Stays of Proceedings - Case Summaries
The database contains 31 case summaries relating to Stays of Proceedings. The summaries are sorted in reverse date order with 20 summaries per page. If there are more than 20 summaries, use the navigation links at the bottom of the page.
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Carriage of Goods by Water — Cargo — bill of Lading — Contract — Stay
Arc-En-Ciel Produce Inc. v. MSC Belle (Ship), 2020 FC 23
Précis: The Federal Court refused to stay proceedings despite a jurisdiction clause in a contract for the carriage of goods by water.
Facts: The defendant sought to stay the within proceedings on the basis of a jurisdiction clause referenced in its standard bill of lading incorporated in the service contract which called for proceedings to be instituted in the United States District Court. The dispute arose from a contract the defendant had with the plaintiff for a shipment of fruits and vegetables from Costa Rica to Ontario. The defendant argued that since the bill of lading was an “express” bill of lading, it was not a “true” bill of lading which evidenced the contract of carriage, the effect of which being the MLA did not apply. The defendant also argued that the transport of the cargo was subject to the service contract, and the jurisdiction clause in the service contract should therefore be upheld. The plaintiff argued the bill of lading was incorporated in the service contract and was sufficient to cover the transport as a “contract for carriage of goods by water”, and that it would be prejudiced if the action was stayed as proceedings in the United States would be time barred.
Decision: Motion dismissed.
Held: The Court found that s. 46(1) of the MLA can be engaged when contractual documents refer to a jurisdiction other than Canada provided that, among other things, the defendant has a place of business or an agency in Canada. With the defendant having an agent in Canada, s. 46(1)(c) was satisfied. The Court held that the service contract was a contract for the carriage of goods by water, and in the absence of the Hamburg Rules having in force in Canada s. 46 applied. However, the Court noted that an existence of a jurisdiction clause does not automatically mean a stay will be granted as the Court retains discretion under s. 50 of the Federal Courts Act to stay a proceeding or not. The affidavit evidence filed in the matter did not address the location of the witnesses or the application of American law should the stay be granted. Therefore, the Court held the plaintiff had shown a “strong cause” for denial of the stay motion.
Interjurisdictional immunity - Paramountcy - Provincial
R. v. Great Lakes Stevedoring Company Ltd., 2019 ONCJ 895
Précis: The Ontario Court of Justice refused to stay environmental charges against a stevedoring company on the grounds of federal paramountcy and interjurisdictional immunity.
Facts: The Applicants (Great Lakes Stevedoring Company Ltd. (“Great Lakes”) and its former vice-president, Quebec Stevedoring Company Ltd. and its founder and chairman, and Snider Marine Terminals Inc. (“Snider”) and its president) were charged with discharging a contaniment into the natural environment in violation of 14(1) of the Ontario Environmental Protection Act (the “Act”) and failing to report that discharge contrary to s. 92(1)(a) of the Act. The charges stemmed from a discharge of cement clinker which fell and was discharged on some neighboring properties near the Port Weller Marine Terminal (the “Terminal”). Great Lakes and Snider marine Terminals Inc. (“Snider”) both own a 50% stake in the Terminal, which is located along the St. Lawrence Seaway and on federal Crown land. Snider leases the lands from the Crown’s agent, St. Lawrence Seaway Management Corporation, and pays the rent to the agent. Great Lakes was contracted for stevedoring services to move the cement clinker through the Terminal. The Applicants argued that those sections of the Act do not apply on the basis of “interjurisdictional immunity” and “federal paramountcy”, as stevedoring activities on federally owned property come within the exclusive core of federal jurisdiction and application of the provisions would frustrate the purpose of the Canada Marine Act and Seaway Property Regulations.
Held: Application dismissed.
Decision: The Court outlined the principle of interjurisdictional immunity and reiterated that the doctrine protects the core of each head of legislative power in ss. 91 and 92 of the Constitution Act. In doing so, the Court rejected the Applicant’s argument that provincial authourities directed significant operational changes that ultimately undermined stevedoring activity, holding that the sections of the Act do not intrude on any matter that is indispensable for the loading and unloading of cargo from ships or removal of cargo from a port. All that is required is that the applicants load and unload cargo in a manner that does not discharge contaminants into the natural environment and report such discharges if they occur. On the federal paramountcy challenge, the Court noted that the Canada Marine Act’s preamble declares its purpose is to, among other things, provide for the commercialization of the St. Lawrence Seaway and also calls for a balance between economic objectives and other interests, including environmental concerns. The Court also noted that the Seaway Property Regulations charges the manager of the Terminal, as agent of the federal Crown, to harmonize those competing interests and that any activity produces prohibited results then the federal manager has jurisdiction to bar the activity or subject It to conditions to mitigate the results. As such there was no inconsistency with the Seaway Property Regulations as the permission of an activity by federal authourities does not mean the applicants were excused from compliance with valid provincial legislation.
