Canada: Maritime Law – Recent Key Judgments – 2015

Last Updated: December 11 2015
Article by Darren McGuire

Most Read Contributor in Canada, September 2016

2015 has seen the usual variety of important Canadian decisions which bear on maritime law and various admiralty practice areas.

A. Fingad Shipping Ltd. v Ningbo Arts & Crafts Imp & Exp. Co. Ltd., 2015 FC 851

The plaintiffs in this case had entered into a contract with the corporate defendants for the construction of the defendant vessel, the "Chemical Aquarius." There was a dispute between the parties and the plaintiffs cancelled the contract in 2010. In June 2012, the Chemical Aquarius was sold by the corporate defen­dants to a third party, Huarong Huiyin Limited ("HH"), and the purported sale was registered. Subsequent ar­bitral proceedings resulted in arbitral awards against the corporate defendants in 2013, substantial portions of which remained owing to the plaintiffs.

In April 2015, the plaintiffs commenced a proceeding in France to enforce the arbitral awards and arrest the Chemical Aquarius. The defendant vessel was seized in France and HH sought to have the seizure lifted on the basis that they, as the registered owner of the ship, were not one of the debtors of the arbitral awards. On May 7, 2015, the Tribunal de Commerce de Terre et de Mer du Havre (the "French Tribunal") lifted the seizure of the Chemical Aquarius.

On July 3, 2015, the plaintiffs commenced a proceed­ing in the Federal Court for the outstanding amounts and seeking the judicial sale of the Chemical Aquarius. The plaintiffs also obtained a warrant for the arrest of the Chemical Aquarius and commenced a separate ex parte application before the Federal Court for the recognition and enforcement of the arbitral awards. In this motion, HH was seeking an order to strike out the Statement of Claim or, alternatively, to set aside the arrest.

Under the Federal Courts Rules, SOR/98-106, a party seeking to strike out a pleading must establish that it is "plain and obvious" that the pleading has no merit on one of the enumerated grounds, and the court should only exercise its discretion to strike only in the clearest of cases. HH argued that arrest had to be set aside since the plaintiffs do not have an in rem right against the vessel because they had no right in personam against its owners (HH). HH further argued that the Federal Court proceeding had to be struck out on the basis of issue estoppel – the French Tribunal had already addressed the enforcement of the arbitral awards through the arrest of the Chemical Aquarius, as well as the issue of the genuineness of the sale to HH.

Justice Locke noted that there are three pre-conditions to the exercise of the court's discretion to apply issue estoppel: (1) the same question has been decided, (2) the judicial decision creates estoppel, and (3) the parties (or their privies) are the same in the judicial decision and the present proceeding (citing Danyluk v Ainsworth Technologies, [2001] 2 SCR 460). In the present case, only the first condition was at issue. Locke J. held that the central issue before the French Tribunal was the same as the central issue in the pres­ent motion since the French Tribunal had fully consid­ered whether the ownership of the Chemical Aquarius had changed and its decision on this issue was final. The plaintiffs argued that they had cited new evidence that had not been considered by the French Tribunal, but Locke J. rejected this argument because to allow new evidence would allow parties to "gut issue estop­pel of any substantial meaning by simply raising new evidence in a subsequent proceeding."

Locke J. refused to exercise his discretion to refuse to apply estoppel and struck the allegations regarding the genuineness of the sale to HH and the reference to the action being in rem, removed the defendant vessel from the style of cause, and released the defendant vessel. HH was awarded the costs of the motion in the amount of $7,500.

Peter G. Pamel and Jean-Marie Fontaine of BLG's Montréal office represented the moving party, Huarong Huiyin Limited, in this motion.

B. Chevron Corp. v Yaiguaje, 2015 SCC 42

The underlying dispute in this case was alleged envi­ronmental pollution in the Lago Agrio region of Ecua­dor, an oil-rich area that has a long history of oil ex­ploration and extraction. For over 20 years, a group of indigenous Ecuadorian villagers (the "Plaintiffs") have been seeking legal accountability and financial and environmental reparation for harms allegedly caused by the former operations of Texaco, Inc. (which later merged with Chevron Corp.) in the area. In 2011, an Ecuadorian trial court ruled in favour of the Plaintiffs and this decision was affirmed by an Ecuadorian ap­pellate court. Finally, in 2013, Ecuador's highest court upheld the appellate decision, with the exception of the punitive damages award, and held that Chevron was liable to pay the Plaintiffs US$9.51 billion.

Chevron refused to acknowledge or pay the award or­dered by the trial court and fought the Plaintiffs in the United States courts. Since Chevron did not hold any Ecuadorian assets, the Plaintiffs had to select another forum to get satisfaction on the debt. In 2012, the Plaintiffs commenced an action in the Ontario Superior Court of Justice for the recognition and enforcement of the Ecuadorian judgment against Chevron (a U.S. corporation), Chevron Canada (a Canadian corporation that is a seventh-level indirect subsidiary of Chevron), and Chevron Canada Finance Limited.

