T-4530-75
Santa Marina Shipping Co. S.A. (Plaintiff)
v.
Lunham & Moore Ltd. (Defendant)
Trial Division, Dubé J.—Montreal, January 30;
Ottawa, February 10, 1978.
Jurisdiction — Maritime law — Application pursuant to
Rule 474 to determine if Court has jurisdiction over claims
under terms of charterparty, where charterparty alleged to be
governed by English law — Whether or not existing "law of
Canada" on which to base jurisdiction — Federal Court Act,
R.S.C. 1970 (2nd Supp.), c. 10, s. 22(2)(i) — Federal Court
Rule 474.
This is an application under Rule 474 on behalf of the
plaintiff for determination before trial of the question whether
the Court has jurisdiction to entertain plaintiff's claim for
money owing under the terms of a charterparty. Defendant's
counsel contends that, pursuant to recent decisions of the
Supreme Court and of the Federal Court, this Court is without
jurisdiction to entertain this action. It is argued that, since
there must be applicable Canadian federal law to support
plaintiff's claim and since the claim must be based on a
charterparty governed by English law, the action cannot be
entertained in this Court: there is no existing "law of Canada"
on which to base jurisdiction.
Held, this Court has jurisdiction. The perimeter of Canadian
maritime law encompasses the subject of charterparty which
has been from time immemorial closely identified with naviga
tion and shipping and is now enshrined in Canadian statutory
law in paragraph 22(2)(i) of the Federal Court Act. It being
established that this Court has jurisdiction to entertain a claim
relating to the use of a ship by charterparty, it has jurisdiction
so to do whatever particular law is to govern the agreement
itself. If the agreement is to be construed according to English
law, this Court will apply English law to the agreement.
Quebec North Shore Paper Co. v. Canadian Pacific Ltd.
[1977] 2 S.C.R. 1054, referred to. McNamara Construc
tion (Western) Ltd. v. The Queen [1977] 2 S.C.R. 654,
referred to. R. v. Canadian Vickers Ltd. [1978] 2 F.C.
675, referred to. Sivaco Wire & Nail Co. v. Atlantic Lines
& Navigation Co., Inc. [1978] 2 F.C. 720, referred to.
Associated Metals & Minerals Corp v. The "Evie W -
[1978] 2 F.C. 710, referred to. Intermunicipal Realty &
Development Corp. v. Gore Mutual Insurance Co. [1978]
2 F.C. 691, considered. De Lovio v. Boit (1817) 2 Gall.
398 (Gallison's Reports), considered.
APPLICATION.
COUNSEL:
Gerald P. Barry for plaintiff.
W. David Angus for defendant.
SOLICITORS:
McMaster, Minnion, Patch, Hyndman,
Legge, Camp & Paterson, Montreal, for
plaintiff.
Stikeman, Elliott, Tamaki, Mercier & Robb,
Montreal, for defendant.
The following are the reasons for judgment
rendered in English by
Dust J.: This is an application under Rule 474
on behalf of the plaintiff for determination before
trial of the question whether the Court has juris
diction to entertain plaintiffs claim for the sum of
$96,730.13 under the terms of a charterparty.
Counsel for both parties are in agreement that
the case on which the question should be deter
mined consists of the pleadings already filed and
the time charter. In view of the agreement it
appeared to be expedient to hear the arguments
forthwith, dispensing with the first stage of such
proceedings under Rule 474 which should be the
application for a decision on the expediency of
such a hearing and for directions.
In the statement of claim plaintiff declares that
it is a Panamanian corporation, owner of the vessel
Marina and that defendant is a Canadian corpora
tion with an office in Montreal, Quebec, carrying
on business as a ship operator and charterer.
By a trip charterparty in amended New York
Produce Exchange form dated at London, Eng-
land, on October 28, 1970, the plaintiff let the
Marina in favour of the defendant as charterer for
one trip via Belize and Eastern Canada to United
Kingdom/Continent or U.S. ports. It is alleged
that under the terms of the charterparty the sum
of $210,551.89 is owing, less sums paid on account
and less disbursements effected by the defendant.
Defendant alleges in its defence that it owes no
further, invokes the doctrine of non adempleti
contractus, claims that plaintiff misrepresented
the capacity of the vessel and otherwise breached
the charterparty agreement, and counterclaims the
sum of U.S. $58,685.44.
The charterparty agreement is titled "Time
Charter, Government Form, approved by the New
York Produce Exchange". It includes an arbitra
tion clause which provides that disputes under the
charterparty in which the amounts claimed do not
exceed U.S. $25,000 shall be referred to three
persons at London, England. Should the amounts
claimed exceed $25,000, the arbitration clause
shall be entirely inapplicable.
