The Robert Simpson Montreal Ltd. (Plaintiff)
v.
Hamburg-Amerika Linie Norddeutscher, Lloyd
Ernst Russ, and Montreal Shipping Co. Ltd.
(Defendants)
and
Hamburg-Amerika Linie Norddeutscher and
Lloyd Ernst Russ (Third Party Plaintiffs)
and
Warnock Hersey International Ltd. and Montreal
Shipping Co. Ltd. (Third Party Defendants)
Trial Division, Walsh J.—Montreal, March 19;
Ottawa, March 26, 1973.
Maritime law—Jurisdiction—Parties—Action for loss of
cargo against ship—Ship claiming indemnity from wharfin-
ger—Jurisdiction—Federal Court Act, s. 22.
Plaintiff brought action against a carrier and shipowner
alleging that upon the ship's arrival at Montreal, plaintiff's
cargo was found in a short and damaged condition. The
carrier and shipowner denied liability and alleged that the
damage occurred after the cargo was discharged into the
custody of terminal operators, and by third party notices
claimed indemnity from them.
Held, the Court had no jurisdiction under section 22 of
the Federal Court Act with respect to the claim by the
shipowner and carrier against the terminal operators, and
the third party notices must be dismissed.
MOTION by defendants to strike out third
party notices.
COUNSEL:
V. Prager for plaintiff.
E. Baudry for defendants.
D. Marier for third party defendants.
SOLICITORS:
Stikeman, Elliott, Tamaki, Mercier and
Robb, Montreal, for plaintiff.
Brisset, Reycraft, Bishop and Davidson,
Montreal, for defendants.
Chauvin, Marler, Dion and Saucier, Mont-
real, for third party defendants.
WALSH J.—This action arose out of loss of or
damage to part of a shipment of woollen goods
and carpets shipped from Antwerp to Montreal.
Paragraph 3 of the statement of claim reads:
3. When the said vessel arrived at the Port of Montreal,
Quebec, Canada, Plaintiff's said cargo was found to be in a
short, damaged and deteriorated condition and notice of loss
was duly given to the Defendants and joint surveys were
held;
Plaintiff's claim against defendants is based on
breach of contract and on tort. Defendants,
Hamburg-Amerika Linie Norddeutscher and
Lloyd Ernst Russ, in their statement of defence
deny any liability on the part of the ship, invok
ing specifically the clause in thé bill of lading
relating to non-responsibility for loss and/or
damage occurring after discharge and state that
the shipment was placed into a harbour transit
shed in the Port of Montreal by Eastern Canada
Stevedoring Division of Warnock Hersey Inter
national Ltd., and into the possession, care,
custody and control of the said firm and that of
Montreal Shipping Company Limited, the latter
firm having leased the shed, and both the said
Eastern Canada Stevedoring and Montreal Ship
ping Company Ltd. then carrying on a joint
venture as terminal operators under the name of
Montreal Shipping Terminals, and allege in gen
eral that they were responsible after discharge
until delivery. Said defendants gave notice to
the co-defendant, Montreal Shipping Company
Ltd. and a third party notice to Eastern Canada
Stevedoring Division of Warnock Hersey Inter
national Ltd. that should they fail in their
defence of the principal action they would claim
to be indemnified against them for the loss or
damage that occurred to the goods while in their
possession.
By the motion before me the third party
defendants now ask that the third party notices
be dismissed as the Court does not have juris-
diction over such a claim under the provisions
of the Federal Court Act.