The Supreme Court of Canada confirmed that Cana­dian courts should take a generous and liberal ap­proach to the recognition and enforcement of foreign judgments. Although this type of process was once technical and challenging, the last twenty years has seen significant streamlining of and openness towards the process of enforcing foreign judgments in Canada. Yaiguaje continues this trend, and offers great assis­tance to parties who wish to seek to enforce a foreign judgment in Canada, whether or not:

  • the judgment debtor/defendant is located in Canada;
  • the judgment debtor/defendant has assets in Canada; or
  • the original underlying dispute that led to the for­eign judgment has any connection to Canada.

There is no need for the applicant to prove a real and substantial connection between the Canadian province where the foreign judgment is sought to be registered and the original underlying dispute that led to the foreign judgment, or between the Canadian province and the judgment debtor/defendant. So long as a real and substantial connection exists between the foreign court and the original action, and so long as the defen­dants were properly served with the original claim, the enforcing Canadian court has jurisdiction to recognize and enforce the judgment.

The decision further reiterates Canadian courts' com­mitment to the principles of comity to and respect of foreign legal systems, and upholds the principles outlined in previous authorities, including Club Resorts Ltd. v Van Breda, 2012 SCC 17 and Beals v Saldanha, 2003 SCC 72. By taking a strong position with respect to the rights of the plaintiffs, the Court confirmed that there are few circumstances in which a Canadian court will not have jurisdiction to recognize and en­force a foreign judgment.

C. Aquavita International S.A. v Pantelis (The), 2015 FC 180

In this decision, the Federal Court interpreted its ju­risdiction over maritime law to include redelivery of a vessel with excessive bunkers. The plaintiff Aqua­ vita International S.A. ("Aquavita"), the sub-sub-time charterer of the defendant vessel, the M/V "Pantelis," alleged that it owned bunkers that remained on board when the vessel was redelivered to its disponent own­ers and that the bunkers were misappropriated by the defendants. The plaintiffs brought an action for unjust enrichment and conversion, framed both in rem and in personam, and arrested the Pantelis.

The defendants brought a motion to strike the action pursuant to Rule 221 of the Federal Courts Rules on the basis that the Federal Court lacked jurisdiction to adjudicate the matter. The defendants submitted that the plaintiff was not entitled to rely on paragraph 22(2) (m) of the Federal Courts Act, RSC 1985, c F-7, which grants jurisdiction to the Federal Court over "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." The defendants argued that the plaintiff was not a bunker supplier, so its claim was based on a contractual obligation.

On the question of jurisdiction, Justice Harrington did not determine whether or not the plaintiff's claim fell under paragraph 22(2)(m), instead relying on subsec­tion 22(1) of the Federal Courts Act to ground the Court's jurisdiction. Justice Harrington cited the Su­preme Court of Canada's decision in ITO-International Terminal Operators Ltd v Miida Electronics Inc., [1986] 1 SCR 752 ("ITO"), wherein the Court had "specifically held that the claim did not fall within subsection 22(2), but rather fell within subsection 22(1) which for this purpose is more or less coextensive with Parliament's jurisdiction over "navigation and shipping" under sub­section 91(10) of the Constitution Act, 1867." Justice Harrington held that what was at issue in the present case was "fuel on board the ship, which fuel was al­legedly used to propel her over the ocean blue" and that "[n]othing could be more maritime."

Accordingly, Justice Harrington dismissed the motion to strike, noting that while he had "no hesitation in holding that [the Federal Court] had jurisdiction to de­cide this action on its merits," this decision was only a determination that it was not "plain and obvious" that the plaintiff does not have a cause of action.

D. Save Halkett Bay Marine Park Society v Canada (Environment), 2015 FC 302

This case involved an application for judicial review of an Environment Canada decision authorizing the sinking of the decommissioned HMCS Annapolis (the "Annapolis") brought by the Save Halkett Bay Marine Park Society (the "Society").

The respondent, the Artificial Reef Society of British Co­lumbia (the "ARSBC"), purchased the Annapolis in 2008 and intended to turn it into an artificial reef in Halkett Bay Marine Park, which is off the coast of Vancouver. The artificial reef was intended to be used for recre­ational diving and to provide marine habitat. Before the ARSBC could sink the Annapolis, it was required to ob­tain various regulatory approvals, including a Disposal at Sea Permit (the "Permit") from Environment Canada. In 2012, the Annapolis was found to contain levels of polychlorinated biphenyls ("PCBs") that could pose a risk if accidentally released in the environment. In June 2013, Environment Canada informed ARSBC that the Permit would not be issued until the PCBs were removed, so the ARSBC withdrew its application and undertook the required remediation work.

