A-264-78
Bensol Customs Brokers Limited, D. H. Grosven-
or Incorporated, Neuchatel Swiss General Insur
ance Company Limited (Appellants) (Plaintiffs)
v.
Air Canada (Respondent) (Defendant)
Court of Appeal, Pratte and Le Dain JJ. and Hyde
D.J.—Montreal, January 8; Ottawa, March 19,
1979.
Jurisdiction — Appeal from judgment determining question
of law pursuant to Rule 474 in action for damages for loss of
goods shipped by air on international flight — Rights of
original consignee assigned to second plaintiff, and thence to
third plaintiff — Court's jurisdiction allegedly derived from s.
23 of the Federal Court Act — Whether or not claim is one
made under an Act of the Parliament of Canada or otherwise
— Whether or not claim must relate to a matter coming within
classes of subjects specified in s. 23 — Federal Court Act,
R.S.C. 1970 (2nd Supp.), c. 10, s. 23 — The British North
America Act, 1867, 30 & 31 Vict., c. 3 (U.K.) [R.S.C. 1970,
Appendix III, s. 101.
This is an appeal from a judgment of the Trial Division,
determining a question of law pursuant to Rule 474, which held
that the appellants' action for damages against Air Canada had
to be dismissed for want of jurisdiction. By their action, appel
lants claim the value of certain goods that Air Canada agreed
to carry from London, England to Montreal and which, it is
alleged, were lost during transportation. Appellant Bensol Cus
toms Brokers Limited, the consignee in Montreal of those
goods, allegedly transferred all its rights to the second appel
lant, D. H. Grosvenor Incorporated, which, in turn, allegedly
transferred them to the third appellant, Neuchatel Swiss Gen
eral Insurance Company Limited. The jurisdiction of the Court
must flow from section 23 of the Federal Court Act. The only
issue is whether or not appellants' claim against the respondent
meets the two conditions of section 23: thà t the claim must be
made "under an Act of the Parliament of Canada or otherwise"
and that it must relate to a matter coming within any of the
classes of subjects specified in the latter part of the section.
Held, the appeal is allowed.
Per Pratte J.: Strictly speaking the insurance company's
claim cannot be said to be made exclusively under the Carriage
by Air Act; it is made both under that statute and under the
law governing the subrogation. Since respondent's liability is
clearly governed by the Carriage by Air Act, the appellants'
claim is made "under an Act of the Parliament of Canada" as
required by section 23, even if it is not made exclusively under
such an Act. To hold otherwise would lead to the unacceptable
result that a claim described in section 23 as being within the
jurisdiction of the Court would cease to be so every time the
claimant would assign his rights to a third party. Respondent
operates an undertaking that extends beyond the limits of a
province and that the damages for which the appellants claim
compensation was allegedly suffered in the course of the opera
tion of that undertaking. The action, therefore, relates to the
operation of an undertaking described in section 23. This is
sufficient to support the conclusion that the claim relates to a
matter coming within one of the classes of subjects enumerated
in the latter part of that section.
Per Le Damn J.: There is nothing in the language of the
Quebec North Shore and McNamara Construction cases to
suggest that the claim must be based solely on federal law in
order to meet the jurisdictional requirement of section 101 of
The British North America Act, 1867 and the Court should not
apply a stricter requirement to the words "made under" or
"sought under" in section 23 of the Federal Court Act. It
should be sufficient if the rights and obligations of the parties
are to be determined to some material extent by federal law. It
should not be necessary that the cause of action be one that is
created by federal law so long as it is one affected by it. The
jurisdiction of the Court with respect to the application of the
Carriage by Air Act is not confined to cases involving an
interprovincial or international air transport undertaking. The
word "aeronautics" in the context of section 23 is to be
understood not in any narrow, technical sense that may be
derived from dictionary definitions, but as referring to that
field of federal legislative jurisdiction that has been recognized
by judicial decision as resting on the general power and there
fore as plenary in nature.
Quebec North Shore Paper Co. v. Canadian Pacific Lim
ited [1977] 2 S.C.R. 1054, referred to. McNamara Con
struction (Western) Ltd. v. The Queen [1977] 2 S.C.R.
654, referred to.
APPEAL.
COUNSEL:
Gerald P. Barry for appellants (plaintiffs).
Jean E. Clerk and Johann Drapeau for
respondent (defendant).
SOLICITORS:
McMaster, Meighen, Montreal, for appellants
(plaintiffs).
Giard, Gagnon, Clerk & Perron, Montreal,
for respondent (defendant).
