T-2182-86
Monde! Transport Inc. (Plaintiff)
v.
Afram Lines Ltd. (Defendant)
and
Afram Lines Ltd. (Cross-plaintiff)
v.
Mondel Transport Inc. and Her Majesty the
Queen in Right of Canada (Cross-defendants)
INDEXED AS: MONDEL TRANSPORT INC. V. AFRAM LINES LTD.
(T.D.)
Trial Division, Addy J.β€”Montreal, April 18;
Ottawa, September 14, 1990.
Maritime law β€” Torts β€” Action to recover legal costs and
expenses incurred to obtain judicial release of cargo illegally
seized by carrier β€” Common law tort of abuse of process
applicable to admiralty claims provided bad faith or malicious
purpose without justification β€” Action allowed β€” Carrier
knew had no right to seize cargo and plaintiff forced to either
pay freight or institute proceedings to release cargo β€” Perver
sion of legal process to thus extort money β€” Plaintiff's action
to obtain release of cargo justified β€” Action for freight based
on allegation owner and plaintiff aware of claim bills of lading
fraudulent when paid dismissed β€” No evidence other parties
agreed to insertion of 'freight to be paid in full prior to
delivery" in bills of lading β€” Not established owner and
plaintiff aware bills of lading unauthorized before paying.
This was an action for damages for the expenses incurred by
Mondel in attending at Abidjan to obtain the judicial release of
cargo and a cross-claim for the payment of freight for the
transportation by ship of a cargo of canola oil. The charter-par
ty agreement between Mondel and the cargo owner provided
that payment would be made five days after completion. Back-
to-back agreements for the ocean carriage portion of the agree
ment were entered into between Mondel and Merchants and
Merchants and Afram. Although Afram knew that the same
terms and conditions as in the sea freight portion of the
charter-party applied, the bills of lading it issued after Mondel
and Merchants had been paid contained the words "freight
pre-paid" as well as "freight to be paid in full prior to delivery
of the cargo". The latter clause was typed on a different
typewriter from the rest of the bill. "Freight pre-paid" merely
indicates that the carrier renounces its normal right to consider
the cargo as security for the payment of freight. The cargo
manifest also showed "freight pre-paid". Upon arrival at Abid-
jan, Afram refused to release the cargo on the grounds that the
freight had not been paid and that the bills of lading given to
Mondel by Merchants were fraudulent as they had not been
signed by Afram nor by an authorized agent. Afram informed
the owner and Mondel that it intended to dispose of part of the
cargo by judicial sale. Mondel sent a solicitor and two company
representatives to Abidjan to obtain a judicial release of the
seized cargo. The first written communication regarding the
unauthorized bills of lading to the owner or Mondel was dated
five days after the owner had paid Mondel and four days after
Mondel had paid Merchants. Afram alleged that the owner and
Mondel had failed to ascertain whether Merchants had author
ity to sign the bills of lading on Afram's vessel after having
been advised that they were fraudulent, that they failed to
protect the freight monies from the illegal acts of Merchants,
and that they illegally benefited from same knowing that the
bills of lading were fraudulent. The issues were whether the
owner, when it paid Mondel and when Mondel paid Merchants,
knew that Afram was claiming that the bills of lading were
fraudulent and whether Monde] was entitled to reimbursement
of its legal costs.
Held, the action claiming damages for the tort of abuse of
process should be allowed; the action for freight should be
dismissed.
Afram did not establish that the owner and Mondel had been
advised, before paying the freight, that the bills of lading to
Mondel by Merchants were unauthorized. They were advised
after payment had been made to Merchants. The cargo mani
fest was substantial evidence of the understanding between the
freight forwarder and the carrier when the cargo was being
loaded that the latter would not be looking to the cargo as
security for the payment of the freight. There is no evidence
that the other parties agreed to the insertion of the contradicto
ry expression "freight to be paid in full prior to delivery of
cargo". The claims of unjust enrichment were unfounded as
neither the owner nor Mondel benefited since they had paid the
freight charges.
