The cases under this title consider the Admiralty jurisdiction of the courts and which court has jurisdiction to hear a particular matter. More specifically, because the provincial superior courts have inherent jurisdiction, the cases usually concern the whether the Federal Court's admiralty jurisdiction is invoked. It is important to note that the Admiralty jurisdiction of the Federal Court is closely related to the definition, nature and scope of the body of law known as Canadian Maritime Law which is, in turn, partly dependant upon the constitutional division of powers between the federal and provincial governments. Therefore, the cases digested under the topic Constitutional Issues may also be relevant and should be consulted when addressing a jurisdiction issue.
The Federal Court is a statutory court and, as such, has only the jurisdiction specifically given to it. Section 22 of the Federal Courts Act is the primary source of the Federal Court's admiralty jurisdiction. Subsection 22(1) is a general grant of concurrent jurisdiction to hear and determine any case "in which a claim for relief is made or a remedy is sought under or by virtue of Canadian maritime law".
22. (1) The Federal Court has concurrent original jurisdiction, between subject and subject as well 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.Subsection 22(2) of the Federal Courts Act also enumerates 19 specific categories of claims over which the Federal Court has jurisdiction. The categories are:
(a) any claim with respect to title, possession or ownership of a ship or any part interest therein or with respect to the proceeds of sale of a ship or any part interest therein;
(b) any question arising between co-owners of a ship with respect to possession, employment or earnings of a ship;
(c) any claim in respect of a mortgage or hypothecation of, or charge on, a ship or any part interest therein or any charge in the nature of bottomry or respondentia for which a ship or part interest therein or cargo was made security;
(d) any claim for damage or for loss of life or personal injury caused by a ship either in collision or otherwise;
(e) any claim for damage sustained by, or for loss of, a ship including, without restricting the generality of the foregoing, damage to or loss of the cargo or equipment of, or any property in or on or being loaded on or off, a ship;
(f) any claim arising out of an agreement relating to the carriage of goods on a ship under a through bill of lading, or in respect of which a through bill of lading is intended to be issued, for loss or damage to goods occurring at any time or place during transit;
(g) any claim for loss of life or personal injury occurring in connection with the operation of a ship including, without restricting the generality of the foregoing, any claim for loss of life or personal injury sustained in consequence of any defect in a ship or in her apparel or equipment, or of the wrongful act, neglect or default of the owners, charterers or persons in possession or control of a ship or of the master or crew thereof or of any other person for whose wrongful acts, neglects or defaults the owners, charterers or persons in possession or control of the ship are responsible, being an act, neglect or default in the management of the ship, in the loading, carriage or discharge of goods on, in or from the ship or in the embarkation, carriage or disembarkation of persons on, in or from the ship;
(h) any claim for loss of or damage to goods carried in or on a ship including, without restricting the generality of the foregoing, loss of or damage to passengers’ baggage or personal effects;
(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;
(j) any claim for salvage including, without restricting the generality of the foregoing, claims for salvage of life, cargo, equipment or other property of, from or by an aircraft to the same extent and in the same manner as if the aircraft were a ship;
(k) any claim for towage in respect of a ship or of an aircraft while the aircraft is water-borne;
(l) any claim for pilotage in respect of a ship or of an aircraft while the aircraft is water-borne;
(m) any claim in respect of goods, materials or services wherever supplied to a ship for the operation or maintenance of the ship, including, without restricting the generality of the foregoing, claims in respect of stevedoring and lighterage;
(n) any claim arising out of a contract relating to the construction, repair or equipping of a ship;
(o) any claim by a master, officer or member of the crew of a ship for wages, money, property or other remuneration or benefits arising out of his or her employment;
(p) any claim by a master, charterer or agent of a ship or shipowner in respect of disbursements, or by a shipper in respect of advances, made on account of a ship;
(q) any claim in respect of general average contribution;
(r) any claim arising out of or in connection with a contract of marine insurance; and
(s) any claim for dock charges, harbour dues or canal tolls including, without restricting the generality of the foregoing, charges for the use of facilities supplied in connection therewith.
Because the Federal Court has jurisdiction to hear and determine any case "in which a claim for relief is made or a remedy is sought under or by virtue of Canadian maritime law", it is often necessary to determine the scope and content of "Canadian maritime law" in order to assess the full extent of the Federal Court's admiralty jurisdiction. Canadian maritime law is a separate and distinct body of law defined in section 2 of the Federal Courts Act and enacted by s. 42 of the Federal Courts 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, chapter A-1 of the Revised Statutes of Canada, 1970, 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 Act or any other Act of Parliament;
42. Canadian maritime law as it was immediately before June 1, 1971 continues subject to such changes therein as may be made by this Act or any other Act of Parliament.
Since at least ITO Terminal Operators Ltd. v Miida Electronics Inc.,  1 SCR 752, the test for a finding of jurisdiction in the Federal Court has required that three essential elements be established:
(1) that there is a statutory grant of jurisdiction to the Federal Court;
(2) that there is an existing body of federal law, essential to the disposition of the case, which nourishes the statutory grant of jurisdiction; and
(3) that the law on which the case is based must be "a law of Canada" as the phrase is used in s. 101 of the Constitution Act.
The first element of the above test, that there be a statutory grant of jurisdiction to the Federal Court, is necessary but not sufficient, by itself, to give the Federal Court jurisdiction. This part of the test is usually satisfied, in relation to maritime matters, by referring to s. 22 of the Federal Courts Act.
