriff of this Court (hereafter the "Sheriff") with authority for appraisal and sale of the ship "ATLANTIS TWO". The Order, which was not appealed, directed that the costs of the appraisal be treated as Sheriff's costs payable out of the proceeds of the sale and that the Sheriff's commission be set at 1% of the total sale price. Ultimately, the vessel sold for US. $1,100,000.00.
[2] Paragraph nos. 19, 20 and 23 of the sale order read:
| 19. Following the successful sale the Sheriff shall deposit the proceeds into Court and produce his account together with his bill of costs and expenses supported with vouchers to be taxed; |
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| 20. All reasonable expenses of advertisement of the sale, agency fees, insurance and all other costs, disbursements, commissions and other expenses necessary or inherent to giving effect to this order and the commission of appraisement and sale and for the preservation, safekeeping or maintenance of the ship, incurred by the Sheriff, shall be treated as Sheriff's costs payable immediately from the proceeds of the sale, upon taxation; |
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| 23. Liberty to apply is granted to the Sheriff and to all interested parties. |
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The Sheriff produced his account by way of Bill of Costs and the Affidavit of Mr. Jones sworn August 20, 1998, in support and filed (as specified in the Commission of Appraisal and Sale) August 21, and the Affidavit of Mr. Jones sworn September 16, 1998, and filed on September 17, in support of his Supplemental Bill of Costs exhibited thereto.
[3] Throughout, the Sheriff pressed the Registry and myself for early settlement of the account and suggested that the reputation of the Court and his reputation suffered because of the delay. He had incurred bills on behalf of the Court and was being pressed for settlement of these accounts. His letter dated September 17, 1998 to the Registry was indicative of his various communications to this effect. In part, it urged us "to deal with this matter soonest so that we can place these people in funds" and to settle the Compass Marine disbursement account as a first priority. There is no question that the Admiralty Court for Canada and the claimants were well served in this matter by Mr. Jones. As well, I recognize and accept that delays in settling accounts are to be avoided. However, the Sheriff's communications may have misconstrued the authority of the Registry and, in particular, of an Assessment Officer in this area. Rules 490(5) and (6) provide for the assessment of the Sheriff's accounts including the participation of any party or caveator who is interested in the proceeds of sale. Those proceeds are held in trust accounts governed by strict regulations concerning access. Therefore, it was never open to me to settle accounts except further to formal notice to interested parties giving them a reasonable opportunity to participate. The sale Order did not exempt the Sheriff from giving notice of his accounts. He did not, however, do so. The Registry and an Assessment Officer did not have any authority under paragraph 23 of the sale Order.
[4] In Court file No. T-76-93, Luis Ricardo Almeida Gomez et al.v. The Ship "M.V. Rio Mafil", similar concerns for the timely payment of sale-related accounts occurred before the sale Order was issued. On August 25, 1993, the Honourable Mr. Justice Rothstein ordered:
| 3. The Vessel shall be appraised and sold pursuant to Rule 1007 and under authority of a commission addressed to a Deputy Marshal of this Honourable Court in the form attached as Schedule "A" hereto, and the price and terms of such sale to be subject to the approval of this Court. |
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| 4. The Plaintiffs shall have joint conduct with the Deputy Marshal of the sale of the Vessel and the Plaintiffs shall be at liberty to list it for sale as aforesaid by engaging a ship broker or a ship brokeraging firm, acceptable to the Deputy Marshal and be at liberty to pay any ship broker or firm who may arrange a sale of the Vessel a commission not to exceed 1% of the gross selling price of the Vessel. Such commission and the expenses of the ship broker or firm in connection with services in promoting the sale, including the costs of advertising, shall be paid from the proceeds of the sale and shall be submitted directly to a Taxing Officer who shall forthwith examine said account. The Taxing Officer shall issue a Certificate ex parte to the ship broker authorizing all or such portions of the account as he deems appropriate. The ship broker is hereby authorized to keep such monies, out of the proceeds of sale, as are authorized by the Certificate of the Taxing Officer and shall pay the net proceeds from the sale into Court to the credit of all claimants in rem against the Defendant vessel and the Plaintiffs shall be at liberty to seek payment out thereafter. The Taxing Officer shall file a report as to that portion of the account not certified for further Order of the Court. |
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| 7. After the deduction of the said commission and the said expenses as described in Paragraph 4 above, the net proceeds from the sal[e] shall be paid into court to the credit of all claimants in rem against the Defendant vessel and the Plaintiffs shall be at liberty to seek payment out thereafter.... |
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As it happened, it was Mr. Jones who was engaged as the Ship Broker in that matter. He filed his account on October 22, 1993 and I issued the appropriate Certificate of Ship Broker's account that same day. Here, the Registry had no authority to apply for similar directions.
