Date: 19981103
Docket: T-1074-97
ACTION IN REM AGAINST THE SHIP "TRINITY"
BETWEEN:
GALEHEAD INC., JAMES J. FLANAGAN SHIPPING CORP.
and BAY-HOUSTON TOWING CO.,
Plaintiffs,
- and -
THE OWNERS AND ALL OTHERS INTERESTED
IN THE SHIP "TRINITY" and THE SHIP "TRINITY",
Defendants.
REASONS FOR ORDER
JOHN A. HARGRAVE,
PROTHONOTARY
BACKGROUND
[1] This in rem action is for American towage services rendered to the ship "Covasna", which at the time was on charter to Overseas Maritime Services S.A. The Covasna subsequently sank, thus the action against the "Trinity", said to be a sistership, responded to by F.V. Fast Trans S.R.L. ("Fast Trans") of Romania, apparently a party interested in the "Trinity". This interesting combination, an American maritime lien enforced through Canadian sistership procedure, is not presently at issue. Rather, the Defendant seeks further documents and specifically:
| 1. All of the accounts of the Plaintiffs, James J. Flanagan Shipping Corp. and Bay-Houston Towing Co., for three ships which Overseas Maritime Services had on charter and to which Bay-Houston Towing rendered services; |
| 2. All of the Plaintiffs' documents related to the subsequent bankruptcy of Overseas Maritime Services; |
| 3. Copies of any communication between Bay-Houston Towing and Overseas Maritime Services before the towing services were rendered to the "Covasna", which might indicate who requested the services and the terms of the services; and |
| 4. Any file which Bay-Houston Towing has, in connection with the "Covasna", which might explain why Bay-Houston Towing continued to provide services to Overseas Maritime Services over a three or four month period when Bay-Houston accounts were not being paid. |
To date the Plaintiffs have provided a substantial affidavit of documents, several additional documents and an affidavit in opposition to this motion which counsel for the Plaintiffs submits deals with all of the requests of the Defendant Fast Trans.
SUBMISSIONS BY COUNSEL
[2] The first item the Defendant seeks, a complete set of accounts rendered by the Plaintiffs to Overseas Maritime Services, is said to be for the purpose of tracing payments made for towage to ships chartered to Overseas Maritime Services, namely the "Nescio", the "Petrash" and the "Covasna". The Plaintiffs say the accounts for the "Nescio" and the "Petrash", which presumably, when chartered by Overseas Maritime Services, were owned by entities other than Fast Trans, have been paid and therefore there is no reason to trace those accounts for they are not relevant. The affidavit evidence of the Plaintiffs is that the account for the "Nescio" was paid by an American law firm in order to have the "Nescio" released from arrest and in this regard the Plaintiffs have produced the relevant correspondence. Further, the "Petrash" account was paid by a wire transfer from an entity called River Ocean General Agency in June of 1996 and again the covering document has been produced. Now this might seem to settle matters, however counsel for the Defendants does not concede that point, at least with regard to the "Petrash". Counsel wonders when services were rendered to the "Petrash" and speculates whether there might not have been some mix-up in billing which would show that the payment on account of services rendered to the "Petrash" ought to have been allocated to the services rendered to the "Covasna". In this regard counsel also asks for a copy of the invoice rendered for services to the "Petrash" in order to give him a date, apparently in order to see whether there might be any possibility that the services rendered to the two vessels, the billings and the payment might have been confused. The Defendants have not explored any of this either by cross-examination on the affidavit of documents or on discovery and indeed, at this point, have no evidence that money sent to Bay-Houston Towing, by or on behalf of Overseas Maritime Services, was applied to the wrong account by Bay-Houston. The Defendant merely says that the possibility of such ought not to be foreclosed.
[3] Subsequently, perhaps in about the Spring of 1997, Overseas Maritime Services went into bankruptcy. The Plaintiffs have produced a bankruptcy court notice of a meeting of creditors scheduled for 4 June 1997. The notice sets out that there appear to be no assets from which payment might be made to unsecured creditors and refers to the prohibition that a creditor may not take independent action against Overseas Maritime Services. The Defendant wishes to determine whether the debt of Overseas Maritime Services, to Bay-Houston Towing, might have been judicially satisfied.