The second element of the above test is that there be existing federal law to nourish the statutory grant of jurisdiction. In maritime matters the federal law nourishing the statutory grant is usually Canadian maritime law as enacted by s. 42 of the Federal Courts Act. There is a very large body of case law that explores the nature, scope and content of Canadian maritime law in relation to Federal Court jurisdiction. The more recent cases are digested on this site and, as well, there are papers listed below that address this issue in detail. In general, Canadian maritime law is the law that governs matters relating to navigation and shipping. It is federal law that is uniform throughout the country and is applied regardless of the court in which proceedings are commenced. It includes, but is not limited by, the rules and principles of English admiralty law as it was exercised in 1934. More specifically, it includes the laws relating to: carriage of goods by sea (Tropwood A.G. v Sivaco Wire & Nail Co); contracts relating to the sale of a ship (Antares Shipping Corp. v The “Capricorn); contracts for the repair of a ship or her equipment (Wire Rope Industries v B.C. Marine Shipbuilders Ltd); marine insurance (Triglav v Terrasses Jewellers Ltd); and stevedores (I.T.O. v Miida Electronics Ltd.). Canadian maritime law includes the common law principles of contract, tort, bailment and agency (Q.N.S. Paper Co. v Chartwell Shipping Ltd.) and tort liability (Whitbread v. Walley).
Finally, the third element in the above test, that the law must be a "law of Canada" within the meaning of s. 101 of the Constitution Act, requires that the nourishing law must be within federal legislative competence under s. 91(10) of the Constitution Act. This element of the test requires a constitutional analysis involving the division of powers under the Constitution Act between the federal and provincial governments. Again, the more recent cases considering these issues are summarized on this site but some are digested under the topic Constitutional Issues.
The three part test in ITO Terminal Operators Ltd. v Miida Electronics Inc. is somewhat easier to apply when one is addressing a matter that falls within one of the enumerated categories in ss. 22(2) of the Federal Courts Act. It has been held that claims within ss. 22(2) are necessarily nourished by Canadian maritime law and within the jurisdiction of the Federal Court. (Harry Sargeant III v. Al-Saleh, 2014 FCA 302, paras. 89-93; Siemens Canada Ltd. v. J. D. Irving Ltd., 2012 FCA 225 (CanLII), para. 35; Skaarup Shipping Corporation v. Hawker Industries Limited  2 F.C. 746)
It is to be noted that the Federal Court's admiralty jurisdiction under section 22 is not exclusive but is concurrent. This means that, unless a specific statute provides otherwise, the provincial superior courts also have jurisdiction to hear and determine admiralty cases. Two statutes that provide otherwise are the Marine Liability Act and the Canada Shipping Act 2001. These statutes give the Federal Court exclusive jurisdiction in relation to the following matters, among others:
|Marine Liability Act||32||The constitution and distribution of a limitation fund established under the LLMC Convention.|
|Marine Liability Act||52||The constitution and distribution of a limitation fund established under the CLC Convention.|
|Marine Liability Act||74.25||The constitution and distribution of a limitation fund established under the HNS Convention 2010, once it enters into force.|
|Marine Liability Act||106||Appeals from decisions by the Administrator of the Ship Source Oil Pollution Fund.|
|Canada Shipping Act, 2001||86(3)||Claims for lien in respect of seamen's wages. (Note that such claims can be made in any court with an in rem procedure but only the Federal Court and the British Columbia Supreme Court have such procedures.)|
For further background and a historical review of the important cases in this area please see the below papers but take note that the papers are not current and this area continues to develop.
The database contains 43 case summaries relating to Admiralty Jurisdiction. The summaries are sorted in reverse date order with 20 summaries per page. If there are more than 20 summaries, use the navigation links at the bottom of the page.
R. v. M/V The Marathassa, 2019 BCSC 386Précis: The B.C. Supreme Court held that a second notice of appeal could be served on counsel for the defendant ship as personal service on the defendant ship was not realistically available to the Crown.
Summary not yet available.
Mercedes-Benz Financial Services Canada Corp. v. Maersk Line A/S, 2018 FC 1119Précis: The Federal Court dismissed a motion for injunctive relief when the applicant failed to satisfy the legal test thereof.
Summary not yet available.
Canpotex Shipping Services Limited v. Marine Petrobulk Ltd., 2018 FC 957Précis: The Federal Court found that the sale of marine bunkers was subject to the standard terms and conditions of the defendant supplier where no objection to those terms was raised by the parties to the original Fixed Price Agreement contract, and ordered the plaintiff to pay the supplier with money held in trust, as well as the receiver of the bankrupt bunker company.
Facts:After the Federal Court of Appeal determined that the trial Judge erred in applying the Fixed Price Agreement to Canpotex’s bunker purchases, this matter was re-heard to determine which party was entitled to payment of funds held in trust. The factual background to this case is important: Canpotex Shipping Services Ltd. (“Canpotex”) and O.W. Supply & Trading A/S agreed to a fixed price trading agreement for marine bunkers (the “Fixed Price Agreement”). Canpotex then obtained bunkers from O.W. Bunkers (U.K.) Ltd. (“O.W.”) for the MV Ken Star and MV Star Jing which were chartered by Canpotex (the “Vessels”). Both charter contracts provided that Canpotex will pay for all fuel and will not allow any liens against the Vessels. The bunkers were physically supplied by the defendant, Marine Petrobulk Ltd. (“M.P.”), who was to deliver the bunkers to the Vessels in Vancouver. M.P. invoiced O.W. who then invoiced Canpotex. Before those invoices were paid, O.W. went bankrupt. ING Bank, receivers for O.W., were to collect any sums outstanding. M.P. and ING claimed entitlement to the amounts owed by Canpotex for the bunkers. M.P. registered a maritime lien against the Vessels and bunkers, upon which Canpotex paid the outstanding amount of $661,050.63 USD into trust.