In July 2014, the Annapolis was inspected and cer­tified to be free from PCBs in solid form, with con­centrations not exceeding the regulatory threshold. Accordingly, the Minister of Environment issued the Permit to ARSBC in October 2014. The Society filed a Notice of Objection in respect of the Permit pursuant to subsection 332(2) of the Canadian Environmental Pro­tection Act, SC 1999, c 33 (the "CEPA"). In response to a subsequent announcement that the ARSBC planned to procced with the sinking of the Annapolis in Halkett Bay, the Society filed an application for judicial review of the Permit.

Chief Justice Crampton of the Federal Court ultimately dismissed the application on the basis that it had not been commenced within 30 days of the Minister's de­cision to issue the Permit, as required by subsection 18.1(2) of the Federal Courts Act. Crampton C.J. did not exercise his discretion to extend the limitation period because the ARSBC had suffered substantial prejudice as a result of the Society's failure to comply with the time period and the delay had not been explained.

Crampton C.J. also noted that, regardless of the ap­plication's procedural failings, he would have also dismissed the Society's application on the merits. The Society had argued that dibutyltin dichloride and tribu­tyltin chloride ("TBTs") are subject to a complete ban in Canada pursuant to the International Convention on the Control of Harmful Anti-fouling Systems on Ships, 2001, the Vessel Pollution and Dangerous Chemicals Regulations, SOR/2012-69 and/or the CEPA and that the Minister had erred by failing to consider the pres­ence of TBTs in the hull of the Annapolis. Crampton C.J. held that there is no such complete ban on TBTs and that the Minister was entitled to issue the Permit.

Crampton C.J. rejected the Society's argument that the Minister's decision was unreasonable because its basis had not been explained, holding that the Minister was not obliged to issue separate detailed reasons and that the decision record and letter from the Minister was adequate. The Society had further argued that the Minister had failed to apply Environment Canada's Clean-Up Standard for Ocean Disposal of Vessels, Air­craft, Platforms & Other Structures with regard to the testing of anti-fouling paint. Crampton C.J. disagreed with this position. Finally, the Society argued that the Minister was obliged to refuse to issue the Permit if there were any TBTs whatsoever in the hull, but Crampton C.J. held that there was no clear and com­pelling evidence that the Annapolis did contain TBTs, so the Minister's decision was entitled to deference.

E. Ehler Marine & Industrial Service Co. v M/V Pacific Yellowfin (Ship), 2015 FC 324

In this case, the Federal Court gave guidance on the enforceability of service quotes, as well as the liability of a repairer when a vessel sustains damage during launch operations.

The plaintiff, Ehler Marine & Industrial Service Co. ("Ehler"), a ship repair company, provided a quote to repair the defendants' wooden vessel, the M/V Pa­cific Yellowfin (the "Yellowfin"). The defendants had issued a Request for Proposal (the "RFP") in respect of the Yellowfin that asked for a "reasonably accurate estimate" for the re-fastening and re-caulking of 15 seams below the waterline per side. Ehler provided an estimate based on the RFP, stipulating that certain items of work would be billed on the basis of the actual time spent and the actual materials used to perform the work. The defendants hired Ehler on the basis of this estimate, but it was later discovered that the RFP had incorrectly described the scope of work and addi­tional seams needed to be re-fastened and re-caulked. The parties agreed that Ehler would do the additional work, but Ehler thought the work was being done on a time and materials basis, while the defendants were under the impression that the original contract price would be prorated.

Ehler completed the repairs, including the additional work, and the final costs exceeded the estimate. The defendants refused to pay, arguing that the estimate was an agreed upon price, and Ehler commenced an action to recover the invoiced amount.

Justice Simpson held that the proper test for deter­mining whether Ehler was bound by its estimate is what a reasonable man in the situation of the parties would understand the contract to be. In these circum­stances, an objective reasonable bystander would have concluded that the estimate was an agreed price, particularly since the estimate had not stipulated that the items of work being disputed would be billed on a time and materials basis.

There was also some damage caused to the Yellowfin while it was being launched after the repairs were completed. The defendants made a counterclaim, arguing that the Ehler's agent was responsible for the damage because it was an implied term of the con­tract that the launch would be safe. Simpson J. dis­missed the counterclaim, finding that the defendants' evidence of the alleged damage was incomplete and contradictory.

