Verreault Navigation Inc. v. 662901 N.B. Ltd.

Verreault Navigation Inc. v. 662901 N.B. Ltd.

The Court held that Verreault possesses a valid possessory lien for services while the Chaulk Lifter was in its possession but must have deductions for damage to third party property, tax rebates and an allowance for alleged excessive profit, leaving a possessory lien of $324,839.01; Trois‑Rivières is entitled to payment of its registered mortgage of $56,305.83; the Administrator of the Ship‑source Oil Pollution Fund and the Canadian Coast Guard have valid claims against the proceeds of the sister ship but rank pari‑passu as ordinary creditors; the Chaulks' registered mortgage is subordinated and ranks after ordinary creditors; Ketah's claim is dismissed as unrelated to the Chaulk Lifter;...

Citation
2016 FC 1281
Parties
Plaintiff/claimant (shipyard and Arresting Creditor): Verreault Navigation Inc.; Owner/defendant (registered Owner of Chaulk Lifter): 662901 N.B. Ltd.; Defendant/related Corporate Party: CAI Group Inc.; Claimant (harbour Authority and Mortgagee): L'Administration portuaire de Trois‑Rivières; Claimants (mortgagees): Brent and Morris Chaulk; Claimant (seeking Security Under Marine Liability Act/bunker Convention): Administrator of the Ship‑source Oil Pollution Fund; Claimant (pollution Response Costs): Canadian Coast Guard / Minister of Transport; Claimant (lender; Claim Dismissed): Ketah Investments Inc.
Court
Federal Court
Jurisdiction
Canada
Judgment Date
17 November 2016
Procedural Posture
Admiralty Action in Rem and in Personam (distribution of Proceeds of Sale of Ship) / Hearing on Motion for Payment Out of Sale Proceeds and Judgment Disposing Priority of Competing Claims; Judgment Issued
Outcome
Motion granted in part and dismissed in part: ordered specified payments out of proceeds; possessory lien recognized with deductions; Ketah's claim dismissed; Chaulks' mortgage subordinated; remaining funds distributed pro rata among ordinary creditors; no other costs ordered.
Legal Topics
Possessory Lien, Priority of Maritime Claims, Sister Ship Claims, Marine Mortgage, Custodia Legis, Ship‑source Oil Pollution Fund (bunker Convention), Maritime Liens Vs Statutory Liens, Security and Distribution of Sale Proceeds
Source Language
English
Admiralty Law Maritime Law Marine Pollution Liability In Rem Proceedings Insolvency and Secured Transactions Possessory Lien Priority of Maritime Claims Sister Ship Claims +5 more

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Parties

Verreault Navigation Inc.

Plaintiff/claimant (shipyard and Arresting Creditor)

662901 N.B. Ltd.

Owner/defendant (registered Owner of Chaulk Lifter)

CAI Group Inc.

Defendant/related Corporate Party

L'Administration portuaire de Trois‑Rivières

Claimant (harbour Authority and Mortgagee)

Brent and Morris Chaulk

Claimants (mortgagees)

Administrator of the Ship‑source Oil Pollution Fund

Claimant (seeking Security Under Marine Liability Act/bunker Convention)

Canadian Coast Guard / Minister of Transport

Claimant (pollution Response Costs)

Ketah Investments Inc.

Claimant (lender; Claim Dismissed)

Procedural Posture

Admiralty Action in Rem and in Personam (distribution of Proceeds of Sale of Ship) / Hearing on Motion for Payment Out of Sale Proceeds and Judgment Disposing Priority of Competing Claims; Judgment Issued

Legal Issues

  1. 1 Whether Verreault's possessory lien covers its full asserted claim and its priority over existing mortgages
  2. 2 Quantum reductions to possessory lien for damage, taxes rebate and alleged profit
  3. 3 Whether the Administrator of the Ship‑source Oil Pollution Fund has a claim against proceeds of sale of a sister ship and the nature/priority of that claim

Ratio Decidendi

The Court held that Verreault possesses a valid possessory lien for services while the Chaulk Lifter was in its possession but must have deductions for damage to third party property, tax rebates and an allowance for alleged excessive profit, leaving a possessory lien of $324,839.01; Trois‑Rivières is entitled to payment of its registered mortgage of $56,305.83; the Administrator of the Ship‑source Oil Pollution Fund and the Canadian Coast Guard have valid claims against the proceeds of the sister ship but rank pari‑passu as ordinary creditors; the Chaulks' registered mortgage is subordinated and ranks after ordinary creditors; Ketah's claim is dismissed as unrelated to the Chaulk Lifter;...

Court Disposition

Motion granted in part and dismissed in part: ordered specified payments out of proceeds; possessory lien recognized with deductions; Ketah's claim dismissed; Chaulks' mortgage subordinated; remaining funds distributed pro rata among ordinary creditors; no other costs ordered.

Orders

  • Pay Verreault Navigation Inc. $328,145.24 (costs $3,306.23 and possessory lien $324,839.01) out of proceeds of sale of Chaulk Lifter
  • Pay L'Administration portuaire de Trois Rivieres $60,899.19 (mortgage $56,305.83 plus $4,593.36) out of proceeds