T-3594-74
The Toronto Harbour Commissioners (Plaintiff)
•
v.
The Ship Toryoung II and Her Owners
(Defendants)
Trial Division, Sweet D.J.—Toronto, June 24-26,
July 7 and August 15, 1975.
Maritime law—Salvage—Parties filing minutes of settle-
ment—Application to have agreement implemented as judg-
ment—Whether maritime lien exists because parties have so
agreed.
Before the close of plaintiff's case, the parties filed minutes
of settlement, after a denial by defendant of the existence of a
maritime lien. In effect, the parties are asking the Court to find
that a maritime lien exists in favour of plaintiff because the
parties alone have agreed that plaintiff is to have the lien,
regardless of the rights of others who have only the status of
ordinary creditors.
Held, a formal judgment based on the minutes of settlement
should not be signed. A maritime lien enforceable against
non-consenting third parties can not arise solely by virtue of an
agreement between the ostensible salvor, and the owner of the
ship to which it is desired to attach the lien. The existence of a
maritime lien depends not only on whether services were per
formed, but also on the nature of the services and associated
circumstances. There have been cases where binding agree
ments have been made in connection with a fair and reasonable
amount of salvage. However, where there are agreements as to
quantum of salvage for these to be binding on others, there
must be services which by their nature and surrounding circum
stances, actually classify as salvage.
The Elin (1882) 8 P.D. 39; The Inna (1938) 19 Asp.
M.L.C. 203, discussed.
APPLICATION.
COUNSEL:
A. J. Stone, Q.C., for plaintiff.
D. L. D. Beard, Q.C., for defendants.
SOLICITORS:
MacKinnon, McTaggart, Toronto, for plain
tiff.
Du Vernet, Carruthers, Toronto, for
defendants.
The following are the reasons for judgment
rendered in English by
SWEET D.J.: Before the close of the plaintiff's
case, the parties filed "Minutes of Settlement" in
the following form:
No. T-3594-74
IN THE FEDERAL COURT OF CANADA
TRIAL DIVISION
BETWEEN:
THE TORONTO HARBOUR COMMISSIONERS
PLAINTIFF
-AND-
THE SHIP "TORYOUNG II" AND HER OWNERS
DEFENDANTS
MINUTES OF SETTLEMENT
The parties hereto by their respective counsel do hereby
consent to the settlement of this action on the following terms:
1. The Plaintiff shall have Judgment against the Defendants
for the sum of $11,500.00 together with interest thereon at the
rate of 6% per annum from the 17th day of September, 1974
until date of payment plus the costs of this action hereby
agreed to at the sum of $1,400.
2. AND IT IS FURTHER AGREED that the said sums set forth
above is salvage and constitutes a maritime lien against the
vessel "TORYOUNG II" as of September 17th, 1974.
3. AND IT IS FURTHER AGREED that the Plaintiff shall withhold
procedures for appraisement and sale of the vessel up to and
including the 15th day of August, 1975 to enable the Defend
ants to pay the above amounts and should the said sums not be
paid by that time the Plaintiff shall be at liberty to proceed
with the appraisement and sale of the vessel "TORYOUNG II" in
accordance with the Rules of the Court.
4. AND IT IS FURTHER AGREED that upon payment as aforesaid
of this Judgment the Plaintiff abandons its claim for dock
improvements claimed in amount of $6,807.08 and agrees to
give a General Release to the Defendants for all claims of any
nature and kind for all matters of debts existing up to the date
hereof which in any way relates to the vessel "TORYOUNG II".
DATED at Toronto, Ontario this 26th day of June, 1975.
"A. J. Stone"
Counsel for the Plaintiff
"David Beard"
Counsel for the Defendants.
Counsel sought to have the "settlement" imple
mented by a formal judgment of this Court.
The "settlement" followed. a denial by the
defendants of the existence of a maritime lien.
In my opinion, the Court would be without
jurisdiction to implement, by judgment, a "settle-
ment" if its terms are beyond the capacity of the
parties. As I see it, what the parties seek to have
done here by their agreement, might affect
adversely the rights of others not privy to their
agreement. Accordingly, in my view, what they
seek to accomplish is beyond their capacity.
The principal difficulty presented by these
"Minutes of Settlement" arises out of its para
graph numbered 2.
