T-2332-74
Intermunicipal Realty & Development Corpora
tion (Plaintiff)
v.
Gore Mutual Insurance Company, Canadian
Marine Underwriters Ltd. and Reed, Shaw, Sten-
house Limited (Defendants)
Trial Division, Gibson J.—Toronto, November 28;
Ottawa, December 13, 1977.
Jurisdiction — Maritime law — Contract — Insurance —
Separate motions brought to dismiss action for recovery under
insurance contracts, and action for negligent misrepresentation
of facts by broker — Whether or not contracts of marine
insurance are admiralty matters — Whether or not marine
contract law part of federal substantive law — Whether or not
federally enacted substantive law within Parliament's legisla
tive competence — Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10, ss. 2, 42 — Federal Court Rule 474.
Defendants, in two separate applications, seek an order pur
suant to Rule 474 dismissing the action on the ground that the
Court is without jurisdiction to consider plaintiff's suit against
the insurer defendants for recovery within the terms of either or
both of the contract policies, and against the insurance broker
defendant for negligent misrepresentation of facts. The issues
raised are: (1) whether or not contracts of marine insurance are
admiralty matters, (2) whether or not maritime contract law
was enacted by Parliament as part of the substantive federal
admiralty law, (3) whether or not any part of federally enacted
substantive law is valid as being within the legislative compe
tence of Parliament.
Held, the insurer defendant's application is dismissed, but
the defendant insurance broker's application is allowed. The
Federal Court's jurisdiction in Canadian maritime law matters,
as defined by sections 2(b) and 42 of the Federal Court Act,
extends over the large body of substantive applicable federal
law passed pursuant to section 91(10) of the British North
America Act, 1867. By almost universal agreement these poli
cies are "maritime contracts" and the substantive law of all
maritime contracts and torts lies within the limits of admiralty
matters. The only restriction is that both must relate to the
navigation business or commerce of the sea or inland waters of
Canada. It has been established that Parliament's legislative
authority extends to claims on marine insurance. Jurisdiction
relating to matters of marine insurance is assigned to the Trial
Division by section 22(2)(r) of the Federal Court Act, and is
concurrent with the jurisdiction provincial courts may have
over the parties. The allegations against the defendant insur
ance broker are not of negligence under the subject contract
policies of marine insurance but instead are founded on the
agency relationship generally. The allegations are not in respect
of any maritime or admiralty matter that is part of "Canadian
maritime law".
Quebec North Shore Paper Co. v. Canadian Pacific Ltd.
[1977] 2 S.C.R. 1054, applied. McNamara Construction
(Western) Ltd. v. The Queen [1977] 2 S.C.R. 654, applied.
R. v. Canadian Vickers Ltd. [1978] 2 F.C. 675, applied.
Sivaco Wire & Nail Co. v. Atlantic Lines & Navigation
Co., Inc. [1978] 2 F.C. 720, applied. Sailing Ship "Blair-
more" Co., Ltd. v. Macredie (1898) 25 R. (H.L.) 57,
applied. De Lovio v. Boit (1817) 2 Gall. 398 (Gallison's
Reports), considered.
APPLICATION.
COUNSEL:
David F. H. Marler for plaintiff.
A. J. Stone, Q.C., for defendants Gore
Mutual Insurance Co. and Canadian Marine
Underwriters Ltd.
G. A. Allison, Q.C., for defendant Reed,
Shaw, Stenhouse Ltd.
SOLICITORS:
Magwood, Pocock, Rogers, O'Callaghan,
Toronto, for plaintiff.
McTaggart, Potts, Stone & Herridge,
Toronto, for defendants Gore Mutual Insur
ance Co. and Canadian Marine Underwriters
Ltd.
Martineau, Walker, Allison, Beaulieu,
MacKell & Clermont, Montreal, for defend
ant Reed, Shaw, Stenhouse Ltd.
The following are the reasons for judgment
rendered in English by
GIBSON J.: The insurer defendants, Gore
Mutual Insurance Company and Canadian Marine
Underwriters Ltd., and also the insurance broker
defendant, Reed, Shaw, Stenhouse Limited in two
separate applications ask for an order pursuant to
Rule 474 dismissing this action on the ground
"that the Court has no jurisdiction to hear and
determine the claims made in this action".
The application of the insurer defendants is first
dealt with; and after that, the application of the
insurance broker defendant.
The plaintiff sues the insurer defendants on two
contracts of marine insurance numbered 408014
and 408015 (copies of which were filed as part of
the affidavit evidence on this motion) claiming
according to the evidence, to be entitled to reim
bursement in the sum of approximately $700,000
for the items detailed in paragraphs 31 and 33 of
the statement of claim, being items all alleged to
be matters within the coverage terms of either or
both of the said contract policies.
These contract policies of marine insurance pro
vide both in rem and in personam coverages.
Three issues are raised and must be considered
on these motions, namely:
1. Whether or not contracts of marine insurance
such as these marine insurance policies are "Mari-
time" matters or "Admiralty" matters; and
specifically whether they are "maritime con
tracts".