Maritime liability - Rafting - S. 140 MLA - Adventure Tourism
Jean Riley v. New Wave Expeditions Inc., 2019 QCCS 3697
Précis: The Quebec Superior Court could not strike a claim arising from a river rafting excursion where the underlying facts, which determined the applicable limitation period, were disputed.
Facts: This was a motion by the defendant to strike the plaintiff's claim. The plaintiff was injured during a rafting trip on 11 June 2015 and claimed damages from the defendant organizer of the trip for same by commencing an action on 8 June 2018. The defendant argued that the claim was time barred by s. 23 of the Marine Liability Act which provisioned a two year limitation period beginning on when the injury arose. The plaintiff argued that s. 23 does not apply as this claim was one of adventure tourism as prescribed by s. 37.1 of the MLA and therefore the three year time limitation period under s. 140 governed the claim.
Decision: Defendant's motion dismissed.
Held: To strike a claim under Quebec's Civil Code, the law can be disputed but the underlying facts of the claim cannot. The Quebec Superior Court examined the wording of s.23 of the MLA and found that section pertained to "vessels in a collision situation". The Court noted however that the plaintiff disputed that this was a "vessel collision" situation, which meant there was as dispute as to the underlying facts. Whether this was a "vessel collision claim" or not was a factual determination which could only be made by the trial judge . Therefore the Court could not strike the defendant's claim.
Res Judicata — Motion — Equitable Mortgage — Secured — Bankruptcy
Royal Bank of Canada v. Seamount Marine Ltd., 2019 FC 1043
Précis: The Federal Court stayed a claim of an alleged secured creditor claiming an equitable mortgage over the defendant vessel after the trustee in bankruptcy conclusively decided that there was no equitable mortgage and the creditor was not secured.
Facts: This was a motion by a trustee in bankruptcy seeking a stay of the claim of Stryder King Holdings Ltd. (“Stryder King”) which alleged it was a the holder of an equitable mortgage over the fishing vessel “Ocean Marauder” pursuant to a loan agreement with the bankrupt defendant dated 20 May 2015. The loan agreement saw $2 million advanced by Stryder King to the defendant for the purchase of the vessel and called for a formal marine mortgage to be registered should the defendant default on any of the agreement’s re-payment terms. Some interest payments were made but ultimately the defendant defaulted on the payment terms and filed an assignment in bankruptcy on 13 December 2017. No formal marine mortgage was registered. The Ocean Marauder was sold by judicial sale on 1 November 2017 with proceeds paid into Court in this within action. Stryder King then sought to enforce its equitable mortgage claim in the within action. The trustee in bankruptcy opposed Stryder King’s claim on the basis that it conclusively decided that the loan agreement was inadequate to meet the test for an equitable mortgage in its notice of disallowance dated 30 October 2017. No appeal of that decision was made within the 30 days after the notice was served or sent as Stryder King was permitted to do under s. 135(4) of the Bankruptcy and Insolvency Act. The trustee relied on the doctrines of issue estoppel, collateral attack, abuse of process and election in support of its arguments.
Decision: Motion granted.
Held: The Court found that decisions of a trustee in bankruptcy in allowing or disallowing a claim are both final and of a judicial nature subject only to appeal under s. 135(4) of the BIA. If the disallowance of a claim was not appealed within 30 days then the matter was res judicata. On this basis alone the Court found that Stryder King was precluded from pursuing its claim through this within proceeding.
Bill of Lading - Container Yard to Container Yard - Obligations - Completed
Black & White Merchandising Co. Ltd. v. Deltrans International Shipping Corporation, 2019 FC 379
Précis: The Federal Court lacked jurisdiction to hear a claim subsequent to completion of the obligations under a bill of lading.
