Canpotex Shipping Services Limited v. Marine Petrobulk Ltd.

Canpotex Shipping Services Limited v. Marine Petrobulk Ltd.
Court (s) Database
Federal Court Decisions
Date
2015-09-23
Neutral citation
2015 FC 1108
File numbers
T-109-15
Decision Content
Date: 20150923
Docket: T-109-15
Citation: 2015 FC 1108
Ottawa, Ontario, September 23, 2015
PRESENT: The Honourable Mr. Justice Russell
BETWEEN:
CANPOTEX SHIPPING SERVICES LIMITED,
NORR SYSTEMS PTE. LTD.,
OLDENDORFF CARRIERS GMBH & CO. K.G. AND
STAR NAVIGATION CORPORATION S.A.
Plaintiffs
And
MARINE PETROBULK LTD.,
O.W. SUPPLY & TRADING A/S,
O.W. BUNKERS (UK) LIMITED,
ING BANK N.V.
IAN DAVID GREEN, ANTHONY VICTOR LOMAS AND PAUL DAVID COPLEY IN THEIR CAPACITIES AS RECEIVERS OF CERTAIN ASSETS OF THE DEFENDANTS O.W. SUPPLY & TRADING A/S AND O.W. BUNKERS (UK) LIMITED AND OTHERS
Defendants
JUDGMENT AND REASONS
I. INTRODUCTION [1] There are three motions for summary judgment pursuant to Rules 108 and 216 of the Federal Courts Rules, SOR/98-106 [Federal Courts Rules] before the Court. Pursuant to an Order of Prothonotary Lafrenière (March 27, 2015), Canpotex Shipping Services Limited [Canpotex] paid USD$661,050.63 into trust which was to be treated as the equivalent to a payment into Court. Canpotex seeks summary judgment that its payment into Court has extinguished any liabilities against Canpotex. ING Bank [ING] and Ian David Green, Anthony Victor Lomas and Paul David Copley [Receivers] seek summary judgment that ING is entitled to the funds. Marine Petrobulk Ltd [MP] seeks summary judgment that it is entitled to the funds.
II. BACKGROUND [2] On February 14, 2014, Canpotex and O.W. Supply & Trading A/S [OW Trading] entered into a contract for the time-to-time purchase of marine bunkers by Canpotex from OW Trading, for vessels that Canpotex charters [Fixed Price Agreement]. The contract was not signed until sometime in June 2014.
[3] On October 3, 2014, Canpotex time chartered the vessel MV Star Jing. The vessel is owned by the Plaintiff, Olendorff Carriers GmbH & Co KG, a company incorporated in Germany and with its head office in Germany. The contract provides that Canpotex will pay for all fuel and will not allow any liens against the vessel.
[4] On October 7, 2014, Canpotex time chartered the vessel MV Ken Star which is owned by the Plaintiff, Star Navigation Corporation SA, a company incorporated in Liberia with its head office in Greece. The contract provides that Canpotex will pay for all fuel and will not allow any liens against the vessel.
[5] On October 22, 2014, Canpotex ordered marine bunkers from the Defendant, O.W. Bunkers (UK) Limited [OW UK], a subsidiary of OW Trading. The marine bunkers were to be delivered to the MV Ken Star.
[6] On October 22, 2014, Canpotex also ordered marine bunkers from OW UK to be delivered to the MV Star Jing.
[7] Both sales order confirmations show that the physical supplier of the fuel was to be the Defendant, MP, a British Columbia bunker fuel supply company.
[8] The parties disagree about whether the Fixed Price Agreement, OW UK’s general terms and conditions, or MP’s standard terms and conditions governed the fuel purchases.
[9] On October 27, 2014, MP provided the marine bunkers for use on the MV Ken Star and MV Star Jing [collectively, the Vessels] in Vancouver.
[10] On October 27, 2014, OW UK invoiced Canpotex for the marine bunkers – USD$375,525.000 for the MV Ken Star and USD$278,968.15 for the MV Star Jing. The invoices indicated that payment was due to OW UK by November 26, 2014.
[11] On October 28 and 29, 2014, MP invoiced OW UK for the marine bunkers supplied – USD$372,300.00 for the MV Ken Star and USD$276,617.40 for the MV Star Jing.
[12] Pursuant to an agreement of December 19, 2013, OW Trading, and certain subsidiaries including OW UK, assigned all rights, interest and title in their third party and intercompany receivables to ING. Receivables from the sale of marine bunkers were specifically assigned to ING. Canpotex was notified of the assignment in December 2013.
[13] On November 7, 2014, OW Trading filed for bankruptcy; OW UK, and other related subsidiaries, filed for bankruptcy shortly thereafter.
