Date: 19980226
Docket: T-2178-96
ACTION IN REM AGAINST THE DEFENDANT
SHIPS "STAR DOVER", "STAR GRAN",
"VERITAS" and "STEPHANIE"
BETWEEN:
FIBRECO PULP INC., FIBRECO EXPORT INC.,
373877 B.C. LTD., EKMAN LEIBIG AB,
ENSO-GUTZEIT OY,
Plaintiffs,
- and -
STAR SHIPPING A/S,
SQUAMISH TERMINALS LTD.,
FURNESS NEOBULK SERVICES b.v.,
DOVER INC., KRAFT LINE AS,
KG STEPHANIEBETEILIGUNGSGES mbH & CO.,
F.S. SWITYNK, and the owners and others interested in the ships
"STAR DOVER", "STAR GRAN", "VERITAS", and "STEPHANIE",
Defendants.
REASONS FOR ORDER
JOHN A. HARGRAVE,
PROTHONOTARY
[1] The Defendants, except for Squamish Terminals Ltd.,1 appear by way of conditional appearances in order to bring motions for stays, in favour of litigation and arbitration, to cancel security as a result of change of ownership of one of the four carrying vessels, the Star Gran, before this litigation was commenced and to contest the way in which the action, which involves carriage of two shipments of wood-pulp from Squamish, British Columbia to Rotterdam and then onward carriage to Finland, has been commenced.
[2] The motions are vigorously contested, for the amounts at stake are large and it may be that if effect were given to the various jurisdictional possibilities the action would become difficult, if not impossible, to litigate either fairly or economically. I turn to some of the relevant background material.
BACKGROUND
[3] The Plaintiffs, Fibreco Pulp Inc., Fibreco Export Inc. and 373877 B.C. Ltd.2 (together referred to as "Fibreco") are joint venturers under the name of Fibreco Pulp at Taylor, British Columbia, where they manufacture wood-pulp. Fibreco provided some 13,000 bales of bleached wood-pulp (the "pulp") to the Plaintiff, Ekman Leibig AB ("Ekman") of Goteberg, Sweden, an exporter and importer of pulp and paper products. The pulp was assembled and stored at the Squamish, British Columbia facility of the Squamish Terminals Ltd. (Squamish Terminals). Ekman shipped the pulp to a buyer, the Plaintiff Enso-Gutzeit OY, a manufacturer of food packaging paper products at Imatra, Finland.
[4] The pulp was shipped by Ekman in two lots out of Squamish, British Columbia, 6,024 bales of pulp aboard the Star Dover, loaded 6 and 7 November 1995 and 7,052 bales of pulp aboard the Star Gran, loaded 3 through 5 December 1995, both ships discharging at Rotterdam.
[5] The transportation from Squamish to Rotterdam was pursuant to a 13 November 1994 contract of affreightment (the "COA") between Ekman as "Shipper" and the Defendant Star Shipping A/S ("Star Shipping") as "Carrier". Star Shipping is said to be of Bergen, Norway, although Star Shipping has a permanent Canadian presence in Vancouver. While Fibreco Pulp Inc. has also signed the COA, as "agreed and approved", I do not take Fibreco Pulp Inc. either to be a party to that agreement or to have the benefit of the arbitration clause therein. Before continuing with the sequence of carriage, I will touch on some of the pertinent portions of the COA and the ownership of the Star Dover and Star Gran.
[6] The COA refers, in clause 3, to an attached Bill of Lading. Apparently no bill of lading was ever attached to the COA, but that may be of no consequence for in the event of conflict between the terms and conditions of the Bill of Lading and the COA, the terms and conditions of the latter are to govern. The Defendants submit the Bills of Lading issued when the pulp was loaded aboard the Star Dover and Star Gran are in the form that was or should have been attached to the COA. This is clearly not the case for section B of the COA requires there be a Canadian clause paramount in the Bill of Lading. No such clause appears in either Bill of Lading
[7] The COA is governed by English law, with any disputes between Ekman and Star Shipping to be arbitrated in London.