There was no contract between Afram and either Mondel or
the owner. Mondel therefore had to base its claim for reim
bursement of expenses in tort. The tort of abuse of process, for
which damages, including exemplary damages, can be claimed,
has a narrow scope and bad faith or improper or malicious
purpose without any justification for launching a judicial pro
ceeding must be established. All legal costs and expenses
reasonably incurred in defending or prosecuting another action
are recoverable at law. The common law tort of abuse of
process applies to claims in admiralty, in view of the principle
of restitutio in integrum which received greater recognition in
admiralty courts than at common law, by reason of the former's
adoption of certain civil law principles. Afram knew that the
goods were to be shipped freight pre-paid and of the terms of
payment agreed upon between the owners and Mondel. It must
have realized that it had no legal right to seize the cargo or
freight. It must also have known that Mondel would be forced
to either pay the freight or immediately institute proceedings in
Abidjan to obtain the release of the cargo from seizure. Legal
process was perverted to extort money from Mondel and the
owner which neither of these parties was legally obliged to pay.
The seizure and threat of immediate sale of the cargo was
commercial blackmail. Mondel was fully justified in taking all
reasonable steps to obtain the release of the cargo in order to
avoid immediate serious financial loss and considerable loss of
goodwill and business. Notwithstanding that recovery of all
reasonable legal costs and expenses are rarely recoverable as
damages, Afram is liable to Mondel for same.
CASES JUDICIALLY CONSIDERED
APPLIED:
The Torsol (1938), 61 LI. L. Rep. 207 (Adm. Div.);
Xenos v. Aldersleyβ€”The Evangelismos, [1878] 12 Moo.
352; (1878), 14 E.R. 945 (P.C.); Turnbull v. Owners of
Ship "Strathnaver" (1875), 1 App. Cas 58 (P.C.); Guil-
ford Industries Ltd. v. Hankinson Management Services
Ltd. et al. (1973), 40 D.L.R. (3d) 398; [1974] 1 W.W.R.
141 (B.C.S.C.); Vantage Navigation Corporation v.
Suhail and Saud Bahwan Building Materials LLC (The
Alev), [1989] 1 Lloyd's Rep. 138 (Q.B.).
DISTINGUISHED:
Hammond v. Bussey (1887), 20 Q.B.D. 79 (C.A.); Wein-
stein et al. v. A.E. LePage (Ontario) Ltd. et al. (1984), 47
O.R. (2d) 126; 10 D.L.R. (4th) 717; 4 O.A.C. 234; 34
R.P.R. 63 (C.A.); Agius v. Great Western Colliery Com
pany, [1899] 1 Q.B. 413 (C.A.); Kasler and Cohen v.
Slavouski, [1928] 1 K.B. 78; Crispin & Co. v. Evans,
Coleman & Evans Ltd. (1922), 31 B.C.R. 328; 68 D.L.R.
623; [1922] 3 W.W.R. 264 (S.C.); Hadley v. Baxendale
(1854), 9 Ex. 341.
CONSIDERED:
Atland Containers Ltd. v. Macs Corp. Ltd. et al. (1974),
7 O.R. (2d) 107; 54 D.L.R. (3d) 363; 17 C.P.R. (2d) 16
(H.C.).
REFERRED TO:
Chastine Maersk (The) v. Trans-Mar Trading Co. Ltd.,
T-1357-74, Mahoney J., judgment dated 6/11/74,
F.C.T.D., not reported; C.P. Ships v. Les Industries Lyon
Corduroys Lige, [1983] 1 F.C. 736; (1982), 21 B.L.R.
185; 44 C.B.R. (N.S.) 163 (T.D.); The Eudora (1879), 4
P.D. 208.
COUNSEL:
Andrew J. Ness for plaintiff/cross-defendant.
David G. Colford for defendant/cross-plain
tiff.
Daniele Dion for cross-defendant Her Majes
ty the Queen.
SOLICITORS:
Marler, Sproule & Pilotte, Montreal, for
plaintiff/cross-defendant.
Brisset Bishop Davidson, Montreal, for
defendant/cross-plaintiff.
Deputy Attorney General of Canada for
cross-defendant Her Majesty the Queen.
The following are the reasons for judgment
rendered in English by
ADDY J.: The action involves the payment of
freight for the ocean voyage portion of the trans
portation of a cargo of canola oil sent to Africa by
CIDA through the Department of Supply and
Services (DSS).