[14] On November 12, 2014, ING appointed the Receivers as receivers of OW Trading and OW UK’s receivables.
[15] On December 12, 2014, Charles Christopher Macmillen [Administrator] was appointed administrator of OW UK.
[16] On December 22, 2014, the Administrator, the Receivers and ING entered into a cooperation agreement, pursuant to which money owed in relation to OW UK receivables would be paid into ING accounts.
[17] OW UK never paid MP’s invoices.
[18] On December 22, 2014, MP demanded payment of USD$648,917.40 from Canpotex for the marine bunkers that MP had supplied to the Vessels. MP claimed it had a maritime lien in accordance with its contract with OW UK and would arrest the Vessels unless Canpotex paid the invoices.
[19] On January 8, 2015, the Receivers demanded payment from Canpotex for the amount owing under the OW UK invoices. The Receivers advised that if payment was not forthcoming, they reserved the right to exercise all powers available to them, including the arrest of the Vessels.
[20] Canpotex does not dispute that it owes the sum of USD$654,493.15 under the OW UK invoices. It says that it has held back the funds because it has received competing demands for them and does not want to expose the Vessels to any liability or liens.
[21] On April 2, 2015, in accordance with the March 27, 2015 Order of Prothonotary Lafrenière, Canpotex paid USD$661,050.63 (the principal amount owed under the OW UK invoices plus admiralty interest) [Funds] into the United States [US] trust account of its solicitor. Prothonotary Lafrenière’s Order deemed this deposit to be a payment into the Court.
[22] On June 22, 2015, the Plaintiffs brought a motion for a declaration establishing:
a) Which of the Defendants is entitled to all, or part, of the Funds;
b) The specific entitlement of each Defendant to receive part, or all, of the Funds;
c) Payment out in accordance with a) and b);
d) That any and all liability of the Plaintiffs and the Vessels to the Defendants in respect of the marine bunkers supplied to the Vessels on October 27, 2014 in Vancouver is extinguished upon payment out of the Funds; and,
e) That the Plaintiffs recover the costs of the action from one of the Defendants or the Funds.
[23] On June 22, 2015, ING and the Receivers brought a motion for:
a) A declaration that the Funds be paid to ING in satisfaction of Canpotex’s debt to OW UK; and,
b) Costs of the proceedings.
[24] On June 22, 2015, MP brought a motion for:
a) Judgment in the Canadian equivalent of MP’s invoices for the supply of the marine bunkers – USD$372,300.00 for the MV Ken Star and USD$276,617.40 for the MV Star Jing;
b) A declaration that MP is entitled to the Funds;
c) Interest on the funds at admiralty rates; and,
d) Costs of the proceedings.
III. ISSUES [25] The Plaintiffs say that the following matters are at issue in this proceeding:
1. Which of the Defendants is entitled to all, or part, of the Funds, including each Defendant’s specific entitlement; and,
2. Whether payment of the Funds will extinguish all of the Plaintiffs’ liability arising out of the marine bunkers supplied to the Vessels.
[26] ING says the sole issue in this proceeding is the appropriate disposition of the Funds.
[27] MP says that, in addition to the appropriate disposition of the Funds, the Court must also determine whether, if MP is not entitled to the Funds, its maritime lien in relation to the bunker supply should be extinguished.
IV. STATUTORY PROVISIONS [28] The following provisions of the Federal Courts Rules are applicable in this proceeding:
Interpleader
Interplaidoirie
108. (1) Where two or more persons make conflicting claims against another person in respect of property in the possession of that person and that person
108. (1) Lorsque deux ou plusieurs personnes font valoir des réclamations contradictoires contre une autre personne à l’égard de biens qui sont en la possession de celle-ci, cette dernière peut, par voie de requête ex parte, demander des directives sur la façon de trancher ces réclamations, si :
(a) claims no interest in the property, and
a) d’une part, elle ne revendique aucun droit sur ces biens;
(b) is willing to deposit the property with the Court or dispose of it as the Court directs,
that person may bring an ex parte motion for directions as to how the claims are to be decided.
b) d’autre part, elle accepte de remettre les biens à la Cour ou d’en disposer selon les directives de celle-ci.
Directions
Directives
(2) On a motion under subsection (1), the Court shall give directions regarding
(2) Sur réception de la requête visée au paragraphe (1), la Cour donne des directives concernant :
(a) notice to be given to possible claimants and advertising for claimants;
a) l’avis à donner aux réclamants éventuels et la publicité pertinente;
(b) the time within which claimants shall be required to file their claims; and
b) le délai de dépôt des réclamations;
(c) the procedure to be followed in determining the rights of the claimants.
c) la procédure à suivre pour décider des droits des réclamants.
