T-4426-74
Vallorbe Shipping Co. S.A. (Plaintiff)
v.
The Ship M.V. Tropwave (Defendant)
Trial Division, Heald J.—St. John, May 1;
Ottawa, May 5, 1975.
Practice—Plaintiff applying for stay of proceedings—Mari-
time law—Charterparty containing arbitration clause—Feder-
al Court Act, s. 50(1)—Arbitration Act, R.S.N.B. 1973, c.
A-10, s. 7.
Notwithstanding the existence of an arbitration clause in the
sub-charterparty between plaintiff and Canadian Transport
Company Ltd., charterer of defendant ship, which provided for
arbitration of disputes in New York, plaintiff commenced an
action in this Court for damages and indemnification against
future damages resulting from the unloading of cargo without
plaintiff's consent. Plaintiff now seeks a stay of proceedings on
the basis of the existence of the arbitration clause.
Held, dismissing the motion, it would not be in the interests
of justice to stay proceedings. By bringing the action, plaintiff
expressed its intention to invoke the jurisdiction of this Court,
as did defendant, by filing its defence and counterclaim. Both
parties have submitted to the Court's jurisdiction (at least some
of the issues of fact arose in Canada) and the claims of both
parties are secured in Canada within the jurisdiction of this
Court.
Bomar Navigation Ltée v. The M.V. "Hansa Bay" [1975]
F.C. 231 and Le Syndicat de Normandin Lumber Ltd. v.
The `Angelic Power" [1971] F.C. 263, applied. The
Eleftheria [1970] P. 94, agreed with.
APPLICATION.
COUNSEL:
M. B. Roderick for plaintiff.
M. R. Jette and P. W. Davidson for
defendant.
SOLICITORS:
Palmer, O'Connell, Leger, Turnball & Turn-
ball, St. John, for plaintiff.
Clarke, Drummie & Company, St. John, for
defendant.
The following are the reasons for judgment
rendered in English by
HEALD J.: This is an application by the plaintiff
for an order granting a stay of proceedings in this
action pursuant to the provisions of section 50(1)
of the Federal Court Act'. The grounds for the
application as stated in the notice of motion are:
(a) that the claim is being proceeded with in another jurisdic
tion and/or
(b) that it is in the interest of justice that the proceedings be
stayed.
The plaintiff is a Panamanian corporation in the
business of chartering ships and arranging for the
carriage of goods in the ships so chartered. The
defendant ship is of Singapore flag. Said ship
arrived at the Port of Saint John, New Brunswick
on November 3, 1974 and on November 4, 1974,
began taking on cargo, the carriage of which had
been arranged by the plaintiff with various ship
pers for delivery on board the defendant at the
Port of Saint John. On November 7, loading of the
ship was stopped and on November 8, discharge of
the cargo already loaded was commenced, in both
instances on the orders of the Master of the vessel
but under orders given him by Canadian Transport
Company Ltd., (hereafter Canadian Transport), a
Vancouver company.
On November 9, the plaintiff commenced this
action against the ship pleading a time charter
dated October 4, 1974 between the plaintiff and
Canadian Transport and alleging that said time
charter is in full force and effect and that the
unloading of the cargo was unlawful and was not
done with the consent of the plaintiff and was
contrary to the plaintiff's intentions. The plaintiff
claimed for damages as a result of the alleged
unlawful removal of cargo and for indemnification
against "exposure to damages to which the plain
tiff may become liable for failure to deliver the
cargo which was loaded on the defendant and/or
which has been or will be unloaded from the
defendant." The ship was arrested and released
upon the filing of a bail bond in the sum of one
million dollars (which was subsequently reduced to
' 50. (1) The Court may, in its discretion, stay proceedings
in any cause or matter,
(a) on the ground that the claim is being proceeded with in
another court or jurisdiction; or
(b) where for any other reason it is in the interest of justice
that the proceedings be stayed.
$500,000 by a consent order granted by Kerr J. on
March 6, 1975).
