[2000] 4 F.C. 159
T-1887-99
Canadian Pacific Railway Company (Plaintiff)
v.
The Owners and all Others Interested in the Ship “Sheena M”, the Owners and all Others Interested in the Ship “Rivtow 901”, Bayside Towing Ltd., Rivtow Marine Ltd., Eugene Beckstrom and William Frizell (Defendants)
Indexed as: Canadian Pacific Railway Co. v. Sheena M (The) (T.D.)
Trial Division, Hargrave P.—Vancouver, January 28; March 7, 2000.
Maritime law — Practice — Barge, in tow of tug, striking CPR bridge — Motion to stay damages action so defendants might pursue limitation action under 1976 Convention without interruption — Consolidation of damages and limitation actions as alternative to stay rejected as actions incompatible — Mon-Oil Ltd. v. Canada two-part test (whether continuation of action would cause prejudice or injustice to defendants and whether would be unjust for plaintiff in liability action ) appropriate where, as here, stay of Court’s own proceeding at issue — Stay granted.
Practice — Stay of proceedings — No res judicata based on order enjoining commencing or continuing proceedings before any court, other than Federal Court — Difference between enjoining and staying — Test for each different — Jurisdiction in Federal Court to stay proceedings under Federal Court Act, s. 50, and to enjoin proceedings under Canada Shipping Act, s. 581(1) — Mon-Oil Ltd. v. Canada two-part test (whether continuation of action would cause prejudice or injustice to defendants and whether would be unjust for plaintiff in liability action) appropriate where, as here, stay of Court’s own proceeding at issue — Stay granted.
In June 1999, the barge Rivtow 901, in tow of the tug Sheena M, struck the CPR bridge spanning the Fraser River at Mission, British Columbia, causing some $5,000,000 damage. This resulted in the present damages action by CPR and a companion limitation of liability action by the owner, master and crew member of the Sheena M. This was a motion to stay the damages action so that the limitation action could be pursued without interruption. The Court also dealt with a motion by the CPR seeking consolidation of the actions as an alternative to a stay.
Held, the motion should be allowed, as between CPR and all of the defendants except Rivtow Marine Ltd. and the Rivtow 901. The CPR motion should be denied.
The consolidation of the limitation and the damages actions was rejected as an alternative to the stay. The actions are incompatible for consolidation because there are different issues, a conflicting burden of proof and different standards of conduct at issue; the limitation action should border on a summary procedure, while the liability action will almost inevitably prove a complex piece of litigation; the consolidation will save little in cost; and the Sheena M interests ought not to be delayed in having their relatively narrow position determined.
Under the Convention on Limitation of Liability for Maritime Claims, 1976 (the 1976 Convention), it is for a claimant wishing to break limitation of liability to prove that a shipowner is not entitled to limit liability by proving that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly, with the knowledge that such loss would probably result. It is thus very difficult to deny a shipowner limitation of his liability. Why allow a complex trial on liability to proceed when there is a quicker, cheaper and likely resolution by way of a limitation action?
The argument that this Court was functus by reason of res judicata was rejected. The earlier order in the limitation action enjoined CPR and the other defendants from commencing or continuing proceedings before any other court, against the Sheena M interests. The enjoinment motion was brought under paragraph 581(1) of the Canada Shipping Act, while the present motion was for a stay under section 50 of the Federal Court Act. There is a difference between enjoining and staying. The tests for stays and enjoinments embody very different concepts. There was no conflict or tension between paragraph 581(1) of the Canada Shipping Act and subsection 50(1) of the Federal Court Act. The Federal Court retains the section 50 jurisdiction to govern its own stay procedure and in addition may enjoin proceedings in other courts under the Canada Shipping Act.
The onus of convincing a court that there ought to be a stay is a heavy one and is on the party seeking the stay. The test for a stay under section 50 of the Federal Court Act is that set out in Mon-Oil Ltd. v. Canada (1989), 26 C.P.R. (3d) 379 (F.C.T.D.). The two-part Mon-Oil test is appropriate where a stay of the Court’s own proceeding is at issue, while the three-part RJR—MacDonald test is appropriate where the stay is that of proceedings before some other tribunal or an order of the Court pending an appeal. In the present instance the stay of the liability action is thus governed by whether a continuation of the action would cause prejudice or injustice, and not merely inconvenience or additional expense, to the Sheena M interests, as defendants and whether a stay would be unjust to CPR, as plaintiff, in the liability action. In this case, a stay would be appropriate under either test.
Application of the Mon-Oil stay test. To force the liability action to trial, which will be lengthy and may well be needless, no matter what the outcome of the limitation action, would be prejudicial to the Sheena M interests for it would, in effect, shut down the operation of the Sheena M. This would result in irreparable harm and would certainly result in prejudice. It would also be an injustice if the limitation liability procedure under the 1976 Convention were not allowed to unfold as intended. On the other hand there would be little if any prejudice to CPR. Second, if CPR does succeed on the limitation action, with its high onus akin to that of gross negligence, establishing that degree of negligence may well do away with any practical need for a liability trial, leaving only damages at issue. Third, CPR has been given full discovery of documents and has been offered full examination for discovery, with the added concession that discovery from the limitation action may be used in any liability action trial. Fourth, a stay of the liability action does not prevent CPR from continuing its investigations or compromise its ability to retain experts. Finally CPR, experienced as it is in similar matters, can scarcely say that the invocation of the 1976 Convention, a limitation action and a stay of liability proceedings are a surprise and thus prejudicial.