2. What maritime contract law was enacted by
the Parliament of Canada as part of the substan
tive federal admiralty law.
3. Whether or not any part of the substantive
federal admiralty law enacted is valid as being
within the constitutional legislative jurisdiction of
the Federal Government of Canada under The
British North America Acts; or putting it another
way and directed to the subject contracts of
marine insurance in this case: Does the legislative
authority of the Parliament of Canada under The
British North America Acts, 1867-1960, particu
larly under section 91, head 10 "Navigation and
Shipping" extend to incorporating as part of the
substantive Canadian maritime law assigned to the
Federal Court of Canada claims such as those
made in this action on contracts of marine
insurance?
Maritime Contracts
These policies of marine insurance, like all such
policies with in rem and in personam coverages,
although usually executed on land, relate to risk
covered, for which premiums are paid, of naviga
tion, business or commerce of the sea and certain
inland waters in Canada.
As to whether these policies are "maritime con
tracts", apparently there is practically universal
agreement. Story J. in De Lovio v. Boit' (a case
sometimes called "the keystone of Admiralty juris
prudence in America") said [at pages 475-476]
that in respect to what are properly to be deemed
"maritime contracts":
... there is little room for controversy. All civilians and jurists
agree, that in this appellation are included, among other things,
charter parties, affreightments, marine hypothecations, con
tracts for maritime service in the building, repairing, supplying,
and navigating ships; contracts between part owners of ships;
contracts and quasi contracts respecting averages, contributions
and jettisons; and, what is more material to our present pur
pose, policies of insurance.* And in point of fact the admiralty
courts of other foreign countries have exercised jurisdiction
over policies of insurance, as maritime contracts; and a similar
claim has been uniformly asserted on the part of the admiralty
of England.** There is no more reason, why the admiralty
should have cognizance of bottomry instruments, as maritime
contracts, than of policies of insurance. Both are executed on
land, and both intrinsically respect maritime risks, injuries and
losses.***
My judgment accordingly is, that policies of insurance are
within (though not exclusively within) the admiralty and mari
time jurisdiction of the United States.****
* Cleirac, Le Guidon, ch. 1, p. 109, ch. 3, p. 124, Id. Jurisd.
de la Marine, p. 191.-1 Valin, Comm. 112, 120, &c. 127,
&c.-2 Emer. 319.—Godolph. 43. Zouch, 90, 92. Exton,
69, &c. 295, &c.—Malyne Lex Merc. 303. Id. Collection of
Sea Laws, ch. 2, p. 47.—Consol. del Mare, ch. 22.-2 Bro.
Adm. ch. 4, p. 71.-4 Bl. Comm. 67.—The Sandwich, Peters's
R. 233, n.—Targa. Reflex. ch. 1.
** Boucher's Consol. del Mare, 2 vol. 730.-1 Valin, Com.
120.-2 Emer. 319. Roccus de Assec. n. 80.-2 Bro. Adm.
80. Zouch, 92, 102.
*** Roccus de Ass. note 80, declares "These subjects of
insurance, and disputes relative to ships, are to be decided
according to maritime law; and the usages and customs of the
sea are to be respected. The proceedings are to be according to
the forms of maritime courts, &c." Targa in his reflections (ch.
1.) defines maritime contracts to be those, which, according to
mercantile usage, respect or concern maritime negotiations and
their incidents. It has been already stated that the jurisdiction
of the admiralty in England and in Scotland were originally the
same. And the admiralty in Scotland still continues to exercise
jurisdiction over all maritime contracts, and particularly over
policies of insurance, upon the footing of its ancient and
inherent rights. In Dow's Reports of decisions in the House of
Lords in 1813 and 1814, are no less than eight insurance
causes, which were originally brought in the admiralty in
Scotland, and finally decided on appeals by the House of
1 (1817) 2 Gall. 398 (Gallison's Reports).
Lords, Lords Ellenborough, Eldon, and Erskine, assisting in
the decisions.—Watt vs. Morris, 1 Dow. R. 32.—Tennant vs.
Henderson, 1 Dow. R. 324.—Watson vs. Clark, 1 Dow. R.
336. Brown vs. Smith, 1 Dow. R. 349.—Sibbald vs. Hill, 2
Dow. R. 263. Hall vs. Brown, 2 Dow. R. 367. Smith vs.
McNeil, 2 Dow. R. 538. Smith vs. Robertson, 2 Dow. R. 474.
**** There can be no possible question, that the courts of
common law have acquired a concurrent jurisdiction, though,
upon the principles of the ancient common law, it is not easy to
trace a legitimate origin to it. See ante, page 422.
Text book writers such as F. L. Wiswall, Jr., 2
and A. R. G. M'Millan 3 recognize the marine
2 The Development of Admiralty Jurisdiction and Practice
Since 1800, by F. L. Wiswall, Jr., at pages 29-30:
The history of the Admiralty jurisdiction in England was
vital knowledge to Story, to whom fell the task of defining
the Admiralty jurisdiction in America; his learning in Admi
ralty was great, as was his respect for Stowell's decisions in
his later years on the bench—both points being well illustrat
ed by his judgment in The Draco (7 Fed. Cas. 1032 (No.