F. Pêcheries Guy Laflamme Inc. v Capitaines propriétaires de la Gaspésie (A.C.P.G) Inc., 2015 FCA 78

Readers of previous editions are likely to be familiar with the facts in Pêcheries Guy Laflamme Inc. v Capit­aines propriétaires de la Gaspésie (A.C.P.G) Inc., 2015 FCA 78. This case arose from an accident during the launch of a fishing boat where a mechanical problem had occurred with the portable crane. The owner of the vessel, Pêcheries Guy Laflamme Inc. ("Pêcheries"), demanded payment for the damage from the owner of the portable crane, Capitaines Propriétaires de la Gas­pésie (A.C.P.G.) Inc. ("Capitaines"). Capitaines refused to pay and denied liability on the basis of an exclusion of liability clause in the boat handling contract, which provided that the owner "accepts liability for any risk resulting from the towage, docking, wintering and/or launching of this vessel" and released the owner and operator of the dry dock from "any civil liability result­ing from these associated operations or handling." Capitaines, its employee and its insurance company commenced an action seeking a declaratory judg­ment that they were not liable to Pêcheries. Pêcher­ies brought a counterclaim against Capitaines and its insurance company claiming damages in excess of $408,000.

At first instance (reasons indexed at 2014 FC 456), Justice Harrington held that the plaintiffs had failed to rebut the presumption that the loss was not caused by a breach of their duty, as bailees, to take reason­able care and that the exclusion clause covered any negligence on the part of Capitaines, be it in contract or in tort. Relying on the Supreme Court of Canada's decision in Tercon Contractors Ltd. v British Columbia (Transportation and Highways), 2010 SCC 4, Har­rington J. held that Canadian courts have increasingly distanced themselves from the presumption that ex­clusion clauses are unreasonable and noted that there are many practical reasons for exclusion clauses to be used by contracting parties. Further, Harrington J. dismissed the argument that Pêcheries had not been made aware of the exclusion clause, since he had signed multiple boat handling contracts in the past and frequently dealt with such documents.

Pêcheries appealed. The Federal Court of Appeal noted that contractual interpretation is a question of mixed fact and law and the trial judge will be given defer­ence unless he made a palpable and overriding error. Pêcheries submitted that Harrington J. committed errors in law, including a failure to consider that the clause does not expressly exclude negligence and to apply the contra proferentem rule against Capitaines. The Court held that, where a party has no civil liability in the absence of negligence, the phrase "any civil liability" in the exclusion clause is synonymous with negligence. Therefore, there was no ambiguity that necessitated the application of the contra proferentem rule. Further, the Court upheld Harrington J.'s findings that Pêcheries was bound by the exclusion clause and that the exclusion clause was neither abusive nor dra­conian. Accordingly, the appeal was dismissed.

G. Snow Valley Marine Services Ltd. v Seaspan Commodore (Tug), 2015 FC 304

Causation can often be a contentious issue, particu­larly where multiple parties are involved in an incident causing loss. This decision stemmed from the sinking of an assist tug, the Warnoc, while it was providing assistance to the defendant vessel, the "Seaspan Sur­vivor." The plaintiff Snow Valley Marine Services Ltd. ("Snow Valley"), was retained to assist in delivering logs to the Seaspan Survivor, which was owned by the defendant, Seaspan Marine Corporation ("Seaspan"). However, when the crew of the Seaspan Survivor re­trieved the stern anchor after loading, the anchor was fouled. At the time, there were two experienced opera­tors on the Warnoc and they assisted with the efforts to untangle the chain from the anchor. The mate of the Seaspan Survivor attended on board the Warnoc and

attached a line from the Warnoc to either the anchor or the anchor chain. Unfortunately, when the anchor came free, it fell rapidly and the weight of the anchor and chain sunk the Warnoc.

Snow Valley alleged that Seaspan's employees had been negligent in failing to properly secure a safety line to the anchor and that this was the sole cause of the accident. In response, Seaspan argued that the acci­dent was due to the failure of the Warnoc's crew to take reasonable steps to ensure the safety of the vessel, including their failure to use a release mechanism for the tow line. Seaspan further argued that the Warnoc's crew did not have the requisite qualifications under the Marine Personnel Regulations, SOR/2007-115.

Justice Manson accepted Seaspan's argument that the crew members were not technically qualified to operate, control, and ensure the safety of the Warnoc, but found that this was not fatal to the claim. He did, however, note that the crew's years of experience and the particular series of events in this case would be relevant to the question of whether their lack of techni­cal qualifications contributed to the sinking.

While Manson J. did acknowledge that the crew of the Warnoc was responsible for ensuring that the tow line connection was safe, he held that the failure of a safety chain between the Seaspan Survivor and the anchor and chain, not the tow line connection, caused the sinking. This meant that Seaspan was solely re­sponsible.

Manson J. awarded damages to Snow Valley based on the value of the Warnoc to Snow Valley as a go­ing concern at the time and place of loss. The value of the lost tug was to be assessed by considering: (1) the market price of a comparable replacement tug, (2) the cost of refitting a tug to do her work, and (3) the compensation required to put Snow Valley in the same position it would have been in if the loss had not occurred (subject to the rules of law on remote­ness of damages).

H. St. Paul Fire & Marine Insurance Company c Valley, 2015 QCCQ 1891

In Canadian maritime law, some provincial superior courts and the Federal Court have concurrent jurisdic­tion. This case is an example of how the courts may tackle the question of which court has jurisdiction over a particular dispute.