In the first decision, the Federal Court ( F.C. 1108) determined that M.P. should be paid out of the funds, and ordered that Canpotex pay ING for the markup in price between O.W. to M.P. Thus, Canpotex’s liabilities were extinguished, including the liens.
The matter was appealed to the Federal Court of Appeal ( FCA 47) which held the Federal Court erred in applying the Fixed Price Agreement to the Canpotex purchase, holding further that O.W.’s standard terms and conditions applied to the purchases.
Decision: The Federal Court maintained the same outcome for payment of the money in trust as it decided in the first decision.
Held: The Federal Court relied on a specific provision of M.P.’s terms and conditions which had the effect of variating the terms and conditions when the supply of the bunkers is provided by a third party, such as in this case. Therefore the plaintiff was bound by M.P.’s terms and conditions. After review, the Federal Court held that M.P. insisted, required or demanded that the bunker delivery was to be done on its own terms and conditions, and in the absence of any objection by the plaintiff or O.W., the terms and conditions applied to the transaction. The Federal Court held that the funds in trust would be paid out in the same manner as the first decision, ordering Canpotex pay M.P. out of trust and pay ING for the markup.
Elroumi v. Shenzhen Top China Imp & Exp Co., Ltd China, 2018 FC 633Précis: The Federal Court struck those parts of a statement of claim relating to road and rail carriers on the grounds that it lacked jurisdiction.
Facts: Plaintiffs purchased goods from two of the named Defendants and paid for shipments of the goods from China to Montreal. A sea-waybill was issued by the third party which indicated Hong Kong as the port of loading, Vancouver as the port of discharge and Montreal as the port of delivery. The Plaintiffs and/or the consignee hired Entrepot Canchi to pick the goods up at the train station. Once the goods cleared customs, the Plaintiffs were told the goods had been damaged and that Entrepot Canchi had to deliver the goods as the Plaintiffs were responsible for that part of the transaction. The Plaintiffs then issued a statement of claim 3 years after the shipment, naming the vendors/shippers, the insurer, the transport agent, the land storage and transport companies involved. The ocean carriers, both named on the bills of lading, were also named as Defendants. Entrepot Canchi launched a third party claim against the ocean carrier CMA CGM.
Decision: Motion granted. Plaintiffs' claim against Entrepot Canchi was struck out, and the third party claim against CMA CGM were also struck out.
Held: The jurisdiction of the Federal court could not extend to claims against rail and land carriers which were other contracts of carriage not part of the bills of lading. The bills of lading covered the liability of the ocean carriers, but not that of Entrepot Canchi, as the Plaintiffs and/or consignee entered into a contract with the provincial land carrier Entrepot Canchi which was independent of the bills of lading. The Superior Court of Quebec or the Court of Quebec has exclusive jurisdiction to hear the claim between the Plaintiff and Entrepot Canchi. As a consequence, the third party claim was struck as the original claim by the Plaintiff against Entrepot Canchi could not be heard by the court.
Facts: The plaintiff and defendant entered into a contract for the carriage of one container of frozen shrimp from Ecuador to Montreal. The container was discharged at Montreal and was later released by the terminal, the defendant’s agent, to a trucking company who was not entitled to delivery. The plaintiff commenced proceedings in the Federal Court against the defendant for wrongful delivery. The defendant then commenced these third party proceedings against the trucking company that took delivery alleging that it took delivery either unlawfully or negligently. The trucking company brought an application for an order striking out the third party claim on the grounds that the Federal Court did not have jurisdiction to hear the third party claim. At first instance (2017 FC 460), the Prothonotary agreed with the third party and held that the court did not have jurisdiction to adjudicate the claim. The defendant appealed.
Decision: Appeal dismissed.
Held: The order of the Prothonotary is discretionary and can only be interfered with if incorrect in law or based on a palpable and overriding error of fact. The defendant argues that the Prothonotary failed to take into account the modern context of navigation and shipping and mischaracterized the third party action as a matter of trucking governed by provincial law rather than as theft from a sea terminal which it says is governed by Canadian maritime law. Whether the claim is governed by Canadian maritime law requires a consideration of whether the subject matter of the claim is integrally connected to maritime matters. Here there is hardly any proximity between the activities of the third party and the sea and there is no contractual connection between the third party and the contract for the carriage of the cargo by sea. In fact, there is no contractual relationship with the third party at all. The activities of the third party are essentially those of a trucker and are governed by provincial law not Canadian maritime law. It is therefore plain and obvious that the Federal Court is without jurisdiction to hear the third party claim.
Re: Bernard LLP v. , 2015 BCSC 2382Précis: A law firm was entitled to interplead disputed funds notwithstanding that the Federal Court had ordered the funds paid to one of the claimants.