As no stay was sought as between CPR and Rivtow, the stay shall not extend to them. However, if the entitlement of the Bayside interests to limitation of liability is left intact, there would be no realistic possibility of CPR breaking Rivtow’s limitation of liability.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Canada Shipping Act, R.S.C. 1952, c. 29, s. 663A (as enacted by S.C. 1964-65, c. 39, s. 37).
Canada Shipping Act, R.S.C. 1970, c. S-9, s. 648(1) (as am. by R.S.C. 1970 (2nd Supp.), c. 10, s. 65).
Canada Shipping Act, R.S.C., 1985, c. S-9, ss. 576(1)(b), 581 (as am. by S.C. 1998, c. 6, s. 2).
Convention on Limitation of Liability for Maritime Claims, 1976, as amended by the Protocol of 1996, to amend the Convention on Limitation of Liability for Maritime Claims, 1976, being Schedule VI of the Canada Shipping Act, R.S.C., 1985, c. S-9 (as enacted by S.C. 1998, c. 6, s. 26), Arts. 1, 4, 13.
Federal Court Act, R.S.C., 1985, c. F-7, s. 50(1)(a),(b).
International Convention relating to the Limitation of the Liability of Owners of Sea-going Ships, Brussels, 10 October 1957.
CASES JUDICIALLY CONSIDERED
APPLIED:
Mon-Oil Ltd. v. Canada (1986), 26 C.P.R. (3d) 379; 27 F.T.R. 50 (F.C.T.D.); Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] 1 A.C. 854 (H.L.); Angle v. M.N.R., [1975] 2 S.C.R. 248; (1974), 47 D.L.R. (3d) 544; 74 DTC 6278; 2 N.R. 397; Poitras v. Sawridge Band, [1999] F.C.J. No. 375 (T.D.) (QL).
DISTINGUISHED:
Manitoba (Attorney General) v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110; (1987), 38 D.L.R. (4th) 321; [1987] 3 W.W.R. 1; 46 Man. R. (2d) 241; 25 Admin. L.R. 20; 87 CLLC 14,015; 18 C.P.C. (2d) 273; 73 N.R. 341; Friends of the West Country Association v. Canada (Minister of Fisheries and Oceans) et al. (1998), 234 N.R. 96 (F.C.A.); Circuit World Corp. v. Lesperance (1997), 33 O.R. (3d) 674; 100 O.A.C. 221 (C.A.); Canning (John E.) Ltd. v. Tripap Inc. (1999), 167 F.T.R. 93 (F.C.T.D.).
CONSIDERED:
RJR—MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311; (1994), 111 D.L.R. (4th) 385; 164 N.R. 1; Stein et al. v. “Kathy K” et al. (The Ship), [1976] 2 S.C.R. 802; (1975), 62 D.L.R. (3d) 1; 6 N.R. 359; Nisshin Kisen Kaisha Ltd. v. Canadian National Railway Co., [1982] 1 F.C. 530 (1981), 122 D.L.R. (3d) 599; 36 N.R. 181 (C.A.); varg Nisshin Kisen Kaisha Ltd. v. Canadian National Railway Co., [1981] 1 F.C. 293 (1980), 11 D.L.R. (3d) 360 (T.D.); AIC Ltd. v. Infinity Investment Counsel Ltd. (1998), 82 C.P.R. (3d) 508; 161 F.T.R. 199 (F.C.T.D.); Varnam v. Canada (Minister of National Health and Welfare) et al. (1987), 12 F.T.R. 34 (F.C.T.D.).
REFERRED TO:
Bayside Towing Ltd. v. Canadian Pacific Railway, [2000] 3 F.C. 127 (T.D.); Breydon Merchant, The, [1992] 1 Lloyd’s Rep. 373 (Q.B. (Com. Ct.)); Valley Towing Ltd. v. Celtic Shipyards (1988) Ltd., [1995] 3 F.C. 527 (T.D.); American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.); Fruit of the Loom Inc. v. Chateau Lingerie Mfg. Co. Ltd. (1984), 79 C.P.R. (2d) 274 (F.C.T.D.); Compulife Software Inc. v. Compuoffice Software Inc. (1997), 77 C.P.R. (3d) 451 (F.C.T.D.); Discreet Logic Inc. v. Canada (Registrar of Copyrights) (1993), 51 C.P.R. (3d) 191 (F.C.T.D.); Plibrico (Canada) Ltd. v. Combustion Engineering Canada Inc. (1990), 30 C.P.R. (3d) 312; 32 F.T.R. 30 (F.C.T.D.).