The owner of a yacht (the "insured") had engaged the services of the defendant to transport the yacht from Québec City, Québec to Willsboro Bay Ma­rina, New York, by sailing the yacht to its destination. However, the yacht was grounded during the voyage and sustained damage. The plaintiff, St. Paul Fire & Marine Insurance Company (the "insurer"), had fully indemnified the insured and commenced subrogation proceedings against the defendant.

In the present application, the defendant asked the Court to dismiss the insurer's action on the basis that the Québec court lacked jurisdiction, as maritime law governs this type of dispute and excludes the applica­tion of the Code civil du Québec, RLRQ c C-1991 (the "QC Civil Code"). The Court disagreed, holding that neither section 22 of the Federal Courts Act nor the jurisprudence restricts jurisdiction over maritime law to the Federal Court, so the Québec superior courts have jurisdiction in admiralty. The Court went on to decide that the contract in question was not a contract of carriage within the meaning of Article 2030 of the QC Civil Code, but a service contract.

Therefore, the Court dismissed the defendant's argu­ment that the claim ought to be dismissed because no notice of claim was provided within 60 days of delivery (as required by Article 2050 of the Code civil du Qué­bec), because this requirement only applies for actions against carriers. The Court noted in obiter that the notice is not required where, as in the present case, the carrier is the one who notifies the property owner about the damage.

I. LF Centennial Pte. Ltd. v TRLU7228664 et al (Containers), 2015 FC 214

The plaintiff, LF Centennial PTE Ltd. ("Centennial"), was a Singaporean company that had acted as the buying agent for Mexx Canada Company ("Mexx"). On December 3, 2014, Mexx filed a Notice of Intention to Make a Proposal ("NOI") with the Official Receiver and commenced insolvency proceedings before the Québec Superior Court (the "QCSC"). In so doing, a stay of proceedings pursuant to the Bankruptcy and Insolvency Act, RSC 1985, c B-3 was put in place. On December 23, 2014, Centennial commenced an in rem action in the Federal Court and arrested shipments of garments that had been purchased by Mexx on the basis of its interest in the cargo as an unpaid seller. Centennial did not seek leave from the QCSC before instituting the Federal Court proceedings.

The parties reached an agreement on bail for the ar­rested cargo that allowed Mexx to ship the garments to its stores and sell them, as long as it deposited the proceeds into an escrow account, less certain amounts, up to a maximum of $1,100,000.

However, Mexx and its receiver brought an application to quash the arrest and to strike the claim on the fol­lowing bases: (1) the existence of the insolvency pro­ceedings before the QCSC, (2) the Federal Court lacked jurisdiction, and (3) the claim was an abuse of process.

At first instance, Prothonotary Morneau determined that Centennial knew at the time it commenced the Federal Court proceedings that Mexx was the owner of the garments and held that Centennial had no right to bring this proceeding without first obtaining the per­mission of the QCSC, which it had not done.

The leading decision on in rem claims in the face of bankruptcy proceedings is the Supreme Court of Canada's decision in Holt Cargo Systems Inc. v ABC Containerline NV (Trustees of), 2001 SCC 90 ("Holt"). In Holt, Holt Cargo Systems Inc. started an in rem action against a Belgian vessel and its owners in the Federal Court, claiming a maritime lien for stevedoring ser­vices in the United States. The vessel was arrested, but its owner was subsequently adjudged bankrupt by a Belgian court and the trustees in bankruptcy obtained an order from the Québec Superior Court recognizing the Belgian court order. The trustees' application for an adjournment of the in rem proceedings was denied and judgment was awarded to Holt against the ship. The Federal Court ordered the judicial sale of the ves­sel and declined to give effect to various stay orders from the bankruptcy court or to stay its proceedings. The Federal Court of Appeal and Supreme Court of Canada upheld the trial decision.

Morneau P. distinguished Holt on the following bases: (1) the vessel in Holt had already been arrested and sold before the bankruptcy court intervened, and (2) in the present case, Centennial's right as a secured cred­itor had not yet crystallized at the time of the arrests. Morneau P. also found that Centennial and its counsel knew or ought to have known of the NOI and failed to disclose the existence of the restructuring proceed­ings pending before the Québec Superior Court when it applied for the arrest of the garments. Accordingly, Morneau P. ordered Centennial to respect the QCSC's orders with respect to the insolvency, ordered a stay of the Federal Court action, discharged the arrest, and dissolved the escrow agreement.