The following are the reasons for judgment
rendered in English by
PRATTE J.: This is an appeal from a judgment
of the Trial Division [[1979] 1 F.C. 167] which,
determining a question of law pursuant to Rule
474, held that the appellants' action for damages
against Air Canada had to be dismissed for lack of
jurisdiction.
By their action, the appellants claim the value of
certain goods that Air Canada agreed to carry
from London to Montreal and which, it is alleged,
were lost during transportation. The appellant
Bensol Customs Brokers Limited was the con-
signee of those goods in Montreal. According to
the statement of claim, it transferred all its rights
against Air Canada to the second appellant D. H.
Grosvenor Incorporated which, in turn, allegedly
transferred them to the third appellant Neuchatel
Swiss General Insurance Company Limited.
It is common ground that the jurisdiction of the
Court to hear and decide the appellants' action, if
it exists, must flow from section 23 of the Federal
Court Act, R.S.C. 1970 (2nd Supp.), c. 10, a
provision reading as follows:
23. The Trial Division has concurrent original jurisdiction 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 an
Act of the Parliament of Canada or otherwise in relation to any
matter coming within any following class of subjects, namely
bills of exchange and promissory notes where the Crown is a
party to the proceedings, aeronautics, and works and undertak
ings connecting a province with any other province or extending
beyond the limits of a province, except to the extent that
jurisdiction has been otherwise specially assigned.
Under that section, two conditions must be met
in order for a claim to be within the jurisdiction of
the Court:
(1) the claim must be made "under an Act of
the Parliament of Canada or otherwise"; and
(2) it must relate to a matter coming within any
of the classes of subjects specified in the latter
part of the section.
The only issue to be determined on this appeal is
whether the appellants' claim against the respond
ent meets those two conditions.
The appellants claim compensation for the
damage they suffered as a result of the loss, during
its transportation, of certain cargo that Air
Canada had agreed to carry from London, Eng-
land, to Montreal. A federal statute, the Carriage
by Air Act, R.S.C. 1970, c. C-14, is applicable to
that claim. It is the appellants' contention that
their claim is made under that Act and, for that
reason, meets the first requirement of section 23.
The Carriage by Air Act incorporated into the
law of Canada the text of the Warsaw Convention
of 1929 as amended at The Hague in 1955. As
stated in its preamble, the Convention regulates
"the conditions of international carriage by air in
respect of the documents to be used for such
carriage and of the liability of the carrier". With
regard to the liability of the carrier for damages to
the passengers, baggage or cargo during transpor
tation, the Convention provides in substance
(1) that the carrier is liable unless he proves
that he was not at fault;
(2) that, save in exceptional cases, the liability
of the carrier shall be limited to certain
amounts; and
(3) that any provision tending to relieve the
carrier of its liability under the Convention shall
be void.
In order to dispose of the appellants' contention
that their claim is made under the Carriage by Air
Act, it is not sufficient to say, as I understand the
Trial Judge to have said, that the appellants'
action is based not "on the legislation alone" but
on the contract of transport. All claims, be they
contractual or not, are made under a law. A
contract cannot be the foundation of an action
unless its binding character is recognized by law.
Any contractual claim is made under the law
which governs the contract in question. The ques
tion here is not whether the appellants' claim is
contractual 2 but whether it is made under the
Carriage by Air Act which is the only federal
statute applicable in this matter.
' Originally enacted in 1939 (S.C. 1939, c. 12) and amended
in 1963 (S.C. 1963, c. 33).
2 On the question of the nature of the carrier's liability under
the Warsaw Convention, see: Pourcelet, Transport aérien
international et responsabilité, Les Presses de l'Université de
Montréal, 1964, pp. 179 et seq.
A claim is made under a statute, in my view,
when that statute is the law which, assuming the
claim to be well founded, would be the source of
the plaintiff's right. There is no doubt in my mind
that, assuming the appellants' action to be well
founded, the Carriage by Air Act would be the
source of the respondent's liability. When there is,
as in this case, an international carriage by air, it
is that Act, instead of the law that would normally
be applicable under the conflict rules, which gov
erns the contractual liability of the carrier.' How
ever, the difficulty in this case arises from the fact
that the Carriage by Air Act is not the only law
applicable to the matter. First, the appellants'
action seems to be founded on delict as well as on
contract and, second, in any event, the validity on
the subrogation in favour of the insurance com
pany, which is the only real plaintiff in this case, is
not governed by federal law.
The author of the statement of claim obviously
thought that the liability created by the Warsaw
Convention did not supersede the tortious liability
that may exist under another applicable law.
