VOL. XIX.} EXCHEQUER COURT REPORTS. 259. ON APPEAL FROM THE NOVA SCOTIA ADMIRALTY 1919 November 25. DISTRICT. HALIFAX SHIPYARDS, LIMITED (Inter- venors) APPELLANTS; AND MONTREAL DRY-DOCKS AND 'SHIP REPAIRING COMPANY, LIMITED, a body corporate, et al, PLAINTIFFS, RESPONDENTS: ' AGAINST THE SHIP ` `WE STERIAN. " Admiralty law—Efect of arrest on repairs subsequent 'thereto— • Beneficial repairs—Possessory lien—Priority. The "Westerian" was formerly used'on inland waters and having . been purchased for ocean trade, had to be repaired and altered to fit it as a sea-going vessel. The respondent did certain repairs at Montreal and then at the ship agent's request, gave up possession, (thereby losing their shipwright's lien) and permitted her to be taken to Halifax where she went into appellants' dry-docks who completed the work. Whilst in the litter's possession, on the .17th January, 1919, she was arrested at the instance of respondents. The Marshal saw the work going on but gave no order to the workmen to stop. He left no one in charge and there was no change • in the actual possession. The work was continued in good faith and was finished on the 27th March following, the ship being subsequently sold for $80,000 and money deposited in Court. The repairs done subsequent to arrest were necessary and required to class her as an ocean going vessel and were performed in continuance of the contract. • *Held,—Upon the facts stated, that the shipwright has a pos-sessory lien for repairs done to a ship, and should be paid, in priority, not alone for such as were done to aship, previous to her arrest, but also for such as were done after, and which are beneficial and necessary to and upon the ship. *The appeal taken to the Supreme Court of Canada is still pending.
X60 EXCHEQUER COURT REPORTS. [VOL. XIX. 1919 . 2. That in such a case a reference should be made to the registrar HALIFAX to ascertain the extent to which the repairs after arrest are beneficial. SHIPYARDS, LTD. V. MONTREAL HIS is an appeal from the judgment of Drysdale, DRY-DOCKS AND SHIP REPAIRING C o. J '7 L ocal Judge in Admiralty, Nova Scotia Ad- Reasons for miralty District, which judgment is varied by this Judgment. Court. C. J. Burchell, K.C., for appellant; J. B. Kenney, for the respondent. The facts are fully stated in the reasons for judgment of the Honourable Sir Walter Cassels which are .as follows : CASSELS, J., now (25th November, 1919), delivered judgment. Appeal on behalf of The Halifax Shipyards, Limited, Intervenors, from the judgment of the Local Judge in Admiralty for the Admiralty District of . Nova Scotia, delivered on the 1st day of August, 1919. The appeal was argued before me on the 28th day of October, 1919. Mr. Burchell, K.C., appeared for the appellant, and Mr. Kenny for the respondent. On behalf of the appellants Mr. Burchell requested that he might have the right to furnish a memorandum of further authorities. This request was granted, he being directed to deliver to the respondents' solicitors a copy of any such memorandum. I have been furnished with a memorandum by Mr. Burchell, and also a memorandum on behalf of the respondents. The facts connected with the appeal are simple, and there is no serious conflict in connection with them.
VOL. XIX.] EXCHEQUER COURT REPORTS. X61 The ship "Westerian" was sold by the Montréal _ 1919 Transp P ortation. Com p pany to certainpersons resid- HALIFAX Y SHIPYARbS, ing in Cuba. She was apparently a vessel plying in : ' MON TREAL the inland waters. It was desired by the owners that DRY. DOC& S AND S HE D the vessel should be repaired, and td a certain ex- REPAIRING CO. tent remodelled, to fit her for the ocean trade, and Jnd gmen r . • t hereupon the owners in Cuba apparently turned over the work of reconstructing the vessel to N. E. McClelland & Company, who let the work to the Montreal Dry Docks Company, a company carrying on business. in Montreal, and the work necessary to • be done was carried on partially in Montreal. .It is said that the Montreal Company performed work amounting to somewhere in the neighborhood of $50,000. It appears that N. E. McClelland & Co., ascertaining that the work could not be completed in Montreal within such time as would enable the ship - to get* down the St. Lawrence before thhe river froze up, the plaintiffs, The Montreal Drydocks and Ship Repairing Company, Limited, permitted the vessel . to be . taken from their works thereby losing their shipwright's lien. She was taken to the City of Halifax to have the work that had to be performed completed; and, McClelland & Co., then made arrangements with the present appellant, The Halifax Shipyards, Limited, to complete the work: The vessel was thereupon delivered to the Halifax Shipyards, • Limited, and remained . in their possession until the works contracted to be performed were' completed.., The. action was . brought in the Admiralty Court • and the ship was arrested on the 17th January, 1919.* At this time she was in the possession of The Hali- fax 'Shipyards, Limited, undergoing repairs..