4057) (C.C. Mass. 1835)). His knowledge was put to excel
lent use; he began to lay the foundation of the American
Admiralty jurisdiction in contract in The Emulous (8 Fed.
Cas. 697 (No. 4479) (C.C. Mass. 1813)), and he expanded
upon it in his greatest decision, DeLovio v. Boit, which is to
this day the keystone of Admiralty jurisprudence in America.
The basic question in DeLovio v. Boit (7 Fed. Cas. 418 (No.
3776) (C.C. Mass. 1815)) was whether policies of marine
insurance were cognizable in Admiralty as maritime con
tracts; though it had long been established in England that
despite their maritime character policies of marine insurance
were actionable only at common law (see A. Browne, vol. 2,
pp. 82-3), Story reasoned that the adoption of the English
common law by the United States did not import those
decisions by the common law courts which had the effect of
restraining Admiralty from the exercise of jurisdiction over
truly maritime matters, and that, likewise, the Statutes of
Richard II were of no force against the Constitution's grant
of jurisdiction in "all civil cases ... admiralty and maritime".
(Article III, § 2, cl. I.) Not only is Story's opinion in
DeLovio cited by modern English Admiralty textwriters for
its historical exposition of the English Admiralty jurisdiction
(See, e.g. Roscoe, Practice, intro., p. 2, n. (c)), but, as will
later be seen, it forms the basis of the English line of decision
on the subject of maritime liens; (See infra, pp. 156-7) and,
together with his later opinion in The Nestor, (18 Fed. Cas. 9
(No. 10126) (C.C. Me. 1831)) Story's rationale in DeLovio
gives the theory of actions in rem in United States
Admiralty.
3 Scottish Maritime Practice by A. R. G. M'Millan, M.A.,
LL.B. at page 5:
It may be observed, further, that the Admiralty jurisdiction
in the two countries is not precisely co-extensive, and that the
(Continued on next page)
character of policies of marine insurance when
they discuss in their texts the acquiring of concur
rent jurisdiction by the courts of common law in
England to hear actions based on policies of
marine insurance. (For a time the Admiralty
Court in England was prohibited by the common
law courts, and also for a time by statutes from
hearing such claims. But no statute or decision of
an English common law court ever purported to
suggest that a policy of marine insurance was not
an Admiralty or maritime matter.)
The basis for these textbook writers' statements
in respect to claims on policies of marine insurance
is a dictum of Lord Watson at page 63 in the case
of the Sailing Ship "Blairmore" Co., Ltd. v.
Macredie °:
All that was determined in that case was, that in maritime
causes which exclusively belonged to the jurisdiction of the
Admiralty Courts in both countries, the law applicable was
neither English nor Scottish, but British law, and therefore one
and the same code. But the jurisdiction exercised by these
Courts in the two countries has never, so far as I am aware,
been precisely coextensive. In Scotland the admiral's jurisdic
tion, although cumulative with that of the Court of Session,
extended to all questions arising in regard to policies of mari
time insurance, and had also been extended "by long posses
sion" to the right of cognizance in bills of exchange and other
mercantile questions which were in no sense maritime (Ersk.
Inst. B. 1, Tit. iii., secs. 33 and 34). In England, on the other
hand, policies of marine insurance were regarded simply as
matters of mercantile contract, and actions brought upon them
(Continued from previous page)
principle of uniformity only applies in causes which exclu
sively belong to the Admiralty jurisdiction in both countries.
Thus in England questions arising in regard to affreightment,
except in certain special circumstances, or to policies of
marine insurance, are outwith the Admiralty jurisdiction,
and are determined entirely on common law principles. In
such causes, therefore, English decisions are not necessarily
precedents in the Scottish Courts (Sailing Ship 'Blairmore"
Co., Ltd. v. Macredie, 1898, 25 R. (H.L.) 59, Lord Watson,
at 63). In certain events, moreover, the Court may require to
apply foreign municipal law. It has been pointed out that
Courts of Admiralty jurisdiction constantly require to apply
such law in claims for possession or wages and in those
arising from bottomry or mortgage (The 'Annette": The
"Dora," 1919, P. 105, Hill, J., at 114). Liability both on
contract and on delict frequently requires to be determined
according to foreign municipal law.
(1898) 25 R. (H.L.) 57.
belonged to the jurisdiction, not of the Admiralty, but of the
Common Law Courts.
This statement of Lord Watson is of no signifi
cance in respect to the present subject matter
because of the enactment of sections 2(b) and 42
of the Federal Court Act for reasons that are
hereinafter stated.
Associate Chief Justice Thurlow in The Queen
v. Canadian Vickers Limited' with extreme thor
oughness and in great detail reviews and recites
the sources of the substantive Canadian maritime
law of the Federal Court of Canada and its juris
diction in relation to the matter of maritime con
tracts. Thurlow A.C.J. found in that case, that the
claim of a ship owner against a shipwright on the
contract between them was not a claim on a
maritime contract.
