Date: 19981120
Docket: T-1721-98
Admiralty action in personam against
UNISPEED GROUP INC.
BETWEEN:
ORDINA SHIPMANAGEMENT LTD.
Plaintiff
- and -
UNISPEED GROUP INC.
Defendant
REASONS FOR ORDER
NADON J.
[1] This is an application by the defendant Unispeed Group Inc. ("Unispeed") requesting that I direct an assessment of the damages suffered and to be suffered by Unispeed as a result of the order rendered by Mr. Justice Dubé on September 1, 1998 pursuant to which he allowed the plaintiff"s application for an interim injunction against Unispeed.
[2] For the reasons that follow, I have come to the conclusion that it would not be appropriate at this time to make the order which Unispeed seeks. My reasons are as follows.
[3] A brief summary of the facts is in order. On September 1, 1998, the plaintiff filed a statement of claim against Unispeed. In its statement of claim, the plaintiff, the owner of the ship ALESSIA R, alleges that Unispeed, the time-charterer of its vessel pursuant to a charter-party dated January 9, 1998, breached the terms and conditions thereof by reason of non-payment of the charter-hire. As a result, the plaintiff withdrew the ALESSIA R from the service of Unispeed.
[4] The plaintiff alleges that a sum of US $546,596.91 is owed to it by Unispeed. The plaintiff then states that it intends to have its dispute with Unispeed referred to and settled by way of arbitration and refers to clause 45 of the charter-party which provides for arbitration in Canada in respect of disputes arising out of or in connection with the charter-party. The plaintiff also refers to articles 8 and 9 of the Commercial Arbitration Code, which is the schedule to the Commercial Arbitration Act, R.S. 1985, (2nd Supp.) chapter 17. Articles 8 and 9 read as follows:
| Article 8 |
Article 8. |
| Arbitration Agreement and Substantive Claim before Court |
Convention d'arbitrage et actions intentées quant au fond devant un tribunal |
| (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. |
1. Le tribunal saisi d'un différend sur une question faisant l'objet d'une convention d'arbitrage renverra les parties à l'arbitrage si l'une d'entre elles le demande au plus tard lorsqu'elle soumet ses premières conclusions quant au fond du différend, à moins qu'il ne constate que la convention est caduque, inopérante ou non susceptible d'être exécutée. |
| (2) Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court. |
2. Lorsque le tribunal est saisi d'une action visée au paragraphe 1 du présent article, la procédure arbitrale peut néanmoins être engagée ou poursuivie et une sentence peut être rendue en attendant que le tribunal ait statué. |
| Article 9 |
Article 9. |
| Arbitration Agreement and Interim Measures by Court |
Convention d'arbitrage et mesures provisoires prises par un tribunal |
| It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure. |
La demande par une partie à un tribunal, avant ou pendant la procédure arbitrale, de mesures provisoires ou conservatoires et l'octroi de telles mesures par un tribunal ne sont pas incompatibles avec une convention d'arbitrage. |
[5] In conclusion to its statement of claim, the plaintiff seeks the following relief:
| ORDER that the present action be stayed pursuant to Article 8 of the Commercial Arbitration Code, and that Ordina and Unispeed be referred to arbitration in order to settle any and all disputes which may have arisen, or will arise, pursuant to the Charter Party; |
| DECLARE any Order of this Honourable Court for an Interlocutory Injunction be an interim measure of protection pursuant to Article 9 of the Commercial Arbitration Code; |
| RESERVE the rights of the parties to seek a further Order of this Honourable Court in exemplification of any Award of the arbitration tribunal composed for the purposes of hearing any such disputes between the parties; |
| RESERVE the rights of the parties to seek a further Order of this Honourable Court for interim measure of protection as this Honourable Court may permit; |
| The whole with costs throughout. |
[6] Pursuant to article 9 of the Commercial Arbitration Code, the plaintiff sought an interlocutory injunction against Unispeed. On September 1, 1998, Mr. Justice Dubé made the order sought by the plaintiff and adjourned the matter until September 14, 1998 at which time the Court would hear the parties with regard to the renewal, variance, or setting aside of his order.
[7] The matter came before Mr. Justice Rouleau in Montreal on September 14, 1998. Mr. Justice Rouleau made the following order:
| Extend Mareva to Monday, September 21, 1998. Defendant to file his affidavit material by Thursday, September 17, 1998. Plaintiff"s affiant as well as Defendant"s to be available for cross-examinations during the week of September 21 and cross-examinations concluded by Wednesday, September 23, 1998. |
| Argument with respect to permanent or interlocutory injunctions to be heard September 28, 1998, if necessary. |
| Costs in the cause. |
[8] On September 17, 1998, Madam Justice McGillis heard two urgent motions made presentable by third parties to set aside or vary the ex parte Mareva injunction issued by Mr. Justice Dubé on September 1, 1998. On that day, Madam Justice McGillis varied Mr. Justice Dubé"s order "in order to protect the interests of third parties".
