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

In Admiralty Practice, In Rem Actions and Arrest on (Updated )

The issue in this motion was the interpretation of a letter of guarantee given by the Royal Bank of Canada to secure the release of the defendant vessel from arrest. By the letter of guarantee the bank agreed that if the owners did not pay a judgment against them execution could issue against the bank. The Plaintiff in due course obtained a judgment against the owners which was not paid and, consequently, made demand under the guarantee. The bank refused payment because the beneficiary of the guarantee was stated as being the Federal Court of Canada. Notwithstanding this wording, the Prothonotary held that the bank was liable under the guarantee. The Prothonotary stated that given the factual background it ought to have been clear to the bank that the guarantee was to secure the Plaintiff and not the Federal Court and he interpreted the guarantee accordingly. With respect to costs, the Prothonotary declined to award costs against the bank, a non-party.