T-2406-86
Elias Metaxas et al. (Plaintiffs)
v.
The Ship Galaxias and All Others Interested in
the Ship Galaxias (Defendants)
INDEXED AS: METAXAS V. GAIIIXIAS (THE)
Trial Division, Rouleau J.—Vancouver, January 4,
5, 6, 7 and 8; Ottawa, April 11, 1988.
Conflict of laws — Distribution of proceeds of judicial sale
of Greek registered vessel — Greek legislation creating mari
time lien in favour of Greek seamen's union (NAT) for monies
owing for wage deductions, owners contributions, wages
advanced and repatriation expenses — Greek law applies to
claim as Greece lex loci of contracts — Maritime lien attach
ing to res when secured obligation incurred — Substantive
rights determined according to lex loci — The Halcyon Isle,
Privy Council decision holding creation and ranking of claims
determined by lex fori, disapproved — Recognition of NAT's
right to participate in proceeds in keeping with Canadian
public policy — NAT duly constituted public authority of
which major claimant, Greek mortgagee, well aware —
Canadian maritime law existing partly to acknowledge claims
in rem by party providing services to ship which benefit all.
Maritime law — Liens and mortgages — Distribution of
proceeds of judicial sale of Greek vessel — Greek legislation
creating maritime lien in favour of Greek seamen's union —
Status of claim under Greek law — Treatment of foreign
maritime liens in Canada: I) whether NAT's rights under
Greek law amounting to maritime lien under Canadian law; 2)
whether The loannis Daskalelis distinguishable; 3) whether
Federal Court having jurisdiction over claim; 4) whether crew
members' lien for wages and repatriation expenses transferable
— Whether nature of employment changed by docking of
vessel and operation as floating hotel — Law governing claim
by American necessariesmen.
Maritime law — Creditors and debtors — Ranking of
claims according to established orders of priority and equity
— As no obvious injustice, Court not exercising discretion to
upset orders of priority — Seamen's claims for gross wages
reduced by amounts of contribution to union, and by repatria
tion expenses or salary advances paid by seamen's union.
Federal Court jurisdiction — Trial Division — Maritime
matters — Greek legislation creating maritime lien in favour
of Greek seamen's union (NAT) for wage deductions and
owners' contributions — Federal Court having jurisdiction
over NA T's claim — Three conditions precedent to Federal
Court jurisdiction set out in ITO—International Terminal
Operators Ltd. v. Miida Electronics Inc. et al. — Federal
Court Act, s. 22 satisfying statutory requirement — Second
requirement of "existing body of federal law" met as Federal
Court would have jurisdiction over comparable Canadian
legislation — As NAT's claim maritime lien recognized by
Court, third requirement met.
Practice — Costs — Successful party not in contempt of
court but guilty of conduct tantamount to blackmail
Ordered to pay costs of party in related action resulting from
its misconduct.
Practice — Judgments and orders — Enforcement — Suc
cessful party guilty of conduct tantamount to blackmail but
falling short of contempt of court — Amounts awarded party
held by court pending satisfaction of certain requirements.
This was an action for the distribution of proceeds of sale of
a Greek registered vessel, the Galaxias. The ship sailed from
Greece, stopped in Acapulco to engage a band of musicians and
proceeded to Vancouver with a full crew, aboard. It berthed in
Vancouver Harbour and was established as a floating hotel
serving visitors to the "Expo 86" world exhibition. Financial
problems arose and the ship was arrested pursuant to a Court
warrant. Numerous claims were filed. The most important
claim was a maritime lien legislated by the Greek government
in favour of the Greek seamen's union, NAT. NAT collects and
administers monies received from the owners of Greek regis
tered ships, the monies being used by various programmes
benefitting Greek seamen. NAT claimed remittance of such
outstanding monies, which included deductions from the crew's
wages and a proportionate contribution from the owners, inter
est on these sums as specified in Greek legislation, wages
advanced after the arrest of the ship, and repatriation expenses.
The issues with respect to this claim were the status of the
NAT lien under Greek law and the treatment of foreign
maritime liens in Canadian courts. NAT's entitlement to relief
was attacked on the following grounds: 1) the rights accorded
to NAT in Greek law did not amount to a maritime lien as it
exists in Canadian law; 2) Canadian case law supports a
deviation from the principle of The loannis Daskalelis, wherein
it was held that Canadian courts will recognize maritime liens
validly created in a foreign jurisdiction. It was argued that the
three leading Canadian cases dealing with the recognition of
foreign maritime liens could be distinguished because they all
arose from the claims of necessariesmen; 3) the Federal Court
did not have jurisdiction to hear NAT's claim because it was
not a basic maritime claim; 4) the crew members' lien for
wages and repatriation expenses was not transferable to NAT.
The Greek crews, masters and seamen, and the musicians
also claimed maritime liens for unpaid wages. The issue was
whether the fact that the Galaxias had docked at Vancouver
changed the nature of the musicians' employment. American
necessariesmen claimed a maritime lien as providers of neces
saries for the voyage from Greece to Canada. They alleged that
their claims were given the status of maritime liens under
American law and that Canadian courts have recognized this
status. The issue was whether American, Canadian or Greek
law applied to this claim. There was also a possessory lien claim
by the wharfinger for services rendered to the ship including
berthage and repairs. Canadian necessariesmen filed claims in
rem for provision of supplies and repairs, medical and promo
tional services. The National Bank of Greece S.A. claimed
pursuant to five preferred mortgages. Finally, the Deputy
Marshall claimed the costs of the sale from the fund. As the
claims exceeded the proceeds of the sale, ranking of the claims
was necessary. At issue was whether the established orders of
priority should be upset to prevent injustice.
Held, the claims should be ranked as follows:
1) Marshal's costs
2) seamen's maritime lien
3) NAT's maritime lien with respect to balance of outstand
ing contributions accruing before arrival in Canada
4) wharfinger's possessory lien with respect to repairs only
5) mortgage claim
6) claims of necessariesmen in rem.
Greek law applies to NAT's claim, even to those portions of
the claim which arose in Vancouver Harbour. The maritime
lien attaches to the res when the obligation which it secures is
incurred. The lex loci of the contracts with respect to the
Galaxias, the crew and the Greek owners was Greece. It was
established by the evidence of a Greek lawyer and the Greek
Code of Maritime Law that under Greek maritime law the
wage deductions and owners' contributions owing to NAT are
given the same "privilege" as seamen's wages. Such privilege
corresponds to the rights enjoyed by a Canadian maritime
lienholder. The /oannis Daskalelis and The Strandhill,
Supreme Court of Canada cases, and The Har Rai, a Federal
Court of Appeal case, have held that the maritime liens of
American necessariesmen, which were granted by American
statute, would be recognized and ranked as such in Canada,
although Canadian necessariesmen only have a right in rem.
This is then subject to the law for the ranking of such claims in
the lex fori. It was argued that those cases were distinguishable
because American legislation merely enhanced the status of
claims of American necessariesmen, whereas the Greek legisla
tion in question gave NAT a completely different claim, thus
extending the principle enunciated by the Supreme Court
beyond all logical limits. It is well established that the substan-
tive rights of the parties are to be determined by reference to
the lex loci. The treatment which Canadian domestic law
would accord such a claim is irrelevant.
The British Privy Council held in The Halcyon Isle that both
the creation and ranking of claims against the res are deter
mined by the lex Jori. The Halcyon Isle was a clear departure
from an earlier British case, The Colorado and was based on a
misconception of the significance of the case. The Privy Coun
cil's decision does not reflect current Canadian maritime law.
Furthermore, the decision in The Halcyon Isle was not unani
mous, two of the five members having dissented.
It is a basic tenet of conflict of laws that foreign law which is
proven to be contrary to the positive law of a country will not
be applied by the latter's courts. But NAT is a duly constituted
public authority charged with the administration of certain
funds for the benefit of Greek seamen. The major claimant is a
Greek mortgagee (National Bank of Greece) which is well
acquainted with NAT. The recognition of NAT and its right to
participate in the proceeds would not be contrary to Canadian
public policy. Canadian maritime law exists partly to acknowl
edge claims in rem by a party who provides services to a ship.
Those who maintain a ship and keep her productive create a
benefit to all. Other claims are therefore subordinated to those
of seamen and repairers in possession. It is in keeping with
Canadian public policy that claims for wages be recognized as
giving rise to a lien as the Greek government purports to have
done: That the Canadian government has not created an analo
gous lien does not affect the validity of NAT's claim.
The Federal Court has jurisdiction in maritime matters if the
three conditions set out by the Supreme Court of Canada in
ITO are met. Section 22 of the Federal Court Act satisfies the
purely statutory requirements of the tripartite test. With
respect to the requirement that there be an "existing body of
federal law" which is essential to the disposition of the case and
which nourishes the statutory grant of jurisdiction, the proper
issue to consider is whether the Federal Court would have had
jurisdiction had a comparable Canadian enactment existed.
This Court would surely have jurisdiction over a Canadian
body created by federal statute analogous to the NAT. A
simpler way of viewing the issue of jurisdiction is that if
Canadian law requires a decision as to whether a claim
amounts to a maritime lien according to the lex loci of the
claim, the Federal Court must have jurisdiction over what
Canadian conflicts of law has dictated must amount to a
maritime lien. In any event, the NAT claim is somewhat
analogous to subsections 284(1) and (2) of the Canada Ship
ping Act, which create maritime liens in favour of a public
authority which pays for seamen's medical needs. The Acrux,
upon which the attack on the Court's jurisdiction was based,
involved a similar fact situation, but the underlying law was
totally different. As to the third requirement for establishing
jurisdiction (law in question must be a law of Canada), NAT's
claim is a maritime lien which is recognized by this Court and
will be ranked accordingly. There was no merit to the argument
that the seamen's liens for wages paid after seizure and repa
triation expenses were extinguished when NAT paid them
because such action was required by Greek law. The entire
amount of NAT's claim is protected by maritime lien.