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Summary Trial
Procès sommaire
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Adverse inference
Conclusions défavorables
(4) The Court may draw an adverse inference if a party fails to cross-examine on an affidavit or to file responding or rebuttal evidence.
(4) La Cour peut tirer des conclusions défavorables du fait qu’une partie ne procède pas au contre-interrogatoire du déclarant d’un affidavit ou ne dépose pas de preuve contradictoire.
Dismissal of motion
Rejet de la requête
(5) The Court shall dismiss the motion if
(5) La Cour rejete la requête si, selon le cas :
(a) the issues raised are not suitable for summary trial; or
a) les questions soulevées ne se prêtent pas à la tenue d’un procès sommaire;
(b) a summary trial would not assist in the efficient resolution of the action.
b) un procès sommaire n’est pas susceptible de contribuer efficacement au règlement de l’action.
Judgment generally or on issue
Jugement sur l’ensemble des questions ou sur une question en particulier
(6) If the Court is satisfied that there is sufficient evidence for adjudication, regardless of the amounts involved, the complexities of the issues and the existence of conflicting evidence, the Court may grant judgment either generally or on an issue, unless the Court is of the opinion that it would be unjust to decide the issues on the motion.
(6) Si la Cour est convaincue de la suffisance de la preuve pour trancher l’affaire, indépendamment des sommes en cause, de la complexité des questions en litige et de l’existence d’une preuve contradictoire, elle peut rendre un jugement sur l’ensemble des questions ou sur une question en particulier à moins qu’elle ne soit d’avis qu’il serait injuste de trancher les questions en litige dans le cadre de la requête.
Order disposing of action
Ordonnance pour statuer sur l’action
(7) On granting judgment, the Court may make any order necessary for the disposition of the action, including an order
(7) Au moment de rendre son jugement, la Cour peut rendre toute ordonnance nécessaire afin de statuer sur l’action, notamment :
(a) directing a trial to determine the amount to which the moving party is entitled or a reference under rule 153 to determine that amount;
a) ordonner une instruction portant sur la détermination de la somme à laquelle a droit le requérant ou le renvoi de cette détermination conformément à la règle 153;
(b) imposing terms respecting the enforcement of the judgment; and
b) imposer les conditions concernant l’exécution forcée du jugement;
(c) awarding costs.
c) adjuger les dépens.
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Types of admiralty actions
Types d’action
477. (1) Admiralty actions may be in rem or in personam, or both.
477. (1) Les actions en matière d’amirauté peuvent être réelles ou personnelles, ou les deux à la fois.
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Defendants in action in rem
Défendeurs dans une action réelle
(4) In an action in rem, a plaintiff shall include as a defendant the owners and all others interested in the subject-matter of the action.
(4) Dans une action réelle, le demandeur est tenu de désigner à titre de défendeurs les propriétaires du bien en cause dans l’action et toutes les autres personnes ayant un intérêt dans celui-ci.
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Defence of action in rem
Défense dans une action réelle
480. (1) An action in rem against a ship or other thing named as a defendant in the action may be defended only by a person who claims to be the owner of the ship or thing or to be otherwise interested therein.
480. (1) Dans une action réelle, la défense pour le compte du navire ou d’une autre chose cités comme le défendeur ne peut être déposée que par la personne qui prétend en être le propriétaire ou détenir tout autre droit sur ceux-ci.
[29] The following provisions of the Marine Liability Act, SC 2001, c 6 [MLA] are applicable in this proceeding:
Maritime Lien
Privilège maritime
Definition of “foreign vessel”
Définition de « bâtiment étranger »
139. (1) In this section, “foreign vessel” has the same meaning as in section 2 of the Canada Shipping Act, 2001.
139. (1) Au présent article, « bâtiment étranger » s’entend au sens de l’article 2 de la Loi de 2001 sur la marine marchande du Canada.
Maritime lien
Privilège maritime
(2) A person, carrying on business in Canada, has a maritime lien against a foreign vessel for claims that arise
(2) La personne qui exploite une entreprise au Canada a un privilège maritime à l’égard du bâtiment étranger sur lequel elle a l’une ou l’autre des créances suivantes :
(a) in respect of goods, materials or services wherever supplied to the foreign vessel for its operation or maintenance, including, without restricting the generality of the foregoing, stevedoring and lighterage; or
a) celle résultant de la fourniture — au Canada ou à l’étranger — au bâtiment étranger de marchandises, de matériel ou de services pour son fonctionnement ou son entretien, notamment en ce qui concerne l’acconage et le gabarage;
(b) out of a contract relating to the repair or equipping of the foreign vessel.
b) celle fondée sur un contrat de réparation ou d’équipement du bâtiment étranger.
