Oy Nokia Ab (Plaintiff)
v.
The ship Martha Russ and E. Russ & Co., Schif-
fahrt-U. Assekuranz-Gesellschaft and the ship
Korendyk and Nederlandsche-Ameri-Kaansche
Stoomvaart Maatschappij, N.V. (Defendants)
Trial Division, Collier J.—Vancouver, Decem-
ber 19, 1972; Ottawa, April 17, 1973.
Maritime law—Jurisdiction—"Canadian maritime law",
meaning—Cargo carried on foreign ship between foreign
ports—Subsequent shipment by different ship to Canada—
Cargo damaged on arrival—No jurisdiction over ship
engaged in first voyage—Federal Court Act, s. 2; Admiralty
Rules (English), 20(d).
Cargo destined for plaintiff at Vancouver was carried
aboard the German ship Martha Russ from Finland to
Hamburg under a bill of lading for that voyage. At Ham-
burg, the cargo was barged to another ship and carried under
a separate bill of lading to Vancouver where it was found
damaged when unloaded. Plaintiff brought action for dam
ages against the two ships and their owners and service of
the statements of claim was made ex juris pursuant to
Federal Court Rule 307.
Held, setting aside the service of the statement of claim
on the German ship and her owners, the Federal Court was
without jurisdiction to entertain the claim against that ship
and her owners.
The Court obtained jurisdiction with respect to such a
claim under section 22(2)(h), 22(3)(a) or 22(3)(c) of the
Federal Court Act, only if it had jurisdiction over the
defendants, which it did not.
The definition of "Canadian maritime law" in section 2 of
the Federal Court Act means the substantive Admiralty law
of England and not the adjectival law. Hence, the English
Admiralty Rules (cf. Rule 20(d)) could not be used to extend
the jurisdiction of the Federal Court Act under section 22.
MOTION.
COUNSEL:
D. McEwen for plaintiff.
J. W. Walsh for E. Russ & Co. and the
Martha Russ.
V. R. Hill, Q.C., for the Korendyk.
SOLICITORS:
Ray, Wolfe, Connell, Lightbody and Rey-
nolds, Vancouver, for plaintiff.
Bull, Housser and Tupper, Vancouver, for
the Martha Russ and E. Russ & Co., Schif-
fahrt-U. Assekuranz-Gesellschaft.
Macrae, Montgomery, Hill and Cunning-
ham, Vancouver, for the Korendyk and
Nederlandsche-Ameri-Kaansche Stoomvaart
Maatschappij, N.V.
COLLIER J.—The defendants, the ship Martha
Russ and E. Russ & Co., Schiffahrt-U. Asseku-
ranz-Gesellschaft by this motion seek to set
aside the service of the statement of claim on
them. An order authorizing service out of the
jurisdiction on these defendants had been made
by this Court on April 24, 1972. Service was
effected in Germany. A conditional appearance
has been entered on their behalf.
The plaintiff and these defendants have, for
the purposes of this motion, agreed to the fol
lowing facts:
1. The Plaintiff is a Finnish corporation which sells
Hydro-electric equipment in Canada.
2. The Defendant E. Russ & Co. is a German corporation
which does not carry on business in Canada.
3. The Defendant, the ship "MARTHA RUSS" is a motor
vessel of German registry of 4,149 tons deadweight,
owned by the Defendant E. Russ & Co.
4. The Plaintiff Oy Nokia Ab sold 469 packages of Serial
Capacitator to B. C. Hydro to be delivered to Vancouver,
British Columbia for installation in British Columbia.
5. The said vessel "MARTHA RUSS" loaded 469 packages
of Serial Capacitator station at Mantyluoto, Finland, and
issued a Bill of Lading for carriage of this cargo from
Mantyluoto, Finland, to Hamburg, Germany. This Bill of
Lading is not a through Bill of Lading, but was a Bill of
Lading for carriage from Mantyluoto to Hamburg.
6. That upon arrival of the "MARTHA RUSS" at Hamburg
on 1 March, 1971, the Defendant E. Russ & Co. notified
Kühne & Nagel, the Agents of the Plaintiff, of the arrival
of the cargo.
