A-490-77
Western Caissons (Quebec) Limited (Appellant)
v.
McNamara Corporation of Newfoundland Co.
Limited, The J. P. Porter Company Limited and
Canadian Dredge & Dock Company Limited
(Respondents)
Court of Appeal, Jackett C.J., Heald J. and
MacKay D.J.—Toronto, September 12, 1978.
Jurisdiction — Appeal from decision striking statement of
claim for want of jurisdiction — Appellant sub-contractor and
respondents contractor for the Crown — Action claiming relief
on sub-contract and circumstances surrounding its execution
— Appellant contending that respondents, if permitted to
proceed, would have launched third party proceedings against
the Crown, thereby establishing jurisdiction because there then
would be claim for relief against the Crown — Whether or not
decision to strike for want of jurisdiction premature.
This is an appeal from a judgment of the Trial Division
striking out the statement of claim by which an action was
launched on the ground that the Federal Court is without
jurisdiction to entertain the appellant's claims. The respondents
are a "joint venture" who entered into a construction contract
with the federal Crown and appellant is a sub-contractor under
that contract. Appellant had claimed entitlement to relief by
virtue of its contract with the respondents and the facts sur
rounding the execution of the contract. Appellant now contends
that the judgment of the Trial Division was premature in that,
if the matter had been allowed to proceed, the respondents
would probably have launched third party proceedings against
the Crown and in that event, the Trial Division would have
jurisdiction with respect to appellant's claim because there then
would be "relief ... claimed against the Crown."
Held, the appeal is dismissed. Even if there were a claim by
the respondents by way of third party proceedings against the
Crown (based on the respondents' contract with the Crown)
that falls within the jurisdiction of the Federal Court, that third
party proceeding would be a separate proceeding from the
proceeding of the appellant against the respondents and would
not alter the nature of that proceeding so as to give the Federal
Court jurisdiction in the appellant's action.
McNamara Construction (Western) Ltd. v. The Queen
[1977] 2 S.C.R. 654, applied. R. v. Bank of Montreal
[1933] S.C.R. 311, distinguished.
APPEAL.
COUNSEL:
D. Laidlaw, Q.C. and R. J. McComb for
appellant.
D. A. Brown for respondents.
SOLICITORS:
McCarthy & McCarthy, Toronto, for appel
lant.
Davies, Ward & Beck, Toronto, for respond
ents.
The following are the reasons for judgment
delivered orally in English by
JACKETT C.J.: This is an appeal from a judg
ment of the Trial Division striking out the state
ment of claim by which an action was launched on
the ground that the Federal Court is without
jurisdiction to entertain the appellant's claims.
The facts as alleged by the statement of claim
are, in effect, as follows:
(a) the respondents are a "joint venture" and,
as such, entered into a contract with Her Majes
ty in right of Canada for the construction of a
public work,
(b) the appellant, by virtue of a contract with
the respondents, was a "sub-contractor" for the
performance of a part of what the respondents
contracted with Her Majesty to do, and
(c) by virtue of the appellant's contract with the
respondents, and the facts surrounding the exe
cution of that contract, the appellant is entitled
to certain relief against the respondents.
On a motion to strike out the statement of
claim, which came on before Campbell Grant D.J.,
a judgment was delivered reading, in part, as
follows:
For reasons set forth in Quebec North Shore Company et al
v. Canadian Pacific Limited et al pronounced by the Supreme
Court of Canada on June 29th, 1976 and McNamara Con
struction (Western) Limited et al v. Her Majesty the Queen et
al v. J. Stephenson & Associates et al pronounced by the
Supreme Court of Canada on Jan. 27th, 1977 I find that the
Federal Court of Canada is without jurisdiction to entertain the
claims of the plaintiff herein, and therefore an order will go
setting aside and striking out the statement of claim herein.
In the McNamara case' to which the learned
Trial Judge refers, what was involved was an
action by Her Majesty in respect of a contract for
the construction of a public work and certain other
proceedings arising from that action. In conclud
ing that the Federal Court did not have jurisdic
tion in those proceedings, Laskin C.J.C., (deliver-
ing the judgment of the Supreme Court of
Canada) said (at pp. 658-660):
Shortly put, the main issue in these appeals is whether the
Federal Court of Canada may be invested with jurisdiction over
a subject at the suit of the Crown in right of Canada which
seeks to enforce in that Court a claim for damages for breach
of contract. The basis, for the conferring of any such jurisdic
tion must be found in s. 101 of the British North America Act
which, inter alla, confers upon Parliament legislative power to
establish courts "for the better administration of the laws of
Canada". In Quebec North Shore Paper Company v. Canadian
Pacific Limited ([1977] 2 S.C.R. infra), (a decision which
came after the judgments of the Federal Court of Appeal in the
present appeals), this Court held that the quoted provisions of s.
