Holt Cargo v. ABC Containerline, 2001 SCC 90

• Judge: McLachlin, C.J.C., L'Heureux-Dubé, Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ.
• Court: Supreme Court (Canada)
• Case Date: March 20, 2001
• Jurisdiction: Canada (Federal)
• Citations: 2001 SCC 90;(2001), 280 N.R. 1 (SCC)

Holt Cargo v. ABC Containerline (2001), 280 N.R. 1 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2001] N.R. TBEd. DE.011

Frans G.A. De Roy and Thierry Van Doosselaere, as Trustees in Bankruptcy of ABC Containerline N.V., the Owners, Charterers and all others interested in the Ship "Brussel" and the Ship "Brussel" (appellants) v. Holt Cargo Systems Inc. (respondent)

(27290; 2001 SCC 90)

Indexed As: Holt Cargo Systems Inc. v. ABC Containerline N.V. (Bankrupt) et al.

Supreme Court of Canada

McLachlin, C.J.C., L'Heureux-Dubé, Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ.

December 20, 2001.

Summary:

The U.S. plaintiff had a maritime lien, under U.S. law, against a Belgian registered ship, for services rendered in the U.S. The plaintiff brought an in rem action in the Federal Court of Canada, Trial Division, and arrested the ship in Halifax. The owners and operators of the ship were subsequently adjudged bankrupt by a Belgian court and trustees were appointed. The ship was ordered sold by the Federal Court. The Que­bec Superior Court sitting in Bank­ruptcy (the bankrupts' Cana­dian agent was in Montreal) made an order pur­porting to dispose of the ship and the pro­ceeds of sale. The Belgian bank­ruptcy trustees applied to the Federal Court for a stay of the in rem proceed­ings. They were unsussessful. The trustees applied for an order that the net proceeds of the sale be paid out to them rather than to those credi­tors, including the plaintiff, who had filed claims against the vessel or its owners in the Fed­eral Court. The Federal Court ruled that the trustees could obtain the pro­ceeds of sale only if they posted security to answer the claims of the secured creditors. No security was paid.

The Federal Court of Canada, Trial Divi­sion, in a decision reported at 127 F.T.R. 244, gave reasons for its decision not to order a stay and not to order payment to the trustees of the proceeds of sale. The court held that: it was bound to recognize the plaintiff's lien; the issues before the court were not pro­ceedings in bankruptcy; the maritime lien was a secured claim which arose prior to the bank­ruptcy; and the Bank­ruptcy and Insol­vency Act did not bar the plaintiff from realizing on its security. The Belgian bank­ruptcy trustees et al. appealed.

The Federal Court of Appeal, in a decision reported at 239 N.R. 114, dismissed the appeal. The Belgian bankruptcy trustees et al. appealed.

The Supreme Court of Canada dismissed the appeal.

Editor's Note: For other decisions in this matter, see 131 F.T.R. 41, 234 N.R. 98 and 185 F.T.R. 1.

Admiralty - Topic 8337

Practice - Actions in rem - Sale - Stay of proceedings - [See first Conflict of Laws - Topic 2467 ].

Admiralty - Topic 8342

Practice - Actions in rem - Liens - Prior­ities - [See first and second Conflict of Laws - Topic 2467 ].

Bankruptcy - Topic 3927.2

Secured creditors - What constitutes a secured creditor - Maritime lien claimant - The U.S. plaintiff had a maritime lien, under U.S. law, against a Belgian regis­tered ship, for services rendered in the U.S. - The services, if rendered in Canada, would not have given rise to a maritime lien - The plaintiff arrested the ship in Halifax - The Federal Court of Canada recognized the maritime lien as a secured claim under Canadian bankruptcy law - The Supreme Court of Canada upheld the decision - A maritime lien validly created under foreign law would be recognized and given the same priority in Canada as a maritime lien created in Canada under Canadian maritime law, unless opposed to some rule of domestic policy or procedure - Canadian law granted the remedy and set the priorities - The plaintiff was a secured creditor under Canadian bankrupt­cy law - See paragraphs 41 to 53.

