Date: 19990811
Docket: T-1041-95
MONTREAL, QUEBEC, THIS 11th DAY OF AUGUST, 1999
Present: RICHARD MORNEAU, ESQ., PROTHONOTARY
AN ACTION IN REM AGAINST THE SHIP KRISTINA LOGOS, ULYBEL ENTERPRISES LIMITED, JOSE PRATAS, and THE OWNERS, CHARTERERS AND OTHERS INTERESTED IN THE SHIP KRISTINA LOGOS
BETWEEN:
MARIO NEVES AND CARLOS NEVES,
Plaintiffs,
AND
THE SHIP KRISTINA LOGOS,
ULYBEL ENTERPRISES LIMITED,
JOSE PRATAS, and THE OWNERS,
CHARTERERS AND OTHERS INTERESTED
IN THE SHIP KRISTINA LOGOS,
Defendants,
AND
HER MAJESTY THE QUEEN,
Intervener.
ORDER
1.Two points still outstanding mean that the collocation plan set out below cannot in practice be implemented before these points are settled.
2.The first of these points is the taxation of costs relating directly to the sale of the ship.
3.The second point is the possible variance by the courts of the size of the forfeiture awarded to the Crown on this day, a forfeiture which for the moment stands at around $50,000.
4.Then, subject to settlement of the two aforementioned points, the proceeds of the sale of the Kristina Logos will have to be distributed in the following numerical order of priority:
(1)to the Crown, costs relating directly to the sale of the Kristina Logos;
(2)to the Crown, the $50,000 forfeited as a result of the conviction of Ulybel;
(3)49 % of the remainder of the proceeds of sale to be distributed to the Neveses;
(4)the remainder, 51 %, to be distributed as follows:
(a)$125,000 to Clearwater, representing its mortgage;
(b)$120,000 to the Crown, representing the fine imposed on Ulybel;
(c)the balance to go to Ulybel and Pratas.
Each of the amounts mentioned in the principal points 3 and 4 above shall carry accumulated interest proportionally.
As the motion at bar represents a common effort by all the claimants, no costs will be awarded on it.
Richard Morneau 
Prothonotary
Certified true translation
Bernard Olivier, LL. B.
Date: 19990811
Docket: T-1041-95
AN ACTION IN REM AGAINST THE SHIP KRISTINA LOGOS, ULYBEL ENTERPRISES LIMITED, JOSE PRATAS, and THE OWNERS, CHARTERERS AND OTHERS INTERESTED IN THE SHIP KRISTINA LOGOS
BETWEEN:
MARIO NEVES AND CARLOS NEVES,
Plaintiffs,
AND
THE SHIP KRISTINA LOGOS,
ULYBEL ENTERPRISES LIMITED,
JOSE PRATAS, and THE OWNERS,
CHARTERERS AND OTHERS INTERESTED
IN THE SHIP KRISTINA LOGOS,
Defendants,
AND
HER MAJESTY THE QUEEN,
Intervener.
REASONS FOR ORDER
RICHARD MORNEAU, PROTHONOTARY
Introduction
I. This motion asks this Court to divide the proceeds of the sale of the ship Kristina Logos between four claimants.
II. The motion was made by the plaintiffs pursuant to Rule 491 of the Federal Court Rules (1998) ("the Rules") further to an order by this Court dated December 18, 1996 ordering that the ship be sold. The motion is also made pursuant to an order of this Court dated December 19, 1997 directing a full trial which would allow each claimant, following the sale of the ship on May 15, 1997, to submit complete evidence of his claim against the $605,000 realized by the sale of the Kristina Logos.
III. To understand the analysis of the essential points indicating the position taken by each claimant on his claim, and those of other claimants which might affect his situation, the Court needs to review the following facts.
