Nirint Inc. (Nirint Canada) v. Mega Throphy Ltd, 2019 FC 1015 (2019-07-29)
Facts: the plaintiff was ship’s agent for the vessel “Seren” and her owners while the vessel was in Canada and sought recovery of costs from the owners it paid out for work rendered to the vessel to correct deficiencies after the vessel failed a Port State Control inspection in November 2016 at the Port of Quebec. The work was completed in late December and the plaintiff personally guaranteed and paid the invoices relating to this work, including additional work rendered to the vessel without the approval or knowledge of the plaintiff or the vessel’s owners by Groupe Ocean Inc. (“Groupe”). Upon the plaintiff invoicing the owners for the additional work on 21 December 2016, the owners requested justification for the charges related to the additional work, ultimately requesting the assistance of the vessel’s P&I correspondent. On 22 December the vessel was served with a detention order from the Port and a warrant for arrest for unpaid supplier’s accounts. On 23 December the P&I correspondent contacted the plaintiff and said that Groupe’s invoices showed payment terms of 30 days and that the charges for the additional work were not immediately due and payable, so that Groupe should not be taking any action, and suggested the vessel sail as planned later that day so that the owners could sort out the disputed invoices in the coming weeks. The plaintiff secured release of the vessel that afternoon by arranging payment or guaranteeing payment to all creditors, with the exception of Groupe. Groupe then, at 3:30 pm on 23 December, threatened arrest unless it obtained a guarantee that the plaintiff would pay in full its invoices, including the disputed invoices. After a phone call from the owners, and by confirmation email at 4:24 pm that same day the owners instructed the plaintiff to take necessary and needful action for the vessel’s release and departure in order to prevent any further delay. The plaintiff ultimately agreed to guarantee Groupe’s invoices and confirmed discontinuance of the arrest proceedings. The vessel sailed from the Port in the late afternoon hours of 23 December, avoiding delay which would have been caused by the impending Christmas holidays that would have seen the vessel unable to depart from the Port until 28 December.
Decision: Judgment awarded for the plaintiff.
Held: The Court found the owners expressly instructed the plaintiff to effect payment of Groupe Ocean’s invoices, which was entirely dispositive of the owner’s liability to reimburse the plaintiff for expenses incurred. As ship’s agent, its duty in the circumstances was to take reasonable steps to protect the owner’s interests, and it was reasonable for the plaintiff to guarantee payment of the invoices to stave off the arrest. The plaintiff was not negligent and did not cause the owner’s damage by failing to raise the 30 day payment terms with Groupe or its lawyer. The Court found that the plaintiff carried out its mandate by paying the invoices for the additional work and collect and provide the owners with the documents to support the charges, which owners did not question or establish that the additional work was not preformed, unnecessary or excessive in cost.