A-776-77
Skaarup Shipping Corporation (Appellant)
(Plaintiff)
v.
Hawker Industries Limited, Hawker Siddeley
Canada Ltd. and the Ship Lionel A. Forsyth
(Respondents) (Defendants)
Court of Appeal, Pratte, Heald and Le Dain JJ.—
Halifax, April 16 and 17, 1980.
Maritime law — Jurisdiction — Respondents, who are ship
repairers, assumed liability for escape of oil into harbour
while repairing appellant's ship — Respondents subsequently
refused to undertake the cleanup of spill, so appellant
arranged cleanup — Appellant's ship was detained by
respondents pending payment of a deposit for repairs and for
costs of cleanup — Appeal from trial judgment dismissing
action in contract and in negligence on the ground of lack of
jurisdiction — Whether the claim is within the jurisdiction of
the Federal Court under s. 22(2)(n) of the Federal Court Act
— Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, ss. 2,
22(1),(2)(n), 42.
Appeal from a judgment dismissing an action in damages by
the appellant shipowners against the respondent ship repairers
for breach of contract and tort in connection with the repair of
a ship on the ground that the Court is without jurisdiction for
lack of existing and applicable federal law to support the claim.
The respondents undertook responsibility to ensure that oil
drained from the appellant's ship while it was being repaired
would not escape into the harbour and assumed liability if it
did. The oil spilled into the harbour, and the respondents
refused to undertake the cleanup. To prevent the arrest of its
ship, the appellant arranged the cleanup. After repairs were
completed the respondents detained the appellant's ship until a
deposit for the cost of repairs and cleanup was made. At trial,
the appellant sought damages to recover loss of earnings during
the period that the ship was detained, and the cost of the
cleanup. In so far as the claim is based on contract, the issue is
whether the claim is within the jurisdiction of the Federal
Court under section 22(2)(n) of the Federal Court Act.
Held, the appeal is allowed. Once a particular claim is found
to come within the terms of a head of jurisdiction in section
22(2), there is necessarily substantive Canadian maritime law
to support the claim. This results from the terms of the
definition of Canadian maritime law in section 2, and, in
particular, the words "or that would have been so administered
if that Court had had, on its Admiralty side, unlimited jurisdic
tion in relation to maritime and admiralty matters", and from
the fact that, because of the terms of section 22(1) of the Act
("all cases in which a claim for relief is made or a remedy is
sought under or by virtue of Canadian maritime law"), the
specific claims set out in section 22(2) amount to a declaration
by Parliament of claims that are considered to be made under
and governed by Canadian maritime law as defined by section
2 and made part of the laws of Canada by section 42. The
repair of an ocean-going vessel to enable it to put to sea again is
clearly a matter within federal legislative jurisdiction with
respect to navigation and shipping.
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, discussed. Benson Bros. Shipbuilding Co. (1960) Ltd.
v. Mark Fishing Co. Ltd. (1978) 21 N.R. 260; (1979) 89
D.L.R. (3d) 527, applied. R. v. Canadian Vickers Ltd.
[ 1980] 1 F.C. 366, applied. Antares Shipping Corp. v. The
"Capricorn" [1980] 1 S.C.R. 553, applied. Tropwood A.G.
v. Sivaco Wire & Nail Co. [1979] 2 S.C.R. 157, applied.
Hawker Industries Ltd. v. Santa Maria Shipowning and
Trading Co., S.A. [1979] 1 F.C. 183, followed. Agence
Maritime Inc. v. Conseil canadien des relations ouvrières
[1969] S.C.R. 851, distinguished.
APPEAL.
COUNSEL:
R. Pugsley, Q.C. and J. D. Murphy for appel
lant (plaintiff).
W. Wylie Spicer and D. Gates for respondents
(defendants).
SOLICITORS:
Stewart, MacKeen & Covert, Halifax, for
appellant (plaintiff).
McInnes, Cooper & Robertson, Halifax, for
respondents (defendants).
The following are the reasons for judgment
delivered orally in English by
LE DAIN J.: This is an appeal from a judgment
of the Trial Division [[1978] 2 F.C. 361] dismiss
ing an action in damages by the appellant ship-
owners against the respondent ship repairers for
breach of contract and tort in connection with the
repair of a ship on the ground that the Court is
without jurisdiction for lack of existing and appli
cable federal law to support the claim. The judg
ment was rendered pursuant to an application for
leave to file a conditional appearance and for a
determination of the question of jurisdiction before
trial.