Facts:A yacht was ordered to be sold by the Federal Court with the proceeds of sale to be deposited into the trust account of the petitioner. Before the vessel was sold, CCAA proceedings were commenced in the British Columbia Supreme Court. In the CCAA proceedings an order was made appointing a “Vessel Construction Officer” and authorizing that officer to borrow funds to prepare a plan to complete the construction of the yacht. The “Vessel Construction Officer” borrowed $144,000 from an interested party, Sargeant, to perform this task. The Federal Court granted a first charge on the vessel for these borrowed funds. Sargeant then assigned his interest in the charge to BHT and brought an application in Federal Court to pay out the funds. That application was contested on the grounds that the assignment was fraudulent. The Federal Court ordered the funds to be paid to Sargeant. Sargeant then appealed on the grounds that the funds should have been made payable to BHT but did not obtain a stay of the order pending appeal. The petitioner then brought an application in the British Columbia Supreme Court for the right to interplead the funds and was granted such an order. Sargeant appealed.
Decision: Appeal dismissed.
Held: The central complaint is that this court should not make an interpleader order when there is an order of the Federal Court which has determined who is entitled to the funds. However, the Federal Court itself recognizes that it has limited jurisdiction to address the fraudulent allegations regarding the assignment and has further recognized that this court has jurisdiction to hear the interpleader application. The Federal Court order is not a final determination of who is entitled to the funds in these circumstances. This is a proper case for an interpleader order.
ATL Trucking Ltd. v. Vancouver Fraser Port Authority, 2015 FC 420Précis: The Federal Court held that it did have jurisdiction to hear a judicial review application appealing a decision by a Port Authority denying trucking licences to the Applicants.
The Port of Metro Vancouver had been plagued with labour issues relating to the drayage of containers to and from the port for many years. In an effort to resolve the issues, the licencing system was changed to, inter alia, decrease the number of trucks used to service the Port’s requirements. The Port evaluated the licence applications received based upon various published criteria but the applications were processed in batches rather than at a single time. The Port did not advise that applications were to be evaluated in this way. The result was that some of the applications that were processed at a later point in time were denied licences even though those applicants had higher scores than applicants who had been processed earlier. A number of the applicants who were denied licences brought this proceeding for judicial review.The Port then filed this application to strike the proceeding on the basis that the Port's decision was not subject to judicial review by the Federal Court.
Decision: Motion dismissed.
Held: The Port is a “federal board, commission or tribunal” and its decision was subject to judicial review by the Federal Court.
Comment: See also Goodrich Transport Ltd. v. Vancouver Fraser Port Authority, 2015 FC 520 where the application for judicial review was allowed.
Demers v. Marine Atlantic Inc., 2015 QCCQ 1793Précis: The Quebec Small Claims Court refused to give effect to a jurisdiction clause in passenger ferry ticket in favour of the Federal Court.
Facts: The plaintiffs had purchased tickets on a ferry that was scheduled to leave from the Port of Argentia but was changed to Port aux Basques, both located in Newfoundland. The plaintiffs commenced this claim in the Quebec Small Claims Court alleging that they suffered additional expenses as a result of this change. The ticket contained a jurisdiction clause that provided the Federal Court in either Newfoundland or Nova Scotia was to have exclusive jurisdiction. The defendant sought to have the case dismissed on the basis of the jurisdiction clause.
Decision: Action dismissed.
Held: The Federal Court would not have jurisdiction to hear this dispute as the claim is based on the law of contract and there is no federal law to nourish the jurisdiction of the Federal Court. The parties cannot by agreement confer jurisdiction on the Federal Court. However, the courts of Quebec are also without jurisdiction pursuant to Art. 3148 of the Civil Code which provides the courts have no jurisdiction where the parties have agreed to refer the matter to a foreign court. The appropriate court to hear the dispute is the small claims court of either Newfoundland or Nova Scotia.
Comment: This decision is clearly wrongly decided. Although most of the reported cases involving carriage of passengers by sea are decisions of provincial superior courts, the law that is applied is, almost without exception, Canadian maritime law including, where applicable, the Athens Convention. Therefore, pursuant to s. 22(1) of the Federal Courts Act, the Federal Court would have concurrent jurisdiction. (Regrettably, as with many Quebec decisions, this decision is reported only in French and the summary is based upon a translation that may be imperfect.)
St. Paul Fire & Marine Insurance Company v. Vallée, 2015 QCCQ 1891Précis: The Court of Quebec held that a contract to deliver a yacht by sea was a services contract and not a contract of carriage.
Facts: The plaintiff was the insurer of a yacht that was damaged while being re-positioned. The yacht owner contracted with the defendant to transport the yacht from Quebec City to the State of New York. The transportation involved the defendant taking possession of the vessel and sailing it to the destination. During the voyage the yacht was damaged. The plaintiff fully indemnified its insured and commenced these subrogation proceedings against the defendant. The defendant then brought this application to dismiss the action on the basis that: (1) the Quebec courts were without jurisdiction: and, (2) no notice of claim was provided within 60 days of delivery as required by art. 2050 of the Quebec Civil Code.
Decision: Application dismissed.
Held: (1) The Quebec Court has jurisdiction in admiralty and s. 22 of the Federal Courts Act does not operate to restrict that jurisdiction. (2) The contract was not a contract of carriage but a service contract and art. 2050 does not apply. In any event, notice is not required where, as here, the carrier notifies the property owner of the damage.
Comment: Although the plaintiff in this action was the insurer of the vessel, in the common law provinces it is not usual for an insurer to be named as the plaintiff in subrogation proceedings. In the common law provinces the insured is normally the named plaintiff.
LF Centennial Pte. Ltd. v. TRLU7228664 et al (Containers), 2015 FC 214Précis: An in rem plaintiff has no right to commence proceedings and arrest in Federal Court when there are ongoing insolvency proceedings in a provincial superior court and an outstanding order under the Bankruptcy and Insolvency Act staying all proceedings.
