A-207-73
Transocean Gateway Corporation (Appellant)
v.
M/V Weser Isle (Respondent)
Court of Appeal, Thurlow J., Choquette and
Mackay D.JJ.—Montreal, June 10; Ottawa, June
18, 1974.
Maritime law—Appellant filing caveat in previous action
against respondent ship—Bond filed to cover appellant's
claim—Bond irregular—Vessel released and caveat with-
drawn—Appellant becoming party in previous action—
Lapse of time before present proceedings—No right in ship
owner to have bond cancelled—Federal Court Rules 1004,
1006(2), 1009.
The respondent vessel was arrested on a warrant issued at
the suit of Sabb Inc; in that action a caveat against the
release of the vessel was filed by the appellant corporation,
alleging a claim for $71,000. A bail bond covering the latter
amount was filed and the caveat withdrawn. The appellant
then obtained leave to intervene as a defendant in the Sabb
action. Eighteen months later, during which the appellant
took no further step in the Sabb action, the Trial Division,
on application by the owners of the respondent vessel, made
an order cancelling and permitting withdrawal of the bail
bond and directing payment by the appellant of the expenses
and premiums incurred for the bond by the owners of the
respondent vessel.
Held, the order of the Trial Division should be set aside.
Under Rule 1004, the bail could only have been taken in the
Sabb action, to which the appellant was not then a party.
The bond was not a bail bond as contemplated by the Rules.
Once it was given, however, and the caveat withdrawn,
presumably in consequence of the filing of the bond, there
could be no cancellation of the bond on a summary applica
tion. As there was no indication in the record of the terms of
any agreement between the parties, the bond must be taken
to have been given unconditionally and without limitation as
to the time it was to be in effect. The parties who gave it had
no right at this stage to have it cancelled.
APPEAL.
COUNSEL:
E. Baudry for appellant.
A. S. Hyndman, Q.C., for respondent.
SOLICITORS:
Brisset, Bishop & Davidson, Montreal, for
appellant.
McMaster, Meighen, Minnion, Patch, Cor-
deau, Hyndman & Legge, Montreal, for
respondent.
The following are the reasons for judgment
delivered orally in English by
THURLOW J.: This appeal is from an order of
the Trial Division cancelling a bail bond filed on
March 24, 1972, permitting the withdrawal of
the bond by the solicitors for the owners of the
Weser Isle and directing payment by the appel
lant of the expenses and premiums incurred by
the owners of the Weser Isle with respect to the
bond.
The vessel had been arrested at Saint John,
New Brunswick on February 29, 1972, on a
warrant issued at the suit of Sabb Inc. and on
March 17, 1972, a caveat against her release
entitled in the Sabb Inc. action and alleging a
claim against her for $71,028.51 had been filed
by the appellant. Thereafter on March 24, 1972,
the bond in question had been filed and the
caveat had been withdrawn though no action
had been brought by the appellant to enforce its
claim.
The bond was executed by an insurance com
pany before the District Administrator of the
Court at Montreal, it was entitled in the action
brought by Sabb Inc. and the effective portion
of it read as follows:
... hereby submit ourselves to the jurisdiction of this Court
and consent that if the Owners of the M/V WESER ISLE shall
not pay what may be adjudged against the M/V WESER ISLE
and her owners with respect to the claim filed by Trans-
ocean Gateway Corp. by way of CAVEAT notice filed the
17th day of March 1972, execution may issue against us,
our successors and assigns, for a sum not exceeding SEVEN
TY FIVE THOUSAND ($75,000.00) in all.
The undersigned consents and agrees that the present
Bond shall remain in force during any appeal in said action
and the same shall apply to any compromise or settlement
between the parties of the subject matter of the said claim
or to an admission of liability therein and to any amount of
damages, interest and costs agreed by the Owners of M/V
WESER ISLE to be paid with respect to the claim or assessed
by the Federal Court of Canada, Trial Division, after admis
sion of liability or compromise, so that if the Owners of the
M/V WESER ISLE shall not pay such amount the undersigned
shall be liable for same in the same manner as if they had
been adjudged by the Court.
