Date: 19990813
Docket: T-2161-98
BETWEEN:
JAMES FISHER & SONS PLC
Applicant
- and -
PEGASUS LINES LIMITED S.A.
Respondent
REASONS FOR ORDER
LUTFY J.:
BACKGROUND
[1] On February 22, 1999, Morneau P. ordered the respondent to pay to the applicant $290,491.49, plus interest and costs, pursuant to an ex parte application for the registration of a foreign judgment under Rules 327 and 328.
[2] The foreign judgment was issued in England by the High Court of Justice, Queen"s Bench Division, Admiralty Court on October 30, 1997, concerning the applicant"s "claim for disbursements incurred by them as agents for and on behalf of the [respondent] in respect of the [respondent"s] chartered vessels calling at various ports during the months of February-August 1995 ...".
[3] In late May 1999, counsel for the applicant caused to be served on "Mr. James Karathanos, as representative of Pegasus Lines Limited S.A."s agent in Montreal", a direction to attend and to produce for inspection certain documents at an examination in aid of execution scheduled for June 8, 1999. This direction was served pursuant to Rules 91 and 426.
[4] In describing Mr. Karathanos "as representative of Pegasus Lines Limited S.A."s agent", the applicant was referring to Amican Navigation Inc. The applicant maintains that Amican is the general agent for Pegasus.
[5] It is common ground that Mr. Karathanos is the president of Amican Navigation Inc. The parties do not agree on the relationship between Amican and the respondent Pegasus Lines Limited S.A. Nor do they agree that Mr. Karathanos is a person who comes within the scope of Rule 426 to be examined in aid of execution against the judgment debtor Pegasus.
[6] On June 8, 1999, Mr. Karathanos attended at the examination in aid of execution so that, in the words of the counsel who accompanied him, "it would not be said that he was ignoring the process of the Court". Counsel then added: "I will state for the record that Mr. Karathanos is not an officer of Pegasus, nor an owner of that company, so I am advised." In view of the position he adopted, counsel for Mr. Karathanos did not allow him to be sworn for the purposes of responding to questions. Counsel further explained his objection and made a limited offer to cooperate in these terms:
| ... anything that Mr. Karathanos would know about Pegasus Lines, to the extent that he knows anything, would be hearsay. He is not the proper subject of an Examination today. Mr. Karathanos is, however, prepared to co-operate by providing you in writing with such information as you may need to track down the officers or other appropriate persons of Pegasus Lines for the purpose of conducting your Examination pursuant to Rule 426.1 |
[7] The applicant now seeks a Court order compelling the examination of Mr. Karathanos pursuant to Rule 426 which provides:
A person who has obtained an order for the payment of money may conduct an oral examination of the judgment debtor or, if the judgment debtor is a body corporate, of an officer thereof, as to the assets of the judgment debtor.
Toute personne qui a obtenu une ordonnance exigeant le paiement d'une somme d'argent peut soumettre le débiteur judiciaire à un interrogatoire oral au sujet de ses biens ou, si celui-ci est une personne morale, l'un de ses dirigeants.
The direction to attend was to Mr. Karathanos as representative of Amican. This motion seeks his examination in aid of execution on behalf of Pegasus.
[8] In support of its motion, the applicant produced the affidavit of one of its Canadian counsel. The deponent"s principal direct assertion is that Pegasus is a corporation registered in Panama and that "over many years Amican Navigation Inc. ... has been its general agent". The applicant"s deponent also produced the affidavit sworn on July 24, 1996 by David Ellis Charity, a solicitor representing Pegasus in England. Counsel for Mr. Karathanos chose to cross-examine the applicant"s deponent and obtained a number of documentary undertakings concerning his understanding of the relationship between Pegasus and Amican and concerning the Charity affidavit. The transcript of this cross-examination and the undertakings form part of the motion records.
[9] The motion record of Mr. Karathanos includes the affidavits of one of his solicitors and an employee of Amican, neither of whom was cross-examined.