The agreement includes a "General Clause
Paramount" which reads as follows:
This Bill of Lading shall have effect subject to the provisions of
the Water Carriage of Goods Act, 1936, of the Dominion of
Canada, including the Schedule thereto, provided that if at the
place of loading the goods some other statute (which descrip
tion includes ordinance, Order in Council or King's Regulation)
enanacting [sic] the Hague Rules, so called, as dealt with by
the Brussels Convention of August 25, 1924, is in effect, then
such other statute shall apply and this Bill of Lading shall have
effect subject to the same....
These two clauses are printed on the American
form:
I. BOTH TO BLAME COLLISION CLAUSE
If the liability for any collision in which the vessel is involved
while performing this Charter Party fails to be determined in
accordance with the laws of the United States of America, the
following clause shall apply:—
II. GENERAL AVERAGE AND THE NEW JASON CLAUSE
General Average shall be payable according to the York/
Antwerp Rules, 1950, but where the adjustment is made in
accordance with the law and practice of the United States of
America, the following clause shall apply:—
In its answer to defence and defence to counter
claim, the plaintiff avers that the proper law of the
charterparty is English. Paragraph 7 reads:
7. It denies Paragraph 21, adding that the proper law of the
Charterparty is English, that Defendant, as it admits, took
delivery of the said Vessel, used it for a voyage in which some
6,400 tons of sugar were loaded in Belize and discharged in
Toronto, and for a subsequent voyage wherein some 7,353.821
metric tons of pellets and meal were loaded in Duluth and
discharged in Rotterdam, that under English Law if Defendant
has a claim (which is not admitted but is specifically denied)
his recourse sounds in damages only; SUBSIDIARILY, AND
WITHOUT PREJUDICE TO THE FOREGOING, the doctrine of non
adempleti contractus is also inapplicable to the circumstances
of the said charterparty and voyages.
It is defendant counsel's contention that, pursu
ant to two recent Supreme Court' and four Feder
al Court 2 decisions on the question of this Court's
jurisdiction, this Court is without jurisdiction to
entertain the action. His argument, as far as I can
understand it, would be to this effect: there must
be applicable Canadian federal law to support
plaintiff's claim, but the claim is based on a chart-
erparty governed by English law, therefore it
cannot be entertained in this Court.
A succinct overview of the six decisions is neces
sary to focus the argument in its proper
perspective.
In both the Quebec North Shore Paper case and
the McNamara case, the plaintiff was invoking the
general law of contract in the Federal Court on the
view that pro tanto such law could be altered by a
federal law in relation to interprovincial transpor
tation, or federal government operations, although
there was no existing federal law on which the
claim could be founded. In the Canadian Vickers
case, the Associate Chief Justice of this Court held
that there is no federal law to support the jurisdic
tion of this Court to entertain a claim by a ship-
owner against a shipwright for breach of a con
tract for the building of a ship. In the Sivaco Wire
& Nail Co. case, Walsh J. held that this Court
does have jurisdiction over a claim arising out of
contract or tort for damage to cargo. In the Gore
Mutual Insurance Co. case, Gibson J. held that
this Court has jurisdiction to hear an action on
contracts of marine insurance. And finally, the
Federal Court of Appeal held in the Associated
Metals & Minerals Corp. case that there is in
Canada a body of substantive law known as admi
ralty law which clearly includes contracts for the
carriage of goods by sea.
I Quebec North Shore Paper Co. v. Canadian Pacific Lim
ited [1977] 2 S.C.R. 1054. McNamara Construction (Western)
Ltd. v. The Queen [1977] 2 S.C.R. 654.
2 The Queen v. Canadian Vickers Ltd. [1978] 2 F.C. 675.
Sivaco Wire & Nail Co. v. Atlantic Lines & Navigation Co.,
Inc. [1978] 2 F.C. 720. Intermunicipal Realty & Development
Corp. v. Gore Mutual Insurance Co. [1978] 2 F.C. 691.
Associated Metals & Minerals Corp. v. The "Evie W" [1978]
2 F.C. 710.
Concurrent original jurisdiction in navigation
and shipping was given to the Trial Division by
section 22 of the Federal Court Act. Paragraph
22(2)(i) declares for greater certainty this Court's
jurisdiction with respect to the hire of a ship by
charterparty or otherwise:
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:
(i) any claim arising out of any agreement relating to the
carriage of goods in or on a ship or to the use or hire of a ship
whether by charter party or otherwise;
It will be recalled that in the Canadian Vickers
decision, after an exhaustive and erudite review of
admiralty law in Canada, it was held that para
graph 22(2)(n)
22. (2) ...