Centennial appealed Morneau P.'s decision, arguing that he had erred in ordering the discharge of the arrest and the dissolution of the escrow agreement without applying the test for a motion to strike. Justice de Montigny, as he then was, wholly dismissed this argument since the motion seeking a stay of proceed­ings was distinct and alternative to the demand that Centennial's action be struck.

de Montigny J. held that section 188(2) of the Bank­ruptcy and Insolvency Act is prescriptive and manda­tory and requires "all courts and officers of all courts to act in aid of the [bankruptcy court]." Therefore, Mor­neau P. had no discretion and was obligated to ensure that the stay of proceedings was respected. Further, the proceedings before the Federal Court were inef­fective because Centennial had failed to obtain leave before commencing them and had not even disclosed the existence of the restructuring proceedings to the Federal Court. Centennial also argued that section 69 of the Bankruptcy and Insolvency Act did not apply to in rem proceedings, so the Federal Court maintained its admiralty jurisdiction and could hear the action. De Montigny J. held that Holt was distinguishable from the present case given that: (1) there were significant differences between Holt and this case with regard to the timing of the bankruptcy/insolvency proceedings, (2) the Court in Holt had not discussed sections 69 and 188(2) of the Bankruptcy and Insolvency Act, and (3) Holt dealt with bankruptcy proceedings (where the objective is to facilitate distribution of a debtor's property to its creditors), while this case involved in­solvency proceedings (where the objective is to allow the debtor to restructure and refinance).

In obiter, de Montigny J. went on to consider whether the Federal Court had jurisdiction over the matter. Cen­tennial contended that its cause of action for stoppage in transit of cargo pursuant to multimodal bills of lad­ing fell under subsection 22(2)(i) of the Federal Courts Act. de Montigny J. dismissed this argument, finding instead that Centennial's claim flowed exclusively from contracts of sale with no maritime component and the mere fact that the garments had been carried on a ship did not establish a sufficient connection between the dispute and maritime transport. On this basis, de Montigny J. concluded that Centennial's claim did not relate to shipping and navigation and did not fall within the Federal Court's admiralty jurisdiction.

Peter G. Pamel and Daniel Grodinsky of BLG's Montréal office represented the plaintiff, LF Centennial Pte. Ltd., in this action.

J. West Kelowna (District) v Newcomb, 2015 BCCA 5

The plaintiff/appellant, the District of West Kelowna (the "District"), had established a bylaw permitting "temporary boat moorage accessory to the use of the immediately abutting upland parcel" in the "Rec­reational Water Use Zone" (the "Bylaw"). The District also held a Licence of Occupation (the "Licence") from the Province of British Columbia over the Crown foreshore of a portion of Okanagan Lake fronting on Gellatly Bay.

The defendant/respondent moored his houseboat in an area covered by the Bylaw until he was issued a notice to relocate pursuant to the Licence. He then moved his houseboat to other parts of Okanagan Lake but remained in the area covered by the Bylaw. The Dis­trict, relying on the Bylaw and its Licence, commenced these proceedings to obtain declaratory relief against Mr. Newcomb and a permanent injunction restraining Mr. Newcomb and all other persons having notice of the order from mooring vessels in the areas covered by the Bylaw and Licence.

The trial judge held that both the Licence and Bylaw were constitutionally valid, since the pith and substance of these measures was to regulate land use, which falls within provincial jurisdiction under subsections 92(13) (property and civil rights) and 92(16) (matters of a local nature) of the Constitution Act, 1867, 30 & 31 Victoria, c 3 (UK). However, the trial judge applied the doctrine of interjurisdictional immunity and concluded that the Licence and Bylaw must be read down so as not to prohibit temporary moorage of vessels that falls within the protected "core" of shipping and navigation. The trial judge found that Mr. Newcomb was in breach of the Licence and Bylaw.

Both parties appealed the trial decision. The BCCA held that the trial judge was correct in holding that the purpose and the pith and substance of the Bylaw were to regulate land use and that the District was entitled to enact the Bylaw. The Court noted that in British Columbia (Attorney General) v Lafarge Canada Inc., 2007 SCC 23, the Supreme Court of Canada af­firmed the double aspect of land use control in federal harbours. Therefore, a finding that temporary moor­age, incidental to active navigational use, is at the protected core of navigation does not mean that the pith and substance may not remain within provincial jurisdiction. The Court held that the trial judge was cor­rect to "address the ambit of moorage rights incidental to navigation as part of the interjurisdictional immunity analysis" and had correctly read down the Bylaw.

K. Allchem Industries Industrial v CMA CGM Florida (Vessel), 2015 FC 558

The plaintiffs were the owners and persons interested in cargo on board the vessel "CMA CGM Florida" (the "Florida"). The Florida was involved in a collision at sea and the plaintiffs commenced a proceeding against the freight forwarders and common carriers that had been used to book the transportation of the various cargoes on the Florida, as well as against the vessel owners. They were seeking to recover losses arising from the alleged damage to the cargo due to the collision and to be indemnified for any general average or salvage contributions that they were compelled to make.