[10] The issue is whether Mr. Karathanos, on the information presently disclosed in his motion record and that of the applicant, is "an officer" of the respondent ("l"un de ses dirigeants") within the meaning of Rule 426.
MR. KARATHANOS AND THE INCORPORATION OF PEGASUS
[11] Pegasus was incorporated in Panama in October 1984. Its nominee directors, president and legal representative, vice-president and treasurer, and secretary were, from the outset, three lawyers with the Panamanian law firm of Tapia, Lenares y Alfaro.2 The same lawyers continue to act in these capacities.3 The legal address of Pegasus, originally and as late as 1996, is that of the Panamanian law firm. Since 1988, the president and legal representative of Pegasus is no longer associated with the law firm and he no longer lives in Panama.4
[12] In May 1995, Joseph F. De May Jr., a lawyer in New York, N.Y., wrote to Mr. Karathanos to advise that his firm would no longer be attending to matters concerning Pegasus in Panama. He asked Mr. Karathanos to advise "to whom you wish to transfer your file and we will make arrangements accordingly".5 In the same letter, Mr. De May also forwarded to Mr. Karathanos correspondence he received from "Tapia & Associates" concerning Pegasus.
[13] It was Mr. De May"s firm which instructed Tapia, Lenares y Alfaro when Pegasus was first established. The Panamanian law firm is not familiar with Amican.6
[14] In May 1995, Mr. Karathanos was asked by Mr. De May to name the person to whom the Pegasus file could be transferred. Mr. De May was a member of the firm which originally instructed Panamanian counsel in 1984 concerning the incorporation of Pegasus. This is the limited information now available to the Court. In the absence of any other evidence, I find, on the balance of probabilities, that in 1984 Mr. Karathanos personally retained Mr. De May"s firm who in turn instructed the Panamanian solicitors to incorporate Pegasus, even prior to Amican acting as its general agent.
[15] In March 1996, Mr. De May also looked to Mr. Karathanos when the English action against Pegasus was brought to his attention by the same Panamanian law firm. The facts concerning the English action will now be considered.
AMICAN AS THE GENERAL AGENT OR "MANAGER" FOR PEGASUS
[16] The applicant first obtained default judgment against Pegasus in the English action which eventually led to this proceeding.
[17] The affidavit of David Ellis Charity, a solicitor representing Pegasus in England, was filed in support of the motion to set aside the default judgment entered against Pegasus on the ground that valid service had not been effected. The Certificate as to Particulars of Judgment to be Registered Abroad, which was filed with the notice of application in this proceeding, explained the circumstances concerning the default judgment, its setting aside on consent and the eventual service of the action in England:
| ... the said writ was originally served upon the said Defendant Pegasus Lines Limited SA personally by the Plaintiff"s agents in Panama on 5th February 1996. Default judgement was obtained on 6th March 1996 but was subsequently set aside, by consent, by order of the court dated 6th August 1996. The consent order contained an undertaking by the above Defendant to nominate solicitors within the jurisdiction of England and Wales with authority to accept service of proceedings. The writ was subsequently served, by first class post, upon Davies Grant & Horton (later Davies Johnson & Co), the solicitors to the above named Defendant on 17th October 1996. The Defendant duly acknowledged service of the writ on 30th October 1996.7 |
[18] On July 9, 1996, Mr. Charity wrote to Mr. De May"s firm concerning the English action to determine "when the Writ first came to the attention of an officer of the company". Mr. Charity was asking the New York counsel when the action first came to the attention of his client, Pegasus.8
[19] Mr. De May immediately replied that he had received the writ by mail from the Panamanian law firm on March 15, 1996. On the same day, he advised Mr. Karathanos of the proceeding by telephone and also faxed to him a copy of the writ, together with other papers received from the Panamanian solicitors.9
[20] In paragraph 1 of his affidavit, Mr. Charity stated:
| I am a solicitor of the Supreme Court and a partner in the firm of Stockler Charity, solicitors for the Defendant herein. I am duly authorised by the Defendant to swear this affidavit on their behalf. The contents of this affidavit, except where otherwise indicated, are derived from documents and information provided to me by Mr James D Karathanos, the President of Amican Navigation Inc. Amican are the managers of Pegasus Lines Limited S.A. in Montreal. The contents of this affidavit are true to the best of my information and belief. [Emphasis added.] |
Contrary to the position taken by counsel for Mr. Karathanos at the hearing of this motion, I am satisfied that an ordinary reading of the paragraph discloses that Mr. Charity was authorized and informed by Mr. Karathanos for the purposes of his affidavit. If, as suggested by counsel, some person from Pegasus (someone other than Mr. Karathanos) authorized Mr. Charity to swear the affidavit, evidence to that effect from Mr. Charity or perhaps from Mr. Karathanos himself should have been filed.