The terms "seamen" and "member of the crew" in the
Canada Shipping Act and Federal Court Act should be given
broad interpretations. A band of musicians engaged to enter
tain passengers at sea are part of the crew. The terms of the
engagement did not distinguish between the time at sea and the
time docked. The band members were also included on crew
lists. As the docking did not affect other crew members, the
musicians were entitled to a maritime lien with respect to
wages earned during the full term of their employment, includ
ing repatriation expenses and interest. The rest of the crew was
also entitled to a maritime lien.
The American necessariesmen did not meet, the onus of
establishing that their claim was a valid maritime lien under
the relevant American law. Therefore the choice of law of the
contract should be determined according to the laws of Canada.
In the absence of an express or implied provision relating to the
choice of laws, it must be determined by the law with which the
transaction has the closest and most real connection. In the
absence of convincing proof to the contrary, this was the law of
the flag of the Galaxias, Greece. Nothing indicated that in
Greek law the provider of necessaries is accorded a maritime
lien. The claims of the American and Canadian necessariesmen
were in rem. The wharfinger's possessory lien extended only to
the sum expended on repairs and maintenance of the ship. The
balance of the claim is with respect to necessaries, the subject
of a claim in rem.
The rules with respect to ranking of liens as set out in
Comeau's Sea Foods Ltd. v. The "Frank and Troy" are subject
to many exceptions. Although equitable considerations are
important in the ranking of claims, the Court's discretion to
upset the orders of priority should only be exercised where
necessary to prevent an obvious injustice. As such a result was
not readily apparent, the Court did not disturb the ranking of
the claims. It was noted that had the American necessariesmen
proven their liens, they should not rank pari passu with the
seamen's wages. The seamen's claims for gross wages should be
reduced by the amount of their contribution to NAT as such
sums are part of NAT's maritime liens. For the same reason,
any repatriation expenses or additional salaries already paid by
NAT to or for the benefit of seamen must be deducted from the
claims made by the seamen.
NAT's behaviour as a party precluded the equitable con
sideration of the Court in either an award of costs or interest. It
delayed in indicating that the issuance of a certificate of
deletion (enabling the purchaser to register the ship in Greece)
was outside its power, and that the Minister of Merchant
Marine would likely refuse it. Such conduct resulted in addi
tional expenses to many parties. Although NAT's conduct did
not amount to contempt of court, it was tantamount to black
mail. In a related action NAT was, for that reason, ordered to
pay both the Deputy Marshal's and the purchaser's costs. NAT
was not entitled to interest on the unpaid owners' contributions
after the seizure, as the lex fori governs. However, the full
claim for interest as provided by Greek law must be allowed up
to the date of arrest, even though the provisions are almost
usurious, as that part of the claim is governed by the lex loci.
The foregoing limitation did not apply to the repatriation
expenses, salary advances or monies owed to NAT by the crew.
All amounts owing to NAT should be paid into Court pending
the delivery of a certificate of deletion sufficient to release the
ship from all outstanding claims against her in the Greek
Registry. Furthermore, should the purchaser so elect the
Galaxias shall be reregistered in Greece at NAT's expense.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Administration of Justice Act, /956 (U.K.), 4 & 5 Eliz.
2, c. 46, s. 1(1) (o).
Canada Shipping Act, R.S.C. 1952, c. 29.
Canada Shipping Act, R.S.C. 1970, c. S-9, s. 284(1),(2).
Code of Maritime Law, Act No. 38161 1958, Art. 205.
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, ss.
22, 43.
Federal Court Rules, C.R.C., c. 663, R. 1008.
CASES JUDICIALLY CONSIDERED
NOT FOLLOWED:
Bankers Trust International Ltd. v. Todd Shipyards
Corpn. (The Halcyon Isle), [1981 ] A.C. 221 (P.C.).
APPLIED:
Todd Shipyards Corp. v. Alterna Compania Maritime
S.A., [1974] S.C.R. 1248; Strandhill, The v. Walter W.
Hodder Co., [1926] S.C.R. 680; Marlex Petroleum, Inc.
v. The Ship "Har Rai", [1984] 2 F.C. 345 (C.A.); The
Colorado, [1923] P. 102 (C.A.); ITO—International
Terminal Operators Ltd. v. Miida Electronics Inc. et al..
[ 1986] I S.C.R. 752; Montreal Dry Docks Co. v. Halifax
Shipyards (1920), 69 S.C.R. 359; Comeau's Sea Foods
Ltd. v. The "Frank and Troy", [1971] F.C. 556 (T.D.):
Osborn Refrigeration Sales and Services Inc. v. The
Atlantean 1, [1979] 2 F.C. 661 (T.D.).
DISTINGUISHED:
Laane & Baliser v. Estonian S.S. Line, [1949] S.C.R.
530; [1949] 2 D.L.R. 641; The Acrux, [1965] 2 All E.R.
323 (H.C. Adm. Div.); The Totten. United Africa Co.,
Ltd. v. Owners of M.V. Tolten, [1946] 2 All E.R. 372
(C.A.); Macbeth & Co. v. Chislett, [1910] A.C. 220
(H.L.); Llido v. The Lowell Thomas Explorer, [1980] I
F.C. 339 (T.D.).
CONSIDERED:
Household Finance Corp. of Canada v: Hill; C.N.R. Co.,
Garnishee (1970), 13 D.L.R. (3d) 737 (P.E.I. S.C.).
REFERRED TO:
Balodis et al. v. The Ship "Prince George", [1985] I
F.C. 890 (T.D.); Connor v. The "Flora" (1898), 6
Ex.C.R. 131; Can. Steamship Lines v. The "Rival",
[1937] 3 D.L.R. 148 (Ex.Ct.); Fernandez v. "Mercury
Bell" (The), [1986] 3 F.C. 454, (sub nom. "Mercury
Bell" (The Ship) v. Amosin et al.) 27 D.L.R. (4th) 641
(C.A.).
AUTHORS. CITED
Castel, J.-G. Conflict of Laws: cases, notes and ma
terials, 2nd ed. Toronto: Buttwerworths, 1968.
Morris, J.H.C. & Others, Dicey's Conflict of Laws, 7th
ed., London: Stevens & Sons Ltd. (1958).
Thomas, D.R. British Shipping Laws, vol. 14, London:
Stevens & Sons, 1980.
COUNSEL:
M. Bray for plaintiffs.
Bradley M. Caldwell for Aqua-Clean Ships
Ltd. and A & A Anderson Tank Service Ltd.
A. Barry Oland for National Bank of Greece
S.A.
A. S. Marinakis for NAT (Naftikon Apoma-
chikon Tameion).
David F. McEwen for Baseline Industires Ltd.
J. B. Ramsay for Ministry of Labour and
Consumer Services of Province of British
Columbia.
C. J. O'Connor for Global Cruises.
J. E. Gouge and K. A. G. Bridge for Sheriff
and Attorney General of British Columbia.
SOLICITORS:
McMaster, Bray, Cameron & Jasich, Van-
couver, for plaintiffs.
Bradley M. Caldwell, Vancouver, for Aqua-
Clean Ships Ltd. and A & A Anderson Tank
Service Ltd.
A. Barry Oland, Vancouver, for National
Bank of Greece S.A.
Marinakis and Company, Vancouver, for
NAT (Naftikon Apomachikon Tameion).
McEwen & Co., Vancouver, for Baseline
Industries Ltd.
Ministry of Attorney General for Ministry of
Labour and Consumer Services of Province of
British Columbia.
Ladner Downs, Vancouver, for Global
Cruises.
Lawson, Lundell, Lawson & McIntosh, Van-
couver, for Sheriff and Attorney General of
British Columbia.
The following are the reasons for order ren
dered in English by
ROULEAU J.: This action involves the distribu
tion of proceeds following the arrest and judicial
sale of a Greek registered vessel, the ship
Galaxias, in the Port of Vancouver. As is fre
quently encountered, the claims against the
Galaxias far exceed the proceeds of the sale so the
ranking of the respective claims will in some cases
determine whether they are to be satisfied at all.'
One of the most difficult and novel claims to be
analysed and ranked by this Court is the one
asserted by the Naftikon Apomachicon Tameion
("NAT"), a public corporate institution created by
Greek law and somewhat akin to a Canadian
Crown corporation. It administers pensions and
other social benefits on behalf of Greek seamen.
The cruise ship Galaxias sailed from Piraeus,
Greece, in the spring of 1986. It proceeded
through the Panama Canal and sailed up the
western seaboard of North America having
stopped in Acapulco, to engage a band of musi
cians. In June of 1986, the Galaxias sailed into
Vancouver Harbour with a full crew aboard. It
berthed there during the summer of 1986 and by
means of certain connections to the shore was
' By order dated February 2, 1987, the style of cause in this
action was abridged for the purpose of expediency and there
fore several parties will be referred to throughout who do not
appear in the style of cause.
established as a "floating hotel" for the enjoyment
of visitors to the world exhibition in Vancouver,
called "Expo 86", being hosted by that city.
In the late summer of 1986, financial problems
developed with respect to the continued operation
of the Galaxias and the ship was arrested on
September 1, 1986 pursuant to a warrant issued by
this Court on the application of the wharfinger
Baseline Industries Ltd. ("Baseline"), on Septem-
ber 1, 1986. Since that date numerous claims have
come to light including several wage claims (Elias
Metaxas et al., T-2406-86, Villanueva-Velasquez
et al., T-2325-86, and Katerelos et al., T-318-87),
a possessory lien claim (Baseline, a wharfinger), a
mortgage claim (National Bank of Greece S.A.),
and most importantly the substantial claim for a
maritime lien legislated by the Greek government
in favour of the Greek seamen's union, NAT.
In addition numerous claims were filed by both
Canadian and U.S. providers of necessaries. The
U.S. necessariesmen allege that their claims are
given the status of maritime liens by operation of
statute in the United States, and that this status
has been recognized by Canadian courts in the
distribution of proceeds following a judicial sale.
The Canadian necessariesmen are making a claim
in rem with respect to goods and services provided
to the Galaxias in Vancouver.
After one false start, (the Galaxias was offered
for sale and no appropriate tender was received),
the Deputy Marshal of the Federal Court, S. R.