In support of this counsel for the third parties
argued that only the carrier and owners were
sued by plaintiff and no attempt was made to
allege that the loss took place after delivery, and
that the only possible sections of the Federal
Court Act which could give jurisdiction to the
Trial Division of this Court over stevedores or
terminal operations would be section 22(2)(e),
(f), (h) or (i) and that a close analysis of each of
these paragraphs of the said section indicates
that none of them is applicable in the present
circumstances. Section 22(2)(J) reads as
follows:
22. (2) Without limiting the generality of subsection (1), it
is hereby declared for greater certainty that the Trial Divi
sion has jurisdiction with respect to any claim or question
arising out of one or more of the following:
() any claim arising out of an agreement relating to the
carriage of goods on a ship under a through bill of lading
or in respect of which a through bill of lading is intended
to be issued, for loss or damage to goods occurring at any
time or place during transit;
but in the present case there is no allegation that
there was a through bill of lading covering loss
or damage occurring at any time or place during
transit, and such a specific allegation would be
necessary to give jurisdiction under this section
had plaintiff intended to bring in stevedores or
warehousemen. Paragraph (e) only applies when
there is damage sustained by or resulting from
loss of a ship in which case cargo damage can
be included. Paragraphs (h) and (i) refer to
claims for loss of or damage to goods or arising
out of any agreement relating to the carriage of
goods "in or on a ship". The words "carriage of
goods in a ship" in section 18(3) of the former
Admiralty Act were held to be not broad enough
to include a case relating to damages to goods
landed from rather than carried in a ship (see
The Toronto Harbour Corn'rs v. The "Robert C.
Norton" [1964] Ex.C.R. 498). Counsel for third
party defendants argued that the law was not
changed with the adoption of the Federal Court
Act since section 42 of that Act reads:
42. Canadian maritime law as it was immediately before
the 1st day of June 1971 continues subject to such changes
therein as may be made by this or any other Act.
He contended that section 22(2)(h) and (i) of the
Federal Court Act is merely a rewording of
section 18(3) of the former Admiralty Act and
that the jurisprudence under that Act is still
applicable. This jurisprudence was reviewed in
the case of Maag and Company Limited et al.
and Eastern Canada Stevedoring Limited, an
unreported judgment of the Exchequer Court
dated October 20, 1969. That case dealt with a
motion by defendants Eastern Canada Steve-
doring Limited for an order that the action be
dismissed against it on the ground of lack of
jurisdiction of the Court for a claim covering
loss of or damage to goods occurring subse
quent to discharge and not caused by a ship.
Reference was made in it to The "Sparrow's
Point" v. Greater Vancouver Water District
[1951] S.C.R. 396, which had referred to the
scandal of bringing two actions, one against the
ship in Admiralty Court and another against the
Harbours Board in another Court, stating that
all claims arising out of damage occasioned by
the ship should be disposed of in one action. In
that case, however, there was no indication as
to which of the defendants was responsible for
the damage. In rendering judgment in the Maag
case I stated:
In the present case it would appear that the facts giving
rise to the action against the defendant Eastern Canada
Stevedoring Limited are inextricably part of the facts giving
rise to the action against the other defendants. At this stage
of the proceedings it is impossible to say which of the
defendants is responsible for the loss of the cargo or if the
liability would be based on contract or on tort. The allega
tions in the statement of claim indicate the intention of
attempting to establish that defendant Eastern Canada
Stevedoring Limited and the other co-defendants are joint
tortfeasors. Under the circumstances it would seem to be
highly unrealistic and undesirable to force plaintiff to bring
proceedings against the ship owners in the Exchequer Court
sitting in Admiralty, and against the defendants Eastern
Canada Stevedoring Limited in the Superior Court for the
Province of Quebec.
The situation is entirely different in the present
case when plaintiff not only did not choose to
sue the third party defendants, relying instead
on the liability of the three parties named as
defendants, but is itself against having the third
party defendants added, its counsel appearing to
join with counsel for the third party defendants
in asking for the dismissal of the third party
proceedings. Plaintiff is entirely satisfied to
limit its claim to the parties sued and does not
wish to expand the action and delay same by
bringing in third parties who would only be
responsible for the goods in question after dis
charge and plaintiff claims they were never dis
charged from the vessel.