Facts: The plaintiff ordered a cargo of children’s shoes and submitted a booking request with the defendant, which in turn contacted various third parties, including Delmar, to organize transportation of the cargo from China to Montreal. Delmar issued a bill of lading that specified Ningbo as the port of loading, Prince Rupert as the port of discharge and Montreal as the place of delivery with an estimated arrival date being 31 January 2017. The terms of the bill of lading specified the type of move as container yard to container yard. The cargo arrived on 5 February 2017 at the container yard in Montreal and was then to be sent to a third-party warehouse. On 6 February 2017 one of the third parties notified Delmar that the container in which the cargo was carried was stolen from that third-party warehouse. Delmar advised the Plaintiff that the container was stolen, and on 22 March 2017 the Plaintiff issued its Statement of Claim, alleging the loss of cargo was a result of the defendant’s breach of the contract of carriage and negligence. On 6 February 2019 the defendant brought this motion to strike the plaintiff’s claim.
Decision: Motion granted; claim struck.
Held: The plaintiff brought this action to Court pursuant to s. 22(2)(f) of the Federal Courts Act. The plaintiff’s affidavit provided that the bill of lading required the cargo to be delivered to the warehouse, and since the cargo was stolen from the warehouse of a third party, the defendant was liable for the loss. The defendant argued that the contractual obligations under the bill of lading ended with it delivered the cargo to the container yard, thus the obligations under the bill of lading were satisfied and complete prior to the theft from the warehouse. In finding that the plaintiff’s Statement of Claim did not assert the bill of lading required the cargo to be delivered to the warehouse, there was no alleged fact supporting the jurisdiction of the Court on the basis of the bill of lading or s. 22(2)(f). Further, the Court found no evidence tendered by the plaintiff as to its assertion that the defendant and Delmar were “one and the same” which would make the defendant liable for the loss. The court found that the transport of the cargo beyond container yard to container yard was not encompassed by the bill of lading and thus would not find jurisdiction under s. 22(2)(f). On that basis, the Court struck the claim without leave to amend.
Foreign Arbitration - Stay of Proceeding - Marine Cargo Insurance - Summary Judgment if Stay Refused
ATS Automation Tooling Systems Inc. v. Chubb Insurance Company of Canada, 2018 ONSC 6139
Précis: The Ontario Superior Court of Justice refused a motion to temporarily stay domestic proceedings where the same dispute was on-going and subject to final arbitral decision in India.
Facts: The plaintiffs ATS and IWK brought a motion to stay proceedings against Chubb Insurance pending an arbitration proceeding in India related to the claim. The claim arose after cargo shipped from Thailand to India by IWK and was found to be irreparably damaged upon arrival at the purchasers’ inland warehouse. The cargo was shipped by sea from Thailand to Chennai, India, and then inland by truck over 2,500km to Baddi, India, where the warehouse was located. The purchaser commenced arbitration in India for the damaged cargo stating that under the purchase and sale documents IWK was responsible for the cargo until it was delivered at the warehouse. ATS made a claim on the insurance policy and Chubb denied the claim on the basis that the damage occurred during inland transit, which was not covered by the policy. Chubb asserted that the CIF policy covered cargo damage occurring aboard the ship and until the goods were offloaded in India. ATS and IWK then brought an action against the defendant insurer in Ontario. The plaintiffs contended that the outcome of the India arbitration would determine the outcome of the Ontario action in terms of finding the goods were damaged prior to over-land shipment or that there was coverage for the entire journey. The defendant did not file a statement of defense in the Ontario action, instead opting for summary judgment motion to dismiss the claim. By judicial direction in November 2017, it was determined that the stay motion be scheduled first, and the summary judgment motion be scheduled if the stay was not granted.
Decision: Request for stay refused.
Held: The Court found that the outcome of the Foreign Arbitration, or the impact of that determination on the Ontario action, could be not be predicted. In the absence of no existing schedule for the arbitration hearing in India, or evidence to say there will be arbitration in India, it was clear the prejudice in delay would all be to Chubb, as having to wait for the outcome of the arbitration in which the insurer has no right of participation was akin to a denial of justice.
Ship Building - Insolvency - Stay of Proceedings - Multiple Proceedings - Balance of Convenience
Sargeant v. Worldspan Marine Inc., 2017 BCSC 1153
Précis: The British Columbia Supreme Court refused to stay the action before it where a similar but not identical action was proceeding in the Federal Court.
