T-3530-79
Marlex Petroleum, Inc. (Plaintiff)
v.
The Ship Har Rai and The Shipping Corporation
of India (Defendants)
Trial Division, Mahoney J.—Vancouver, March 1,
2, 3 and 5, 1982.
Maritime law — Action to enforce a maritime lien that
arose under American law — Plaintiff furnished fuel oil to
defendant ship pursuant to a contract not with the owner —
Unbeknown to the plaintiff charterparty contained a prohibi
tion of lien clause — Action in personam against defendant
owner was dismissed — Under American law, plaintiff has a
right in rem — Whether Canadian maritime law provides for
the enforcement of a right in rem that arose under foreign law
where the owner is not liable in personam — Action dismissed
— Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, ss.
22 ( 1 ),( 2 )(n),( 3 )(a),(c).
Westcan Stevedoring Ltd. v. The ship "Armar" [1973]
F.C. 1232, followed. The 'Strandhill" v. Walter W.
Hodder Co. [1926] S.C.R. 680, agreed with. Todd Ship
yards Corp. v. Alterna Compania Maritima S.A. [1974]
S.C.R. 1248, distinguished.
ACTION.
COUNSEL:
Peter Gordon and Glen Morgan for plaintiff.
W. Perrett for defendants.
SOLICITORS:
Davis & Co., Vancouver, for plaintiff.
Macrae, Montgomery & Cunningham, Van-
couver, for defendants.
The following are the reasons for judgment
rendered in English by
MAHONEY J.: This is an action to enforce a
maritime lien that arose under the law of the
United States of America. The plaintiff is a Cali-
fornia corporation doing its business at Long
Beach. The defendant ship, hereinafter "Har
Rai", was of Indian registry owned by the other
defendant, hereinafter "the owner", and was
chartered.
On May 6, 1979, the plaintiff supplied Har Rai
with quantities of bunker fuel oil and diesel fuel
oil. Har Rai was in Vancouver, B.C., on July 12,
1979, when this action was commenced and Har
Rai arrested. On commencement of the trial, the
Court was advised that the parties wished judg
ment on the issue of liability only and that quan
tum of damages be made subject of a reference, if
necessary. At the close of the plaintiff's case, the
owner moved for dismissal, with costs, of the
action in personam against it. That motion was
granted. The evidence simply did not support a
finding of liability in personam. These reasons deal
only with the action in rem against Har Rai.
The issues are whether, in the circumstances, a
maritime lien on Har Rai arose under U.S. law
and, if so, whether that lien is enforceable in an
action in rem in this Court. The law governing the
supply of the fuels was clearly that of the United
States.
The only witnesses as to fact, both called by the
plaintiff, were Dan Maruyama and James Bill-
strom, its acting credit manager and assistant
operations manager of the day, both of whom were
entirely credible. Aside from their testimony, the
evidence as to fact was limited to portions of
examinations for discovery with exhibits read into
the record by both parties. I do not find it neces
sary to review the evidence as to fact beyond
finding that the plaintiff did, pursuant to a con
tract not with the owner, furnish to Har Rai,
9,182.66 barrels of bunker fuel oil and 634.30
barrels of diesel fuel oil; that the fuel was a
necessary; that Har Rai accepted it and that the
total bill, at the quoted prices plus barging, wharf-
age and tax, of $167,578.43 (U.S.) remains
unpaid. The plaintiff may not have known of the
charterparty but, if it had directed its mind to the
question, it should have inferred its existence. The
plaintiff did not, however, know, nor is there any
basis for holding on the evidence that it ought to
have inferred, that the charterparty contained a
prohibition of lien clause. The plaintiff did rely on
its past experience with Global Bulk Handling
Limited in agreeing to extend credit and it did
attempt to collect from it. Global was not the
charterer but had held itself out to be the intended
purchaser of the fuel.