262 EXCHEQUER COURT REPORTS. [VOL. XIX.. 1919 It is important to bear in mind that at the time the HALIFAX SHIPYARDS, warrant was served on the ship I namely the 17th LTD . January, 1919, the repairs required in order that the MONTREAL DRY-DOCKS vessel could be classed for ocean going service, she AND SII IP REPAIRING co. having been previously classed for inland waters i lû8 dgmenir only, had not been completed. Although in point of fact the warrant was served on the ship on the 17th January, 1919—there was -no change in . the actual possession of the vessel—she was still left in the possession of The Halifax Shipyards, Limited, the In-tervenors in the action. There was no notification • given to them that they were not do proceed with the repairs, and The Halifax Shipyards, Limited, in perfect good faith continued to perform their contract. The work was finished on or about the 27th March, 1919. The repairs subsequent to the alleged seizure were repairs necessary, and were performed in continuance of the contract for the purpose of having the vessel classed for ocean going service. Had these repairs not been. made the vessel could not have been so classed. It is claimed that these repairs amounted to the sum of about $15,000. The present appellants claim they are entitled to a shipwright's lien for this amount in addition to what has been allowed by the learned judge. The Deputy Marshal, Malcolm H. Mitchell, states in the 'affidavit filed by him, that he "personally serv-"ed the writ and the warrant on the said 17th day "of January, 1919, in the usual way, being the first "writ and warrant served on the said ship." He states further, "nobody was left in charge of the "'said ship by the Marshal during the time the said "ship was under arrest, but I spoke to the Captain "and told him the ship was under arrest and could
VOL. XIX.] EXCHEQUER COURT REPORTS. 263 • "not leave port without bonds being first provided. 19/9 "4. When I made the arrest the ship was under- S H LIFAX "going repairs and I saw workmen employed in L n • MONTREAL • "making said repairs. I did not notify the said DRY-Does AND SHIP workmen that the ship was under arrest or to stop REPAIRING CO. "the making of said repairs, as I had no instruction Seasons for Judgment. "to do so. • "5. When the ship was arrested she was moored "to the 'Lake Manitoba' at the wharf of the Halifax "Shipyards, Limited, at the dry.-dock, Halifax." The learned Judge states as follows, in his reasons for judgment, dated August 1st; 1919: "The Only point remaining epen in this case is "in connection with the taking of accounts. The "Shipyards Company intervening claim a posses- sory lien. At the time of arrest, January 17th, '1919, the ship was in the possession of the Ship- ' `yards Company, undergoing repairs: The. Com- "pany will be 'protected in respect of any work "done up to that time but they now assert a claim "for work done after the arrest. This cannot be "allowed. After January 17th the ship was in "charge of this Court, and no orders were' ever "given for any work after arrest. I will see that "the possessory, lien is protected but claims for "work done after the arrest cannot be 'allowed." The appeal 'on behalf of The Halifax Shipyards, Limited, Is from that part of the judgment which re- lates tô the work done between the time of the arrest, D , 'January 17th, 1919, and the date of the completion of the repairs. It was stated on the appeal by respondent's couil . sel that the learned judge did not intend to disallow-these subsequent repairs, that all the' learned judge
264 EXCHEQUER. COURT REPORTS. [VOL. XIX. 1919 intended was that the privileged claim should be dis- HALIFAX SHIPYARDS, allowed 7 and that for the balance of the work the LTD. v. Intervenors should rank pari passu with the other MONTREAL DRY-DOCKS creditors. It was stated by Mr. Kenny that an ap- AND SHIP REPAIRING CO. plication would be made to the learned judge to have Reasons for Judgm ent. . i is judgment so Varied. Ho wever , , no such varia- tion has been made, nor do I think the learned judge intended that the order should be so varied. His reasons for judgment show that the claim was disallowed by reason of the fact that after January 17th, 1919, the ship was in charge of the. court 'and no orders were ever given for any work after arrest. The formal judgment directs, as follows : "The Judge ordered that the District Registrar "pay out of Court to the Intervenors or their "solicitor the value of the work and labour done "and materials furnished by the said Intervenors "upon and to the defendant ship on and before "the 17th day of January, 1919, to be found by the "District Registrar and merchants." And in his own handwriting he adds : "and that the Intervenors have priority therefor. "And the judge ordered that the claim of the "Intervenors for work done and materials furn-"ished after January 17th, 1919, be, disallowed. I listened carefully to the arguments of the learned counsel, and have considered the various authorities referred to by them upon the argument, and in their written memoranda. With great respect for the learned judge who determined this case, and who has had a long ex- perience in dealing with this class of case, I have come to the conclusion that he has erred in disallowing the lien for these 'subsequent repairs.