Facts: Sargeant commissioned Worldspan build a luxury yacht. Disputes arose during the course of construction which resulted in the vessel being arrested in the Federal Court by Offshore, an unpaid supplier of materials and services. Various in rem claims were filed against the vessel in the Federal Court including claims by Sargeant and Worldspan. Subsequent to the commencement of the Federal Court action, Sargeant commenced this action against Worldspan in the Supreme Court of British Columbia for breach of duty, breach of trust, conversion, fraud and breach of contract. Worldspan brought this application for a temporary stay of these proceedings pending the adjudication of Sargeant’s claim in the Federal Court proceeding.
Decision: Application dismissed.
Held: The jurisdiction to grant a stay of proceedings is to be exercised cautiously taking into account all relevant factors and prejudice to the parties. Worldspan says it will be prejudiced if it must take steps in this proceeding before the in rem claims are determined in the Federal Court and further says that the Federal Court action will fully determine the claims of the parties. However, Sargeant’s claims for fraud and conversion will not be addressed in the Federal Court. Additionally, the potential recovery in the Federal Court is limited by the in rem claim and proceeds whereas the damages in this action are not so limited. A stay of proceedings will also not promote judicial economy and efficiency since Sargeant intends to pursue the fraud claim regardless of the outcome of the Federal Court proceeding. Finally, there is little risk of inconsistent verdicts since the adjudication of the conversion and fraud claims will not be part of the Federal Court proceeding. The balance of convenience favours dismissing the stay application.
Hanjin Bankruptcy – Recognition of Foreign Insolvency Proceedings – Stays of Federal Court Proceedings
Re: Hanjin Shipping Co. Ltd. v. , 2016 BCSC 2213
Précis: The automatic stay of proceedings that arises upon recognition of a foreign insolvency proceeding does not automatically include existing Federal Court in rem proceedings.
Facts: Following well publicized financial difficulties, Hanjin Shipping obtained a creditor protection order from Korean courts under the Debtor Rehabilitation and Bankruptcy Act of Korea. The Trustee of Hanjin then made this application to the British Columbia Supreme Court under the Companies’ Creditors Arrangement Act for recognition of the Korean proceeding as the main proceeding and for a stay of any proceedings as against Hanjin and its property. At the time of the application, there were several proceedings already commenced against Hanjin in the Federal Court and at least two vessels that had been operated by Hanjin had been arrested in those Federal Court proceedings.
Decision: Application allowed, except in respect of the Federal Court proceedings.
Held: The contentious issues relate to the Federal Court proceedings. “In recognition that in rem proceedings are before the Federal Court in respect of the vessels, Hanjin Vienna, Hanjin Scarlet, and Hanjin Marine, this order shall not apply to those proceedings (including caveators) unless and to the extent the Federal Court of Canada may determine in the exercise of its own unfettered jurisdiction and discretion.”
Booking Note - Charters - Arbitration Clause - Stay of Proceedings - Appeals - Standard of Review
Comtois International Exports Inc. v. Livestock Express BV, 2013 FC 1239 2014 FC 475
Précis: The court had no discretion to not enforce an arbitration clause in a charter party/booking note.
Facts: The defendant was the operator of the “Orient I”, a special livestock carrier. The plaintiff entered into a voyage charter of the vessel for a single voyage between Canada and Russia. The charter party was apparently contained in a booking note issued in Belgium. The booking note incorporated an arbitration clause in favour of London and a choice of law clause selecting English law. The booking note also contained an ice clause which gave the defendant the option of loading the cargo in St. John, New Brunswick if the port of Becancour, Quebec was not in ice free condition. The defendant in fact did sail to St. John because of forecasted ice conditions at Becancour. The loading of the cargo at St. John increased the plaintiff’s costs by $250,000. The plaintiff claimed this amount from the defendant alleging it had no right to change the port of loading to St. John. The defendant brought this motion for a stay of proceedings on the basis of the arbitration clause in the booking note.
At first instance (reported at 2013 FC 1239), the Prothonotary dismissed the motion for a stay of proceedings. The Prothonotary held that s. 46 of the Marine Liability Act did not apply as the contract between the parties was a charter party. However, he also held that the Court had discretion to grant a stay under s. 50 of the Federal Courts Act and that the plaintiff had discharged the heavy burden of establishing the existence of strong grounds for denying the stay on this basis. The Prothonotary noted that there was nothing linking this matter to England and that an arbitration in England would result in prohibitive costs for the plaintiff, a small company of 6 employees. The defendant appealed.
