C.I.B.C. v. “Le Chene No. 1” et al.

In Maritime Liens, Mortgages & Priorities on (Updated )

The main issue in this case was whether a claim for severance pay or damages for wrongful dismissal is a maritime lien entitling the claimant to priority over a ship’s mortgage. The claimant had been employed by the shipowner on a full time basis for 12 years and had worked as chief engineer on various ships for 8 of those 12 years. The claimant’s employment was terminated when the shipowner made an assignment in bankruptcy. The Prothonotary held that the claimant was entitled to damages for wrongful dismissal but refused the claim for a maritime lien. The Prothonotary held that there must be a relationship between the severance pay and a particular ship before such a claim can be categorized as a maritime lien and that such a relationship was lacking in the instant case. On Appeal, the appeal Judge agreed with the Prothonotary that the Plaintiff was entitled to damages for wrongful dismissal but disagreed with the Prothonotary’s findings concerning the existence of a maritime lien. The appeal Judge noted that damages for wrongful dismissal have long been recognized as giving rise to a maritime lien and held that it did not matter whether the Plaintiff had served on one or more ships or whether the employment contract failed to specify a particular ship or ships. The appeal Judge further held that the lien would attach to the ship that received the benefit which in this case would be the ship the Plaintiff was working on at the time of his wrongful dismissal. That ship was the Defendant vessel.