[8] Under the COA, Star Shipping arranged for the carriage to Rotterdam to be performed by the Star Dover and the Star Gran, vessels it had under some form of charter. The ships are both Norwegian flagged. The Star Dover is perhaps owned by Dover Inc. of Liberia, or equally possibly by Poseidon Limited of Bermuda, but in either case through Consolidated Services Ltd. of Bermuda, which is the Bermudian office of Liberian Corporate Services Inc. of Reston, Virginia, U.S.A.3 The Star Gran was, when used to transport Fibreco's pulp, owned by the Defendant Kraft Line AS ("Kraft Line") of Panama, but purportedly sold the ship to Gran Inc. of Liberia, the sale documented by, among other paperwork, a Norwegian Saleform dated 22 April 1996 and a Bill of Sale dated 10 May 1996 and notarized by a Japanese Notary, living and practicing in Tokyo. Despite due diligence, the Plaintiffs have been unable to obtain lists of directors from the Liberian corporate registry system, directors their being issued with numbers, not names and addresses. It is interesting to note that while Kraft Line has a Japanese attorney in fact, banks in Japan and has Japanese guarantors, all of the day to day business of Kraft Line is said to be conducted by A/S Billabong, also referred to as Billabong 1994, of Bergen, Norway. To bring matters full circle, the managers of both vessels were and are A/S Billabong, formerly Greig Shipping A/S of Bergen, Norway, Greig being the guarantor of and having the same attorney in fact as Gran Inc. All of the day to day business of Gran Inc. is said to be conducted by A/S Billabong. However, the affidavit material filed as to the places of business of both Kraft Line and Gran Inc. carefully avoids the question of the locations of the actual directing minds of those two shipowners, which locations might well be their principle places of business. It is fortunate that the legal system evolved, long ago, to include an in rem procedure for bringing home liability to such nebulous owners.
[9] I now turn to the Bills of Lading for carriage from Squamish, British Columbia, issued at Vancouver, British Columbia and styled as "Signed for Star Shipping A/S as Carrier by Star Shipping (Canada) Ltd., as Agent", although the reverse of the Bills of Lading provides that the owner of the ship is in fact the carrier. I prefer the signed clear large print statement on the face of the bill of lading that Star Shipping A/S is the carrier, as opposed to fine print in the middle of terms on the reverse indicating the carrier may be an unknown vessel owner. Further, in written argument, counsel for the Defendants (other than Squamish Terminals) submits that the Bills of Lading confirm Star Shipping is the carrier. The carrier, by clause 18 on the reverse of the Bill of Lading purports to extend the benefits and immunities of the Bill of Lading by means of a Himalaya clause to the servants and agents, including the independent contractors, of the carrier.
[10] The Bills of Lading refer to Rotterdam, as the discharge port, but bear the notation "for on carriage to Kotka, Finland". Here I would note that the Bills of Lading issued by Star Shipping for the cargo loaded aboard the Star Dover and the Star Gran are pure ocean through Bills of Lading whereby Star Shipping contracts to carry from Squamish to Rotterdam and onward to Kotka, Finland. That Star Shipping has contracted to carry to Finland is born out by the freight invoices and by Star Shipping's charter of the ships transporting the pulp from Rotterdam to Kotka.
[11] There is a jurisdiction clause in the Bills of Lading in favour of the country where the carrier has its principle place of business:
| 3. Jurisdiction. Any dispute arising under this Bill of Lading shall be decided in the country where the carrier has his principle place of business, and the law of such country shall apply except as provided elsewhere herein. |
This jurisdiction clause is inconsistent with the COA which is the contract between Ekman as Shipper and Star Shipping as Carrier: by its terms the COA governs.
[12] In order to complete its commitment to carry the pulp onward to Kotka, Finland, Star Shipping voyage chartered from Echoship ApS of Svendborg, Denmark, vessels to be nominated and which turned out to be the Stephanie and the Veritas, owned by KG Stephaniebeteiligungsges mbH & Co. (referred to as "Stephanie Co.") and F.S. Switynk, nationalities unknown, but apparently agreeable to being sued in Norway.
[13] The Bills of Lading issued for carriage aboard the Stephanie and the Veritas contain fairly skeletal conditions, each purporting to incorporate the provisions of an unidentified charter party. Neither the Bills of Lading nor the charter party between Echoship ApS and Star Shipping contain any jurisdiction or arbitration provisions.
[14] There is some suggestion that Stephanie Co. and F.S. Switynk ought to have the protection offered by the Kraft Line Bills of Lading issued for carriage aboard the Star Dover and Star Gran by way of the Himalaya clause and thus be able to litigate in Norway or even arbitrate in London as servants, agents or independent contractors of Star Shipping, whom they submit is the carrier under the Star Dover and Star Gran Bills of Lading and who has the right to arbitrate in London under the COA.