AUTHORS CITED
Black’s Law Dictionary, revised 4th ed. St. Paul, Minn.: West Publishing Co., 1968.
Davison, Richard and Anthony Snelson. The Law of Towage. London: Lloyd’s of London Press, 1990.
Griggs, Patrick and Richard Williams. Limitation of Liability for Maritime Claims. London: Lloyd’s of London Press, 1998.
Halsbury’s Laws of England, 4th ed., Vol. 37. London: Butterworths, 1982.
New Shorter Oxford English on Historical Principles. Oxford: Clarendon Press, 1993, “enjoin”.
Osborn’s Concise Law Dictionary, 5th ed. London: Sweet & Maxwell.
MOTION for a stay of a damages action arising out of an accident in which a barge, in tow of a tug, struck a CPR bridge, to allow the defendants in that action to pursue a limitation of liability action without interruption. Motion allowed, as between CPR and all of the defendants except Rivtow Marine Ltd. and the Rivtow 901. MOTION by CPR for consolidation of damages, limitation actions. Motion denied.
APPEARANCES:
William M. Everett, Q.C. for plaintiff.
David F. McEwen for defendants, Sheena M interests and Bayside Towing Ltd.
Doug G. Morrison for defendants, Rivtow 901 interests and Rivtow Marine Ltd.
SOLICITORS OF RECORD:
Lawson Lundell Lawson & McIntosh, Vancouver, for plaintiff.
McEwen, Schmitt & Co., Vancouver, for defendants, Sheena M interests and Bayside Towing Ltd.
Bull, Housser & Tupper, Vancouver, for defendants, Rivtow 901 interests and Rivtow Marine Ltd.
The following are the reasons for order rendered in English by
[1] Hargrave P.: This action, which I will call the damages action, being a claim for damages by the Canadian Pacific Railway Company (CPR), arises out of some $5,000,000 damage done to the CPR bridge spanning the Fraser River at Mission, British Columbia, when the barge Rivtow 901, in tow of the tug Sheena M, struck the bridge on 2 June 1999. The defendants in the damages action include the owner, master and crew member of the Sheena M. There is also a prior companion action, Bayside Towing Ltd. v. Canadian Pacific Railway, [2000] 3 F.C. 127 (T.D.) (the limitation action), in which the plaintiffs, the same owner, master and crew member of the Sheena M, to whom I shall refer as the “Sheena M interests”, seek limitation of liability under the Convention on Limitation of Liability for Maritime Claims, 1976 [as amended by the Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims, 1976, being Schedule VI of the Canada Shipping Act, R.S.C., 1985, c. S-9 (as enacted by S.C. 1998, c. 6, s. 26)] (the 1976 Convention].
[2] The Sheena M interests, in the damages action, now seek a stay vis-à-vis the CPR so they may pursue the limitation action without interruption. While these reasons deal with the stay, which I have granted, the reasons also touch upon a motion brought by the CPR, on the same day, seeking a consolidation of the limitation action and the damages action as an alternative to the stay.
[3] I have thoroughly considered the aspects of the consolidation motion urged by counsel for the CPR and by counsel for Rivtow Marine Ltd., but have rejected consolidation for many reasons. These reasons include that the limitation and the liability actions are incompatible for consolidation because there are different issues, a conflicting burden of proof and different standards of conduct at issue; that the limitation action should border on a summary procedure, particularly here where the Sheena M interests do not want discovery, but in contrast, the liability action will almost inevitably prove a complex piece of litigation; that consolidation will save little in cost and indeed could result in substantial extra cost; and that the Sheena M interests, as plaintiffs in the limitation action, are substantially ahead of the CPR, as plaintiffs in the liability action: the Sheena M interests ought not to be delayed in having their relatively narrow position determined. I thus rejected the consolidation motion.
CONSIDERATION
Limitation of Liability: Past
[4] By way of background it is useful to begin by touching upon limitation of liability as it stood, under the 1957 Limitation of Liability Convention [International Convention relating to the Limitation of the Liability of Owners of Sea-going Ships, Brussels, 10 October 1957], as interpreted by Canada and as enacted in the Canada Shipping Act [R.S.C. 1952, c. 29, s. 663A (as enacted by S.C. 1964-65, c. 39, s. 37)], before Canada adopted the 1976 Convention. Under the 1957 Limitation regime a wrong-doing shipowner, wishing to limit liability, had the exceedingly heavy onus of establishing not only an absence of fault, but that he or she was not privy to the fault causing the accident: Stein et al. v. “Kathy K” et al. (The Ship), [1976] 2 S.C.R. 802, at page 819. While a shipowner usually failed to satisfy the onus, there was a great incentive to attempt to establish limitation of liability, for the limitation fund, for vessels of less than 300 tons, was only about $40,000. Limitation was usually pleaded by way of counterclaim, but sometimes by way of a separate limitation action. However, to obtain a stay of an action for damages, in order to obtain a separate free-standing decree of limitation under the 1957 Limitation regime and Canada Shipping Act, a decree good against all claimants, the shipowner had to admit liability: Nisshin Kisen Kaisha Ltd. v. Canadian National Railway Co., [1982] 1 F.C. 530 (C.A.) [hereinafter Japan Erica].