[4] The affidavit of the Plaintiffs, sworn by Peter Godfrey, controller of James J. Flanagan Shipping Corporation, sets out that there have
| "... been no monies received from the bankruptcy proceedings and there has been no adjudication of our rights. As I understand it, we are simply on the list of unsecured creditors and there is not expected to be any payment made.". |
[5] Counsel for the Defendant submits that the deponent of the Plaintiffs' affidavit, the controller of James J. Flanagan Shipping Corp., is probably not legally trained and might well be wrong as to what he swears to in his affidavit. Counsel for the Plaintiffs says that this is, at best, mere suspicion and a fishing expedition for material which, if it exists, is irrelevant.
[6] The third class of material requested by the Defendant is that of documents preceding the written acknowledgment of the master of the "Covasna" that towing services were provided on 28 and 29 July, 1995 and the invoice of 31 July. The Defendant submits that there ought to be documents as evidence of a request for towing services so that the Defendant might determine who requested the services and upon what terms the towing services were provided. Here I would note that there is no evidence, let alone persuasive evidence, to indicate such documents in fact exist.
[7] Counsel for the Plaintiffs submits that towing services relating to ship movement between berths in a harbour are not always and perhaps not even normally governed by or supplied pursuant to written requests, but rather are often requested by telephone by a shore-side agent for the ship. Counsel for the Plaintiffs also points out that there is a sworn affidavit of documents, which does not note any existing material in the nature of a written order or memorandum for dealing with the requirement for tug assistance for the "Covasna". Counsel again characterizes this as a fishing expedition.
[8] As to the last request for documents, counsel for the Defendant wonders why Bay-Houston Towing, after providing services to the "Covasna" at the end of July 1995, also provided towing services to the "Covasna" in mid-August and finally, on a third occasion, toward the end of November, 1995, towing services over a period of nearly four months, without worrying about payment. Counsel submits that there ought to be documents, other than invoices, documents going to Bay-Houston's concern that they had not been paid some $5610 (U.S.). His argument is that there must logically be additional documents.
[9] Counsel for the Plaintiffs points out that one letter of February 1996, a letter pursuing the receivable, has been produced. The material produced in fact includes a letter to Overseas Maritime Services, 6 February 1996 and a faxed letter of 26 March 1996 from Bay-Houston Towing to Navrom Shipping Co., managers of the "Covasna". The former requests payment. The latter expresses a concern that Overseas Maritime Services is unable to pay the account of $5610 (U.S.), requests the assistance of the ship's managers and notes that the "Covasna" is in jeopardy of being arrested in order to enforce the claim. Counsel for the Plaintiffs submits that the affidavit of documents ought to be an answer, that the request is merely a fishing expedition and that the Defendant needs more than a mere suspicion in order to succeed on an application for documents such as the present.
CONSIDERATION
[10] Had this application for further documents, which counsel has a suspicion might exist, been under former Rule 448, I would have denied the motion, in all probability without reasons, characterizing it as a fishing expedition, for to succeed there must be persuasive evidence that such documents are available: Liebmann v. Canada (Minister of National Defence) et al. (1995) 87 F.T.R. 154 at 157. However counsel for the Defendant submits that production of documents under the present rules and specifically Rule 222(2) is broader. This is a point which I do not believe has been dealt with in written reasons.1
[11] When considering production of documents under Rule 448, which defined production in terms of relevancy, the Court looked to the general jurisprudence, which has its base in The Compagnie Financière et Commerciale du Pacifique v. The Peruvian Guano Company (1882), 11 Q.B. 55 (C.A.) at page 63, where Lord Justice Brett sets out to define documents that are material to an affidavit of documents under the Rules of Court of that day:
| "It seems to me that every document relates to the matters in question in the action, which not only would be evidence upon any issue, but also which, it is reasonable to suppose, contains information which may " not which must " either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. I have put in the words "either directly or indirectly", because, as it seems to me, a document can properly be said to contain information which may enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary, if it is a document which may fairly lead him to a train of inquiry, which may have either of these two consequences: ...".2 |
This concept, that production must be made of documents which might reasonably be supposed to contain material which may directly or indirectly enable a party to advance its own case, or which may damage the case of its adversary is also neatly set out by Mr. Justice McNair in Reading & Bates Construction Co. v. Baker Energy Resources Co., Baker Marine Co. and Gaz Inter-cite Quebec Inc. (1989), 25 F.T.R. 226 at 230:
| "The test as to what documents are required to be produced is simply relevance. The test of relevance is not a matter for the exercise of the discretion. What documents parties are entitled to is a matter of law, not a matter of discretion. The principle for determining what document properly relates to the matters in issue is that it must be one which might reasonably be supposed to contain information which may directly or indirectly enable the party requiring production to advance his own case or to damage the case of his adversary, or which might fairly lead him to a train of inquiry that could have either of these consequences: Trigg v. MI Movers International (1987), 13 C.P.C. (2d) 150 (Ont. H.C.); Canex Placer Ltd. v. A.G. B.C. (1976), 63 D.L.R. (3d) 282 (B.C.S.C.); and Compagnie Financière et Commerciale du Pacifique v. Peruvian Guano Co. (1882), 11 Q.B.D. 55 (C.A.).". |
[12] In a case of a document with some semblance of relevancy, it ought to be produced, leaving it to the judge, at trial, to make the final determination of relevancy: see for example Toronto Board of Education Staff Credit Union Ltd. v. Skinner et al. (1985), 2 C.P.C. (2d) 247 (Ont. H.C.). at 296 and Liebmann v. Canada (loc. cit.).
