A-471-77
The Queen (Appellant) (Plaintiff)
v.
Canadian Vickers Limited (Respondent) (Defend-
ant)
and
Canadian General Electric Company Limited
(Third Party)
Court of Appeal, Jackett C.J., Pratte J. and
Lalande D.J.—Montreal, June 18, 19 and 20,
1979.
Jurisdiction — Maritime law — Appeal from Trial Divi
sion's decision dismissing action against respondent in respect
of respondent's alleged failure to fulfil a contract to build a
ship — Whether or not provisions of Federal Court Act
enacting substantive law concerning admiralty matters are so
framed as to enact law concerning shipbuilding contracts that
constitutes federal law — Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10, ss. 22, 42 — Federal Court Rule 474.
This is an appeal from a judgment of the Trial Division
dismissing an action against the respondent for relief in respect
of respondent's alleged failure to fulfil its obligations under a
contract whereby respondent agreed to build a ship for appel
lant. The judgment was based on a determination under Rule
474 that the Trial Division did not have jurisdiction to entertain
the action. The question raised by this case is whether the
provisions of the Federal Court Act enacting substantive law
concerning admiralty matters are so framed as to enact law
concerning shipbuilding contracts that constitutes "federal"
law.
Held, the appeal is allowed. Section 42 (read with the
definition of Canadian maritime law), whereby Parliament
enacts substantive maritime law, should not be read as limited
by the jurisdiction provisions of the Federal Court Act or the
jurisdiction under earlier statutes. What is continued by section
42, subject to statutory changes, is: (a) the law that was
administered by the Exchequer Court by virtue of The Admi
ralty Act, 1934, (b) the law that was administered by the
Exchequer Court on its Admiralty side by virtue of any other
statute, and (c) the law that would have been administered by
the Exchequer Court if it had had, on its Admiralty side,
unlimited jurisdiction in relation to maritime and admiralty
matters. Paragraph (b) is not restricted to a law that was
administered immediately before the enactment of the Federal
Court Act. Section 42 operates to continue a law that was
administered by the Exchequer Court and does not merely
operate to continue such a law to the extent that the Court had
jurisdiction to apply it at some time in the past. This is the
plain meaning of section 42 when the substantive provisions of
the Federal Court Act are read independently of the jurisdic
tion provisions, as they should be. There is federal law on which
the appellant's claim can be supported. Such a law was enacted
by section 42 having regard to the law that was administered by
the Exchequer Court under The Admiralty Act, 1934. Even if
that conclusion not be sound, there is a federal law, which was
enacted by section 42 having regard to the law that would have
been administered by the Exchequer Court, if it had had, on its
Admiralty side, unlimited jurisdiction in relation to maritime
and admiralty matters.
Tropwood A.G. v. Sivaco Wire & Nail Co. [1979] 2
S.C.R. 157, considered. Benson Bros. Shipbuilding Co.
(1960) Ltd. v. Mark Fishing Co. Ltd. (1979) 89 D.L.R.
(3d) 527, considered.
APPEAL.
COUNSEL:
J. R. Nuss, Q.C. and Paul Coderre, Q.C. for
appellant (plaintiff).
G. B. Maughan for respondent (defendant).
B. Lacombe for third party.
SOLICITORS:
Ahern, Nuss & Drymer, Montreal, for appel
lant (plaintiff).
Deputy Attorney General of Canada for
appellant (plaintiff).
Ogilvy, Montgomery, Renault, Clarke, Kirk-
patrick, Hannon & Howard, Montreal, for
respondent (defendant).
Martineau, Walker, Allison, Beaulieu,
MacKell & Clermont, Montreal, for third
party.
The following are the reasons for judgment
delivered orally in English by
JACKETT C.J.: This is an appeal by Her Majesty
in right of Canada from a judgment of the Trial
Division [[1978] 2 F.C. 675] dismissing an action
against the respondent for relief in respect of
alleged failure by the respondent to fulfil its obli
gations under a contract whereby the respondent
agreed to build a ship for Her Majesty. The
judgment was based on a determination under
Rule 474 that the Trial Division did not have
jurisdiction to entertain the action.
The judgment in question was delivered on June
22, 1977, and, as far as I know, is the first
judgment as to the extent of the Trial Division's
jurisdiction in Admiralty in the light of the deci
sions of the Supreme Court of Canada in Quebec
North Shore Paper Company v. Canadian Pacific
Limited' and McNamara Construction (Western)
Limited v. The Queen 2 .