[15] When the bales of pulp arrived at Kotka, Finland, they are said to have been delivered damaged, particularly being torn, dirty, crushed, broken, wet and suffering from mould and bacteriological contamination. Security for the damage was given at Vancouver to satisfy any Canadian judgments against the Star Dover and Star Gran: it is clear from covering correspondence that any right to arbitrate in London was reserved. Squamish Terminals has filed a third party notice against the vessel interests.
[16] As to the motions, Star Shipping, Stephanie Co. and F.S. Switynk seek a stay, pursuant to Article 8 of the Schedule to the Commercial Arbitration Act so they may arbitrate in London. Alternately, they seek an order striking out the action as improperly commenced by reason of joinder of two separate causes of action. I have grant the stay. However, in the event that mandatory arbitration between Shipper and Carrier does not settle all of the issues between the parties, leaving matters to be litigated in this action, I have also dealt with the alleged improper joining of causes of action.
[17] Dover and Kraft Line similarly seek a stay on the basis of the possibility of the benefit of a bill of lading jurisdiction clause. They also submit the claim, by containing two separate causes of action, was improperly commenced. Kraft Line, for itself, seeks an order that the in rem claim against the Star Gran be struck out and the security, given to obtain the release of the ship, be returned because the Star Gran was sold after the voyage in question, but before this action was commenced, thus terminating the Court's in rem jurisdiction.
[18] Before turning to a consideration of the motions I would note several pertinent concessions made by the Defendants, notwithstanding that they dispute the Plaintiffs' claim as to damage to the cargo, the cause of the damage and the loss. The concessions are first, subject to the return of the Star Gran's security, the security given at Vancouver will stand in any London arbitration or Norwegian litigation in the event of a stay; and second, any time bar which might be raised in either London or Norway is waived by the Defendants. On the point of the security for the Star Dover remaining in place I would add that on a stay such as this the security in certain circumstances may remain in place: see for example The Rena K, [1978] 1 Lloyd's 545 at 559 and The Tuyuti, [1984] 2 Lloyd's 51 at 63-64.
CONSIDERATION
Onward Carriers and the Himalaya clause
[19] The onward carriers, Stephanie Co. and F.S. Switynk, have no jurisdiction provision or place for suit specified in their Bills of Lading. Nor is there any such provision in their charter with Star Shipping, which is incorporated into their Bills of Lading. Their counsel suggests that these two Defendants, as an alternative to London arbitration, are prepared to litigate in Norway. There is no apparent connection with Norway, other than perhaps the presence of the manager of the Star Gran and Star Dover, for the place of business of the owners, or perhaps the chartered owners, of the Veritas and Stephanie, is Denmark. A trial in Norway would be a hardship on a majority of the parties and would not serve the interests of economic justice.
[20] As I noted earlier, Stephanie Co. and F.S. Switynk submit they have the benefit of the Kraft Line Bills of Lading issued for carriage aboard the Star Dover and Star Gran and thus, by way of the Himalaya clause, are able to litigate in Norway or perhaps even arbitrate in London as servants, agents or contractors of Star Shipping. The question thus is whether Stephanie Co. and F.S. Switynk in fact obtain the benefit of bill of lading clauses by way of the Himalaya clause.
[21] The Federal Court of Appeal in Sears Ltd. v. Ceres Stevedoring Co. Ltd. (The "Tolya Komar") (1989), 88 N.R. 296 at 302-303, refers to the four-part test for obtaining the benefit of immunity provisions by way of a Himalaya clause as set out by the House of Lords in Midland Silicones Ltd. v. Scruttons Ltd., [1962] A.C. 446. In Midland Silicones, at page 474, Lord Reid dealt with the possibility that, through the agency of the carrier, stevedores were entitled to the benefit of bill of lading conditions, or alternatively, that there had been some later ratification by the stevedores of the Himalaya clause thus giving them the benefit of the bill of lading conditions:
| "I can see a possibility of success of the agency argument if (first) the bill of lading makes it clear that the stevedore is intended to be protected by the provisions in it which limit liability, (secondly) the bill of lading makes it clear that the carrier, in addition to contracting for these provisions on his own behalf, is also contracting as agent for the stevedore that these provisions should apply to the stevedore, (thirdly) the carrier has authority from the stevedore to do that, or perhaps ratification by the stevedore would suffice, and (fourthly) that any difficulties about consideration moving from the stevedore were overcome." |
Returning to the Federal Court of Appeal decision in The "Tolya Komar" the Court points out not only that to ratify a clause one must be aware of its existence, but also such ratification must be made within a reasonable time after the contract is made and certainly before the time fixed for commencement of performance by the contracting party (see p. 304). In the present instance, there is neither evidence that the onward carriers from Rotterdam come within the test set out in Midland Silicones nor that there has been any ratification.
