Canada v. Neves (The “Kristina Logos)

This was an appeal from an order of a motions Judge setting priorities to the sale proceeds of the Defendant vessel. The vessel had been seized by the Crown for violations of the Fisheries Act and was later arrested and sold at the application of the Crown. The claimants were the Crown, the mortgagee, and the co-owners of the vessel. The Crown claimed a priority for the costs of sale, the costs of maintaining the ship, for $50,000.00 ordered forfeited to the Crown and for a $120,000.00 fine imposed by the Supreme Court of Newfoundland for violations of the Fisheries Act. The Prothonotary granted the Crown priority ahead of the mortgagee for the costs of sale and for the $50,000.00 ordered forfeited. The Prothonotary refused to grant the Crown a priority for the $120,000.00 fine or for the costs of maintaining the vessel. The Prothonotary further ordered that the amount owing to the mortgagee should rank after the claim of one of the co-owners of the vessel to the surplus. On appeal the motions Judge altered the priorities. The motions Judge gave the highest priority to the Crown for the costs relating directly to sale. Second priority went to the mortgagee. Third in priority came the costs of the Crown incurred for the care of the crew. Fourth and fifth in priority, respectively were the claims for the $50,000.00 forfeiture and $120,000.00 fine. The balance of the fund was to be distributed to the owners of the ship. The Crown’s claim for the costs of preserving the ship were disallowed. On further appeal, the Federal Court of Appeal upheld the decision of the motions Judge except with respect to the $50,000.00 forfeited. With respect to the forfeiture, the Court of Appeal held that this was an in rem claim pursuant to s. 72(1) of the Fisheries Act and that pursuant to s. 75 of that act such a claim should be ranked in priority to all other claims.