Provincial Holdings Limited / Gestion Provincial Limitée v. Océan Nouveau-brunswick Inc.

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

Précis: A claim for breach of a personal obligation can be advanced in rem provided the Court has jurisdiction.

Facts: In this motion the defendant sought to quash the arrest warrant, set aside the arrest of and release the in rem defendant without bail, or alternatively set bail so as to secure its release. The plaintiff entered into a contract with the defendant for the construction of a floating dry dock on 24 October 2016. A third party was also party to the build contract. The contract called for the dock to be built at a shipyard located in New Brunswick operated by the defendant, to be worked on by New Brunswick workers and also contained an arbitration clause. Subject to some minor finishing work the dock was 95% complete and was about to be put in the water for sea trials. The defendant wanted to tow the dock to a place in Quebec where it proposed to carry out the finishing work after sea trials. The plaintiff contested that the work had to be completed by New Brunswick workers and could not be done outside of the New Brunswick shipyard save for any portion which was not “reasonably possible” to be performed there, all of which reflected in the build contract and forming an integral part thereof. The plaintiff then filed in the Federal Court for the immediate possession of the dock and arrest of same. Specifically, the plaintiff sought a declaration of a right to some form or concept of possession in the dock pursuant to the build contract that allows it to require the dock remain at the New Brunswick yard for the completion of the finishing work. The defendant contested the remedy chosen by the plaintiff to sue and secure its claim.

Decision: Motion granted in part; bail set at $260,000.00

Held: The Court limited its ruling on this motion to whether the arrest warrant should be quashed and whether this is an appropriate case to set bail as the principal dispute (ie. whether the finishing work was to be completed in New Brunswick) was to be determined by arbitration per the contract. The Court held that a breach of obligation in a contract, although personal, can be pursued in rem provided the court has jurisdiction to entertain the claim. Here, the jurisdiction stemmed from s. 22(2)(a) FCA. As this was not a motion to strike the in rem claim, the Court need not determine the merits of the plaintiff’s assertion to the possessory claim. The Court rejected the defendant’s argument that with 95% of the $12 million project already completed the plaintiff was “using a sledge hammer to kill a fly”, holding that it is entirely proper to use the procedural remedy of an arrest to secure its contractual rights regardless of the quantification of those rights. On the evidence before the Court there was no justification for setting aside the arrest without bail, and bail was therefore set at $260,000 to take into account interest and costs, including costs of arbitration.