Digests

Royal Bank of Scotland plc v. Golden Trinity (The)

T-32-99, T-38-99, T-119-99, T-186-99

2004 FC 795, Hargrave P.

31/5/04

96 pp.

Priorities--Court-approved sales of four arrested ships, Golden Trinity, Ypapadi, Kimisis III, Zoodotis, managed by Pronoia Ship Agents & Brokers Inc. (Pronoia)--All sold above appraised value--20 claims against sale proceeds settled on consent, largely on basis constituted maritime liens with evident priority to sales proceeds--Claimants to balance of proceeds, as mortgagees, The Royal Bank of Scotland plc (RBS), mortgagee of Ypapadi, Golden Trinity, Kimisis III, and Nedship Bank N.V. (Nedship), mortgagee of Zoodotis-- Principal challenge facing banks claims of Tramp Oil & Marine Limited (Tramp) for bunkers supplied to four defendant vessels, various other ships, also managed by Pronoia, said to be sisterships--Tramp basing claims in part on maritime lien for bunkers supplied to Golden Trinity, but largely on challenge of security held by banks, on actions of banks--Underlying security of both RBS, Nedship sound--(1) Tramp's claim of maritime lien against Golden Trinity based upon supply of bunkers in American port by bunkering firm acting on instructions of Tramp--Latter invoking subrogation to maritime lien of American supplier, Petro-Diamond Inc. under doctrine of subrogation and American "so-called rule of advances"--Petro-Diamond entitled to assert American maritime lien against Golden Trinity, notwithstanding Petro-Diamond's invoice for fuel directed to Tramp--Presumption, under American law, someone furnishing necessaries to vessel acquires maritime lien; anyone attacking presumption has burden of establishing supplier of necessaries purposely intended to forego maritime lien--Ongoing relationship, for many years, between Tramp, Pronoia--Payment made by Tramp to Petro-Diamond to satisfy claim of latter outstanding against Golden Trinity, in fact advance to ship--Advance, on ample authority, that of Pronoia--Money advanced by Tramp used to satisfy outstanding lien claim of Petro-Diamond--Given nature of worldwide bunkering trade, no real connection with England other than Tramp's choice of law clause--Vessel ownership, management, registration providing no common thread-- However, evidence indicating pattern of trading by Pronoia vessels into United States, substantial bunkering in American ports--Mutual commercial, economic benefit herein, arose in Long Beach, California--American law therefore appropriate choice of substantive law to govern--Supply of bunkers thus giving rise to maritime lien, jurisdiction--Right of Tramp to maritime lien by way of subrogation which occurred under American law when Petro-Diamond's invoice paid by Tramp--Portion of Tramp's claim, for $55,211.10, including interest to June 30, 2001, accorded priority of maritime lien--(2) Tramp, as backup to claim of maritime lien for bunkers supplied to Golden Trinity, also claiming contractual lien for that account--Priority of such contractual lien falling below that of mortgage, not raising such claim above other statutory in rem necessaries claims--Such bilateral contractually founded right not deserving priority which would defeat third party with established priority, bearing in mind priorities accorded holders of marine mortgage security and necessaries suppliers with Canadian statutory in rem claim--(3) Tramp's American maritime liens for bunkers against vessels which may be sisterships cannot be enforced as such using Federal Court sistership procedure in Canada--Background, purpose of sistership legislation set out in Norcan Electrical Systems Inc. v. FB XIX (The), [2003] 4 F.C. 938 (T.D.)--Sistership principle based on International Convention for the Unification of Certain Rules Relating to the Arrest of Seagoing Ships, Brussels, 1952, Art. 3--While Canada has not ratified 1952 Brussels Convention, it has enacted sistership legislation in Federal Court Act, s. 43(8)--Plain wording of sistership provision in French version of s. 43(8) allowing plaintiff to exercise in rem jurisdiction against ship which, at time action brought, owned by beneficial owner of ship subject of action--Standard by which to establish sistership relationship that of proof by preponderance of evidence or reasonable degree of probability, that more probable than not vessels in question sisterships--Even though sistership remedy, as whole, extraordinary remedy not to be lightly invoked, civil standard of proof still applies--Not instance where probabilities almost equal, but where absence of sistership relationship more probable--Party alleging sistership relationship between vessels must establish such relationship--Very difficult task to accomplish when, as here, registered owners, all who might be beneficial owners, or have first-hand knowledge, have walked away from businesses, ships, and neither available records nor individuals to provide evidence as to who enjoyed, was entitled to profit, benefit derived from those ships--At best, Tramp established likelihood Peter Lygnos, principal of Pronoia, a beneficial owner, not the beneficial owner-- Preponderance of probability some other family members also beneficial owners--Not establishing beneficial owner as required by Federal Court Act, s. 43(8)--(4) Tramp submitting ought to be equitable re-ordering of ranking of necessaries claims for supply of bunkers because banks ought to have moved sooner to realize on security, thus shutting down Pronoia earlier--Priority given to supply of bunkers, under Canadian law, below that given to holders of mortgage security, here RBS, Nedship--Usual priorities not to be overturned merely because lending bank trying to work out course of action of mutual benefit to customers, bank--No evidence of secret purchase by banks of vessels--Vessels, for most part, sold at open, very competitive auctions, with prices exceeding appraised values--Tramp not establishing very special circumstances calling for re-ordering of long-established priorities, to benefit either Tramp or other necessaries suppliers--Tramp, on own evidence, not satisfying very substantial onus of showing departure from conventional priorities necessary to prevent obvious injustice--(5) Calogeras Marine Inc. (Calogeras), Calogeras & Master Supplies Inc. long-established ship chandler, supplier of necessaries including to ships said to be connected to Peter Lygnos--Claim only good if vessels sisterships--Not establishing sistership relationship--Even if it did, security of RBS and Nedship being sound, claims of Calogeras, Calogeras & Master, as statutory rights in rem, come after claims of plaintiffs, RBS and Nedship, as mortgage-holders-- Claims dismissed--(6) Aduanera Columbia S.I.A. Ltd. Inc. supplied goods to Golden Trinity in amount of $100,663.48, net figure against payment received--Subrogated maritime lien, held by Aduanera, as to entry duties for lights, buoys, in amount of $1,961.53 and by way of master for pilot, tug services, in amount of $3,377.09, for total of $5,338.62-- Aduanera also to have pro rata share of interest accrued on Golden Trinity sale proceeds--(7) Only through re-ordering of priorities could United Maritime Supplies Inc., Canadian supplier of necessaries, succeed--As in case of Tramp, United Maritime not meeting onus of showing special circumstances required to obtain re-ordering of priorities--Unfortunate that Canadian necessaries suppliers not having same privilege of maritime lien as American suppliers--Claim of United Maritime dismissed--(8) Amounts paid as sheriff's fees, commissions standing in first priority, as well as substantial claims by banks, for amounts paid by them, deemed marshal's expenses, eg. crew's wages, port and pilotage charges, provisions, water, repairs, crew repatriation--Federal Court Act, R.S.C., 1985, c. F-7, s. 43(8) (as am. by S.C. 1990, c. 8, s. 12)--International Convention for the Unification of certain Rules Relating to the Arrest of Sea-going Ships, May 10, 1952, 439 U.N.T.S. 193, Art. 3.