T-1453-74
The Queen (Plaintiff)
v.
Canadian Vickers Limited (Defendant)
and
Canadian General Electric Company Limited
(Third Party)
Trial Division, Addy J.—Montreal, February 17;
Ottawa, February 28, 1975.
Maritime law—Practice—Motion to strike third party pro-
ceedings—Defendant constructing ship for plaintiff—Crown
claiming $3.5 million for faulty installation of generators—
Third party notice against manufacturer of generators—Juris-
diction—Whether Parliament can legislate as to subcontracts
for building of parts of ship—Federal Court Act, ss. 2,
22(2)(n)—British North America Act, s. 91(10), 92(13), 101.
Plaintiff claims $3,500,000 for faulty installation of genera
tors in a ship constructed for it by defendant. Defendant claims
that third party is responsible to indemnify defendant. Third
party applies to have the notice struck out for lack of
jurisdiction.
Held, dismissing the application, the Parliament of Canada
has jurisdiction to legislate regarding construction of ships such
as that involved in the main action, and that jurisdiction
includes the power to legislate as to the respective rights and
duties of the builders and owners of such ships. Such power
extends to subcontracts where they are for the actual construc
tion of portions of the ship, and not merely remotely connected.
As to wether jurisdiction exists to try the issue arising out of
the subcontract between defendant and third party, jurisdiction
as to a third party issue must be considered on its own merits.
Here, the issue, dealing as it does with the actual construction
of an integral part of the ship is one which arises "out of a
contract relating to the construction of... a ship" within the
meaning of section 22(2)(n) of the Federal Court Act. The
plain and ordinary meaning of section 22(2)(n) is not limited or
restricted by section 22(1), and on reading section 2 of the
Federal Court Act, it is clear that the "law of Canada" in
section 22(1) has the same meaning as in section 101 of the
British North America Act, and, therefore, the words are
deemed to embrace not only a statute actually enacted b}y
Parliament, but also a law that it would be competent for
Parliament to enact, modify or amend.
Reference re Validity of Industrial Relations and Dis
putes Investigation Act (Can.) [1955] S.C.R. 529 and The
Robert Simpson Montreal Ltd. v. Hamburg-Amerika
Linie Norddeutscher [1973] F.C. 1356, applied. Grand
Trunk Railway Company of Canada v. Attorney General
of Canada [1907] A.C. 65; Attorney General for Ontario
v. Attorney General for The Dominion [1896] A.C. 348;
Ladore v. Bennett [1939] 3 D.L.R. 1; The Queen v.
Finlayson (1895-9) 5 Ex.C.R. 387; The King v. The Globe
Indemnity Company of Canada (1914-22) 21 Ex.C.R. 34
and Bow, McLachlan and Co., Limited v. The Ship
"Camosun" [1909] A.C. 597, considered.
APPLICATION.
COUNSEL:
No one for plaintiff.
G. Maughan and T. Montgomery, Q.C., for
defendant.
B. Lacombe for third party.
SOLICITORS:
Deputy Attorney General of Canada for
plaintiff.
Ogilvy, Cope, Porteous, Hansard, Marler,
Montgomery and Renault, Montreal, for
defendant.
Martineau, Walker, Allison, Beaulieu,
MacKell and Clermont, Montreal, for third
party.
The following are the reasons for order ren
dered in English by
ADDY J.: This is an application by the third
party by way of motion before delivery of a
defence thereto to have the third party notice
struck out for lack of jurisdiction of this Court to
entertain the third party claim. The grounds
advanced by the applicant at the hearing were that
any such claim, by reason of the British North
America Act, rests exclusively within the jurisdic
tion of the Superior Court of the Province of
Quebec and, alternatively, that in any event nei
ther section 22(2)(n) nor any other provision of
the Federal Court Act grants this Court jurisdic
tion to entertain the action.
The main action consists of a claim of over
$3,500,000 for the faulty installation by the
defendant of nine propulsion generators forming
part of the electric propulsion system of the ice
breaker Louis S. St. Laurent, during the construc
tion of the aforesaid ship for the plaintiff by the
defendant.
The defendant in its third party notice claims
that the said generators, which are the subject
matter of the main action, were built, furnished
and installed in the ship by the third party,
Canadian General Electric Company Limited, and
that, pursuant to a guarantee covering design,
materials and workmanship, the third party would
be responsible to indemnify the defendant against
the claim of the plaintiff.