[5] Paragraph no. 9 of the sale Order set July 30, 1998, as the deadline to file claims. Several were filed. It appeared from the Court file that no single document listed the interested parties contemplated by Rule 490(6). Neither the Sheriff nor any claimant provided a list. I searched the Court file and prepared one. Further, the Registry brought the first Bill of Costs to my attention when it was filed. The first page of exhibit A to Mr. Jones' affidavit filed August 21, 1998, indicated that further accounts were to be produced. Soon after, the Sheriff informally advised the Registry that a supplemental Bill of Costs was forthcoming. It was immediately apparent to me that the claim in the initial account for 50 hours @ $200.00 per hour for "Sheriff's time and costs" might attract objections given Federal Business Development Bank v. The "Saturna Maid", [1979] 2 F.C. 342 (F.C.A.) addressing the commission to be taken, and also given that Tariff A4 and A5 of the Federal Court Rules likely did not preclude the operation of the British Columbia Supreme Court Rules, Appendix C, Schedule 2, s. 5(b) entitled "For arrest of ships" which settles the hourly rate at $45.00 for Sheriffs for "attending, investigating, inventorying, cataloguing, taking and maintaining possession, preparing for sale". As well, I noted that the language of Rule 490(1)(d) was permissive while that of Rule 490(2) was imperative, i.e. an agent could be engaged subject to stipulated terms of compensation, but the appraisal or sale of property under arrest must proceed under the authority of a commission addressed to the sheriff.
[6] As I read the sale Order at August 21, 1998, it was open to dispute as to whether the Sheriff was exempt from the operation of Schedule 2. His own account described the time as Sheriff's time. The letter dated August 19, 1998, marked as exhibit A to his affidavit sworn August 20, appeared to reinforce the relationship of his hours to his duties as Sheriff, distinct from the commission of 1% of the sale price for his duties as Ship Broker. I recognized the practicality and efficiency of the sale Order in taking advantage of his expertise in this market but, as of August 21, 1998, the Sheriff had not presented any materials that would have reassured me that there was no possibility of objections to any portion of the account. Given the regulations governing trust accounts and the absence of an application, which the Registry itself could not make, by the Sheriff or any claimant for directions, I decided that circulation of the accounts should occur after full compliance with paragraph no. 19 of the sale Order.
