A-346-81
Freighters (Steamship Agents) Co. (Respondent)
(Plaintiff)
v.
The Ship Number Four (Appellant) (Defendant)
Court of Appeal, Pratte, Ryan JJ. and Lalande
D.J.—Quebec City, May 13; Ottawa, May 26,
1982.
Maritime law — Appeal from order rejecting motion for
dismissal of in rem action and to vacate arrest of ship where
identical action pending in Korea — Two actions launched in
Korea by plaintiff — First dismissed for want of jurisdiction
— Service not yet effected in second — Unclear whether
security given in Korea sufficient to cover plaintiff's entire
claim — Canadian proceedings not dismissed as vexatious
where foreign litigation pending if real benefit possible — If
Quebec action succeeds, plaintiff will have priority over other
creditors — Benefit unavailable in Korean action — Defendant
might apply for stay until Korean action discontinued —
Appeal dismissed.
Plaintiff's claim is for $138,000 in respect of services pro
vided to the Number Four while in an American harbour. The
ship, of Liberian registry, was served and arrested at Quebec
City. Plaintiffs argument is that, under American law, its
claim is secured by a maritime lien. The ship's owner moved
before the Trial Division for dismissal of this in rem action and
to vacate the arrest on the ground that there was lis pendens,
an identical action having been commenced by the plaintiff in
Korea. Defendant had deposited $157,000 as a security in the
Korean litigation to obtain release of the ship.
Held, the appeal should be dismissed with costs. It was true
that plaintiff had brought two actions in Korea against the
owners of the Number Four. They were not, however, actions in
rem since in Korea, all actions are in personam. In the first
Korean action, the owners had obtained release of the vessel
from arrest upon depositing a sum as security. The action was
dismissed for want of jurisdiction, the foreign ship then being
outside Korean territory. The second Korean action is pending
in that plaintiff has been unable to locate defendants to effect
service. The Court was not persuaded by appellant's argument,
that in view of the deposit made in Korea, plaintiff had lost the
right to have the ship arrested for the same debt. Even if the
first Korean action was considered as the equivalent of an
action in rem, the rule that the lien is expunged by the giving of
bail applies only if the security posted is sufficient to cover the
debt in its entirety—capital, interest and costs. It was not clear
that the security in question did cover the whole debt. Nor does
the rule apply where the security was given abroad in respect of
proceedings terminated for lack of jurisdiction.
Turning to counsel's second argument, the precedents to the
effect that it is vexatious to arrest a ship in England when an in
rem action is pending abroad if the creditor has obtained
security after arresting the ship, are inapplicable to the case at
bar. The first Korean action is over and the second is a mere
personal action in which a bank deposit has been arrested. The
general rule is that a Canadian action will not be dismissed as
vexatious on the ground that identical proceedings are pending
in a foreign court if the plaintiff might be able to derive a real
benefit from the Canadian proceedings. If plaintiffs Quebec
action succeeds, it would secure a lien on the ship and this
would take priority over the claims of defendant's other credi
tors. Such benefit would not be available in the Korean action.
It may be that the defendant, upon application, could obtain
an order staying the Quebec action until the Korean litigation
has been discontinued.
CASES JUDICIALLY CONSIDERED
DISTINGUISHED:
The Christiansborg (1885), 10 P.D. 141 (C.A.); The
Golaa, [1926] P. 103; The Marinero, [1955] 1 All E.R.
676.
REFERRED TO:
Ionian Bank, Ltd. v. Couvreur, [1969] 2 All E.R. 651
(C.A.).
COUNSEL:
Louis Huot for respondent (plaintiff).
Guy Vaillancourt for appellant (defendant).
SOLICITORS:
Létourneau & Stein, Quebec City, for
respondent (plaintiff).
Langlois, Drouin & Associés, Quebec City,
for appellant (defendant).
The following is the English version of the
reasons for judgment rendered by
PRATTE J.: This appeal is from a judgment of
the Trial Division, which dismissed the motion by
which the owners of the ship Number Four asked
the Court to dismiss the action in rem brought by
the respondent against the ship and to vacate the
arrest made in that action.
The Number Four is a ship registered in
Liberia. The respondent's action was served on it
and it was arrested while it was in the Port of
Quebec City. By this action, the respondent
claimed payment of an amount of over $138,000
US, representing the cost of services which it said
it has provided to the Number Four while it was
berthed in a harbour in the United States. The
respondent alleged that, under U.S. law, its debt is
secured by a maritime lien on the ship.