Services requested by owner
Service demandé par le propriétaire
(2.1) Subject to section 251 of the Canada Shipping Act, 2001, for the purposes of paragraph (2)(a), with respect to stevedoring or lighterage, the services must have been provided at the request of the owner of the foreign vessel or a person acting on the owner’s behalf.
(2.1) Sous réserve de l’article 251 de la Loi de 2001 sur la marine marchande du Canada et pour l’application de l’alinéa (2)a), dans le cas de l’acconage et du gabarage, le service doit avoir été fourni à la demande du propriétaire du bâtiment étranger ou de la personne agissant en son nom.
Exception
Exceptions
(3) A maritime lien against a foreign vessel may be enforced by an action in rem against a foreign vessel unless
(3) Le privilège maritime peut être exercé en matière réelle à l’égard du bâtiment étranger qui n’est pas :
(a) the vessel is a warship, coast guard ship or police vessel; or
a) un navire de guerre, un garde-côte ou un bateau de police;
(b) at the time the claim arises or the action is commenced, the vessel is being used exclusively for non-commercial governmental purposes.
b) un navire accomplissant exclusivement une mission non commerciale au moment où a été formulée la demande ou a été intentée l’action le concernant.
Federal Courts Act
Loi sur les Cours fédérales
(4) Subsection 43(3) of the Federal Courts Act does not apply to a claim secured by a maritime lien under this section.
(4) Le paragraphe 43(3) de la Loi sur les Cours fédérales ne s’applique pas aux créances garanties par un privilège maritime au titre du présent article.
[30] The following provisions of the Federal Courts Act, RSC 1985, c F-7 [Federal Courts Act] are applicable in this proceeding:
Navigation and shipping
Navigation et marine marchande
22. (1) The Federal Court has concurrent original jurisdiction, between subject and subject as well as otherwise, in all cases in which a claim for relief is made or a remedy is sought under or by virtue of Canadian maritime law or any other law of Canada relating to any matter coming within the class of subject of navigation and shipping, except to the extent that jurisdiction has been otherwise specially assigned.
22. (1) La Cour fédérale a compétence concurrente, en première instance, dans les cas — opposant notamment des administrés — où une demande de réparation ou un recours est présenté en vertu du droit maritime canadien ou d’une loi fédérale concernant la navigation ou la marine marchande, sauf attribution expresse contraire de cette compétence.
Maritime jurisdiction
Compétence maritime
(2) Without limiting the generality of subsection (1), for greater certainty, the Federal Court has jurisdiction with respect to all of the following:
(2) Il demeure entendu que, sans préjudice de la portée générale du paragraphe (1), elle a compétence dans les cas suivants :
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(m) any claim in respect of goods, materials or services wherever supplied to a ship for the operation or maintenance of the ship, including, without restricting the generality of the foregoing, claims in respect of stevedoring and lighterage;
m) une demande relative à des marchandises, matériels ou services fournis à un navire pour son fonctionnement ou son entretien, notamment en ce qui concerne l’acconage et le gabarage;
V. ARGUMENT A. Plaintiffs [31] The Plaintiffs say they have no interest in the determination of which of the Defendants is legally entitled to the Funds. The Plaintiffs merely wish to be relieved of any liabilities related to the marine bunker supply.
[32] The Plaintiffs submit that if the Court can find the necessary facts on a motion for summary trial, then judgment should be granted: Inspiration Management Ltd v McDermid St Lawrence Ltd (1989), 36 BCLR (2d) 202 [Inspiration Management]; Louis Vuitton Malletier SA v Singga Enterprises (Canada) Inc, 2011 FC 776. Absent serious issues of credibility, the Court should generally determine legal issues, particularly where summary trial will dispose of all the issues in the action: 0871768 BC Ltd v Aestival (The), 2014 FC 1047 at paras 57-61. The Plaintiffs say there are no material facts in dispute, and the action turns purely on the legal question of whether Canpotex can be liable to pay for the bunkers twice.
[33] The Plaintiffs submit that they have satisfied the requirements of Rule 108 of the Federal Courts Rules. The affidavit evidence clearly establishes that Canpotex is facing conflicting claims in respect to the marine bunkers supplied to the Vessels. The Receivers and MP both demand payment in respect of the same supply of the same marine bunkers. Both parties have advised that they will exercise their rights to arrest the Vessels.