[21] I am satisfied on the record before me that Mr. Karathanos through Amican acted as general agent or manager for Pegasus, at least for the purposes of the English action. Mr. Charity described Amican as "the managers" of Pegasus in Montréal.
[22] This finding is fully consistent with information in the other documentary undertakings filed on behalf of the applicant"s deponent that Amican acted as general agent or manager for Pegasus in the years preceding the English action.10 This information also indicates that Pegasus was an operating company in the shipping industry. As recently as 1995, Pegasus "chartered vessels" (Certificate as to Particulars of Judgment) and in September 1995, a claim was filed on its behalf and in its name in the High Court of Justice, Queen"s Bench Division, Admiralty Court as the disponent owner of the AGHIA MARINA.11
[23] It would appear, again absent evidence to the contrary, that Amican continues to act as agent for Pegasus, at least for this proceeding. As recently as late June 1999, an employee of Amican communicated with a representative of the applicant concerning this litigation. There appears to have been an attempt to dissuade the applicant from examining Mr. Karathanos and perhaps even to resolve the litigation, at least on a nominal basis. The Amican employee acknowledged that "the matter could obviously not be resolved on payment of a nominal amount, which is all that Amican would have been prepared to pay in order to avoid further expense and disruption ...".12
[24] Counsel for Mr. Karathanos argued that even if Amican was the general agent for Pegasus in 1995-96 and previously, there is no evidence that such a relationship exists today. I have serious doubts that this is a relevant distinction on the facts of this case, if at all. First, the debts which are the subject matter of the orders issued by the High Court of Justice and this Court were incurred in 1995. Second, one of the English solicitors for Pegasus concerning this litigation was provided documents and other information, for the purposes of his affidavit, from Mr. Karathanos as president of Amican. In any event, representatives of Amican and the applicant discussed the possibility of resolving this litigation as late as June 1999.
[25] None of the material, however, discloses who, if anyone, apart from Panamanian lawyers involved in its incorporation as nominees, English lawyers involved in its litigation and Mr. Karathanos through Amican Inc., represented Pegasus. No one has suggested that the lawyers participated in the ordinary business activities of Pegasus. As late as July 1996, Tapia, Linares y Alfaro was not familiar with Amican. If Pegasus was represented by anyone other than Amican and Mr. Karathanos in its shipping and financial activities, the identity of that person or persons has not been disclosed.
ANALYSIS
[26] In Control Data Canada, Ltd. v. Senstar Corporation,13 Justice Cullen held, in the context of who could be examined for discovery on behalf of a corporation, that the word "officer" ("un membre de la direction") in Rule 465(1)(b ), as it then existed, should be granted a liberal interpretation, perhaps even to include persons who have some particular knowledge of events relating to the action.
[27] Subsequent to amendments to the discovery rules in 1990, Rule 456(2) provided that a corporation selected an informed "officer, director, member or employee" ("un dirigeant, un directeur, un membre ou un employé") to be examined on its behalf. Currently, under the Federal Court Rules, 1998 , a corporation selects "a representative" ("un représentant") to be examined for discovery pursuant to Rule 237(1).