The first point raised by the applicant third
party to the effect that it would not be within the
jurisdiction of Parliament to legislate in the matter
covered by the third party notice depends on the
interpretation of head 10 of section 91 of the
British North America Act, which provides that
Parliament has the right to legislate concerning
the matter of navigation and shipping. The specific
question is whether, in the exercise of its jurisdic
tion over navigation and shipping, the Parliament
of Canada can legislate, as to subcontracts, for the
building of parts of ships.
At the hearing, counsel for the applicant, con
trary to the more general wording of the notice of
motion, admitted that the Parliament of Canada
did in fact have jurisdiction over contracts for the
repair and construction of ships, but denied that it
had jurisdiction over the subcontracts.
Since jurisdiction cannot be granted by consent
and since the question had been raised originally in
the notice of motion, it would be preferable that a
specific finding be made on the broader aspect of
the problem.
The extent of the powers granted by Parliament
under the heading of "Navigation and Shipping"
and the considerable extent to which those powers
take precedence over the property and civil rights
provisions of the British North America Act were
fully discussed in 1955 by the Supreme Court of
Canada in Reference Re Validity of Industrial
Relations and Disputes Investigation Act (Can.)'.
It is evident from this case that the power to
legislate in the field of navigation and shipping is
to be broadly interpreted. The subject was dealt
with more recently by the Appeal Division of
this Court in the case of The Robert Simpson
Montreal Ltd. v. Hamburg-Amerika Linie
' [1955] S.C.R. 529.
Norddeutsche 2 . In this case, the nature and
extent to which section 22(1) of the Federal Court
Act grants jurisdiction to this Court was also dealt
with and the broad scope of that subsection as well
as its constitutionality were established. The prin
ciple was also stated therein that section 22(1)
grants jurisdiction by virtue of a law relating to a
matter falling within the class of subject "Naviga-
tion and Shipping" that it would be competent for
the Parliament of Canada to enact, or that it
grants jurisdiction in an action or suit in relation
to some subject matter, which is within the legisla
tive competence of the Canadian Parliament,
because that subject matter falls within the class
of "Navigation -and Shipping" (refer page 1361 of
the above-mentioned report of the case). In other
words, it is not necessary for Parliament to have
actually legislated on the matter in order for the
Federal Court of Canada to have received jurisdic
tion over the matter by virtue of section 22(1) of
the Federal Court Act.
It is obvious that the regulation and determina
tion of the rights and duties existing between a
ship builder and a ship owner are really ancillary
to the subject matter of navigation and shipping
and do not constitute an essential or an integral
part of same. But, in order to found jurisdiction,
such an intimate relationship is not required; if a
subordinate or ancillary power is reasonably
required for the proper exercise of the main power
or if it is required in order to prevent the main
power from being substantially frustrated or
impeded, then jurisdiction over such a subordinate
matter exists where jurisdiction over the main
subject matter does. Control over the building of
ships, at least ships which are of the seagoing type
such as that involved in this action, in my view, is
necessarily incidental to, truly ancillary to, or rea
sonably required for a proper exercise of jurisdic
tion and control over navigation and shipping;
control over the rights and duties existing between
the owners and builders of such ships is the most
direct and effective way of controlling the actual
building of these ships. (As to "truly ancillary" see
Grand Trunk Railway Company of Canada v.
2 [1973] F.C. 1356.
Attorney-General of Canada 3 ; as to "necessarily
incidental" see local prohibition case—Attorney
General for Ontario v. Attorney General for the
Dominion 4 ; and as to "incidentally" see Ladore v.
Bennetts.) I am, of course, not referring to the
manufacture of all types of watercraft for it would
not be too difficult to conceive of a situation where
there would be no justification at law to find that
jurisdiction lies with the Parliament of Canada
rather than with the Provinces.
I therefore conclude that the Parliament of
Canada does, in fact, have jurisdiction to legislate
regarding the construction of ships such as that
involved in the main action and that such jurisdic
tion includes the power to legislate as to the
respective rights and duties of the builders and
owners of such ships.
If power exists in Parliament to legislate in the
field of contracts for ship construction, then it
follows that such power must extend to subcon
tracts as well as the main ,contract where the
subcontracts are for the actual construction of
portions of the ship and are not merely connected
to ship construction in a remote manner such as
contracts for the supply of materials. The power is
to legislate over the construction and it matters not
whether the construction is carried out by means
of a main contract or several subcontracts and a
main contract.