[34] The Plaintiffs say that if Canpotex pays either the Receivers or MP, to the detriment of the other, it would do so at its own peril: G&N Angelakis Shipping Co SA v Compagnie National Algerienne de Navigation (The “Attika Hope”), [1988] 1 Lloyd’s Rep 439 (Comm Ct) [Attika Hope]; Rio Tinto Shipping (Asia) Pte Ltd v Korea Line Corp, 2008 FC 1376 [Rio Tinto]. For example, in Attika Hope, the plaintiff faced competing claims for the payment of freight. One party was the owner of the vessel, and the other party was the assignee of the rights of the charterer. The plaintiff paid the freight to the owner of the vessel. The Court ultimately held that the assignee of the rights of the charterer was in fact entitled to the freight. It held that the plaintiff had paid the owner of the vessel at its own peril and was required to make a second payment to the assignee. The Plaintiffs bring this motion to extricate themselves from being in the position of having to make multiple payments.
[35] The Plaintiffs say that the jurisprudence regarding Rule 108 is limited, but in Rio Tinto, above, the Federal Court granted the plaintiff’s request to interplead an amount that was subject to competing and/or conflicting claims in respect to payment of freight for the carriage of cargo.
[36] The Plaintiffs point out that there are motions similar to the present motion, which involves the Defendants, in both the United States (USDC SDNY 14 Civ 9262) and the UK (Stena Bulk AB v Copley, [2015] 1 Lloyd’s Rep 280 at 281 [Stena Bulk]). In Stena Bulk, the plaintiff similarly faced competing claims from a supplier and intermediary. An Admiralty Court Registrar granted the plaintiff’s motion to pay the claimed funds into court despite the fact that the Admiralty Court had no specific rule analogous to Rule 108 of the Federal Courts Rules.
[37] The Plaintiffs also respond to some of the Defendants’ claims in their Statement of Defence. First, the Defendants claim that the Receivers’ claim and MP’s claim are not identical. The Plaintiffs say that, while this is technically correct, the underlying supply of bunkers is exactly the same in both claims. The only meaningful difference in the amounts claimed is that OW UK added its mark-up to the MP invoices before submitting them to Canpotex.
[38] Second, the Plaintiffs reject the Defendants’ claim that there is a difference between the in rem claims against the Vessels themselves and the in personam claims, such that the losing party may be permitted to arrest the Vessels and recover their account in an in rem action. The Federal Court of Appeal has held that an in rem action is only a “procedural device” which allows a claimant to obtain security for its in personam claim: Westshore Terminals Limited Partnership v Leo Ocean, SA, 2014 FCA 231 at para 92. In this case, one Defendant will be paid out and its in rem claim will cease to exist. The other Defendant is not entitled to anything more than the funds, so that their in rem claim should also be barred.
[39] The Plaintiffs say that the Defendants’ argument seems to be that, because an arrest would initially affect the ship owner, the in rem claim would be different from the in personam claim. However, the charter relationship vests the property of the marine bunkers in the charterer during the length of the charter: Terence Coughlin et al, Time Charters, 6th ed (London: informa, 2008) at 260. The in rem proceeding, then, would be a claim against the charterer and not the owner: Norwegian Bunkers AS v Boone Star Owners Inc, 2014 FC 1200 at para 90 [Norwegian Bunkers]. In addition, the Federal Court has held that an intermediary who has not paid an actual physical supplier of goods or services to a vessel is not entitled to make an in rem claim against the vessel where the goods and services were supplied: Balcan Ehf v Atlas (The), 2001 FCT 1328 [Balcan].
[40] The Plaintiffs, again, assert that they claim no interest in which of the Defendants is entitled to the Funds. However, they do not want the losing Defendant to be able to circumvent the Court’s order by arresting the Vessels in another jurisdiction. The Federal Court is clearly the correct jurisdiction. The MP standard terms and conditions provide that the Federal Court is the proper jurisdiction, and MP’s standard terms and conditions are incorporated into the OW UK contract. The parties have also attorned to the Federal Court’s jurisdiction.
[41] Third, the Plaintiffs say that the issue of whether a Canadian maritime lien under s 139 of the MLA would flow from the purchase of bunkers by a charterer rather than by the owners of the Vessels is irrelevant in this proceeding. MP, as an unpaid physical supplier, has a statutory right of action in rem pursuant to s 22(2)(m) of the Federal Courts Act.
[42] Fourth, the Plaintiffs say that the affidavit evidence is clear that the Fixed Price Agreement was to govern the purchase of the marine bunkers. Regardless, the choice of law and forum clauses are very similar in the Fixed Price Agreement and in OW UK’s general terms and conditions. The Plaintiffs say that, regardless of which version is used, it is clear that MP’s standard terms and conditions were incorporated into either agreement.