Walsh J. in another case, Sivaco Wire & Nail
Company v. Atlantic Lines & Navigation Com
pany, Inc. 6 held that in so far as the claim was
based on contract, the claim in that case for
damage to cargo carried from France to Montreal
on the defendant vessel was a claim on a maritime
contract.
What "Maritime Law" has been enacted in
Canada as part of the Substantive Admiralty law.
What is the substantive "Canadian maritime
law", Federal law, today, is prescribed by section
42 of the Federal Court Act together with section
2(b) the definition of it, which read:
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.
2. In this Act
"Canadian maritime law" means the law that was administered
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 relation to mari
time and admiralty matters, as that law has been altered by
this or any other Act of the Parliament of Canada;
5 Supra, page 675.
6 Infra, page 720.
(In 1891 by The Admiralty Act, 1891, this
Court in its predecessor name, the Exchequer
Court of Canada, was first assigned admiralty law
jurisdiction. Before 1891, jurisdiction was assigned
to various other Courts in Canada.)
In passing these sections in 1970, the Federal
Parliament had the legislative powers given it by
The British North America Acts, 1867-1960 and
without the legislative restrictions that it had when
it passed, for example, The Admiralty Act, 1891
by reason of the Statute of Westminster, 1931. As
a result, Parliament had power to enact a greater
body of substantive maritime law and to assign
jurisdiction than heretofore. As Thurlow A.C.J. in
The Queen v. Canadian Vickers Limited (supra)
said at page 682:
In the period from 1890 to 1931, the authority of Parliament
to legislate with respect to merchant shipping was to some
extent restricted by the Colonial Laws Validity Act, 1865, 28
& 29 Vict., c. 63, but, by section 2 of the Statute of Westmin-
ster, 1931 (1931, 22 Geo. V, c. 4 (Imp.)), that Act ceased to
apply in respect of subsequent legislation by the parliaments of
the self-governing Dominions. Further, under section 6, restric
tions on the powers of Parliament imposed by the Colonial
Courts of Admiralty Act, 1890 ceased to have effect, and by
subsection 2(2), authority was given to repeal Imperial enact
ments in so far as they applied in the Dominion.
Not for the purpose of construction, but to recall
the background situation when the Statute of
Westminster, 1931 was passed, there is noted here
some of the sections of that Act and the annota
tions in respect to them of Maurice 011ivier, Q.C.,
sometime Parliamentary Counsel, House of Com
mons, Ottawa. The notations are from the collec
tion of statutes and annotations entitled British
North America Acts and Selected Statutes 1867-
1962 (Queen's Printer) at pages 149-51. (Sections
2, 3, 4, 5 and 6 of the Statute of Westminster,
1931 and annotation footnotes.)
2. (1) The Colonial Laws Validity Act, 1865, shall not
apply to any law made after the commencement of this Act by
the Parliament of a Dominion.
(2) No law and no provision of any law made after the
commencement of this Act by the Parliament of a Dominion
shall be void or inoperative on the ground that it is repugnant
to the law of England, or to the provisions of any existing or
future Act of Parliament of the United Kingdom, or to any
order, rule, or regulation made under any such Act, and the
powers of the Parliament of a Dominion shall include the power
to repeal or amend any such Act, order, rule or regulation in so
far as the same is part of the law of the Dominion.*
3. It is hereby declared and enacted that the Parliament of a
Dominion has full power to make laws having extra-territorial
operation.**
4. No Act of Parliament of the United Kingdom passed after
the commencement of this Act shall extend or be deemed to
extend, to a Dominion as part of the law of that Dominion,
unless it is expressly declared in that Act that that Dominion
has requested, and consented to, the enactment thereof.***
5. Without prejudice to the generality of the foregoing provi
sions of this Act, sections seven hundred and thirty-five and
seven hundred and thirty-six of the Merchant Shipping Act,
1894, shall be construed as though reference therein to the
Legislature of a British possession did not include reference to
the Parliament of a Dominion.****
6. Without prejudice to a generality of the foregoing provi
sions of this Act, section four of the Colonial Courts of
Admiralty Act, 1890 (which requires certain laws to be
reserved for the signification of His Majesty's pleasure or to
contain a suspending clause), and so much of section seven of
that Act as requires the approval of His Majesty in Council to
any rules of Court for regulating the practice and procedure of
a Colonial Court of Admiralty, shall cease to have effect in any
Dominion as from the commencement of this Act.*****
* Pursuant to the declarations which had been made at the
Conference of 1926, the conference of experts which met in
1929 recommended the repeal of this Act of 1865 which had
been passed in the first instance to extend the powers of
colonial legislatures beyond the narrow limits assigned to them
by judicial decisions. The Act of 1865 had declared that laws
passed by a colony should not be invalid unless they were
repugnant to some Act of Parliament which applied to the
colony, and only to the extent of such repugnancy. (See Nadan
vs. The King, 1926 A.C. p. 482.)