Position of Star Shipping
[22] The evidence of Mr. Anthony Roper, of Star Shipping (Canada) Ltd., a wholly owned subsidiary of Star Shipping and the west coast agent for Star Shipping is that transportation of the pulp to Finland was pursuant to the COA, with all freight, including additional freight for onward carriage from Rotterdam to Finland, being invoiced at the times of loading at Squamish.
[23] The arbitration provision in the COA, between Star Shipping and Ekman, is clear:
| "This agreement shall be governed by English Law. Should any dispute arise between the Carrier and the Shipper, the matter in dispute shall be referred to three persons, one to be appointed by each of the parties hereof, and the third party by the two so chosen. Their decision of that of any two of them shall be final, and for the purpose of enforcing any ward [sic], this agreement may be made a rule of the court. Arbitration proceedings shall be conducted in London." |
Article 8 of the Commercial Arbitration Act, chapter 17 of the Revised Statutes of Canada, 1985, enacts the Commercial Arbitration Code as adopted by the United Nations Commission on International Trade Law in 1985. The Code provides a clear and mandatory direction, requiring a court to refer to arbitration any matter which is the subject of an arbitration agreement:
| "(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed." |
Unfortunately, in an instance of non-domestic arbitration, a court has no discretion by which to avoid the potential of a multiplicity of proceedings unless the arbitration clause either comes within one of the exceptions in Article 8(1) of the Code or the arbitration provision does not apply to the dispute at hand.
[24] I will now consider whether the transportation of the pulp falls within the scope of the COA and is thus to be arbitrated. The scope of the COA is set out in the first paragraph as follows:
| "This agreement covers the Shippers total export of Chemi-Thermo-Mechanical Pulp (CMPT) and/or BCTMP supplied by Fibreco Pulp Inc. from its mill at Taylor, British Columbia for shipments from Squamish, British Columbia to ports in Japan, Korea, United Kingdom, Belgium, Germany, the Netherlands, France and Italy as specified herein." |
Events arising from the transportation of the pulp from Squamish to Rotterdam certainly fall within the scope of the COA. The question is whether Ekman and Star Shipping intended the onward carriage, from Rotterdam to a port in Finland to also come within the COA. Certainly ports in Finland are not specifically included within the scope as set out in the COA. However, there is nothing to indicate that such was not the intent of Ekman and Star Shipping and indeed there is the uncontroverted evidence of Anthony Roper, Vice President and General Manager of Star Shipping (Canada) Ltd., that the carriage of the pulp, including from Rotterdam to Kotka, Finland, was arranged pursuant to the COA and was the subject of a common invoice, with Star Shipping chartering the Stephanie and Veritas for that onward carriage. Furthermore, in the case of the Stephanie and the Veritas, their Bills of Lading make it clear both that the goods are in transit from Canada, without customs being cleared at Rotterdam and that the pulp is not to be released not against a Veritas or Stephanie Bill of Lading, but only on presentation of the original Star Gran and Star Dover Bills of Lading. Without doubt, had Ekman and Star Shipping been asked to turn their corporate minds to the agreement covering the onward transportation of the pulp from Rotterdam to Finland, they would have answered that of course the terms of the COA, including the arbitration provision, governed.
[25] It may be inconvenient and uneconomic that the claim of Ekman against Star Shipping be split off from this litigation, in order that it might be arbitrated in London, but those factors do not mean the arbitration provision is, to quote Article 8 of the Commercial Arbitration Code, "... null and void, inoperative or incapable of being performed.". I have no discretion but must stay the claim of Ekman against Star Shipping and refer those two parties to London arbitration. A more interesting question is whether the claim by the Plaintiffs against the balance of the Defendants ought also to be stayed.