Krochenski, arranged for the re-advertisement of
the Galaxias in several international newspapers
pursuant to the order of Madam Justice Reed
dated April 27, 1987 (this order, as subsequently
amended, is referred to as the order for sale). As a
result of the advertisement, an offer of $1.1 million
was received from Global Cruises S.A. ("Global"),
and this offer, the highest tender, was accepted. A
bill of sale was drawn up pursuant to the order for
sale, which has included the following terms:
5. The M.V. Galaxias shall be sold, where is, as is, with all
faults as they now lie, without any allowance for deficiency in
length, weight, quantity or quality or any defect or error
whatsover, particulars not guaranteed, free and clear of all
encumbrances.
6. The Deputy Marshal of the Federal Court of Canada shall
be vested with the right to execute a Bill of Sale, transferring
the vessel to the successful purchaser of the vessel, free and
clear of all encumbrances.
7. The proceeds of the sale of the vessel shall be paid into this
Court to the credit of all actions in rem, against the vessel, of
creditors who have filed Affidavits of Claim in the Registry of
this Honourable Court on or before April 23, 1987. [My
emphasis.]
Problems arose shortly thereafter. Closing of the
sale was extended several times as the purchaser
encountered difficulties in arranging the financing
of the balance of the purchase price. The purchas
er became uneasy with respect to the attitude
taken by the Greek Minister of Merchant Marine
regarding the reregistration of the Galaxias in the
Greek Registry of Shipping at Piraeus. There was
evidence that following the issuance of the bill of
sale, the Minister objected to the issuance of the
necessary deletion certificate and made it contin
gent on the success of NAT in receiving satisfac
tion for its claims in this Court. As a result of this
situation, a show cause hearing was held with
respect to a possible contempt of court on the part
of NAT having not complied with the Court order
to register the deletion certificate and transfer title
of the vessel without encumbrances. It was heard
on January 4, 1988, along with argument concern
ing the balance of the claims. The show cause
hearing has been delt with separately.
In addition, the Deputy Marshal commenced
Court Action No. T-2297-87 against the purchaser
Global, and all the claimants from the proceeds of
the sale and sought a declaration from this Court
that he has fulfilled his duties with respect to the
order of sale, and for direction from the Court
with respect to the disbursement of the proceeds.
The Deputy Marshal is also of course a claimant
from the fund with respect to the cost of the sale
and other charges occasioned by the carrying out
of the order of sale. Global filed a defence in Court
Action No. T-2297-87 and also counterclaimed
with respect to all the costs and damages which it
alleges have occurred due to the failure of the
Deputy Marshal to convey the ship to it "free and
clear of all encumbrances", sufficient to allow the
ship to be registered in the Greek Registry. NAT
was made a third party to the action.
By a report dated December 31, 1987, Charles
E. Stinson, Referee, disposed of many of the sale-
related expenses of the Deputy Marshal and
recommended that the charges relating to berth-
age, security and fuel be paid. An order confirm
ing his report was issued.
The parties have concurred that my findings on
the classification and hence priority of their
respective claims might well dispense with the
need of proving quantum. Therefore, these reasons
will only refer to amounts for the purpose of
dealing with a claim that is not an indivisible mass.
Any quantum referred to will have to be fully
proven in due course.
I will therefore proceed to consider the following
issues:
(i) the claim made by NAT to the benefit of a
maritime lien;
(ii) the wage claim made by the Greek crews,
master and seamen;
(iii) the wage claim made by the band of musi
cians engaged in Acapulco;
(iv) the claim made by American necessariesmen
to a maritime lien recognized in American law;
(v) the claim made by Baseline to a possessory
lien;
(vi) the claim made by the Canadian necessaries-
men;
(vii) the claim made by the National Bank of
Greece S.A. as a mortgagee;
(viii) the entitlement of all of the above to claim
from the fund, and the priority of the claim.
(1) THE CLAIM OF NAT
Naftikon Apomachicon Tameion is a public
body created by statute in the Republic of Greece.
Although it operates with some degree of autono
my it ultimately falls under the supervision and
control of the Greek Minister of Merchant
Marine. NAT is charged with the collection and
administration of monies received from the owners
of Greek registered ships. These funds are made
up from a percentage deducted by the owners from
the wages of the ship's crew as well as a propor
tionate contribution from the owners.
The amounts owing to NAT by both seamen
and shipowners are calculated based on a percent
age of the seamen's wages, which percentage is
determined from time to time by statute. Any
shipowner who is in default of his obligations to
NAT is further assessed every six months for an
additional charge of interest, which is also dictated
by statute. For every year that the shipower is in
default, the amount of interest on the overdue sum
increases, to reach a maximum of 75% of the
original amount owing.
The monies which are collected are applied
either directly by NAT or by several subsidiary
organizations to a broad range of activities
designed for the benefit of Greek seamen, includ
ing pensions, repatriation expenses and training
programmes.
NAT asserts before this Court that it is owed
four separate and distinct claims:
outstanding remittance of deductions made by the
owners from the seamen's wages and as well as
their proportionate contributions (some of which
are more than five years overdue);
interest on these sums calculated in accordance
with the formula referred to above;
more than one month's wages advanced to the
crew of the Galaxias after the arrest of the ship;
the monies expended by NAT to effect the repa
triation of the crew who were stranded in
Vancouver.
The claim, according to the preliminary docu
ments filed on behalf of NAT, appears to be in
excess of $500,000.
Bearing in mind that after June, 1986, the
Galaxias was no longer in Greek waters, it
becomes necessary to determine whether the valid
ity of the NAT lien continued to be subject to the
laws of Greece even with respect to claims to
contributions which arose long after the Galaxias
set sail. The maritime lien attaches to the res when
the obligation which it secures is incurred. The lex
loci of the contracts with respect to the Galaxias,
the crew and the Greek owners of the ship was
undoubtedly Greece. It is therefore my view that
Greek law applies to NAT's claim, even to those
portions of the claim which arose in Vancouver
Harbour.
Evidence of Greek law relating to the treatment
of NAT's claims in that country was given to the
Court by a Mr. George Bournis of the Piraeus Bar.
Despite some difficulties I encountered due to the
language barrier, I was generally satisfied that I
was given sufficient information concerning Greek
law as it relates to NAT and its claims.
The evidence of Mr. Bournis is that the monies
owing to NAT, wage deductions and owner's con
tributions, are bestowed the same "privilege" in
Greek maritime law as seamen's wages. This is
confirmed by the translation provided to the Court
of Article 205 of the Code of Maritime Law, Act
No. 381611958 of the Republic of Greece:
[TRANSLATION] Article 205—The following privileged claims
have priority on the ship and cargo in the following order:
(a) The legal costs incurred in the common interest of all
creditors, dues and charges on the ship, taxes in connection
with the navigation, watchman and maintenance costs
incurred since the ship's arrival at the last port.
(b) The claims of the master and crew members arising out
of an employment contract: also the claims of the seamen's
pension fund (Naftikon Apomachicon Tameion).
(c) The expenses arising out of salvage.
(d) The amounts owing to the ship, passengers or cargoes
due to collision.
The above privileges take priority over the Mortgage. [Empha-
sis added.]
After listening to Mr. Bournis' evidence, I am
satisfied that the words "privileged claims" in
Article 205 should be translated in English as
"liens". The word "lien" corresponds to the civil
law concept of "privilège" and Greece is a civil
law jurisdiction.
The rights afforded to the holder of these "privi-
leged claims" or liens as I shall call them,
correspond to the rights enjoyed by the lienholder
in Canadian maritime law—the right to the pursue
the res into the hands of the innocent purchaser at
a public auction and the right to priority in rank
ing over the mortgage holder. I therefore find that
the Greek Parliament has created by operation of
statute a maritime lien which is in substance
analogous to a maritime lien in Canadian law.
Having determined for the purposes of this
action the status of the claim asserted by NAT in
Greek law, I will now address the issue of how a
Canadian court will deal with a maritime lien
which has been validly created by the statutory
enactment of another jurisdiction.
This area of the law has been considered on two
occasions by the Supreme Court of Canada, and in
a further instance by the Federal Court of Appeal,
which decision was affirmed without reasons by
the Supreme Court. All three cases dealt with
claims asserted by American necessariesmen. In
the United States, the claim of the necessariesmen
is granted the protection of a maritime lien by
operation of statute. Under Canadian maritime
law the claim of the necessariesmen is given a
right in rem only.
In all three decisions, the Supreme Court of
Canada, and the Federal Court of Appeal respec
tively held that the maritime lien of the American
claimant would be recognized and ranked as such
in Canada, with all the benefits and priority
accorded to maritime liens in this country.
It would appear therefore that these three cases
have established that in Canada, when the lex loci
of the ship (either the country of registration or
the proper law applicable to the contract in ques
tion) creates a maritime lien in favour of a party,
the latter is entitled to claim the benefits of a
maritime lien under the lex fori. This is then
subject to the law for the ranking of such claims or
liens in the lex fori. The cases supporting this
proposition are Todd Shipyards Corp. v. Alterna
Compania Maritima S.A., [1974] S.C.R. 1248
(The Ioannis Daskalelis); Strandhill, The v.
Walter W. Hodder Co., [1926] S.C.R. 680 (The
Strandhill); Marlex Petroleum, Inc. v. The Ship
"Har Rai", [ 1984] 2 F.C. 345 (C.A.); affd
[1987] 1 S.C.R. 57 (The Har Rai).
Although these three cases would appear to have
definitively addressed the treatment of foreign
maritime liens in Canadian courts, counsel for
Baseline Industries Ltd. has launched an attack on
NAT's entitlement to the relief it claims on three
grounds:
I. the rights accorded to NAT in Greek law do not
amount to a maritime lien;
II. Canadian jurisprudence supports either a dis
tinction or a deviation from the principle in The
boannis Daskalelis;
III. the Federal Court does not have jurisdiction
to hear and adjudicate any claim inter partes that
is not a basic maritime claim.
