T-4205-74
Bomar Navigation Ltée. (Plaintiff)
v.
The M.V. Hansa Bay and the owners of the M.V.
Hansa Bay and Straudheim & Stensaker Sweig-
niederlassung and Maritime Coastal Containers
Limited (Defendants)
Trial Division, Heald J.—Ottawa, February 20
and 21, 1975.
Maritime law—Canadian corporation sub-chartering ship
from second Canadian corporation—Second corporation
chartering from foreign owners—Cargo shipped by sub-chart-
erer from Canada to Libya—Damages claimed by sub-charter-
er for defects in ship's operation—London arbitration clause in
sub-charterparty—Whether clause would lead to injustice—
Motion for stay of action—Federal Court Rule 401(c).
The defendant ship was under a long-term charter to the
defendant "Maritime", through the defendant "Stensaker", a
German corporation, as agent for the ship's owners. The
defendant "Maritime" sub-chartered the ship to the plaintiff
for the carriage of lumber from Thunder Bay, Ontario, and
Valleyfield, Quebec, to Tripoli, Libya. The plaintiff sued to
recover amounts expended to meet deficiencies in the ship's
operation, particularly in the failure of the ship's cranes to load
the cargo in Canada and to discharge it in Libya. The defend
ants, moving for leave to file a conditional appearance for the
purpose of objecting to the Court's jurisdiction, and for an
order staying proceedings, relied on the clause in the sub-char-
terparty for arbitration at London.
Held, dismissing the motion, the prima facie presumption in
favour of granting a stay was dislodged by the strong evidence
to the contrary. The defendant "Maritime", a Canadian corpo
ration, had carriage of the action on behalf of all defendants.
The bulk of the testimony was to be adduced from persons
found in Canada. The plaintiff was a Canadian corporation
based in Montreal, with assets solely in the Province of Quebec,
against which an award of London arbitrators, on the claim
filed for arbitration by the defendants, would have to be
enforced. On the evidence as a whole, the enforcement of the
arbitration clause would lead to an injustice.
Le Syndicat de Normandin Lumber Ltd. v. "Angelic Pow
er" [1971] F.C. 263, distinguished. The Eleftheria [1970]
L.R.P.D. 94 and The Fehmarn [1958] 1 W.L.R. 159,
agreed with. Polito v. Gestioni [1960] Ex.C.R. 233,
applied.
MOTION.
COUNSEL:
E. Baudry for plaintiff.
D. A. Kerr, Q.C., for defendants.
SOLICITORS:
Brisset, Bishop & Davidson, Montreal, for
plaintiff.
Stewart, MacKeen & Covert, Halifax, for
defendants.
The following are the reasons for judgment
rendered in English by
HEALD J.: This is an application by the defend
ants under Rule 401 (c)' for leave to file a condi
tional appearance for the purpose of objecting to
the jurisdiction of the Court and for an order
granting a stay of proceedings in the action.
The plaintiff is a Canadian corporation with
head office at Montreal. The defendant Straud-
heim & Stensaker Sweigniederlassung (hereafter
Stensaker—a German corporation) is agent for
the owners of the motor vessel Hansa Bay. The
defendant Maritime Coastal Containers Limited
(hereafter Maritime) is a corporation with head
office at Halifax, Nova Scotia. Maritime had the
vessel Hansa Bay on a long-term charter. By
charterparty dated November 7, 1973, the defend
ant Maritime, in effect, sub-chartered subject
vessel to the plaintiff for a voyage from the Great
Lakes to the Western Mediterranean, with redeliv-
ery at Eastern North American ports. The plaintiff
had chartered the Hansa Bay for the purpose of
lifting a cargo of lumber from Thunder Bay,
Ontario and Valleyfield, Quebec, for discharge at
Tripoli, Libya.
The statement of claim goes on to allege that in
order to transport said cargo, the Hansa Bay was
' Rule 401. A defendant may, by leave of the Court, file a
conditional appearance for the purpose of objecting to
(c) the jurisdiction of the Court, and an order granting such
leave shall make provision for any stay of proceedings neces
sary to allow such objection to be raised and disposed of.
represented to plaintiff as being equipped with one
ten-ton Munckloader "C" type crane and that,
accordingly, the plaintiff expected the Hansa Bay
to be able to load and discharge its cargo without
the assistance of shore cranes. It is further alleged
that when the vessel commenced loading both at
Thunder Bay and Valleyfield, the vessel's crane
was not operating, resulting in the plaintiff having
to employ shore cranes at both places at a cost of
$4,469.82.