Background
IV. The four claimants at bar are the following:
I.the intervener, Her Majesty the Queen ("the Crown");
II.Clearwater Fine Foods Inc. ("Clearwater");
III.the plaintiffs in the case at bar, Mario Neves and Carlo Neves ("the Neveses");
IV.the defendants in the case at bar, Ulybel Enterprises Limited and Jose Pratas ("Ulybel and Pratas").
V. The facts determining the precedence of these claimants will emerge in the following review of the main facts, and in the subsequent analysis of each claim.
VI. We may begin this review at February 3, 1992.
VII. On or about that date, Pratas purchased the Kristina Logos from a predecessor of Clearwater. The balance of the selling price was reflected in a promissory note of $250,000 due on May 1, 1992. This balance was also secured by a first maritime mortgage. It is on the basis of this mortgage that Clearwater claimed that an amount of $125,000 was still owed to it by Pratas from the initial balance of $250,000. To that amount Clearwater added interest of $58,642 which it calculated from the time the balance was in practice due, on May 3, 1992, until approximately the date when the motion at bar was heard.
VIII. On April 2, 1994 the Kristina Logos were seized by the Crown together with the fish on board pursuant to s. 51 of the Fisheries Act, R.S.C. 1985, c. F-14, as amended ("the Act"), on the ground that the ship had been used in the commission of an offence under the Act. A few days later the master of the ship, Antonio Tavares, Pratas as director of Ulybel and the latter corporation as owner of the ship were also charged with various offences under the Act.
IX. On April 5, 1994 Clearwater brought an action against Ulybel and Pratas in this Court in case T-799-94 seeking reimbursement of the aforementioned balance on the selling price. Clearwater at the same time proceeded to place an arrest on the Kristina Logos.
X. On July 27, 1994 Capt. Tavares was convicted of the offences with which he was charged and the Kristina Logos was at the same time forfeited to the Crown. This conviction and the forfeiture of the ship stood until September 9, 1996, when the Newfoundland Court of Appeal reversed this verdict and quashed the forfeiture, thus placing the ship under a simple seizure by the Crown.
XI. On or about October 28, 1994 the fish on board the ship was sold and the proceeds of this sale, amounting to $58,989.34, was forfeited to the Crown.
XII. On May 23, 1995 the Neveses brought the action in the case at bar against Ulybel and Pratas.
XIII. By their action the Neveses asked that they be recognized as holding a 49 % ownership interest in the Kristina Logos. This 49 % interest was justified by the fact that the Neveses allegedly contributed 49 % of the purchase price and cost of repairs of the ship, while Pratas contributed 51 %. This 49 % interest was to be translated by the awarding to the Neveses of 49 % of the shares in Ulybel: Pratas would hold 51 % of the shares. Ulybel was allegedly created by Pratas to serve as registered owner of the ship and to hold the Kristina Logos on behalf of two groups of owners. As the Neveses continued to receive no formal and official recognition of their interest in the ship, and as the ship was seized by the Crown on April 2, 1994, the Neveses brought an action against Pratas and Ulybel to secure their position in any event.
XIV. In the argument in this Court Ulybel and Pratas, in challenging the validity of the claims by Clearwater and the Crown, asked that the proceeds of sale of the ship, with the interest subsequently accumulated, be divided by giving them 51 % and the Neveses 49 %, less costs, which they submitted should be equitably borne by the Neveses in proportion to their interest as owners of the ship. It should be noted that Ulybel and Pratas admitted that the Neveses have a 49 % interest in the Kristina Logos. However, they argued that because of that interest the Neveses should now contribute their fair share of the costs incurred by Ulybel and Pratas to defend the ship in the various court proceedings and in their own defence, namely that of Ulybel and Pratas, in prosecutions brought under the Act. Ulybel and Pratas accordingly argued that the Neveses' 49 % interest in the ship, an interest which now applies to the proceeds of its sale, should be reduced by an amount corresponding to the proportional share of the Neveses in these costs.
