T-1648-77
Skaarup Shipping Corporation (Plaintiff)
v.
Hawker Industries Limited, Hawker Siddeley
Canada Ltd. and the Ship Lionel A. Forsyth
(Defendants)
Trial Division, Mahoney J.-Halifax, September
6; Ottawa, September 26, 1977.
Maritime law — Jurisdiction — Defendants assumed re
sponsibility to avert oil spill, and of liability if spill occurred
— Payment by plaintiff of cleanup cost to prevent ship's arrest
— Ship placed in detention by defendants until deposit for
repairs and cleanup paid — Action by plaintiff to recover
amount spent for cleanup, and for damages for loss of revenue
due to detention — Application by defendants to dismiss
action for want of jurisdiction — Federal Court Act, R.S.C.
1970 (2nd Supp.), c. 10, ss. 22, 42 — Administration of Justice
Act, 1956, 4 & 5 Eliz. 2, c. 46, s. 1(1)(n) (U.K.) — Statute of
Westminster, 1931, 22 Geo. 5, c. 4, s. 4 (U.K.) — Admiralty
Act, R.S.C. 1952, c. 1, s. 18(1) — Canada Shipping Act,
R.S.C. 1970, c. S-9, ss. 734, 735.
Defendants seek a declaration that this Court is without
jurisdiction in this action because there is no relevant substan
tive federal law to be applied. Fuel from plaintiff's ship escaped
into Halifax harbour when the ship had been raised in defend
ants' floating dry dock. Plaintiff arranged the cleanup at
substantial cost in order to avoid the ship's arrest, even though
defendants had undertaken responsibility for avoiding an oil
spill, and had agreed to accept liability for one. Defendants,
nevertheless, detained the vessel until the plaintiff paid a
deposit covering repairs and cleanup, and a further sum for
cleanup about the drydock. Plaintiff sought to recover the total
amount paid for the cleanup, and damages for loss of earnings
for the period defendants had detained the ship.
Held, the application to dismiss the action is allowed.
Although the owner of the Colin Brown suffered major finan
cial injury as a result of defendants' alleged negligence and
breach of contract, the ship itself had not been physically
damaged. Canadian maritime law does not extend to include an
action by a shipowner against a ship-repairer for a breach of, or
negligence in performance of, a contract of repair in the
absence of physical damage to the ship being repaired. There is
no federal legislation supporting the jurisdiction of the Court in
this action. To argue that the Exchequer Court's jurisdiction in
admiralty—derived from section 18(1) of the Admiralty Act—
was extended by Britain's Administration of Justice Act, 1956,
is contrary to section 4 of the Statute of Westminster, 1931,
and the principles of statutory interpretation. The cause of
action in no way can be based on sections 734 and 735 of the
Canada Shipping Act. Finally, jurisdiction does not flow from
merely asking for interest at commercial rates from the date of
loss.
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. T-1453-74 (not yet reported),
applied. Sivaco Wire & Nail Co. v. Atlantic Lines T-4371-
76 (not yet reported), distinguished.
APPLICATION.
COUNSEL:
J. Murphy for plaintiff.
J. M. Davison, Q.C., J. E. Gould and W. W.
Spicer for defendants.
SOLICITORS:
Stewart, MacKeen & Covert, Halifax, for
plaintiff.
McInnes, Cooper & Robertson, Halifax, for
defendants.
The following are the reasons for order ren
dered in English by
MAHONEY J.: The defendants seek a declara
tion that this Court is without jurisdiction in this
action on the ground that there is no relevant
substantive federal law to be applied.
The material facts, as alleged in the statement
of claim and an affidavit filed in opposition to the
motion, which, for this purpose, I must accept as
true and capable of proof, are that the corporate
defendants are associated in the business of repair
ing ships at Halifax. The defendant ship is a
floating dry dock operated by them in that busi
ness. The plaintiff owns the ship Colin Brown
which was considerably damaged when stranded
near the entrance to Halifax Harbour on April 4,
1975. After salvage, the Colin Brown was removed
to a pier in the harbour and arrangements were
made to have the defendants repair her. A quanti
ty of fuel oil remained on the Colin Brown. It was
anticipated that when she was raised in the dry
dock the oil would fall out the holes in her bottom
into the dry dock and, unless prevented, flow out
the open ends of the dry dock into the harbour.
