Norstar Shipping and Trading Ltd. v. The Rosy (Ship)

In Admiralty Practice, Arbitration/Jurisdiction Clauses in Maritime Law, Bail on

Facts: This was a motion to set bail. The defendant’s ship was chartered by the plaintiff for a period of six months with an option to extend for a further six months plus or minus 15 days. The plaintiff argued that the defendant repudiated the charter. The ship was arrested and security was posted by a letter of undertaking. The actual factual matters in dispute regarding the charter were to be resolved by London arbitration and not by the Federal Court. The defendant sought to fix bail at CAD $328,535 plus 30% for interests and costs, and the plaintiff argued bail should be fixed at U.S. $635,870 plus 30% interests and costs.

Decision: Bail set at U.S. $635,870 plus 30% (CAD $1,101,733.10)

Held: The general rule for determining the amount of bail required to obtain the release of an arrested vessel is that it should be equal to the reasonably best arguable case, plus interests and costs, limited to the value of the arrested vessel. A court can reduce the amount claimed where circumstances are quite extraordinary or there are special circumstances. The Court found nothing on record that was quite extraordinary or special that merited departure from the general rule, or that the amount of security sought was exorbitant or the power of arrest was used in an oppressive fashion. The plaintiff’s supporting affidavit laid out its best reasonably arguable case. Accordingly the Court set bail at the amount claimed by the plaintiff in its statement of claim plus the 30% uplift. As the plaintiff was a non-Canadian entity it was ordered to pay into Court security for costs at 12% of the bail amount pursuant to Rule 416(1).