Bankruptcy - Topic 3927.2

Secured creditors - What constitutes a secured creditor - Maritime lien claimant - [See second Conflict of Laws - Topic 2467 ].

Conflict of Laws - Topic 2402

Admiralty - General - Forum conveniens - The U.S. plaintiff had a maritime lien, under U.S. law, against a Belgian regis­tered ship - The plaintiff arrested the ship in Halifax - The owners and operators of the ship were subsequently adjudged bankrupt by a Belgian court - The ship was ordered sold by the Federal Court of Canada - The Belgian bankruptcy trustees applied to the Federal Court to stay its order - They argued, inter alia, that Bel­gium was the proper forum - The trial judge refused a stay - The Federal Court of Appeal upheld the decision - The Supreme Court of Canada dismissed a further appeal - The court noted that lack of substantive connections to any particular jurisdiction, including its home port, was a feature of ships engaged in international maritime commerce - The court held that in deter­mining the appropriate forum, the "real and substantial connection test" had to take into account the special lifestyle of ocean going freighters - See paragraph 93.

Conflict of Laws - Topic 2402

Admiralty - General - Forum conveniens - [See first Conflict of Laws - Topic 2467 ].

Conflict of Laws - Topic 2467

Admiralty - Actions in rem - Sale - The U.S. plaintiff had a maritime lien, under U.S. law, against a Belgian registered ship - The plaintiff arrested the ship in Halifax - The owners and operators of the ship were subsequently adjudged bankrupt by a Belgian court - The ship was ordered sold by the Federal Court of Canada - The Belgian bank­ruptcy trustees applied, unsuccessful­ly, to the Federal Court to stay its order - The trustees appealed - They submitted, inter alia, that Bel­gium was the proper forum and that the Federal Court lacked jurisdiction by virtue of the Belgian bank­ruptcy order and follow up orders issued by the Quebec Superior Court sit­ting in Bank­ruptcy (the bank­rupts' Cana­dian agent was in Montreal) - The Supreme Court of Canada held that the trial judge had juris­diction over the mari­time law pro­ceedings and did not err in exercising his discretion to ref­use a stay - See paragraphs 60 to 98.

Conflict of Laws - Topic 2467

Admiralty - Actions in rem - Sale - The U.S. plaintiff had a maritime lien, under U.S. law, against a Belgian registered ship - The plaintiff arrested the ship in Halifax - The owners and operators of the ship were subsequently adjudged bankrupt by a Belgian court - The ship was ordered sold by the Federal Court - The Belgian bank­ruptcy trustees applied to the Federal Court to stay its order - The Supreme Court of Canada held, inter alia, that on the date of bankruptcy the Belgian trustees acquired under Canadian law the bankrupt shipown­er's interest in the ship - However, that interest was and remained subject to the prior claim of the secured creditors, in­cluding the maritime lienholders who were seeking relief in the Federal Court, Trial Division - See paragraphs 54 to 59.

Conflict of Laws - Topic 2467

Admiralty - Actions in rem - Sale - The plaintiff had a maritime lien against a Belgian registered ship - The plaintiff arrested the ship in Halifax - The owners and operators of the ship were subsequent­ly adjudged bankrupt by a Belgian court - The ship was ordered sold by the Federal Court of Canada - The Quebec Superior Court sitting in Bank­ruptcy issued follow up orders respecting the Bel­gian bank­ruptcy (the bankrupts' Cana­dian agent was in Montreal) - The trustees applied, unsuccessfully, to the Federal Court to stay the sale - They appealed - The Supreme Court of Canada held that the Belgian bank­ruptcy order and the follow up orders of the Canadian bank­ruptcy court had not trans­formed a mari­time matter into one of bankruptcy - The Fed­eral Court was not exercising original, ancillary or auxiliary jurisdiction in bank­ruptcy - There was no jurisdic­tional bar­rier to its continuing to adjudicate the plaintiff's in rem action against the ship - See para­graphs 60 to 66.

Conflict of Laws - Topic 5606

Bankruptcy - General - Effect of foreign bankruptcy - [See all Conflict of Laws - Topic 2467 ].