Decision: Appeal allowed.
Held: With respect to the standard of review applicable in this case, the refusal to grant a stay of proceedings is a discretionary order vital to the final issues in the case. Therefore the Court can proceed with a de novo review on this appeal.
The Prothonotary correctly held that s. 46 of the Marine Liability Act did not apply as the contract was a charter party and s. 46 does not apply to charter parties. However, the Prothonotary was in error when he held the Court had discretion to grant a stay under s. 50 of the Federal Courts Act. Article 8 of the Commercial Arbitration Code removes any discretion to grant a stay as was held by the Federal Court of Appeal in Nanisivik Mines Ltd v FCRS Shipping Ltd, 1994 CanLII 3466.
Stays Pending Appeal
Byatt International SA v. Canworld Shipping Company Limited, 2013 BCCA 558
This was an application to stay the order of the British Columbia Court of Appeal rendered in Byatt International S.A. v Canworld Shipping Company Limited, 2013 BCCA 427, wherein the court ordered that the ship owner was entitled to sub-freight paid into court. The grounds for the application were that an application for leave to appeal the decision had been filed with the Supreme Court of Canada.
Decision: Application dismissed.
Held: The test for a stay pending an appeal is: (1) that there is merit to the appeal in the sense that there is a serious question to be tried; (2) that irreparable harm would result if the stay was refused; and (3) that the inconvenience to the applicant if the stay is refused would be greater than the inconvenience to the respondent if the stay was granted. The merits test involves a consideration of whether the issues raised are of public importance. The issues raised here are not of such importance. This case involves the application of well settled legal principles and the fact that there is an argument the case may have been wrongly decided is not, by itself, sufficient to elevate the issue to one of national importance.
Stays of Proceedings - Second action Pending - Setting Aside Arrest
Quin-Sea Fisheries Limited v. The Broadbill I , 2013 FC 575
The plaintiff and defendants entered into an agreement whereby, in consideration of a loan by the plaintiff, the defendants granted a mortgage over the defendant vessel and agreed to make its catch available to the plaintiff for one year following the year the loan was repaid. The loan was repaid but the defendants failed to sell their catch to the plaintiff. As a result, the plaintiff commenced proceedings in the Supreme Court of Newfoundland for a mandatory injunction requiring the defendants to sell their catch to it. That injunction was refused on the grounds that there was no irreparable harm. The plaintiff then commenced these proceedings and arrested the vessel in Federal Court. The defendants brought this motion to stay the Federal Court proceedings on the grounds that parallel proceedings existed in the Supreme Court of Newfoundland.
Decision: Motion dismissed.
Held: The plaintiff was not acting in a vexatious manner when it sought to arrest the vessel after failing to obtain the injunction. The Supreme Court of Newfoundland has no specific admiralty rules dealing with arrest and an injunction is a very different procedure from an action in rem. It is not unusual for a party to take action in the Federal Court merely to obtain security. It would be inappropriate to stay the Federal Court proceedings at this time although at some point in time one of the actions must be stayed.
Jurisdiction Clauses - Stays of Proceedings - Forwarding Agents
DHL Global Forwarding (Canada) Inc. v. CMA-CGM S.A., 2013 FC 534
Précis: A jurisdiction clause in a bill of lading was enforced against the shipper’s agent.
The plaintiff issued bills of lading for 68 containers carried by the defendant from Halifax to Ho Chi Minh City. Upon the arrival in Vietnam, the containers were put into storage because the bills of lading had not been released by the plaintiff. Apparently the shipper had failed to pay the freight charges owing to the plaintiff. The defendant brought proceedings before the Tribunale de Commerce de Marseille against the plaintiff and consignee for demurrage and storage charges. After receiving notice of the French proceedings the plaintiff commenced these proceedings in the Federal Court for a declaration it was not liable for demurrage and storage charges. The defendant then brought this motion under s. 50 of the Federal Courts Act for a stay of the Federal Court proceedings on the grounds of a jurisdiction clause in the bills of lading in favour of the Marseille tribunal.
Decision: Motion granted.
Held: Although the plaintiff was acting as agent for the shipper, the terms of the bill of lading define “holder” as any person in possession of the bill of lading and define “Merchant” as including anyone acting on behalf of a shipper. Under these definitions the plaintiff was a “Holder” and a “Merchant” and is bound by the jurisdiction clause in the bills of lading.