Facts: The plaintiff is a buying agent on behalf of garment retailers and had acted as buying agent for Mexx. In December 2014 Mexx became insolvent. A stay of proceeding under the Bankruptcy and Insolvency Act was put in place and various insolvency related orders were made by the Quebec superior court. On 23 December 2014 the plaintiff commenced this in rem” proceeding against various shipments and had the cargo arrested. The plaintiff did not obtain leave from the Quebec superior court before commencing the proceeding. The plaintiff alleged it was an unpaid seller exercising its right of stoppage in transit. Mexx and its receiver brought this application to quash the arrest and strike the statement of claim.
At first instance, the Prothonotary held the plaintiff had no right to bring this proceeding without first obtaining leave from the Quebec superior court. In reaching this conclusion the Prothonotary distinguished Holt Cargo Systems Inc v ABC Containerline NV (Trustees of), 2001 SCC 90 on the basis that in Holt the ship had been arrested and sold before the bankruptcy proceedings had been commenced. The plaintiff appealed.
Decision: Appeal dismissed.
Held: Section 188(2) of the Bankruptcy and Insolvency Act is prescriptive and mandatory. It requires all courts to act in aid of the bankruptcy/insolvency court. The Prothonotary had no discretion and was bound to come to the aid of the superior court to ensure the stay was respected. The plaintiff did not obtain leave before commencing this proceeding and the proceeding is therefore ineffective. The Prothonotary correctly distinguished the Supreme Court’s decision in Holt as nowhere in that decision is there a consideration of the s. 69 stay of proceedings. A more fundamental distinction between this case and Holt is that Holt concerned bankruptcy proceedings and secured creditors whereas this matter concerns insolvency proceedings. In bankruptcy proceedings secured creditors are not affected by the stay of proceedings but the stay does apply to secured creditors in insolvency proceedings. Additionally, the plaintiff’s claim flows exclusively from a commercial contract of sale with no maritime component. The mere fact the garments were carried on a ship does not establish a sufficient connection to make it subject to maritime law. The underlying claim does not relate to shipping and navigation and does not fall within the court’s admiralty jurisdiction.
Aquavita International S.A. v. M/V Pantelis (Ship), 2015 FC 180Précis: The Federal Court held that it did have jurisdiction over a claim by a sub-charterer for excessive bunkers on board the ship when re-delivered at the conclusion of the sub-charter.
Facts: The plaintiff was the sub-sub time charterer of the defendant vessel “Pantelis”. The plaintiff commenced this proceeding alleging that when it re-delivered the vessel there were bunkers aboard belonging to it and that these bunkers were consumed the defendants. The plaintiff arrested the “Pantelis”. The defendants brought this motion to strike the action and set aside the arrest on the grounds that the court was without jurisdiction.
Decision: Motion dismissed.
Held: The owners argue that s. 22(2)(m) of the Federal Courts Act has no application as the plaintiff was not a bunker supplier. However, a claim need not fall within one of the categories in s. 22(2) to be within the court’s admiralty jurisdiction. It is sufficient if a claim falls within s. 22(1) which is coextensive with Parliament’s jurisdiction over navigation and shipping What is at issue in this case “is fuel on board a ship, which fuel was allegedly used to propel her over the ocean blue. Nothing could be more maritime.”
Harry Sargeant III v. Al-Saleh, 2014 FCA 302Précis: The Federal Court of Appeal held that a foreign fraud judgment in a non-maritime matter could not support a claim in rem and was outside the jurisdiction of the Federal Court.
Facts: Sargeant and Worldspan entered into an agreement for the construction of a vessel by Worldspan. Sargeant advanced funds to build the vessel which were secured by a builder’s mortgage. Sargeant advanced approximately $11 million towards the construction and then entered into a loan agreement with Comerica to finance the completion of the building. Sargeant’s interest in the construction agreement was assigned to Comerica. Comerica advanced an additional $9 million towards the construction. A dispute then arose concerning the costs of construction and construction was halted. The vessel was arrested in Federal Court and Worldspan filed a petition in the British Columbia Supreme Court seeking relief under the Companies Creditors Arrangement Act (“CCAA”) of British Columbia. Pursuant to the process adopted in the two courts, in rem claims against the vessel were to be decided in the Federal Court and all other claims were to be decided in the British Columbia CCAA proceedings. Al-Saleh sought an order for leave to file an in rem claim to enforce a judgement obtained from the Florida Circuit Court. The judgment was in the amount of US$28 million and was for fraud and conspiracy to commit fraud in relation to a business scheme that had nothing to do with maritime matters. Al-Saleh alleged some of the monies of which he was defrauded were paid to Worldspan and used in the construction of the vessel and that this gave rise to an in rem claim. Sargeant opposed the application and by its own motion requested that the Al-Saleh claim be dismissed.
At first instance (unreported), the Prothonotary granted the motion of Al-Saleh, held the court had jurisdiction to adjudicate the in rem claim, recognized the Florida judgment and dismissed the motion of Sargeant. Sargeant and Comerica appealed and were successful, in part. On appeal (2013 FC 1204) the appeal Judge held that: (a) the court had jurisdiction to adjudicate the in rem claim; (b) the Sargeant motion should be dismissed; and, (c) the Florida judgment should not be recognized and enforced. With respect to the Florida Judgment, the appeal Judge held that the relief granted in that judgment did not fall within the Federal Court’s jurisdiction pertaining to Canadian maritime law and therefore could not be recognized and enforced. Sargeant and Comerica further appealed on points (a) and (b).