[43] Fifth, the Plaintiffs say that “full justice and equity” call for dismissal of the in rem claims: NM Paterson & Sons Ltd v Birchglen (The), [1990] 3 FC 301 (TD) [Birchglen]. MP says that a lien claim can only be extinguished upon payment or security including interest and costs. However, the Court has held that a lien claimant’s in rem claim is defeated if it has not paid for the goods and services which it supplies to the vessel. In Birchglen, the Court held that (at 311):
… courts appear to adopt a fairly discretionary or pragmatic approach on the question and whether or not a maritime lien continues or is revived or is extinguished when security has been put up, is determined according to the facts of each particular case and of the requirements that full justice and equity be applied. The Plaintiffs say that full justice and equity calls for dismissal of all in rem claims because they have paid the Funds into Court and are allowing the Court to dispose of the Funds.
[44] Sixth, both this Court and the Federal Court of Appeal have held that the Court has the jurisdiction to grant declaratory judgment, even though a cause of action does not exist, so long as the plaintiff seeks some relief which could be of value: Morneault v Canada (Attorney General), [2001] 1 FC 30 (CA); Gariepy v Canada (Administrator of the Federal Court), [1989] 1 FC 544 (TD). The Plaintiffs submit that a declaration extinguishing the Defendants’ in rem rights is critical to the interpleader proceedings. Without a declaration extinguishing the in rem claims, the Plaintiffs face the prospect of having to pay twice for the same delivery of marine bunkers.
B. Defendants – ING and Receivers [45] ING says that the only issue in this summary trial motion is the appropriate disposition of the Funds. ING says that the Funds represent a debt that Canpotex owes to OW UK. OW UK’s rights to the Funds have been assigned to ING, and there are no valid competing claims to the Funds.
[46] ING agrees that the parties entered into the Fixed Price Agreement on February 14, 2014. However, ING says that no purchases were ever made under this agreement. The marine bunker purchases which are the subject of this proceeding were made on a spot basis and so are outside of the terms of the Fixed Price Agreement.
[47] ING says that OW UK’s sales order confirmations say that the supply of the marine bunkers was governed by the OW UK standard terms and conditions. The documentary evidence makes clear that the Fixed Price Agreement did not apply to the sale of the marine bunkers to the Vessels because: the Fixed Price Agreement was with OW Trading, but the marine bunkers were supplied by OW UK; the sales confirmations indicated that the supply was governed by the OW UK standard terms and conditions; the OW invoices refer to the OW UK general terms and conditions; and, the Fixed Price Agreement specifies that a specific sales order confirmation is to be used for sales under the Fixed Price Agreement – that particular sales order confirmation was not used in this sale.
[48] ING also says that the Plaintiffs have not met the test for Rule 108 interpleader. Rule 108 contemplates a single person interpleading a single item of property which is subject to conflicting claims. In contrast, in the present case there are four Plaintiffs, each of whom is subject to separate liabilities, on different legal bases, in different amounts owed to different parties. The Plaintiffs face multiple claims arising from separate obligations attached to several items of property. Canpotex acknowledges that the Funds are the money owing under the OW UK invoices. Canpotex is exposed to two claims from two different sources: the debt owed to OW UK which has been assigned to ING; and to the Vessels’ owners due to their charter contracts. These are not the same obligation. Canpotex could have purchased fuel directly from MP, but in purchasing through OW UK it secured certain advantages, while also assuming the risk of multiple liabilities.
[49] Interpleader does not apply where the allegedly competing claims are “based on separate and distinct causes of action.” See British Columbia v Gonclaves, [1995] BCJ No 2365 (QL) at paras 15, 19 (SC) [Gonclaves]; Farr v Ward (1837) 2 M&W 844 [Farr]; City of Morgan Hill v Brown (1999), 71 Cal App 4th 1114 at 1122 (6th Dist) [Morgan Hill].
[50] MP has no direct claim against Canpotex and does not have a claim to the debt owed under the OW UK invoices. MP has a claim against OW UK and may have an in rem claim against the Vessels. The distinction between contractual and lien claims led the Singapore High Court to refuse interpleader in another claim arising from the OW Trading and OW UK bankruptcy: Kamil Norwid Shipping Co Ltd v ING Bank N.V. and Transocean Oil Pte Ltd, High Court of Singapore, April 24, 2015 at para 8 [Kamil].
[51] It remains an open question at the Federal Court as to whether a maritime lien under s 139 of the MLA can attach to a purchase from a charterer as opposed to an owner: Norwegian Bunkers, above, at para 80. But, even if MP can assert a maritime lien, the lien is limited to the Vessels in rem and does not constitute a direct claim against Canpotex.