The first ground of attack is that the rights
accorded to NAT in Greek law do not amount to a
maritime lien as it exists in Canadian maritime
law, or any right analogous thereto. As a result,
NAT cannot assert a right in rem with respect to
its claim before this Court. For the reasons given
above, this argument cannot succeed. In my view,
NAT's claim in Greek law is equivalent to a
Canadian maritime lien, and counsel did not
profer any evidence or authority which would
permit me to conclude otherwise in the face of the
uncontradicted statements by Mr. Bournis in this
regard.
I hasten to add that counsel was quite correct in
his statement of the law, for if he had been able to
prove that the claim asserted by NAT was any
thing less than a maritime lien according to Greek
law, I do not believe that NAT would have been
entitled to participate in this distribution at all.
II
The second head of attack mounted by counsel
for Baseline is that Canadian jurisprudence sup
ports my making further refinements and distinc
tions to the principle that "Canadian courts will
recognize maritime liens validly created in a for
eign jurisdiction". His argument can be summa
rized as follows:
A maritime lien validly created in the lex loci
would be recognized as such in the lex fori
provided it was the proper subject-matter of a
maritime lien or a claim in rem in the lex fori
and only then would it be ranked according to
the relevant provisions of the lex fori.
Counsel for Baseline submits that as the three
leading Canadian cases dealing with the recogni
tion of foreign maritime liens all arose from the
same narrow fact situation, (necessariesmen),
there is room for me to distinguish these cases and
therefore to import a restriction into the principle
enunciated by the Supreme Court.
In order to fully explore the impact of counsel's
argument and its possible ramifications, it is neces
sary to review at some length not only the
Supreme Court decisions, but also an early case
decided in the United Kingdom, The Colorado,
which was followed in The Strandhill; and a
recent Privy Council decision (Bankers Trust
International Ltd. v. Todd Shipyards Corpn. (The
Halcyon Isle), [1981] A.C. 221 (P.C.)) which
appears to pursue a completely different approach
than that taken by our courts.
One of the most important early cases dealing
with the recognition of maritime rights arising
from a foreign jurisdiction is The Colorado,
[ 1923] P. 102 (C.A.). This case dealt with a
French-flagged ship which was subject to a hypo-
thèque validly constituted under French civil law.
The ship was seized and sold in the United King
dom at the behest of some Welsh necessariesmen
who had performed repairs on The Colorado when
it was docked at Cardiff. The holder of the hypo-
thèque appeared before the Court a full year after
the ship had been sold and claimed an interest in
the proceeds.
The English Court of Appeal, in upholding the
decision of the Trial Judge, held that in maritime
matters, the nature of the right asserted is properly
analysed under the law of the contract where it
arose, whereas the remedy which this right is to be
given is determined according the law of the forum
where the claimant seeks relief. Lord Justice Atkin
stated, at page 110 of the decision:
Where parties are litigating in this country in respect of rights
created elsewhere, to ascertain their rights we may look, in
appropriate cases, to the law of the country where the contract
was made, or where the thing over which rights are claimed
was situate, or where the person claiming the right is domiciled;
but to ascertain the remedies which the Court will give to
enforce the rights we have to look to the law of this country, the
lex fori.
The Court of Appeal therefore proceeded to
make a determination of the nature of the hypo-
thèque under French law. Evidence was given by
an expert who stated that under French law, the
hypothèque created a right in rem which entitled
the holder of the hypothèque to pursue the ship
into the hands of innocent purchasers of the res.
Their Lordships were hence of the opinion that the
holder of the hypothèque enjoyed rights analogous
to the maritime lienholder, and that the claimant
must be treated as a lienholder in an English
Court.
The Court of Appeal went on to apply English
law with respect to the ranking of the respective
claims. As the holder of a maritime lien or its
equivalent, the holder of the hypothèque ranked
ahead of the necessariesmen, who were not able to
claim the benefit of a possessory lien. It is
extremely important to note that in France, the
claim of the holder of a hypothèque would be
subordinated to the claim of necessariesmen in the
determination of priorities, but as the right accord
ed to the claimant was separate from the remedy
sought, this did not affect the outcome of the case
when heard in an English Court.
The Colorado laid the foundation for the logic
pursued in The Strandhill, and subsequently, The
Har Rai, and The Ioannis Daskalelis. In each of
these cases, it was held the contracts for necessar
ies entered into in the United States will be treated
before Canadian courts according to the laws of
the United States with respect to the substance of
the claims asserted, but ranked according to the
Canadian law with respect to the priority of this
type of claim in a distribution.
It is at this point that counsel for Baseline is
attempting to import a limitation into what would
appear to be a general rule with respect to the
recognition of foreign maritime liens in Canada.
Counsel has argued that as the claims of necessar-
iesmen in Canada are recognized as being claims
in rem, the fact that an American statute enhances
the status of these claims into a full blown mari
time lien is merely a case of polishing up an apple
into a bigger and brighter apple. He extended his
analogy to the case before me and stated that the
Greek legislation creating a maritime lien in
favour of NAT was an attempt to make an orange
into an apple, and that this situation could never
have been contemplated by the Supreme Court;
that it was an extension of the principle beyond all
logical limits.
Despite its initial appeal, I cannot agree with the
contention that this restriction can be imported
into Canadian law. The Supreme Court has clearly
stated on several occasions that the substantive
rights of the parties are to be determined by
reference to the lex loci. The treatment which
Canada as the forum would accord such a claim in
its domestic law does not enter into consideration.
As Mr. Justice Ritchie stated in quoting from the
decision at first instance in The Strandhill, at page
1252 of The loannis Daskalelis:
In rendering the judgment at first instance in the Nova Scotia
Admiralty District, Mellish L.J.A., said:
If a maritime lien exists, it cannot be shaken off by changing
the location of the res. A foreign judgment in rem creates a
maritime lien and even although such a judgment could not
have been obtained in the courts of this country, it will be
enforced here by an action in rem. But a maritime lien may
be created by foreign law otherwise than by a judgment in
rem; and if it be so created I think that it can be equally
enforced here in the same way. If the plaintiffs have lawfully
acquired the right to the res even under foreign law, it would
be strange if they had not the liberty to enforce it here in the
only court providing relief in rem.
It is important at this point to examine the way
in which an English Court, in dealing with a
virtually identical fact situation, has come to a
conclusion radically different from that of the
Supreme Court of Canada. In The Halcyon Isle
(supra), the Privy Council dealt with the issue of
whether an American necessariesman is entitled to
claim the benefit of a maritime lien in a distribu
tion of a fund following a seizure and sale of a ship
in Singapore. The Privy Council specifically reject
ed the Supreme Court of Canada's reasoning in
The Ioannis Daskalelis and held that both the
creation and ranking of claims against the res are
to be determined by the lex fori, as if the events
giving rise to the right had occurred in the United
Kingdom, instead of in the jurisdiction where they
actually did happen.
In coming to this conclusion, the Privy Council
stated that Mr. Justice Ritchie's decision in The
boannis Daskalelis was based on a faulty analysis
of The Colorado (supra). Their Lordships stated
that The Colorado was not a case dealing with
maritime liens at all. In their view, the reference
with respect to French law was made only to
determine whether or not the hypothèque in ques
tion could be considered to have been of the same
rank as an English mortgage, and not to determine
whether it was entitled to the same treatment as a
maritime lien. This contention is made despite that
fact that Scrutton L.J. quite clearly conducts an
analysis of the hypothèque in terms of the lan-
guage of maritime liens, and not as if the object of
the exercise was to determine whether or not the
hypothèque is analogous to an English mortgage.
With all due respect to their Lordships, I will
follow Mr. Justice Ritchie as I believe that the
decision in The Halcyon Isle is a clear departure
from that in The Colorado and is based on a
misconception of the significance of the case. Any
attempt to review the claim asserted by NAT in
terms of Canadian law would be a clear departure
from the reasoning of the Supreme Court and to
follow the Privy Council, would, in my respectful
opinion, not be a reflection of Canadian maritime
law today.
Moreover, the decision of the Privy Council in
The Halcyon Isle was by no means unanimous.
Two of the five members dissented. During the
course of their review of the two competing theo
ries of recognition of foreign maritime liens, the
dissenting Lords, Salmon and Scarman, recog
nized that the route chosen by Canada could be
seen as an encouragement to the mounting of
spurious claims through the legislative process of
other nations, although they ultimately approve of
the Canadian approach. As their Lordships stated
in their joint dissenting judgment, at page 244:
Whether it be put in terms of the law of the sea or of the rules
of private international law, the question has to be asked and
answered in this appeal: does English and Singapore law recog
nise a foreign maritime lien, where none would exist, had the
claim arisen in England or Singapore? Whatever the answer,
the result is unsatisfactory. If in the affirmative, maritime
states may be tempted to pass "chauvinistic" laws conferring
liens on a plurality of claims so that the claimants may obtain
abroad a preference denied to domestic claimants; if in the
negative, claimants who have given the ship credit in reliance
upon their lien may find themselves sorely deceived. If the law
of the sea were a truly universal code, those dangers would
disappear. Unfortunately the maritime nations, though they
have tried, have failed to secure uniformity in their rules
regarding maritime liens: see the fate of the two Conventions of
1926 and 1967 (British Shipping Laws, 2nd ed., vol. 8 (1973),
pp. 1392, 1397) each entitled (optimistically) an International
Convention for the Unification of Certain Rules of Law relat
ing to Maritime Liens and Mortgages. Though it signed each of
them, the United Kingdom has not ratified either of them . ....
In such confusion policy is an uncertain guide to the law.
Principle offers a better prospect for the future.
Their Lordships' reservations are commendable
in view of the desirability of a uniform approach to
international maritime law. The mobility of the
ships is such that those engaged in maritime trade
ought to be able to do so with the knowledge that
they will enjoy uniform rights and obligations
wherever their voyage takes them. Until this ideal
state is reached however, I would have preferred a
more "chauvinistic" result, or at least a sense that
Canadian courts are able to safeguard the interests
of Canadians who provide services to foreign ships
and have no way of ascertaining whether or not
the ships are subject to a broad range of charges of
which they could have no knowledge.
In reviewing the three Canadian cases referred
to, I feel that the result in each case was dictated
to some extent by the fact that the claimants were
Americans, citizens of a major partner of our
country. I can understand that our Courts would
be loath to lend their assistance to a party who
need simply sail across a river or a lake into
Canadian waters to avoid contractual obligations.