In the present motion, one of the defendants, Top­ocean Consolidation Service Inc. ("Topocean"), had moved to contest service of the Statement of Claim. The plaintiffs had directed a process server to serve Topocean with the Statement of Claim at the prem­ises of Manitoulin Global Forwarding ("Manitoulin"), a freight forwarding company. While Topocean admitted that it used Manitoulin as an "agent" for some of its Canadian shipments, it contested service on the basis that the Statement of Claim had not been served at its place of business and Manitoulin was not a "branch or agency" of Topocean, nor had it been used in connec­tion with the transportation of the cargo in issue.

Prothonotary Tabib held that Manitoulin carried on some integral part of Topocean's business in Canada and the fact that it was not acting in this capacity for the shipment in question did not detract from this con­nection. Further, Tabib P. found it relevant that Mani­toulin had considered it its duty as an agent to forward the Statement of Claim to Topocean and that Topocean had publicly promoted itself on its website as a group of "owned and agent offices" that carried on business as "a network" worldwide, including at a specific ad­dress in Canada through the agency of Manitoulin. Giv­en a lack of evidence to the contrary, Tabib P. concluded that Manitoulin was Topocean's agent in Canada and, therefore, service was validly effected.

BLG represents a defendant in this action, China Shipping Container Lines (Hong Kong) Co. Ltd., but made no appearance in this motion because it only related to the defendant Topocean.

L. C.H. Robinson Worldwide v Northbridge Insurance, 2015 ONSC 232

This case involved a claim made by a judgment credi­tor against a carrier's insurer following the loss of a shipment. The applicant, C.H. Robinson Worldwide Inc. ("Robinson"), had contracted with a motor carrier, KLM, to transport a shipment of food products. Pursu­ant to the contract between the parties, KLM was to be liable for the value of any shipments tendered to it and had to maintain insurance coverage. To this end, KLM applied for and obtained coverage (the "Policy") from the respondent, Northbridge Insurance ("Northbridge") and provided proof of coverage to Robinson. Unfortu­nately, KLM's truck was involved in an accident while carrying the shipment and the goods were destroyed.

KLM failed to pay Robinson for the loss, so Robinson obtained judgment against KLM in the Ontario Supe­rior Court of Justice. Robinson then sought payment of the judgment from Northbridge pursuant to subsection 132(1) of the Insurance Act, RSO 1990, c I.8, which provides that where an insured person is liable for injury or damage to a person or property of another and has failed to satisfy a judgment awarding dam­ages against them, a person entitled to damages may recover by an action against an insurer for the amount of the judgment up to the face value of the policy. This right of the claimant is "subject to the same equities as the insurer would have if the judgment had been satisfied."

Northbridge refused to pay Robinson, arguing that the Policy was void for misrepresentation and, in the alter­native, that its liability to Robinson was limited to the maximum amount allowed under the Policy.

Brown C.J. noted that, as an applicant for insurance, KLM had a common law obligation to fully and accu­rately disclose all matters within its knowledge that were relevant to the nature and extent of the risk to be assumed by Northbridge. As it turned out, the insur­ance application had included a question regarding whether there were any contracts with shippers that stipulated limits of liability that superseded KLM's standard bill of lading. KLM had answered this question in the negative and did not give Northbridge a copy of its contract with Robinson. Under the Ontario Highway Traffic Act, RSO 1990, c H.8, any contract of carriage by a motor carrier is deemed to include the Uniform Conditions of Carriage that limit the carrier's liability to $4.41 per kilogram. Brown C.J held that KLM's con­tract with Robinson expanded its liability beyond this statutory limitation and, since this fact was directly relevant to the issue of insurability, KLM was obligated to disclose it. The Court found that the contract terms were material based on affidavit evidence stating that, if disclosed, this information would have affected the amount of the premium charged to KLM.

On the basis of the foregoing, Brown C.J. concluded that the Policy was void and Robinson's claims against Northbridge were dismissed.

M. ATL Trucking Ltd. v Vancouver Fraser Port Authority, 2015 FC 420 ("ATL") and Goodrich Transport Ltd. v Vancouver Fraser Port Authority, 2015 FC 520 ("Goodrich")

Goodrich, and the interlocutory decision in ATL, arose from a decision by the Vancouver Fraser Port Authority, also known as Port Metro Vancouver ("PMV"). PMV is a Canadian port authority established and governed by the provisions of the Canada Marine Act, SC 1998, c 10 and Letters Patent dated December 6, 2007. PMV operates and manages various port facilities in and around Vancouver, British Columbia, and is Canada's largest port. PMV had experienced a long history of labour disputes connected to the drayage sector and work stoppages in 1999, 2005, and 2014 were brought on by poor remuneration, increased operating costs, undercutting of wages, and operational inefficiencies. The work stoppages caused significant delays in con­tainer movement and significant economic losses.

