Maple Leaf Mills Limited (Plaintiff)
v.
The ship Baffin Bay, her freight and Global
Navigation Limited (Defendants)
Trial Division, Walsh J.—Montreal, September
20; Ottawa, September 26, 1973.
Practice—Maritime law—Attachment before judgment—
Whether permitted by Rule 5.
Plaintiff chartered the Baffin Bay at Montreal in 1973 for
a voyage to Haiti. The ship suffered mishaps at sea and her
owners abandoned the voyage at Halifax. Plaintiff took off
the cargo at Halifax and sued the ship and her owners for
$700,000 damages. The ship was released on the posting of
a bail bond for $239,000. The insurers were about to pay the
owners the agreed amount of the loss, $750,000, when
plaintiff obtained an ex parte order attaching the said insur
ance moneys in the hands of the insurers in Quebec.
Held, the attachment order must be set aside. While Rule
5 provides for the adoption by the Federal Court of practice
in the appropriate provincial courts in certain circumstances,
an attachment before judgment (which is permitted in
Quebec and Nova Scotia) should not be allowed to meet the
circumstances of a particular case.
MOTION.
COUNSEL:
J. E. Gould for plaintiff.
D. A. Kerr for defendants.
SOLICITORS:
McInnes, Cooper and Robertson, Halifax,
for plaintiff.
Stewart, MacKeen and Covert, Halifax for
defendants.
WALSH J.—This matter came on for hearing
before me in Montreal on September 20, 1973
on motion of the defendant, Global Navigation
Limited, for an order under Rule 330 to rescind
the Attachment Order granted and issued by me
at Montreal on September 10, 1973, and for
damages and costs. Before dealing with the law
which was argued fully before me both by writ
ten submissions and orally by counsel for the
parties at the hearing on September 20, it is
necessary to review briefly the facts giving rise
to the ex parte order of September 10. Plaintiff
chartered the vessel Baffin Bay by charterparty
dated at Montreal on May 5, 1973 for the car
riage of a cargo of 9,000 long tons of wheat to
Haiti. The charterparty provided for a minimum
of three such voyages from St. Lawrence River
ports with an option by the charterer for three
further such voyages and a second option for an
additional three voyages so that at the option of
the charterer it could have covered nine con
secutive round voyages to Haiti. The ship sailed
from Montreal on June 13, 1973 but encoun
tered mechanical and other difficulties, includ
ing boiler breakdowns, main engine break
downs, loss of stearing gear, near collision with
a tanker, a collision with a lock at Canso, a
collision with a tug boat off the Port of Halifax
and other problems, eventually putting into
Halifax, Nova Scotia on June 24, 1973. While
there it encountered further difficulties, having
an oil spill for which it was prosecuted and
fined, and after some repairs were attempted at
Halifax, attempted to leave without success and
on July 5 took fire which allegedly started in the
ship's boiler room while the vessel was along
side the Texaco Refinery pier at the Eastern
Passage, Halifax. While the fire was eventually
extinguished it was necessary to retain several
tugs owned by Eastern Canada Towing Limited
and others to haul the ship into the harbour, as a
result of which there are salvage claims by the
tug company for which plaintiff gave an under
taking to the tug companies in an amount of
$30,000 to prevent the arrest of the cargo. The
voyage was abandoned at Halifax by the
defendant-owner which refused to discharge or
on-carry the cargo as a result of which plaintiff
had to do this under protest at its own expense
without prejudice to its rights against defend
ants to recover these payments. The ship was
towed to a grain berth as a dead ship and
unloaded by shore cranes and other machinery
of the National Harbours Board by which time
it was ascertained that a substantial part of the
cargo could be salvaged, some 6,000 bushels
being damaged and left undischarged. Plaintiff
claims total damages of approximately $700,-
000, part of which is undetermined as yet as
there will allegedly be claims for plaintiff's con-
tractual obligations to the consignee, and dam
ages resulting from the loss of the future chart
ers. The vessel was accepted by its underwriters
as a constructive total loss and allegedly they
undertook to pay defendant, Global Navigation
Limited, the sum of $750,000 being the insured
value. At the same time, the owners agreed to
sell the vessel for salvage for $239,000 U.S.
