Date: 19990324
Docket: T-186-99
BETWEEN:
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 AND ORDER
MR. JOHN A. HARGRAVE, PROTHONOTARY
[1] The motion of Samsara Shipping Corporation, the second high bidder for the Zoodotis, is to set aside an ex parte Order of 22 March 1999 granting the high-bidder, Beheer-en Beleggingsmaatschappij Elrosa B.V., an extra two days to transfer the balance of the purchase price to Vancouver, there having been a transfer error by bankers. Samsara Shipping Corporation, which bid $3,550,000 (US) say they are now prepared to match the high bid of $4,950,000.00 (US). At this point, counsel for the high bidder is in funds and is able to complete.
[2] An ex parte order may be both granted and, on application, set aside, at the discretion of the Court. To set aside an ex parte order there must have been an error of fact or law. It is for the party seeking to set aside the Order to establish a prima facie case why the order ought not to have been made. However, such an order, setting aside an ex parte order, ought not to be made arbitrarily, particularly where there may be substantial prejudice. Here, to set aside the two day time extension would result in the loss of a very substantial deposit made by the high bidder.
[3] The Order for the sale of the vessel sets out a bidding process whereby the successful bidder must pay the purchase price within seven days, failing which the bidder's deposit is forfeited. At that point there are several options. First, the Sheriff may communicate the amount of the highest offer to other offerors with a view to obtaining a higher offer, in essence, a calling for new tenders from a limited set of bidders. Second, any party may request approval of the sale of the vessel "to the second highest bidder should he or she still be willing....". Third, the Sheriff may issue a new tender for bids.
[4] Counsel for Samsara Shipping submits that his client would be entitled to purchase the vessel at $3,550,000 (US), that being above the appraised value, however Samsara Shipping is prepared to offer an amount equal to that of the high bid, and says this comes within the second option of the resale mechanism. However, on the plain wording of the sale order, the second option does not allow the second highest bidder to remake its bid. Rather, the bid might only be remade, in a higher amount, were the Sheriff either to call for higher offers from other offerors, or to put out a new tender for bids.
[5] The question then is whether I ought to give some instruction to the Sheriff to seek new offers or to call for new tenders. That would delay the process and would not be equitable. I have decided to let Beheer-en Beleggingsmaatschappij Elrosa B.V. complete the purchase.
[6] In exercising my discretion, I have taken into account that forfeiture is a drastic event and all the more so when the breech has been an innocent one brought about through a bank transfer problem. The law leans against forfeiture. In my view, the forfeiture provisions in the Sale Order are there to deal with a recalcitrant buyer, one who, after going through the bid process and succeeding, then decides not to complete. Certainly time limits are not made to be ignored, but nor ought they to penalize a bona fide buyer who has run a foul of a bank clerk who cannot cope with a bank transfer.
[7] All things considered, it is proper and in the interests of justice that Beheer-en Beleggingsmaatschappij Elrosa B.V. be allowed to complete the purchase.
ORDER
| The motion is dismissed. |
(Sgd.) "John A. Hargrave"
Prothonotary
Vancouver, British Columbia
March 24, 1999
FEDERAL COURT TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
HEARING DATED: March 24, 1999
COURT NO.: T-186-99
STYLE OF CAUSE: Nedship Bank N.V. et al.
v.
The Ship "Zoodotis" et al.
PLACE OF HEARING: Vancouver, BC
REASONS FOR ORDER AND ORDER
OF MR. JOHN A. HARGRAVE, PROTHONOTARY
dated March 24, 1999
APPEARANCES:
Mr. John Bromley for Samsara Shiopping Corp.
Mr. Peter Bernard for Beheer-en Beleggingsmaatschappij Elrosa B.V.
SOLICITORS OF RECORD:
Bromley, Chapelski
Vancouver, BC for Samsara Shiopping Corp.
Campney & Murphy
Vancouver, BC for Beheer-en Beleggingsmaatschappij Elrosa B.V.