Decision: The appeal is allowed and the in rem claim of Al-Saleh (the “Respondent”) is dismissed.
Held: Both the Prothonotary and the appeal Judge were clearly wrong when they decided the Federal Court had jurisdiction to entertain the Respondent’s claim. The claim does not relate to any subject matter over which the court has jurisdiction. It cannot succeed and must be dismissed. The Respondent alleges that the funds of which he was defrauded were used to finance the construction of the vessel and that he therefore has an interest in the vessel. He also asserts that the doctrines of constructive trust and unjust enrichment support his claim. He finally adds that he can trace his property to the vessel. In essence, the Respondent alleges that his claim is one for an ownership interest in a ship pursuant to s. 22(2)(a) of the Federal Courts Act. The Appellant argues that a claim of an ownership interest is not sufficient to support jurisdiction. That is not correct. “There can be no doubt whatsoever that once a claim is held to fall within one of the heads found in subsection 22(2) of the Act, there is necessarily substantive maritime law to support the claim.” However, the question is, does the Respondent’s claim fall within s. 22(2)? The Respondent could not have brought in Federal Court the claim that he brought in the Florida court as it has nothing to do with maritime law. This is why the appeal Judge correctly refused to recognize the Florida judgment. There must be a body of federal law essential to the disposition of the case before the Federal Court has jurisdiction. There is no such federal law here. Further, the Respondent’s claims are not “so integrally connected to maritime matters as to be legitimate Canadian maritime law within federal competence”. Rather the claim raises issues that are within the exclusive legislative jurisdiction of the provinces.
Comment: Perhaps the most interesting point made in this decision is the statement that where a claim falls within s. 22(2) of the Federal Courts Act there is necessarily substantive maritime law to support it.
Facts: The plaintiff was the purchaser of a cargo of iron ore pellets and the voyage charterer of the “Rt. Hon. Paul J. Martin”, a self-unloading bulk carrier and the ship that was to carry the pellets. The defendant was the vendor of the pellets. The cargo was sold FOB ship’s hold. The terms of sale specified the cargo was to have a maximum moisture content of 2.5% (to prevent freezing) and required the vendor to indemnify the purchaser for additional costs incurred in the event the pellets were frozen. The cargo of iron ore pellets was loaded in very cold weather, about -18 degrees Celsius, at Port Cartier, Quebec. The “Rt. Hon. Paul J. Martin” then sailed to Toledo, Ohio where it was to discharge the cargo. Upon discharge it was discovered that the cargo was frozen and, as a consequence, the plaintiff was required to pay to the ship owner demurrage, additional loading costs and costs to repair damage to the ship during the unloading. The plaintiff brought this indemnity action against the defendant alleging that the moisture content of the cargo was in excess of that required by the contract of sale. The defendant argued that it was not in breach of its contract with the plaintiff, that the cause of the loss was the failure of the carrier to properly load, carry and discharge the cargo and that it had not been given timely notice of the alleged breach of contract.
At trial (2014 FC 118), the Judge addressed two issues; whether the Federal Court had jurisdiction; and whether the defendant was liable. On the first issue, the trial Judge held that the claim was really about the suitability or fitness of the cargo for transport, a matter of navigation and shipping, and therefore within the maritime jurisdiction of the Federal Court. On the second issue the trial Judge held that the cause of the freezing was the excessive moisture content of the pellets and was not due to any fault on the part of the carrier. The Judge further held the defendant was aware of the breach before the plaintiff and did not require notice. Accordingly, judgment was rendered for the plaintiff. The defendant appealed the substantive finding that it was liable (but apparently not the decision concerning the jurisdiction of the Federal Court).
Decision: Appeal dismissed.
Held: The appellant challenges the trial Judge’s findings on liability, reasonable notice, and spoliation. These are, however, questions of fact or mixed fact and law and the appellant must show the Judge committed a palpable and overriding error. The appellant has failed to meet this threshold. The Judge’s findings are supported by the evidence.
Coastal Float Camps Ltd. v. Jardine Lloyd Thompson Canada Inc., 2014 FC 906Précis: The Federal Court refused to strike a claim for negligence against a marine broker as it was not “plain and obvious” the court was without jurisdiction.
Facts: The plaintiff’s vessel capsized and sank on 5 November 2009. The plaintiff’s insurer denied coverage on the grounds of material non-disclosure and misrepresentation. The plaintiff commenced this action against the insurer for a declaration that the loss was covered. The plaintiff later amended the statement of claim to include a claim against its marine broker for negligence and breach of contract. The broker then brought this application to strike the allegations against it on the grounds that the Federal Court had no jurisdiction in respect of those claims.
Decision: Application dismissed.
Held: The applicable test on a motion to strike is whether it is plain and obvious the claim discloses no reasonable cause of action. The fact that a claim is novel or difficult is not sufficient. “The burden on the defendant is very high and the Court should exercise its discretion to strike only in the clearest of cases.” The broker relies upon the decision in Intermunicipal Realty & Development Corp v Gore Mutual Insurance Co,  2 FC 691 where it was held the Federal Court did not have jurisdiction over a marine insurance broker in agency and misrepresentation. However, the plaintiff cites a number of authorities that show the law concerning the jurisdiction of the Federal Court has evolved considerably since Intermunicipal Realty was decided and that it may no longer be good law. In the circumstances, it is not plain and obvious the plaintiff’s claim cannot succeed.
General MPP Carriers Ltd. v. SCL Bern AG, 2014 FC 571Précis: The Federal Court has no jurisdiction over a shareholders dispute even though the company was a “one ship company”.