Assuming that opinion to be well founded, 4 it
3 In Grein v. Imperial Airways, Ltd. [1937] 1 K.B. 50 at pp.
74-75, Greene L.J. had this to say on the effect of the
Convention:
The Carriage by Air Act, 1932, was passed for the purpose
of giving binding effect in this country to the Convention
signed at Warsaw on October 12, 1929, a translation of
which (omitting the preamble) is set out in the Schedule to
the Act. In approaching the construction of such a document
as this Convention it is, I think, important at the outset to
have in mind its general objects so far as they appear from
the language used and the subject-matter with which it deals.
The object of the Convention is stated to be "the unification
of certain rules relating to international carriage by air." By
"unification of certain rules" is clearly meant "the adoption
of certain uniform rules," that is to say, rules which will be
applied by the Courts of the High Contracting Parties in all
matters where contracts of international carriage by air come
into question. The rules laid down are in effect an interna
tional code declaring the rights and liabilities of the parties
to contracts of international carriage by air; and when by the
appropriate machinery they are given the force of law in the
territory of a High Contracting Party they govern (so far as
regards the Courts of that Party) the contractual relations of
the parties to the contract of carriage of which (to use
language appropriate to the legal systems of the United
Kingdom) they become statutory terms.
° For an expression of the same view, see: Calkins, "The
Cause of Action Under the Warsaw Convention", The Journal
of Air, Law and Commerce [1959] Vol. 26, pp. 217 and 323 at
327.
merely follows, in my view, that the appellants'
claim, in so far as it is founded on tort, would not
be made under a federal statute and would not be
within the jurisdiction of the Court. This would
not, however, affect the jurisdiction of the Court to
hear and decide the appellants' claim in so far as it
is founded on the Warsaw Convention.
But there is, as I already said, another difficulty.
The real plaintiff in this action is the insurance
company which alleges to have been subrogated to
the rights of the owners of the goods which Air
Canada failed to deliver to the consignee. In order
to succeed, that plaintiff will have to show, in
addition to the respondent's liability, that it has
acquired the right to claim compensation for the
loss, a question which is obviously not governed by
federal law. Strictly speaking, therefore, the claim
of the insurance company cannot be said to be
made exclusively under the Carriage by Air Act; it
is made both under that statute and under the law
governing the subrogation. I do not hesitate to say,
however, in view of the fact that the respondent's
liability is clearly governed by the Carriage by Air
Act, that the appellants' claim is nevertheless
made "under an Act of the Parliament of Canada"
as required by section 23, even if it is not made
exclusively under such an Act. To hold otherwise
would lead to the unacceptable result that a claim
described in section 23 as being within the jurisdic
tion of the Court would cease to be so every time
the claimant would assign his rights to a third
party.
It is therefore my opinion that the appellants'
claim meets the first requirement of section 23.
There remains to be considered whether it meets
the second one, that is to say whether it "is made
... in relation to any matter coming within any
following class of subjects, namely ... aeronautics,
and works and undertakings connecting a province
with any other province or extending beyond the
limits of a province ...".
It is common ground that the respondent oper
ates an undertaking that extends beyond the limits
of a province and that the damage for which the
appellants claim compensation was allegedly suf
fered in the course of the operation of that under-
taking. The action, therefore, relates to the opera
tion of an undertaking described in section 23.
This is sufficient, in my view, to support the
conclusion that the claim relates to a matter
coming within one of the classes of subjects
enumerated in the latter part of that section.
For those reasons, I would allow the appeal, set
aside the judgment of the Trial Division dismissing
with costs the appellants' action and, determining
the point of law submitted by the appellants, I
would decide that the Trial Division has jurisdic
tion, under section 23 of the Federal Court Act, to
hear and decide the appellants' action against the
respondent. I would order the respondent to pay
the appellants' costs both in this Court and in the
Trial Division.
* *
The following are the reasons for judgment
rendered in English by
HYDE D.J.: For the reasons given by Mr. Justice
Pratte I would maintain this appeal with costs here
and in the Court below.
* *
The following are the reasons for judgment
rendered in English by
LE DAIN J.: I agree that the appeal should be
allowed for the reasons given by my brother
Pratte. I merely wish to add a few observations on
two points: the relationship that must exist be
tween the applicable federal law and the cause of
action in order for the Court to have jurisdiction
under section 23 of the Federal Court Act, and
whether the claim for relief in this case can be said
to be one that is made in relation to a matter
coming within the subject of aeronautics.
In the Quebec North Shore Paper case', which
involved section 23 of the Federal Court Act, the
Supreme Court of Canada held that the words
"Administration of the Laws of Canada" in sec
tion 101 of The British North America Act, 1867
[R.S.C. 1970, Appendix II] required that there be
"applicable and existing federal law, whether
under statute or regulation or common law, as in
5 Quebec North Shore Paper Company v. Canadian Pacific
Limited [1977] 2 S.C.R. 1054.
the case of the Crown, upon which the jurisdiction
of the Federal Court can be exercised." The Court
found that there was no applicable federal law so
that it was not necessary to consider the precise
relationship that must exist between applicable
federal law and the cause of action to satisfy not
only the requirement of section 101 of the B.N.A.
