Kremikovtzi Trade v. Phoenix Bulk Carriers Ltd. et al., 2007 FCA 381

• Judge: Linden, Nadon and Sharlow, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: December 04, 2007
• Jurisdiction: Canada (Federal)
• Citations: 2007 FCA 381;(2007), 370 N.R. 317 (FCA)

Kremikovtzi v. Phoenix Bulk Carriers Ltd. (2007), 370 N.R. 317 (FCA)

MLB headnote and full text

Temp. Cite: [2007] N.R. TBEd. DE.018

Kremikovtzi Trade also known as Kremikovski Trade (appellant) v. Phoenix Bulk Carriers Limited, The Cargo of Coal loaded on the Ship "M/V Swift Fortune" and the Owners of the Cargo and all others interested in the Cargo of Coal loaded on the Ship "M/V Swift Fortune" (respondents)

(A-409-05; 2007 FCA 381)

Indexed As: Kremikovtzi Trade v. Phoenix Bulk Carriers Ltd. et al.

Federal Court of Appeal

Linden, Nadon and Sharlow, JJ.A.

December 4, 2007.

Summary:

A cargo owner agreed to ship its cargo of coal on a ship owned by Phoenix, but shipped the cargo on another ship. Phoenix filed an in rem claim against the cargo and an in personam claim against the cargo owners and all others interested in the cargo. Phoenix caused the cargo to be arrested. The owner applied to strike the in rem claim and to set aside the warrant of arrest.

The Federal Court dismissed the motion. The owner appealed.

The Federal Court of Appeal, in a judgment reported (2006), 345 N.R. 61, allowed the appeal, finding itself bound by a prior decision of the court which it believed to be wrongly decided. Phoenix could not commence an in rem claim against the cargo because the cargo was not the "subject of the action" within the meaning of s. 43(2) of the Federal Court Act and, accordingly, could not have the cargo arrested. Phoenix appealed.

The Supreme Court of Canada, in a judgment reported (2007), 360 N.R. 171, allowed the appeal and remitted the matter to the Court of Appeal for determination of the two issues not dealt with. Those issues were (1) that the cargo owner was not the beneficial owner of the cargo at the time the cause of action arose and at the time the action was commenced, as required by s. 43(2) and (2) that the Affidavit to Lead Warrant was deficient and the arrest warrant should be set aside.

The Federal Court of Appeal dismissed the appeal.

Admiralty - Topic 8135

Practice - Actions in rem - Warrants of arrest - Application - Affidavits - A cargo owner agreed to ship its cargo of coal on a ship owned by Phoenix, but shipped the cargo on another ship - Phoenix filed an in rem claim against the cargo and an in personam claim against the cargo owners and all others interested in the cargo - Phoenix caused the cargo to be arrested - The owner applied to strike the in rem claim and to set aside the warrant of arrest on the ground that the Affidavit to Lead Warrant was deficient - Rule 481(2)(b) required that the Affidavit state "the nature of the claim and the basis for invoking the in rem jurisdiction of the court" - The owner submitted that rule 481(2)(b) was not satisfied where the Affidavit failed to assert that the owner owned the cargo both at the time the cause of action arose and at the time the action was commenced - The Federal Court of Appeal held that the Affidavit was not deficient - Phoenix was not required by rule 481(2)(b) to say anything respecting either beneficial ownership of the cargo or the factual basis supporting the court's in rem jurisdiction - It was sufficient to set out the legal basis upon which Phoenix relied to invoke the court's in rem jurisdiction - By referring to s. 43(3) of the Federal Courts Act, Phoenix implicitly asserted that the circumstances of the case were such that its claim could be made in rem - The Affidavit, read in its entirety, met the requirements of rule 481(2)(b) - See paragraphs 12 to 23.

Admiralty - Topic 8516

Practice - Pleadings - Striking out - Failure to disclose cause of action - A cargo owner agreed to ship its cargo of coal on a ship owned by Phoenix, but shipped the cargo on another ship - Phoenix filed an in rem claim against the cargo and an in personam claim against the cargo owners and all others interested in the cargo - Phoenix caused the cargo to be arrested - The owner sought to strike the statement of claim for failing to disclose a cause action - The owner submitted that, in order for Phoenix to sustain the in rem proceedings, its statement of claim had to assert an in personam claim against the cargo owners, which it failed to do - The Federal Court of Appeal agreed that "in circumstances where a statement of claim does not include a claim in personam against the owners of a ship, or its cargo, the statement of claim does not set out the necessary basis for a claim either in personam against the owners of a ship or in rem against the ships or cargo, and any warrant of arrest or supporting affidavit based on the statement of claim shall be set aside, and the statement of claim shall be struck out" - The court, in declining to strike the statement of claim, held that although the statement of claim was imprecise, it did contain an allegation of personal liability against the cargo owners - Further, Phoenix had an arguable case that the cargo owner was the beneficial owner both at the time that the cause of action arose and at the time the action was commenced - Accordingly, it was not plain and obvious that the claim could not succeed - See paragraphs 26 to 61.

Cases Noticed:

Lorac Transport Ltd. v. Ship Atra, [1985] 1 F.C. 459 (T.D.), refd to. [para. 18].

Cold Ocean Inc. v. Ship Gornostaevka et al. (1999), 168 F.T.R. 269 (T.D.), refd to. [para. 29].

Mount Royal/Walsh Inc. v. Ship Jensen Star et al., [1990] 1 F.C. 199; 99 N.R. 42 (F.C.A.), refd to. [para. 30].

Waterside Ocean Navigation Co. v. International Navigation Ltd., [1977] 2 F.C. 257 (T.D.), refd to. [para. 32].

Hodgson et al. v. Ermineskin Indian Band et al. (2000), 267 N.R. 143 (F.C.A.), refd to. [para. 33].

Ship Aliakmon, Re, [1986] 2 Lloyd's Rep. 1 (H.L.), refd to. [para. 53].

Wait, Re, [1927] 1 Ch. 606 (C.A.), refd to. [para. 53].

Hendrickson v. Mid-City Motors Ltd., 1951 CarswellAlta 13 (S.C.), refd to. [para. 58].

Minister of National Revenue v. Wardean Drilling Ltd., [1969] 2 Ex. C.R. 166, refd to. [para. 58].

Ministre du Revenu national v. Construction Bérou Inc. (1999), 251 N.R. 115; 1999 CanLII 9102 (F.C.A.), refd to. [para. 58].

Statutes Noticed:

Federal Courts Act, R.S.C. 1985, c. F-7, sect. 43(1), sect. 43(2), sect. 43(3), sect. 43(8) [para. 10].

Federal Courts Rules, rule 481(2) [para. 13].

Counsel:

John W. Bromley, for the appellant;

Jean-Marie Fontaine and Peter Pamel, for the respondents.

Solicitors of Record:

Bromley Chapelski, Vancouver, B.C., for the appellant;

Borden Ladner Gervais LLP, Montreal, Quebec, for the respondent.

This appeal was heard on November 6, 2007, at Vancouver, B.C., before Linden, Nadon and Sharlow, JJ.A., of the Federal Court of Appeal.

On December 4, 2007, Nadon, J.A., delivered the following judgment for the Court of Appeal.