Facts: The plaintiff loaned the first defendant US$5 million for a 40% interest in the defendant ship "SCL Bern". The loan was secured by a shareholders agreement granting the plaintiff 40% of the shares of the second defendant, the owner of the "SCL Bern". The remaining 60% of the shares were owned by the first defendant. The shareholders agreement included provisions concerning a right of first refusal and prohibiting the disposal of shares. In particular, the plaintiff was prohibited from disposing of its shares to third parties but could require the second defendant to purchase its shares at a specified price upon the giving of notice. The plaintiff alleged that it gave the appropriate notice but the second defendant refused to purchase the shares. The plaintiff commenced proceedings in Switzerland and obtained judgement against the second defendant, which was under appeal. The plaintiff then commenced these proceedings and arrested the "SCL Bern". The plaintiff alleged it was a part owner of the "SCL Bern" and that it had suffered damages as a result of the defendant's breach of the shareholders agreement. In the alternative, the plaintiff alleged that the $5 million loaned was secured by a mortgage or charge on the "SCL Bern". The defendants brought this motion to strike the in rem action and set aside the arrest on the basis that the Federal Court had no jurisdiction.
Decision: The in rem action is struck and the arrest set aside.
Held: The test for striking pleadings is whether it is plain and obvious the claim discloses no reasonable cause of action. The onus on the party seeking to strike pleadings is a heavy one. The evidence discloses that the registered owner of the "SCL Bern" is the second defendant and there is no mortgage or charge registered against the vessel. The plaintiff acquired an interest in the shares of the second defendant, not an ownership interest in the vessel. It is quite clear that the plaintiff's claims arise from alleged breaches of the shareholders agreement concerning the sale of shares. The dispute is therefore one of corporate law not maritime law. The subject matter is not so integrally connected to maritime matters as to fall within maritime law.
Roynat Inc v. Phoenix Sun Shipping Inc, 2013 ONSC 7308Précis: The Ontario Superior Court referred applications concerning the sale of a ship to the Federal Court on the grounds that deference had to be paid to the Federal Court Proceedings.
The ship “Phoenix Sun” was arrested in Federal Court proceedings by two creditors. The mortgagee subsequently commenced proceedings in the Ontario Superior Court and obtained an order for the appointment of a receiver over the assets of the ship owner. The mortgagee also obtained a very detailed sales order from the Federal Court that, among other things, appointed the receiver as “Acting Admiralty Marshall” to sell the ship and set up a priorities claims process. The receiver found a buyer for the ship and now brought applications in the Ontario Superior Court for an order approving the sale and for directions regarding the disposition of the sale proceeds.
Decision: The applications should not be brought in the Ontario Superior Court but in the Federal Court.
Held: Although the provincial superior courts and the Federal Court have overlapping jurisdiction in maritime law matters, a creditor must take great care that it sets up a process by which one court will have primary carriage of the realization proceedings. Once in rem proceedings are commenced in the Federal Court the provincial superior court should pay due regard or deference to the Federal Court proceedings. Considering the extensive order made by the Federal Court, it is not appropriate for the Ontario Superior Court to exercise any of its jurisdiction and the motion should be brought before the Federal Court. Any residual matters the Federal Court cannot deal with can then be brought in the Ontario Superior Court.
This was an in rem and in personam action against both the federal and provincial crowns and a vessel owned by the Alberta government. The action concerned a fatal accident that occurred on an Alberta lake. The plaintiffs alleged that the defendants were negligent in their performance of search and rescue duties. The Province of Alberta objected to the jurisdiction of the Federal Court over it and initially brought a motion to strike the statement of claim. That application was dismissed (see: Canada v Toney, 2011 FC 1440 and 2012 FCA 167). The parties then agreed that the issue of the in personam jurisdiction of the Federal Court over the Province of Alberta should be determined as a question of law and Alberta brought this application for such a determination. Alberta argued that the doctrine of Crown immunity applied and that it could not be bound by a federal statute. The motions Judge disagreed and held (at 2012 FC 1412) that the Federal Court did have in personam jurisdiction. In reaching this decision the motions Judge noted that the Federal Court had subject matter jurisdiction and further noted that s. 3 of the Marine Liability Act and s. 43(7) of the Federal Courts Act both permitted actions against a province. The Province of Alberta appealed.
Decision: Appeal allowed.
Held: The four basic principles are: first, the Crown (both federal and provincial) is prima facie immune from legislation; second, where Parliament (the federal Crown) has the authority to legislate in an area, a provincial Crown will be bound where Parliament so chooses; third, in order for a provincial Crown to be sued in the Federal Court, there must be some legislative provision permitting it; and fourth, the Federal Court must have jurisdiction over both the subject matter and the parties. The question is whether there is a legislative provision indicating a clear intent by Parliament to bind the province. The possibilities are ss. 22 and 19 of the Federal Courts Act and the Alberta Proceedings Against the Crown Act. Section 22 of the Federal Courts Act (granting jurisdiction “between subject and subject as well as otherwise”) does not contain a clear expression of intention to bind a Province. Section 19 of the Federal Courts Act (intergovernmental disputes) does not apply to claims by a private citizen and is therefore of no assistance. Finally, even though the Alberta Proceedings Against the Crown Act does not expressly reserve jurisdiction to the courts of Alberta, it also does not expressly grant jurisdiction to the Federal Court. In result, the appeal is allowed and the Federal Court has no in personam jurisdiction over the Province of Alberta.
