Norcan Electrical Systems Inc. v. Feeding Systems A/S et al.

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

These were two actions for necessaries. The first was for necessaries supplied to the vessels “FB XIX” and “FB XX” . The second action was for necessaries supplied to the vessels “FB XXII” and “FB XXIII”, which were alleged to be sister ships of “FB XIX” and “FB XX”. The vessels “FB XIX” and “FB XX” were arrested pursuant to warrants of arrest issued in both actions. An application was brought in the first action to have bail set and an application was brought in the second action to have the claims struck on the ground that the arrested vessels were not sister ships of the vessels to which the necessaries were supplied. Regarding the setting of bail, the Prothonotary applied the general rule that a Plaintiff is entitled to bail in an amount sufficient to cover his or her reasonably arguable best case, together with interest and costs, but limited by the value of the vessel. The Prothonotary noted, however, that in the event that security demanded and posted was excessive, there is a separate remedy for wrongful demand of excessive security. Regarding the sistership issue, the Prothonotary found as facts that the arrested vessels were owned by Feeding Systems A/S, that the wrongdoing vessels were owned by Feeding Systems Chile Ltda. and that all the shares in Feeding Systems Chile Ltda. were owned by Feeding Systems A/S. Moreover, the Prothonotary found that Feeding Systems Chile Ltda. was an agent of and fully controlled by Feeding Systems A/S and that Feeding Systems A/S had guaranteed the Chilean debts of Feeding Systems Chile Ltda. The Prothonotary reviewed the English and French versions of s. 43(8) of the Federal Court Act and concluded that the two versions were different and irreconcilable. Under the English version, which looked to registered ownership, the vessels arrested in the second action would not be sister ships of the wrongdoing vessels. However, under the French version, which looked at beneficial ownership, there was a substantial and reasonably arguable case that these vessels were sister ships. In the event, the Prothonotary concluded that it was not plain, obvious and beyond doubt that the Plaintiff’s case would not succeed and he was not prepared to strike the claim. (Note: See also Royal Bank of Scotland PLC v The “Golden Trinity” et al., 2004 FC 795, which is summarized below.)