In April 1972 the appellant applied for leave
to intervene in the action brought by Sabb Inc.,
to file a statement of its claim against the vessel
and to prove its claim as if it were a party to the
action. The relief so sought was, for the most
part, denied, but an order was made in the
following terms:
The applicant is given leave to intervene in this action and
in virtue of the present order the applicant shall have the
following rights:
(a) The applicant shall be at liberty, within the next 10
days, to file a statement of defence and in the event of its
doing so, it shall be considered as being one of the
defendants to this action.
(b) in the event of the applicant deciding not to file a
statement of defence, it shall nevertheless be considered
as being a party to the action and, as such, it shall have
the right, at the trial of the action, to cross-examine the
witnesses and to be heard in argument; the applicant shall
further have the right to appeal from the judgment to be
rendered in this action and, with leave of the Court, to
take any other steps in this action that it might deem
appropriate.
Some eighteen months later, that is to say, in
October 1973 the owners of the Weser Isle
brought the motion which resulted in the order
presently under appeal. In the meantime the
appellant had neither brought an action to
enforce its claim nor taken any further step in
the Sabb Inc. action. No reasons were given by
the learned Trial Judge for the order which hé
made.
The rules of this Court with respect to arrest,
bail, release and caveats are very similar to
those found in Order 75 of the English Rules
and in the former Rules of the Exchequer Court
of Canada in Admiralty. With respect to
caveats, Rule 1009 provides inter alia:
Rule 1009.
(2) Any person desiring to prevent the release of any prop
erty under arrest shall file a notice, and thereupon the
Registry shall enter a caveat in the caveat release book
hereinafter mentioned. (Forms 48 and 49).
(4) If the person entering a caveat is not a party to the
action, the notice shall state his name and address, and an
address within 3 miles of an office of the Registry at which
it shall be sufficient to leave all documents required to be
served upon him.
(6) The party at whose instance a caveat release or caveat
payment is entered shall be condemned in all costs and
damages occasioned thereby, unless he shall show to the
satisfaction of the Court good and sufficient reason to the
contrary.
(7) A caveat shall not remain in force for more than 6
months from the date of entering the same but this provision
shall not be taken as preventing the entry of successive
caveats.
(8) A caveat may at any time be withdrawn by the person at
whose instance it has been entered, on his filing a notice
withdrawing it. (Form 52).
(9) The Court may overrule any caveat.
Authority to release property under arrest is
found in Rule 1006 which provides:
Rule 1006.
(2) A release may be issued by a prothonotary or an officer
of the Registry who has been authorized by the Court to
issue warrants under Rule 1003 (hereinafter referred to as
the "issuing officer") unless there is a caveat under Rule
1009 outstanding against the release of the property,
- The Rule makes no specific provision for
release of the property under seizure when a
caveat against release is still outstanding but
there is no reason to doubt that the Court has
power to order release in a proper case and in
any case no problem arises on this aspect of the
rule, since the caveat filed by the appellant was
withdrawn upon the filing of the bond in
question.
Bail is provided for in Rule 1004 in the fol
lowing terms:-
Rule 1004. In any Admiralty proceeding, bail may be taken
to answer any judgment in the proceeding and the Court
may withhold the release of any property under arrest until
such bail is given.
This is the only rule which provides for taking
bail and it seems perfectly clear that under it
bail may only be taken to answer the judgment
that may be given in the proceedings in which
the bail is taken. Having filed its caveat the
appellant could have brought its action to recov
er its claim and might have been entitled to
maintain the caveat and thus prevent the release
of the vessel until bail was given in that action
to answer any judgment it might obtain therein.