[5] In Japan Erica the shipowner sought to stay a number of liability proceedings on the basis of a very limited and narrow admission of liability. The Trial Judge [[1981] 1 F.C. 293 allowed a stay, however that order was varied by the Court of Appeal, which allowed one of the liability actions to go ahead. In effect, Mr. Justice Thurlow upheld the then usual practice of refusing a stay where liability had not been admitted. It is fair to say that this usual practice was based on the fact that limitation actions were, under the 1957 Limitation regime, usually complex and protracted and often resulted in complex appeals. Therefore, to stay the liability aspect might well result in substantial delay and thus prejudice a plaintiff claiming damages, a point touched upon by Mr. Justice Thurlow in Japan Erica, at page 534. I now turn to a brief overview of the present limitation of liability regime in Canada.
Limitation of Liability: Present
[6] In 1998 Canada enacted a new limitation of liability regime [S.C. 1998, c. 6], by adopting the 1976 Convention and a Protocol of 1996, with some Canadian variations, for example that variation allowed under Article 15, paragraph 2(b) whereby a state that is party to the 1976 Convention may set its own limits for ships under 300 tons. Here I will note that the 33.5 foot Sheena M is of 9.9 tons gross, according to the Shipping Registry, however I recognize that the tonnage under the 1976 Convention may differ slightly by reason of different measurement criteria.
[7] Under the 1976 Convention it is for a claimant who wishes to break limitation of liability to prove that a shipowner is not entitled to limit liability with the standard of proof being that set out in Article 4 of the Convention:
A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly, with the knowledge that such loss would probably result.
The conventional wisdom is that it is very much more difficult to break limitation under the 1976 Convention. Indeed, Mr. Justice Sheen remarked in Breydon Merchant, The, [1992] 1 Lloyd’s Rep. 373 (Q.B. (Com. Ct.)), at page 376, that the right to limit liability under the 1976 Convention is “almost indisputable”. See also Valley Towing Ltd. v. Celtic Shipyards (1988) Ltd., [1995] 3 F.C. 527 (T.D.), at page 541.
[8] A part of the reasoning behind the 1976 Convention is neatly set out in Griggs and Williams, Limitation of Liability for Maritime Claims, Lloyd’s of London Press, 1998, at page 3, which begins by the authors referring to the 1957 Limitation Convention:
It was recognized that the previous system of limitation had given rise to too much litigation and there was a desire that this should be avoided in future. There was agreement that a balance needed to be struck between the desire to ensure on the one hand that a successful claimant should be suitably compensated for any loss or injury which he had suffered and the need on the other hand to allow shipowners, for public policy reasons, to limit their liability to an amount which was readily insurable at a reasonable premium.
The solution which was finally adopted to resolve the competing requirements of claimant and defendant was (a) the establishment of a limitation fund which was as high as a shipowner could cover by insurance at a reasonable cost, and (b) the creation of a virtually unbreakable right to limit liability.
The text of the 1976 Convention finally adopted by the Conference therefore represents a compromise. In exchange for the establishment of a much higher limitation fund claimants would have to accept the extremely limited opportunities to break the right to limit liability. Under the 1976 Convention the right to limit liability is lost only when the claimant can prove wilful intent or recklessness on the part of the person seeking to limit (Article 4).
This desire of the delegates to the 1976 Convention to avoid excess litigation is laudable: hopefully that will prove to be the case once the Convention has been appropriately tested in the courts. Davison and Snelson, The Law of Towage, Lloyd’s of London Press, 1990, make a similar comment in considering Article 4 of the 1976 Convention, at page 84:
This formula will make it very much harder for claimants to oppose limitation. Not only is it unlikely (indeed, almost inconceivable) that a shipowner would be guilty of the requisite intent or degree of recklessness but the burden of proving as much is now on the claimant. This a reversal of the former position.
[9] The view that limitation under the 1976 Convention is, while not an absolute, very difficult to deny a shipowner, plays a part in this decision to stay the liability action. One must question the sense of allowing a complex trial on liability to proceed when there is a quicker, cheaper and likely resolution by way of a limitation action. Here I would note that the plaintiffs, in the limitation action, the Sheena M interests, have produced documents, offered examination for discovery and have indicated not only do they not require examination for discovery in return, but also that they wish to proceed by summary judgment procedure. In contrast, the CPR, in its liability action, commenced not long after the limitation action, have not made nearly as much progress.
[10] Returning to the overview of the 1976 Convention, the limitation fund has been increased more than tenfold, to $500,000, for property damage caused by a vessel of less than 300 tons.