Courts - Topic 4026

Federal Court of Canada - Jurisdiction - Trial Division - Maritime and admiralty matters - [See third Conflict of Laws - Topic 2467 ].

Courts - Topic 4047.1

Federal Court of Canada - Jurisdiction - Trial Division - Bankruptcy - [See third Conflict of Laws - Topic 2467 ].

Cases Noticed:

Antwerp Bulkcarriers, N.V., Re (2001), 279 N.R. 154 (S.C.C.), refd to. [para. 1].

Amchem Products Inc. et al. v. Workers' Compensation Board (B.C.), [1993] 1 S.C.R. 897; 150 N.R. 321; 23 B.C.A.C. 1; 39 W.A.C. 1, refd to. [para. 17].

Treco, Re (2001), 240 F.3d 148 (2nd Cir.), refd to. [para. 23].

Laane and Balster v. Estonian State Cargo & Passenger Steamship Line, [1949] S.C.R. 530, refd to. [para. 25].

Chartwell Shipping Ltd. v. Q.N.S. Paper Co., [1989] 2 S.C.R. 683; 101 N.R. 1; 26 Q.A.C. 81, refd to. [para. 25].

Ship Tolten, Re, [1946] P. 135 (C.A.), refd to. [para. 26].

Olympia & York Developments Ltd. v. Royal Trust Co. (1993), 20 C.B.R.(3d) 165 (Ont. Gen. Div.), refd to. [para. 30].

Cadillac Fairview Inc., Re (1995), 30 C.B.R.(3d) 17 (Ont. Gen. Div.), refd to. [para. 30].

Roberts v. Picture Butte Municipal Hospi­tal et al. (1998), 227 A.R. 308; 64 Alta. L.R.(3d) 218 (Q.B.), refd to. [para. 30].

Walker (Bankrupt), Re (1998), 70 O.T.C. 386; 5 C.B.R.(4th) 123 (Gen. Div. Bktcy.), refd to. [para. 30].

Babcock & Wilcox Canada Ltd., Re, [2000] O.T.C. 135; 18 C.B.R.(4th) 157 (Sup. Ct.), refd to. [para. 30].

Federal Business Development Bank v. Commission de la santé et de la sécurité du travail et al., [1988] 1 S.C.R. 1061; 84 N.R. 308; 14 Q.A.C. 140, refd to. [para. 31].

Ship Strandhill v. Hodder (Walter W.) Co., [1926] S.C.R. 680, refd to. [para. 41].

Todd Shipyards Corp. v. Altema Compania Maritime S.A. and Ship Ioannis Daskalelis, [1974] S.C.R. 1248, refd to. [para. 41].

Marlex Petroleum Inc. v. Ship Har Rai and Shipping Corporation of India Ltd., [1987] 1 S.C.R. 57; 72 N.R. 75, affing. [1984] 2 F.C. 345; 53 N.R. 1 (F.C.A.), refd to. [para. 43].

Riordon Co. v. Danforth Co., [1923] S.C.R. 319, refd to. [para. 51].

Husky Oil Operations Ltd. v. Minister of National Revenue et al., [1995] 3 S.C.R. 453; 188 N.R. 1; 137 Sask.R. 81; 107 W.A.C. 81, refd to. [para. 52].

Galbraith v. Grimshaw, [1910] A.C. 508 (H.L.), refd to. [para. 57].

Anantapadmanabhaswami v. Official Receiver of Secunderabad, [1933] A.C. 394 (P.C.), refd to. [para. 57].

Miida Electronics Inc. v. Mitsui O.S.K. Lines Ltd. and ITO-International Ter­minal Operators Ltd., [1986] 1 S.C.R. 752; 68 N.R. 241, refd to. [para. 64].

R. v. Zingre, Wuest and Reiser, [1981] 2 S.C.R. 392; 38 N.R. 272; 10 Man.R.(2d) 62, refd to. [para. 68].

R. v. Spencer, [1985] 2 S.C.R. 278; 62 N.R. 81; 11 O.A.C. 207, refd to. [para. 69].

Ordon et al. v. Grail, [1998] 3 S.C.R. 437; 232 N.R. 201; 115 O.A.C. 1, refd to. [para. 70].