Following a successful tender, the plaintiff
"Mondel" had obtained a contract from Her
Majesty the Queen through DSS to transport the
cargo from the Port of Montreal to the Port of
Abidjan, Ivory Coast, and thereafter by road to
the States of Burkina Faso and Niger. In accord
ance with the agreement, Mondel entered into a
charter-party agreement with DSS. Mondel then
entered into a back-to-back agreement with Mer
chants North America Shipping Limited, herein-
after called "Merchants", for the ocean carriage
portion of the agreement. Merchants undertook to
comply with all the terms and conditions of the
Mondel-DSS charter-party except for the rate of
freight. Shortly after, Merchants entered into a
fixture with Afram Lines Limited, hereinafter
referred to as "Afram", for the ocean carriage
portion of the said cargo from Montreal to the
Port of Abidjan. Bills of lading were subsequently
issued covering this agreement.
When the shipment arrived at Abidjan, Afram
refused to deliver it on the grounds that payment
of the freight had not been tendered to it and that
the bills of lading presented by the agents from
Mondel, which bills had been given to Mondel by
Merchants, had not been signed by Afram or by
any person authorized by Afram. This fact has
been admitted by the parties. Afram characterized
the bills presented by Merchants as being
fraudulent.
DSS paid Mondel who in turn paid Merchants
but the latter never paid and refused to pay Afram
because of some serious disputes between them.
Afram then informed Mondel and DSS that, to
satisfy its claim for freight, it intended to dispose
of part of the cargo by judicial sale in Abidjan
unless freight was paid forthwith. Mondel was put
on notice by DSS that unless the cargo was
released, DSS would draw on a letter of credit
posted by Mondel pursuant to its contract and
would also hold it responsible for all damages
caused by non-delivery.
As a result, Mondel sent one of its solicitors and
two company representatives to Abidjan in order
to obtain a judicial release of the seized cargo.
Mondel's attorney applied to a court on the Ivory
Coast for the immediate release of the cargo and
was successful in obtaining it.
The claims advanced by the parties may be
summarized as follows:
Mondel claims from Afram the sum of
$79,104.88 for expenses incurred in attending at
Abidjan to obtain the judicial release of the cargo.
Afram in turn denies liability and claims from
Mondel and also from DSS the amount of
$179,440 U.S. (or $251,220.60 Can.), for freight.
This claim is based on allegations that Mondel and
DSS had failed to ascertain whether Merchants
had authority to sign the bills of lading on Afram's
vessel after having been advised that they were
fraudulent, that they failed to adopt measures to
protect the freight monies from the illegal and
fraudulent acts of Merchants and that they illegal-
ly benefited from same knowing or being in a
position to know that the bills of lading were
fraudulent.
The cargo destined for Abidjan had left the Port
of Montreal on board the ship Philippi which had
been chartered by and was operated on behalf of
Afram. The cargo was seized on arrival in Abidjan
on January 16, 1986, by Afram following an ex
parte court order obtained by it from the local
tribunal, as such seizures cannot be effected in
Niger without court authorization. The order
releasing the cargo was obtained on February 13.
Meanwhile, on February 7, the major part of the
cargo was voluntarily released from seizure by
Afram as the amount of cargo originally seized
was clearly excessive, having regard to the amount
claimed for freight.
The parties admitted that the bill of lading
presented by Merchants to Mondel and then by it
to DSS and on the basis of which DSS paid
Mondel who in turn paid Merchants was not in
fact a bill authorized by the Master of the Philippi
or by any authorized agent of Afram. Counsel for
Afram, however, readily conceded that Mondel
could not be faulted for having, when presented
with the bills of lading, failed to check the actual
authority of the person purporting to sign a bill of
lading on behalf of Merchants, it being accepted
by the parties that persons engaged in shipping
would not be expected to do so, unless there exist
ed some special cause for concern, as the carrying
on of business would become impossible in view of
the hundreds of bills of lading being issued every
day.