To repeal the Act of 1865 was not sufficient, for there was a
danger that the repeal might be held to restore the old common
law doctrine; it was therefore considered necessary to indicate
that the Acts adopted by a Dominion since 1865 could not
become inoperative on account of being repugnant to the law of
England.
The provinces (especially Ontario and Quebec) requested
and obtained at the Interprovincial Conference which sat
during April, 1931, that the benefits of section 2 be extended to
them and this is the reason for the enactment of subsection (2)
of section 7 of the Statute.
** The right of extra-territoriality, which is one of the attri
butes of sovereignty, is the operation of laws upon the persons,
the rights and the statutes existing outside of the limits of a
state but continuing however to be subject to the laws of that
state. It means for a nation the right to legislate for its own
nationals outside of the limits of territorial waters, in such a
way as to subject them to its own laws when they return to their
country's jurisdiction.
Our limitations with respect to extra-territoriality previously
extended notably to fisheries, taxes, navigation, aviation, mar
riage, criminal law, copyright, deportation and finally to the
bringing into force of Acts on smuggling and illegal
immigration.
Section 3 stipulates in an absolutely clear manner and with
out any restrictions that the Parliament of a Dominion has full
power to make laws having extra-territorial operation.
This section does not apply to the legislatures of the prov
inces, thus avoiding the conflict of laws which might arise if
each province had the power to enact laws having extra-ter
ritorial operation.
*** The situation with respect to our right to legislate may
be summarized as follows:
In the beginning the United Kingdom would legislate for all
its colonies without any form of consultation. The second period
occurred when the colonies obtained the right to legislate
subject to many restrictions, certain matters being reserved and
remaining within the jurisdiction of the Parliament of the
United Kingdom.
During a third period the Dominions were allowed to adopt
for their own territory the British Statute, as in 1911 the
Copyright Act and in 1914 the British Nationality Act.
A fourth period was that of consultation when the acts of
interest to the whole Empire were to be adopted only after
consultation of the different parties interested. For practical
purposes, so far as uniformity of laws is required this period is
still in existence, but the consultation has now become volun
tary; for instance our Merchant Shipping Act has been enacted
in conformity with the Convention respecting the British Com
monwealth Merchant Shipping Agreement which has been
signed in London on the 10th of December 1931.
The United Kingdom has itself limited its own power of
legislating with respect to the Dominions by the adoption of
section 4 of the Statute. As may be noticed from the perusal of
this section, the British Acts referred to, are those which have
been passed after the coming into force of the Statute of
Westminster.
The Acts passed previously and which previously applied to
the Dominions remain in force until our Parliament decides to
repeal them. This section follows the recommendation of the
Conference of 1930.
**** Up to the time of the passing of the Statute of West-
minster, Canada's legislative autonomy in matters relating to
merchant shipping was circumscribed by the provisions of the
Colonial Laws Validity Act, 1865, and also by sections 735 and
736 of the Merchant Shipping Act of 1894 (British) and from
the fact that the Dominion could not give to its legislation
extra-territorial effect.
The Merchant Shipping Act of 1854 applied to Great Britain
and to its colonies, as there were then no Dominions. When the
first Dominion was created in 1867, power was given to our
federal Parliament to legislate as to navigation and merchant
shipping. Our legislation, however, could be valid only in so far
as it was not repugnant to that of the United Kingdom. A new
British statute was passed in 1894 which was a consolidation of
the Act of 1854 with the amendments made in the course of the
past forty years.
Therefore the British Act of 1894 with the amendments
made thereto up to 1911, also our own merchant shipping
legislation have governed us up to the coming into force of our
own statute passed in 1934. From 1911, it had been stipulated
that the amendments made to the legislation of the United
Kingdom would not apply to the Dominions.
We have mentioned previously that the Colonial Laws Valid
ity Act was an obstacle to our autonomy in matters of shipping
legislation and that another difficulty came from the fact that
we could not pass laws having extra-territorial operation. These
difficulties have ceased to exist from the operation of sections 2
and 3 of the Statute of Westminster already mentioned, which
have cured these defects.
Section 2 states that the Colonial Laws Validity Act, 1865,
shall not apply to any law made after the commencement of the
Act by the Parliament of a Dominion, and section 3, that the
Parliament of a Dominion has full power to make laws having
extra-territorial operation. The non-application of the Colonial
Laws Validity Act removed the main obstacle with respect to
our right to legislate on merchant shipping.
However, it was not sufficient to state that the Colonial Laws
Validity Act would not apply in the future nor to declare that
the Dominion Parliament could make laws having extra-ter
ritorial operation, but it was also necessary that sections 735
and 736 of the Imperial Merchant Shipping Act should cease to
apply to the Dominions, and this was done by section 5 of the
Statute of Westminster.
For that reason, the Dominion has exercised that right by
passing a new Merchant Shipping Act in 1934.
By passing that Act, the Dominion has exercised the absolute
right it has of legislating with respect to ships, wherever they
may come from, when they happen to be in Canadian waters; it
has exercised its right to legislate as to ships registered in
Canada, whether they be in Canadian waters or elsewhere,
subject in that case to local laws when the ships happen to be in
non-Canadian waters or ports.