Proceedings were started by plaintiff against
defendant, Global Navigation Limited, and as a
result of the proceedings in rem security for the
release of the vessel was fixed at its salvage
value of $239,000 by judgment of Mr. Justice
Heald in addition to which defendants also
posted $9,000 to cover a bank guarantee for
crew members who had filed a caveat for wages
and indemnity which would rank ahead of plain
tiff's claims. The bail bond of $239,000 posted
by defendants would be subject to the claim of
the salvors who had also commenced proceed
ings so at best the full amount of same would
not be paid to plaintiff. The defendant, Global
Navigation Limited, having its head office in
Nassau and allegedly no other assets in Canada
save for the ship for which the said bond had
been put up, was allegedly, at the time of the
hearing of the ex parte application before me on
September 10, about to be paid that very day in
Montreal the sum due by the insurance under
writers and unless said sums could be attached
before judgment they would then pass out of
the jurisdiction of the Court leaving plaintiff's
claim unprotected to the extent of some $500,-
000 in the event that it should be successful in
its action.
Since the Federal Court Rules do not provide
a procedure for attachment before judgment,
plaintiff's counsel invoked the application of the
"gap" rule being Rule 5 which reads as follows:
Rule 5. In any proceeding in the Court where any matter
arises not otherwise provided for by any provision in any
Act of the Parliament of Canada or by any general rule or
order of the Court (except this rule), the practice and
procedure shall be determined by the Court (either on a
preliminary motion for directions, or after the event if no
such motion has been made) for the particular matter by
analogy
(a) to the other provisions of these Rules, or
(b) to the practice and procedure in force for similar
proceedings in the courts of that province to which the
subject matter of the proceedings most particularly
relates,
whichever is, in the opinion of the Court, most appropriate
in the circumstances.
and in particular to paragraph (b) on the basis
that both in the Province of Nova Scotia and in
the Province of Quebec, the two provinces con
cerned with the "subject matter of the proceed
ings", there is a procedure for attachment
before judgment. The application was supported
by affidavits of Mr. James E. Gould, Barrister
and Solicitor of Halifax representing the plain
tiff, and of Carol Caswell, Manager of plaintiff
substantiating the relevant facts as outlined
above. Copies of the Rules of Civil Procedure
of the Supreme Court of Nova Scotia relating to
attachment orders were annexed to Mr. Gould's
affidavit and he took the position that the sub
ject matter of the proceedings related primarily
to Nova Scotia since that is where the loss
occurred, although it could also be argued, since
a substantial part of plaintiff's claim would be
for breach of the charterparty with respect to
future voyages which charterparty had been
made in Montreal, that the subject matter might
also relate to the laws of the Province of
Quebec. In any event, since attachment before
judgment procedure is not repugnant to the laws
of that province but is provided for in its Code
of Civil Procedure, the problem of which pro
vincial law would govern became of less impor
tance than had the charterparty been made, for
example, in Ontario where, I understand, there
is no similar procedure for attachment before
judgment. On this basis the form of attachment
applicable in Nova Scotia was adopted and the
seizure was in due course made in the hands of
the insurers in Quebec. The order granted per
mission to seize only $500,000 of such assets in
view of the bond having been posted in the
amount of $239,000. This had the effect of
holding the insurance money, or such portion of
same as had not already been paid, in Canada
and preventing it from leaving the country
forthwith. The Nova Scotia rule also leaves it to
the discretion of the judge to exempt plaintiff
when making such a seizure from posting secur
ity in the amount of one and one-quarter times
the amount seized, and on the basis of the
information supported by affidavit of the very
substantial assets of plaintiff in Canada I
exempted it from posting such a bond.
Defendant, Global Navigation Limited, now
contests the granting of this attachment, granted
ex parte on an emergency basis, as it is entitled
to do under Rule 330, contending that it has a
good defence to make to plaintiff's action, and
that in any event the total amount of ascertain
able damages would be less than the amount of
the bond put up for the ship, and that the Court
has no authority to issue such an order, the gap
rule not being intended to apply to situations
such as the present, and that the attachment, if
made, should have been made by virtue of
Quebec law.
At the hearing before me on September 20,
plaintiff's counsel provided further details of
the damages allegedly suffered totaling some
$245,000 to date which would allegedly
increase to $332,000 if the cargo could not be
moved until February 1974 as seems possible,
to which various other items were added such
as the cost of obtaining a replacement cargo for
immediate delivery less the salvage value of the
original cargo, bringing the damages to some
$780,000 without including the claim for possi
ble damages resulting from the breach of con
tract with respect to the eight future charters.
While I am satisfied that some of the items of
damage so claimed could not properly be
allowed, it nevertheless does seem apparent
that, in the event of a successful judgment, the
damages suffered by plaintiff would substantial
ly exceed the $239,000 bond deposited for the
release of the ship from which the claims of the
salvors must also be deducted. I am also satis
fied that plaintiff might well experience consid
erable difficulty in ever collecting the balance of
its claim if the insurance money left the jurisdic
tion of the Court and defendant, Global Naviga
tion Limited, had no other assets in the country.