The original contract with DSS provided the
bills of lading were to be in the Baltimore "C"
form and that payment would be made by DSS
five days after all work was completed or five days
after substantiating documents were received,
whichever would be the later. Afram well knew
this when it entered into its agreement with Mer
chants and knew that it was to be entering into a
back-to-back agreement in conformity with Mer
chants' agreement with Mondel and the latter's
agreement with DSS. In other words, Afram knew
and in effect confirmed that it was booking sea
freight on a back-to-back basis on the same terms
and conditions as in the sea freight portion of the
charter-party. Afram had a copy of this charter-
party.
There is no evidence or issue that the Baltimore
"C" form bill of lading signed by Merchants was
in any way inaccurate as to the amount or nature
of the cargo being shipped. The agents for Mer
chants presented the bills to Mondel on December
22, 1985 and the latter presented same to DSS on
or about the 23rd.
The main dispute governing this action turns on
the question of whether DSS when it paid Mondel
and when Mondel paid Merchants on the basis of
the bills of lading, knew that Afram was claiming
them to be unauthorized or fraudulent. I find that
DSS paid Mondel on January 8 and the latter paid
Merchants on the following day.
Afram did not issue Baltimore "C" forms and
bills of lading as provided for in the charter-party
but issued special bills in a form apparently
required by the owners of the ship and the insur
ers. The bills did not incorporate the terms and
conditions of the DSS tender as required by DSS
charter-party and Afram had in fact planned to
carry part of the cargo on deck although it well
knew that below deck carriage was required by
DSS. The Afram bills are dated December 22,
1985 but they were only actually issued on Janu-
ary 13, 1986.
I entertain some serious reservations regarding
the evidence of the witness Bptt and I am not
prepared to find that he was, as he claimed, in
contact with DSS and Mondel on January 7, or at
any time previous to payment by Mondel on Janu-
ary 9, regarding the unauthorized bills of lading
presented by Merchants or that he in fact told
them previous to that time that the bills were
fraudulent. The first written communication in
any way pertaining to this is dated January 13.
Both Mr. Lambert and Mr. Delorme testified that
they had not received any notice from Afram until
after freight had been paid to Merchants. It is
indeed difficult to conceive that anybody at DSS
would, without any inquiry, pay the freight to
Mondel or that Mondel would in turn pay it to
Merchants at a time when the carrier Afram was
claiming that Merchants' bills of lading were
fraudulent. It is equally difficult to understand
why, if Afram became aware that Merchants had
presented or intended to present fraudulent bills of
lading, it would not have immediately advised both
Mondel and DSS of that fact by some written
communication. It is clear from documents that as
late as January 3, 1986, Afram was still looking to
Merchants for payment and it was only some time
subsequently that Afram decided to look to DSS
and to Mondel or the consignee.
Even the bills issued by Afram and on which it
bases its defence to Mondel's action and its claims
in its own action, contained the words "freight
pre-paid". This, of course, does not mean that the
carrier has actually been paid but merely indicates
that it renounces its normal right to consider the
cargo as security for the payment of freight See
Chastine Maersk (The) v. Trans-Mar Trading Co.
Ltd., unreported judgment of Mahoney J. dated
November 6, 1974, file T-1357-74; C.P. Ships v.
Les Industries Lyon Corduroys Ltee, [1983] 1
F.C. 736 (T.D.).
Afram sought to rely on some American juris
prudence to the effect that, although the owner of
the goods and the freight forwarder could rely on
the endorsement "freight pre-paid", a court can
find that there is nonetheless an implied contract
between the carrier and the consignee which pre
cludes the latter from refusing to pay on delivery
and will allow the carrier to claim a lien and seize
the goods as security for payment of freight. I
refrain from commenting on whether this principle
would be recognized by our courts, since in the
case at bar, the consignee and Mondel or its
assignee as a transporter happen to be the same
person, as the shipment was to be delivered to the
ultimate consignees only following the journey by
road to its final destination.