[7] Two of the claimants, from Norway and Great Britain, were not represented by counsel within this jurisdiction. It was open to the Sheriff or to any claimant to have advanced the process by forwarding the accounts to the other interested parties contemplated by Rule 490(6) so as to secure consents or waivers. The Sheriff performs his service with authority from the Admiralty Court for the benefit of all creditors and is accordingly given first priority to the proceeds of sale. The Registry however, being neutral, has no authority to advise the Sheriff of possible difficulties in a filed account such as the hourly rate. I decided that the absence of submissions clarifying this point, and potentially others, did not justify putting the interested parties to the extra expense associated with the circulation of multiple time frames addressing segments of the accounts. Instead, I directed that the Registry photocopy all of the accounts and supporting materials and forward them to the twenty interested parties contemplated by Rule 490(6) under cover of a letter dated September 24, 1998, including this passage:
| The Assessment Officer directs that written submissions and materials be served and filed as follows: |
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| a) The attached schedule sets out all claimants or interested parties and, if known, their solicitors within the jurisdiction. Any entity appearing thereon may serve and file, on all others, any written submissions and supporting materials, by 5:00 p.m. on Tuesday, October 20, 1998. The written |
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| submissions, to be considered responsive, must begin by a listing in this format: |
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| (i) the items to which (name of claimant or interested party) consents are _______________. |
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| (ii) the items to which (name of claimant or interested party) objects are _________________. |
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| (iii) the items for which (name of claimant or interested party) takes no position are _________________. |
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| b) Any reply materials shall similarly be served and filed by 5:00 p.m. on Friday, October 30, 1998; and |
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| c) Any rebuttal materials shall similarly be served and filed by 5:00 p.m. on Thursday, November 5, 1998. |
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The Registry incurred extra expense for the special arrangements to ensure that the claimants in Norway and Great Britain received the notification at the same time as those claimants represented within this jurisdiction. Given the number of claimants potentially exchanging submissions and that no prior consents or waivers existed, and given Rule 490(6), a shorter time frame might have prejudiced the rights of claimants relative to the trust fund notwithstanding service providers pressing for settlement.
[8] As it happened, the claimants Mega Marine Services Inc., Hellenic Ship Supply Inc., Atlantic Steamers Supply Co. (NLN) Inc. and Atlantic Steamers Supply Co. (DE) Inc. (hereafter the "Mega Claimants") filed this objection on October 20, 1998:
| The items to which the Claimant [sic] objects are: |
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1. Sheriff's time and costs @ $200 per hour of $10,700 dollars CDN; and
2. Agents [sic] fees in the amount of $400 dollars.
The reason for the Claimants' objections are set out below.
| The order for sale (para. 3) provides for the Sheriff to be remunerated by way of commission. Pursuant to that order, the Sheriff has properly claimed a commission of $11,000 USD for his services. This translates into approximately $17,000 CDN. To the extent that any of the time charges claim relate to selling the vessel, they have been paid for by way of commission. |
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| The order for sale also provides (para. 22) for the payment of agents [sic] fees. Agency fees have been paid to Compass Marine Services Inc. in the amount of $5,085 CDN at a rate of $350 dollars per day for the first four days and $45 dollars per day for a remaining 73 days. As Compass Marine Services Inc. has the same address as the Sheriff, it appears to be a related company. There also appears to be an overcharge of $400 dollars, as $1,800 dollars has been charge [sic] for the first four days instead of $1,400 dollars. |
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| In the alternative, if hourly fees are payable in addition to commission, the Sheriff has not provided a sufficient description of his services to determine if they are properly chargeable as sheriff services. To the extent that there are any proper hourly charges for services, it is submitted that $45.00 per hour is the appropriate rate pursuant to Schedule 2, paragraph 2(b) of the British Columbia Supreme Court Rules as incorporated by reference by section 4 of Tariff A of the Federal Court Rules. |
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| The Claimants take no position with respect to the other items on the Sheriff's Bill of Costs. |
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The Mega Claimants then filed this Supplemental Written Submission on October 22, 1998:
| As the only parties who have contested the bills of costs of the acting sheriff, the Claimants (as defined herein) would not object to the immediate payment out to the acting sheriff of all of his costs other than the following: |
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| $10,700 CDN Sheriff's time @ $200 per hour |
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| $400 CDN Disputed Agency Fees |
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[9] The Sheriff sent a letter noting his attempts to speed up the process of settling the Bill of Costs; indicating that he was providing "evidence of agency tariffs applicable which prove that we have actually charged below the standard rates set out by the B.C. Chamber of Shipping"; requesting that the funds not in dispute be paid out promptly; asserting that the distinction between his roles as Sheriff and Ship Broker were obvious; complaining again about the delay and hinting both at the submission of a further supplemental Bill of Costs for his extra hours in dealing with this matter and at levying interest on the funds paid out so far on behalf of the Court. If he had done work required by Rule 490(6) and the restrictions concerning trust funds so as to hurry the process, it was not disclosed to me prior to the letter dated September 24, 1998 from the Registry circulating the timetable for participation in the assessment and providing copies of the relevant material. If I had had directions comparable to the Rio Mafil, supra, or some other directions waiving the full effect of Rule 490(6) relative to a trust fund, I would have cut short the period of circulation. Here, neither the Sheriff nor any claimant applied, by way of notice of motion to the Court, for such directions. It was open to the Sheriff to have searched the Court file for the names and representatives of caveators and claimants prior to submission of his accounts. He could then have obtained consents or waivers or a partial waiver such as from the Mega Claimants here. In the absence of such work disclosed to me by September 24, 1998, I circulated a full timetable.