[52] MP also cannot claim a contractual lien against Canpotex because it has no contractual relationship with Canpotex. The lack of privity was a barrier to a similar claim in India arising from the OW Trading and OW UK bankruptcy: Gulf Petrochem Energy Pvt Ltd v MT Valor, Bombay High Court, April 15, 2015 at para 13 [Gulf Petrochem].
[53] ING acknowledges that the OW UK general terms and conditions provide that Canpotex is deemed to have read and accepted the terms and conditions imposed by a physical supplier and that the terms vary the OW UK contract. However, this is only the case when the physical supplier insists that the buyer be bound. MP did not insist on the application of its terms to Canpotex. Nonetheless, even if the terms were incorporated, that does not give rise to an independent contractual relationship between Canpotex and MP. In addition, MP’s standard terms and conditions state that they only apply to the sale and delivery of marine fuel to a customer. The fuel was sold by MP to OW UK. Canpotex did not purchase the fuel from MP.
[54] Even if MP has a direct claim against Canpotex, it does not have a claim to the Funds which are the money owing under the OW UK invoices. Canpotex is required to pay that debt in full to OW UK. There is no basis in law for relieving the Plaintiffs of their liabilities to any of the Defendants or for extinguishing the Defendants’ in rem rights.
C. Defendant – MP [55] MP claims that it is entitled to the Funds both in contract, including a contractual lien, and pursuant to a maritime lien under s 139 of the MLA.
[56] MP says its contractual claim is based upon the following factors:
a) OW UK acted as agent for Canpotex in purchasing the bunkers;
b) MP contracted under its standard terms and conditions;
c) MP’s standard terms and conditions define “customer” as including “charterer,” which includes Canpotex as charterer of the Vessels; and,
d) MP’s standard terms and conditions provide that a “customer” is liable for all obligations as a vessel owner would be.
[57] MP says these circumstances either lead to a direct contractual relationship, or to a finding that Canpotex is directly liable as principal.
[58] MP’s standard terms and conditions also provide that MP can assert a lien against the vessel or other assets “beneficially owned or controlled” by the customer. The Funds are clearly an asset beneficially owned or controlled by Canpotex. See DC Jackson, Enforcement of Maritime Claims, 4th ed (London: LLP, 2005) [Enforcement of Maritime Claims] at 469. In contrast, OW UK has no lien rights. OW UK did not pay for the maritime bunkers and therefore has no right in rem: Balcan, above.
[59] MP also says that it has a statutory maritime lien in accordance with s 139 of the MLA and that it satisfies all of the statutory requirements: MP is a British Columbia (Canadian) company; the Vessels are foreign vessels; and, the bunkers were supplied to the Vessels for their operation: see Norwegian Bunkers, above, at paras 75, 77-78, 80. As the Funds are meant to replace the property to which the lien attaches, MP has a valid and enforceable maritime lien to the Funds.
[60] MP asserts that whether its valid and enforceable maritime lien is characterized as a special legislative right or as a traditional maritime lien, it ranks in priority relative to any of OW UK’s claims: William Tetley, Maritime Liens and Claims, 2d ed (Montreal: Blais, 1998) at 884-892; Royal Bank of Scotland v Golden Trinity (Ship), 2004 FC 795 at para 111 [Royal Bank of Scotland].
[61] OW UK lacks an in rem claim against the Vessels or any contractual rights against the Funds. In Balcan, the Court found that no in rem right of action with respect to a necessaries claim can arise where the claimant has failed to supply necessaries to a ship (above, at paras 12, 16, 19). Similarly, OW UK has neither paid for nor supplied the bunkers to the Vessels. It is therefore not in the position of a necessaries claimant, and has no in rem right against the Vessels. The same submissions apply to the s 139 maritime lien.
[62] MP’s maritime lien takes priority over any of OW UK’s in personam claims against the Plaintiffs. A maritime lien arises without registration or formality and goes everywhere with a vessel: Holt Cargo Systems Inc v ABC Containerline NV (Trustee of), 2001 SCC 90 at para 26. Even if OW UK had a valid mortgage or right in rem, a maritime lien still ranks higher: Royal Bank of Scotland, above, at para 111.