101, make it a prerequisite to the exercise of jurisdiction by the
Federal Court that there be existing and applicable federal law
which can be invoked to support any proceedings before it. It is
not enough that the Parliament of Canada have legislative
jurisdiction in respect of some matter which is the subject of
litigation in the Federal Court. As this Court indicated in the
Quebec North Shore Paper Company case, judicial jurisdiction
contemplated by s. 101 is not co-extensive with federal legisla
tive jurisdiction. It follows that the mere fact that Parliament
has exclusive legislative authority in relation to "the public debt
and property" under s. 91(1A) of the British North America
Act and in relation to "the establishment, maintenance and
management of penitentiaries" under s. 91(28), and that the
subject matter of the construction contract may fall within
either or both of these grants of power, is not enough to support
a grant of jurisdiction to the Federal Court to entertain the
claim for damages made in these cases.
Section 17(4) of the Federal Court Act is the foundation for
the assertion of jurisdiction herein at the suit of the Crown.
Section 17(1) and (2) invest the Trial Division of the Federal
Court with jurisdiction in actions against the Crown, and no
issue arises here as to the validity of those provisions. Nor are
we concerned here with the validity of s. 17(3) which provides
for jurisdiction through agreement in certain situations between
the Crown and a subject, and also in proceedings to resolve
conflicting claims in respect of an alleged obligation of the
Crown. Section 17(4) reads as follows:
(4) The Trial Division has concurrent original jurisdiction
(a) in proceedings of a civil nature in which the Crown or
the Attorney General of Canada claims relief; and
(b) in proceedings in which relief is sought against any
person for anything done or omitted to be done in the
' [1977] 2 S.C.R. 654.
performance of his duties as an officer or servant of the
Crown.
A comparable predecessor provision was s. 29(d) of the Ex
chequer Court Act, R.S.C. 1952, c. 98 which gave jurisdiction
to the Exchequer Court
in all other actions and suits of a civil nature at common law
or equity in which the Crown is plaintiff or petitioner.
In the Quebec North Shore Paper Company case, this Court
observed, referring to this provision, that the Crown in right of
Canada in seeking to bring persons into the Exchequer Court as
defendants must have founded its action on some existing
federal law, whether statute or regulation or common law.
What must be decided in the present appeals, therefore, is
not whether the Crown's action is in respect of matters that are
within federal legislative jurisdiction but whether it is founded
on existing federal law. I do not think that s. 17(4), read
literally, is valid federal legislation under s. 101 of the British
North America Act in purporting to give jurisdiction to the
Federal Court to entertain any type of civil action simply
because the Crown in right of Canada asserts a claim as
plaintiff. The common law rule that the Crown may sue in any
Court having jurisdiction in the particular matter, developed in
unitary England, has no unlimited application to federal
Canada where legislative and executive powers are distributed
between the central and provincial levels of legislature and
government and where, moreover, there is a constitutional
limitation on the power of Parliament to establish Courts.
and (at pp. 662-663):
What remains for consideration here on the question of
jurisdiction is whether there is applicable federal law involved
in the cases in appeal to support the competence of the Federal
Court to entertain the Crown's action, both with respect to the
claim for damages and the claim on the surety bond. In the
Quebec North Shore Paper Company case, this Court referred
to what I may for convenience call Crown law as follows:
... It should be recalled that the law respecting the Crown
came into Canada as part of the public or constitutional law
of Great Britain, and there can be no pretence that that law
is provincial law. In so far as there is a common law
associated with the Crown's position as a litigant it is federal
law in relation to the Crown in right of Canada, just as it is
provincial law in relation to the Crown in right of a Province,
and is subject to modification in each case by the competent
Parliament or Legislature. Crown law does not enter into the
present case.
This passage cannot be taken as saying that it is enough that
the Crown is a party to a contract, on which it is suing as a
plaintiff, to satisfy the requirement of applicable federal law.
The situation is different if Crown liability is involved because
in that respect there were existing common law rules respecting
Crown liability in contract and immunity in tort, rules which
have been considerably modified by legislation. Where it is not
the Crown's liability that is involved but that of the other party
to a bilateral contract, a different situation prevails as to the
right of the Crown to compel that person to answer process
issued out of the Federal Court.
