A Newfoundland seafood processor has won a $100,000 lawsuit against a fisherman who agreed to buy a boat and a fishing licence shortly before the Newfoundland government imposed the moratorium on fishing cod.
According to court documents obtained by the Telegram, fisherman Wayne Coady of St. John’s agreed in December 1991 to buy the unfinished boat Penney’s Dream. He bought it for a dollar, and the agreement was Coady would complete the vessel’s construction and then pay Quinlan Brothers Ltd. about $1 million after it was finished. The following May, Quinlan Brothers agreed to transfer an otter trawl licence to Coady, allowing him to harvest groundfish by dragging an otter trawl along the ocean floor. Coady agreed to pay 10 per cent of his total catch from the trawl or $100,000 in a lump sum at any time.
By the time Coady finished Penney’s Dream — and renamed it Atlantic Storm — and began fishing, it was June 1992, shortly before the cod moratorium was declared on July 2 that year. Coady’s plans were dealt another blow later that month when he was denied financing from the Fisheries Loan Board, which he was counting on to pay for the Atlantic Storm.
“Mr. Coady subsequently ret-urned the ‘bluebook’ for the Atlantic Storm to an employee of Quinlans, and on Sept. 30, 1992, he formally conveyed his interest in the vessel back to Quinlans for $1,” according to court records. What was to be done with the otter trawl licence was not discussed at the time, but in 1997, Coady began to fish on it, but didn’t sell the 10 per cent of his catch to Quinlans or pay the lump sum. In 2002, the company sued him for the return of the licence.
Shortly after Coady learned of the lawsuit he sold the licence to a third party for $275,000, so Quinlan Brothers amended its claim, seeking monetary damages based on the original agreement.
The judge dismissed Quinlan Brothers’ suit, deciding the company and Coady “implicitly agreed to abandon or walk away from their rights and obligations pursuant to the otter trawl licence agreement in the summer of 1992,” but a Supreme Court appeal last month overturned the ruling and found in favour of Quinlan Brothers.
Newfoundland and Labrador Supreme Court Justice Lois Hoegg found fault with inferences made by the trial judge, such as that the Quinlans presumably let Coady keep the otter trawl licence — rendered much less valuable by the moratorium — as compensation for his work in making the Atlantic Storm seaworthy. But Hoegg noted the moratorium also made the Atlantic Dream considerably less valuable too.
“While there is little doubt that a fully constructed vessel is better than an incompletely constructed vessel, the value of the Atlantic Storm may have been affected by the moratorium,” wrote Hoegg in her May 9 decision. “The trial judge found that the otter trawl licence was worth less as a result of the moratorium, but he did not apply similar reasoning to the value of the vessel.”
Hoegg found the trial judge “committed palpable and overriding error” in applying the law to determine Quinlan Brothers and Coady had agreed to abandon the otter trawl licence agreement, saying no agreement was ever made.
“Mr. Coady’s position was only that he assumed that Quinlans was not standing on its contractual rights because the otter trawl licence had not been discussed. Ignoring an agreement by the parties does not establish a new agreement to end the old one,” she wrote. Hoegg awarded Quinlan Brothers $100,000 plus pre-judgment interest accruing from the date of its claim, as well as court costs.
Coady could not be reached for comment. Calls to Quinlan Brothers requesting comment from president Patrick Quinlan — named in the decision as the company principal who made the deals with Coady — were not returned.