XV. The prosecutions against Ulybel under the Act began on November 28, 1996. Ulybel was subsequently (on July 2, 1997) ordered to pay a fine of $120,000 and the Newfoundland Supreme Court further ordered, inter alia, forfeiture to the Crown of $50,000 from the proceeds of the sale of the Kristina Logos. This decision by the Newfoundland Supreme Court was appealed. The Crown apparently filed a cross-appeal as to the limited size of the award and the matter is currently before the Newfoundland Court of Appeal.
XVI. On December 6, 1996 Russell J. of the Newfoundland Supreme Court dismissed a motion by Ulybel and Pratas, seeking essentially a ruling that the Crown, because of its statutory obligations regarding preservation of the ship following the seizure of April 2, 1994, could not apply to the Federal Court for an order by that Court for sale of the ship.
XVII. On December 18, 1996 the Court by order authorized the Crown to intervene in the action at bar and allowed the latter's motion for an order that the Kristina Logos be sold. This decision was affirmed at trial on February 4, 1997 and the appeal against the decision was dismissed. In December 1996 this Court agreed that the ship should be sold since the costs incurred to date and those which the Crown would incur to maintain and preserve the ship while under seizure were significant and would probably continue to increase.
XVIII. On May 15, 1997 the Court approved the sale of the Kristina Logos for the sum of $605,000.
Analysis
XIX. The question now is as to the validity of each claim, and most importantly, what priorities should be given to the claims by the Crown and Clearwater.
XX. I do not intend in this analysis to review and discuss all the points which the various claimants may have made in support of their claims or in opposition to others' claims.
XXI. Furthermore, it is of course clear that in determining a collocation plan such as the present one, each claimant has a definite interest in weakening not only the position of claimants which may potentially have priority over himself, but also those at the same level as himself, since in the latter case it appears from the allegations of the claimants in general that the division should be made in proportion to their respective claims.
I.The Crown's claim
XXII. The Crown's claim includes several parts that must be dealt with separately. It covers:
(a)costs relating directly to the sale of the ship;
(b)the $50,000 forfeited following the conviction of Ulybel;
(c)an amount of $359,043.69 incurred by the Crown for the care and preservation of the ship between April 5, 1994 and the judicial sale of the ship;
(d)an amount of $120,000, representing the fine imposed on Ulybel.
(a)Costs relating directly to sale of the ship
XXIII. It appears that these costs are still to be taxed. They are therefore not yet liquidated. They result in particular, if not entirely, from this Court's order on May 15, 1997 approving the sale of the Kristina Logos.
XXIV. To my mind there is no doubt that these costs should be regarded as costs custodia legis. Once taxed, therefore, they should be paid before any other claim.
XXV. There is no basis in the case at bar for the Court to vary the award of these costs to the Crown, as requested by Ulybel and Pratas, by making an order to the opposite effect or even by the making of a "bullock" type order.
(b)The $50,000 forfeited following the conviction of Ulybel
XXVI. This amount must also be paid to the Crown with priority and its payment must follow that of the costs of sale. It is important that this amount be paid with priority, not as suggested by the Neveses that it be deducted from any amount accruing to Ulybel and Pratas following the distribution.
XXVII. It appears that this forfeiture is currently pending in the Newfoundland Court of Appeal. Its size, whether more or less, is thus possibly subject to change. Any change in this regard will thus have an impact on whatever remains to be distributed to the claimants. That is why - and all the claimants appeared to agree with this - the order accompanying these reasons will provide inter alia that the distribution it contains shall take place only after the possible variance by the courts of the size of the award so far made to the Crown.
(c)The sum of $359,943.69 incurred by the Crown for the care and preservation of the ship between April 5, 1994 and the judicial sale of the ship
XXVIII. Counsel for the Crown admitted that the sum of $15,850.74 in GST should be deducted from this amount. This leaves us with the sum of $343,192.95 claimed by the Crown from the proceeds of the sale of the Kristina Logos.