[10] Mr. Jones asserted that he had two distinct roles, being Acting Sheriff and Ship Broker. He noted that the role of broker concerned marketing and selling the ship and the role of Sheriff dealt with administering the needs of the ship and making commercial decisions about the vessel crew and other legal items arising out of this matter. In a communication dated October 20, 1998, to the Claimants' counsel, the Sheriff asserted:
| We are in receipt of your submissions regarding Sheriff's costs and we are rather surprised by your claimant's objection. In order to save time, we hope that we can answer your objections and you would therefore withdraw your claimant's objections accordingly. |
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| 1) The role of Sheriff and Broker are two separate roles. |
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| I was appointed the Acting Sheriff and also acted as broker in order to save time and money for all parties. The Sheriff dealt with all matters regarding the administration of the ship; arranging supplies, movement, crew repatriation, etc, etc, and the broking side concerned the commercial sale of the vessel. |
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| These roles are distinct and acting as the Sheriff with de facto ownership powers, I was able to minimise expenses of the vessel and in fact by the moving the vessel to a berth saved considerable amounts of money in crew wages. |
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| The rate of CDN $200 per hour for Sheriff's time is not unreasonable bearing in mind I have 23 years experience in this business and is in line with current fee structures. The US $11,000 is the agreed commission for the broking aspect of the sale, which is totally separate from the Sheriff's duties. In reality, as the Sheriff, I and my staff spent far more than the hours claimed for and actually continue to spend our time dealing with matters regarding the sale of this ship. If I were to submit another bill for my time incurred after the sale, this would greatly increase the hours further. In the spirit of trying to co-operate with the creditors I have not done so yet. |
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| Regarding your objections on the agency fees, I attach a 1998 agency schedule and refer you to Section B. where the basic agency fee for the first four days is CDN $1800 and thereafter CDN $325 per day. As you can see, our charges of CDN $45 per day for the 73 days after the initial period is well below the standard fees and I trust this answers your questions for this item... |
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The Sheriff included a breakdown of the 50 hours for his time, a note that he had rounded down the Bill of Costs by 12.5 hours voluntarily and a summary of 14 hours, incurred subsequent to the 50 hours, which he was prepared to waive if the bill was settled promptly.
[11] His letter dated October 25, 1998 (exhibit A to his affidavit sworn October 29, 1998) contained these submissions:
| Please find enclosed our reply dated October 20, 1998 to Mr. Caldwell's written submissions regarding the Acting Sheriff's Bill of Costs and agency fees in the amount of $400. |
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| RE NO. 1 Sheriff's time and costs @ $200 per hour of $10,700 dollars CDN |
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| Enclosed are a revised Summary of Sheriff's Costs showing a further breakdown of Sheriff's hours and a Summary of Sheriff's Subsequent Costs (subsequent to submission of original Bill of Costs - first drafted August 17, 1998 and submitted to court, August 21, 1998), as yet unclaimed for. |
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| Summary of Sheriff's Costs |
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| - revised to show actual hours 62.5 Hours |
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| Summary of Sheriff's Subsequent Costs |
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| - shows unclaimed hours subsequent to submission |
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| of original Bill of Costs 14 Hours |
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| Total Actual Hours 76.5 Hours |
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| *Total Hours Claimed 50 Hours |
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| (*In the interests of keeping costs down I rounded down my Bill of Costs by 12.5 hours voluntarily and have not yet claimed for subsequent costs) |
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| At the time we were requested to act we agreed to act as both Sheriff and broker for this deal in the interests of saving costs and efficiency. The role of Sheriff and broker are two very separate roles and if we had acted solely as brokers the time spent on selling this vessel would have been much less than the hours we actually incurred. |