The statement of claim alleges further that
despite warnings given by the plaintiff that it was
essential for the crane to be functioning upon
arrival at Tripoli, and despite assurances by the
defendants that the crane was operational, it was
found upon arrival at Tripoli that the crane was
still out of order, forcing the plaintiff to rent shore
cranes at Tripoli and to incur travelling and survey
expenses, the Tripoli expenses totalling
$19,949.77.
The statement of claim makes further claims
against the defendants which may be summarized
as follows:
1. Engine breakdowns during the voyage causing
loss to plaintiff through lost time and additional
pilotage expenses $ 2,030.91
2. Loss of time at Montreal when the vessel was
delayed due to an oil pollution prosecution 2,138.73
3. Loss of time during voyage because the vessel
did not satisfy its speed warranty 2,200.82
4. Overpayment of hire by plaintiff to defendants 19,023.73
5. Expenses paid by plaintiff on behalf of owners
and cash advances and supplies given to the master
of the vessel 4,139.21
The basis of the defendants' application rests on
paragraph 17 of the sub-charterparty with the
plaintiff referred to supra. Said paragraph 17
reads as follows:
That should any dispute arise between owners and the charter-
ers, the matter in dispute shall be referred to three persons at
London, 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, their agreement shall be made a rule of the Court. The
arbitrators shall be commercial men.
Defendants' counsel relied heavily on the judg
ment of my brother Pratte J. in the case of Le
syndicat de Normandin Lumber Ltd. v. `Angelic
Power" 2 . In that case, where there was an arbitra
tion clause identical to the one in the case at bar,
Mr. Justice Pratte ordered a stay of proceedings in
this Court so that the parties could proceed to
arbitration as they had agreed to do. At page 272
of his judgment, Mr. Justice Pratte said:
I therefore conclude that the present arbitration clause to
which the parties freely subscribed must be enforced unless it
appears that this would be unjust. However, plaintiff's counsel
did not put forward any grounds for concluding that the
enforcement of the arbitration clause in this case would lead to
an injustice.
I have no hesitation in accepting the foregoing
statement as a correct statement of the law. The
principles to be considered in exercising the
Court's discretion in a case such as this, are, in my
view, concisely stated by Brandon J. in The
Eleftheria 3 at pages 99 and 100 of the judgment
where the learned Justice said:
The principles established by the authorities can, I think, be
summarised as follows: (1) Where plaintiffs sue in England in
breach of an agreement to refer disputes to a foreign court, and
the defendants apply for a stay, the English court, assuming the
claim to be otherwise within its jurisdiction, is not bound to
grant a stay but has a discretion whether to do so or not. (2)
The discretion should be exercised by granting a stay unless
strong cause for not doing so is shown. (3) The burden of
proving such strong cause is on the plaintiffs. (4) In exercising
its discretion the court should take into account all the circum
stances of the particular case. (5) In particular, but without
prejudice to (4), the following matters, where they arise, may
properly be regarded:—(a) In what country the evidence on the
issues of fact is situated, or more readily available, and the
effect of that on the relative convenience and expense of trial as
between the English and foreign courts. (b) Whether the law of
the foreign court applies and, if so, whether it differs from
English law in any material respects. (c) With what country
either party is connected, and how closely. (d) Whether the
defendants genuinely desire trial in the foreign country, or are
only seeking procedural advantages. (e) Whether the plaintiffs
would be prejudiced by having to sue in the foreign court
because they would: (i) be deprived of security for their claim;
(ii) be unable to enforce any judgment obtained; (iii) be faced
with a time-bar not applicable in England; or (iv) for political,
racial, religious or other reasons be unlikely to get a fair trial.
2 [1971] F.C. 263.
3 [1970] L.R.P.D. 94.
Having regard to the evidence adduced before
me on this application, I have concluded, that
notwithstanding the prima facie presumption in
favour of granting a stay, I should refuse to do so
because of the strong evidence against doing so
which I find to be here present. The plaintiff is a
Canadian corporation. The defendant, Maritime,
was, by agreement amongst the defendants, at all
relevant times, in control of the operation and
management of the vessel (see paragraph 4 of
affidavit of W. M. L. Ryan, filed on behalf of
defendants) and is also a Canadian corporation.