I am prepared to speculate that the result reached
might have been very different in the case of a
limited fund where the rights of a Canadian claim
ant would be subordinated to those of a foreign
lienholder whose existence could not have been
anticipated. This appears to be the operating prin
ciple behind the majority decision in The Halcyon
Isle (supra).
As it happens, in the case before me, the party
that stands to lose the most is a Greek mortgagee
who was well acquainted with NAT and cannot
plead surprise at the discovery of a secret charge.
Despite the analysis used by the Supreme Court
of Canada, I do not believe that our courts will be
inevitably led to the recognition of spurious claims
for maritime liens purportedly created by legisla
tive flat in a foreign jurisdiction. In The Strandhill
(supra), the limitations to the application of the
general principle were discussed. Mr. Justice New-
combe held that a foreign lien would not be
enforced in this country when to do so would be
either contrary to Canadian public policy or where
the contract in question is void for immorality. Mr.
Justice Newcombe stated, at pages 686-687 of The
Strandhill:
It cannot of course be said that the contract is void on the
ground of immorality, nor is it contrary to such positive law as
would prohibit the making of it, and therefore I think that the
right which has accrued under or incident to it, may be
recognized and enforced, if the tribunal to which the plaintiff
has resorted has the requisite jurisdiction.
It is a basic tenet of conflict of laws that foreign
law which is proven to be contrary to the positive
law of a country will not be applied by the latter's
courts. The operation of this principle is illustrated
in the case of Laane & Baltser v. Estonian S.S.
Line, [1949] S.C.R. 530; [1949] 2 D.L.R. 641
where the Supreme Court refused to recognize the
expropriation of a ship by the decree of a foreign
government due to the penal nature of the decree.
In contrast with the Laane case (supra), NAT is
a duly constituted public authority charged with
the administration of certain funds for the benefit
of Greek seamen who served aboard the Galaxias
and I do not believe that the recognition of this
body and its right to participate in the proceeds
would be in any way contrary to Canadian public
policy.
If, however, another jurisdiction purported to
create maritime liens with respect to the unpaid
personal or corporate income tax obligations of the
ship's owner, I believe that a Canadian court
would refuse to enforce such a lien, and would do
so on the grounds that to recognize it would be
contrary to Canadian public policy.
Canadian maritime law exists in part to
acknowledge claims in rem made by any party who
provides services to a ship. The purpose of this rule
is evidently that those who maintain a ship and
keep her productive create a benefit to all those
who have an interest in her. Maritime law has
determined that the other creditors of the ship
must acknowledge the importance of services ren
dered to her, and that most other claims are
subordinated to those of seamen and repairers in
possession.
In The Strandhill (supra), Newcombe J. stated,
at pages 684-685 of his judgment:
In The Ripon City ([1897] P.D. 226, at pp. 241, 242, 243,
246), Gorrell Barnes J., in the course of an instructive judg
ment, adopts Lord Tenterden's definition, and he says:
The definition of a maritime lien as recognized by the law
maritime given by Lord Tenterden has thus been adopted. It
is a privileged claim upon a thing in respect of service done to
it or injury caused by it, to be carried into effect by legal
process.
One of the most important claims which has
long been recognized as giving rise to a maritime
lien is the claim for seamen's wages, including
emoluments. It is perfectly in keeping with
Canadian public policy that all the incidents of the
seamen's right to wages and benefits be recognized
as giving rise to a lien as the Greek government
purports to have done. The fact that the Canadian
government has not created an analogous lien to
benefit Canadian sailors does not affect the validi
ty of NAT's claim. For over sixty years, the
American necessariesman has enjoyed rights supe
rior to the Canadian necessariesman before
Canadian courts by operation of the same princi
ple of law. In my opinion, this is not a case where
policy should override principle.
III
The third argument made before me was that I
do not have jurisdiction to hear the claim asserted
by NAT, as it is not a basic maritime claim. I will
deal with this issue by making some general com
ments with respect to jurisdiction and then relating
them specifically to NAT's claim.
The jurisdiction of the. Federal Court with
respect to maritime law has been exhaustively
analysed by the Supreme Court of Canada on
several occasions in the last decade. I have
reviewed these authorities and it is my understand
ing that the Federal Court has jurisdiction in
maritime matters if the following three conditions
are met:
I. There must be a statutory grant of jurisdiction by the
federal Parliament.
2. There must be an existing body of federal law which is
essential to the disposition of the case and which nourishes the
statutory grant of jurisdiction.
3. The law on which the case is based must be "a law of
Canada" as the phrase is used in s. 101 of the Constitution Act,
1867.
(ITO—International Terminal Operators Ltd. v.
Miida Electronics Inc. et al., [1986] 1 S.C.R. 752,
at page 766 per McIntyre J.)
From the same judgment, it is evident that
section 22 of the Federal Court Act [R.S.C. 1970
(2nd Supp.), c. 10] is sufficient to satisfy the
purely statutory requirements of the tripartite test.
With respect to the second requirement, Mr. Jus
tice McIntyre continued, at page 769 of ITO:
To decide if the second requirement is met, it must be
determined whether Canadian maritime law or any other law
of Canada relating to any matter coming within the class or
subject of navigation and shipping is essential to the disposition
of the case and nourishes the statutory grant of jurisdiction. On
this point, no "other law of Canada" was referred to as being
essential to the disposition of the case or as nourishing the
statutory claim of jurisdiction of the Federal Court.
Canadian maritime law, as defined in s. 2 of the Federal
Court Act, can be separated into two categories. It is the law
that:
(1) was administered by the Exchequer Court of Canada on its
Admiralty side by virtue of the Admiralty Act or any
other statute; or
(2) would have been so administered if that court had had on
its Admiralty side unlimited jurisdiction in relation to
maritime and admiralty matters.
At page 774 of the same judgment, McIntyre J.
concludes that although jurisdiction in some cases
is founded on a historical precedent, in others, a
broader approach must be taken. He states:
An historical approach may serve to enlighten, but it must not
be permitted to confine. In my view the second part of the s. 2
definition of Canadian maritime law was adopted for the
purpose of assuring that Canadian maritime law would include
an unlimited jurisdiction in relation to maritime and admiralty
matters. As such, it constitutes a statutory recognition of
Canadian maritime law as a body of federal law dealing with
all claims in respect of maritime and admiralty matters. Those
matters are not to be considered as having been frozen by The
Admiralty Act, 1934. On the contrary, the words "maritime"
and "admiralty" should be interpreted within the modern con
text of commerce and shipping ....
In order to resolve the question of jurisdiction, it
is thus no longer necessary to conduct a minute
historical analysis to determine whether or not the
claim made by a seamen's pension fund could have
been considered to be a maritime claim or lien
under English maritime law as it may have existed
either in 1891 or 1934.
As early as The Strandhill, supra, the Supreme
Court recognized that the jurisdiction to give
effect to American statutory liens was not founded
on the existence of a comparable provision in
Canadian legislation. The proper issue to consider
was whether the Federal Court (then the Excheq
uer Court) would have had jurisdiction, had such a
comparable enactment been made by a Canadian
legislative act. The Court in The Strandhill had no
doubt on the facts before it that this was so; nor do
I believe that it is beyond doubt that if the federal
government were to create a body analogous to
NAT and secure monies owing to it by means of
maritime liens, that this Court would have the
jurisdiction to hear and adjudicate claims with
respect to liens created in this manner.
There is however a much simpler way of viewing
the whole issue of jurisdiction. If Canadian law
requires that we decide whether or not a claim
amounts to a maritime lien according to the lex
loci of the claim, I fail to see how the Federal
Court could lack jurisdiction over what Canadian
conflicts of law has dictated must amount to a
maritime lien in this country. I believe that this is
the approach taken in The Har Rai. Paragraph
22(2)(m) and subsection 43(3) of the Federal
Court Act would appear to limit the right in rem
of necessariesmen to the case where the beneficial
owner of the ship at the time when the action is
brought is the same as at the time when the
obligation was incurred. When however an Ameri-
can necessariesman claimed a maritime lien with
respect to an obligation which arose where there
was not an identity of beneficial owners as
required by subsection 43(3), the Court held that
it had jurisdiction to receive and give effect to the
claim. As Mr. Justice Le Dain stated, at page 355
of The Har Rai:
In my view, the jurisdiction to enforce a maritime lien for
necessaries must be considered to be in addition to the jurisdic
tion conferred by paragraph 22(2)(m) of the Act with respect
to a claim for necessaries that is unsecured by maritime lien.
Otherwise the limitation imposed by subsection 43(3) of the
Act on the in rem jurisdiction of the Court with respect to a
claim mentioned in paragraph 22(2)(m)—that it shall not be
exercised unless at the time of the commencement of the action
the ship is beneficially owned by the person who was the
beneficial owner at the time when the cause of action arose—
would deprive the lien of one of its principal effects.
In essence, the Court drew its jurisdiction from
the fact that the claimant enjoyed a maritime lien
under American law which could be recognized
under the general jurisdiction in subsection 22(1)
and not by reason of the enumeration of the claims
in rem in subsection 22(2).
Even if this analysis is too simplistic, I note that
the NAT claim is not entirely without analogy in
the Canadian legislative context.
As an example, subsections 284(1) and (2) of
the Canada Shipping Act, R.S.C. 1970, c. S-9,
provide a mechanism whereby a public authority
may recover monies disbursed for seamen's medi
cal needs "in the Court and in the manner in
which wages may be recovered by seamen". This,
in my understanding creates a maritime lien in
favour of the appropriate public authority. I note
that the Supreme Court of Prince Edward Island
has held (Household Finance Corp. of Canada v.
Hill; C.N.R. Co., Garnishee (1970), 13 D.L.R.
(3d) 737) that monies withheld from seamen's
wages as pension benefits constitute "emoluments"
under an earlier version of the Canada Shipping
Act, namely R.S.C. 1952, c. 29 and are hence not
subject to garnishment proceedings under provin
cial law.