The facts that must be taken as established for
purposes of the issue on the appeal are convenient
ly summarized in the reasons of the learned Trial
Judge as follows [at pages 362-363]:
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
repairing ships at Halifax. The defendant ship is a floating dry
dock operated by them in that business. 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 defend
ants repair her. A quantity 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 ensuring 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 Trans
port 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 unseaworthi-
ness 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
(R.S.C. 1970, c. S-9).
The allegation in the statement of claim that is
of particular significance for the question of juris
diction is that the respondents agreed, as a condi
tion of the contract to repair the ship, to take
measures to prevent the oil from escaping into the
harbour and to assume responsibility for cleaning
up the oil if it did escape. This is set out in
paragraph 15 of the statement of claim as follows:
It was the intention of the Plaintiff, which was communicat
ed to the Defendants and all others concerned, that when the oil
came from the "COLON [Sid] BROWN" upon her being raised in
the floating dock, that oil would be contained within the
floating dock and not permitted to escape into Halifax Har
bour. At the same time, the Plaintiff advised the Defendants
and the Defendants understood that it was the Defendants'
responsibility to ensure that oil did not escape into Halifax
Harbour from the floating dock, and that should any oil escape,
any liability for cleaning up the oil or liability otherwise
incurred as a result of the escape would be the sole liability of
the Defendants. That understanding or arrangement was
agreed between the parties and was a term of the contract
entered into between the Plaintiff and the Defendants with
respect to the Defendants' repair of the "COLON [sic] BROWN".
In so far as the claim is based on contract, the
issue is whether the claim is within the jurisdiction
of the Federal Court under section 22(2)(n) of the
Federal Court Act, R.S.C. 1970 (2nd Supp.), c.
10, which reads:
22....
(2) Without limiting the generality of subsection (I), 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;
After referring to the decisions of the Supreme
Court of Canada in the Quebec North Shore
Paper' and McNamara Construction 2 cases and to
the judgment of the Trial Division in the Canadian
Vickers 3 case, which has since been reversed by
this Court, the Trial Judge said that the issue was
"whether by competent legislation, Parliament has
enacted law giving a shipowner a right of action
against a repairer in the factual situation alleged."
He referred to cases cited by the appellant which
involved actions by shipowners in contract or tort
against ship repairers 4 and in tort against dock
owners or operators 5 , and said: "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 defend
ants' alleged negligence and breach of contract."
I Quebec North Shore Paper Company v. Canadian Pacific
Limited [1977] 2 S.C.R. 1054.
2 McNamara Construction (Western) Limited v. The Queen
[1977] 2 S.C.R. 654.
3 The Queen v. Canadian Vickers Limited [1978] 2 F.C. 675.
4 The Lancastrian (1915-16) 32 T.L.R. 117 and 655; The
Rehearo (1929-36) 18 Asp. Mar. Law Cas. 422; The Forfar-
shire (1908-11) 11 Asp. Mar. Law Cas. 158.
5 The Moorcock (1888) 13 P.D. 157; The Devon (1923-24)
40 T.L.R. 136; The Empress [1923] P. 96; The Grit [1924] P.
246.
The learned Trial Judge concluded: "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."
This approach to the question of the Court's
jurisdiction in maritime matters, which followed
that adopted by the Trial Division in the Canadian
Vickers case, is no longer in my respectful opinion,
as a result of subsequent decisions, a sufficient
basis for denying jurisdiction where it appears to
have been conferred with respect to a particular
claim by the terms of section 22(2) of the Federal
Court Act.
Once a particular claim is found to come within
the terms of a head of jurisdiction in section 22(2),
there is, in my opinion, necessarily substantive
Canadian maritime law to support the claim. This
results from the terms of the definition of Canadi-
an maritime law in section 2, 6 and, in particular,
the words "or that would have been so adminis
tered if that Court had had, on its Admiralty side,
unlimited jurisdiction in relation to maritime and
admiralty matters", and from the fact that,
because of the terms of section 22(1)' of the Act
6 "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 relation 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.
