Richardson International Ltd v. The “MYS CHIKHACHEVA” et al.

In Maritime Liens, Mortgages & Priorities on (Updated )

This was an appeal from a decision of the Trial Division allowing the Plaintiff’s claim for necessaries supplied to the “Mys Chikhacheva”. The facts of the case were very complicated. The Plaintiff and one Defendant, Starodubskoe, had entered into a series of agreements relating to the re-fitting of a vessel, the supply and purchase of fish products and the supply by the Plaintiff of provisions to the “Mys Chikhacheva”. Starodubskoe later became bankrupt and the Plaintiff obtained a default judgment in Seattle, Washington. The “Mys Chikhacheva” was subsequently arrested in Nanaimo, British Columbia for the necessaries supplied to her and paid for by the Plaintiff. The Defendant resisted the Plaintiff’s claim arguing, inter alia, that the “Mys Chikhacheva” was not owned by Stardubskoe, that the Plaintiff had no maritime lien for necessaries, that the matter was res judicata because of the Washington judgment and that the Plaintiff had waived any right to a maritime lien. At trial the Judge reviewed the evidence of ownership and noted that the vessel had been registered both in Cypress and Russia with different registered owners. The trial Judge concluded that Stardubskoe was not the registered owner but held that it was nevertheless a bareboat charterer. The trial Judge next considered the issue of applicable law and concluded that the contracts were governed by American law. In reaching this conclusion the trial Judge noted that the agreements called for American law, that the place of arbitration was Seattle, that the currency of payment was United States dollars, that payments were to be made in Washington and that interest was fixed by reference to the prime rate of the U.S. Bank of Washington. The trial Judge accepted the evidence of the Plaintiff’s expert on American law that, under American law, the Plaintiff had a maritime lien for the necessaries supplied and paid for by the Plaintiff. The trial Judge further held that, under American law, a maritime lien could not be defeated unless there was an express waiver. On the issue of res judicata the Court held that the Washington judgment was not res judicata as the Washington case was against Stardubskoe whereas the case at bar was based on a maritime lien on the vessel “Mys Chikhacheva”. Finally, on the issue of damages the trial Judge held that there was no requirement to set off the lien amounts against the value of fish delivered by the Defendant to the Plaintiff and further allowed the Plaintiff to amend its Statement of Claim just prior to closing argument to increase the amount claimed. On appeal, the Court of Appeal upheld the trial Judge’s determination of the proper law of the contract as being American law and noted that such a determination should be granted a high level of curial deference analogous to a finding of fact. On the issue of waiver the Court of Appeal stated that there was a strong presumption against such waiver under American law and upheld the trial Judge’s finding that there had been no express waiver. On the issue of damages, the Court of Appeal agreed with the trial Judge that there was no right of set-off and further agreed that the amendments were appropriate as they did not cause prejudice in a meaningful way.