The attack mounted by counsel for Baseline on
the jurisdiction of this Court to hear NAT's claim
was primarily founded on The Acrux, [1965] 2 All
E.R. 323 (H.C. Adm. Div.). The facts in that case
were remarkably similar to those in the case before
me. In The Acrux, a corporate body created under
the law of Italy for the purposes of providing social
benefits to Italian sailors, claimed the benefit of a
maritime lien with respect to a large sum of over
due contributions of both seamen and owners. Mr.
Justice Hewson of the Admiralty Division of the
English High Court was of the opinion that the
claimant should be entitled to claim a maritime
lien (page 331), however, he did not feel that he
had jurisdiction to entertain the claim. He rea
soned that the claim could not be ranked under
paragraph 1(1) (o) of the Administration of Jus
tice Act, 1956 [(U.K.), 4 & 5 Eliz. 2, c. 46] which
is similar to paragraph 22(2)(o) of the Federal
Court Act ("any claim by a master, officer or
member of the crew of a ship for wages, money,
property or other remuneration or benefits arising
out of his employment"). The claim made by NAT
does not come within paragraph 22(2)(o) for the
reasons discussed by Mr. Justice Hewson, it is not
a claim made "by a master, officer or member of
the crew of a ship".
Mr. Justice Hewson then went on to consider an
excerpt from Dicey's Conflict of Laws (7th ed.)
which states that any action in rem which is
brought in an English Court must relate to a
question or claim specified to be within the Admi
ralty jurisdiction as determined by the domestic
law. He stated, at page 331, with reference to Lord
Justice Scott's decision in The Tolten. United
Africa Co., Ltd. v. Owners of M.V. Tolten, [1946]
2 All E.R. 372 (C.A.):
In my view, this particular maritime lien for unpaid insurance
contributions is not one which is recognised by this court. In
view of SCOTT, L.J.'s approval of DICEY'S pronouncement, I
am unable to stretch this court's equitable jurisdiction to
include it; that is a matter for the legislature or, it may be,
some higher court. No case has been quoted to show, much as I
desire to do it, that I may enlarge the jurisdiction to benefit the
foreign claimants when English claimants have no similar
benefits conferred on them. [Emphasis added.]
In my opinion, this excerpt underscores the dif
ference between the law in the United Kingdom,
and the law in Canada.
In the first place, there is ample authority in this
country which gives this Court jurisdiction to
recognize a maritime lien where a domestic trader
would not be entitled to the benefit of one. Fur
thermore, as the Canadian court determines the
nature of the claim according to the lex loci, even
if the claim is not enumerated in the subsections of
subsection 22(2), (as in The Har Rai), the very
fact that it is validly constituted as a maritime lien
in the lex loci is sufficient to put it within the
jurisdiction of the Federal Court.
The Acrux may be based on a similar fact
situation but the underlying law is totally differ
ent. I do not intend to follow it.
The final requirement of the tripartite test for
the establishment of jurisdiction is simply stated
by Mr. Justice McIntyre, at page 777 of the ITO
decision (supra):
The third requirement that the law in question must be a law of
Canada, as that expression is used in s. 101 of the Constitution
Act, 1867, is also met because Canadian maritime law and
other laws dealing with navigation or shipping come with s.
91(10) of the Constitution Act, 1867, thus confirming federal
legislative competence.
I therefore find that to the extent to which the
amount claimed by NAT can be proven, it is a
maritime lien which is recognized by this Court
and will be ranked accordingly.
Finally, it was argued before me that the monies
expended by NAT in paying the crew's salary
after seizure and in repatriating the seamen were
paid on a voluntary basis. Although these claims
would have been the subject of a maritime lien in
the hands of the crewmen involved, counsel argues
that a lien cannot be transferred and it was hence
extinguished when NAT stepped forward and sup
plied the money itself. There is no merit in that
argument. Evidence was submitted to the effect
that providing repatriation expenses and payment
of salaries under the extraordinary situation in
which the Galaxias' crew found themselves was
required by Greek law. The words of article
205(b) of the Code of Maritime Law (supra) "the
claims of the seamen's pension fund", do not
exclude monies paid to stranded sailors. The entire
amount of NAT's claim is protected by a maritime
lien and will be dealt with accordingly.
There is one further argument urged by counsel
for Baseline Industries Ltd. and the National Bank
of Greece S.A., and it is one which I view in a very
serious light: he claims that the maritime lien is
not an indelible right, it is one that can be extin
guished by behaviour which on the lienholder's
part amounts to laches or acquiescence. As this is
an issue which properly applies to the question of
ranking, it will be discussed in that context below.
(ii) and (iii) SEAMEN'S WAGES, INCLUDING
CREWMEMBERS AND MUSICIANS'
CLAIMS TO A MARITIME LIEN
Apart from the crew of the Galaxias on board
the ship from Piraeus (their right to a maritime
lien with respect to wages is beyond question), the
members of the band "Passport of Acapulco" are
also claiming the benefit of a maritime lien. The
band members were engaged in Mexico to play
aboard the Galaxias both en route to Vancouver
and once docked there. They are claiming unpaid
wages in the amount of $23,427.20.
I am satisfied that the terms "seaman" and
"member of the crew" in the Canada Shipping
Act (supra) and the Federal Court Act (supra)
respectively, should be given a very broad interpre
tation (Balodis et al. v. The Ship "Prince George",
[1985] 1 F.C. 890 (T.D.)). It has also long been
recognized that the cruise ship has particular
needs with respect to crew, based on the nature of
the enterprise (e.g. Connor v. The "Flora" (1898),
6 Ex.C.R. 131).
In my opinion a band of musicians engaged by
contract for the entertainment of passengers at sea
on a cruise ship are as integral a part of the crew
as are the galley staff, stewards and cabin boys. It
remains to be determined therefore whether the
fact that the Galaxias subsequently docked at
Vancouver and set up connections with the shore
for the purpose of establishing a "floating hotel"
would have the effect of changing the nature of the
musicians' employment so that the wages attribut
able to the latter part of their services would not
be accorded the protection of a maritime lien.
Eric Cochegrus-Montes in his affidavit dated
April 13, 1987 filed in support of the claim of all
the members of "Passport of Acapulco" states that
the band was taken aboard the cruise ship Galaxy
(sic) on June 17, 1986 and performed until Sep-
tember 28, 1986 when their employment was ter
minated. He introduces as an exhibit to his affida
vit the agreement between the owners' agents and
the band and it seems clear that the band was
engaged to live and perform on the ship for the
time stipulated, with no distinction made between
the time at sea and the time when the Galaxias
was to be docked in Vancouver Harbour. I also
note that Elias Metaxas, purser of the Galaxias,
included the individual members of the band on a
crew list under the heading Additional Crew List,
and counted them in a "grand total of crew mem
bers" on this list (exhibit C to the affidavit of Eric
Cochegrus-Montes).
It is my view that the definition of "seaman" is
no longer bound by such terminology as "by voca
tion a seafaring man" and work connected there
with (Macbeth & Co. v. Chislett, [1910] A.C. 220
(H.L.), at page 223). I have also reviewed the
cases relating to services provided by engineers
and nightwatchmen (e.g. Llido v. The Lowell
Thomas Explorer, [1980] 1 F.C. 339 (T.D.)) and
I do not believe that these cases are of assistance
on this point of law. These cases are readily distin
guishable in that in both instances the Court found
that the claimant was neither on board ship nor a
member of the crew in situations quite different
from the one before me.
As a further note of interest I would add that if
counsel is advancing the proposition that the dock
ing of the ship as a "floating hotel" with connec
tions to the dock was sufficient to alter the nature
of the employment of the band members, this
could also presumably apply not only to the rest of
the crew but also to any subsequent lien claimants,
including the wharfinger, Baseline Industries Ltd.
This is clearly not the case, and I find therefore
that the musicians are entitled to a maritime lien
with respect to wages earned during the full term
of their employment including repatriation
expenses and interest.
In this respect, they join Elias Metaxas et al.
and the balance of the crew members who are
without question entitled to a maritime lien with
respect to the provable quantum of their claim,
with interest.
(iv) THE CLAIM OF THE AMERICAN NECESSAR-
IESMEN
Two individuals, a Mr. Czech and Mr. Legge
duly filed a statement of claim and supporting
affidavits claiming the benefit of a maritime lien
as providers of necessaries to the Galaxias on its
voyage from Piraeus, Greece, to Vancouver, Brit-
ish Columbia. The parties did not appear, nor were
they represented at the January 4, 1988 hearing
although it would seem, that Mr. Czech, in any
event, was informed of the hearing date well in
advance and in fact submitted a letter to the
Registry with a request that it he put before the
Court pursuant to Rule 324 [Federal Court Rules,
C.R.C., c. 663].
The assertion that these claims were maritime
liens caused me a great deal of concern due to the
existence of the decisions referred to above,
namely, The Strandhill and The b annis Daskale-
lis (supra) which would appear to leave no doubt
that Canadian courts will acknowledge a validly
created maritime lien held by an American provid
er of necessaries. Needless to say, these claimants
would be entitled to a high ranking in the distribu
tion of the proceeds if the material filed by the
claimants establishes that they are entitled to a
maritime lien.
Despite the direction given by The Ioannis Das-
kalelis et al with respect to the treatment accord
ed to an American statutory maritime lien once
proven, the onus naturally rests on the claimants to
establish that their claim would be a valid mari
time lien under the relevant American law. I am
also mindful of the fact that in the absence of
adequate proof to the contrary, I am entitled to
assume that the law relating to a question before
me, is the same as the law of Canada on the issue
(Fernandez v. "Mercury Bell" (The), [1986] 3
F.C. 454, (sub nom. "Mercury Bell" (The Ship) v.
Amosin et al.) 27 D.L.R. (4th) 641 (C.A.)).