XXIX. The Crown argued essentially that not only did these costs give rise to a claim in rem, but because of their nature they should be treated as costs custodia legis. The other claimants objected vigorously to these arguments. In particular, Ulybel and Pratas maintained that the Crown should not receive anything in this Court because, by seeking to have the ship sold, the Crown contravened the spirit of the various provisions of the Act which require it to preserve the ship, or any other non-perishable property, following a seizure as a trustee until the ship is forfeited to it or can be returned to its owner.
XXX. I do not intend to dwell on this argument at any length. By an order dated December 18, 1996 this Court agreed that the Kristina Logos would be sold in this Court at the Crown's request and that order has become res judicata. Further, Russell J. of the Newfoundland Supreme Court refused to find that the Court could not act as it did. I therefore do not intend to apply this argument against any award to the Crown.
XXXI. It was also argued for the claimants that s. 71.1(1) of the Act means that any compensation which the Crown might obtain as a result of seizure of the ship should come from the courts covered indirectly by that subsection, namely the Newfoundland Provincial or Supreme Courts, and not this Court. That subsection reads as follows:
71.1 (1) Where a person is convicted of an offence under this Act, the court may, in addition to any punishment imposed, order the person to pay the Minister an amount of money as compensation for any costs incurred in the seizure, storage or disposition of any fish or other thing seized under this Act by means of or in relation to which the offence was committed.
(My emphasis)
71.1 (1) Le tribunal qui déclare une personne coupable d'une infraction à la présente loi peut, en sus de toute autre peine infligée, ordonner au contrevenant d'indemniser le ministre des frais engagés dans le cadre de la saisie, de la garde ou de l'aliénation du poisson ou des objets saisis qui ont servi ou donné lieu à la perpétration de l'infraction.
XXXII. Referring solely to the English wording of this subsection, the Crown argued that it could not apply to the long-term seizure of a ship since if the word "seizure" had such a meaning Parliament would not immediately thereafter have used the word "storage". In the Crown's submission, it is this word "storage" which potentially covers the long-term custody of property. In the Crown's submission, it can be seen from reference to various English definitions of the word "storage" that it covers not ships but property which may be placed or kept in a warehouse. However, we can see from looking at the French wording of the same subs. 71.1(1) the words "de la saisie, de la garde . . . des objets saisis". The English word "storage" has been rendered by the word "garde" in French. The Crown did not succeed in establishing that the word "garde" could not cover the maintenance or even long-term custody of the Kristina Logos.
XXXIII. In my opinion, it is this version of s. 71.1(1) which should prevail, since it does not contradict the English version of the provision but permits an interpretation of the latter which is consistent with the content of s. 12 of the Interpretation Act, R.S.C. 1985, c. I-21 (Opetchesaht Indian Band et al. v. Canada et al. (1997), 211 N.R. 241, paras. 72 and 73).
XXXIV. Accordingly, even if the Crown could apply to this Court for an order for the sale of the Kristina Logos to determine the costs which it incurred in caring for or preserving the ship, it cannot as I read s. 71.1(1) of the Act apply to this Court for reimbursement of those costs. In the case at bar, it must seek that reimbursement from the Newfoundland courts.
XXXV. Moreover, even if I had concluded that s. 71.1(1) of the Act did not apply to the costs under review and that those costs could be claimed in this Court, I would still have concluded that they could not be given custodia legis priority.
XXXVI. The Crown incurred the aforementioned costs in pursuing its own ends under the Act. The Crown did not find itself responsible for managing the care of the Kristina Logos because of the arrests of the ship in this Court. The duty of such care fell to it because of the provisions of the Act. Accordingly, it is the provisions of the Act, and not the involvement of this Court, which initiated the process.
XXXVII. It appeared that shortly after the date of the seizure, April 2, 1994, everything was complete for the trial of Capt. Tavares to take place. As mentioned above, on July 27, 1994 he was convicted and from that date until September 9, 1996 (that is, barely two months before the Crown applied to this Court to have the ship sold), the Kristina Logos was forfeited to the Crown.