No doubt what the parties mean by that para
graph is that the sum of $11,500.00 referred to in
paragraph numbered 1 of the minutes is a salvage
reward, that the plaintiff has a maritime lien upon
the ship Toryoung II for that reward and for the
interest and costs referred to in paragraph 1 and
that such maritime lien has subsisted since Sep-
tember 17, 1974.
I suggested that there be added to paragraph 2
of the minutes of settlement the words "but only as
between the parties to this action". Adopting ver
batim the words of the paragraph, and with such
addition, the paragraph, as so amended, would
read:
2. And it is further agreed that the said sums set forth above
is salvage and constitutes a maritime lien against the vessel
Toryoung II as of September 17, 1974, but only as between the
parties to this action.
In connection with that suggestion, Mr. Stone,
counsel for- the plaintiff, according to the tran
script, said:
I believe it would create a problem for the plaintiff in that we
know of other potential claimants and we would not wish to be
in the position where we have a judgment which is only
effective in so far as the maritime lien, as between the parties.
It is apparent, then, that what is desired to have
accomplished by the "Minutes of Settlement"
implemented by a judgment of this Court is a
situation which might affect adversely the rights of
others.
As I see it, what the parties in effect ask the
Court to do at this stage in the proceedings is to
find that a maritime lien, with all its advantages,
and priorities, exists in favour of the plaintiff on
the basis that the parties to the action, and they
alone, have agreed that the plaintiff is to have the
lien and this regardless of what security other
parties might be entitled to and regardless of the
rights of others who might have only the status of
ordinary creditors.
In my opinion, a maritime lien enforceable
against non-consenting third parties, cannot arise
solely by virtue of an agreement between the
ostensible salvor and the owner of the ship to
which it is desired to attach the lien. All services in
connection with a ship do not necessarily classify
as salvage. The existence of a maritime lien
depends not only on whether there were services
performed, but also upon the nature of such ser
vices and the circumstances associated with their
performance.
Of course, the ostensible salvor and the ship's
owner can, by agreement, bind each other (as
distinguished from third parties) in an arrange
ment whereby the ostensible salvor is to have all
remedies as against the ship as though he were
indeed a salvor. Obviously, that is not the same as
two parties, for whatever reason, entering into an
agreement giving one of those parties an advan
tage or priority over existing non-consenting third
parties when the facts may not justify such an
advantage or priority.
I do not consider that I have been asked to give
judgment based upon the evidence. I consider that
I have been asked to give judgment merely upon
the agreement of the parties to this action. I do not
consider that there has been an application to the
Court to determine whether or not a maritime lien
exists but only to find that such a lien exists
because the parties to the action have so agreed. I
have not overlooked the references of Mr. Beard to
the evidence in this connection, but I do not feel
that these references constitute an application to
make a finding in respect of a maritime lien on the
evidence.
In any event, as I understand it, all of the
evidence which it was intended to adduce has not
yet been adduced, that it was the intention of the
plaintiff to call further evidence, and that the
defendants, who have not yet called any evidence,
had intended to do so.
I am aware of cases where binding agreements
have been made in connection with a fair and
reasonable amount of salvage. However, as I see it,
even when there are agreements as to the quantum
of salvage, for these to be binding on others, there
must nevertheless be services which, by their
nature and the surrounding circumstances, actual
ly classify as salvage.
I have been referred to: The Elin (1882) 8 P.D.
39, and The Inna (1938) 19 Asp. M.L.C. 203. In
my opinion, this issue was not an issue in those
cases and was not a subject matter of adjudication
there.
For the reasons given, I am of the opinion that a
formal judgment based on the "Minutes of Settle
ment" should not be signed.
It occurs to me that paragraphs numbered 3 and
4 would not be appropriate for inclusion in the
formal judgment if one were to be signed.
Mr. Stone indicated that if it was decided that a
formal judgment, implementing the agreement for
a maritime lien could not be signed, he would wish
to proceed further with the trial. Accordingly, the
matter may be spoken to for a date for its resump
tion. Furthermore, if the parties wish to present
argument in connection with the proof of the right
to a maritime lien, on the basis of the evidence
already heard, an application may made for a
date to be fixed for the presentation of such
argument.
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.