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| At the time we accepted to act as Sheriff, we were not made aware of any standard tariff set down by the Federal Court and we accepted on the premise that we would be paid at a rate that we normally charge out our services. Our work as Sheriff not only involved my time but that of my assistant and a number of other senior brokers in the office. Accordingly, we request that the fees claimed are allowed by the court under Section 20(2) of the Federal Court Rules. |
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| The lack of objections from any other party shows that they do not believe that these are out of line with the current fee structures being paid to someone of 23 years experience in the international shipping market. |
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| RE: NO. 2 Agents fees in the amount of $400 |
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| We have already explained to Mr. Caldwell that the fee structure charged for agency is in conformity with the standards set down by the BC Chamber of Shipping and in fact, the subsequent daily rate after the initial period is actually $280 below the recommended daily charge.... |
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[12] The Mega Claimants filed rebuttal submissions on November 5, 1998:
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1. With respect to the description of the breakdown of the hours performed by the acting Sheriff, the Claimants say as follows: |
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a) The eight hours spent dealing with the administration of crew matters from June 1 to June 30 was done as a function of the ships agent's duties rather than the Sheriff. If this function was performed by Mr. Jones, it was done in his capacity as an employee of Compas Marine Services Inc. which has been paid for its services. |
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b) Similarly, any administration of crew matters done between July 1 to July 31 was done as agents duties. Unfortunately, it is not clear from the materials filed, how many, of the eight hours claimed, were devoted to crew matters. The claimants are not opposed to further affidavit evidence being filed or oral evidence being led at the hearing with respect to this matter. |
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c) The four hours spent negotiating with INCOFE and new owners regarding the Charter Party between August 1 and August 16 are matters which are the duties of the broker and are accordingly covered by the commission paid. |
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d) The four hours spent effecting delivery of the vessel are also matters which are the duties of brokers. |
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e) The hours claimed after August 17, 1998 all appear to be duties ordinarily carried out by a sheriff, except |
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i) the two hours of discussions with the court registry regarding delays; and |
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ii) the two hours trying to effect speedy acceptance of his bill of costs. |
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2. With respect to agency fees, it is submitted that in his capacity as acting sheriff, Mr. Bernard negotiated with Compass Marine Services Ltd. to provide agency services at a set rate. At this rate, there was an overcharge of $400 dollars. It is too late now to re-negotiate a new rate for the agent. |
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[13] I have issued a Certificate of Assessment dated October 27, 1998, "that the costs of the Acting Sheriff, Bernard J. Jones, presented at CDN $71,046.18; US $19,229.00 and GB "4,060.00 relative to the sale of the ship "Atlantis Two ", are assessed and allowed at CDN $59,946.18, US $19,229.00 and GB "4,060.00 and the assessment of the remaining CDN $11,000.00 disputed by the Claimants... is reserved pending the expiry of the last time limit for submissions set for Thursday, November 5, 1998". The Registry immediately began processing cheques in those three currencies.
[14] The sale Order was shaped to realize the greatest fund possible for the benefit of the claimants by taking advantage of Mr. Jones' expertise. Likely, its intent was to fold the expertise of a Ship Broker into the function of the Sheriff for practicality and value. However, the Order did not appear to assign him dual functions such as that of Sheriff for part of the time and that of Ship Broker for the remaining time. For example, paragraph no. 3 identified him as a Ship Broker and appointed him "as an acting Sheriff of this Court" and then stipulated that the "Sheriff's commission shall be 1% of the total sale price". That is, the Order did not appear to distinguish, by title, the roles of Sheriff and Ship Broker in terms of compensation.