There is no question that the Federal Court Act,
R.S.C. 1970 (2nd Supp.), c. 10, purports to confer,
on the . Trial Division, jurisdiction in admiralty
matters including a claim arising out of a ship
building contract. Prior to the aforesaid decisions
of the Supreme Court of Canada, that would have
been sufficient to support the jurisdiction of the
Trial Division in this matter on the view that was
then widely accepted that Parliament could, by
virtue of section 101 of The British North Ameri-
ca Act, 1867, R.S.C. 1970, Appendix II, confer on
a court such as the Federal Court jurisdiction "in
respect of matters that are within federal legisla
tive jurisdiction". In the light of those decisions,
however, it is clear that section 101 is to be read as
authorizing Parliament to confer on such a court
jurisdiction to administer "existing" federal laws.
The question raised by this case is, therefore,
whether the provisions of the Federal Court Act
enacting substantive law concerning admiralty
matters are so framed as to enact law concerning
shipbuilding contracts that constitutes "federal"
law. If they are so framed, it would seem clear
from the recent decision of the Supreme Court of
Canada in Tropwood A.G. v. Sivaco Wire & Nail
Company, which was delivered on March 6, 1979,
[[1979] 2 S.C.R. 157] that they support the juris-
' [1977] 2 S.C.R. 1054.
2 [1977] 2 S.C.R. 654.
'See section 22, which reads in part:
22. (1) The Trial Division has concurrent original juris
diction 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;
diction of the Trial Division in this matter. 4
In my view, the short answer to the question so
raised, as far as this Court is concerned, is con
tained in the Court's decision in Benson Bros.
Shipbuilding Co. (1960) Ltd. v. Mark Fishing Co.
Ltd., 5 which was delivered on June 9, 1978. In that
case, it was held that section 42 of the Federal
Court Act (read with the definition of "Canadian
maritime law" in section 2 of that Act) enacted
law on which a claim under a shipbuilding con
tract by a shipbuilder against the shipowner could
be supported. It having been established that such
a law exists, in my view, it will also support a
claim under a shipbuilding contract by the ship-
owner against the shipbuilder. In the absence of
legislation to the contrary, as it seems to me, the
same law must regulate the rights and obligations
of both parties to the shipbuilding contract.
Out of deference to the very careful reasoning of
the Associate Chief Justice upon which he based
the judgment of the Trial Division that that Court
does not have jurisdiction in this matter, I shall
endeavour to explain in my own words why I have
come to the conclusion that the Trial Division does
have jurisdiction in claims arising out of a ship
building contract.
Section 42 of the Federal Court Act provides
that Canadian maritime law (as it was immediate
ly before June 1, 1971) continues subject to such
changes therein as may be made by statute; and
section 2 of that Act provides, inter alia that, in
that 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;
4 I am satisfied, and the respondent has not otherwise sub
mitted, that such a law would have been validly enacted by
Parliament as a law in relation to "Navigation and Shipping".
See section 91(10) of The British North America Act, 1867.
5 (1979) 89 D.L.R. (3d) 527.
In the Benson case, the Court pointed out that, by
virtue of the Canadian The Admiralty Act, 1934,
S.C. 1934, c. 31, the Court had jurisdiction in
"any claim for building ... a ship" provided the
ship, or the proceeds thereof, was under arrest, and
that it followed that "... there was in the Canadi-
an maritime law applied by the Exchequer Court,
law on which a claim for building a ship could be
supported." In this case, the question is whether a
law that supports a claim by a shipbuilder on a
shipbuilding contract does not also support a claim
by the other party to the contract based on the
same contract. In my view, in the absence of
express legislation to the contrary, a law governing
a contract that supports a claim by one party to a
contract for breach of the contract must also sup
port a claim by the other party to the contract for
a breach thereof.
The difference, as I understand it, between this
reasoning and the reasoning of the learned Associ
ate Chief Justice lies in the fact that he reads the
definition of Canadian maritime law as limiting
the law referred to therein to that law when appli
cable to the matters in respect of which the Court
had jurisdiction, whereas, in my view, section 42
(read with the definition of Canadian maritime
law), whereby Parliament enacts substantive mari
time law, should not be read as limited by the
jurisdiction provisions of the Federal Court Act or
the jurisdiction under earlier statutes. 6
As I read section 42, what is, subject to statu
tory changes, "continued" is
(a) the law that was administered by the Ex
chequer Court by virtue of The Admiralty Act,
1934,
6 There are, as I understand it, two completely separate
matters dealt with by the Federal Court Act in this connection,
viz.:
(a) certain provisions enact substantive law, and
(b) other provisions confer jurisdiction on the Trial
Division.
The statute deals with them quite separately and it becomes
important, in the light of the recent decisions concerning
section 101, to keep them separate. Existing federal law is a
condition precedent to the conferring of jurisdiction on the
Court.
(b) the law that was administered by the Ex
chequer Court on its Admiralty side by virtue of
any other statute, and
(c) the law that would have been administered
by the Exchequer Court if it had had, on its
Admiralty side, unlimited jurisdiction in relation
to maritime and admiralty matters.