It was the contention of the Attorney-General of Canada on
behalf of the Crown that the construction contract, being in
relation to a public work or property, involved on that account
federal law. What federal law was not indicated. Certainly
there is no statutory basis for the Crown's suit, nor is there any
invocation by the Crown of some principle of law peculiar to it
by which its claims against the appellants would be assessed or
determined. Counsel for the Attorney-General was candid
enough to say that his position had to be that jurisdiction
existed in the Federal Court in respect of any contract claim
asserted by the Crown. I have already indicated that this is
untenable and, clearly, s. 17(4) would be ultra vires if that was
its reach. It can be valid only in so far as its terms are limited in
accordance with what s. 101 of the British North America Act
prescribes.
I take the same view of the Crown's claim on the bond as I
do of its claim against McNamara for damages. It was urged
that a difference existed because (1) s. 16(1) of the Public
Works Act, now R.S.C. 1970, c. P-38 obliges the responsible
Minister to obtain sufficient security for the due performance
of a contract for a public work and (2) Consolidated Distiller
ies v. The King, supra, stands as an authority in support of the
Crown's right to invoke the jurisdiction of the Federal Court
where it sues on a bond. Neither of these contentions improves
the Crown's position. Section 16(1) of the Public Works Act
stipulates an executive or administrative requirement that a
bond be taken but prescribes nothing as to the law governing
the enforcement of the bond. The Consolidated Distilleries
case involved an action on a bond given pursuant to the federal
Inland Revenue Act and, as the Privy Council noted "the
subject matter of the actions directly arose from legislation of
Parliament in respect of excise"; see [1933] A.C. 508 at p. 521.
As I understand his reasoning, the legal princi
ple on which the McNamara decision was based is
that it is "a prerequisite to the exercise of jurisdic
tion by the Federal Court that there be existing .. .
federal law which can be invoked to support any
proceedings before it". 2 It is common ground that
2 This principle has been applied by this Court in:
(a) Associated Metals & Minerals Corporation v. The
"Evie W" [1978] 2 F.C. 710.
(b) The "Capricorn" v. Antares Shipping Corp. [1978] 2
F.C. 834.
(c) Hawker Industries Limited v. Santa Maria Shipowning
and Trading Company, S.A. [1979] 1 F.C. 183.
(d) Benson Bros. Shipbuilding Co. (1960) Ltd. v. Mark
Shipping Co. Ltd. (1978) 21 N.R. 260.
(Continued on next page)
there is no law on which the appellant founds its
action to enforce its contract against the respond
ents that can be regarded as federal law within the
meaning of that phrase as used in the McNamara
case.
The appellant submits, however, that the judg
ment of the Trial Division was premature in that,
if the matter had been allowed to proceed, the
respondents would probably have launched third
party proceedings against the Crown and in that
event, the Trial Division would have jurisdiction
with respect to the appellant's claim, because there
would then be "relief ... claimed against the
Crown." In my view, the short answer is that, even
if there were a claim by the respondents by way of
third party proceedings against the Crown (based
on the respondents' contract with the Crown) that
falls within the jurisdiction of the Federal Court,
that third party proceeding would be a separate
proceeding from the proceeding of the appellant
against the respondents and would not alter the
nature of that proceeding so as to give the Federal
Court jurisdiction in the appellant's action. 3 I
express no opinion as to whether the Federal
Court Act is so worded as to give the Trial Divi
sion jurisdiction in the appellant's action if it were
not for the constitutional hurdle made obvious by
the McNamara case. I would say, however, that,
in my view, MacDougall General Contractors Ltd.
v. The Foundation Co. of Ontario Ltd. [1952] 4
D.L.R. 630, on which the appellant relies, would
have no application. All that case stands for, in
this connection, as I understand it, is that, where
another court has been given exclusive jurisdiction,
(Continued from previous page)
In the McNamara case, the requirement was not fulfilled
because the Crown was proceeding on the basis of the provin
cial law of contract applicable between subject and subject. Cf.
The Queen v. Murray [1967] S.C.R. 262 per Martland J.
(delivering the judgment of the Court) at pp. 264 et seq. I have
not overlooked the distinction made in the McNamara case
between claims by the Crown and claims against the Crown. I
assume that the distinction lies in the fact that, while Her
Majesty may enforce contracts in the Courts as though she
were an ordinary person, by reason of her prerogative not to be
impleaded in her own Courts, a subject has no legally enforce
able right against Her Majesty in the absence of statute and, in
the case of the Government of Canada, the essential statute is a
federal law.
3 Cf. The King v. Bank of Montreal [1933] S.C.R. 311.
the Supreme Court of Ontario will not entertain
such jurisdiction indirectly by way of an action for
a declaration.
In my opinion, the appeal should be dismissed
with costs.
* * *
HEALD J. concurred.
* * *
MAcKAY D.J. concurred.
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.