Defendants for their part claim that the loss
occurred after discharge and are not entirely
satisfied that this constitutes a valid defence of
the action brought against them. They contend
that jurisprudence under the old Admiralty Act
is no longer applicable and that the Federal
Court's jurisdiction is not limited to situations
set out in the paragraphs of section 22(2) of the
Federal Court Act. Defendants' counsel relies
on section 22(1) which reads as follows:
22. (1) The Trial Division has concurrent original juris
diction as well between subject and subject as otherwise, in
all cases in which a claim for relief is made or a remedy is
sought under or by virtue of Canadian maritime law or any
other law of Canada relating to any matter coming within
the class of subject of navigation and shipping, except to the
extent that jurisdiction has been otherwise specially
assigned.
and on the definition of "Canadian maritime
law" contained in section 2 of the Act which
reads:
2. In this Act,
"Canadian maritime law" means the law that was adminis
tered by the Exchequer Court of Canada on its Admiralty
side by virtue of the Admiralty Act or any other statute,
or that would have been so administered if that Court had
had, on its Admiralty side, unlimited jurisdiction in rela-
tion to maritime and admiralty matters, as that law has
been altered by this or any other Act of the Parliament of
Canada;
He relies on the words "unlimited jurisdiction in
relation to maritime and admiralty matters". In
support of his argument that the jurisdiction of
the Court would not be limited to damage to
goods carried "in or on a ship" when interpret
ing section 22(2)(h) and (i), he refers to section
657 of the Canada Shipping Act, R.S.C. 1970,
c. S-9, which extends the responsibility of carri
ers "not only for goods received on board their
vessels, but also for goods delivered to them for
conveyance by any such vessel". He argues that
the Hague Rules permit a derogation from the
regular limitation of the ship's responsibility to
the tackle to tackle period so as to include
damages prior to loading or after discharge and
refers to a recent, and as yet unreported, judg
ment of the Quebec Court of Appeal rendered
on July 5, 1972 under No. 11,506 in the case of
Fjell-oranje Lines & Fjell Line v. Oranje Lijn
(Maatschapij Zee-Transport) N.V. et al. in
which Mr. Justice Owen stated at page 6:
Saying that the risk shifts from the carrier to the consign-
ee when the goods are discharged from the ship is not the
same thing as saying that the contract of carriage is ter
minated when the goods are discharged. The contract still
applies and the carrier still has the obligation to deliver to
the consignee after the goods have been discharged.
He argued that on this line of reasoning it might
not be a sufficient defence for his clients to say
that the goods were duly discharged but that
they might still be held liable and it was there
fore necessary to bring in the third party
defendants so as to settle all matters in dispute
between the parties. In that case the bill of
lading provided that after discharge the goods
would be at the entire risk of the consignee, and
the action against the carrier was dismissed. He
stated that at this stage of the proceedings it
cannot be said whether there was a similar
provision in the bill of lading. This is rather
specious arguing since defendants are well
aware of the terms of the bill of lading, and as
already stated in their defence they refer to the
fact that it contained a clause relating to non-
responsibility for loss and/or damage occurring
after discharge. Defendants' counsel further
invoked the provisions of Rule 1716(2)(b) of the
Federal Court Rules which reads as follows:
Rule 1716. (2) At any stage of an action the Court may,
on such terms as it thinks just and either of its own motion
or on application,
(6) order any person who ought to have been joined as a
party or whose presence before the Court is necessary to
ensure that all matters in dispute in the action may be
effectually and completely determined and adjudicated
upon, to be added as a party;
but no person shall be added as a plaintiff without his
consent signified in writing or in such other manner as the
Court may find to be adequate in the circumstances.
and Rule 1729(2) which reads:
Rule 1729. (2) The Court, upon the hearing of an applica
tion under paragraph (1), may strike out the third party
notice or may order the question of liability, as between the
third party and the defendant giving the notice, to be tried in
such manner, at or after the trial of the action, as the Court
may direct, and may give the third party liberty to defend
the action, upon such terms as may be just, or to appear at
the trial and take part therein, and generally may order such
proceedings to be taken and give such directions as may
appear proper for having the question between the defend
ant and the third party most conveniently determined, and
as to the mode and extent in or to which the third party shall
be bound or made liable by the judgment in the action.
contending that they indicate the desirability of
having all parties who may be concerned with
the outcome of an action before the Court so
that all matters in dispute can be effectually
determined and adjudicated upon. He also
invokes Rule 1726(1) which reads as follows:
Rule 1726. (1) Where a defendant claims to be entitled to
contribution or indemnity from, or to relief over against, any
person not a party to the action (hereinafter called the "third
party"), he may file a third party notice.