The Afram bill of lading, however, also contains
the notation "freight to be paid in full prior to
delivery of the cargo". Strangely enough, both
these expressions, which are basically contradicto
ry, are initialled by Twelve Oaks the authorized
agents of Afram. No explanation was furnished by
Afram as to why these contradictory conditions
were both included. However, the latter clause, to
the effect that freight is to be paid upon delivery,
is written on a different typewriter from the
remainder of the bill and the expression "freight
pre-paid". The cargo manifest, dated December
27, which is also signed on behalf of Afram, also
shows "freight pre-paid" with regard to all items
and matters mentioned therein. Although a cargo
manifest is not a document of title, the notation
throughout of "freight pre-paid" constitutes sub
stantial evidence that, at the time the cargo was
being loaded, the understanding between the
freight forwarder and the carrier was that the
latter would not be looking to the cargo as security
for the payment of the freight.
Another important element of proof as to the
sequence of events is Exhibit 6 which is a telex
dated January 13, from Afram Lines to its agents
Twelve Oaks instructing them to include in the
bills of lading the expression "freight to be paid in
full prior to release of bill of lading". That instruc
tion was varied by a telephonic communication on
the same day to add instead the expression
"freight to be paid in full prior to delivery of
cargo" which, as previously stated, was the expres
sion actually included in the Afram bills. This
establishes quite clearly that it was only on Janu-
ary 13 that the last-mentioned notation on the bill
was inserted and there is no credible evidence
whatsoever that this change was agreed upon in
any way either explicitly or implicitly by either
DSS Mondel, Merchants or the consignees.
Altogether apart from the question whether
Afram, being fully aware of the conditions of the
charter-party between DSS and Mondel, could at
law enforce a lien against the cargo, it is clear that
the claims of Afram against both Mondel and
DSS were predicated upon Afram establishing
that, before paying the freight, they had in fact
been advised and warned that the bills of lading
delivered to Mondel by Merchants were unauthor
ized and were considered by Afram to be fraudu
lent. I have found that, not only has this fact not
been established but, on the contrary, it has been
shown positively that these parties were only
advised of this situation after payment had been
made to Merchants. A supplementary argument
by Afram to the effect that it should be entitled to
recover on the basis of unjust enrichment of DSS
or Mondel, simply does not make sense: neither of
these parties benefited from the situation since
they actually paid the freight charges. Clearly, the
only party against whom unjust enrichment could
be pleaded would be Merchants. The claims of
Afram against these parties must therefore be
dismissed.
The claim of Mondel for reimbursement of
expenses incurred in attending at Abidjan to
obtain the release of the cargo from Afram's lien is
somewhat more tenuous from a legal standpoint.
Three English cases were relied upon by counsel
for Afram in support of its argument that Mondel
had no right at law to recover as damages compen
sation for the costs and expenses incurred by it in
obtaining the release from the seizure. The first
two pertain to the alleged improper arrest of a ship
while the last one pertains to cargo. The three
cases involved are: Xenos v. Aldersleyβ€”The
Evangelismos, [1878] 12 Moo. 352; (1878), 14
E.R. 945 (P.C.); Turnbull v. Owners of Ship
`Strathnaver" (1875), 1 App. Cas. 58 (P.C.); and
The Eudora (1879), 4 P.D. 208.
In each of these cases, the claim for damages
pertaining to the arrest of the plaintiff's property
was denied. The Evangelismos case, which is an
appeal from a decision of the High Court of
Admiralty, is a leading case. Its principles were
subsequently fully approved by the Judicial Com
mittee of the Privy Council on an appeal from the
Vice-Admiralty Court of New Zealand and were
also affirmed and applied without reasons however
in The Eudora case.
It is important to note that in both the first-
mentioned cases the Court fully recognized that an
action for abuse of process would lie if the plaintiff
could establish male fides or crassa negligentia on
the part of the defendant in engaging in the judi
cial proceeding complained of.
We find the following statement at pages 359-
360 of the above-mentioned report of The Evan-
gelismos case:
Their Lordships think there is no reason for distinguishing
this case, or giving damages. Undoubtedly there may be cases
in which there is either mala fides, or that crassa negligentia,
which implies malice, which would justify a Court of Admiralty
giving damages, as in an action brought at Common law
damages may be obtained. In the Court of Admiralty the
proceedings are, however, more convenient, because in the
action in which the main question is disposed of, damages may
be awarded.
The real question in this case, following the principles laid
down with regard to actions of this description, comes to this: is
there or is there not, reason to say, that the action was so
unwarrantably brought, or brought with so little colour, or so
little foundation, that it rather implies malice on the part of the
Plaintiff, or that gross negligence which is equivalent to it?