The motion dismissed by the Trial Judge was
made immediately after the action was served and
the ship arrested. This motion asked the Court to
dismiss the action and vacate the arrest on the
ground that there was lis pendens, since the
respondent was also bringing an identical action in
the courts of Korea. In particular, the owners of
the Number Four stated that the respondent had
brought an action against their ship and arrested it
for the same reason in Korea, and that in view of
these still pending proceedings, they had deposited
an amount of $157,000 in a Korean bank as a
security to obtain release of the ship. In such
circumstances, they concluded, the respondent
should not be allowed to sue and arrest the ship
Number Four a second time.
The facts as they emerge from the record are
not quite so straightforward. It is true that the
respondent attempted to recover its debt in the
Korean courts; it even brought two successive
actions against the owners of the Number Four
there. Strictly speaking, these actions were not
actions in rem. It appears that in Korean law all
actions are in personam, in the sense that they are
always brought against persons, never against
things. The first action brought by the respondent
in Korea for the cost of the services provided to the
Number Four was however similar to an action in
rem, as in it the plaintiff cited the maritime lien it
claimed to have on the Number Four. In Korean
law such an action, in which a plaintiff is seeking
recognition of a real right such as a maritime lien
on property of the defendant, begins with arrest of
the property in question. This explains why the
Number Four was arrested in Korea at the begin
ning of this first action. Without advising the
respondent, the appellants then obtained release of
the arrest from a Korean court by depositing as
security in a Korean bank a sum which the appel
lants said was $157,000 but which according to the
respondent was only $138,077.98.' When the
arrest was released, the Number Four left Korea
and the respondent's action was apparently dis
missed on the ground that the Korean courts were
not competent to decide an action seeking recogni
tion of a lien on a foreign ship which was then
outside Korean territory. The respondent then
brought a second action, a purely personal one
against the owners of the Number Four, for the
cost of the same services, and as part of the new
action arrested before judgment the sum which
had been deposited in the bank to obtain release of
the arrest in the first action'. These new proceed
ings are still pending, but were never served on the
appellants because, it would appear, the respond
ent has not yet been able to locate them.
In the submission of Mr. Vaillancourt, counsel
for the appellants, the Trial Judge should have
allowed the motion, dismissed the action and
vacated the arrest, for two reasons: the first con
cerns the effect of the first action brought by the
respondent in Korea, and the second relates to the
second action brought there.
The respondent first proceeded against the
appellants in reliance on the lien which it claimed
to have over the ship Number Four; at the start of
this action, the ship was arrested and the appel
lants obtained a release of this arrest by depositing
a sum of money in a Korean bank to guarantee the
payment of the respondent's claim. That being the
case, counsel for the appellants maintained, the
respondent has lost the right to again have the
same ship arrested for the same debt. In support of
his contention, he referred the Court to two pas
sages from a text on maritime liens, 2 where the
author says the following:
If the respondent's contention were correct, the amount
deposited by the appellants would only have secured the capital
sum claimed by the respondent, excluding the interest and
costs.
2 D. R. Thomas, British Shipping Laws, Vol. 14 entitled
Maritime Liens, at pp. 288 and 291.
Where therefore bail is given to the full value of the claim, or
to the claim as limited by statute, or to the value of the res,
whichever is relevant in the particular case, together with the
costs of the claimant, the lien in respect of which the bail is
given is expunged and the res may not be subjected to re-arrest.
Although payment into court in lieu of bail is rarely resorted to
in practice and there is consequently a notable absence of
guiding authority, it is probably the case that where the
payment is made in full satisfaction of the plaintiff's claim and
costs, it operates in the same manner as bail, and, subject to the
same qualifications, to expunge the maritime or other lien of
the plaintiff, so that the released res thereupon goes forth free
from incumbrance.
I am not persuaded by this first argument. To
begin with, even if it is assumed that the first
action brought in Korea by the respondent was the
equivalent of an action in rem, which is by no
means clear, the rule cited by counsel for the
appellants would only appear to apply if the secu
rity provided by the appellants was sufficient to
cover the respondent's debt in its entirety, capital,
interest and costs. That too is uncertain. Secondly,
and more importantly, I consider that this rule
does not apply in a case such as the one at bar,
where the security was given abroad in connection
with proceedings which were prematurely ter
minated, because the court hearing them was not
competent to do so. The first proceedings which
the respondent brought in Korea do not therefore
appear to me to be a bar to those brought by it in
Quebec City.
