ICS Petroleum (Montreal) Ltd. v. es Dauphins du St. Laurent et al.

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

The Plaintiff in this action was a fuel supplier that had supplied fuel to a shore tank for use in three ships allegedly owned by the now bankrupt in personam Defendant. Two of the ships were in fact owned by the Defendant but the third ship, the “Corona Borealis”, was merely demise chartered to the Defendant. When the Defendant defaulted in its payments the Plaintiff arrested all three ships in this action to recover the price of fuel sold. The owner of the “Corona Borealis” brought this application to set aside the arrest and strike the in rem claim as against the “Corona Borealis”. The motion was successful. The Prothonotary found that the fuel was supplied by the Plaintiff pursuant to standard contractual terms that contained a clause creating an unspecified lien “over the vessel” and that acknowledged the Plaintiff/Seller was relying upon the credit of the vessel. The Prothonotary acknowledged that this clause created a lien of some description over the ships in fact owned by the Defendant, however, it was held not to create a lien over the “Corona Borealis” which was not owned by the Defendant. Moreover, the Prothonotary noted that the fuel was not supplied to “a ship” as required by section 22(2(m) of the Federal Court Act, but to a storage tank. Accordingly, the arrest was set aside and the in rem action against the “Corona Borealis” was struck. A further procedural point discussed in this matter concerned the use of affidavit evidence on a motion to strike. The Plaintiff argued that such evidence was not permitted. The Prothonotary, however, held that affidavit evidence is allowed on a motion going to jurisdiction.