On December 9, 1974, Canadian Transport filed
a statement of defence and counterclaim "As Dis-
ponent Owners of the Vessel Tropwave, the
Defendant Herein". The plaintiff has not, as yet,
pleaded to said statement of defence and counter
claim. By said pleading, Canadian Transport
pleads a time charter dated August 3, 1973 be
tween itself as charterer and the owners of the
defendant vessel for a minimum of 22 months and
a maximum of 26 months. The charterparty to the
plaintiff by Canadian Transport is in effect a
sub-charter. The essence of the defence is that
pursuant to said sub-charterparty, the plaintiff was
to pay the rental agreed upon to Canadian Trans
port in Vancouver, B.C. in cash in U.S. currency,
semi-monthly in advance, otherwise failing the
punctual and regular payment of the hire or on
any breach of said sub-charterparty, Canadian
Transport could withdraw the vessel from the ser
vice of the plaintiff without prejudice to any other
claims they might have against the plaintiff; that
the first hire instalment became due on November
3, 1974 but was not paid at that time; that various
communications ensued between the parties with
out payment being received, culminating in a mes
sage being sent by Canadian Transport to the
plaintiff advising that if the amount due was not
received or transmitted by 10 a.m. November 7,
1974, Canadian Transport would stop all cargo
loading operations and, if the default continued,
that the vessel would be withdrawn from the plain
tiff's service.
Canadian Transport pleads further that at 1.45
p.m. on November 7, no payment having been
received nor any reply having been received to
their last message, that they notified the plaintiff
that they were withdrawing the vessel from the
plaintiff's service and, that the loading was being
stopped. Further discussions ensued and messages
were exchanged between the parties. However, on
November 8, Canadian Transport instructed the
Master to commence at 1.00 p.m. to discharge the
cargo which had already been loaded. On the same
day, November 8, the amount due and owing was
deposited in a Vancouver bank into the account of
Canadian Transport who informed the plaintiff
that said remittance of some $250,000 would be
kept as security for the cross-claims of Canadian
Transport for the damages they would suffer as a
result of the plaintiff's breach of contract. The
unloading of the vessel was continued and was
completed on November 11, 1974 and the vessel
left the Port of Saint John on November 12, 1974.
Canadian Transport pleads that it was entitled in
law and in fact to withdraw the vessel from the
plaintiff's service. The said sum of $250,000 is
being retained on deposit in an interest bearing
trust account at a bank in Montreal in the name of
Canadian Transport's solicitors as trustees " .. .
and to be remitted by them in accordance with the
directions of this Honourable Court". Canadian
Transport is in effect pleading fundamental breach
of the sub-charterparty by the plaintiff. The coun
terclaim repeats the facts alleged in the statement
of defence as above summarized and claims the
sum of $250,000 as damages for the losses,
expenses and damages which they have suffered
and will suffer as a result of said alleged funda
mental breach.
The only material filed before me other than the
pleadings summarized supra, was an affidavit
sworn by Mr. Roderick, the plaintiff's solicitor.
Said affidavit repeats paragraph 17 of the sub-
charterparty between the plaintiff and Canadian
Transport which reads as follows:
17. That should any dispute arise between Owners and the
Charterers, the matter in dispute shall be referred to three
persons at New York one to be appointed by each of the parties
hereto, and the third by the two so chosen; their decision or that
of any two of them, shall be final, and for the purpose of
enforcing any award, this agreement may be made a rule of the
Court. The Arbitrators shall be commercial men.
Mr. Roderick's affidavit also repeats section 7 of
the Arbitration Act of New Brunswick' and then
gives his opinion, that because of said statutory
2 R.S.N.B. 1973, c. A-10.
7. If a party to a submission, or any person claiming
through or under him, commences any legal proceedings in a
court against any other party to the submission, or any
provision, it is not against the public policy of the
Province of New Brunswick that actions be stayed
where arbitration proceedings are pending with
regard to the matters in issue in an action. Said
affidavit also states " ... that the arbitrators have
been selected and the arbitration provided for by
paragraph 17 of the time charter referred to above
is scheduled to proceed in the City of New York at
the office of the American solicitors for Canadian
Transport Company Ltd. at 12 noon on the 6th
day of May, 1975."