Stay in Favour of other Defendants
[26] In Nanisivik Mines Ltd. v. Canarctic Shipping Co. Ltd. (1994), 113 D.L.R. (4th) 536, the Federal Court of Appeal considered a situation in which cargo interests sued the time chartering carriers, together with the owner, the demise charterer and crew members on account of a loss of an entire cargo of ore when the Finnpolaris sank. The voyage charter, between Nanisivik Mines and Canarctic Shipping, contained an arbitration provision. Article 8 of the Code contained in the Commercial Arbitration Act made arbitration between Nanisivik Mines and Canarctic Shipping mandatory. That left at issue what should happen to the co-plaintiff receiver, Zinc Corporation of America and the other defendants. The Federal Court of Appeal decided to stay the entire litigation until the arbitration award had been made for it seemed likely that disposing of the issues between the two parties to the arbitration agreement might, more likely than not, resolve the entire litigation.
[27] In Nanisivik Mines the Court of Appeal pointed out that an agreement to arbitrate disputes under a charter party was not an agreement to arbitrate disputes under a bill of lading where the bill of lading incorporated the charter party (page 545 and following). There the Court put a narrow construction on an arbitration clause relating to disputes under the charter party. Here, the arbitration clause relates to disputes between shipper and carrier in the persons of Ekman and Star Shipping. Star Shipping claims to be carrier to Finland under the Star Dover and Star Gran Bills of Lading, a very likely fact. Now the present litigation is a little more complex than it was in Nanisivik. However, since Star Shipping is clearly the carrier under pure through ocean bills of lading, arbitration between Ekman and Star Shipping may well resolve at least most of the issues.
[28] I cannot force those who are not parties to the arbitration clause in the COA to submit to arbitration. However, in this instance the onward carriers, Stephanie Co. and Switynk wish, as set out as an alternative in their motion, to have a stay to arbitrate in London. I have decided to stay this action for in this instance London arbitration may well resolve the whole claim, except possible that against Squamish Terminals. It is unfortunate that Squamish Terminals may yet face further litigation and the pursuit of its third party remedies in the Federal Court. But a stay pending arbitration between Ekman Leibig AB and Star Shipping A/S, KG Stephaniebeteiligungsges mbH & Co. and F.S. Switynk is preferable either to splitting the claim into less manageable fractions in various jurisdictions or proceeding with arbitration between two parties and with Stephanie Co. and F.S. Switynk, who do not have the benefit of any jurisdiction provisions, remaining parties to active litigation in the Federal Court, for such fragmented claim resolution would be expensive and could well arrive at conflicting results.
Proceedings In Rem Against Star Gran
[29] As I have noted, the Defendants Dover Inc. and Kraft Line agree their security should remain in place to secure the outcome of the London arbitration, subject to a decision of this Court as to the propriety of the in rem claim against the Star Gran. Here the submission is that the ship passed to new owners after the voyage in question, but before this action was commenced. If the sale was bonafide and took place in May of 1996, the in rem claim against the Star Gran would be cut off by section 43(3) of the Federal Court Act. To elaborate, section 43(2) of the Federal Court Act, which provides for in rem jurisdiction to enforce claims against ships, is subject to section 43(3) which, paraphrased, prevents the exercise of various causes of action, including cargo claims, unless when the statement of claim is filed the ship's beneficial ownership has remained unchanged from that when the cause of action arose.
[30] The submission of counsel, on behalf of Kraft Line, is simply put. The claim, which falls within either section 22(h) of the Act, a claim for loss of damage to goods carried in a ship, or section 22(i), a claim arising out of the carriage of goods in a ship, is now beyond the Court's in rem jurisdiction by reason of a legitimate arms length transaction verified by a memorandum of agreement on a Norwegian Saleform, between Kraft Line and Gran Inc. and the subsequent bill of sale. Since the Court was without jurisdiction both over the ship and to issue the warrant, by which the vessel was arrested, and which resulted in the lodging of security to release the vessel, the security should be cancelled and the in rem claim against the Star Gran struck out.
[31] The Plaintiffs say that security ought to be returned only on the discontinuance or dismissal of an action. The Plaintiffs submit such a return of security is analogous to a release of a ship under Rule 1006(2)(e), a release on a discontinuance or dismissal of the action. However, I am satisfied the Court has a residual or implied jurisdiction over its own process: see for example Margem Chartering Co. Inc. v. The Bocsa, [1997] 2 F.C. 1001 at pages 1014 - 1015 and Pawar v. Canada (1997), 132 F.T.R. 44 at 48. Thus, in a proper situation, an arrest may be vacated, the security ordered returned and the action in rem struck out.