Carriage of Goods - Arbitration Clause - Stay of Proceedings - Application of s.46 MLA to Charterparties
T. Co. Metals LLC v. The Federal Ems, 2011 FC 291 2012 FCA 284
A cargo of cold-rolled steel coils was carried from Brazil to Toronto pursuant to bills of lading that incorporated the terms and conditions of a voyage charterparty between the exporter and the time charterer of the vessel. Pursuant to the terms of the voyage charterparty, the exporter was to be responsible for the loading, stowing and discharging of the cargo. The voyage charterparty also contained an arbitration clause in favour of New York arbitration. At the time of the loading of the cargo there was a disagreement between the Master and the exporter as to whether the cargo should be covered with plastic sheeting. To resolve this disagreement, the exporter provided a letter of indemnity holding the Master and owners harmless for any damage due to the use of the plastic sheets. Upon arrival of the cargo at Toronto, there was damage to the cargo and the plaintiff/consignee commenced this action against the ship owner and time charterer. The owner and time charterer, in turn, commenced third party proceedings against the exporter. The exporter then brought an application to stay the third party proceedings relying upon the arbitration clause in the voyage charterparty. The owner and time charterer opposed the stay arguing that s. 46 of the Marine Liability Act applied and the third party proceedings were entitled to be brought in Canada. Additionally, they argued that the letter of indemnity was a separate contract not subject to the arbitration clause. Finally, the owner alleged it was not a party to the voyage charterparty and therefore not bound by the arbitration clause.
At first instance (2011 FC 291), the Prothonotary dismissed the motion. On appeal to a Judge (2011 FC 1067), the Appeal Judge allowed the appeal and stayed the proceedings. The main issue was whether s. 46 of the Marine Liability Act applies to charter parties. The Appeal Judge noted that the ordinary meaning of the expression “contract for the carriage of goods by water” in s. 46 could support the inclusion of charter parties. However, relying heavily on the fact that the Hague-Visby and Hamburg Rules excluded charter parties, the Appeal Judge concluded that s. 46 did not apply to charter parties. The Appeal Judge further held that the letter of indemnity was not a separate contract but an amendment of the voyage charterparty and therefore any claim under the letter of indemnity was caught by the arbitration clause in the voyage charterparty. The owner and time charterer appealed.
Decision: Appeal dismissed vis a vis the time charterer and allowed vis a vis the owner.
Held: When interpreting words in a statute the entire context and the purpose must be considered and not just the "plain meaning" of the words used. It is important to note that none of the international conventions relating to carriage of goods by sea apply to charter parties. The imbalance in bargaining power that led to the various international conventions does not exist in relation to charter parties where the traditional mode of resolving charter party disputes is arbitration. Section 46 of the Marine Liability Act was intended to address perceived unfairness resulting from the application of jurisdiction and arbitration clauses in bills of lading. In the context of legislation dealing with the rights and obligations of common carriers, the expression "contract of carriage" should not be understood to include charter parties. Moreover, there is no policy reason why charter party contracts between commercial entities dealing directly with one another should not be enforced. Further, the Appeal Judge’s conclusion that the letter of indemnity was an amendment to the charter-party is logical and supported by the evidence. However, the owner was not a party to the voyage charterparty and is not bound by the arbitration clause in that charterparty.
Note: An application to appeal to the Supreme Court of Canada was dismissed on 16 May 2013.
Ship Building - Insolvency - Stay of Proceedings
Worldspan Marine Inc. (Re) v. , 2011 BCSC 1758
The issue in this case was whether a stay of proceedings previously granted under the Companies Creditors Arrangement Act to allow an insolvent ship builder to refinance should be continued. The intended buyer of the partially constructed yacht opposed the builder’s application to continue the stay. The buyer wanted to lift the stay so that he could appoint a receiver for the vessel and exercise his remedies. The Court noted that a stay should only be granted or continued when it would further the objective of facilitating a plan of arrangement between the debtor and its creditors. Other factors included the debtor’s progress towards a restructuring and the relative prejudice. The Court reviewed the various steps that had been taken and ultimately granted the continuation of the stay noting that “at this stage, a CCAA restructuring still offers the best option for all of the stakeholders”.