XXXVIII. It can thus be argued that at all relevant times the Crown dealt with the ship pursuant to the Act. What is more, from July 27, 1994 to September 9, 1996 it was responsible for care of the Kristina Logos as owner of the ship. This means that during that period the Crown certainly was in charge of caring for the ship but not with the intention and for the purpose of benefitting all the creditors, but clearly with a view to protecting its property. The cost thus incurred by the Crown were not incurred in order to create a common fund for all claimants.
XXXIX. Until September 9, 1996, as the Crown held forfeiture of the ship it did not have to be concerned with ensuring priority payment in the Federal Court of its expenses. However, when the forfeiture collapsed the Crown's position changed. To ensure that its expenses would be given priority in the event of such an untoward development, the Crown could and should on or about April 5, 1994 - at the time of the first arrest of the Kristina Logos - or in the weeks following the arrest when it became clear that the ship would not be released on bail, have applied to this Court to have all its past and future expenses seen and determined as expenses amounting to those of the sheriff. In this way, as counsel for Neves put it in his written submissions:
All potential claimants against the Vessel would then have known that the ongoing care and maintenance expenses would be depleting the fund from which their claims could be satisfied. As well, the expenses incurred would then have remained subject to Court scrutiny over the course of the period the Vessel remained under seizure and under Federal Court arrest. However, rather than taking such steps which, in the words of the "Alexandros G. Tsavliris" case, "would have enabled other claimants including the plaintiff to most effectively protect their interests", the Crown incurred the claimed expenses without any consultation with other parties or claimants and without any notice that it would subsequently seek to claim these costs in custodia legis, until it commenced steps to arrange judicial sale of the Vessel.
XL. In short, as the same counsel noted:
... in incurring these expenses over a number of years while seeking forfeiture of the Vessel, the Crown took its chances that those expenses would be rewarded upon forfeiture of the Vessel to it.
XLI. It is true that the costs incurred by the Crown ultimately benefitted all the claimants. However, in view of the foregoing reasons it is feasible to apply to the Crown the following observations of this Court in Banco Do Brasil S.A. v. Ship Alexandros G. Tsavliris et al. (1993), 68 F.T.R. 284, at 290:
While I have some sympathy for the position of Fraser Surrey which unquestionably provided services to the defendant Ship that accrued to the benefit of the plaintiff as well as other claimants against the proceeds of sale of the defendant Ship, I am not satisfied that Fraser Surrey acted through the period of time that the defendant Ship was under arrest, and indeed later, in a reasonable and prudent way that would have enabled other claimants including the plaintiffs to most effectively protect their interests.
XLII. For the foregoing reasons, I also cannot see any special circumstances favouring the Crown - within the meaning of The Montreal Dry Docks and Ship Repairing Company v. Halifax Shipyards, Limited, [1920] S.C.R. 359, and Llido v. the Vessel "Lowell Thomas Explorer", [1980] 1 F.C. 339 - or apply legal institutions such as equity or unjust enrichment to grant the priority sought by the Crown.
XLIII. Nevertheless, notwithstanding the foregoing, even if I had concluded that s. 71.1(1) of the Act did not cover the Crown's costs in the amount of $343,192.95 (see paras. 32 to 34, supra) and that accordingly those costs could be claimed in this Court, I would still have allowed these costs of $343,192.95 as a simple debt in rem. In this connection, I maintain the position I took in my decision of December 18, 1996 (see Neves v. Ship Kristina Logos et al. (1996), 124 F.T.R. 167, at 171, paras. 27 and 28).
(d) An amount of $120,000 representing the fine imposed on Ulybel
XLIV. As mentioned above in para. 15, on July 2, 1997 Ulybel was ordered to pay a fine of $120,000.
XLV. The Crown claimed this amount as an ordinary creditor. Accordingly, the claim has no priority in this regard.
XLVI. However, the question that arises is whether the Crown can claim this amount against the proceeds of the sale of the Kristina Logos. I think it can. In this connection, I entirely agree with counsel for the Crown that this order against Ulybel can be executed against any of the latter's property, which includes the ship or its proceeds of sale.