[11] Counsel for the Sheena M interests makes the point that if a Trial Division judge were to make a finding of fact that the accident was intentionally caused, or caused recklessly with knowledge that the damage would result, an appeal is less likely than under the 1957 Convention. Be that as it may, were an injured party able to break limitation under the 1976 Convention, in effect establishing intention, or recklessness and knowledge of the damage, it is difficult to conceive that a shipowner could even wish to defend a liability action. This is so even though Article 1, paragraph 7 of the 1976 Convention provides that the invocation of limitation of liability does not constitute an admission of liability.
Stay of Liability Action
[12] The arguments of the Sheena M interests for a stay may be summarized as first, proceeding with the limitation action and the liability action concurrently, given that Bayside’s president is the primary master of its one tug, will result in an unnecessary disruption of the business of Bayside. Second, were both actions to proceed simultaneously, or even as a consolidated action, there will be unnecessary legal expense. Third, the new limitation regime, which seeks to avoid unnecessary litigation, ought to be allowed to achieve its purpose. The Sheena M interests go on to raise the possibility of conflicting judgments if both actions proceed: that ought not to be any problem, for the issues in the limitation action and the liability action differ substantially. Before looking at these submissions in detail, there are several arguments which the CPR makes which go generally to jurisdiction to grant a stay.
Jurisdiction to Grant a Stay
[13] Counsel for the Sheena M interests refers to Article 13 of the 1976 Convention for the proposition that an intention of the Convention is that, once a limitation fund has been constituted, assets of anyone claiming limitation not be subjected to attachment by a claimant who has claimed against the limitation fund. This is consistent with the overall tenor of the 1976 Convention, but I do not take Article 13 as any bar to a liability proceeding going forward at the same time as a limitation proceeding. However, both section 581 [as am. by S.C. 1998, c. 6, s. 2] of the Canada Shipping Act [R.S.C., 1985, c. S-9] and paragraphs 50(1)(a) and (b) of the Federal Court Act [R.S.C., 1985, c. F-7] give the Court discretion to stay a proceeding. At this point the Sheena M interests and the CPR differ as to whether a stay is available in this instance and if that possibility is open, whether the conditions for granting a stay are those set out in Mon-Oil Ltd. v. Canada (1989), 26 C.P.R. (3d) 379 (F.C.T.D.) or whether the test established in RJR—MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 is that which governs.
(i) Loss of Jurisdiction by Reason of Res Judicata
[14] I have considered, but rejected, the CPR’s argument that this Court is functus by reason of res judicata. This argument is based upon my earlier order in the limitation action enjoining the CPR and the other defendants from commencing or continuing proceedings before any court, other than this Court, against the Sheena M interests. I will elaborate.
[15] The CPR, in opposition to the stay, submits that the Court is functus, for by order of November 2, 1999, in the limitation action, the defendants were enjoined from commencing or continuing proceedings before any court, other than the Federal Court, as against the Sheena M interests. The CPR points out that when the order was made, 2 November 1999, it had already commenced the damages action. To be fair to the Sheena M interests, when they set down the enjoinment motion, under section 581 of the Canada Shipping Act, the CPR had not then commenced the damages action. The Sheena M interests did not seek a stay in the damages action nor was it argued, by either side, on the enjoinment motion, what the status of the damages action should be.
[16] Certainly, the same parties were involved in the enjoinment motion and the ensuing enjoinment order, not having been appealed, is final. However there is a third element in issue estoppel, that of the same question being decided: see Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] 1 A.C. 853 (H.L.), at page 935, approved by the Supreme Court of Canada in Angle v. M.N.R., [1975] 2 S.C.R. 248. At issue on the enjoinment motion was the right of the Sheena M interests to avoid facing actions on another front, specifically in the B.C. Supreme Court, until their limitation action had been dealt with. The motion was purely under paragraph 581(1)(c) of the Canada Shipping Act, which grants this Court jurisdiction to prevent the continuation of a proceeding before any court “other than the Admiralty Court”. This section does not grant and indeed does not need to grant to the Federal Court, as the Admiralty Court, the procedural power to stay proceedings in its own Court, but rather it grants the Federal Court the ability to enjoin other courts from proceeding with their actions in certain circumstances. The test for such an enjoinment is that of appropriateness as set out in the preamble to subsection 581(1) of the Canada Shipping Act. In contrast, the present motion is for a stay under section 50 of the Federal Court Act.
[17] To complete this line of reasoning, there is a difference between enjoining and staying. The former, is defined in the revised 4th edition of Black’s Law Dictionary in terms of an injunctive direction to perform or to abstain from some act. The New Shorter Oxford English Dictionary on Historical Principles reflects this injunctive aspect of the verb “enjoin”:
Prohibit, forbid; esp. (Law) prohibit or restrain by an injunction.
In contrast a stay, or a stay of proceedings as it is correctly called, is an order by which a court suspends its own proceedings, either temporarily, until something is done, or permanently, where it is improper to proceed: see for example Osborn’s Concise Law Dictionary, Sweet & Maxwell, 5th edition. That a stay is a procedure internal to the Court issuing the order is clear from the dissertation on the nature of a stay set out in the 4th edition (1982) of Halsbury’s Laws of England, Volume 37, at page 325, which includes the following:
A stay of proceedings arises under an order of the court which puts the stop or “stay” on the further conduct of the proceedings in that court at the stage which they have then reached, so that the parties are precluded thereafter from taking any further step in the proceedings. [Emphasis added.]