A review of the documents filed by the Ameri-
can claimants reveals:
(i) an affidavit from a Canadian solicitor (now
without instructions and no longer solicitor of
record) which introduces a quantity of unex
plained photocopied documents (the Sachs affida
vit);
(ii) two affidavits filed by another solicitor (from
the same firm) stating that each of the claimants
Czech and Legge are entitled to maritime liens
against the Ship Galaxias in the amounts of
$58,000 and $290,432 (U.S.) respectively for sup
plying monies which were used to pay crew's
wages and purchase fuel and provisions (the Cun-
ningham affidavits);
(iii) an affidavit from the claimant Czech person
ally, reiterating the statements in the Cunningham
affidavit referring to his claim;
(iv) the affidavit of another solicitor from the firm
above,, introducing some comments with respect to
American maritime liens and, as an Exhibit, a
document entitled "Agency Agreement and Gua
rantee" apparently made between the claimants
and a Mr. Brian L. Burry, agent for the charterer
of the Ship (the Perrett affidavit);
(v) the affidavit of Brian Burry indicating that he
received monies from the claimants and either
purchased necessaries himself for the ship or gave
them to a Mr. Berry Jones who used the funds tc
purchase necessaries; and
(vi) the letter written by Mr. Czech to the Court
indicating that he claims a maritime lien with
respect to the monies paid and that Mr. Czech is
willing to provide any further material that the
Court may need.
Rule 1008 of the Federal Court Rules [C.R.C.,
c. 663] provides that the Court has broad discre
tion to regulate the procedure relating to the dis
tribution of proceeds of property arrested under a
warrant. Paragraph 1008(2) states:
Rule 1008. ...
(2) For the purpose of any application under paragraph (I),
the Court may, at the time it makes the order for sale of the
property or at any time thereafter, give directions as to notices
to be given to other possible claimants to such money, and as to
advertising for such other claimants, as to the time within
which claimants must file their claims, and generally as to the
procedure to be followed to enable the Court properly to
adjudicate upon the right of the parties, and to give judgment
upon any claim or claims against the money in court; and any
claim that is not made within the time limited, and in the
manner prescribed, by such an order of the Court shall be
barred, and the Court may proceed to determine the other
claims and distribute the moneys among the parties entitled
thereto without reference to any claim so barred. [Emphasis
added.]
Pursuant to an order of this Court, dated
November 10, 1987, any party desirous of leading
opinion evidence with respect to foreign law was to
do so by December 9, 1987 and all particulars of
claims were to be submitted by November 23,
1987. I therefore intend to determine the rights of
the claimants Legge and Czech by the material
filed by them or on their behalf thus far.
Apart from the claims themselves, the only evi
dence proferred as to American law appears in
paragraph 4 of the Perrett affidavit which I
reproduce in full:
4. 1 am advised by David T. McCune, an attorney experienced
in maritime law, practicing as a partner in the San Francisco
firm of Lillick, McHose and Charles, and verily believe as
follows:
"It is my preliminary opinion based upon review of the
Agency Agreement dated May 20, 1986 (signed by Brian L.
Burry), the list of payments made from funds supplied by the
plaintiffs William S. Czech and John Legge to enable the
"Galaxias" to cruise from Greece to Vancouver, British
Columbia, and the supporting invoices and other documents
itemizing the said payments, that, assuming United States
law applies to the Agreement, the plaintiffs acquired mari
time liens against the Galaxias to the extent the funds
advanced under the Agreement were used to satisfy obliga
tions giving rise to maritime liens, which include specifically
advances to pay for crew salaries and wages, fuel, provisions
and port expenses." [My emphasis.]
Even if I were prepared to accept the statement
of Mr. Perrett that he verily believes Mr.
McCune's assessment of the claimants' position,
the opinion of an expert is not admissible in this
Court when the expert is not available for cross-
examination (Rule 482 of the Federal Court Rules
(supra)). In any event, there is a problem arising
from a close examination of the quotation which is
fatal to the claimants' assertion. Mr. McCune
states that the payments made by Czech and
Legge would be the subject of a maritime lien
"assuming United States law applies to the Agree
ment". Mr. McCune makes no comment on
whether it does or not. In my opinion, it clearly
does not.
The agency agreement and guarantee was not
signed by the claimants, only by Brian L. Burry.
Its purpose is to provide for the transfer of funds
from the claimants to the then owner of the
Galaxias, Hellenic Cruise Lines. The latter com
pany is Greek. The Galaxias was a Greek flagged
ship and the monies forwarded during the voyage
were disbursed in Greece, the Canary islands,
Aruba, Panama, Mexico, the United States and
Canada. The claimants were American, and the
payments were made in United States dollars. No
indication as to the place where the contract was
signed is in evidence. The claimants' investment is
guaranteed by a Canadian company, then a pros
pective purchaser of the Galaxias.
The choice of law of the contract falls to be
determined according to the laws of Canada, the
lex fori. In the absence of an express or implied
provision relating to a choice of laws, it must be
determined by the law with which the transaction
has the closest and most real connection (Castel,
J.-G. Conflict of Laws: cases, notes and materials,
(2d ed.), page 530). In the absence of any convinc
ing proof to the contrary, I hold this to be the law
of the flag of the Galaxias, namely Greek law.
The question of the claimants' lien in American
law need no longer be addressed. There is nothing
to indicate that in Greek law the provider of
necessaries is accorded a maritime lien so I there
fore would place the claimants Czech and Legge
on the same footing as Canadian necessariesmen,
claimants in rem.
I should also comment that the sum total of
evidence proferred by the claimants falls far short
of establishing the validity of any of these claims.
The Perrett affidavit, while evidently filed in sup
port of motion to amend the statement of claim
would not have been sufficient to establish that the
arrangement between the claimants and Mr. Burry
for Hellenic Cruises would give rise to the benefits
of a maritime lien under American law.
(V) CLAIM BY BASELINE TO A POSSESSORY LIEN
Baseline Industries Ltd. (Baseline) a Vancouver
wharfinger, has advanced a claim for in excess of
$450,000 for services rendered to the ship before
March 24, 1987 including berthage and repairs as
outlined in the Birmingham affidavit dated
November 23, 1987. Baseline further alleges that
as it was in possession of the ship at the time of
assumption of her control by the Marshal of the
Federal Court, that it is entitled to priority in
ranking second only to maritime liens as it had a
possessory lien over the Galaxias. Counsel for
Baseline has acknowledged that the possessory lien
extends only to the sum of $5,652.67 which was
monies expended on repairs and improvements to
the Galaxias. The balance of the claim is with
respect to necessaries provided to the ship, the
subject of a claim in rem. The leading authority
cited by Baseline with respect to possessory liens
for repairmen is the case of Montreal Dry Docks
Co. v. Halifax Shipyards (1920), 69 S.C.R. 359.
In keeping with that case, I am satisfied that
Baseline's claim for repairs has the attributes of a
possessory lien and will be treated as such. The
balance of his client's claim will be ranked as a
statutory claim in rem.
(vi) THE CLAIMS OF THE CANADIAN NECESSAR-
I ESMEN
The numerous claims made by Canadian provid
ers of necessaries are claims in rem. The claims
ranged from laundry services to provision of sup
plies and repairs, medical services and promotional
services. These claims are properly received
against the proceeds of the sale of the Galaxias
pursuant to paragraphs 22(1)(m) and (n) of the
Federal Court Act.
(vii) THE CLAIMS OF THE MORTGAGEE, THE
NATIONAL BANK OF GREECE S.A.
The mortgagee is apparently the holder of five
preferred mortgages, substantially in arrears,
which total approximately three times the value of
the proceeds. The material filed on behalf of the
mortgagee namely the affidavit of Steve E. Yan-
nakeas (sworn April 22, 1987) and the notice to
admit amply introduce and outline the documenta
tion on which the mortgagee relies. The authentici
ty and effect of the mortgages were not
challenged.
(viii) RANKING OF CLAIMS
The law with respect to the ranking of liens was
lucidly reviewed by Keirstead D.J. in the case of
Comeau's Sea Foods Ltd. v. The "Frank and
Troy", [1971] F.C. 556 (T.D.), at page 560:
Priority between liens: The ranking of liens becomes impor
tant when the value of the res is insufficient to satisfy all the
claims against it. Certain general rules have been laid down to
determine priorities but these rules are subject to many
exceptions.
The order of preference between liens may be generally
stated to be as follows:
(i) Cost of rendering a fund available by the sale of the res:
The lmmacolata Concezione (1873) 9 P.D. 37;
(ii) Maritime liens;
(iii) Possessory liens;
(iv) Mortgages;
(v) Statutory liens.
The time when a lien attaches is material in determining
priorities. A maritime lien attaches when the event giving rise
to the lien occurs. A possessory lien arises when the claimant
obtains possession of the property. A statutory lien arises when
a suit is instituted to enforce the lien.
As District Judge Keirstead stated above, how
ever, these rules are subject to many exceptions. I
have previously raised the issue of equitable con
siderations in the ranking of maritime liens and I
will now address it in full.
I am satisfied that equitable considerations can
play an important role in the ranking of claims as
was evident in the Montreal Dry Docks case
(supra). These cases appear to be founded on the
doctrine of unjust enrichment (Montreal Dry
Docks) or laches and acquiescence, Can. Steam
ship Lines v. The "Rival", [1937] 3 D.L.R. 148
(Ex.Ct.)
As Mr. Justice Walsh stated in Osborn Refrig
eration Sales and Service Inc. v. The Atlantean I,
[1979] 2 F.C. 661 (T.D.), at page 686:
While fundamental rules as to priorities should not be
ignored there is some authority for the proposition that equity
should be done to the parties in the circumstances of each
particular case.
Counsel for the crew has also provided a British
textual reference namely British Shipping Laws,
(1980), D. R. Thomas, vol. 14, at page 281 on the
same topic:
The Court of Admiralty, in harmony with the courts of law
and equity, has long recognised the dangers of "stale claims"
and therefore insisted that claims be advanced with reasonable
expedition. A lienee who sleeps on his claim may well discover
the judicial forum to be unsympathetic and unwilling to offer a
remedy, particularly if the delay has been coupled with a want
of due diligence or proved prejudicial to third parties. Given the
nature of a maritime lien it is patently transparent that inactivi-
ty on the part of the lienee is capable of working substantial
harm on the innocent and unsuspecting. This danger was
recognised as early as The Bold Buccleugh where the Privy
Council combined the cautious restraint of the doctrine of
laches with their exposition of the newly coined maritime lien.