Morguard Investments Ltd. et al. v. De Savoye, [1990] 3 S.C.R. 1077; 122 N.R. 81, refd to. [para. 71].

Hunt v. T & N plc - see Hunt v. Lac d'Amiante du Québec Ltée et al.

Hunt v. Lac d'Amiante du Québec Ltée et al., [1993] 4 S.C.R. 289; 161 N.R. 81; 37 B.C.A.C. 161; 60 W.A.C. 161, refd to. [para. 71].

Tolofson v. Jensen and Tolofson, [1994] 3 S.C.R. 1022; 175 N.R. 161; 77 O.A.C. 81; 51 B.C.A.C. 241; 84 W.A.C. 241, refd to. [para. 71].

Canada Southern Railway Co. v. Gebhard (1883), 109 U.S. 527 (U.S. Sup. Ct.), refd to. [para. 75].

Allen v. Hanson (1890), 18 S.C.R. 667, refd to. [para. 79].

Breakwater Co., Re (1914), 33 O.L.R. 65 (H.C.), refd to. [para. 79].

Clarke (E.H.) & Co., Re, [1923] 1 D.L.R. 716 (Ont. S.C.), refd to. [para. 79].

Stewart & Matthews Ltd. and The Wind­ing-Up Act, Re (1916), 10 W.W.R. 154 (Man. K.B.), refd to. [para. 79].

Antares Shipping Corp. v. Ship Capricorn et al., [1977] 2 S.C.R. 422; 7 N.R. 518, refd to. [para. 93].

Ship Atlantic Star, Re, [1973] 2 All E.R. 175, refd to. [para. 93].

Harelkin v. University of Regina, [1979] 2 S.C.R. 561; 26 N.R. 364, refd to. [para. 98].

Friends of the Oldman River Society v. Canada (Minister of Transport and Min­ister of Fisheries and Oceans), [1992] 1 S.C.R. 3; 132 N.R. 321, refd to. [para. 98].

Authors and Works Noticed:

Benedict on Admiralty (7th Ed. 1974) (Looseleaf update 2000, Release 81), vol. 1, p. 1-4 [para. 25].

Castel, J.-G., Canadian Conflict of Laws (4th Ed. 1997), pp. 553 [paras. 73, 77]; 554 [paras. 77, 80]; 555 [para. 80]; 564 [para. 55]; 565 [paras. 55, 79].

Dicey and Morris on the Conflict of Laws (13th Ed. 2000), vol. 2, pp. 1184, 1185 [para. 56].

Fletcher, Ian F., Insolvency in Private International Approaches (1999), pp. 61, 62 [para. 56].

Honsberger, John D., Canadian Recogni­tion of Foreign Judicially Supervised Arrangements (1990), 76 C.B.R.(N.S.) 204, generally [para. 30].

Houlden, L.W., and Morawetz, Geoffrey B., The 2001 Annotated Bankruptcy and Insolvency Act (2001), p. 346 [para. 52].

LoPucki, Lynn M., Cooperation in Inter­national Bankruptcy: A Post-Universalist Approach (1999), 84 Cornell L. Rev. 696, generally [para. 52].

Tetley, William, Maritime Liens and Claims (2nd Ed. 1998), pp. 7, 8, 56 [para. 25].

Ziegel, Jacob S., Ships at Sea, Interna­tional Insolvencies, and Divided Courts (1998), 53 C.B.R.(3d) 310, generally [para. 77].

Counsel:

David G. Colford, for the appellants;

Thomas E. Hart and Jane O'Neill, for the respondent.

Solicitors of Record:

Brisset Bishop, Montréal, Quebec, for the appellants;

McInnes Cooper & Robertson, Halifax, Nova Scotia, for the respondent.

This appeal was heard on March 20, 2001, by McLachlin, C.J.C., L'Heureux-Dubé, Gonthier, Iacobucci, Major, Bastarache, Binnie, Arbour and LeBel, JJ. Binnie, J., delivered the following decision for the court in both official languages on December 20, 2001.