***** It is a moot question whether this section was neces
sary or not. The Colonial Courts of Admiralty Act of 1890 did
govern, up to the passing of the Statute of Westminster, the
constitution and, to a certain extent, the functioning of our
courts of admiralty and had the effect of limiting their jurisdic
tion. Section 4 prevented the Dominion legislatures from
extending their jurisdiction or affecting their procedure without
the approval of the Secretary of State.
The jurisdiction of our court of admiralty was limited to that
of the High Court of Admiralty in England; on the other hand
since 1890 important additions were made to the admiralty
jurisdiction of the High Court which were not added to our
own, that is to the jurisdiction of the Exchequer Court as a
court of admiralty (chapter 29 of our statutes of 1891 has made
the Exchequer Court a court of admiralty under the Colonial
Courts of Admiralty Act).
The restrictions imposed upon us have now disappeared by
virtue of section 6 of the statute. It will not be necessary any
more that our enactments before coming into force be approved
by the Sovereign in Council, and as we have seen in the note to
section 2, the Dominion Parliament was given power to repeal
Acts of the United Kingdom "in so far as the same is part of
the law of the Dominion," which of course includes the power
to repeal, as far as we are concerned, the Colonial Courts of
Admiralty Act, 1890.
As a consequence, it should be noted that when
Parliament re-enacted in 1970 its substantive and
jurisdictional federal Canadian maritime law, its
enabling legislative power had increased substan
tially and it exercised this increased legislative
power and assigned jurisdiction so that now the
substantive body of federal Canadian maritime
law assigned to the Federal Court of Canada
includes not only (1) "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," but also (2) the substantive law
"that would have been so administered if that
Court had had, on its Admiralty side, unlimited
jurisdiction in relation to maritime and admiralty
matters, as that law has been altered by this or any
other Act of the Parliament of Canada".
A large body of substantive admiralty law,
much of it non-statutory in its original source, was
thus incorporated by reference into federal
Canadian maritime law and the Federal Court of
Canada was invested with jurisdiction over actions
and suits in relation to the subject matter of it
under the legislative authority of head 10 of sec
tion 91 of The British North America Act of
"Navigation and Shipping" (cf. Kerwin J. (as he
then was) in An Act to Amend the Supreme Court
Act 7 ; and see also Laskin's Canadian Constitu
tional Law, Fourth Edition, 1973 at 796) and
section 101 of The British North America Act.
Accordingly, because there is this large body of
substantive applicable federal law passed pursuant
to the enabling power under head 10 of section 91
of The British North America Act relating to
[1940] S.C.R. 49 at 108.
"Navigation and Shipping", there is a valid prem
ise for the jurisdiction of the Federal Court of
Canada in Canadian maritime law matters; and
the principle enunciated in the cases of Quebec
North Shore Paper Company v. Canadian Pacific
Limited 8 and McNamara Construction (Western)
Limited v. The Queen 9 in relation to the proposi
tion that there must "be applicable and existing
federal law, whether under statute or regulation or
common law," is fulfilled in that in respect to
Canadian maritime law there is "judicial jurisdic
tion ... co-extensive with [federal] legislative
jurisdiction".
In addition and very germane to the subject
matter of this motion is the reference to the fact of
the dictum of Lord Watson at page 63 of the case
of the Sailing Ship "Blairmore" Co., Ltd. v.
Macredie quoted above that the jurisdiction of the
Scottish and the English Admiralty Courts were
not co-extensive and especially the fact that Eng-
lish common law courts and not the English Admi
ralty Court at that time and for a time exercised
jurisdiction in respect to claims on policies of
marine insurance. These facts are no longer of any
significance in this matter because this Court now
has jurisdiction to entertain actions on all claims in
respect to admiralty and maritime matters, which
includes all claims on policies of marine insurance
of the kind which for a time were heard in the
English common law courts. (And as stated, in any
event, no judicial decision ever suggested at any
time that a claim on a policy of marine insurance
was not a maritime or admiralty matter.)
What are the limits of this maritime law so
incorporated statutorily by reference and enacted
as federal Canadian maritime law in Canada may
be difficult to determine precisely, except by a case
by case analysis.
Speaking generally within such limits are all
maritime and admiralty matters. Certainly specifi
cally within such limits are the substantive law of
all maritime contracts and torts. The only restric
tion is that both must relate to the navigation
8 [1977] 2 S.C.R. 1054.
9 [1977] 2 S.C.R. 654.
business or commerce of the sea or inland waters
of Canada.
The words of Story J. in De Lovio v. Boit
(supra) at page 400 are apt in this connection:
What was originally the nature and extent of the jurisdiction
of the admiralty cannot now with absolute certainty be known.