The two most recent decisions in this Court, of
which I am aware, in which a stay of proceedings
has been asked for on the basis of the existence in
the charterparty of an arbitration clause are my
own decision in the case of Bomar Navigation Ltée
v. The M.V. `Hansa Bay"' and the decision of
Pratte J. in the case of Le Syndicat de Normandin
Lumber Ltd. v. The "Angelic Power" 4 . In both of
these cases, the application for the stay was by the
defendant in the action. The unusual feature of
this application is the fact that it is being made by
the plaintiff, after it had taken a conscious deci
sion to invoke the Court's jurisdiction by com
mencing this action in the Federal Court. I agree
with the statement of Pratte J. in the Normandin
person claiming through or under him, in respect of a matter
agreed to be referred, the latter party may, at any time after
appearance and before delivering any pleadings or taking any
other step in the proceedings, apply to that court to stay the
proceedings, and that court or a judge thereof, if satisfied
that there is no sufficient reason why the matter should not
be referred in accordance with the submission, and that the
applicant was at the time when the proceedings were com
menced and still remains ready and willing to do all things
necessary to the proper conduct of the arbitration, may make
an order staying the proceedings. R.S., c. 9, s. 7.
This provision of the New Brunswick statute does not, in my
view, assist the plaintiff because it permits "the latter party" to
apply for a stay. On the facts in this case, the "latter party"
would be the defendant herein and not the plaintiff.
3 [1975] F.C. 231.
4 [1971] F.C. 263.
case (supra) where he said at page 271 thereof:
The arbitration clause is an agreement; like any agreement, it
may be revoked by common consent of the parties. By bringing
the suit, plaintiff clearly expressed its intention to revoke the
arbitration clause to which it had subscribed; and the question
is whether the defendants in fact consented, expressly or by
implication, to this revocation.
In the case at bar, the plaintiff by bringing this
action, clearly expressed its intention to revoke the
arbitration clause and the defendant, by filing its
statement of defence and counterclaim, has also
clearly expressed a similar intention (a circum
stance which was not present in the Normandin
Lumber case (supra)). Thus, the plaintiff in
November of 1974 and Canadian Transport in
December of 1974, took actions which clearly
indicated the intention of each to pursue its
remedy in the Federal Court. Normally, that
would be conclusive of the matter. However, it
seems that, notwithstanding this Federal Court
action in which both parties have pleaded, both
parties also are proceeding with the New York
arbitration which is scheduled to commence on
May 6, 1975.
In the Hansa Bay case cited supra, I cited with
approval the principles established by Brandon J.
in The Eleftheria 5 as the principles to be con
sidered in exercising the Court's discretion in a
case such as this. Unfortunately, in the case at bar,
I have very little evidence upon which to base the
exercise of my discretion. However, such as it is, it
leads me to the conclusion that I should not grant
a stay in this case. The alleged breach of which the
plaintiff complains (i.e., the cessation of loading
and the unloading) took place in Canada; the
security for the plaintiff's claim (i.e., the $500,000
bond) is in Canada and the security for the
defendant's counterclaim (i.e., the $250,000 bank
trust deposit with the defendant's solicitors) is in
Canada. No evidence was tendered concerning in
which country the evidence on the issues of fact is
situated or more readily available. I have no evi
dence on the question as to whether or not foreign
5 [1970] P. 94.
law applies to this dispute. There is also very little
evidence on the other criteria detailed in the
Eleftheria case (supra). However, because both
parties have submitted to the jurisdiction of the
Federal Court and because at least some of the
issues of fact arose in Canada, and because the
claims of both parties are secured in Canada
within the jurisdiction of this Court, I have con
cluded, on the facts of this case as presented to me,
that it would not be in the interests of justice to
stay the proceedings herein.
The plaintiff's motion is accordingly dismissed.
Canadian Transport is entitled to its costs of the
motion, in any event of the cause.
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.