[2000] 2 F.C. 445
T-1640-99
Frontier International Shipping Corporation (Plaintiff)
v.
The Owners and All Others Interested in the Ship “Tavros” and Passport Maritime S.A. (Defendants)
Indexed as: Frontier International Shipping Corp. v. Tavros (The) (T.D.)
Trial Division, Pinard J.—Vancouver, December 20; Ottawa, December 23, 1999.
Maritime law — Practice — Arbitration — On motion for stay of Federal Court action for breach of charter party in favour of arbitration at New York, Prothonotary granted stay but awarded defendant shipowner costs of action as “interim protection” — Appeal by way of motion from part of order awarding costs against plaintiff — Interim protection within Commercial Arbitration Code, Art. 9 not permitting costs to be awarded in advance, without determination on merits — Such award payment, not “interim”, and not “protective” in nature.
Practice — Costs — On motion for stay of action for breach of charter party in favour of arbitration, Prothonotary granted stay but awarded defendant shipowner costs of action as “interim protection” — Appeal by way of motion from part of order awarding costs against plaintiff — Defendant did not seek costs of action at any stage of hearing — Prothonotary erred in awarding costs when action not finally determined, and in awarding costs not sought or spoken to by defendant.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Commercial Arbitration Code, being Schedule to the Commercial Arbitration Act, R.S.C., 1985 (2nd Supp.), c. 17, Arts. 8, 9.
CASES JUDICIALLY CONSIDERED
APPLIED:
Lubrizol Corp. v. Imperial Oil Ltd. (1989), 27 C.I.P.R. 147; 26 C.P.R. (3d) 461; 103 N.R. 237 (F.C.A.); Armada Lines Ltd. v. Chaleur Fertilizers Ltd., [1997] 2 S.C.R. 617; (1997), 148 D.L.R. (4th) 217; 213 N.R. 228; R. v. James Lorimer and Company Limited, [1984] 1 F.C. 1065; (1984), 77 C.P.R. (2d) 262; 180 N.R. 351 (C.A.).
APPEAL by way of motion from portion of Prothonotary’s order awarding costs against plaintiff. Motion allowed.
APPEARANCES:
H. Peter Swanson for plaintiff.
Doug G. Morrison for defendants.
SOLICITORS OF RECORD:
Campney, Murphy, Vancouver, for plaintiff.
Bull, Housser & Tupper, Vancouver, for defendants.
The following are the reasons for order rendered in English by
[1] Pinard, J.: This is an appeal by the plaintiff seeking to overturn a portion of the order of the Prothonotary dated November 5, 1999 [[2000] 2 F.C. 427 (T.D.)] in which the Prothonotary awarded costs against the plaintiff, “as interim protection”, following a successful stay of proceedings application by the plaintiff. The Prothonotary’s order reads as follows:
THIS COURT ORDERS that
This action is stayed pending the conclusion of New York arbitration. The Defendants may have, as interim protection, the costs and disbursements of this action which, including a lump sum of $750 on this motion, are set at the lump sum of $13,262.64.
[2] When the application for a stay of proceedings was heard before the Prothonotary on October 18, 1999, the defendant Passport Maritime S.A. (the defendant) sought either security for its claim in the New York arbitration or alternatively, security for costs of this proceeding including the costs of the security. The defendant defined the issue before the Court in its reply submissions as follows:
POINTS IN ISSUE
1. Whether the Court should order, as a condition of granting the stay of proceedings, that the Plaintiff provide security for the award sought by the Defendants in the United States arbitration proceedings and/or security for the costs incurred by the Plaintiff in these proceedings, including the costs of the security the Plaintiff has forced the Defendant to provide.
[3] In the same document, the defendant sought the following order:
ORDER SOUGHT
The Defendants seek an Order that, as a condition of this Court’s granting a stay in the proceedings before it, the Plaintiff provide security to the Defendants:
(a) in respect of the Defendant’s claim in the United States arbitration proceedings;
(b) in the alternative, for costs the Defendants have incurred in proceedings before this Court, including the cost of the security the Plaintiff has forced the Defendants to provide;
[4] It appears, therefore, that the defendant did not seek costs at any stage of the hearing and certainly not the costs of the action. Rather the defendant sought three different types of security as “interim protection”.
[5] It is clear from the Prothonotary’s reasons in support of his decision that he intended to grant the costs and the disbursements of the within action to the defendant as “interim protection” within Article 9 of the Commercial Arbitration Code, Schedule to the Commercial Arbitration Act, R.S.C., 1985 (2nd Supp.), c. 17, which reads:
Article 9
…
It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure.
[6] In his reasons, the Prothonotary also states, at paragraph 35 [page 444]:
The defendant shall have its costs of providing the security and the lump sum which I have awarded for this motion …. It will be up to the defendant to collect its costs as best it may.
[7] In my view, the impugned order ought to be set aside on the ground that it does not grant the interim protection provided for in Article 9 of the Commercial Arbitration Code. I agree with the plaintiff’s submission that interim protection is “interim” in that it is something done pending final determination of the issues on the merits. It is protection, not payment. Here, the Prothonotary awarded costs to be collected now, without any determination whatsoever on the merits. There is no opportunity to alter this award. There is nothing “interim” about the award, and it is not “protective” in nature—it is payment.
[8] In addition, I find that the Prothonotary erred in awarding costs of the action when the action had not been concluded or finally determined, and in awarding costs which were not sought or spoken to by the Defendant (see Lubrizol Corp. v. Imperial Oil Ltd. (1989), 27 C.I.P.R. 147 (F.C.A.); and Armada Lines Ltd. v. Chaleur Fertilizers Ltd., [1997] 2 S.C.R. 617).
[9] It appears, therefore, that costs were wrongly awarded to the unsuccessful party (see R. v. James Lorimer and Company Limited, [1984] 1 F.C. 1065 (C.A.)).
[10] For all the above reasons, the motion is granted and the portion of the order of the Prothonotary awarding the defendants costs and disbursements of the action as interim protection is set aside. Costs of this motion are adjudicated in favour of the plaintiff.