The plaintiff called Carter Quinby, a California
attorney, as an expert witness. His expertise in
U.S. admiralty law was accepted by the defend
ants and the Court. The defendants called no
expert evidence. It is not without significance that
the statement of Quinby's proposed evidence in
chief had, pursuant to Rule 482, been filed and
served September 15, 1981. The trial began March
1, 1982. I fully accept Quinby's conclusions as to
the applicable law of the United States. He heard
the evidence as to fact and identified two points
where his hypotheses were at variance with that
evidence. He nevertheless maintained his opinion
that:
It is my opinion that, under United States law, plaintiff
Marlex has a maritime lien against defendant vessel for the
reasonable value of the fuel oil and diesel oil supplied to the
HAR RAI at Los Angeles/Long Beach in May 1979, but
defendant Shipping Corporation of India is not personally
liable to Marlex for the cost of such oil. Under the Ship
Mortgage Act as amended in 1971, Marlex is entitled to such a
maritime lien even if it had actual knowledge that the HAR
RAI was chartered and that the oil had been ordered by or on
behalf of the charterer, unless the vessel owner affirmatively
establishes that the charter contains a prohibition of lien clause
and that Marlex had actual knowledge of the existence of such
prohibition prior to the delivery of the oil in question. Marlex
did not waive its lien against the vessel even if it investigated
and relied in part on the charterer's credit-worthiness, and even
though it may have attempted to collect the amount due from
the charterer.
The plaintiff does, under United States law, have
the maritime lien it asserts.
While the law of the United States determines
the existence of the plaintiff's right in rem, its
remedy, in this Court, is determined by the law of
Canada. This Court has jurisdiction only if the
"remedy is sought under or by virtue of Canadian
maritime law".' Subject to that, the Court has
jurisdiction.
If the owner were liable in personam, this Court
would enforce a right in rem arising under foreign
' Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s.
22(1), 22(2)(n) and 22(3)(a) and (c).
law. 2 Apart from statute, however, a right in rem
arising under Canadian law cannot be enforced in
the absence of liability of the owner in personam. 3
The question remains whether Canadian maritime
law provides for the enforcement of a right in rem
that arose under foreign law where the owner is
not liable in personam. The plaintiff relies on
Todd Shipyards Corporation v. Alterna Compania
Maritima S.A. 4
That decision is authority for the proposition
that a foreign maritime lien, which is given prece
dence over a registered mortgage by its lex loci,
will be given the same precedence under Canadian
maritime law. It is by no means clear that it is
authority for the proposition that a remedy in rem
is available in Canada, at all, in the absence of the
owner's liability in personam.
The reasons for judgment, if any, of the Excheq
uer Court in Todd Shipyards Corporation v.
Alterna Compania Maritima S.A. appear not to
have been reported. There is no recitation of rele
vant facts in the Supreme Court of Canada deci
sion beyond that, at page 1250, to the effect that
the repairs giving rise to the lien had been per
formed "at the request of those responsible for the
management of the ship". That is as consistent
with them having been requested by or for the
owner as by or for another responsible for its
management. While not a recitation of a finding of
fact, the decision does, at page 1251, quote por
tions of the lien-holder's pleading, including the
following:
The aforesaid supplying of necessary supplies and repair work
to the Defendant Ship at the request of her Owners and their
aforesaid representatives....
I think it fair to infer that the pleading would not
have been recited without comment unless it was
accepted as the truth. Having particular regard to
the counsel involved in that action, I cannot con
ceive that this issue would not have been raised if a
basis for doing so had existed in fact.
2 The 'Strandhill" v. Walter W. Hodder Company [1926]
S.C.R. 680.
3 Westcan Stevedoring Ltd. v. The ship 'Armar" [1973]
F.C. 1232.
4 [1974] S.C.R. 1248.
Todd Shipyards Corporation v. Alterna Corn-
pania Maritima S.A. is not authority binding this
Court to grant relief in rem against the Har Rai in
the absence of the liability of the owner in perso-
nam. The Armar is authority to the contrary. The
question appears not yet to have been addressed by
the Federal Court of Appeal or the Supreme Court
of Canada.
JUDGMENT
The plaintiff's action is dismissed with costs.
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.