JPMorgan Chase Bank et al. v. Mystras Maritime Corp. et al., 2005 FC 864

CourtFederal Court (Canada)
Case DateFebruary 24, 2005
JurisdictionCanada (Federal)
Citations2005 FC 864;(2005), 275 F.T.R. 159 (FC)

JPMorgan Chase Bk. v. Mystras Maritime (2005), 275 F.T.R. 159 (FC)

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: [2005] F.T.R. TBEd. JL.015

Admiralty Action in Rem

JPMorgan Chase Bank (formerly the Chase Manhattan Bank) and J.P. Morgan Europe Limited (formerly Chase Manhattan International Limited) (plaintiffs) v. Mystras Maritime Corporation and the Owners and All Others Interested in The Ship "Lanner" and The Ship "Lanner" (defendants)

(T-531-03; 2005 CF 864; 2005 FC 864)

Indexed As: JPMorgan Chase Bank et al. v. Mystras Maritime Corp. et al.

Federal Court

Morneau, Prothonotary

June 17, 2005.

Summary:

A bank signed a loan agreement with three borrowers. They defaulted on the loan. The bank took possession of the borrowers' ships and sold them. A balance of $2.7 million from the proceeds of the sale of the Ship "Lanner" remained in issue. The bank and a number of suppliers of necessaries to the "Lanner" moved for an order that they were entitled to receive the balance of the proceeds.

A Prothonotary of the Federal Court held that the bank was entitled to receive the balance of the proceeds.

Admiralty - Topic 8330

Practice - Actions in rem - Sale - Sale proceeds - Entitlement to - A bank signed a loan agreement with three borrowers - They defaulted on the loan - The bank took possession of the borrowers' ships and sold them - A balance of $2.7 million from the proceeds of the sale of the Ship "Lanner" remained in issue - The bank and a number of suppliers of necessaries to the "Lanner" moved for an order that they were entitled to receive the balance of the proceeds - The suppliers argued that they held a maritime lien on the "Lanner" under their contracts with the "Lanner's" owner which stated that the parties accepted the general maritime law of the United States - A Prothonotary of the Federal Court rejected the suppliers' argument and held that the bank was entitled to receive the balance of the proceeds - The United States could not be taken to be the jurisdiction with the closest and most substantial connection to the parties - Since the maritime law of the United States was not applicable and the law of no other jurisdiction had been argued or proved, the maritime law of Canada applied - Under Canadian maritime law, a supplier of necessaries did not have a maritime lien and ranked lower than a mortgagee (the bank) in traditional priorities - See paragraphs 36 to 62.

Admiralty - Topic 8330

Practice - Actions in rem - Sale - Sale proceeds - Entitlement to - A bank signed a loan agreement with three borrowers - They defaulted on the loan - The bank took possession of the borrowers' ships and sold them - A balance of $2.7 million from the proceeds of the sale of the Ship "Lanner" remained in issue - The bank and a number of suppliers of necessaries to the "Lanner" moved for an order that they were entitled to receive the balance of the proceeds - Under Canadian maritime law, a supplier of necessaries did not have a maritime lien and ranked lower than a mortgagee (the bank) in traditional priorities - The suppliers argued that they held a maritime lien pursuant to their contracts with the "Lanner's" owner - A Prothonotary of the Federal Court rejected the suppliers' argument and held that the bank was entitled to receive the balance of the proceeds - Notwithstanding the wording of the contracts, the bank was not a party to those contracts and accordingly, the contracts could not be asserted against it - In any event, under both Canadian maritime law and American maritime law, a contract could not create a maritime lien - See paragraphs 63 to 73.

Admiralty - Topic 8342

Practice - Actions in rem - Liens - Priorities - [See both Admiralty - Topic 8330 ].