The defendants undertook responsibility for ensur
ing that the oil did not escape into the harbour and
assumed liability if it did. Measures taken by the
defendants to that end failed. Both ships, the Colin
Brown and the Lionel A. Forsyth, were threatened
with arrest by the Ministry of Transport unless the
spill was cleaned up. The defendants refused to
/undertake the harbour cleanup and, to prevent the
arrest of the Colin Brown, the plaintiff arranged it
at a cost of almost $210,000. After repairs were
completed the Colin Brown was detained for some
30 days by the defendants who refused to release
her until a deposit for the cost of both repairs and
cleanup was made. Included was a further $165,-
000, paid without prejudice, for cleanup of the oil
within and around the floating dry dock.
The plaintiff seeks to recover damages for loss
of earnings for the 30-day period and an aggregate
of $374,896.02 paid for cleanup of the spill along
with interest at commercial rates and its costs.
Breach of contract, negligence and the unseawor-
thiness of the Lionel A. Forsyth are alleged with
particulars. The defendants' affidavit alleges facts
intended to establish that the Lionel A. Forsyth is
not, in fact, a ship although she is so registered
under the provisions of the Canada Shipping Act'.
Two recent decisions of the Supreme Court of
Canada 2 have led to the jurisdiction of this Court
being challenged in a number of situations which,
apparently, were previously generally taken to fall
within this Court's admiralty jurisdiction 3 . Briefly,
the Supreme Court has held that the term "the
Laws of Canada" in section 101 of The British
North America Act, 1867 is restricted to Crown
law as it pertains to the Crown in right of Canada
R.S.C. 1970, c. S-9.
2 Quebec North Shore Paper Company v. Canadian Pacific
Limited [1977] 2 S.C.R. 1054, and McNamara Construction
(Western) Limited v. The Queen [1977] 2 S.C.R. 654.
3 The Robert Simpson Montreal Limited v. Hamburg-
Amerika Linie Norddeutscher [1973] F.C. 1356.
and competent legislation enacted by the Parlia
ment of Canada. This Court being constituted
under the authority of section 101, its jurisdiction
is limited to the administration of the laws of
Canada so defined. Crown law is not in play in this
action.
As to such legislation it may, I take it, result in
substantive federal law in at least three ways.
Parliament may enact such law expressly within its
area of legislative competence. It may adopt by
reference, to be applied within an area of its
legislative competence, the statute law of another
jurisdiction as, for example, it has adopted the
provincial exemption from seizures Acts under
subsection 225(5) of the Income Tax Act 4 . Parlia
ment may also adopt by reference the existing
non-statute law of other jurisdictions to be applied
within an area of its legislative competence. It
appears to have taken a combination of all three
with respect to "Canadian maritime law" in enact
ing the relevant provisions of the Federal Court
Act 5 . With reference to those provisions, the
S.C. 1970-71-72, c. 63.
5 R.S.C. 1970 (2nd Supp.), c. 10.
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;
22. (1) The Trial Division has concurrent original jurisdic
tion 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.
(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;
Associate Chief Justice has said 6 :
In my view, the effect of these provisions is to continue in
effect as law of Canada the body of admiralty law that had
become part of the law of Canada by the Admiralty Act, 1891
and had been administered thereafter by the Exchequer Court
of Canada both under that Act and the Admiralty Act, 1934,
and possibly to introduce as well maritime law, based on the
sources of law referred to in the passage I have cited from
Mayers' Admiralty Law and Practice, which was administered
in the Admiralty Court in the reign of Edward III and prior to
the statutes of Richard II and Henry IV which were subse
quently interpreted and enforced by the common law courts,
applying common law principles, so as to severely restrict the
jurisdiction of the Admiralty Court. But, as I have already
indicated, the law introduced by the Admiralty Act, 1891
(Can.), in my opinion, did not include substantive law giving
the shipowner a remedy in admiralty against a shipwright for
damages for breach of a contract for the building, equipping or
repairing of a ship and I have not been referred to any au
thority, nor have I found any, which indicates that the mari
time law administered in the Admiralty Court ever included
law dealing with the rights of a shipowner against a shipwright
on such a contract or giving a shipowner a remedy in damages
in a case such as the present. [Emphasis added.]