[28] There has not been any change in the English version of the corresponding rules concerning the person to be examined in aid of execution. Where the judgment debtor was a corporation, "an officer" ("un membre de la direction") was the person to be examined under former Rule 2200. Under the current Rule 426, the French version of "an officer" of the corporation is "l"un de ses dirigeants".14
[29] The dictionary definitions of "officer" and "dirigeant" include but do not limit their meaning to corporate officers, such as president, vice-president, treasurer and secretary. In The New Oxford Dictionary of English,15 "officer" is defined as:
| 1 a person holding a position of authority, especially one with a commission, in the armed services, the mercantile marine, or on a passenger ship. |
| 2 ... a holder of a post in a society, company, or other organization, especially one who is involved at a senior level in its management: a chief executive officer. |
In Le Nouveau Petit Robert,16 "dirigeant" is defined as:
| Personne qui dirige. Les dirigeants d"une entreprise. = > administrateur, directeur, gérant ; décideur. |
[30] As was decided in Control Data Canada, Ltd., I agree that "officer" includes more than the principal officers of the corporation.17 This is particularly so in this case where the president, vice-president and treasurer, and secretary of Pegasus, since its inception in 1984, are three nominee officers from a Panamanian law firm. The president has not been associated with the firm since 1988 and no longer lives in Panama. The law firm is not familiar with Amican. One can infer that its lawyers, three of whom are the directors and corporate officers of Pegasus, did not instruct Amican as general agent or manager of Pegasus.
[31] As suggested in the definitions, "officer" includes persons in positions of authority, at the senior level of management and "gérants" or "décideurs", managers or decision-makers. In a corporation with no active personnel, its "officer" for the purposes of Rule 426 may well be its external general agent or manager, or some other similar person who decides for the company.
[32] The outcome will depend on more facts. It is only because Mr. Karathanos has yet to be examined that no final determination can be made concerning his status with Pegasus. It would be inappropriate to resolve the issue definitively on this motion, with much of the relevant information not yet disclosed. On the present record, this warrants and requires the evidence of Mr. Karathanos.
[33] In summary, on my appreciation of the limited available information, I find that Mr. Karathanos, through Amican and personally, is the person in authority, the general agent, the manager or the person who decides with respect to Pegasus. At this stage, I find that Mr. Karathanos is "an officer" of Pegasus ("un de ses dirigeants") within the meaning of Rule 426. Accordingly, he will be examined as "an officer" of Pegasus under Rule 426. It is not sufficient for Mr. Karathanos, let alone his counsel, to make a bald assertion that he is neither an officer or owner of Pegasus. That is a judicial determination to be made, in the particular circumstances of this case, upon answers to be given by Mr. Karathanos. The information available on this motion establishes that Mr. Karathanos may well know the identity of the person responsible for the business and financial matters of Pegasus, if in fact it is someone other than himself or Amican, for whom he speaks.
[34] As an alternative argument, which I need not consider in view of my findings, counsel for the applicant invited me to use Rule 4, the gap rule, in order to compel the attendance of Mr. Karathanos under articles 543 and 544 of the Code of Civil Procedure of Quebec. Rule 60.18(6) of the Ontario Rules of Civil Procedure also provides options not explicitly stated in the Federal Court Rules, 1998. If it had been necessary and appropriate for me to rely on Rule 4, I would have examined by analogy both Rule 237(1) concerning the discovery of a corporation and the provincial rules raised by the applicant.