VOL. XIX.] EXCHEQUER COURT REPORTS. 265 . The vessel has been sold with these repairs and 1 919 realized, it is stated,the 'sum of about $80,000. It S HALIFx7I HIPYARDS seems to me very inequitable and unjust that this L sum of money realized unquestionably.in part by the MONTREAL DRY-DOCKS ANn SRiP enhanced value given to the vessel by reason of these REPAIRING co. subsequent repairs, should all enure to the benefit • Ins entr of those creditors who had no special lien upon the vessel,, and that that portion of the price which the vessel brought by reason of these repairs so made by the Intervenors should not enure to their benefit. Apparently, the reason for the disallowance was that' the repairs were continued subsequent to the alleged seizure, and were proceeded with 'without the order of the court. There is but little, doubt that had the court been applied to, directions would have been given to the • Intervenors to continue the work provided by. the. contract, and no question as to the right of the shipwrights to their' lien Would have been raised. There seems to be no direct authority bearing upon the question. There are authorities, however, which seem to me to bear strongly upon the point before the court. The "Aline "1 Lushington, J., says: • "Again, with regard to the ease of the person "who has received the damage, is not his interest "benefited by the vessel being repaired and en- "abled to proceed to her port of destination'? Is "he injured in the amount of hi's indemnity fund? "Not at all. His interest I have already stated, "is co-extensive with the rights possessed ;by the "owner of •the vessel at the time when the damage "is done, and his claim is paramount to the extent 1 (1839), 1 wm. Rob. 111, at 119.
266 EXCHEQUER COURT REPORTS. [VOL. XIA. 1919 "of her value at, that period. With respect to any HALIFAX SHIPYARDS, "subsequent accretion in the value of the vessel LTD. e. "arising from repairs done after the period When MONTREAL DRY-DOCKS "the damage was occasioned, his claim to partici- AND SHIP REPAIRING CO. pate in the benefit of such increase of value must Reasons for Judgment. "depend upon the consideration how that increase "arises and to whom it in equity belongs. Against "the owner who repairs his vessel at his own ex -"pense, the claim of the successful suitor would "extend to the full amount of his loss against the "ship and the subsequent repairs. Where, how- ever, the repairs have been effected by a stranger "upon the security of a bond of bottomry, the case "is altogether different; and I cannot hold that "universally bonds so granted must give way to "prior claims of damage." In the case of The "Acacia,"1 Townsend, J., at p. 256, referring to the case of the vessel states as follows : "The fact is, that in this case the vessel has "never left the possession of the Messrs. Harland "and Wolf, and is this moment fastened to their "quay; the marshal seems to have adopted their "possession; 'his possession is merely constructive "and technical, for the actual possession is still "with the defendants." The facts in the ease before me are very similar. In Williams v. Allsup,2 Erle, C. J., referring to the facts of that case at p. 426, states: "Under these circumstances, the mortgagor did "that which was obviously for the advantage of "all parties interested; he puts her into the hands (1880), 4 Asp. (N.S.) 254. 2 (1861), 10 C. B., (N.S.) 417.