I have underlined the last sentence in the foregoing
quotation because the nub of the plaintiff's princi
pal argument is that, at least as it pertains to a
repair contract, the Associate Chief Justice would
not likely have arrived at that conclusion had he
had the benefit of the authority to which the
plaintiff has referred me.
As to paragraph 22(2)(n), the Associate Chief
Justice had this to say:
On the face of it, these words are broad enough to include the
claim of an owner against a builder for damages for breach of a
contract for building or equipping a ship. But it seems to me
that the paragraphs of subsection (2), in their description of
categories of claims enforceable in the Court, must be read as
subject to the limitation that the claims are enforceable in the
court only when they are founded on Canadian maritime law or
other federal law, whether such as is mentioned in subsection
22(1) or otherwise.
The question is whether by competent legisla
tion, Parliament has enacted law giving a shipown-
er a right of action against a repairer in the factual
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.
6 The Queen v. Canadian Vickers Limited Court No.
T-1453-74, a decision rendered June 22, 1977.
situation alleged. I should say at once that, while
in the Vickers case the Associate Chief Justice was
dealing with a contract to construct and equip a
ship and his conclusion vis-Ã -vis a repair contract
might, strictly speaking, be dictum, that is, to me,
an unacceptably narrow basis for distinguishing
the two cases. I am, of course, aware that in
another recent decision' my brother Walsh held
that the Court does have jurisdiction over the
subject matter of an action in contract or tort
arising out of damage to a ship's cargo; that is
plainly to be distinguished.
The cases upon which the plaintiff relies in
asserting that Canadian maritime law, as con
tinued by section 42, and administered by this
Court pursuant to section 22 of the Federal Court
Act, embraces the cause of action herein are: The
Lancastrian 8 , The Rehearo 9 and The
Forfarshire 10 , all actions for breach of contract or,
alternatively, negligence by a shipowner against a
ship repairer, and The Moorcock", The Devon 1 Z,
The Empress" and The Grit 14 , all actions in negli
gence by a shipowner against dock owners or
operators. In every one of those cases, the ship was
physically damaged; in this case, the Colin Brown
has not been physically damaged although her
owner has plainly suffered a major financial injury
as a result of the defendants' alleged negligence
and breach of contract.
7 Sivaco Wire & Nail Co. v. Atlantic Lines Court No.
T-4371-76, a decision rendered July 11, 1977.
8 (1915) 32 T.L.R. 117 affirmed ibid. p. 655.
9 (1933) 18 Asp. Mar. Law Case 422.
10 (1908) 11 Asp. Mar. Law Cas. 158.
" (1888) 13 P.D. 157.
12 (1923) 40 T.L.R. 136.
13 [1923] P. 96.
14 [1924] P. 246.
I see no substance in the plaintiff's argument
that the statement of claim discloses an action for
damages to a ship and/or by a ship. It is therefore
unnecessary to consider the evidence and argu
ments adduced for and against the proposition that
the Lionel A. Forsyth is, in fact, a ship.
The plaintiff further argues that if the Excheq
uer Court of Canada did not already have the
necessary jurisdiction before (which it contends it
did) then it certainly gained the jurisdiction with
the coming in force of the Administration of Jus
tice Act, 1956 15 in the United Kingdom. This
argument is directly contrary to section 4 of the
Statute of Westminster, 1931' 6 ; however, it is
necessary to consider the argument from the
Canadian, not the British, point of view. In 1956,
the Exchequer Court of Canada derived its admi
ralty jurisdiction from the Admiralty Act 17 ,
whereof subsection 18(1) provided, in part, as
follows:
... such jurisdiction shall ... be over the like places, persons,
matters and things as the Admiralty jurisdiction now possessed
by the High Court of Justice in England, whether existing by
virtue of any statute or otherwise....
Is the phrase "now possessed" in the subsection to
be construed as referring to the time it became
law, 1934, or did it speak also of all times while it
remained in force, thus incorporating the 1954
British amendment into Canadian maritime law?
To hold that it spoke in 1954 would be to hold that
by insertion of the words "now possessed" in sub
section 18(1) Parliament intended to arrive at the
opposite result to that the Privy Council held to
pertain to a very similar section of the Colonial
15 4 & 5 Eliz. 2, c. 46 (U.K.).