[35] Accordingly, an order will issue compelling James Karathanos, in his personal capacity and as president of Amican, to attend at an examination under Rule 426 and to produce for inspection the documents sought by the applicant, pursuant to Rule 91. Without limiting the rights of the applicant or Mr. Karathanos during the examination, in issuing the order I have in mind that the questions that may be asked of Mr. Karathanos include those concerning: (a) the identity of the person who instructed Mr. De May"s law firm in 1984 with respect to the incorporation of Pegasus; (b) the identity of the person from Pegasus who instructed Amican when the latter acted as the former"s agent, including the identity of the person from Pegasus, if any, who instructed Amican concerning the June 1999 possible resolution of the litigation; (c) issues related to (a) and (b); and (d) issues related to the documents listed in the order.
[36] The applicant has also sought that the examination be conducted before a prothonotary or judge of this Court. Counsel for Mr. Karathanos did not forcefully contest this request and left the matter for my discretion. I prefer that this examination should proceed in the usual way, at least initially, without the simultaneous and immediate supervision of the Court. I should not assume that Mr. Karathanos will not respect fully an order of this Court.
[37] Finally, if Mr. Karathanos is satisfied, on the basis of new information disclosed in his responses during the examination, that my finding that he is an "officer" of Pegasus under Rule 426, as interpreted in these reasons, can be rebutted, he may seek an order that he be relieved from further examination. The Court"s discretion concerning costs should assure that the possibility of any such motion will not be abused.
[38] Mr. Karathanos, who was represented by counsel in his personal capacity on this motion, shall pay the applicant"s costs which I fix at $2,000.
"Allan Lutfy"
J.F.C.C.
Ottawa, Ontario
August 13, 1999
__________________1 Applicant"s motion record, tab E at pp. 6 and 9.
2 Charity affidavit, exhibit DEC1, pp. 2-3. The Charity affidavit is in the applicant"smotion record under tab A. Exhibit DEC1 is a bundle of documents attached to the Charity affidavit and filed as part of the undertakings made during the cross-examination of the applicant"s deponent (Applicant"s Answers to Undertakings). The page numbers are those referred to by Mr. Charity in his affidavit and noted in handwriting at the bottom of the respective sheets.
3 The motion record of Mr. Karathanos, affidavit of Me. C. Jacques, exhibit B.
4 Charity affidavit, exhibit DEC1, pp. 17 and 30.
5 Charity affidavit, exhibit DEC1, p. 11. Mr. De May"s letter is to Mr. Karathanos personally but forwarded to the office address for Amican.
6 Charity affidavit, exhibit DEC1, p. 17 at paragraph 4.
7 After Pegasus acknowledged service of the writ, a defence and counterclaim and a reply and defence to counterclaim were filed. Judgment was obtained against Pegasus on October 30, 1997. The notice of application for the registration of the English judgment in this Court was commenced on November 19, 1998.
8 Charity affidavit, exhibit DEC1, pp. 19-20.
9 Charity affidavit, exhibit DEC1, pp. 4-8, 19-20 and 21. Mr. De May telecopied thedocuments to Mr. Karathanos at a telephone number other than that indicated on Amican"s letterhead. The English action was purportedly served on Pegasus at the offices of the Panamanian law firm (pp. 4-5), one of whose members sent the documents to Mr. De May"s law firm on March 4, 1996 (p. 6). The papers were apparently received by Mr. De May on March 15, 1996 (p. 21).
10 Answers to Undertakings, tab 2.
11 Charity affidavit, exhibit DEC1, pp. 23-26 and 29-30.
12 Motion record of Mr. Karathanos, tab 3, page 2 and the applicant"s Answers to Undertakings, answer no. 4.
14 Both language versions are equally authoritative: section 13 of the Official Languages Act , R.S.C. 1985, c. O-3.01.
15 J. Pearsall and P. Hanks, The New Oxford Dictionary of English (Oxford: Clarendon Press, 1998).
16 J. Rey-Debove and A. Rey, Le Nouveau Petit Robert (Paris: Dictionnaires Le Robert, 1995).
17 Supra note 13 at 519, where reference is also made to Leitch v. Grand Trunk R.W. Co. (1890), 13 P.R. 369 (Ont. C.A.).