XLVII.A special question arises here. Should this amount of $120,000 owed to the Crown be collocated pro rata in the same rank as the claims of other ordinary creditors or, as suggested by Neves, should it be taken from amounts which would accrue to Pratas and Ulybel as part of their 51 % interest in the ship? Of course, if the amount is not taken from the 51 % of Pratas and Ulybel its collocation will affect the amount due to Neves as part of their 49 % interest.
XLVIII. I have come to the conclusion, on the weight of the evidence in the record, that this fine of $120,000 imposed on Ulybel should be paid from the amounts which would be due to Pratas and Ulybel.
XLIX. Although it must be borne in mind that the Neveses also hold a 49 % interest in a Portuguese corporation known as Marqueirpesca Lda. and that it is this entity which was operating the Kristina Logos under a bareboat charter-party at the time it was seized by the Crown, the fact remains that the Neveses did not actually have any involvement in the ship's activities. In this connection I adopt the following written submissions by the Neveses:
The Plaintiffs have faced no charges in the Newfoundland courts and, as deposed in their Affidavits, it was Mr. Pratas who was responsible for the direction of the Vessel's fishing activities and its administrative affairs, including registration, the maintenance of applicable certificates, and liaison with appropriate government authorities. Messrs. Neves had no involvement with these matters and, until the Vessel was seized by Canadian fisheries authorities, they believed that it was registered in Panama. They had no knowledge of it being registered in Canada or information that could have led them to conclude that it was registered in Canada. As indicated in the decision of the Newfoundland Supreme Court convicting Ulybel, Mr. Pratas' involvement in and knowledge of the Vessel's Canadian registration was a prerequisite to the conviction of Ulybel, while the Vessel's Master, Captain Tavares, was acquitted of similar charges on the basis that he reasonably and honestly believed that the Vessel was Panamanian.
II.Clearwater's claim
L. The background to Clearwater's claim has already been indicated in outline in para. 7 of these reasons.
LI. Pratas and Ulybel tried to establish in evidence that they owed nothing to Clearwater since the amount of $125,000 claimed by Clearwater had been largely offset by monies owed by Clearwater to Pratas and Ulybel.
LII. According to Pratas and Ulybel, from February to May 1992 Pratas chartered the Kristina Logos to Clearwater so the ship could participate in an experimental shrimp fishing project in Guinea-Bissau, a West African country. The cost of this charter was allegedly $250,000. The project also involved expenses of $79,403.38 owed to Pratas by Clearwater.
LIII. However, in support of an affidavit by Clearwater's president dated March 2, 1998 Clearwater attached, as Exhibit A, a letter dated September 18, 1992 - and thus a letter which was subsequent to the period of the charter-party from February to May 1992 - in which Pratas still acknowledged that it owed Clearwater the sum of $225,000. In my assessment of the evidence submitted by either side, this letter of September 18, 1992 is most significant and must be a basis for discounting the alleged existence of debts previously contracted by Clearwater to Pratas.
LIV. I am also unable to accept in this connection the allegation against Clearwater that it and its counsel admitted in July 1997 that money was actually owed to Pratas by Clearwater under the 1992 charter-party. This allegation is contained in an originating motion which Clearwater apparently made in the Newfoundland Supreme Court to obtain an order under s. 75(4) of the Act that its rights were not affected by the forfeiture ordered on July 2, 1997.
LV. This motion was not entered in evidence either by Clearwater or indeed by Pratas and Ulybel. It is the Crown which attached this pleading to its claim record. In fact, counsel for Pratas and Ulybel objected to this document being used by the Crown in argument. Finally, as can be seen this motion was filed in a proceeding other than the one at bar.