VOL. XIX.] EXCHEQUER COURT REPORTS. 267 of the defendant to be repaired; and, according i919 "to all ordinary usage, the defendant ought to s pY IARDS, "have a right of lien on the ship, so that those who LV . MONTREAL "are interested in the ship and who will be bene- DRY-DOCKS AND SHIP "fated by the repairs, should not be allowed to take RE PAIR I N G Co. "her out of his hand's withoût paying for them." V irstar . Then at page 427 the learned judge states, as follows: "There, is, no doubt, some difficulty in the case. "But it is to be observed that the money expended "in repairsadds to the value of ,the ship; and, "looking to the rights and interests of the parties "generally, it cannot be doubted that it is much to . "the advantage of the mortgagee that the mort-"ga;gor should be held to have power to confer a "right of lien on the ship for repairs necessary "to keep her seaworthy." • In The "Gustaf," Lush. (1862), 506, 'Dr. Lushing-ton, at page 507, states as follows : "The present question, what claims shall . be "allowed to take preference of the lien by common ' "law of the shipwright, who retains. the ship in his "possession until the-Court of Admiralty lays its "hand upon it and orders it to be sold, is not with-. "out difficulty. I am'not aware that before I oc-"cupied this chair, any such question ever arose. "Indeed, I may confidently say that none such "ever did arise, and consequently . I have no `authority to resort to, beyond the proposition "which is subject to no doubt that certain liens, "such as salvage 'and wages, 'attach to the Ship. "On consideration, I think that, save in cases "which may appear to have a paramount claim,
268 EXCHEQUER COURT REPORTS. [VOL. XIX. 1919 "the right of a shipwright—the common law lien HALIFAX SHIPYARDS, "—ought not to be infringed upon. " LTD. O. MONTREAL Then at page 508 : DRY-DOCKS AND SHIP "I think it right to add, that the chief difficulty REPAIRING CO. Reasons for "I have experienced is in satisfying my own mind Judgment. "that any claim at all could compete with the corn -"mon law lien, which is, that the shipwright may "hold till paid, or until possession is forcibly de- manded by this Court." In The "St. Olaf,"I Sir R. Phillimore states as follows, at page 361: "Another objection, however, was taken, and it "was urged that at least in this case the value of "£1,037, though admitted to be that of the ship at "the time when she was arrested, is not the value "at which she ought now to be released, and for "this reason it appears that since the lis has been "pending in this matter, application was made "to the Court by the foreign owner of the St. Olaf "to be allowed to make certain repairs in his ves-"sel. Certain repairs were made, and I will take "it that these repairs were without the consent "of the opposite party. I am still very clearly of "opinion that they could not prejudice any right "which the owners of the St. Olaf possessed be-"fore they were made. I am clearly of that opin-"ion myself, because the right of the plaintiff who "proceeds against the St. Olaf, was to have the "value of the vessel at the time she was brought "into court, as far as the proceedings in rem are " concerned. ' His right was to have this res made "responsible for the damage inflicted upon his 1 (1869), L. R. 2 A. & E. 360.
. VOL. XIX.] EXCHEQUER COURT REPORTS. "ship, so far as the value of. it extended, and the " repair ()Ville vesselsubsequent to the damage , s "for the purpose of preventing a deterioration of "the property could not in any way increase his "right or the obligation of the other party. It left ' "them, as I conceive, in statu quo These authorities indicate that the right of the plaintiff who seized the vessel is on the value of the vessel as at the date of the seizure, and not the value subsequently enhanced by the necessary work of the shipwright. Analogous cases are to be found where a Receiver • has been appointed' of property and repairs have been made without the authority of the court. In these cases while prima facie repairs are disallowed, • the court directs a reference as to whether the repairs were reasonable. ' In Blunt v. Clitherow,' the Master of the Rolls, Sir William Grant, points .out that a considerable portion of the repairs was done previously to the appointment of the Receiver, and a reference was di- . . rected as to whether .the repairs subsequeDtlÿ 'performed without.) the direction of the . court . were) reasonable, and upon a favorable report the claim was allowed. In Tempest v. Ord,? Lord Chancellor Eldon pointed out, that the usual course now is a reference . to . ascertain whether the repairs were beneficial and if so .the claim is allowed„ notwithstanding that the , order 'of the court had not been applied for. I think the same course should have been followed by the learned local Judge. I (1802)', 6 Ves. 799. 2 (1816), 2 Mer. 55. 269 1919 • I PYARDS L MONTREAL DRY. DOCSs AND SHIP REPAIRING CO.' in that respect. „ R J e u as d o g n m s e f n o t r .
270 EXCHEQUER COURT REPORTS. [VOL. XIX. 1919 The evidence is fairly voluminous as to the value HALIFAX SHIPYARDS, of the work and the labour done between the 17th LTD. v. January, 1919, until the completion of the work, but MONTREAL DRY-DOCKS if the parties cannot agree upon the amounts, I think AND SHIP REPAIRING CO. the judgment of the learned Judge should be varied aJud gm ent by ordering the District Registrar to pay out of • court to the Intervenors or their solicitors the value of the work and labour done and materials furnished by the said Intervenors, as may be reasonable and beneficial upon and to the defendant ship subsequent to the 17th January, 1919, as well as what has been allowed up to the 17th January, 1919, and that the judgment should be so amended. That portion of the Judge's order which directs the plaintiff to have the costs of this application to be taxed should be iset aside, and in lieu thereof it is ordered that the Intervenors should 'have the costs of the application and of this appeal to be taxed and paid 'by the plaintiff. Subsequent costs of the reference to be reserved. Judgment accordingly. Solicitors for appellants : McLean, Burchell, Ralston & Co. Solicitors for respondents: McInnes, Jenks,. Lovett & Co.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.