However, the desirability from a practical point
of view of making such an attachment before
judgment does not of itself justify such a proce
dure unless it can be permitted and carried out
within the framework of the Rules of this Court.
What has to be determined is whether the
absence of such a rule in this Court was deliber
ate, and whether the lack of it can, in this event,
be remedied for the circumstances of a specific
case by the application of Rule 5. A Court can
only make rules within the framework of its
governing statute and we therefore have to look
also to the Federal Court Act. Section 56(1) of
the Federal Court Act reads as follows:
56. (1) In addition to any writs of execution or other
process that are prescribed by the Rules for enforcement of
its judgments or orders, the Court may issue process against
the person or the property of any party, of the same tenor
and effect as those that may be issued out of any of the
superior courts of the province in which any judgment or
order is to be executed; and where, by the law of that
province, an order of a judge is required for the issue of any
process, a judge of the Court may make a similar order, as
regards like process to issue out of the Court.
Defendant, Global Navigation Limited, empha
sizes that the Court may only issue process "for
the enforcement of its judgments or orders" and
contends that in this case there was no preced
ing judgment or order and that the order itself
authorizing the issue of the writ of attachment
cannot be such an order. On the other hand, the
last clause of that section reading: "where, by
the law of that province, an order of a judge is
required for the issue of any process, a judge of
the Court may make a similar order, as regards
like process to issue out of the Court" would
not seem to prevent the issue of an attachment
before judgment for which an order of the judge
is required both under the law of the Province
of Nova Scotia and of the Province of Quebec.
The word "process" in this context, as I under
stand it, is synonymous with the word "pro-
ceeding" as appears from section 55(1) which
commences with the words: "The process of the
Court shall run throughout Canada". I do not,
therefore, conclude, nor is it necessary to do so
to settle the present matter, that the Federal
Court could not if it chose to do so provide in
its Rules procedure for attachment before judg
ment had this been deemed desirable.
I find it difficult to conclude, however, that
the omission of such an important rule or set of
rules could be an oversight. The words "where
any matter arises not otherwise provided for by
any provision in any Act of the Parliament of
Canada or by any general rule or order of the
Court" in Rule 5 should not in my view be used
by the presiding judge to provide a rule for a
special set of circumstances before him if such
a general rule was deliberately omitted in
making the Rules of the Court. The rule-making
power of the Court is provided for in section 46
of the Act which provides for general rules to
be made by the judges subject to the approval
of the Governor in Council. Rules, orders and
amendments are published in the Canada
Gazette and laid before both Houses of Parlia
ment. Rule 5 should therefore be applied quite
restrictively and limited to supplementing gener
al rules or orders to overcome a problem which
may arise in their application which was per
haps not foreseen or foreseeable at the time the
general rules were drawn. I have carefully
examined the cases to which I have been
referred in which the so-called "gap" rule was
applied and find this to be the general tenor of
their findings. Whether an attachment before
judgment is a mere matter of procedure, or as
defendant, Global Navigation Limited, argued
the creation of a new substantive right for plain
tiff, it certainly would introduce a new and
important procedure into the Rules, the absence
of which might in certain cases, such as the
present, cause grave prejudice to the plaintiff,
but the existence of which might also cause
grave prejudice to a defendant against whom it
is used, and it does not therefore appear to be a
mere matter of providing a procedure for carry
ing out something already provided for in the
Act or the Rules. On mature reflection and after
having heard the arguments of counsel for both
parties and examined the relevant jurisprudence
I am forced to the conclusion that however
desirable such a procedure may be it should, if
so desired, be provided for by a general rule and
not by a precedent-creating order of a judge
making same to accommodate the situation in a
particular case. For this reason alone, therefore,
I believe that the order made on September 10,
1973 should be rescinded.
There is a further problem, however. In seek
ing the application of Rule 5(b) and applying
same so as to use the Nova Scotia rule plaintiff
was relying on the "subject matter" of the pro
ceedings most particularly relating to Nova
Scotia (although certainly part of the subject
matter relates also to the Province of Quebec).
However, what might perhaps be considered as
the enabling authority for the use of Rule 5 is
found in section 56 of the Act. Section 56(1)
(supra) refers to the issue of process "of the
same tenor and effect as those that may be
issued out of any of the superior courts of the
province in which any judgment or order is to
be executed" (italics mine) and section 56(3)
emphasizes this, reading as follows:
56. (3) All writs of execution or other process against
property, as well those prescribed by the Rules as those
hereinbefore authorized, shall, unless otherwise provided by
the Rules, be executed, as regards the property liable to
execution and the mode of seizure and sale, as nearly as
possible in the same manner as the manner in which similar
writs or process, issued out of the superior courts of the
province in which the property to be seized is situated, are,
by the law of that province, required to be executed; and
such writs or process shall bind property in the same
manner as such similar writs or process, and the rights of
purchasers thereunder are the same as those of purchasers
under such similar writs or process.