Their Lordships are of opinion, that there is nothing whatever
to establish the Appellant's proposition.
The "Strathnaver" case fully approves of the
principles laid down in The Evangelismos. It was
applied in the following terms at page 67 of the
above-mentioned report:
Undoubtedly there may be cases in which there is either ma/a
fides or that crassa negligentia which implies malice, which
would justify a Court of Admiralty giving damages, as in an
action brought at common law damages may be obtained. In
the Court of Admiralty the proceedings are however more
convenient, because in the action in which the main question is
disposed of, damages may be awarded. Their Lordships came to
the conclusion, though the case was certainly a very strong one,
inasmuch as the wrong vessel had been seized, that in the
absence of proof of ma/a fides or malicious negligence, they
ought not to give damages against the parties arresting the
ship. It appears to their Lordships that the general principles of
law are correctly laid down in that judgment, and it is their
intention to adhere to them. They will therefore humbly advise
Her Majesty that that part of the learned Judge's sentence be
reversed.
Although these cases do not appear to specifical
ly mention the legal costs involved in defending
another action but rather incidental damages aris
ing out of its institution and prosecution, the case
of The Torso! (1938), 61 L 1 . L. Rep. 207 (Adm.
Div.), does deal specifically with this matter. A
right to recover the cost was recognized and
applied. In the case of Atland Containers Ltd. v.
Macs Corp. Ltd. et al. (1974), 7 O.R. (2d) 107
(H.C.) which also involved a claim for abuse of
process, the claim was denied but the principle
governing the tort of abuse of process was recog
nized by the Trial Judge. Parker J., as he then
was, stated in the closing paragraph of his remarks
at page 111:
However, the law re the abuse of process is very narrow in
scope. It is only where the process of the Court is used for an
improper purpose and where there is a definite act or threat in
furtherance of such a purpose. No such act or threat is pleaded
in this case. In any event the counterclaim is not a proper
subject-matter for inclusion in this action since the causes of
action are not similar in type. The counterclaim will therefore
be struck out with costs.
It therefore seems clear that in Canadian law
the tort of abuse of process for which damages
including exemplary damages can be claimed
exists but that it has a narrow scope and bad faith
or improper or malicious purpose without any
justification must be established.
In support of Mondel's claim the following cases
were relied upon: Hammond v. Bussey (1887), 20
Q.B.D. 79 (C.A.); Weinstein et al. v. A.E. LePage
(Ontario) Ltd. et al. (1984), 47 O.R. (2d) 126
(C.A.); Agius v. Great Western Colliery Com
pany, [1899] 1 Q.B. 413 (C.A.); Kasler and Cohen
v. Slavouski, [1928] 1 K.B. 78; and Crispin & Co.
v. Evans, Coleman & Evans Ltd. (1922), 31
B.C.R. 328 (S.C.). All of these cases involve the
application of the rule in the classic case of Hadley
v. Baxendale (1854), 9 Ex. 341. They all recognize
the right that, subject to the rules of remoteness,
the costs incurred in prosecuting or defending
another action can be recovered as damages. This
whole line of cases, however, involve actions aris
ing out of a breach of contract. On the other hand,
The Torso case above referred to is founded on
tort.
There was of course no actual contractual rela
tionship between Afram and either Mondel or
DSS. Afram's contract was with Merchants. If
Mondel were obliged at law to base its claim on
breach of contract, it would of course fail.
Having regard to The Torsol case and, more
importantly to the principles which were clearly
recognized by the English courts in The Evan-
gelismos and the "Strathnaver" cases, which were
relied upon by Afram and were founded on the
alleged tort of abuse of process, I can see no reason
why, in a proper case, all legal costs and expenses
reasonably incurred in defending or prosecuting
another action cannot be recovered at law. I feel
that the principles enunciated in these English
cases are applicable to Canadian admiralty cases.
There can be no logical reason why, in a proper
case, the common law tort of abuse of process
would not fully apply to claims in admiralty, in
view of the principle of restitutio in integrum
which was always afforded even greater recogni
tion in admiralty courts than at common law, by
reason of the former's adoption of certain civil law
principles, where for instance interest could always
be awarded on a claim founded on tort from the
date of the commission of the tortious act.