[13] Rule 223(1) of the 1998 Federal Court Rules requires production of "all relevant documents". Prima facie this is the same production as was required under former the rules, however new Rule 222(2) goes on to define the concept of relevancy:
| "... a document of a party is relevant if a party intends to rely on it or if the document tends to adversely affect the party's case or to support another party's case.". |
On a strict reading of this definition of relevancy, in Rule 222(2) a party, arguably, might not have to produce a document which is relevant in the traditional sense and which supports its own case, but upon which that party does not intend to rely. In that sense the new rule for production of documents may be narrower than Rule 448.
[14] In addition, still dealing with the scope of production under the new rules, old Rule 448, as interpreted by the Federal Court, required the production of
| "... any document which might reasonably be supposed to contain information which may directly or indirectly enable the party requiring production to advance his own case or to damage the case of his adversary.": C.M. Security Components Ltd. v. Canada (1995), 79 F.T.R. 282 at 286 - 87. |
In C.M. Security Mr. Justice Teitelbaum to emphasis the point, underlined the words "might reasonably", in the phrase "... which might reasonably be supposed to contain information". Here we do have an element of conjecture or assumption, however this did stop short of requiring production of documents on a mere suspicion that the document might exist or might have some connection with the proceeding. Rather the test, as set out in C.M. Security (supra) is that the document ought to be one which might reasonably be supposed to contain information which may directly or indirectly enable the party requiring production to advance his or her own case or damage the case of his or her adversary.
[15] Certainly, under the rules as they existed before April of this year, for a defendant to seek production of the documents in question would have been held a fishing expedition where the defendant was neither able to show that the material had some semblance of relevancy nor, by persuasive evidence, to demonstrate that such documents were available.
[16] In the present instance the Defendant, Fast Trans, has obtained what appears to be substantial production of documents from the Plaintiffs. Fast Trans has neither produced any persuasive evidence that additional documents are available nor that relevant information has been suppressed. A mere suspicion that a document exists, or that it might be relevant, is a fishing expedition.
[17] Turning again to Rule 222(2), I do not have to decide the limits of that Rule. It is sufficient, for the purpose of deciding this motion, to determine that the new definition of relevancy is certainly not broader and is very likely narrower than the concept of relevancy set out in the traditional case law. The Defendants' motion for additional documents is denied.
(Sgd.) "John A. Hargrave"
Prothonotary
Vancouver, British Columbia
3 November 1998
__________________1 The editors of Sgayis on Federal Court Practice (Carswell), in the "Transitional Supplement to the 1998 Rules", at page 76, suggest production of documents is now narrower. Robert T. Hughes, Q.C., in his 1998/99 Annotated Federal Court Act and Rules (Butterworth), at page 11, 631, is of a similar view and goes on to give an example, referring to C.M. Security Components Ltd. v. Canada (1995), 79 F.T.R. 282, which I have touched on in these reasons.
2 The Court of Appeal in Peruvian Guano dealt with documents relating to an action. Our Rules, former and present, deal with documents that are relevant to an action. These two terms, related and relevant, do not have entirely separate and distinct meanings. For a document to be related to an action necessarily imparts an element of relevance. On this point see the majority decision, written by Mr. Justice of Appeal Marceau in Owen Holdings Ltd. v. Minister of National Revenue (1997), 216 N.R. 381 at 384.