Sir John Jervis observed:
"It is not necessary to say that the lien is indelible, and may
not be lost by negligence or delay, where the rights of third
parties may be compromised; but where reasonable diligence
is used, and the proceedings are had in good faith, the lien
may be enforced into whosesoever possession the thing may
come."
Prior to May 1986, the Galaxias was in Greek
waters. At that point as much as three years'
worth, and possibly even more, of contributions
were outstanding and yet NAT allowed the ship to
leave Greek waters and set sail for Canada to
incur further obligations to innocent suppliers in
Canada, and it would appear, in the United States.
As I understand it, my powers in equity to upset
the orders of priority long established in Canadian
maritime law should be exercised only where
necessary to prevent an obvious injustice. It is not
immediately obvious to me that this is likely to
occur if I do not intervene. With respect to the
claims of NAT as they affect the claims of the
National Bank of Greece S.A., as stated previous
ly, the Bank of Greece must be well aware of the
statutory authority of NAT and cannot plead sur
prise with respect to NAT's claim. Furthermore, it
ill behooves the Bank to raise the question of
laches on NAT's behalf for it too allowed the
Galaxias to sail from Greek waters while subject
to a mortgage, which as far as I can determine,
was for an amount several times the appraised
value of the ship.
The claims of the Canadian necessariesmen
rank unquestionably below those of the mortgagee
and due to the considerable amount owing on the
mortgage they are not in any way affected by the
ranking of NAT's claim.
The possessory lienholder Baseline will probably
collect the small amount of its lien regardless of
whether NAT is successful or not. I further note
on viewing the reference before Mr. Charles Stin-
son with regard to the payment of the Marshal's
costs for the maintenance and sale of the
Galaxias, in excess of $150,000 that Baseline is
not walking away from this affair empty handed
and I do not feel there is any reason to invoke
equitable principles so as to upset the rules of
ranking on this ground.
I do however feel that it is not appropriate to
rank the seamen's wages pari passu with the
claims of NAT and the liens of the American
necessariesmen, had they been proven. Even
though this Court recognizes that the enactment of
foreign statute can create a maritime lien, I do not
believe that the ranking of this type of claim has
yet been specifically considered in Canadian juris
prudence particularly as it applies to seamen's
wages. Historically, these maritime liens have been
given unquestioned priority and I intend to do so
as well.
I would also like to make it quite clear that any
seamen's claims for gross wages should be reduced
by the amount of their contribution, as such sums
are part of the maritime liens claimed by NAT.
Furthermore, any repatriation expenses or addi
tional salaries already paid by NAT to or for the
benefit of seamen must be deducted from the
claims made by the seamen and made part of
NAT's claim.
Although I am not disposed to exercise my
equitable jurisdiction in favour of any party to this
action by disturbing the ranking of their respective
claims, for the reasons given, I do intend to make
certain orders with respect to costs and interest
which will reflect my displeasure with the conduct
of NAT in this and related actions
NAT clearly attorned to the jurisdiction of this
Court and has been given every opportunity to
argue its claims before me. It has met with a
considerable degree of success and will receive
almost total satisfaction for the full amount of its
substantial claim. Despite the ultimate vindication
of its position in law, I am not satisfied that
NAT's behaviour as a party warrants the equitable
consideration of the Court in either an award of
costs, or an ward of interest on its claim.
During the course of this action, several claim
ants brought a motion to hold a show cause hear
ing with respect to a possible contempt of court on
the part of NAT. In the face of an unequivocal
order of this Court to produce the deletion certifi
cate which would enable the purchaser of the
Galaxias to register the ship in Greece in its name,
NAT pleaded after a significant delay, that it was
unable to produce such a certificate. It argued that
the issuance of such a certificate was at the discre
tion of the Minister of Merchant Marine, that the
latter refused to comply, that its hands were tied,
and that no contempt was intended.
I accepted this argument because the Minister
of Merchant Marine was not a party to the pro
ceedings and I did not feel that, in the circum
stances, an order of contempt was appropriate. I
did nevertheless feel that costs and disbursements
should be awarded to the party who brought the
contempt motion, and this was reflected in my
order.
Apart from the issue of contempt however, I am
mindful that virtually all of the costs of the allied
action T-2297-87, brought by the Deputy Marshal
against the purchaser Global Cruises S.A. were
occasioned by the failure of the appropriate organ
of the Greek government to produce the certificate
in question. All of the costs incurred by Global in
mounting the counterclaim and defending the
action were also in my opinion reasonable and
understandable, and were as a direct result of
NAT's failure to indicate right from the earliest
moment possible that the issuance of the certifi
cate was outside its power, and even likely to be
refused by the Minister.
In addition, Global experienced considerable
difficulties in arranging for the payment of the
balance of the purchase price due to the concerns
of investors relating to the attitude of the Minister
of Merchant Marine. Global was also forced to go
to the expense of arranging for the reflagging of
the Galaxias in Antigua, and is really for all
practical purposes prevented from sailing the
Galaxias into Greek waters, which the purchaser
had indicated was one of the reasons why Global
was interested in acquiring the vessel.
Some of the parties to these proceedings have
been forced to participate in several additional
motions resulting from NAT's conduct and all of
the parties have been affected by the long delays in
disbursement of the proceeds of the sale. NAT was
at this time itself actively pursuing a claim before
me, knowing full well that the rules of law and
equity would prevail, regardless of its activities.
In addition, both the fund and the Registry
Office of the Federal Court were put to consider
able expense in complying with the procedural
requirements of service of the relevant documents
in Greece, as well as the need to provide Greek
translation of court orders.
Although I am still of the opinion that NAT is
not in contempt of Court, I feel very strongly that
this Court will not stand idly by in the face of
what is tantamount to blackmail by them. NAT
has asked this Court to adjudicate on the merits of
its claim, and yet holds in reserve a powerful
weapon over the purchaser of the Galaxias, pre
sumably to cover the eventuality that the Court
would not recognize the claims it asserts. Even
though this behaviour does not technically amount
to contempt of court, it does prompt me to make
the following orders with respect to costs and
interest.
On January 6, 1988, I rendered an oral judg
ment in Court Action T-2297-87 which was fol
lowed by a written judgment on February 10,
1988. At that time, costs were awarded to the
plaintiff Krochenski with respect to the main
action and the counterclaim against the defendant
Global Cruises S.A. After serious consideration
and much reflection, I am satisfied that the costs
which were to have been paid by Global Cruises
S.A. were the direct result of the failure of NAT
to arrange for the issuance of the necessary certifi
cate through the Minister of Merchant Marine, or
at least to alert the Court in a frank and timely
fashion of the problems it was encountering. If
these costs have already been taxed and paid, I
order that they be reimbursed to Global by NAT,
if they have not already been paid, they shall be
paid to the plaintiff Krochenski by NAT directly,
following taxation. The costs incurred by Global
were also as a direct result of the actions and
conduct of NAT through its Minister and I intend
to order that Global's costs in action T-2297-87 be
taxed and paid by NAT.
With respect to the interest claimed by NAT on
the monies owing to it in the action T-2406-86, I
am satisfied that the provisions for interest in the
relevant Greek statute are more than generous and
on one interpretation could amount to an almost
usurious rate. I seriously considered therefore the
possibility of not allowing the claims for interest
relating to the period when the Galaxias was
outside Greek waters.
Ultimately, and with some reluctance, I believe
that the full claim for interest as provided by
Greek law must be allowed up to the date of arrest
of the ship. Up until that time, the claim by NAT
to a maritime lien is determined by the lex loci of
the claim, namely the law of Greece. Maritime
liens could validly attach to her until this law was
interrupted or superseded. The relevant Greek
statute secures the claim of interest on unpaid
contributions with a maritime lien, and this claim
should be acknowledged.
After the seizure however, the right to interest is
a remedy which is determined according to the lex
fori, and for the reasons given above, I believe that
NAT has disentitled itself from the consideration
of the Court to such an award. This limitation does
not apply to the sums expended by NAT to repa
triate the crew and to pay them salary advances,
nor does it apply to monies owed to NAT by the
crew. These amounts will be subject to the rate of
6% interest per annum.
Finally, I also feel that it is appropriate that I
order that all amounts owing to NAT be held by
the Court pending the delivery of a valid deletion
certificate which would be sufficient to release the
ship Galaxias from any and all claims outstanding
against it in the Greek Registry. Furthermore,
should the purchaser Global so elect, the reregis-
tration of the Galaxias shall take place in Greece
at the expense of NAT with all formalities duly
complied with.
The Court acknowledges the valuable assistance
of the solicitor for the seamen who has been
entirely successful in advancing the claims of his
clients before this Court. His clients throughout
were in a most preferred position but payment was
unnecessarily delayed for months because of the
actions of NAT or the Minister of Merchant
Marine of Greece. I am therefore prepared to
entertain a motion for costs over and above the
regular Tariff to fix an appropriate amount in this
regard and any additional costs which I may
award in excess of the Tariff will be payable by
NAT.
The other parties are entitled to their costs.
I therefore rank the various claims of the parties
as follows (the first of the claims has already been
dealt with):
(1) Marshal's costs;
(2) Seamen's maritime lien (all claimants) includ
ing all wages and repatriation expenses not already
paid by NAT, excluding any statutory contribu
tions owing to NAT; NAT's claim to maritime lien
with respect to repatriation expenses, wages paid
to crew and any deductions and contributions out
standing from the arrival of the ship in Canada;
interest at the rate of 6% per annum; costs of the
solicitor for all the wage claimants and costs relat
ing to the bringing of a representative of the
seamen to Vancouver, fixed at $5,500, costs of the
party Global in action T-2297-87;
(3) The claim of NAT to a maritime lien with
respect to the balance of outstanding contributions
and deductions accruing before arrival in Canada
and interest determined by statute thereon up to
the date of arrest;
(4) Baseline's claim for a possessory lien with
respect to repairs only;
(5) The claim of the National Bank of Greece
S.A., mortgage holder;
(6) All claims from Canadian and American
necessariesmen, and other statutory claimants in
rem, pari passu.
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.