[32] The Plaintiffs next submit that the procedure to set aside an arrest and to order security returned is akin to a summary judgment and must be governed by the rules governing summary judgment as set out, for example, in Granville Shipping Co. v. Pegasus Lines Ltd. (1996) 111 F.T.R. 189 at 193. More particularly they submit that summary judgment should only be granted where the case is so doubtful that does not deserve consideration at a future trial and that summary judgment cannot be granted if the necessary facts cannot be found or it would be unjust to do so. The Plaintiffs go on to suggest that the evidence put forward on behalf of Kraft Line is inadequate and unreliable, leaving serious issues that ought to be dealt with at a trial.
[33] The proper course is not to allow a question of ownership, such as the present, to remain to be dealt with at a trial. If an in rem action falls outside of the jurisdiction of a court, here by reason of a lack of continuity of beneficial ownership, the challenge must be made before the party contesting ownership appears unconditionally. Any issue as to irregularity in the issuance of process cannot be pleaded as a defence: were the Defendant, Kraft Line, to appear unconditionally it would have taken to waive any irregularity. Therefore the point must be taken on the present motion and cannot be dealt with as an issue in the trial of the action. This is essentially the reasoning given by Mr. Justice Goff in The I Congreso Del Partido, [1977] 1 Lloyd's 536 at 558-559 (Q.B.). On a motion dealing with the circumstances in which an action in rem may be brought, Mr. Justice Goff pointed out that while evidence will usually be by affidavit, in theory oral evidence, perhaps by cross-examination of deponents of affidavits, might be appropriate but the matter should be dealt with at the motion stage for if there is no jurisdiction a defendant ought not to be troubled with the action at all (ibid page 559).
[34] In the present instance the principles of summary judgment are not all applicable, for it is not a matter of finding that the case is so doubtful that it does not deserve consideration at a future trial, or of denying a decision because the necessary facts cannot be found short of a trial or that it might be unjust to do so. While it would have been helpful had the Plaintiffs cross-examined on one or more of the affidavits filed by the Defendants, I gather that was not done by reason of cost. Thus, I must do the best I can, with the information available, to reach a conclusion.
[35] The issue which, as I have indicated, is dictated by section 43(3) of the Federal Court Act, is whether the beneficial ownership of the Star Gran changed between the time of carriage of Fibreco's pulp and the commencement of the action. The sale agreement, on the Norwegian Saleform, the bill of sale, the commercial invoice, the protocol of delivery and acceptance and the Norwegian Shipping Registries certificate of ownership and encumbrances are certainly prima facie evidence of a change of ownership, a sale by Kraft Line of Panama to Gran Inc. of Liberia. Unfortunately, despite a delay of some 3 months between the filing and the hearing of this motion, there is no first hand evidence from any director of either Kraft Line or Gran Inc. about the transaction, merely production, without comment, of a number of documents and an information and belief affidavit as to the sale, sworn by the managing director of the Norwegian ship managers of the vessel.
[36] It is not, as submitted by counsel for Kraft Line, clear from the evidence that the sale of the Star Gran was at arm's length. Yet the Plaintiffs have raised nothing concrete to show the transaction is less than it purports to be and that a Court should therefore lift the corporate veil in order to examine beneficial ownership. An analysis of this sort of situation should begin with the concept that a registered owner is not a nominal or bare legal owner with a beneficial owner standing behind and indeed, such a concept, without some evidence, is a contradiction: see for example The Evpo Agnic, [1988] 2 Lloyd's 411 at 415 (C.A.) and The Jensen Star (1989) 99 N.R. 42 at 47 (F.C.A.). Certainly, where there is a dispute substantiated by concrete material as to beneficial ownership a Court may, in all instances and in some instances should look behind the registered owner in order to determine beneficial ownership: The Aventicum, [1978] 1 Lloyd's 184 at 187 (Q.B.).
[37] Turning next to the matter of onus it is for the Plaintiff to show the same beneficial ownership of the ship when the claim arose as when the action was commenced: The Aventicum (supra) at 186, The Maritime Trader, [1981] 2 Lloyd's 153 at 157 and The Andres Bonifacio, [1993] 3 SLR 521 at 524 (Singapore C.A.).