I find that Afram was fully aware of the condi
tions under which the goods were to be shipped
and of the terms of payment agreed upon between
the owners and Mondel. It knew that they were to
be shipped freight pre-paid and it would not be
entitled to look to the cargo as security for the
payment on delivery in Abidjan. It could not help
but realize it had no legal right whatsoever to
effect a seizure on the cargo or freight. The bills of
lading were to be marked freight pre-paid and
Afram in fact so marked them. It was only some
time later namely on January 13, 1986 when,
because of the dispute existing between it and
Merchants, the expression "freight to be paid in
full on delivery of the cargo" was added, in an
attempt to obtain from Mondel and DSS a pay
ment which it fully knew they were not obliged to
pay on delivery. This was obviously done because,
for reasons which are of no concern to either of the
last two mentioned parties, Afram felt that pay-
ment of the freight by Merchants would not be
immediately forthcoming.
Furthermore, in seizing the cargo, it could not
help but know that Mondel would be put in an
almost untenable position with DSS and that it
would be forced to either pay the freight as
demanded or immediately institute proceedings in
Abidjan to release the cargo from seizure. It most
probably knew at the time of seizure that Mer
chants had already been paid by Mondel. It cer
tainly could not have helped to be aware of this at
that time or shortly thereafter, since Mondel had
paid Merchants on January 9. It nevertheless con
tinued to maintain the seizure and notified Mondel
that unless paid immediately, a portion of the
cargo would be sold forthwith to pay for the
freight. Having seen the original charter-party it
also was aware that Mondel would be responsible
for non-delivery and that DSS would in all likeli
hood be calling in the letter of guaranty which
Mondel had posted pursuant to the contract,
should the remainder of the shipment be sold as
Afram was threatening to do.
The case of Vantage Nagivation Corporation v.
Suhail and Saud Bahwan Building Materials LLC
(The Alev), [1989] 1 Lloyd's Rep. 138 (Q.B.), is
quite similar to the case at bar in some respects.
The owners of the cargo were told by the ship
owners that unless the freight was paid to them on
delivery the cargo would be seized. The latter had
no right to seize the cargo since it had been
shipped freight pre-paid. In order to obtain the
cargo and avoid serious damage, the cargo owners
were obliged to pay the freight and also to sign an
agreement pursuant to which they waived all
claims or rights against the ship owners. Subse
quently, in order to obtain the return of the money
paid for freight and notwithstanding the agree
ment which they had signed, the cargo owners
caused The Alev to be arrested pleading duress
and breach of contract and claiming damages. The
ship owners before obtaining the release of the
vessel in turn sued the cargo owners for damages
and for the return of the monies paid to release
The Alev. The Court held that the defendants
were not bound by the agreement which they had
signed under duress and dismissed the action of
the plaintiff ship owners.
The Trial Judge, Mr. Justice Hobhouse, stated
at page 142 of the report:
The plaintiffs were openly breaking their contracts and (in the
words of Mr. Justice Lewis in the Government of the Republic
of Spain v. North of England S.S. Co. Ltd., (1938) 61 LI.
L.Rep. 44 at p. 56) were exercising dominion over the defend
ants' goods. Mr. Davies concluded that if the defendants
wanted to have their goods they had no choice but to agree to
what the plaintiffs' representatives were demanding. There was
no question of any commercial bargain being struck; the reality
and substance was: "if you want us to perform the bill of lading
contracts, you must agree to what we demand".
And again at page 145:
In the present case it is clear that the agreement falls within
the principles of economic duress and for that matter duress of
goods. The plaintiffs did make a threat which was illegitimate,
and, if it be relevant, they knew it to be illegitimate. They were
under an obligation to carry the cargo to Mina Qaboos and
deliver it there to the defendants. They had no right to refuse to
do so or to assert any inconsistent right over the goods. They
did refuse to carry the goods to Mina Qaboos and deliver them
to the defendants unless the defendants met their demands.
They did assert a dominion over the defendants' goods; they
refused to recognize the defendants' right to have the goods.