It is involved in the same obscurity, which rests on the original
jurisdiction of the courts of common law. It seems, however,
that, at a very early period, the admiralty had cognizance of all
questions of prize; of torts and offences, as well in ports within
the ebb and flow of the tide, as upon the high seas; of maritime
contracts and navigation; and also the peculiar custody of the
rights, prerogatives, and authorities of the crown, in the British
seas. The forms of its proceedings were borrowed from the civil
law; and the rules by which it was governed, were, as is every
where avowed, the ancient laws, customs and usages of the
seas. In fact, there can scarcely be the slightest doubt, that the
admiralty of England, and the maritime courts of all the other
powers of Europe, were formed upon one and the same
common model; and that their jurisdiction included the same
subjects, as the consular courts of the Mediterranean. These
courts are described in the Consolato del Mare, as having
jurisdiction of "all controversies respecting freight; of damages
to goods shipped; of the wages of mariners; of the partition of
ships by public sale; of jettison; of commissions or bailments to
masters and mariners; of debts contracted by the master for the
use and necessities of his ship; of agreements made by the
master with merchants, or by merchants with the master; of
goods found on the high seas or on the shore; of the armament
or equipment of ships, gallies or other vessels; and generally of
all other contracts declared in the customs of the sea."
Within such limits certainly (1) there continued.
the body of admiralty law as Canadian maritime
law made Federal law by The Admiralty Act,
1891 and The Admiralty Act, 1934; and (2) there
is introduced as Canadian maritime law all admi
ralty and maritime law administered in the Admi
ralty Court in England "in reign of Edward III
and prior to the statutes of Richard II and Henry
IV which were subsequently interpreted and
enforced by the common law courts, applying
common law principles, so as to severely restrict
the jurisdiction of the Admiralty Court". i°
1C cf. The Queen v. Canadian Vickers Ltd. (supra) at page
688, Thurlow A.C.J.
The limits referred to above, however, are suffi
cient to decide the issues in this motion in relation
to the subject contract policies of marine
insurance.
What are the precise limits of such maritime or
admiralty matters will be determined in future
cases of this Court.
Legislative Authority of Parliament to enact Sec
tions 2(b) and 42 of the Federal Court Act
Does the legislative authority of the Parliament
of Canada under The British North America Acts,
1867-1960 particularly under section 91, head 10
"Navigation and Shipping" extend to incorporat
ing as part of the substantive Canadian maritime
law assigned to the Federal Court of Canada
claims such as those made in this action on con
tracts or marine insurance?
The Supreme Court of Canada has already, in
principle, said Parliament does when it found in
The `Picton"" that The Maritime Jurisdiction
Act, 1877 was intra vires legislation in relation to
navigation and shipping and under section 101 of
The British North America Act. (The Maritime
Court of Ontario and also the Vice-Admiralty
Courts operating in other parts of Canada were
abolished on the coming into force of The Admi
ralty Act, 1891.)
Jurisdiction
The distinction between the jurisdiction to
administer substantive Canadian maritime law and
the existence of such said substantive Canadian
maritime law should be noted.
The jurisdiction to administer the substantive
Canadian maritime law which was enacted by the
Parliament of Canada in 1891 by The Admiralty
Act, 1891, was in that Act assigned to the Excheq
uer Court of Canada on its Admiralty side; such
assignment to the Exchequer Court of Canada was
continued by The Admiralty Act, 1934; and was
" (1879) 4 S.C.R. 648 at 655.
next assigned to the Federal Court of Canada (a
continuation of the Exchequer Court of Canada
under this new name) under the Federal Court
Act, R.S.C. 1970 (2nd Supp.), c. 10.
In respect to the specific kind of subject matter
of this action, the Parliament of Canada by section
22(2)(r) of the Federal Court Act assigned juris
diction to the Trial Division of the Federal Court.
The words of assignment read:
22....
(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:
(r) any claim arising out of or in connection with a contract
of marine insurance; ...
Such jurisdiction in relation to contracts of
marine insurance, however, is not exclusive to the
Federal Court of Canada. It is concurrent with
provincial courts when such courts have jurisdic
tion over the parties.
This fact and a consideration of the constitution
al insurance cases, some of which are hereinafter
listed, however, do not affect the validity of what
has been said in these reasons:
Attorney-General for Canada v. Attorney-Gen
eral for Alberta 12 ; Attorney-General for
Ontario v. Reciprocal Insurers 13 ; In re The In
surance Act of Canada 14 ; and Reference as to
the validity of Section 16 of the Special War
Revenue Act 15 .
As to these constitutional cases, reference is
made to Vincent C. MacDonald's 16 article in the
1946 Canadian Bar Review at page 257 on "The
Regulation of Insurance in Canada" where he
quoted C. P. Plaxton, K.C., Acting Deputy Minis
ter of Justice of Canada [at page 270] as follows
as to the net effect of them up to that time:
12 [1916] 2 A.C. 588.
13 [1924] A.C. 328.
14 [1932] A.C. 41.
15 [1942] S.C.R. 429.
16 Sometime Dean of Dalhousie Law School, Halifax, and
later a Judge of the Supreme Court of Nova Scotia.
... "that all persons, whether Canadian, Britishers, or
foreigners, are subject in the conduct of the business of
insurance (whether in respect of contracts or other incidents
of that business) to provincial laws of general operation on
the subject of property and civil rights; and that the Domin
ion Parliament has no jurisdiction to trench upon that field".