It would thus appear that the writ should be in
the form used in the province where it is to be
executed although the authority for issuing it, if
Rule 5 is to be applied, requires that it must be
done according to the practice and procedure in
force for similar proceedings in the court of that
province to which the subject matter of the
proceedings most particularly relates. This
appears to create a conflict since, although as
already stated, the principle of attachment
before judgment is not repugnant to Quebec
law, the procedure is substantially different
from that in Nova Scotia. Article 733 of the
Quebec Code of Civil Procedure reads as
follows:
733. The plaintiff may, with the authorization of a judge,
seize before judgment the property of the defendant, when
there is reason to fear that without this remedy the recovery
of his debt may be put in jeopardy.
and article 735 reads:
735. A seizure before judgment is effected in virtue of a
writ, issued by the prothonotary upon a written requisition
supported by an affidavit affirming the existence of the debt
and the facts which give rise to the seizure and, if based on
information, indicating the sources thereof.
In the case of article 733, the authorization of the judge
must appear upon the requisition itself.
In the present case there was not, of course, any
writ issued by the prothonotary upon a written
requisition although the necessary affidavits
were submitted and the authority of a judge
obtained. Other articles of the Quebec Code of
Civil Procedure require the defendant, upon
whom the written affidavit must be served, to
appear to answer the demand made against him
and hear the seizure declared valid and within
five days he may demand that it be quashed
because of the insufficiency or falsity of the
allegations of the affidavit on the strength of
which it was issued. If the declaration is not
served on the defendant with the writ of sei
zure, the plaintiff must file it within five days
and "the suit is contested in the ordinary man
ner" (article 740 Quebec Code of Civil Proce
dure). It is clear that the seizure is effected by a
writ which itself is introductory of the proceed
ings and not as an incident of proceedings
already instituted and taken during the course of
same. On the other hand, the Nova Scotia order
issued in conformity with the Rules of that
province calls on the sheriff (or bailiff) to
"attach, accept as a receiver, hold and dispose
of" the property seized whether in the posses
sion of defendant or any other person and not
exempted by law from seizure to the extent of
plaintiff's claim in the amount of $500,000
including probable costs. Apparently the goods
remain under attachment until the matter is dis
posed of on the merits. Rule 49.01(3) reads:
49.01. (3) When a proceeding is commenced for a debt or
demand not yet due, an attachment order may be granted
therein in any case mentioned in paragraph (1), but judg
ment shall not be granted against a defendant until maturity
of the debt or demand.
Rule 49.12(c) reads:
49.12. When an attachment order has been granted, the
court may on notice,
(c) upon being satisfied that the attachment order is not
necessary for the security of a plaintiff, or a plaintiff has
failed to bring the proceeding to trial and judgment
promptly, or the proceeding has been discontinued or
dismissed as against a defendant, or a plaintiff's claim
against a defendant has been fully satisfied, or for other
just cause, vacate or dissolve in whole or in part, the
attachment order and any attachment made thereunder;
There is no preliminary proceeding calling upon
the defendant to appear to answer the demand
made against him and to hear the seizure
declared valid since the procedure is not neces
sarily introductory of the action itself as is the
case in the Province of Quebec. On the whole,
therefore, it would appear that the defendant
might suffer serious prejudice by the execution
in the Province of Quebec of proceedings
designed for use in the Province of Nova Scotia.
Although plaintiff will undoubtedly suffer
prejudice as a result of the quashing of this
seizure, it is by no means unusual for a plaintiff
to seek and to obtain judgment against a non
resident defendant who may have no assets in
the country at the time the judgment is rendered
enabling such judgment to be collected, and it is
only as a result of the fortuitous circumstance
that there were insurance moneys in this coun
try about to be paid to defendant at the time of
the seizure that plaintiff was able to seek to
adopt this procedure. On the basis of the evi
dence before me, plaintiff's attempt to attach
before judgment moneys about to be paid to a
non-resident defendant does not appear to have
been either frivolous or malicious, however. I
am now rescinding the initial order by virtue of
Rule 330 which reads as follows:
Rule 330. The Court may rescind any order that was made
ex parte, but no such rescission will affect the validity or
character of anything done or not done before the rescinding
order was made.
Defendant, Global Navigation Limited, is en
titled to its costs on the motion seeking the
rescinding of the said order. I will therefore
issue an order rescinding the Attachment Order
of September 10, 1973 and directing plaintiff to
forthwith advise all persons to whom notice of
the said Attachment Order was given that same
is rescinded, the whole with costs in favour of
defendants.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.