("all cases in which a claim for relief is made or a
remedy is sought under or by virtue of Canadian
maritime law"), the specific claims set out in
section 22(2) amount to a declaration by Parlia
ment of claims that are considered to be made
under and governed by Canadian maritime law as
defined by section 2 and made part of the laws of
Canada by section 42. 8
In the Benson Bros. Shipbuilding 9 and Canadi-
an Vickers"' cases this Court held that by virtue of
sections 2 and 42 there was substantive Canadian
maritime law to support claims that came within
the terms of section 22(2) despite limitations in the
past on the jurisdiction that may have been exer-
cisable in respect of claims of that particular class.
In the Canadian Vickers case the Court held that
there was Canadian maritime law to support a
claim by a shipowner against a shipbuilder for
breach of a contract to build a ship. In the Santa
Maria" case the Court held that there was
Canadian maritime law to support a claim by a
shipowner for breach of a contract to repair a ship.
In that case Jackett C.J. said [at page 188]:
It remains only to say that, in my view, a contract for the
repair of a ship disabled at sea is, and has always been
recognized as, a contract for enabling the ship to carry on its
navigation operations in the same way as a contract to provide
a ship with "necessaries" has always been so recognized; and, in
my view, it is not an over-generalization to say that the doing of
what is necessary to enable ships to carry on their navigation
operations is something that falls within the field of activity
regulated by Admiralty law.
In my respectful opinion, the view that as a
result of the admiralty provisions of the Federal
Court Act as a whole there is the necessary sub
stantive federal law to support an exercise of juris
diction conferred by section 22 finds implicit sup
port in the judgment of Ritchie J. in the Antares
8 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.
9 Benson Bros. Shipbuilding Co. (1960) Ltd. v. Mark Fishing
Co. Ltd. (1978) 21 N.R. 260; (1979) 89 D.L.R. (3d) 527.
10 The Queen v. Canadian Vickers Limited [1980] 1 F.C.
366.
" Hawker Industries Limited v. Santa Maria Shipowning
and Trading Company, S.A. [ 1979] 1 F.C. 183.
case, 1 2 where he said, in a context in which the
question was whether there was federal law to
support the jurisdiction, that "the provisions of s.
22(2)(a) of the Act constitute existing federal
statutory law coming within the class of subject of
navigation and shipping and expressly designed to
confer jurisdiction on the Federal Court for claims
of the kind here advanced by the appellant."
Counsel for the respondents made the further
submission that if the claim fell within section
22(2)(n) of the Federal Court Act and was sup
ported by Canadian maritime law it was not a
claim that fell within the federal legislative juris
diction with respect to "Navigation and Shipping"
under section 91(10) of The British North Ameri-
ca Act, 1867, R.S.C. 1970, Appendix II, No. 5. He
referred to the two-fold test applied by Laskin
C.J.C. in the Tropwood" case, where he said:
"Two questions, therefore, remain. The first is
whether a claim of the kind made here was within
the scope of admiralty law as it was incorporated
into the law of Canada in 1891. If so, the second
question is whether such a claim fell within the
scope of federal power in relation to navigation
and shipping." Counsel bases his submission as to
constitutionality on the decision of the Supreme
Court of Canada in Agence Maritime Inc. v. Con-
seil canadien des relations ouvrières [1969]
S.C.R. 851, in which it was held that labour
relations in an intra-provincial shipping undertak
ing fell within provincial legislative jurisdiction. In
my opinion this decision is not applicable to the
facts of the present case as disclosed by the state
ment of claim. Here there was a contract to repair
a vessel that was damaged by being stranded near
Halifax Harbour after attempting to return to port
to avoid a storm. The repair of an ocean-going
vessel to enable it to put to sea again is in my
opinion clearly a matter within federal legislative
jurisdiction with respect to navigation and
shipping.
12 Antares Shipping Corporation v. The "Capricorn" [1980]
1 S.C.R. 553, at p. 559.
13 Tropwood A.G. v. Sivaco Wire & Nail Co. [1979] 2
S.C.R. 157, at pp. 163-164.
For these reasons, I would allow the appeal and
dismiss the respondents' application that the action
be dismissed for lack of jurisdiction, with costs in
this Court and in the Trial Division.
* * *
PRATTE J. concurred.
* * *
HEALD 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.