2014 FC, 2014 FC 1205

Date: 20141212 Docket: T-2371-14 Citation: 2014 FC 1205 Ottawa, Ontario, December 12, 2014 PRESENT: The Honourable Mr. Justice Harrington ADMIRALTY ACTION IN REM AND IN PERSONAM BETWEEN: BBC CHARTERING CARRIERS GmbH & Co.

KGPlaintiffandJINDAL STEEL & POWER LIMITED, AND THE OWNERS AND ALL OTHERS INTERESTED IN THE CARGO OFPRIME HOT ROLLED STEEL PLATES LOADED ON THE SHIP “MV KURT PAUL”Defendants ORDER AND REASONS (Delivered from the Bench at Ottawa, Ontario, 12 December 2014, the Court reserving the right to correct errors in grammar, if any, and complete citations) [1] The Court is faced with a motion by Jindal Steel & Power Limited to have the arrest of certain cargo covered by bill oflading number BBCH1106008VH08 by the plaintiff, set aside on the basis that this Court lacks jurisdiction in rem. [2] The motion is made pursuant to Rule 221 of the Federal Courts Rules.

Normally, a motion that pleadings should be struck asnot disclosing a cause of action is heard without the benefit of affidavit evidence. However, when the failure to disclose a cause of actionpertains to the jurisdiction of the Court, affidavit evidence is allowed (MIL Davie Inc. v Hibernia Management and Development Co. (FCA), 226 NR 369 (FCA), [1998] FCJ No 614 (QL).

Nevertheless, the Court is not called upon to determine themerits of the dispute but rather to determine whether it is plain and obvious that the plaintiff does not have a cause of action in remwithin the jurisdiction of this Court (Hunt v Carey Canada Inc., (SCC), [1990] 2 SCR 959, [1990] SCJ No 93 (QL)). [3] The dispute arises under a voyage charter party in the well known Gencon form between the plaintiff as owner (in fact, timecharterer) and Jindal as voyage charterer. Although the charter party calls for London arbitration, the jurisdiction of this Court is notousted.

Under the Commercial Arbitration Act and the Code which is a

schedule thereto, a plaintiff may seek interim measures from thisCourt, which is the case here. [4] The plaintiff claims demurrage at discharge and other expenses. It relies on the lien clause, clause 8 of the charter party,which provides that it has a lien on the cargo for freight, dead freight, demurrage, claims for damages, and all other amounts due underthe charter party. [5] Jindal was the shipper under bills of lading issued, which were subject to the charter party.

The uncontradicted evidence isthat the bills of lading had been negotiated and Jindal no longer has control over the cargo. [6] Jindal’s argument is that the lien contemplated by clause 8 of the charter party is a possessory lien and that BBC Charteringhas lost possession as it discharged the cargo. The difficulty I have with that argument is that the demurrage clause, clause 7, includesdemurrage at the discharge port.

How can demurrage, which is time in excess of the agreed laytime, accrue unless the cargo has beendischarged and, in these circumstances, unless the plaintiff has lost possession of the cargo? [7] At this stage of the proceedings, the controlling case is that of Mr. Justice Muldoon in Textainer Equipment ManagementB.V. v Baltic Shipping Company, 84 FTR 108, [1994] FCJ No 1267 (QL).

It is certainly arguable that the plaintiff has at least anequitable charge on the cargo and would be entitled to arrest same. [8] Consequently, the motion to set aside the arrest and to dismiss the action in rem is dismissed. [9] The Court is also faced with a motion on behalf of the plaintiff BBC Chartering Carriers GmbH & Co. KG to enforce anagreement to provide security for London arbitration. The dispute arises form the fact that the bank guarantee offered has a two-yeartime limit which is unsatisfactory to BBC. I agree. Security stands as payment for a final judgment or arbitration award as the case maybe.

Security which lapses after two years is not security at all. However, I need not deal with that motion and I am adjourning it sine die. [10] The fact of the matter is that the cargo under bill of lading number 8 remains under arrest and can only be released if bail isgiven. Under Rule 486 of the Federal Courts Rules, the parties are free to agree, including an agreement to release the cargo in favour ofsecurity placed in London arbitration. However, failing that, the sufficiency of any security is to be determined by the Court under Rule486(4).

As I understand it, the parties have agreed that the amount of security should be $200,000. Unless the parties reach an agreementthemselves, this Court will not release that cargo unless there is a guarantee by a Canadian chartered bank. That guarantee may have an

expiration date but must, in that case, include an evergreen clause, which is to say it will be automatically renewed from time to time. If the bank decides not to renew, the guarantee must provide that $200,000 will be deposited with the Federal Court Registry. Otherwise, the security may be in a form of bond by a surety company, again in accordance with Rule 486, or cash deposit into the Registry. [ 11 ] Costs shall be in the cause. ORDER FOR REASONS GIVEN; THIS COURT ORDERS that : 1. The motion by Jindal Steel & Power Limited to set aside the arrest and dismiss the action is dismissed, costs in the cause. 2.

The motion by BBC Chartering Carriers GmbH & Co. KG to enforce a security agreement is adjourned sine die . “Sean Harrington” Judge FEDERAL COURT SOLICITORS OF RECORD docket: t-2371-14 STYLE OF CAUSE: BBC CHARTERING CARRIERS GmbH & Co. KG v JINDAL STEEL & POWER LIMITED ET AL PLACE OF HEARING: BY WAY OF VIDEOCONFERENCE BETWEEN OTTAWA, ONTARIO AND TORONTO, ONTARIO DATE OF HEARING: DECEMBER 12, 2014 ORDER AND REASONS HARRINGTON J. DATED: December 12, 2014 APPEARANCES : Alan S. Cofman For The PLAINTIFF Reeva M. Finkel For The DEFENDANTS SOLICITORS OF RECORD : Isaacs & Co.

Barristers & Solicitors Toronto, Ontario For The PLAINTIFF Blaney McMurtry LLP Barristers & Solicitors Toronto, Ontario For The DEFENDANTS