F.C. Yachts Ltd. v. P.R. Yacht Builders Ltd.

In Admiralty Practice, Parties on (Updated )

This was an application by the mortgagee of a vessel under construction for intervenor status. The vessel was being built under a contract between the purchaser, NWEY, and the builder, PRYB. This contract contained an arbitration clause. PRYB had, however, sub-contracted the labour part of the build to a related company, FCY. The subcontract contained no arbitration clause. The funds for the build came from the mortgagee who was eventually to be the ultimate user of the vessel. Disputes arose during the course of the construction. Arbitration was initiated between NWEY and PRYB. FCY commenced this proceeding in Federal Court and had the vessel arrested. Later, pursuant to an agreement between NWEY, PRYB and FCY, the vessel was released from arrest upon the posting of security and this proceeding was stayed in favour of arbitration. FCY was ultimately successful in the arbitration and in the B.C. Supreme Court where aspects of the arbitration had been challenged. After the decision of the arbitrator and the B.C. Supreme Court, this application was brought for intervenor status. The purpose of the intervenor status was so that the applicant could then apply to set aside the arrest even though the vessel had already been released and was no longer in the jurisdiction. The Court noted that the granting of intervenor status is highly discretionary and listed some of the relevant factors. The Court further noted that the intervenor must take the case as the parties have framed it and cannot “hijack the parties’ dispute”. The Court said that the central theme of the proposed intervenor’s case was that the transaction between FCY and PRYB was a sham and this went well beyond the matters the parties had put in issue. The Court further said that the proposed intervention had all the hallmarks of an end-run on the arbitration and B.C. Supreme Court proceedings and noted the absence of any evidence of fraud. Accordingly, the application was dismissed.