Ship building - Insolvency -Stays of Proceedings
Sargeant v. Worldspan Marine Inc., 2011 BCSC 767
This matter concerned a partially constructed yacht, an insolvent builder and many unhappy creditors. Some of the creditors had commenced proceedings in the Federal Court and obtained either arrest warrants against the vessel or caveats. The builder brought this application in the British Columbia Supreme Court under the Companies Creditors ArrangementAct seeking, inter alia, a stay of the Federal Court proceedings so that it could develop a viable restructuring plan that would allow it to complete the construction of the yacht. Although the Court granted much of the relief requested, including a general stay of all proceedings, the Court refused to specifically stay the Federal Court proceedings “as a matter of comity”. Instead, the Order of the Court included a specific request to the Federal Court for its assistance to recognize the stay. The Court noted that the British Columbia Supreme Court and the Federal Court “working cooperatively and each exercising its own jurisdiction should be able to avoid any insuperable conflicts between their respective jurisdictions”.
Stay of Proceedings - Arbitration Clause - Fraud - Res Judicata
New World Expedition Yachts LLC v. P.R. Yacht Builders, 2011 BCSC 78
In this action the plaintiff alleged that the defendant shipbuilders had engaged in a fraudulent scheme in relation to a ship building contract. The vessel was being built under a contract between the plaintiff/purchaser, NWEY, and the defendant/builder, PRYB. PRYB sub-contracted
the labour part of the build to a related company, FCY, also a defendant. Disputes arose during the course of the construction which were referred to arbitration and decided against the plaintiff in two arbitrations. The plaintiff first sought unsuccessfully to set aside the award on
the basis of bias of the arbitrator. When that was unsuccessful, the plaintiff brought this action for damages alleging fraud. The defendants moved to stay the action on the basis of the arbitration clause in the building contract and on the grounds that the issues were res judicata having already been decided in the arbitrations. The Court agreed with the defendants on both counts holding that the plaintiff was seeking to re-litigate matters that were or could have been decided in the arbitrations.
Practice - Carriage - Stay of Proceedings - Jurisdiction Clause - Federal Court Jurisdiction
Hitachi Maxco Ltd v. Dolphin Logistics Co., 2010 FC 853
This was a motion by the defendants for a stay of proceedings. The main issue was whether an admiralty action instituted in Canada in personam by two foreign corporations against four foreign corporations for the loss of cargo shipped from one foreign port and intended for discharge and delivery in another foreign jurisdiction should be stayed in favour of the jurisdiction stipulated in the bill of lading. The Court noted that there is no geographical limitation on the subject matter jurisdiction of the Federal Court and that it did not matter that the goods were not shipped from or to a Canadian port. The Court further noted that one may always institute an admiralty action in Federal Court that has absolutely no connection with Canada provided the defendants were served in Canada. The issue, the Court said, is whether it should maintain the jurisdiction or refer the matter to another court. The Court reviewed the authorities and the evidence and ultimately held that the defendants had not proven that there was a more convenient forum. The absence of evidence from the defendants was a significant factor in the decision.
Practice - Stay of Proceedings - Supreme Court and Federal Court
Labki Finance Inc. v. Glovertown Shipyards Limited, 2010 NLTD 71
The underlying proceedings in this matter were commenced in the Supreme Court of Newfoundland by the defendant shipbuilder for an order requiring the owner of the vessel to remove the vessel from its shipyard and for storage fees of $1,000 per day. A second proceeding had also been commenced by the mortgagee of the vessel in Federal Court in which the mortgagee obtained judgment. The mortgagee brought this application in the Newfoundland proceedings for an order staying the proceedings. The application was refused. In reaching its conclusion the Court reviewed the authorities peculiar to the admiralty jurisdiction of the Newfoundland Supreme Court and concluded that the Newfoundland Supreme Court had concurrent admiralty jurisdiction with the Federal Court. The Court then questioned, without deciding, whether the Federal Court would have the jurisdiction to grant the relief sought in the Newfoundland proceedings. In any event, the Court held that the applicant had not established that the Federal Court was necessarily the more appropriate forum. The Court further found that there was little likelihood of conflicting orders affecting the vessel.