Act but the terms of section 23 itself. In the
McNamara Construction case 6 , which did not
involve the terms of section 23, Laskin C.J.C. used
language indicating that to satisfy the requirement
of section 101 of the B.N.A. Act a claim must be
"founded" on existing federal law. Speaking of the
jurisdiction conferred by section 29(d) of the Ex
chequer Court Act, R.S.C. 1952, c. 98, he said at
p. 659: "In the Quebec North Shore Paper Com
pany 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 regu
lation or common law", and he continued, "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 jurisdic
tion but whether it is founded on existing federal
law." At p. 662 he said, "What remains for con
sideration 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." Speaking of the
Crown's claim for damages, he said at p. 663:
"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."
There is nothing in this language to suggest that
the claim must be based solely on federal law in
order to meet the jurisdictional requirement of
section 101 of the B.N.A. Act, and I do not think
we should apply a stricter requirement to the
6 McNamara Construction (Western) Limited v. The Queen
[1977] 2 S.C.R. 654.
words "made under" or "sought under" in section
23 of the Federal Court Act. There will inevitably
be claims in which the rights and obligations of the
parties will be determined partly by federal law
and partly by provincial law. It should be suffi
cient in my opinion if the rights and obligations of
the parties are to be determined to some material
extent by federal law. It should not be necessary
that the cause of action be one that is created by
federal law so long as it is one affected by it.
While I think it is sufficient for purposes of the
present case to find that the claim is one that is
made in relation to a matter coming within the
class of subject described in section 23 of the
Federal Court Act as "works and undertakings
connecting a province with any other province or
extending beyond the limits of a province", I do
not wish to be thought to imply that the jurisdic
tion of the Court with respect to the application of
the Carriage by Air Act is confined to cases involv
ing an interprovincial or international air transport
undertaking. In my opinion, the form of language
used in section 23 ("any matter coming within any
following class of subjects") strongly suggests that
what is contemplated are matters falling within
specific and established areas of federal legislative
competence: bills of exchange (where the Crown is
a party); aeronautics, and extra-provincial works
and undertakings. I think the word "aeronautics"
in the context of section 23 is to be understood not
in any narrow, technical sense that may be derived
from dictionary definitions, but as referring to that
field of federal legislative jurisdiction that has
been recognized by judicial decision as resting on
the general power and therefore as plenary in
nature. While the Aeronautics' and Johannesson 8
cases were concerned with matters that related to
aerial navigation in the strict sense, there is lan
guage in those cases which shows that what was
contemplated by the word "aeronautics" as desig
nating a field of federal legislative jurisdiction was
air transportation as a whole. In the Aeronautics
case Lord Sankey L.C. said at pp. 73-74: "In their
Lordships' view, transport as a subject is dealt
' In re The Regulation and Control of Aeronautics in
Canada [1932] A.C. 54.
8 Johannesson v. The Rural Municipality of West St. Paul
[1952] 1 S.C.R. 292.
with in certain branches both of s. 91 and of s. 92,
but neither of those sections deals specially with
that branch of transport which is concerned with
aeronautics." In the Johannesson case, Rinfret
C.J.C. said at pp. 302-303: "Notwithstanding that
the International Convention under consideration
in the Aeronautics case ... was denounced by the
Government of Canada as of April 4, 1947, I
entertain no doubt that the decision of the Judicial
Committee is in its pith and substance that the
whole field of aerial transportation comes under
the jurisdiction of the Dominion Parliament." In
his reasons in the same case, Locke J. at page 326
emphasized the growth and importance of air traf
fic, both passenger and freight, as indicating the
national dimension of aeronautics. In the Trop-
wood case 9 recently, Laskin C.J.C., who delivered
the judgment of the Supreme Court of Canada,
affirmed the validity of the Carriage by Air Act
with reference to "Federal legislative authority to
deal with contractual aspects of transportation
services, which are within federal regulatory pow
er". The regulation of the liability of air carriers,
which is the subject matter of the Carriage by Air
Act, is surely an aspect of the regulation of air
traffic as a whole. I am, therefore, of the opinion
that a claim based on the Carriage by Air Act is
one that is related to a matter coming within the
subject of aeronautics for purposes of section 23 of
the Federal Court Act.
9 Sivaco Wire & Nail Company v. Tropwood A.G. (1979) 26
N.R. 313.
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.