The consent of the defendants was overborne. There was a
coercion of their will. They neither in law nor in fact entered
into the agreement voluntarily.
In the present case legal process was perverted
to obtain or extort money from Mondel and DSS
which it was obvious neither of these parties was
legally obliged to pay.
In Guilford Industries Ltd. v. Hankinson Man
agement Services Ltd. et al. (1973), 40 D.L.R.
(3d) 398 (B.C.S.C.), there was a mechanics' lien
action of the case where a mechanics' lien was
improperly and without power of right registered
against the property of the plaintiff. Anderson J.
at pages 405 and 406 stated:
If the case at bar, the lien proceedings are completely devoid
of any legal foundation and were initiated for an unlawful
purpose, namely, to obtain a settlement by means of legal
"blackmail".
While the Courts must protect the right of every resident "to
have his day in Court" where there is some evidence, however
slight, on which a claim might be supported, the Courts will not
permit the processes of the law to be used for ulterior purposes.
This Court cannot shut its eyes to the fact that mechanics'
liens, lis pendens and garnishing orders are sometimes, though
not often, used by unscrupulous persons to achieve results
which could not otherwise be obtained. The Courts will be
quick to curb such acts and, hence, protect the sanctity of the
Courts and processes provided by law for the achievement of
lawful purposes.
This in my view constitutes a valid statement of
the applicable law. It is to be noted that in this
case exemplary damages were also granted.
Mondel, in its statement of claim, referred to
the seizure and the threat of immediate sale of the
cargo as commercial blackmail. That description,
in my view, is not overly exaggerated, since Afram
knew or most certainly should have known in what
position Mondel would find itself as a result of a
sale.
Mondel, in fact, had not only been advised by
DSS that, unless the seized cargo was released
forthwith, its performance bond would be called
in, but was told that it was to consider itself
presently barred from submitting any tenders on
any other contracts offered by DSS and that
unless and until the cargo was released, it would be
struck off DSS's list of approved tenderers.
Mondel was therefore fully justified in taking all
reasonable steps available to it to obtain the
release of the cargo in order to avoid immediate
serious financial loss and considerable future loss
of goodwill and business. Notwithstanding the fact
that recovery of all reasonable legal costs and
expenses are rarely recoverable as damages, in the
present case I find that Afram is liable to Mondel
for same.
An agreed statement of facts was filed as Exhib
it 2 at trial. Paragraph 34 of that statement reads
as follows:
34. In consequence of the foregoing, Mondel incurred
expenses outlined hereinbelow as follows:
i) legal disbursements and fees due
to Mondel's Montreal attorneys; $41,262.55
ii) legal disbursements and fees due
to Mondel's attorneys in Abidjan; $2,915.46
iii) storage expenses in Abidjan for
excess days from completion of
voyage; $15,972.66
iv) extra expenses and airfare for
government surveyor; $10,975.00
v) salaries for Mr. Bechard and Mr.
Lambert during stay in Abidjan (loss
of executive time), long distance
telephone calls, numerous telexes,
hotel and incidentals; $7,979.21
TOTAL: $79,104.88
Although Afram agreed that Mondel incurred
the above-mentioned expenses it did not concede
that they were all recoverable as having been
reasonably incurred and properly attributable to
obtaining the release of cargo.
I find that item v) in the amount of $7,979.21 is
not allowable as the two gentlemen therein-men
tioned were salaried employees of Mondel and
there is no proof or insufficient proof of the loss of
executive time. It also appears that they might
very well have attended in Abidjan in any event.
With regard to item iv) I am disallowing from the
sum of $10,975 the return airfare of the surveyor
since he would have attended at Abidjan in any
event. The extra expenses incurred as a result of
the seizure however are allowable. The return
airfare amounted to $1,975.
After deducting the two above-mentioned
amounts which totalled $9,954.21, I find that
Afram must pay Mondel the sum of $69,150.67.
The latter will be entitled to its costs throughout
and DSS will be entitled to its costs for defending
the action against it. All costs shall be taxed on a
party and party basis. Since no claim was made by
Mondel for interest from the date of the tort,
interest on its claim shall run from the date of
judgment.
Judgment shall issue accordingly.
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