The second argument of counsel for the appel
lants is related to the second action begun by the
respondent in Korea. This purely personal action
was accompanied by an arrest before judgment of
the sum deposited as security in connection with
the preceding action, and although it has not yet
been served on the appellants, it is still pending. In
such circumstances, Mr. Vaillancourt contended,
the proceedings brought in Quebec City are vexa
tious, and, for that reason, the action should be
dismissed and the arrest vacated. He referred the
Court on this point to the decision of the British
Court of Appeal in The Christiansborg (1885), 10
P.D. 141 (C.A.) and the decision of Bateson J. in
The Golaa, [1926] P. 103; and he might also have
cited the more recent decision in The Marinero,
[1955] 1 All E.R. 676. In all these cases, the Court
held to be vexatious the arrest of a ship in England
by a creditor while an action in rem was still
pending abroad, brought for the same cause
against the same ship by the same creditor, who
after arresting the ship abroad had obtained a
security from the owners of the ship. In my opin
ion, these precedents do not apply to the case at
bar. The first action brought by the respondent in
Korea has now ceased; the second is a purely
personal action accompanied by the arrest of a
bank deposit. The situation is quite different from
that of the cases mentioned above, which con
cerned plaintiffs who, having brought an action
against and arrested a ship abroad, and obtained a
security from the ship's owners in connection with
the foreign proceedings, which were still pending,
brought identical proceedings in Britain, where
they again arrested the same ship for the same
cause in the hope of compelling the owners to
provide a second security.
An action brought here is not vexatious solely on
the ground that the plaintiff, at the same time as
he is proceeding in Canadian courts, is also pro
ceeding against the same defendant abroad for the
same cause of action. As a general rule, for an
action brought in Canada to be dismissed as vexa
tious solely on the ground that identical proceed
ings are pending in a foreign court, the plaintiff
suing in Canada must not be able to derive any
real benefit from these proceedings.' This means
that an action brought in Canada should not ordi
narily be dismissed as vexatious if it can provide
benefits to a plaintiff which it cannot obtain from
the proceedings brought abroad. That is clearly
the situation at bar. The action brought in Quebec
City has already been served; the one brought in
Korea has not yet been, and the respondent main
tained that it may not be for several months.
Further, if the action brought in Quebec City
succeeds, the respondent will benefit, if the allega
tions in the statement of claim are valid, from a
lien on the ship which was arrested, and this will
guarantee it priority of payment over the appel
lants' other creditors; the proceedings brought in
3 P. M. North, Cheshire and North Private International
Law, 10th ed., London, Butterworths, 1979, p. 117 and the
authorities cited, esp. Ionian Bank, Ltd. v. Couvreur, [1969] 2
All E.R. 651 (C.A.) at pp. 654 et seq.
Korea would not give the respondent the same
benefit, since it is clear that it cannot claim a lien
over the bank deposit arrested by it in Korea. It
seems clear that the proceedings brought by the
respondent in Quebec City, the action as well as
the arrest, will provide it with a definite benefit.
For this reason, I feel the Trial Judge correctly
refused to dismiss them.
It is possible that this is a case in which the
appellants could have asked the Court, and still
may do so, to order a stay of the action brought in
Quebec City by the respondent, so long as it has
not discontinued the proceedings brought in
Korea. It would seem fair that the respondent
should release the arrest made in Korea now that
it has attached the Number Four in Canada. As
the appellants have not sought such an order, I will
not deal with this possibility.
For these reasons, I would dismiss the appeal
with costs.
RYAN J.: I concur.
* * *
The following is the English version of the
reasons for judgment rendered by
LALANDE D.J.: The respondent claimed to have
a lien on the ship Number Four and brought an
action in rem in Canada, arresting the ship in the
Port of Quebec City.
The appellant asked that the Court dismiss the
action and vacate the arrest on the ground that the
ship had already been arrested in Korea, where a
sum of money had been deposited to obtain its
release. This request was denied by the Trial
Judge.
Pratte J. points out that what resulted from the
proceedings in Korea to the benefit of the respond
ent, is an arrest before judgment or stop order of
an amount which could be insufficient, in an
action in personam which has not yet been served
on the owners of the ship. What the respondent
obtains by his action in rem in Canada, accom
panied by an arrest of the ship, is something
entirely different, namely a bail for any judgment
which may be rendered to guarantee satisfaction
of the alleged lien. In other words, the bail of Rule
1004 replaces the ship.
In the decision of the British Court of Appeal in
Ionian Bank, Ltd. v. Couvreur, 4 Lord Denning, at
page 655, mentions that a stop order is not the
same thing as the bail in our own admiralty proce
dure, and that the precedents on which the appel
lant relied, including The Christiansborg, 5 do not
apply in the circumstances.
To correct the injustice of the defendant having
to deposit money in Korea and then provide secu
rity in Canada, I concur in the view of Pratte J.: he
may undoubtedly obtain, by an application to stay
the action, a discontinuance of the Korean pro
ceedings and a release of the arrest of the money
deposited.
I would dismiss the appeal with costs.
4 [1969] 2 All E.R. 651 (C.A.).
5 (1885), 10 P.D. 141 (C.A.).
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.