[38] The Plaintiffs have not gone beyond speculation as to continuity of beneficial ownership and what one might possibly find on lifting the corporate veil. There is no positive evidence from the Plaintiffs establishing that Gran Inc. is owned beneficially by Kraft Line, or whoever owned the Star Gran in the first place.
[39] In The Looiersgracht, [1995] 2 Lloyd's 411, I referred, at page 414-415 the risk of non-persuasion where facts are particularly within a party's knowledge, referring to The Stavroula, [1987] 1 S.A. 75, a trial decision out of South Africa and to Wigmore on Evidence, 1981 Edition, Vol. IX, s. 2486 in considering whether there ought to be a shift in the burden of proof to a party who presumably has particular means of knowledge enabling him or her to prove something is false. In The Looiersgracht the defendants dealt successfully with the risk of non-persuasion by providing evidence of ownership to show that The Looiersgracht and other vessels were owned by separate limited partnerships, with different partners, thus establishing that a series of one-ship companies were not a sham, but rather had been establish for a legitimate purpose.
[40] In the present instance the Defendant, Kraft Line, might have gone further in explaining the situation by providing first hand evidence to show a change of beneficial ownership. Indeed, had the Plaintiffs been able to muster even a little concrete evidence, Kraft Line would certainly have had to produce additional evidence. As it is I am satisfied, on the affidavit material presented, and of course realizing that it may not be entirely complete, that the beneficial owner of the Star Gran at the time of the carriage of the pulp, when the cause of action arose, is not the same entity that is the present beneficial owner for I cannot ignore the fact that there is really no positive evidence, from the Plaintiffs, establishing continuity of beneficial ownership. While it is a serious matter to strike out an in rem claim and order security be returned, the application of the Defendant, Kraft Line, must be granted, setting aside the in rem proceedings against the Star Gran and requiring a return of the security.
Joinder of Two Claims
[41] The final issue is the propriety of the commencement of the action, for the Defendants, Star Shipping, Stephanie Co. and F.S. Switynk, say that there are two separate causes of action, one involving each of the two shipments of pulp.
[42] The present action claims for similar damage to two consecutive shipments of pulp carried by Star Shipping aboard two different vessels to Rotterdam and then carried further, by two more vessels, to Kotka, Finland. The position of the Defendants, other than Squamish Terminals, is that the Plaintiffs have consolidated two distinct claims in one action without the leave of the Court, referring to Rule 1715(1)(a):
| 1715. (1) Two or more persons may be joined together in one action as plaintiffs or as defendants with the leave of the Court or where |
| (a) if separate actions were brought by or against each of them, as the case may be, some common questions of law or fact would arise in all the actions; ... |
This rule does not require the separate causes of action to have completely common questions of law or fact, but only some commonality. The Defendants submit there are no common legal or factual issues which would allow the two claims to be pursued together and therefore the action should be struck out. At best the Defendants say there should be two separate and distinct actions.
[43] While there are two distinct claims, arising from two shipments of pulp, there are also many common questions of fact and law, catalogued by the Plaintiffs in written and oral argument, including:
| 1. Plaintiffs who are collectively the manufacturer, shipper and receiver of both shipments; |
| 2. Shipment of the same commodity aboard ships of a similar size from Squamish to Rotterdam at roughly the same time of year; |
| 3. Onward carriage aboard two ships, each chartered by the Defendant, Star Shipping; |
| 4. A common transportation agreement, the COA, together with common Bills of Lading for the carriage to Rotterdam and common Bills of Lading and incorporated charters for the carriage from Rotterdam to Kotka; |
| 5. Common management of the Star Dover and Star Gran; |
| 6. At least some similar expert opinion; |
| 7. Common issues of shipboard practice including proper ventilation and protection of the pulp from moisture; |
| 8. Similar legal issues including the duties of Star Shipping as carrier, the effect of the COA and of the Star Shipping Bills of Lading and of the law which applies to each stage of transportation. |
[44] Counsel for the Defendants who provided transportation refers to an Ontario County Court decision, Wessels v. Laviolette, [1972] 1 O.R. 706 involving two automobile accidents, two days apart, both of which caused injury to the plaintiff. The judge found they were two distinct and separate causes of action without any balance of convenience as a reason to allow them to proceed as one action and moreover that it would be difficult, if not impossible, to regulate the handling of payments into court, for if the plaintiff were to accept money paid in by the first defendant, he would deprive himself of any right to claim against the second defendant. The correctness of the Wessels decision is self-evident. There were no common elements, other than that the plaintiff was involved in both automobile accidents. To allow both claims to proceed in the guise of one action would be of no benefit to anyone. The situation is quite different in the present instance.