The applicants were 28 businesses engaged in dray­age, specifically the transportation of shipping con­tainers by truck in and around the Lower Mainland of British Columbia. A great deal of their business involved moving shipping containers to and from certain con­tainer terminals managed by PMV. This commercial relationship was not without problems and a work stoppage by the truck drivers occurred in 2014. The Minister of Transport commenced an independent review that concluded, among other things, that there was an oversupply of trucks authorized to access the port under PMV's Truck Licensing System ("TLS"). Fol­lowing this review, PMV publicly announced its inten­tion to reform the TLS, including its intention to reduce the number of licenced trucks. Under this new scheme, PMV gave notice that all existing authorizations to en­ter the port were terminated and interim authorizations would expire on January 31, 2015. This had the effect of denying access to PMV facilities to any truckers who were unsuccessful in the new TLS process.

In early December 2014, PMV published a handbook providing instructions on how to submit an applica­tion under the new TLS, outlining the mandatory and discretionary criteria that would be used to assess the applications, and indicating that the anticipated num­ber of applications would likely exceed the number of available licenses. The application process was to run from December 10, 2014 to January 16, 2015, and the applications were processed in batches. During this period, PMV issued several notices indicating that a certain number of applications had been ap­proved and that the applications would continue to be processed until the end of January 2015 or when the target number of truck tags had been reached. Unbe­knownst to the applicants, PMV was operating on a "rolling approvals" basis and a more onerous scoring benchmark was being used for the assessment of the later batches of applications.

The application process was concluded and the ap­plicants each received a form letter from PMV denying their applications. This was the decision for which the applicants sought judicial review in the Federal Court.

In the Goodrich applications for judicial review, the ap­plicants argued that the impugned decision was made without lawful authority because PMV fettered its discretion by adopting an inflexible evaluation model and that PMV's process was procedurally unfair. PMV accepted that duty of fairness applied, but argued that the content of the duty fell on the lower range of participation given the largely contractual nature of the parties' relationship (citing Mavi v Canada, 2011 SCC 30).

Meanwhile, PMV brought a motion arguing that the Federal Court lacked jurisdiction to hear the Goodrich judicial review applications because it was not acting as a "federal board, commission or tribunal" within the meaning of the Federal Courts Act and its decision was of a private and commercial nature. In the alterna­tive, PMV submitted that if the Court did in fact have jurisdiction, the applications ought to be dismissed because the applicants had failed to commence the applications within the 30-day time period provided in the Federal Courts Act and had not sought an exten­sion of the time.

PMV's motion was considered by Justice Zinn in the interlocutory ATL decision. He concluded that PMV's decisions regarding the applicants' licences, in effect, denied the applicants access to PMV facilities in order to carry on their commercial activities. He held that this activity was one of the main functions of the port and that, in making this decision, PMV was exercising its statutory authority pursuant to paragraph 28(2)(a) of the Canada Marine Act, SC 1998, c 10 to engage in port activities related to shipping, transportation of goods, handling of goods, and storage of goods. Zinn J. confirmed that there was a reviewable decision within the meaning of the Federal Courts Act, given that the applications had been assessed and PMV had reached a decision to deny the applicants' applications. There­fore, the case proceeded to a judicial review hearing before Justice Barnes (Goodrich).

In Goodrich, Barnes J. held that PMV had a duty of fairness to the applicants in relation to the evaluation of the licence applications. While there was no legis­lative limitation over PMV's procedure in considering the applications, Barnes J. noted that the decisions were of considerable economic importance to the applicants, PMV had promised a "consistent, fair and transparent process" and the applicants had no right to a reconsideration or appeal. In such circumstances, the applicants were entitled to a fair, impartial and open process that afforded them meaningful rights of participation. Citing Fisher v Canada, 2012 FC 720, Barnes J. held that effective notice is fundamental to procedural fairness and that, despite PMV's initial dis­closure regarding the criteria, "fairness demanded the disclosure of the more onerous scoring system that applied to later applications." He concluded that PMV's decision to reach the benchmark was likely done on an ad hoc basis with little, if any, regard for fairness and that this process had unfair results.

Barnes J. went on to consider whether PMV had fet­tered its discretion. He concluded that, "in the absence of statutory confinement, a decision-maker does not act unreasonably or fetter its discretion by develop­ing and applying firm rules to the evaluation of license applications" as long as it acts fairly and the rules it adopts are relevant to the exercise of its proper dis­cretion. On this basis, he concluded that, while PMV's assessment scheme lacked nuance, it was not unrea­sonable or unlawful for PMV to adopt the criteria set out in the handbook or to assign scores solely on the basis of binary choices.

The decisions made by PMV in denying licences to the applicants were set aside. Further, PMV was ordered to reconsider the applications "on the merits and in ac­cordance with the most favourable approval benchmark applied to any of the successful licensing applications" and to issue licences to "any qualified Applicant whose application meets that benchmark for approval."

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