LVI. At the same time, I consider that Clearwater holds a valid mortgage and that it is not possible to consider, as Pratas and Ulybel argued, that on October 14, 1992 this mortgage ceased to exist for all practical purposes because of the fact that a portion titled "Memorandum of its Discharge" on the back was completed by the holder of this mortgage.
LVII. It is clear from the explanations given by Clearwater in this Court and from the typed text on the back of this mortgage, under the heading "Transfer of Mortgage", that the holder at the time, Hillsdown International Limited, had never really carried out this "Discharge" as Pratas had not paid its balance, except for an amount of $100,000 received from a third party some time afterwards.
LVIII. A balance of $125,000 is thus still owing to Clearwater under its mortgage.
LIX. However, applying the submissions of Pratas and Ulybel in this respect, it can be seen that both the demand note and the mortgage do not provide for the payment of interest in the event of non-payment on the due date. This is the law of the contract which the parties have settled between themselves and the Court sees no sufficient reason in the case at bar for modifying this situation in equity so as to award interest to Clearwater. Between May 1992 and April 2, 1994 Clearwater did not establish whether it had taken steps to recover its debt. After April 2, 1994 many factors combined to delay payment of the debt. Pratas and Ulybel are not responsible for all these factors.
LX. The sum of $125,000 is thus payable to Clearwater.
LXI. Should this amount now be paid with priority, that is before the money owed to the Neveses and to Pratas and Ulybel, or should it be taken, like the $120,000 fine, from the amounts which might accrue to Pratas and Ulybel?
LXII. For reasons similar to those which applied in respect of the said fine, I consider that Clearwater should be paid with priority from the amounts accruing to Pratas and Ulybel. I entirely concur with counsel for the Neveses when he indicated, in paragraph 20 of his written submissions, that:
As set out in the reply Affidavits of the Neves brothers, when they contributed the sum of $512,750 to the purchase and repair of the Vessel, representing 49% of the cost of such purchase and repair, they understood and believed that Mr. Pratas was contributing the remaining 51% by way of cash. Mr. Pratas did not advise them that any portion of the purchase price of the Vessel or the later costs of repairs was being financed by means of a promissory note in favour of Peche Nordique Incorporated or a mortgage upon the Vessel. Messrs. Neves had no knowledge of the promissory note or the mortgage prior to the seizure of the Vessel by Canadian fisheries authorities in 1994, and at no time did they authorize, consent to, or acquiesce in the mortgage of the Vessel by either Mr. Pratas or Ulybel.
LXIII. In light of the amounts which will eventually accrue to Pratas and Ulybel under the division, I feel that Clearwater may thus be paid without prejudicing its rights as the holder of a mortgage.
III. The Neveses' claim
LXIV. Along with Clearwater, we have seen in paras. 13 and 14 above the general situation in which these claimants find themselves.
LXV. The only point that remains to be determined at this stage is whether the 49 % interest of the Neveses in the Kristina Logos, an interest which now applies to the proceeds of sale of the ship, should be reduced by the amount corresponding to the proportional share which, according to Pratas and Ulybel, the Neveses should pay of the expenses incurred by the latter to defend the ship in the various court proceedings and in connection with the defence of Pratas and Ulybel in the prosecutions brought under the Act.
LXVI. I do not feel that the amount which should accrue to the Neveses ought to be reduced in this way.
LXVII.To begin with, Pratas and Ulybel did not specify, and so liquidate for the purposes of the motion at bar, the amount which their counter-claim would represent.
LXVIII. Second, I adopt here mutatis mutandis the reasons which I gave earlier in paras. 48 and 62, when I established that the $120,000 fine and Clearwater's mortgage should be paid by Pratas and Ulybel.
LXIX. It must therefore be acknowledged that the Neveses are entitled to receive 49 % of the proceeds of the sale of the Kristina Logos once the priority amounts of the cost of selling the ship (see para. 24, supra) and $50,000 (see para. 26, supra) have been paid.