[63] If OW UK’s claims ranked higher than MP’s claim, which MP denies, then equity dictates that the priorities be re-ordered so that MP is paid and not OW UK. The Court should not depart from the list of priorities except in special circumstances and if necessary to prevent an obvious injustice: Royal Bank of Scotland, above, at para 118. A reordering to prioritize MP’s claim would be appropriate in this case because: MP actually supplied the bunkers; OW UK did not pay for the bunkers; OW UK was only ever supposed to receive a small percentage payment for arranging the supply of the bunkers; OW UK is bankrupt and has no intention of paying MP for the bunkers and any funds they receive will be pooled and paid on a percentage basis; and, MP has a s 139 maritime lien against the bunkers. If OW UK is paid, the Plaintiffs may have to pay twice (once to OW UK through this action, and twice if MP asserts its maritime lien to obtain payment from the Vessels’ owners). MP says that it would also be inequitable to pay the Funds to OW UK because it did not fulfil its obligation to pay for the marine bunkers. A payment to OW UK could result in MP being out-of-pocket for the full value of the bunkers it supplied.
[64] MP also submits that it would be inappropriate for the Court to extinguish its maritime lien before MP is paid in full for the bunkers. The Federal Court has held that the Court has adopted a “fairly discretionary or pragmatic approach on the question and whether or not a maritime lien continues or is revived or is extinguished when security has been put up, is determined according to the facts of each particular case and of the requirements that full justice and equity be applied”: Birchglen, above, at 311. In Birchglen, security was put up and the plaintiff wished to have the maritime lien extinguished. Here, Canpotex has only paid the Funds into Court because it faced competing claims, not as security for MP’s maritime lien. If the Funds are security for the maritime lien, then OW UK has no right to the funds because OW UK has no rights in rem. A maritime lien can only be extinguished upon payment or lapse of time. There is no legal or equitable basis for extinguishing an otherwise valid maritime lien.
D. Canpotex’s Reply [65] Canpotex says that, but for the OW UK bankruptcy, it would have paid the OW UK invoices, OW UK would have paid the MP invoices, and the Receivers would have had a right to the OW UK mark-up. It is only because of the bankruptcy that both the Receivers and MP claim that Canpotex is responsible for full payment under both invoices. The Defendants say that Canpotex can be required to pay for the bunkers twice because the in personam and in rem claims are different. Canpotex says that acceptance of this position leads to an unjust result.
[66] Canpotex first distinguishes the case law that ING relies upon. It says that in Kamil, above, the Singapore High Court said that whatever the difference between in personam and in rem rights may be in accordance with the law of Singapore, it was clear that the Federal Court of Appeal has held that, in Canada, in rem proceedings are mere procedural devices.
[67] Canpotex also distinguishes the Greatorex v Shackle, [1895] 2 QB 249 [Greatorex] case referred to in the Kamil decision. That decision stands for the proposition that an order for interpleader will not be granted if the competing claims arise out of separate contracts: John D Wood & Co v Dantata, [1985] 2 EGLR 44 [Dantata]; LJ Hooker Ltd v Dominion Factors Pty Ltd, [1963] SR (NSW) 146. The Greatorex decision has no application to this proceeding because the subject matter at issue arises from the same chain of supply contracts, not two separate and distinct contracts.
[68] Canpotex also distinguishes the Gulf Petrochem, above, case. It says that the decision was made in the context of two motions to set aside arrests of vessels by physical suppliers. The applicant claimed that there was no privity of contract between the vessel owners and the physical suppliers. The decision turned on the fact that there is no maritime lien for the supply of bunkers in India. In the first motion, the Court found no tortious or statutory liability (such as s 139 of the MLA) and so no basis to arrest the vessel. In the second motion, the Court did not set the arrest aside because there was an arguable case that the owners were privy to the contract. Canpotex says that this does not reflect Canadian law.
[69] Canpotex also says that interpleader decisions based on American interpleader statutes have doubtful utility for the interpretation of the Canadian common law of interpleader. Regardless, Morgan Hill, above, says that the scope of American interpleader has broadened and enlarged to allow interpleader “even though one claimant seeks part of the fund and the other claimant seeks the entire fund amount” and that the “remaining restriction against independent liability is construed so that it is rarely an obstacle to the remedy” (at para 6). Similarly, Farr, above, was decided when the interpleader remedy was restricted and also involved an unusual fact situation. Canpotex says that modern interpleader applies to cases where “two or more persons severally claim delivery of the same property, payment of the same debt or rendering of the same duty, under different titles or in separate interests, from another person, and the latter did not know to which of the claimants he ought to deliver the property, pay the debt or render the duty”: Halsbury’s Laws of England, vol 16, 4th ed (London, UK: Butterworths, 1980) at 666-668.
[70] In Canada, interpleader only requires that a plaintiff be: “a neutral stakeholder with no beneficial interest in the property”; and, be at the risk of two conflicting claims against the fund or property or some parts of it. See Frederick M Irvine et al, British Columbia Practice, 3rd ed (LexisNexis Canada, 2006), rule 10-3 at 2-4 [British Columbia Practice]. The conflicting claims may be for all or some of the funds or property at issue: Reading v School B