[9] On September 28, 1998, I made the following order:
| The ex parte Mareva Injunction issued by Dubé J. on September 1, 1998 shall not be extended as the Plaintiff advised me that it was abandoning its motion for continuation thereof. |
[10] On October 13, 1998, I stayed these proceedings pursuant to Section 50 of the Federal Court Act, R.S.C. 1985, c. F-7, and Article 8 of the Commercial Arbitration Code.
[11] Unispeed now submits that, since the proceedings herein are at an end, it is in order for this Court to direct that its damages resulting from the order made by Mr. Justice Dubé be assessed. In making this request, Unispeed referred me to paragraph 8 of Mr. Justice Dubé"s order which reads as follows:
| 8. Ordina [the plaintiff] has undertaken to file security in the form of a security bond or bank letter of guarantee or cash in the amount of $10,000.00 for possible damages to Unispeed, within 10 days. |
[12] There is no real disagreement between the parties with respect to the applicable principles. Both sides have referred me to Sharpe, Robert J., Injunctions and Specific Performance, 2nd Ed., Canada Law Book Inc., pp 2-28 to 2-34, 2-52. At page 2-28, paragraph 2.470, the learned author writes:
| Concomitant with the question of irreparable harm is the requirement of the plaintiff"s undertaking in damages. It is well established that, as a condition of obtaining an interlocutory injunction, the plaintiff must give an undertaking to pay to the defendant any damages that the defendant sustains by reason of the injunction, should the plaintiff fail in the ultimate result. The rationale for the undertaking is to protect the defendant from the risk of granting a remedy before the substantive rights of the parties have been determined. In the event the defendant succeeds at trial, the interlocutory injunction will have prevented the defendant from acting in accordance with his or her legal rights. The undertaking in damages shifts all or part of that risk to the party who is asking for a pre-trial remedy, the plaintiff. |
[13] Further, each side has referred me to a number of decisions dealing with the assessment or the possible assessment of damages where interim injunctions have been issued by a Court pending litigation. It is clear from the authorities submitted to me that the matter of assessing a defendant"s damages where interim injunctions have been issued is one that should wait until the litigation has been disposed of. The rule appears to be that the decision with respect to directing an enquiry into a defendant"s damages is a matter which ought to be left to the discretion of the trial judge after he or she has decided the case on its merits.
[14] As I have just indicated, these proceedings have been stayed in order to allow the parties to proceed with their arbitration agreement. In my view, it cannot be said, however, that these proceedings are at an end. The purpose of the statement of claim was to invoke this Court"s jurisdiction in regard to the dispute between the parties and to seek the Court"s authority to proceed with the arbitration agreement. Pursuant to the Order that I made on October 13, 1998, the parties may now proceed to arbitration and need not comply with the Federal Court Rules, 1998 , SOR/98-106. The merits of the dispute shall be dealt with by the arbitrators who, in due course, will render an award. If the award is favourable to the plaintiff, it may then seek to have the award homologated by this Court so as to enforce it against Unispeed in Canada. On the other hand, the award might be unfavourable to the plaintiff. In either scenario, Unispeed will obviously be at liberty to apply to the Court for an order directing that its damages be assessed.
[15] In my view, in order to direct an assessment of Unispeed"s damages, it is necessary for the judge to be aware of the outcome of the litigation between the parties. That will allow the judge to exercise his or her discretion properly. In other words, knowledge of all the relevant facts is essential for the exercise of discretion in regard to Unispeed"s application.
[16] I am therefore concluding that Unispeed"s application should not be allowed. Costs shall be in the cause.
Montréal, Québec "MARC NADON"
November 20, 1998 JUDGE
FEDERAL COURT OF CANADA
TRIAL DIVISION
Date: 19981120
Docket: T-1721-98
Admiralty action in personam against
UNISPEED GROUP INC.
BETWEEN:
ORDINA SHIPMANAGEMENT LTD.
Plaintiff
AND:
UNISPEED GROUP INC.
Defendant
REASONS FOR ORDER
[17]
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS ON THE RECORD
COURT FILE NO.: T-1721-98
STYLE OF CAUSE: ORDINA SHIPMANAGEMENT LTD.
Plaintiff
AND:
| UNISPEED GROUP INC. |
Defendant
PLACE OF HEARING: Montreal (Quebec)
DATE OF HEARING: October 13, 1998
REASONS FOR ORDER OF NADON, J.
DATED: November 20, 1998
APPEARANCES:
Mr. Peter G. Pamel for the Plaintiff
Mr. Andrew Ness for the Defendant
SOLICITORS OF RECORD:
McMASTER GERVAIS
Montreal (Quebec) for the Plaintiff
SPROULE, CASTONGUAY, POLLACK
Montreal (Quebec) for the Defendant
OGILVY RENAULT for the Third Party
Montreal (Quebec) International Marine Services Inc.
BRISSET, BISHOP for the Third Party
Montreal (Quebec) Almassa International Inc.
[18]