1.—(1) The Admiralty jurisdiction of the High Court
shall be as follows, that is to say, jurisdiction to hear and
determine any of the following questions or claims—
(n) any claim in respect of the construction, repair or
equipment of a ship or dock charges or dues;
16 22 Geo. 5, c. 4 (U.K.).
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.
17 R.S.C. 1952, c. 1.
Courts of Admiralty Act, 1890 18 in The Yuri
Maru 19 . If Parliament had intended to reverse The
Yuri Maru, I should think it would have employed
the more usual expression "from time to time
possessed" as suggested by Lord Merrivale in that
decision, rather than "now possessed". The only
Canadian cases I have been able to find dealing
with the effect of the word "now" in a very similar
circumstance involved a rule of the Manitoba
Court of Queen's Bench which empowered a
referee in chambers "to do such things ... and
exercise ... such ... jurisdiction ... as are now
done ... by any Judge of the Court sitting in
Chambers". That was held not to vest a referee
with jurisdiction conferred upon judges after
enactment of the Act under which the rule was
made 20 .
The interpretation urged by the plaintiff is not,
to my mind, the natural interpretation of the
section nor is it one to which I am impelled by
section 10 of the Interpretation Act 21 . I should be
most surprised to find that Parliament had, after
enactment of the Statute of Westminster, delegat
ed amendment of the law of Canada to the British
Parliament, otherwise than in the most explicit
terms. Furthermore, it must be recognized that, in
modern times, a declaration by the British Parlia
ment that the High Court's admiralty jurisdiction
18 53 & 54 Vict. c. 27 (U.K.).
2....
(2.) The jurisdiction ... shall ... be over the like places,
persons, matters and things as the Admiralty jurisdiction of
the High Court in England, whether existing by virtue of any
statute or otherwise, ...
19 [ 1927] A.C. 906.
20 E.g. Watson v. Dandy (1898) 12 Man. L.R. 175. It
appears the rules were later changed to the opposite effect. Vid.
Walker v. Stinson [1930] 3 D.L.R. 144.
21 R.S.C. 1970, c. I-23.
10. The law shall be considered as always speaking, and
whenever a matter or thing is expressed in the present tense,
it shall be applied to the circumstances as they arise, so that
effect may be given to the enactment and every part thereof
according to its true spirit, intent and meaning. [My
emphasis.]
extends to a new subject matter has merely the
effect of transferring jurisdiction over that subject
matter from one division of the High Court to
another. The effect of the Canadian Parliament
vesting this Court with jurisdiction in admiralty
over a new cause of action is to put courts having
historical inherent jurisdiction over that cause of
action in the position of sharing a theretofore
exclusive jurisdiction. I find it impossible to accept
that Parliament intended that result to flow from
what, in Britain, is little, if anything, more than a
reorganization of the work load within the High
Court.
Likewise, I see no merit in the proposition that
the plaintiff's cause of action is in any way found
ed on sections 734 and 735 of the Canada Ship
ping Act, which are not specifically pleaded in the
statement of claim. There are a number of reasons
I might give for this conclusion but it is sufficient
to say that those sections pertain to "a ship that
carries a pollutant in bulk"; that "in bulk" has
been competently defined by regulation as "a
quantity that exceeds 1,000 tons" 22 and that the
statement of claim alleges that, when she stranded,
the Colin Brown had on board approximately 674
tons of oil, and when raised in the dry dock,
approximately 100 tons.
I am equally satisfied that the plaintiffs claim
has nothing to do with salvage and that the plain
tiff cannot cloak this Court with jurisdiction it
does not otherwise have simply by asking for "in-
terest ... at commercial rates from the date of
loss", a remedy available in an admiralty court but
not a common law court.
Finally, I fully appreciate the expense and in
convenience confronting a non-resident shipowner
required to comply with provincial corporation
registration and licensing laws in order to gain
access to a provincial superior court. The expedi
ence that motivates a litigant to avoid that does
22 Maritime Pollution Claims Fund Regulations, SOR/73-
536, s. 2(2).
nothing to this Court's jurisdiction one way or
another.
Nothing to which I have been referred or found
indicates to me that Canadian maritime law
extends to include an action by a shipowner
against a ship repairer for breach of, or negligence
in performance of, a contract of repair in the
absence of physical damage to the ship being
repaired. Likewise, I can find no federal legislation
supporting the jurisdiction of this Court in this
action.
ORDER
The application is allowed with costs. The action
is dismissed.
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