Date: 19990519
Docket: T-32-99
T-38-99
T-119-99
T-186-99
BETWEEN:
T-32-99
THE ROYAL BANK OF SCOTLAND plc.,
Plaintiff,
- and -
THE OWNERS AND ALL OTHERS INTERESTED
IN THE SHIP "GOLDEN TRINITY" AND
GOLDEN MARITIME INC.,
Defendants.
AND BETWEEN:
T-38-99
THE ROYAL BANK OF SCOTLAND plc.,
Plaintiff,
- and -
THE OWNERS AND ALL OTHERS INTERESTED
IN THE SHIP "KIMISIS III" AND
MADONNA NAVIGATION (MALTA) LIMITED,
Defendants.
AND BETWEEN:
T-119-99
THE ROYAL BANK OF SCOTLAND plc.,
Plaintiff,
- and -
THE OWNERS AND ALL OTHERS INTERESTED
IN THE SHIP "YPAPADI" AND
YPAPADI MARITIME INC.,
Defendants.
AND BETWEEN:
T-186-99
NEDSHIP BANK N.V. PREVIOUSLY KNOWN AS
NEDERLANDSE SCHEEPSHYPOTHEEKBANK N.V.,
Plaintiff,
- and -
THE OWNERS AND ALL OTHERS INTERESTED
IN THE SHIP "ZOODOTIS" AND
ZOODOTIS NAVIGATION INC.,
Defendants.
REASONS FOR ORDER
MR. JOHN A. HARGRAVE,
PROTHONOTARY
[1] The motion from which these reasons arise dealt with default judgments, various procedural matters leading to determination of priorities among lien claimants and with payment out of portions of the sale proceeds that are surplus to the requirements of lien claimants. These reasons deal with the payment of surplus funds to the Plaintiffs, substantial banks with large secured claims by way of mortgages, payment being made before both proof of a number of in rem claims and a determination of their priorities. More specifically the reasons deal with an issue of law raised, by letter to the Court from counsel for one of the lien claimants, after I had made my Order as to payments out to the Royal Bank of Scotland plc. in three instances and to Nedship Bank N.V., (collectively called the "Banks"), in open Court and after a full hearing.
[2] Counsel for the lien claimant who raises the issue felt that Plaintiffs' counsel had misinterpreted one of two cases during argument, an interpretation with which lien claimant's counsel only later came to question.
[3] The two cases are first, Holt Cargo Systems Inc. v. The Brussel, [1997] 3 F.C. 187 (T.D.) and second, Textainer Equipment Management B.V. v. Baltic Shipping Company, [1995] 2 F.C. 609 (T.D.). When counsel for the Plaintiffs referred to these two case I was aware of some of the background to the litigation in each instance, of a good portion of the relevant facts, and of the outcomes. Counsel for the questioning lien claimant now submits that, on the basis of the Holt case, I ought not to have made early payments out of surplus funds to the Banks. However the two cases are very different, Holt not really being concerned with early payment out, except to the extent of recounting an earlier order, while Textainer was concerned with early payment out to a secured creditor and the basis on which that might be done.
[4] To elaborate, in Holt the plaintiff obtained default judgment for a provisional amount, with a mechanism for challenge of that amount. There was such a challenge. At issue then was ranking and the interplay of jurisdictions between, on the one hand, the Quebec Superior Court sitting in bankruptcy and an off-shore trustee in bankruptcy, and on the other hand, the Federal Court's maritime jurisdiction as applied to secured creditors, including the claims of a large number of secured claimants in the guise of maritime lien holders. While there had been, in effect, a provisional order for early payment out to Holt Cargo Systems Inc., there were a number of issues to resolve before that payment out might properly and safely be made.
[5] In contrast, in Textainer, the Court believed, mistakenly as it turned out, that an early payment out, before advertising for lien claimants, would prejudice no one as substantial money would remain to satisfy any possible claimants. In the Textainer case, Textainer Equipment Management B.V. was a secured creditor, but not a judgment creditor and it received, in effect, an advance on its share of the sale proceeds. Key to the difficulty in which the Court found itself, in Textainer, was incorrect information, or perhaps some lack of disclosure, and the fact that a search for lien claimants had not been completed.
[6] In the present instance, the Banks are secured creditors. The advertising and search for lien claimants has long been completed. Clearly there are surplus funds available, even after payment of all the lien claimants who have filed claims, even assuming that they are all able to prove their claims, together with an ample reserve for costs and interest. If this were not enough the mortgagees, the Banks, judgment creditors, albeit for as yet undetermined amounts, the mortgage security being for many millions of dollars, have undertaken to return their advances, or a portion of their advances, should the completely unexpected occur.
[7] In short, no one will either be prejudiced or jeopardized by the advances of surplus funds to such judgment creditors. There is no point in having surplus funds languish in an account, even in an interest bearing account, when they might properly be paid to and used more productively by the judgment creditors. Thus the Orders for early payment out of surplus sale proceeds, as an advance, to the Banks as judgment creditors.
(Sgd.) "John A. Hargrave"
Prothonotary
Vancouver, British Columbia
May 19, 1999
FEDERAL COURT TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
HEARING DATED: May 18, 1999
COURT NO.: T-32.99, T-38-99, T-119-99, T-186-99
STYLE OF CAUSE: The Royal Bank of Scotland plc.
v.
The Ship "Golden Trinity" et al.
PLACE OF HEARING: Vancouver, BC
REASONS FOR ORDER OF
MR. JOHN A. HARGRAVE, PROTHONOTARY
dated May 19, 1999
APPEARANCES:
Mr. Peter Bernard for Plaintiffs
| Mr. Vincent Prager for Unitor ASA, Crescent Towing & Salvage Co. Inc. and Alliance Grain |
Mr. Greg Blue for United Maritime Suppliers
Mr. Jack Buchan for Trans-Oceanic Shipping Co. Ltd.
| Mr. Michael Bird for Texaco International Trader Inc. and Marine Marketing LLC |
Mr. D. G. Morrison for Sun N Sea Trans Inc. et al.
Mr. Glenn Morgan for Tramp Oil & Marine Inc.
Mr. Robert Margolis for Proios Maritime Inc.
Me. Louis Buteau for Calogeras Marine Inc.
Mr. Michael Seed for Naftiko Apomahiko Tameio
SOLICITORS OF RECORD:
Campney & Murphy
Vancouver, BC for Plaintiffs
Stikeman, Elliot
| Montreal, PQ for Unitor ASA, Crescent Towing & Salvage Co. Inc. and Alliance Grain |
McEwen Schmitt
Vancouver, BC for United Maritime Suppliers
Cohen Buchan Edwards
Richmond, BC for Trans-Oceanic Shipping Co. Ltd.
Owen Bird
| Vancouver, BC for Texaco International Trader Inc. and Marine Marketing LLC |
Bull, Housser & Tupper
Vancouver, BC for Sun N Sea Trans Inc. et al.
Davis & Company
Vancouver, BC for Tramp Oil & Marine Inc.
Giaschi, Margolis
Vancouver, BC for Proios Maritime Inc.
Sproule, Castonguay, Pollack
Montreal, PQ for Calogeras Marine Inc.
Marinakas & Ferbers
Vancouver, BC for Naftiko Apomahiko Tameio