[15] As noted above, the Bill of Costs filed August 21, 1998, did distinguish clearly the roles of Sheriff and Ship Broker, in terms of compensation, by associating the hours with the former and the commission with the latter. Mr. Jones' written submissions carefully reinforced that distinction and went so far as to emphasize that "U.S. $11,000 is the agreed commission for the broking aspect of the sale, which is totally separate from the Sheriff's duties" (my emphasis). That is, he confirmed that none of the 50 hours related to broking. Paragraph no. 5 of the sale Order provided that the Sheriff be entitled to "retain the services of an agent to promote the sale of the ship" and does not help his position. The references to Sheriff throughout, and in subsequent Orders, did not break out the role of Ship Broker in the manner asserted by Mr. Jones. His accounts throughout reinforced the association of hours with the role of Sheriff and of commission with the role of Ship Broker.
[16] Relief under Rule 20(2) is not available simply by way of a letter addressed to the Court or exhibited to an affidavit. Rule 20(2) provides for modification of the limits in Rule 20(1), defined as Sheriff's "fees for service and disbursements set out in Tariff A". Subject to section A5, Tariff A4 provides that the amount payable for services of a sheriff "shall be the amount permitted for similar services by the tariff of the superior court of the province in which the services were rendered". Tariff A5 provides for the sheriff's fees in situations where the "practice of the superior court of the province in which a writ was executed does not provide for sheriff's fees realizable on execution". It is silent on hourly charges. Rules 358-71 govern the procedure for relief. No motion was brought. I note that the process here was not for execution of a writ. Initially, I was inclined to examine the particular listing of duties in s.5(b) of Appendix C, Schedule 2 supra with a view to applying Rule 3 of the Federal Court Rules, 1998, to embrace the practicality of using an experienced Ship Broker as the acting Sheriff. In other words, I might have examined the accounts to apportion hours to his duties as Sheriff and hours to his duties as Ship Broker. However, the submissions clearly precluded that approach. This statement in exhibit A to Mr. Jones' affidavit filed August 21, 1998, "Our fees are charged in accordance with the Federal Court Rules", was ultimately inconsistent with subsequent materials. I am bound by the tariff to the British Columbia Supreme Court Rules. I allow 50 hours @ $45.00 per hour plus 7% GST = $2,407.50 for the Bill of Costs filed August 21. I took into consideration the submissions by the Mega Claimants concerning prior compensation for Compass Marine and for broking. However, the Rules require that the sale be effected by authority issued to a sheriff. I was not satisfied on the materials that roles, other than that of Sheriff, attributed to Mr. Jones duplicated his ultimate responsibilities as a sheriff for the sale process.
[17] Mr. Jones presented the additional 14 hours as follows:
| August 17 - Present Subsequent hours preparing Sheriff's Bill of Costs and 5 |
| Supplementary Bill of Costs |
| Fielding questions from creditors/debtors to the Sheriff 5 |
| Various Discussions with Court Registry regarding delays 2 |
| in settlement of Sheriff's Bill of Costs |
| Communications with various lawyers, trying to effect 2 |
| speedy acceptance of Sheriff's costs |
| -- We are prepared to waive these additional hours if the bill is settled promptly. However, if not, then we will reluctantly have to submit them. |
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Mr. Jones' situation was similar to a litigant's solicitor or the litigant filing a Bill of Costs per Rule 406(1) to initiate the process of assessment of costs. Clearly, they would spend time or incur disbursements subsequent to that filing date in finalizing the costs. Item No. 26 in Tariff B accounts for the solicitor's time. Here, I allow the 5 hours for preparation of the Bills of Costs and the 5 hours for fielding questions. Consistent with the rationale above, I discount completely the 2 hours for discussions with the Registry concerning delays. As for the 2 hours addressing speedy acceptance, I note his various assertions concerning his experience in the market. I find it difficult to approve depletion of the sale fund indirectly because of his professed lack of knowledge of long-standing regulations governing fees surely familiar to people in the maritime sector in varying degrees. I disallow these 2 hours. Therefore, I allow an additional 10 hours @ $45.00 per hour + 7% GST = $481.50. As for the agency fees in dispute, the Sheriff's explanation satisfies me. I allow the $400.00 as presented.
(Sgd.) "Charles E. Stinson"
Assessment Officer
Dated this 13th day of November, 1998