The test for a stay, in the interests of justice, is generally acknowledged to be the three-part test set out in RJR—MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, being the three-part American Cyanamid test [American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.)] although in this instance the appropriate test for a stay of proceedings is a two-part test set out in Mon-Oil Ltd. v. Canada (1989), 26 C.P.R. (3d) 379 (F.C.T.D.), a point that I shall touch on again in due course. The test for a stay is very different concept and test from that of an enjoinment of a proceeding in another court under the Canada Shipping Act. Indeed, this is to be expected for in one statute the draftsman has used the term enjoin and in the other the reference is to a stay. Thus the same question not being decided on each of the motions, the third element of the Carl Zeiss test has not been met. I now turn to the next argument presented by the CPR, that this Court does not, in any event, have the jurisdiction to stay the damages action.
(ii) Loss of Jurisdiction by Reason of Implied Exception Rule
[18] The CPR submits that the specific wording of paragraph 581(1)(c) of the Canada Shipping Act, providing for an enjoinment of a proceeding, prevails over the general provision for granting a stay, under subsection 50(1) of the Federal Court Act. The CPR here points out that in such an instance a cannon of interpretation, the implied exception or generalia specialibus non derogant rule, whereby general things do not derogate from special things, brings the two statutes into harmony by an exception from the general provision for a stay in the Federal Court Act, in favour of the specific power of enjoinment in the Canada Shipping Act. The CPR submits that, on this approach, the Federal Court’s jurisdiction in a limitation proceeding, which formerly, for example in Japan Erica (supra), was governed by subsection 648(1) [as am. by R.S.C. 1970 (2nd Supp.), c. 10, s. 65] of the Canada Shipping Act [R.S.C. 1970, c. S-9], was at one time much broader in that it allowed the Court to “stay any proceedings pending in any court in relation to the same matter”. The CPR’s argument is that the jurisdiction of the Federal Court, to stay proceedings in the limitation situation, is now limited to a stay in any court other than the Admiralty Court, here referring to the wording of paragraph 581(1)(c). There was also a transitional provision between subsection 648(1) of the [former] Canada Shipping Act and paragraph 581(1)(c) of the present Canada Shipping Act, being paragraph 576(1)(b) which appears in the 1985 version of the Canada Shipping Act: there the power was to “stay any proceedings pending in any other court in relation to the same matter”.
[19] It is interesting to observe the change of wording from earlier provisions in the Canada Shipping Act, providing for a stay, in any court, through to a later provision providing for a stay in other courts, to the present wording providing for an enjoinment of proceedings in other courts. Obviously the people drafting the present legislation had a different concept in mind, not that of a stay, but rather than of an enjoinment. As I have already pointed out, the former is a procedure inherent to a court making an order in its own internal procedure, while the latter is a procedure providing an effect external to the court making the order, a direction to another court enjoining it from acting or proceeding.
[20] These concepts, a stay and an enjoinment, are very different concepts. There is no conflict or tension between paragraph 581(1)(a) of the Canada Shipping Act and subsection 50(1) of the Federal Court Act which requires harmonizing through the use of the implied exception rule. The Federal Court retains the section 50 jurisdiction to govern its own stay procedure and in addition may enjoin proceedings in other courts under the Canada Shipping Act. I now turn to the merits of the application for the stay of the liability action.
Stay of Liability Action
(i) Onus and Test for a Stay
[21] There is no dispute that the onus of convincing a court that there ought to be a stay is a heavy one and is on the party seeking the stay. It is the test that is at issue. However, before dealing with two contrary lines of cases, one should keep in mind that a stay, under section 50 of the Federal Court Act, is either one granted where the claim is also proceeding in another court, which is not relevant on the present motion, or “where for any other reason it is in the interest of justice that the proceedings be stayed” (subsection 50(1)(b) of the Act).
[22] The CPR submits the test for a stay is that set out in Mon-Oil Ltd. v. Canada (supra), where at issue was the consolidation of three actions which, if allowed, would delay one of the actions in which the plaintiff was practically ready for trial. In Mon-Oil Mr. Justice Cullen looked upon the effect of consolidation as that of a stay. He drew upon earlier trial division precedent in order to determine a test for stay, being that enunciated by Mr. Justice Muldoon in Fruit of the Loom Inc. v. Chateau Lingerie Mfg. Co. Ltd. (1984), 79 C.P.R. (2d) 274 (F.C.T.D.), at page 278, to the effect that the applicant must persuade the Court that a continuation would be an abuse of process by which the applicant for the stay would be prejudiced, not merely inconvenienced. Fruit of the Loom involved a stay where there was also similar litigation in another court, being the first branch of a section 50 stay, a branch not applicable in the present instance.