On the specific point raised at the hearing,
namely, that in the building of a ship, although
jurisdiction exists to try the issue arising out of the
main contract between the plaintiff and the
defendant, there nevertheless is no jurisdiction in
this Court to try the issue arising out of the
subcontract between the defendant and the third
party, the applicant cited the cases of The Queen
v. Finlayson 6 , The King v. The Globe Indemnity
Company of Canada', and Bow, McLachlan &
3 [1907] A.C. 65.
[1896] A.C. 348 at 360.
5 [1939] 3 D.L.R. 1.
6 (1895-9) 5 Ex.C.R. 387.
7 (1914-22) 21 Ex.C.R. 34.
Co., Limited v. The Ship "Camosun" 8 as author
ity for the proposition that this Court does not
possess such jurisdiction.
These cases are authority for the bare proposi
tion that jurisdiction to try the main issue does not
of itself create jurisdiction to try issues arising
between a third party and a defendant in the main
action merely because the third party issue would
arise only in the event of liability being established
in the main action. Jurisdiction as to a third party
issue must be considered on its own merits and, if
jurisdiction would not exist to try the issue as an
action, independently of the main action, then
jurisdiction does not exist to try it merely because
it happens to be an issue existing between a third
person and a defendant who is properly before the
Court, notwithstanding very cogent and logical
arguments which may be advanced for the exist
ence of such jurisdiction from the standpoint of
cost, saving of time, unity of jurisdiction and the
avoidance of contrary decisions on the same set of
facts, etc. The question is, therefore, whether this
Court was actually granted jurisdiction over the
issue between the defendant and the third party,
independently of the main action. Subparagraph
(n) of section 22(2) of the Federal Court Act reads
as follows:
(2) Without limiting the generality of subsection (1), it is
hereby declared for greater certainty that the Trial Division has
jurisdiction with respect to any claim or question arising out of
one or more of the following:
(n) any claim arising out of a contract relating to the
construction, repair or equipping of a ship;
If one is to assume that the allegations of the
third party notice are true, and one is obliged to do
so when considering jurisdiction at this stage of the
proceedings, then it is clear that the third party
not only designed and built the machines but
physically installed them in the ship and assumed
toward the defendant all responsibility for doing
so. The third party issue therefore deals with the
actual construction of an integral part of the ship,
namely, the construction and installation of its
8 [1909] A.C. 597.
propulsion system. When applying the factual sit
uation as outlined in the third party notice to
section 22(2)(n), it seems absolutely clear to me
that the claim is one which "arises out of a con
tract relating to the construction of ... a ship." It
may be true that it is not a contract of construc
tion of a ship, nor a contract for the construction
of a ship, since it is one for the supply and
installation of the propulsion system but, the
supply and installation of the system constitute an
integral part of the actual construction itself and
it, therefore, certainly "relates" to the construction
of a ship and could not do so more directly without
being a contract for the construction of the entire
ship. On the plain and ordinary meaning of that
paragraph, this Court was granted jurisdiction by
Parliament over issues such as contemplated in the
third party claim and that plain and ordinary
meaning is, in no way, limited or restricted by
subsection (1) of section 22 which gives a general
concurrent jurisdiction of this Court, as well as
between subject and subject as otherwise, relating
to any matter coming within the class of subject of
"Navigation and Shipping." As stated previously,
the far-reaching effect of the jurisdiction granted
under section 22(1) was fully discussed in the
above-mentioned case of The Robert Simpson
Montreal Ltd. v. Hamburg-Amerika Linie Nord-
deutscher and more particularly at page 1361 of
the report and it is abundantly clear, in reading
the decision, that section 22(1) in no way restricts
22(2)(n) nor does any other section of the Federal
Court Act do so.
Furthermore, on reading section 2 of the Feder
al Court Act, it is clear that "law of Canada" in
section 22(1) has the same meaning as in section
101 of the British North America Act and, there
fore, the words are deemed to embrace not only a
statute actually enacted by the Parliament of
Canada but also a law that it would be competent
for the Parliament of Canada to enact, modify or
amend.
I therefore conclude that this Court has jurisdic
tion concurrent with that of the Superior Court of
the Province of Quebec to try the issue between
the third party and the defendant. The application
to have the third party notice struck out is there
fore dismissed 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.