N.L. fishing companies in tug of war over towing bill

Two power players in the Newfoundland and Labrador fishing industry are bickering over the nearly half-a-million-dollar fee being charged for towing services after one vessel became stranded in thick ice and issued a call for help in January.

The dispute between Ocean Choice International and Newfound Resources has now reached the Federal Court, with one vessel being arrested by sheriffs last week, and both sides accusing the other of wrongdoing.

Newfound has gone to court, trying to recover the nearly $270,000 plus HST it says it is owed by Ocean Choice, while Ocean Choice has paid $200,000 to Newfound, and is refusing to hand over any more cash, saying the bill is excessive.

The matter escalated July 19, when the Newfoundland Lynx, which harvests Ocean Choice's shrimp quota, docked in Harbour Grace. Sheriffs boarded the vessel and arrested it.

The Lynx was released the next day, but only after Ocean Choice paid a release fee of $320,000 to the Federal Court.

Lynx loses propulsion

It all started Jan. 30, while the Newfoundland Lynx was harvesting shrimp for Ocean Choice in the Hopedale Channel, off the coast of Labrador.

The Lynx lost propulsion in ice-infested water and issued a distress call. The Canadian Coast Guard was unable to respond, so the Newfoundland Victor, which harvests Newfound's shrimp quota and was fishing nearby, came to its aid.

In a sworn affidavit to the Federal Court, Newfound CEO Mark Quinlan said he agreed to have the Victor tow the Lynx into Conception Bay, but at a price of $130,000 per day, plus a $75,000 fee to cover Newfound's lost fishing revenue.

The meter started running from the time the Victor stopped fishing early on Jan. 30 to respond to the Lynx's distress call, until the Lynx reached Conception Bay. 

Mark Quinlan declined an interview request. In court documents, he wrote that Ocean Choice leadership accepted the terms, so the tow got underway.

But email exchanges reveal how those in charge of Ocean Choice's fleet pushed back against Quinlan.

'We need to be paid fairly'

OCI fleet director Peter Adams wrote: "We realize we are at your mercy and will accept what you end up charging us, but I do ask that you take another look at the numbers to see if there is anything else you can do to bring the cost down."

But Quinlan was firm in his response, writing, "We need to be paid fairly and I thought my offer was fair."

Quinlan said his terms were "supported by our costs and economics." He said Newfound paid a daily tow rate of  $100,000 to another company four years ago to have the Victor rescued, when fuel prices and the market value for shrimp were much lower. 

Quinlan also called the tow request "a big inconvenience for us."

It took four days for the Victor to tow the Lynx into Conception Bay, with the tow line being released early on the morning of Feb. 3.

In what Quinlan described in an email as a goodwill gesture, Newfound gave Ocean Choice a one-day credit, so the total bill came in at $467,700, plus HST.

In the weeks that followed, Quinlan made repeated written and verbal requests for payment, but Ocean Choice refused to pay up.

Nearly four months later, Ocean Choice CEO Martin Sullivan wrote Quinlan, refusing to acknowledge there was any agreement on pricing back in February.

On June 19, Ocean Choice made a payment of $200,000 plus HST to Newfound, which was less than half of the invoice amount.

With both sides at a stalemate, Newfound took its case to the Federal Court, asserting what's called a maritime lien over the Lynx for the amount owing: nearly $270,000 plus HST.

In a telephone interview this week, Sullivan called Newfound's legal action "an extremely excessive and unwarranted approach."

Sullivan accused Newfound of trying to take advantage of the situation to charge them almost three times what he thinks the bill should be.

"And that's what we believe is unfair."
        
Sullivan said the Victor was nearly full of shrimp on Jan. 30 and was about to leave the fishing grounds anyway. He believes the Victor lost 1.6 days of fishing; not four.

"We offered to pay them $100,000 a day," he said, which would have been $160,000. But the amount Newfound wants works out to close to $300,000 a day by Sullivan's calculation of 1.6 days. "And we thought that was very excessive."

Vessels are obliged to come to the aid of others in distress, and Sullivan said the dispute with Newfound Resources won't change his company's approach to that philosophy.

But he admitted relations are raw between Ocean Choice and Newfound, and said he was disappointed no one at Newfound warned them of boat's impending seizure.

"For not even to get a call that your boat is getting arrested, that was pretty unprecedented. We would never do something like that," said Sullivan.

Sullivan said his company is preparing a statement of defence and fully expects to recover the money it paid to the Federal Court for the release of the Lynx.

"This has to be settled either in court or out of court before things get put to bed," he said.

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