This argument must also be rejected. Even in
cases where it is desirable that third parties be
joined, and I am not so stating in the present
case, the Rules cannot permit the joinder of
them unless the Court would, by virtue of the
Act, have jurisdiction over the subject-matter of
the claim. This is made very clear by the
Supreme Court in Consolidated Distilleries Lim
ited v. Consolidated Exporters Corporation Ltd.,
[1930] S.C.R. 531 at p. 536 in which Chief
Justice Anglin stated:
It would, therefore, in our opinion, be beyond the power
of Parliament to legislate directly for the enforcement of
such a right in the Exchequer Court of Canada, as between
subject and subject, and it seems reasonably clear that
Parliament has made no attempt to do so. What Parliament
cannot do directly, by way of conferring jurisdiction upon
the Exchequer Court, that court cannot itself do by virtue of
any rule it may pass. It follows that, even if, ex facie, rule
262 of the Exchequer Court might be broad enough to
include a third party procedure in a case such as that now
before us, it cannot have been intended to have any such
effect, since so to construe it would be to attribute to the
Exchequer Court an intention, by its rules, to confer upon
itself a jurisdiction which it would transcend the power of
Parliament to give to it.
On this short ground the present appeal should be
dismissed.
While it might conceivably be convenient in some cases to
have the Exchequer Court exercise, by way of third party
procedure, a jurisdiction such as that here invoked, it cer
tainly cannot be said that it is "necessarily incidental" (City
of Montreal v. Montreal Street Railway [1912] A.C. 333, at
pp. 344-6) to the exercise by that court of the jurisdiction
conferred upon it by Parliament, that it should possess
power to deal with such matters, even where they arise out
of the disposition of cases within its jurisdiction. On the
other hand, in many cases, and not at all improbably in the
present case, it would be highly inconvenient that the Crown
should be delayed in its recovery against the defendant
liable to it while that defendant litigated with the third party
a claim—possibly very contentious—to be indemnified by it.
This statement is very pertinent to the present
case in that not only do third party defendants
contend that the Court does not have jurisdic
tion over the claim against them in the event
that it should be established that the loss
occurred after discharge, but plaintiff itself con
tends that it would be highly inconvenient that it
should be delayed in its recovery against the
defendants while they litigate with the third
parties a claim, possibly very contentious, to be
indemnified by them.
In the present case, if plaintiff had been
unable to determine when or how the loss
occurred and had chosen to sue not only the
ship and owners but also the stevedores and
warehousemen, no doubt the Court would have
accepted jurisdiction over all parties as in the
Maag case (supra). Plaintiff has chosen, how
ever, to adopt the position that the loss occurred
before the goods were discharged and is quite
satisfied to rely on this and take proceedings
against the defendants named. There is no jus
tification for defendants to attempt to enlarge
the scope of the proceedings and costs of same
by attempting to bring in the third party defend
ants. Defendants have already alleged in their
defence that the loss did not occur during car
riage and that they are not responsible for it, but
rather the third parties who had control of the
merchandise after discharge. If this defence is
successful, plaintiff's action will be dismissed
and defendants will have had no need to bring in
the third parties. Plaintiff itself would then have
to bring proceedings against the third parties,
should it choose to do so, in another Court. On
the other hand, should plaintiff succeed in its
action against defendants this will be because it
has been successful in establishing that the loss
or damage occurred during carriage, in which
event defendants' action for indemnity against
the third parties would fail and unnecessary
costs would have been incurred had they been
made parties to the principal action. In either
event I can see no necessity for joining them at
this stage of the proceedings. Neither do I agree
with defendants' contention that the Federal
Court Act has the effect of expanding the juris
diction of the Court so as to bring within its
ambit claims for damages for loss of merchan
dise after discharge, which jurisdiction it would
only have under section 22(2)(D when a through
bill of lading has been issued which, in the
absence of an allegation to this effect by plain
tiff or defendants, cannot be assumed to exist
here.
The motion of the third party defendants for
the dismissal of the third party proceedings
against them is therefore maintained, with costs.
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.