IV. The claim of Ulybel and Pratas
LXX. The position of these parties has been indicated in the preceding reasons. Before their 51 % is calculated the $50,000 forfeited and the cost of sale of the ship must be paid. Further, once the 51 % has been determined Clearwater's mortgage and the $120,000 fine must be collocated from this amount of 51 %. The balance will then accrue to Ulybel and Pratas.
Conclusion
LXXI. According to my understanding of the overall position, two points still outstanding mean that the collocation plan set out below cannot in practice be implemented before these points are settled.
LXXII.The first of these points is the taxation of costs relating directly to the sale of the ship.
LXXIII. The second is the possible variance by the courts of the size of the forfeiture so far awarded to the Crown, a forfeiture which for the moment stands at around $50,000.
LXXIV. Then, subject to settlement of the two aforementioned points, the proceeds of the sale of the Kristina Logos will have to be distributed in the following numerical order of priority:
(1)to the Crown, expenses relating directly to the sale of the Kristina Logos;
(2)to the Crown, the $50,000 forfeited as a result of the conviction of Ulybel;
(3)49 % of the remainder of the proceeds of sale to be distributed to the Neveses;
(4)the remainder, 51 %, to be distributed as follows:
(a)$125,000 to Clearwater, representing its mortgage;
(b)$120,000 to the Crown, representing the fine imposed on Ulybel;
(c)the balance to go to Ulybel and Pratas.
LXXV.Each of the amounts mentioned in paragraphs 73 and 74 above will carry accumulated interest proportionally.
LXXVI. As the motion at bar is a common effort by all the claimants, no costs will be awarded on it.
LXXVII. An order is made accordingly.
Richard Morneau 
Prothonotary
MONTRÉAL, QUEBEC
August 11, 1999
Certified true translation
Bernard Olivier, LL. B.
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Federal Court of Canada Trial Division
Date: 19990811 Docket: T-1041-95
Between:
MARIO NEVES AND CARLOS NEVES,
Plaintiffs,
AND
THE SHIP KRISTINA LOGOS, ULYBEL ENTERPRISES LIMITED, JOSE PRATAS, and THE OWNERS, CHARTERERS AND OTHERS INTERESTED IN THE SHIP KRISTINA LOGOS,
Defendants,
AND
HER MAJESTY THE QUEEN,
Intervener.
REASONS FOR ORDER
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FEDERAL COURT OF CANADA
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT FILE No.:
STYLE OF CAUSE:
T-1041-95
MARIO NEVES AND CARLOS NEVES,
Plaintiffs,
AND
THE SHIP KRISTINA LOGOS,
ULYBEL ENTERPRISES LIMITED,
JOSE PRATAS, and THE OWNERS,
CHARTERERS AND OTHERS INTERESTED
IN THE SHIP KRISTINA LOGOS,
Defendants,
AND
HER MAJESTY THE QUEEN,
Intervenor.
PLACE OF HEARING: Halifax, Nova Scotia
DATE OF HEARING: May 19 and 20, 1999
REASONS FOR ORDER BY: RICHARD MORNEAU, PROTHONOTARY
DATE OF REASONS FOR ORDER: August 11, 1999
APPEARANCES:
| Richard Southcott |
for the plaintiffs |
| John R. Sinnott |
for the defendants |
| Danièle Dion |
for the intervenor |
| Thomas Hart |
for Clearwater Fine Foods Inc. |
SOLICITORS OF RECORD:
| Stewart, McKelvey, Stirling, Scales Richard Southcott Halifax, Nova Scotia |
for the plaintiffs |
| Lewis, Sinnott, Shortall, Hurley John R. Sinnott St. John's, Newfoundland |
for the defendants |
| Brisset, Bishop Danièle Dion Montréal, Quebec |
for the intervenor |
| McInnes, Cooper & Robertson Thomas Hart Halifax, Nova Scotia |
for Clearwater Fine Foods Inc. |