[23] Next, counsel for the CPR refers to Compulife Software Inc. v. Compuoffice Software Inc. (1997), 77 C.P.R. (3d) 451 (F.C.T.D.), in which Mon-Oil was applied. However the reference to Mon-Oil in Compulife, was in the context of joinder. While the issue of stay was also determined in Compulife, the Mon-Oil case was not cited in that context. The test applied in Compulife is one attributed to Discreet Logic Inc. v. Canada (Registrar of Copyrights) (1993), 51 C.P.R. (3d) 191 (F.C.T.D.), however it is clear in Discreet Logic that the test originated in Plibrico (Canada) Ltd. v. Combustion Engineering Canada Inc. (1990), 30 C.P.R. (3d) 312 (F.C.T.D.), at page 315, involving a stay until other litigation, which did not involve the same parties, was completed. The applicant for a stay had to show both that a continuation of the action would cause prejudice or injustice and not merely inconvenience or extra expense to the defendant and that a stay would not be unjust to the other side. For convenience I will also refer to this two-part test as the “Mon-Oil test”.
[24] The next case which counsel for CPR refers is AIC Ltd. v. Infinity Investment Counsel Ltd. (1998), 82 C.P.R. (3d) 508 (F.C.T.D.), a decision of Associate Chief Justice Richard, as he then was. At issue was a stay pending a decision from the Court of Appeal. There the governing principle was taken to be that set out in Varnam v. Canada (Minister of National Health and Welfare) et al. (1987), 12 F.T.R. 34 (F.C.T.D.), the issue in Varnam also being a stay pending an appeal. The test was to the effect that the defendant must establish that a continuance would work an injustice, or be an abuse of process and that a stay must not cause an injustice to the plaintiff. AIC Ltd. also proceeded on its own specific and interesting facts, for there it was the plaintiff who sought the stay and was refused. There was no reference in AIC Ltd. to the test for a stay as set out by the Supreme Court in RJR—MacDonald (supra).
[25] A stay was also the topic in Canning (John E.) Ltd. v. Tripap Inc. (1999), 167 F.T.R. 93 (F.C.T.D.), a motion for a consolidation, or alternatively a stay of one action pending the determination of a second. Mr. Justice Lemieux denied the consolidation request but noted [at page 99], when dealing with the alternative that “[t]he test governing this type of stay was enunciated by Wetston J., in Compulife”. The difficulty with the application for a stay in Canning, and indeed in applying Canning to the present situation, was that the parties in the action in which the stay was sought were not the same parties as in the action which was sought to be stayed.
[26] The principle set out in this line of cases, based on pre-RJR—MacDonald cases, that a stay must not be unjust to the plaintiff and that continuation would cause prejudice to the defendant, has been applied in various fact situations, including where there was similar litigation in another court, where there were two actions involving different litigants and where an appeal was pending. This test is, in a sense, a balance of inconvenience test. Yet I must also consider the test for a stay set out by the Supreme Court of Canada in RJR—MacDonald.
[27] RJR—MacDonald has its roots in Manitoba (Attorney General) v. Metropolitan Stores Ltd., [1987] 1 S.C.R. 110, which involved a stay of proceedings of a labour tribunal pending a decision as to the validity of certain legislation. There the Supreme Court observed that a stay of proceedings and an interlocutory injunction were remedies of the same nature. The Supreme Court, in Metropolitan Stores, adopted a three-stage test, which is set out in RJR—MacDonald Inc. (supra) at page 334. First, there should be a preliminary assessment to determine that there is a serious issue to be tried. Second, it is for the applicant to demonstrate that he or she will suffer irreparable harm if a stay is not granted. Third, it is for the Court to assess the balance of convenience. The RJR—MacDonald case, itself, involved the suspension of the operation of legislation pending determination of its constitutional validity.
[28] My initial reaction to these two lines of cases, the first involving a general purpose sort of stay, balancing injustices of imposing a stay and the second, an assessment of the merits, demonstration of irreparable harm and a balance of inconvenience, to use a term from Metropolitan Stores (supra) at page 129, was that the three-part test might be one more appropriately used to stay the proceedings of a tribunal, or to stay the effect of legislation pending the outcome of litigation, or to stay an order, with a two-part test, involving prejudice or injustice, being appropriate in other instances.
[29] Certainly, in AIC Ltd. (supra) Associate Chief Justice Richard, as he then was, tested for the injustice of a continuance and the injustice of a stay, on each of the parties where at issue was a stay pending a decision from the Court of Appeal.
[30] This concept of the appropriate use of the two sets of tests for a stay is consistent with a case decided by Chief Justice Isaac a month after AIC Ltd. was decided. In Friends of the West Country Association v. Canada (Minister of Fisheries and Oceans) et al. (1998), 234 N.R. 96 (F.C.A.), at issue was the staying of an order remitting environmental assessment reports to the Minister for reconsideration. The Court used the test from RJR—MacDonald.