The defendant Maritime has conducted all corre
spondence and negotiations with the plaintiff (see
paragraphs 5, 6, 7, 8, and 9 of Ryan's affidavit) on
behalf of all defendants and has instructed London
solicitors on behalf of all defendants (see para
graphs 10 and 11 of Ryan's affidavit).
Furthermore, the affidavit of Capt. J. R. Bou-
chard, the president of the plaintiff corporation
establishes that the bulk of the evidence in this
action is to be adduced from parties to be found in
Canada (see paragraph 8 thereof). Capt. Bou-
chard deposes further as follows:
9. Trial of the issues at Montreal or Halifax will necessarily be
far less expensive than arbitration proceedings in London,
which will entail the attendance there of witnesses and Canadi-
an Counsel, the appointment of local solicitors, and the pay
ment of fees to the arbitrator(s);
10. The Plaintiff is a Montreal based company with its sole
assets situated in the Province of Quebec; execution upon its
property of any award rendered by London arbitrators in
favour of the Defendants will be subject to review by Quebec
courts, at which time Plaintiff intends to raise anew all avail
able grounds of defence;
11. As Defendants may be unable to enforce any award
obtained, arbitration in London offers no guarantee of a speedy
and economical solution of the issues; on the contrary, a final
and binding decision can best be obtained by continuing the
proceedings instituted before this Honourable Court in first
instance;
Paragraphs 10 and 11 above quoted become
relevant because the defendants have filed a claim
against the plaintiff in the sum of $137,737.46
which they wish the London arbitrators to
consider.
As against this rather substantial evidence on
"injustice" and "balance of convenience", the only
evidence adduced by the defendants is the opinion
expressed by Mr. Ryan in paragraph 21 of his
affidavit:
... that the Defendants have already incurred expense in
connection with the said arbitration; that the said London
arbitration would have proceeded on December 13, 1974 had
not the Plaintiff breached the said contract by refusing and
failing to abide by the provisions of Arbitration Clause; and
that (inasmuch as the Defendants other than MCCL are in
Europe), the balance of convenience would best be served by
placing the disputes between the parties before experienced
commercial arbitrators in London as had been agreed to by the
Plaintiff.
I do not find the above expressed opinion of Mr.
Ryan very persuasive in view of the other evidence
before me. It is clear, on the evidence, that the
defendant Maritime, as the long time charterer of
the vessel, has the "carriage" of the proceedings on
behalf of all the defendants. It is also clear that
much of the alleged damages occurred in Canada
(i.e., Thunder Bay, Ontario, Valleyfield, Quebec
and Montreal, Quebec). The uncontradicted evi
dence before me is that the bulk of the evidence is
to be adduced from parties to be found in Canada.
Possibly some evidence will be adduced from par
ties in Libya. However, I have no evidence that
such evidence would be more expensively or more
inconveniently adduced in Canada than in London.
There was no evidence before me as to the present
whereabouts of the vessel. Therefore, there is noth
ing from which I can conclude that evidence from
the vessel's crew would be more difficult or more
expensive to obtain in Canada than in London (if
indeed such evidence is necessary, on which point,
the material before me is silent). Taking the evi
dence as a whole, I have concluded that enforce
ment of the arbitration clause in this case would
lead to an injustice. I also have the view that the
very strong circumstances which re-enforced the
prima fade case for a stay in The Eleftheria case
(supra) are not present in the case at bar.
I am fortified in my conclusion that a stay
should not be ordered on the facts in this case by
the decision in The Fehmarn 4 , and in particular
the comments of Lord Denning on page 162; of
Lord Hodson on page 163 and of Lord Morris on
page 164.
In circumstances similar to those here present,
Mr. Justice A. I. Smith of the Quebec Admiralty
District also refused to grant a stay in the case of
Polito v. Gestioni 5 .
For the foregoing reasons, the defendants'
motion is dismissed, with costs of this motion to
the plaintiff in any event of the cause.
4 [1958] 1 W.L.R. 159.
[1960] Ex.C.R. 233.
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.