Admiralty - Topic 8342

Practice - Actions in rem - Liens - Priorities - A bank signed a loan agreement with three borrowers - They defaulted on the loan - The bank took possession of the borrowers' ships and sold them - A balance of $2.7 million from the proceeds of the sale of the Ship "Lanner" remained in issue - The bank and a number of suppliers of necessaries to the "Lanner" moved for an order that they were entitled to receive the balance of the proceeds - Under Canadian maritime law, a supplier of necessaries did not have a maritime lien and ranked lower than a mortgagee (the bank) in traditional priorities - The suppliers argued that there should be a rearrangement of the traditional order of priority in the interest of equity - A Prothonotary of the Federal Court rejected the suppliers' argument and held that the bank was entitled to receive the balance of the proceeds - The suppliers failed to demonstrate through persuasive evidence that an equity based rearrangement was needed due to the presence of very special circumstances and that a departure from this order of priority was essential to prevent obvious injustice - See paragraphs 74 to 91.

Admiralty - Topic 8345

Practice - Actions in rem - Liens - Maritime lien for necessities - [See both Admiralty - Topic 8330 ].

Admiralty - Topic 8347

Practice - Actions in rem - Liens - Maritime lien created by law of foreign jurisdiction - [See first Admiralty - Topic 8330 ].

Conflict of Laws - Topic 2454

Admiralty - Liens - Maritime lien created by law of foreign jurisdiction - [See first Admiralty - Topic 8330 ].

Conflict of Laws - Topic 2481

Admiralty - Choice of law - General - [See first Admiralty - Topic 8330 ].

Cases Noticed:

Royal Bank of Scotland plc v. Ship Golden Trinity et al. (2004), 254 F.T.R. 1 (F.C. Protho.), consd. [para. 31].

Textainer Equipment Management B.V. v. Baltic Shipping Co. et al. (1994), 84 F.T.R. 108 (T.D.), dist. [para. 36].

Kirgan Holdings S.A. v. Ship Panamax Leader et al. (2002), 225 F.T.R. 273 (T.D.), dist. [para. 36].

Bank of Scotland v. Ship Nel et al., [2001] 1 F.C. 408; 189 F.T.R. 230 (T.D.), refd to. [para. 39].

Imperial Oil Ltd. v. Petromar Inc. et al. (2001), 283 N.R. 182; 209 D.L.R.(4th) 158 (F.C.A.), consd. [para. 41].

Lauritzen v. Larsen (1953), 345 U.S. 571 (S.C.), refd to. [para. 48].

Holt Cargo Systems Inc. v. Ship Brussel (2000), 185 F.T.R. 1 (T.D.), refd to. [para. 77].

Fraser Shipyard and Industrial Centre Ltd. v. Expedient Maritime Co. et al. (1999), 170 F.T.R. 1 (T.D. Protho.), varied. (1999), 170 F.T.R. 57 (T.D.), dist. [para. 88].

Counsel:

Anil Mohan and James Gould, for the plaintiffs;

Louis Buteau, for the claimants, Hellas and International Paint;

Marc de Man, for the claimant, Calogeras;

Gassim Bangoura, for the claimants, Kent Trade, E.N. Bisso and Chengxi.

Solicitors of Record:

Metcalf & Company, Halifax, Nova Scotia, for the plaintiffs;

Robinson Sheppard Shapiro, Montreal, Quebec, for the claimants, Hellas and International Paint;

De Man, Pilotte, Montreal, Quebec, for the claimant, Calogeras;

Borden Ladner Gervais, Montreal, Quebec, for the claimants, Kent Trade, E.N. Bisso and Chengxi.

This motion was heard on February 24, 2005, at Montreal, Quebec, by Morneau, Prothonotary, of the Federal Court, who delivered the following judgment on June 17, 2005.