[31] Here I would also refer to Circuit World Corp. v. Lesperance (1997), 33 O.R. (3d) 674 (C.A.), a decision in which Mr. Justice of Appeal Laskin states that the three-part test from RJR—MacDonald is the appropriate test for staying an order pending an appeal.
[32] In summary, that the two-part test is appropriate where a stay of the Court’s own proceeding is at issue, while the three-part RJR—MacDonald test is appropriate where the stay is that of proceedings before some tribunal or an order of the Court pending an appeal. In the present instance the stay of the liability action is thus governed by whether a continuation of the action would cause prejudice or injustice, and not merely inconvenience or additional expense, to the Sheena M interests, as defendants and whether a stay would be unjust to the CPR, as plaintiff, in the liability action.
[33] Counsel for the CPR suggests, at least in this instance, that the two-part Mon-Oil test is the more difficult to satisfy. That may well be the case. However, having considered the relevant facts, from two perspectives, that of the three-part RJR—MacDonald test and that of the two-part Mon-Oil test, I have no doubt that a stay would be appropriate under either test. I now turn to the relevant facts and the Mon-Oil test.
(ii) Application of the Stay Test
[34] There are two factors which, under the Mon-Oil test, are relevant in considering a stay from the perspective of the Sheena M interests. First, Bayside Towing Ltd. is essentially a one-man operation: Captain Beckstrom is the principal and only regular master of the Sheena M. It is safe to say that successful operation of a small tug in the Mission area of the Fraser River requires a high degree of specialized competence and skill. To force the liability action to trial, a trial which will be lengthy and may well be needless, no matter what the outcome of the limitation action, would be prejudicial to the Sheena M interests for it would, in effect, shut down the operation of the Sheena M. This is certainly prejudicial.
[35] To elaborate, Mr. Justice Hugessen, in Poitras v. Sawridge Band, [1999] F.C.J. No. 375 (T.D.) (QL), dealt with a motion for a partial stay in which, interestingly, he applied the RJR—MacDonald three-part test. Mr. Justice Hugessen looked upon duplication of proceedings as serious harm per se and indeed, as irreparable harm. I see little difference between prejudice and serious harm. Alternately, irreparable harm is much more serious than mere prejudice. In the present instance, to effectively shut down the one-man operation of the Sheena M for a number of weeks and perhaps, given the recent history of bridge damage liability actions, for much longer, would be, applying Mr. Justice Hugessen’s view of duplication of actions, at least serious harm. To shut down a one-man tugboat operation, as I believe would be the case were the liability action to be tried, would result in irreparable harm and would certainly result in prejudice.
[36] Second, under the first branch of the Mon-Oil test there is also the issue of injustice. This is an alternative to the prejudice aspect. The present limitation regime is designed to reduce litigation. It would be an injustice if the limitation of liability procedure under the 1976 Convention were not allowed to unfold as intended.
[37] Turning now to prejudice to the CPR, I have difficulty imagining any. First, given the intended summary nature of the limitation action, there ought not to be any prejudicial delay. Here I would note that any delay, in both the limitation action and the liability action has, to date, been on the part of the CPR. The Bayside interests are ready for the limitation action hearing, having waived discovery, having made production of documents to the CPR and having offered the CPR examination for discovery.
[38] Second, if the CPR does succeed on the limitation action, with its high onus, an onus which, to borrow an overworked and underdefined term, is akin to gross negligence, establishing that degree of negligence may well do away with any practical need for a liability trial, leaving only damages at issue.
[39] Third, the CPR has been given full discovery of documents and has been offered full examination for discovery, with the added concession that discovery from the limitation action may be used in any liability action trial.
[40] Fourth, any stay, at this point, of the liability action does not prevent the CPR from continuing its investigations or compromise its ability to retain experts: the CPR’s case on these aspects is just not established.
[41] Finally, the CPR, as a bridge owner familiar both with bridge damage caused by errant barges and with limitation of liability, can scarcely say that the invocation of the 1976 Convention, a limitation action and a stay of liability proceedings are a surprise and thus prejudicial.
[42] I should note that to stay the liability action, as between the Sheena M interests and the CPR, could be unfortunate from the point of view of Rivtow Marine Ltd., the owner of the barge. However, from the point of view of the owner of a dumb barge under tow, involved in an accident, liability on the part of such an owner is usually rather dubious. Thus the stay sought and granted is more an inconvenience than it is prejudicial. In making this observation I am aware of Rivtow’s counterclaim, in the liability action, for limitation of liability. While I sympathize with Rivtow’s wish to bring closure to the whole incident as quickly as possible, this does not outweigh the overall advantages of staying the liability action as between the CPR and the Sheena M interests and of proceeding with the limitation action at this time. But no stay is sought as between the CPR and Rivtow: the stay shall not extend to them. However I would note that if the entitlement of the Bayside interests to limitation of liability is left intact, there would be no realistic possibility of the CPR breaking Rivtow’s limitation of liability.
[43] The motion for a stay of proceedings, as between the CPR and all of the defendants except Rivtow Marine Ltd. and the Rivtow 901, therefore succeeds.