[45] A more applicable precedent is that of Apotex Inc. and Novopharm Ltd v. Wellcome Foundation Ltd. (1994), 69 F.T.R. 178, a decision of Mr. Justice MacKay of the Trial Division. There the parties sought to join two actions, both involving the same drug, one action alleging patent infringement and the other action alleging patent impeachment, but from different perspectives, the plaintiffs in one action being defendants in the other action. The purpose of the motion was to eliminate duplication in pre-trial preparation, including production of documents and discovery and to prevent duplication in trials and particularly as to the issues of validity and infringement of the patent. Many of the same witnesses and expert witnesses would be called in each trial. Counsel were common to both actions, although they were not in agreement on the consolidation point. Mr. Justice MacKay pointed out that Rules 1714, 1715 and 1716, dealing with joinder of causes of action, joinder of parties and the addition and removal of parties did not specifically provide for the joinder of issues in one action with issues in another where the parties to the two actions are not identical. However, he had no doubt that the Court had an inherent jurisdiction to order proceedings in two such actions to be tried together in a manner that simplified the proceedings and reduced the costs, both for the parties and for the Court, but in doing so the Court should seek a procedure which was to the convenience of the litigants and did not prejudice any of them substantially (page 182). However, in that instance, one action was substantially more advanced than the other, thus the plaintiff in that action ought not to be interfered with or prejudiced by having to wait until the parties brought the second action up to a similar state of readiness. In the result, Mr. Justice MacKay denied the motion for joinder.
[46] In the present instance, there are, as I have pointed out, many factual and legal issues in common in the two claims which ought, sensibly, to proceed as one action. There is no prejudice to anyone in allowing the two claims to proceed in one action and every reason that they ought to proceed in that way, with the result, if the stay were to be removed, of a simplified proceeding at reduced costs of time and money.
CONCLUSION
[47] The present action is stayed, with Ekman Leibig AB, Star Shipping A/S, Dover Inc. and Kraft Line AS to arbitrate in London. I would note again that these Defendants have agreed that they will not raise any time bar argument. The Defendants have also agreed that the security, or at least that which remains, being the security for the Star Dover, will stand as security for that branch of the London arbitration.
[48] The in rem action against the Star Gran, being commenced after an apparent bonafide transfer of the vessel, is dismissed, with the security to be returned.
[49] The claims arising out of the two shipments of pulp from Squamish, British Columbia to Kotka, Finland may proceed in one action.
[50] As there has been mixed success, there will be no award of costs. I thank counsel for the substantial argument and material provided.
(Sgd.) "John A. Hargrave"
Prothonotary
Vancouver, British Columbia
February 26, 1998
FEDERAL COURT TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
HEARING DATED: January 19, 1998
COURT NO.: T-2178-96
STYLE OF CAUSE: FIBRECO PULP INC. et al.
v.
THE SHIP "STAR DOVER" et al.
PLACE OF HEARING: Vancouver, BC
REASONS FOR ORDER OF
JOHN A. HARGRAVE, PROTHONOTARY
dated February 26, 1998
APPEARANCES:
Mr. Doug Schmitt for Plaintiff
Mr. Peter Swanson for Defendant Star Shipping A/S, et al.
Mr. Robert Lonergan for Defendant Squamish Terminals Ltd.
SOLICITORS OF RECORD:
McEwen, Schmitt & Co. for Plaintiff
Vancouver, BC
Campney & Murphy for Defendant Star Shipping A/S, et al.
Vancouver, BC
Russell & DuMoulin for Defendant Squamish Termianals Ltd.
Vancouver, BC
__________________1 The action has been discontinued as against Furness Neobulk Services b.v.
2 The Plaintiff 373877 B.C. Ltd. no longer exists, Fibreco Pulp Inc. being its successor.
3 Any actual Liberian Company registry in Liberia may be a figment, for it has no listed number in Liberia. Moreover, all public documents of the Liberian company, Dover Inc., are with Liberian Corporate Services Inc. in Virginia, U.S.A.