It is clear from the decision of the Supreme
Court of Canada in Tropwood that No. (b) is not
restricted to a law that was so administered
immediately before the enactment of the Federal
Court Act.' What this Court held in Benson is that
section 42 operates to continue a law that was
administered by the Exchequer Court and does not
merely operate to continue such a law to the extent
that the Court had jurisdiction to apply it at some
time in the past. In my opinion, this is the plain
meaning of section 42 when the substantive provi
sions of the Federal Court Act are read independ
ently of the jurisdiction provisions, as in my view
they should be. 8
' In Tropwood, the Chief Justice of Canada, speaking for the
Court, said, with reference to these provisions [at page 163]:
This definition of Canadian maritime law in s. 2 refers to the
law that was administered by the Exchequer Court "by
virtue of the Admiralty Act or any other statute". The
reference to the Admiralty Act is undoubtedly to the Act of
1934, but the Admiralty Act of 1891, although it was
repealed, may certainly be considered as "any other statute"
by virtue of which law was administered by the Exchequer
Court on its admiralty side.
s As I read Bow, McLachlan & Co., Ltd. v. The "Camosun"
[1909] A.C. 597, to which the Associate Chief Justice refers, it
is a decision based on the jurisdictional limitations imposed on
the Court as of that time and Lord Gorell does not, as far as I
have been able to find, express any view that maritime law does
not deal with ship construction contracts. Impliedly, he recog
nizes that it does. See pages 608-609, where he said:
Proceeding then with the consideration of what is the
Admiralty jurisdiction of the High Court in such a case, it
must be pointed out that, under that jurisdiction, no claim
could be made formerly by a mortgagee of a ship to enforce
his mortgage, nor by either party for breach of a contract for
the building of a ship. The history of the long contest
between the civilians of the Admiralty Court and the Courts
of common law is well known and need not be gone into now.
It resulted in the Admiralty jurisdiction being confined
within certain well-defined limits, which were, however,
extended by the Legislature in more modern times, but not
(Continued on next page)
My conclusion is, therefore, that there is federal
law on which Her Majesty's claim can be support
ed. In my view, such a law was enacted by section
42 having regard to the law that was administered
by the Exchequer Court under The Admiralty
Act, 1934. I should add that, even if that conclu
sion not be sound, having regard to the references
made by counsel for the appellant to the Black
Book and other authorities dealing with early
maritime and admiralty law, to which in the cir
cumstances I need not refer in detail, I am of the
view that there is such a federal law, which was
enacted by section 42 having regard to the law
that would have been administered by the Excheq
uer Court, if it had had, on its Admiralty side,
unlimited jurisdiction in relation to maritime and
admiralty matters.
I am, therefore, of opinion that the appeal
should be allowed without costs, that the judgment
of the Trial Division should be set aside, that it
should be adjudged that the Trial Division does
have jurisdiction in the action by Her Majesty
against the respondent for relief in respect of
(Continued from previous page)
sufficiently to include a suit to enforce such a claim as that
made by the respondents.
With regard to mortgages, the Act 3 & 4 Vict. c. 65
provided (s. 3) that whenever any ship or vessel should be
under arrest by process issuing from the High Court of
Admiralty, or the proceeds of any ship or vessel having been
so arrested should have been brought into Court and be in
the registry of the said Court, in either such case the Court
should have full jurisdiction to take cognizance of all claims
or causes of action of any person in respect of any mortgage
of such ship or vessel, and to decide any suit instituted by any
such person in respect of any such claims or causes of action
respectively. The object of this was to enable the Court in the
cases mentioned to take cognizance of claims by mortgagees
of ships to enforce their mortgages in suits and to intervene
to protect their property. This remedy being found to be
inadequate, it was enacted by the 11th section of the Admi
ralty Court Act, 1861, that the Admiralty Court should have
jurisdiction over any claim in respect of any mortgage duly
registered according to the provisions of the Merchant Ship
ping Act, 1854 (now the Act of 1894), whether the ship or
proceeds thereof were under arrest of the said Court or not.
These sections seemed to be confined to claims by mort
gagees. It is under the jurisdiction conferred by the later Act
that the appellants proceeded in this case.
With regard to the building of a ship, the 4th section of the
last-mentioned Act gave the Admiralty Court jurisdiction
over any claim for the building, equipping, or repairing of
any ship, if at the time of the institution of the cause the ship
or the proceeds thereof are under arrest of the Court.
alleged breaches by the respondent of the ship
building contract referred to in the statement of
claim; and that the costs in the Trial Division of
the proceedings under Rule 474 should be costs in
the cause.
* * *
PRATTE J. concurred.
* * *
LALANDE 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.