Practice – Stay of Proceedings – Jurisdiction – Charter Dispute
McDermott Gulf Operating Company v. Oceanographia Sociedad Anonima de Capital Variable, 2010 NSSC 118
This was an application to stay proceedings commenced in the Nova Scotia Supreme Court on the basis that the court lacked jurisdiction simpliciter or was otherwise not the appropriate forum. The underlying claim by the plaintiff was for charter hire and other charges allegedly owed by the defendants. The first plaintiff was a Panamanian company and was the owner of the vessel which was registered in Barbados. The second plaintiff managed the charter party for the first plaintiff and was a Nova Scotia company. The defendants were resident in the United States or Mexico. The area of operations of the vessel that were the subject of the proceedings were entirely in Mexico. The Charterparty provided for Nova Scotia jurisdiction and Canadian law. The moving defendant was not the charterer under the Charterparty but it was the entity that obtained the benefit of the vessel and it appears that it had essentially assumed the obligations of the charterer. The Court first referred to the Nova Scotia Court Jurisdiction and Proceedings Transfer Act (“CJPTA”) which lists the circumstances where the court has jurisdiction. These include where there is an agreement on jurisdiction or where there is a real and substantial connection with the jurisdiction. The Court held that there was insufficient evidence of an agreement on jurisdiction given that the moving defendant was not a party to the Charterparty. The Court next considered whether there was a real and substantial connection with the province and noted that the CJPTA lists some of the factors to be taken into account when determining a real and substantial connection. The Court found that none of these factors were applicable but held that other factors may be taken into consideration including the connection of the parties to the jurisdiction, fairness, the involvement of other parties, comity and others. The Court reviewed these various factors and ultimately held that Nova Scotia did have jurisdiction. The Court further held that Mexico was not a more appropriate forum.
Carriage of Goods - Stay of Proceedings - s.46 M.L.A. – Jurisdiction Clause
Mitsui O.S.K. Lines Ltd. v. Mazda Canada Inc., 2008 FCA 219 2008 CanLII 63491
The Cougar Ace took on a list of 60 degrees while en route to Canada and the U.S.A. from Japan. As a consequence, a large number of automobiles destined for Canada and U.S.A. were damaged. All of the automobiles were subject to a contract of carriage that contained a jurisdiction clause in favour of Japan and a choice of law clause selecting Japanese law. This action was commenced by the Plaintiff to recover damages for those automobiles destined to be unloaded at Canadian Ports. A separate action was commenced in the U.S.A. in respect of the automobiles bound for U.S.A. ports but that action was dismissed based on the jurisdiction clause. Although the dismissal of the American action was under appeal, a separate action was commenced in Japan in respect of the U.S.A. bound automobiles. An action was also commenced in Japan in respect of some damaged trucks and the ship owner also commenced proceedings in Japan for a declaration of non-liability. The ship owner brought this application for an order enforcing the jurisdiction clause and for a stay of the Canadian proceedings. The Plaintiff argued, in reliance on s. 46 of the Marine Liability Act , that it was entitled to bring the action in Canada notwithstanding the jurisdiction clause. At first instance (2007 FC 916), the motions Judge noted that s. 46 permits certain actions to be brought in Canada notwithstanding a jurisdiction clause but does not override the court’s discretion to grant a stay of proceedings based on forum non conveniens factors. He then considered the various factors that are often considered and held that it had not been clearly established that Japan was a more appropriate forum than Canada. Factors that seemed to be of particular relevance to his decision included that Canada was the intended port of discharge, that the limitation amount would be higher in Canada and that the public policy behind s. 46 favoured Canada.
On appeal, the Federal Court of Appeal agreed with the motions Judge that jurisdiction clauses were no longer controlling but are now merely one of many factors to take into account in deciding the forum non conveniens issue. However, the Court of Appeal held that the motions Judge had made errors of law in his assessment of the various factors by undervaluing some and overvaluing others. Specifically, the court found that the motions Judge failed to attach sufficient weight to: the fact that there were three actions in Japan that were proceeding expeditiously; the fact that the residence of most witnesses would be Japan; the fact that applicable law was Japanese law; and, the fact of the jurisdiction clause in favour of Japan. The Court of Appeal also said it was unclear that greater damages would be available in Canada than in Japan and, in any event, suggested that this was not a reason justifying a refusal of a stay. The Court also said the motions Judge was wrong to reason that s. 46 evinced a policy in favour of Canada. In result, the appeal was allowed and the action was stayed. An application for leave to appeal to the Supreme Court of Canada was subsequently dismissed.