The appellant was not, however, a party to the
action brought by Sabb Inc. in which the vessel
had been arrested and, I am at a loss to under
stand what reason there was, at any time, to
think that the appellant would or could obtain
judgment for its claim in that action. Moreover,
having regard to the readiness of the owners of
the Weser Isle to post bail for the amount of the
appellant's claim against their vessel I am also
at a loss to understand what interest the appel
lant could have thought it had in the Sabb Inc.
action, or what possible judgment in that pro
ceeding the bail could be taken to answer.
Nevertheless the bail bond was entitled in that
action and it is not unlikely that it was so
entitled because there was at that time no other
pending action in which it could be entitled and
because there was some misconception on the
part of the solicitors for the appellant, if not, at
that time, on the part of solicitors for the
owners of the Weser Isle as well, by whom the
bond was filed, that the appellant could take
steps to enforce its claim in that action.
In my view entitling the bond in that action
was irregular, and even more irregular was the
conditioning of it to pay the judgment of the
Court on what is referred to as a claim "by way
of caveat notice", for there is no such judgment
referred to in the Rules and in particular in Rule
1004. As I see it the bond was misconceived
and was not a bail bond as contemplated by the
Rules.
Such a bond having been given, however, and
the appellant's caveat having been withdrawn,
presumably in consequence of the filing of the
bond, the question remains whether it could be
cancelled, as it was, on a summary application.
As there is in the record no indication of the
terms of any agreement between the parties it
seems to me that the bond must be taken to
have been given unconditionally and without
limitation as to the time it was to 'be in effect
and it appears to me to follow from this that the
parties who gave it have no right at this stage to
have it cancelled.
Moreover, aside from any irregularities that
may have occurred in the filing of the caveat in
the Sabb Inc. action and in entitling the bond in
that action the bond by its terms is an undertak
ing to secure to the appellant the payment of
any judgment or settlement of the claim against
the Weser Isle referred to in the caveat. Until
that claim has been established or settled the
question of any liability on the bond, whether in
the Sabb Inc. action or any other action, cannot
be determined and it seems to follow that the
bond should not have been cancelled at this
stage on a summary application. The question of
liability on it should have been left to be decid
ed only after determination of the appellant's
claim against the Weser Isle.
On the hearing of the appeal counsel for the
respondents took the position, first, that the
bond could serve as security only for any judg
ment that might be obtained by the appellant by
pursuing its claim in the Sabb Inc. action, in
which the bond had been filed, and that since
the appellant had no right to proceed with its
claim and obtain judgment therefor in that
action the bond served no purpose and should
be cancelled. It appears to me that the answer to
that is that as the bond was given by the
respondents unconditionally and without limit
as to time in order to secure the immediate
release of their vessel they have no right to have
it cancelled prior to that action being concluded.
The second position taken was that it was an
abuse of the process of the Court for the appel
lant after obtaining the filing of the bond to
have failed to bring an action within a reason
able time in which it could have its claim
adjudicated and that the bond should on that
account be cancelled. This position is not con
sistent with the position that the bond is not
security in any action other than that in which it
was filed. If that is the true position it plainly
cannot be an abuse of the process entitling the
owners of the Weser Isle to have the bond
cancelled for the appellant to have failed to
bring an action in which the bond would not
serve as security. On the other hand if the bond
can serve as security in any other proceeding it
does not seem to me to be open to parties who,
in order to secure the immediate release of their
vessel, arranged for the giving of such a bond
unconditionally and without any stipulation as
to time or as to the bringing of another action
for the adjudication of the appellant's claim, to
complain of abuse and demand its cancellation
because of the failure of the appellant to act
promptly to bring another action in which its
claim could be decided.
I would therefore allow the appeal and set
aside the order of the Trial Division. The appel
lant should have its costs of the appeal and of
the motion in the Trial Division.
* * *
The following are the reasons for judgment
delivered in English by
CHOQUETTE D.J.: I agree with the reasons for
judgment of Mr. Justice Thurlow and with the
disposition of the appeal proposed by him.
* * *
MACKAY D.J. concurred.
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.