(n) any claim arising out of a contract relating to the
construction, repair or equipping of a ship;
did not include a claim from the owner against the
builder of a ship, because the body of admiralty
law that had become the law of Canada did not
provide such a remedy to the owner, and that
situation was not changed by paragraph 22(2)(n).
In the Gore Mutual Insurance Co. decision,
Gibson J. determined that marine insurance poli
cies are "maritime contracts". He referred to De
Lovio v. Boit 3 , a Massachusetts Circuit Court
decision of 1815 described as the "keystone of
admiralty jurisprudence in America". The judg
ment of Story J. is an elaborate essay on the
history of admiralty reaching back to the reign of
Richard the First and the Laws of Oleron com
piled by him on his return from the Holy Land.
3 (1817) 2 Gall. 398 (Gallison's Reports).
Story J. lays down three basic principles: (1)
Admiralty has jurisdiction over all marine con
tracts, wheresoever the same may be made or
executed, and whatever may be the form of the
stipulations. (2) A policy of insurance is a mari
time contract and therefore of admiralty jurisdic
tion. (3) Courts of common law have a jurisdiction
concurrent with the admiralty over maritime con
tracts. His definition of "maritime contracts"
includes charterparties as well as marine insur
ance. He says at page 475:
The next inquiry is, what are properly to be deemed "mari-
time contracts." Happily in this particular 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, contracts 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 purpose, policies of
insurance.
My judgment accordingly is, that policies of insurance are
within (though not exclusively within) the admiralty and mari
time jurisdiction of the United States. [The underlining is
mine.]
Further on, at page 695 of his reasons for
judgment, Gibson J. observes that "no statute or
decision of an English common law court ever
purported to suggest that a policy of marine insur
ance was not an Admiralty or maritime matter".
He probes the limits of maritime law in Canada
and concludes at pages 704-705:
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 admiralty
and maritime law administered in the Admiralty 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".
The limits referred to above, however, are sufficient to decide
the issues in this motion in relation to the subject contract
policies of marine insurance.
For the same reasons the perimeter of Canadian
maritime law encompasses the subject of charter-
party which has been from time immemorial close-
ly identified with navigation and shipping and is
now enshrined in Canadian statutory law by the
provisions of paragraph 22(2)(i) of the Federal
Court Act.
Counsel for defendant, however, as I understand
his contention, does not say that paragraph
22(2)(i) does not clothe this Court with the proper
jurisdiction to entertain an action for the hire of a
ship by charterparty. He alleges that the charter-
party at bar being governed by English law, there
would be no existing "law of Canada" on which to
base a jurisdiction in the instant case.
It being established that this Court has jurisdic
tion to entertain a claim relating to the use of a
ship by charterparty, it has jurisdiction so to do
whatever particular law is to govern the agreement
itself. (It will be recalled that the defendant is a
Canadian corporation with office in Montreal,
Quebec.) If the agreement is to be construed
according to English law, and I am far from
convinced that it is, then this Court will apply
English law to the agreement. The foreign law to
be applied then becomes a question of fact.
The arbitration clause in the charterparty does
not represent an express agreement that the proper
law to govern the charterparty should be English
law. The clause is no more than one indication
which may give way to other evidence adduced at
the trial. And the fact that the agreement was
signed in England is not rigidly conclusive: as
stated by Lord Wright, the lex loci contractus or
lex loci solutionis are not the only criteria, the
matter must be treated "as depending on the
intention of the parties to be ascertained in each
case on a consideration of the terms of the con
tract, the situation of the parties, and generally on
all the surrounding facts" 4 . In accordance with the
general rule, where there is no express choice, the
proper law of the contract is that of the place or
system with which it is most closely associated
(vide Compagnie d'Armement Maritime S.A. v.
Compagnie Tunisienne de Navigation S.A. 5 ). And
in the absence of evidence to the contrary, the
4 Mount Albert Borough Council v. Australasian Temper
ance Assurance [1938] A.C. 224, 240 (P.C.).
5 [1971] A.C. 572.
presumption is that the foreign law is the same as
the law of Canada (vide Ertel Bieber & Co. v. Rio
Tinto Co. Ltd. 6 ).
Should the Trial Judge hold that the plaintiff is
bound by its allegation in paragraph 7 of the
answer, or for other reasons that the proper law to
construe the charterparty is English law, then
English law will be presumed to be the same as
Canadian law. If it be proved to be different in
some material respect, then the state of the foreign
law will be but one fact and it is not the foreign
law, but our own law, to which effect is given.
I am therefore of the view that this Court does
have jurisdiction to entertain plaintiffs action.
Both parties having consented to this application,
the costs will be in the cause.
6 [1918] A.C. 260.
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.