Mr. Plaxton goes on to point out the distinction emphasized
by all the decisions "that there is a constitutional disjunction
between creating or controlling or limiting the subjective
status and the field of operations of a Dominion, British or
foreign company incorporated for the purpose of carrying on
the business of insurance, on the one hand, and the regula
tion of the objective exercise of its powers in respect of
property and civil rights in a Province, on the other hand.
The former class of regulation is within the exclusive compe
tence of the Dominion Parliament; the latter is within the
exclusive competence of the Provincial Legislatures.
In like manner the existence of certain provin
cial statutory law, namely, provincial maritime
insurance statutes such as those hereinafter
referred to does not affect the validity of what has
already been said in these reasons: The Marine
Insurance Act, R.S.O. 1970, c. 260; Marine Insur
ance Act, R.S.N.B. 1973, c. M-1; Marine Insur
ance Act, R.S.B.C. 1960, c. 231; The Marine
Insurance Act, R.S.M. 1970, c. M40; sections 184
to 273 of Insurance Act, 1967, R.S.N.S. 1967, c.
148; and articles 2468 to 2692 of the Civil Code of
Quebec.
Resort to and use of some of such statutory law,
and other statutory provincial law, a kind of use
and application which for example was discussed
in The Queen v. Murray" may perhaps be neces
sary in adjudicating the issues in this action. But if
that should become necessary any such use and
application of provincial law would not constitute
"a comprehensive incorporation or referential
adoption of provincial law to feed the jurisdiction
of the Federal Court" as was urged may be neces
sary in this case, and as was urged by counsel in
another context and commented upon in the
Quebec North Shore Paper Company v. Canadian
Pacific Limited case (supra).
For these reasons, therefore, I am of the view
the Trial Division of the Federal Court of Canada
17 [1965] 2 Ex.C.R. 663; conf. [1967] S.C.R. 262.
has jurisdiction to hear these claims on the two
subject contract policies of marine insurance.
Accordingly, the motion of the insurer defend
ants is dismissed with costs in the cause.
As to the second motion by the insurance broker
defendant, Reed, Shaw, Stenhouse Limited, the
claim against them is set out in paragraphs 26 to
29 of the statement of claim. The claim appears in
essence to be based on allegations that this insur
ance broker defendant negligently misrepresented
certain facts. The allegations are not allegations of
negligence under the subject contract policies of
marine insurance, but instead are founded on the
agency relationship generally. In any event, and in
short for the purpose of this action, the allegations
are not in respect to any maritime or admiralty
matter that is part of "Canadian maritime law".
Paragraphs 26 to 29 of the statement of claim
read as follows:
26. On the 7th day of February, 1974, the Plaintiff received
from the brokers Messrs. Reed, Shaw, Stenhouse Limited a
letter transmitting to the Plaintiff the text of a message
received from the Defendant Canadian Marine Underwriters
Ltd. stating that the insurers, the Defendants Gore Mutual
Insurance Company and Canadian Marine Underwriters Ltd.,
were considering the policy void as from the commencement of
the risk and that the underwriters would therefore not honour
their obligations with respect to any insurable matter falling
within the period of the insurance coverage, namely, the 16th
March, 1973 to the 16th March, 1974;
27. Upon inquiry made by the Plaintiff it was informed that
the decision of the insurers, the Defendants Gore Mutual
Insurance Company and Canadian Marine Underwriters Ltd.,
to void the policy from the inception of the risk was as a result
of alleged false information given to them by the brokers
Messrs. Reed, Shaw, Stenhouse Limited;
28. At no time did the Plaintiff give either directly to Defend
ants Gore Mutual Insurance Company and Canadian Marine
Underwriters Ltd. or indirectly through its brokers Messrs.
Reed, Shaw, Stenhouse Limited any false information in con
nection with the placing of the insurance or otherwise and
accordingly the Defendant underwriters, Gore Mutual Insur
ance Company and Canadian Marine Underwriters Ltd. had no
right to ever consider the policy void as from the commence
ment of the risk;
29. However, in the event that this Honourable Court should
find that the underwriters were well founded in considering the
policy void as and from the commencement of the risk, which
the Plaintiff expressly denies, then Plaintiff is entitled to ask
that the Defendant Reed, Shaw, Stenhouse Limited, be con
demned to all sums for which the underwriters would have been
liable to Plaintiff if the said policy had been in force during its
full term, including all damages caused to Plaintiff as a result
of a cancellation of the policies from the commencement of the
risk;
Accordingly, there is no jurisdiction in the Fed
eral Court of Canada to hear the claim against
this insurance broker defendant.
Therefore, paragraphs 26 to 29 in the statement
of claim are struck out and any other parts of the
statement of claim relating to this insurance
broker defendant; and the action against Reed,
Shaw, Stenhouse Limited is dismissed with costs;
with leave to the plaintiff to make any consequen
tial changes in the statement of claim including
the numbering of paragraphs to eliminate all
claims against this insurance broker defendant and
to enable it to pursue its claims against the insurer
defendants.
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.