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4 practice notes
  • Year in review: developments in Canadian law in 2008.
    • Canada
    • University of Toronto Faculty of Law Review Vol. 67 No. 2, March 2009
    • March 22, 2009
    ...and Finance Inc. v. JP Morgan Chase Bank, 2008 FCA 399 [Kent Trade (FCA)]. (314) Kent Trade and Finance Inc. v. JP Morgan Chase Bank, 2005 FC 864 [Kent Trade (FCTD)]. (315) Imperial Oil Ltd. v. Petromar Inc., 2001 FCA 391 [Imperial Oil]. (316) Kent Trade and Finance Inc. v. JP Morgan Chase ......
  • JPMorgan Chase Bank c. Lanner (Le),
    • Canada
    • Court of Appeal (Canada)
    • December 12, 2008
    ...289; (2006), 289 F.T.R. 165; 2006 FC 409; revg in part sub nom. JP Morgan Chase Bank v. Mystras Maritime Corp. (2005), 275 F.T.R. 159; 2005 FC 864) that U.S. law did not apply to give maritime liens to the appellants, non-U.S. suppliers of necessaries to a foreign ship in foreign ports arre......
  • Kent Trade and Finance Inc. et al. v. JPMorgan Chase Bank et al., 2008 FCA 399
    • Canada
    • Canada (Federal) Federal Court of Appeal (Canada)
    • October 8, 2008
    ...an order that they were entitled to receive the balance of the proceeds. A Prothonotary of the Federal Court, in a decision reported at 275 F.T.R. 159, held that the bank was entitled to receive the balance of the proceeds. Five suppliers The Federal Court, in a decision reported at 289 F.T......
  • JPMorgan Chase Bank et al. v. Mystras Maritime Corp. et al., 2006 FC 409
    • Canada
    • Canada (Federal) Federal Court (Canada)
    • November 1, 2005
    ...an order that they were entitled to receive the balance of the proceeds. A Prothonotary of the Federal Court, in a decision reported at 275 F.T.R. 159, held that the bank was entitled to receive the balance of the proceeds. Five suppliers The Federal Court allowed the appeal in part. Admira......
3 cases
  • JPMorgan Chase Bank c. Lanner (Le),
    • Canada
    • Court of Appeal (Canada)
    • December 12, 2008
    ...289; (2006), 289 F.T.R. 165; 2006 FC 409; revg in part sub nom. JP Morgan Chase Bank v. Mystras Maritime Corp. (2005), 275 F.T.R. 159; 2005 FC 864) that U.S. law did not apply to give maritime liens to the appellants, non-U.S. suppliers of necessaries to a foreign ship in foreign ports arre......
  • Kent Trade and Finance Inc. et al. v. JPMorgan Chase Bank et al., 2008 FCA 399
    • Canada
    • Canada (Federal) Federal Court of Appeal (Canada)
    • October 8, 2008
    ...an order that they were entitled to receive the balance of the proceeds. A Prothonotary of the Federal Court, in a decision reported at 275 F.T.R. 159, held that the bank was entitled to receive the balance of the proceeds. Five suppliers The Federal Court, in a decision reported at 289 F.T......
  • JPMorgan Chase Bank et al. v. Mystras Maritime Corp. et al., 2006 FC 409
    • Canada
    • Canada (Federal) Federal Court (Canada)
    • November 1, 2005
    ...an order that they were entitled to receive the balance of the proceeds. A Prothonotary of the Federal Court, in a decision reported at 275 F.T.R. 159, held that the bank was entitled to receive the balance of the proceeds. Five suppliers The Federal Court allowed the appeal in part. Admira......
1 books & journal articles
  • Year in review: developments in Canadian law in 2008.
    • Canada
    • University of Toronto Faculty of Law Review Vol. 67 No. 2, March 2009
    • March 22, 2009
    ...and Finance Inc. v. JP Morgan Chase Bank, 2008 FCA 399 [Kent Trade (FCA)]. (314) Kent Trade and Finance Inc. v. JP Morgan Chase Bank, 2005 FC 864 [Kent Trade (FCTD)]. (315) Imperial Oil Ltd. v. Petromar Inc., 2001 FCA 391 [Imperial Oil]. (316) Kent Trade and Finance Inc. v. JP Morgan Chase ......

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