SDV Logistiques (Canada) Inc. v. Dieselgenset Type 8M 25, Engine No. 45085 EX the Barge Andrea, 2013 FC 671Précis: The court held that it had no jurisdiction to sell property that was not located in Canada.
The plaintiff, at the request of a ship builder, arranged for the pick-up and storage of generators at the Port of Hamburg. The generators were intended to be installed in two vessels being built by the builder. The builder originally paid the storage charges but ran into financial difficulties and ceased to make payments leaving the plaintiff with a debt owing of in excess of $200,000. The plaintiff brought these proceedings in personam against the successor of the builder and the mortgagee of the vessels and also brought in rem proceedings against the generators and other cargo. A Warrant of Arrest was issued but was never served with the result that the action proceeded solely as an in personam action. The plaintiff, nevertheless, brought a motion pursuant to Rule 379 for an order that the generators be sold. At first instance, the Prothonotary refused the order. The plaintiff appealed.
Decision: Appeal dismissed.
Held: Rule 379 cannot be applied because the generators are not and have never been in Canada and there is no evidence the generators are likely to deteriorate. Further, for the court to order the sale of property outside of the jurisdiction, there must be some enabling statutory provision and there is none. Consequently, the court has no jurisdiction to issue the order requested.
Ship Source Oil Pollution Fund v. British Columbia (Finance), 2012 FC 725Précis: The admiralty jurisdiction of the Federal Court was held to include jurisdiction in actions against a provincial crown. (This is probably no longer good law. See the "Comment" in the summary.
This action by the plaintiff was pursuant to the Marine Liability Act to recover costs it paid to clean up oil pollution from a vessel that sank in Brittania Bay, British Columbia. The defendant was the Crown in right of the Province of British Columbia who had allegedly became the “owner” of the vessel when its registered and beneficial owner was dissolved under the Society Act of British Columbia. The BC Crown brought this application to strike the claim on various grounds including that the Federal Court does not have in personam jurisdiction against it or, alternatively, that that Federal Court is without subject matter jurisdiction because the issue of ownership depended on provincial law.
Decision: Application dismissed.
Held: The test on a motion to strike for lack of jurisdiction is whether it is plain and obvious the claim discloses no reasonable cause of action. For the purpose of the application, the allegations of fact in the pleadings are accepted as proved unless patently ridiculous or incapable of proof. The onus is on the party moving to strike the pleading. The BC Crown is asking the Federal Court to engage in a complex exercise of statutory interpretation to justify the “draconian” measure of striking the Statement of Claim. “A motion to strike is not the proper forum to make a final determination on such weighty matters.” Alberta v Toney, 2012 FCA 167, is dispositive of the issue and, in any event, it is not plain and obvious the Federal Court is without jurisdiction. Jurisdiction is based on a three part test: there must be a statutory grant of jurisdiction; there must be an existing body of federal law essential to the disposition of the case that nourishes the statutory grant; and, the law on which the case is based must be “a law of Canada” within the meaning of s.101 of the Constitution Act. Section 22(2)(d) of the Federal Courts Act grants jurisdiction with respect to “damage done by a ship” and the sinking of a ship resulting in pollution is arguably damage within the meaning of s. 22(2)(d). There is case authority that the Federal Court has jurisdiction over a claim against a province as owner of a vessel where the claim is a maritime claim. Section 43(7) of the Federal Courts Act also suggests the Federal Court has in rem jurisdiction against a ship owned by a province. Section 3 of the Marine Liability Act also expressly provides that act is binding on a province. At the very least it is not plain and obvious the Federal Court does not have personal jurisdiction over the BC Crown. The fact that the ownership issue may require the application by the Federal Court of provincial law does not matter. The ancillary application of provincial law does not affect the jurisdiction of the Federal Court.
Comment: It is now clear that the Federal Court does not have jurisdiction over a province as decided in Alberta (Canada) v. Toney, 2013 FCA 217.
This was an in rem and in personam action against both the federal and provincial crowns and a vessel owned by the Alberta government. The action concerned a fatal accident that occurred on an Alberta lake. The plaintiffs alleged that the defendants were negligent in their performance of search and rescue duties. The Alberta defendants moved to strike the in rem action on the basis that the vessel had been sold prior to the commencement of the action and also moved to strike the in personam action against them on the basis that actions against a provincial crown should be commenced in the provincial courts. The federal defendants also moved to stay the action or to have it struck as an abuse of process. At first instance, the trial Judge allowed the motions only with respect to the action in rem. The trial Judge held that the sale of the vessel prior to the commencement of the action did defeat the action in rem but it did not affect the action in personam. The trial Judge (2011 FC 40) held that the fact one of the defendants was a provincial crown was irrelevant as the action (and the Federal Court’s jurisdiction) was not grounded in s. 17 of the Federal Courts Act (which governs actions against the Federal Crown) but in s.6 and following of the Marine Liability Act. The Alberta defendants appealed.
Decision: Appeal dismissed.
Held: The Federal Court of Appeal Court noted that it was undisputed the plaintiffs’ claims fall within the subject of navigation and shipping and within the express terms of section 22 of the Federal Courts Act. It was not plain and obvious that the Federal Court was without jurisdiction.
Comment: In Toney v. Canada, 2012 FC 1412, the same point was brought to the court on a question of law (as opposed to the above case which was a motion to strike). At first instance the Federal Court held that it had jurisdiction in personam against a province in a maritime matter. However, on appeal, at 2013 FCA 217, the Federal Court of Appeal held that the Federal Court has no jurisdiction over a provincial crown.