7. At the direction of Kühne & Nagel, the cargo was
unloaded from the "MARTHA RUSS" at Hamburg into
barges, owned by Hamburg Sudamerikanische and operat
ed by Hanseatische Hafenbetriebs.
8. These barges were ordered and paid for by Kühne &
Nagel.
9. After the goods had been discharged from the "MAR-
THA RUSS" onto the barges, the barges were towed away
to the vessel "KORENDYK" owned by the Defendant
Nederlandsche-Amerikaansche Stoomvaart Maatschappij,
N.V.
10. That the goods later left the Port of Hamburg onboard
the Defendant vessel "KORENDYK" bound for Vancouver
and covered by the Bill of Lading, Hamburg to Vancouver
issued by or on behalf of the owners of the ship
"KORENDYK".
11. The said 469 packages were not opened, nor were the
contents examined for damage until after discharge from
the ship "KORENDYK" at Vancouver, British Columbia.
12. That after being directed by Kiihne & Nagel to unload
the said cargo from the "MARTHA RUSS" to the barges
provided by Kühne & Nagel, and so unloading the cargo,
the Defendant E. Russ & Co. Schiffahrt-U., Assekuranz-
gesellschaft did not participate further in the carriage or
handling of the cargo.
13. Attached hereto is a copy of Bill of Lading No. 19
covering carriage of the goods onboard the "MARTHA
RUSS" from Mantyluoto to Hamburg. Also attached is a
copy of a Bill of Lading No. 3 covering carriage of the
goods from Hamburg to Vancouver, onboard the ship
"KORENDYK".
I add one more fact. The Martha Russ has not
been arrested in this action.
In the statement of claim, the gist of the cause
of action against all defendants is set out in
paragraph 8:
8. In breach of contract contained in the said Bill of
Lading and/or negligently and/or in breach of its duty in
the premises as a carrier for reward, the Defendants, their
servants or agents, did not deliver the said "469 packages
Serial Capacitator Station" in good order and condition
but delivered them Beverly [sic] damaged, dented and
loose.
Counsel for these defendants contends the
cause of action against them is based on a
contract of carriage made and performed else
where than in Canada; if any breach by these
particular defendants occurred, it was commit
ted elsewhere than in Canada; if there was any
fault or negligence on their part, that fault or
negligence did not take place in Canada. Coun
sel submits that on the facts agreed to here, the
action has been brought in personam against
these defendants, and jurisdiction in this Court
can only arise if the bill of lading (contract) was
entered into in Canada, or if the delivery of the
goods was to be made by the defendants in this
country. Similarly, he argues that if the action is
based on negligence, then the breach of duty
must have occurred here in order to found juris
diction. The fact that the damaged goods even
tually found their way into Canada, it is said,
does not create a basis for jurisdiction in perso-
nam, or to put it another way, that fact does not
provide the nexus which gives jurisdiction. Reli
ance is placed, also, on an earlier decision of
mine Anglophoto Ltd. v. The "Ferncliff' [1972]
F.C. 1337, where service of a statement of
claim on a warehouseman in the United States,
in whose possession certain goods were alleged
to have been for a short period, was set aside.
Counsel for the plaintiff submits this Court
has jurisdiction by virtue of paragraph 22(2)(h)
of the Federal Court Act. I shall set out portions
of section 22, including the paragraph relied on:
22. (1) The Trial Division has concurrent original jurisdic
tion as well between subject and subject as otherwise, in all
cases in which a claim for relief is made or a remedy is
sought under or by virtue of Canadian maritime law or any
other law of Canada relating to any matter coming within
the class of subject of navigation and shipping, except to the
extent that jurisdiction has been otherwise specially
assigned.
(2) Without limiting the generality of subsection (1), it is
hereby declared for greater certainty that the Trial Division
has jurisdiction with respect to any claim or question arising
out of one or more of the following:
(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;
(3) For greater certainty it is hereby declared that the
jurisdiction conferred on the Court by this section is
applicable
(a) in relation to all ships whether Canadian or not and
wherever the residence or domicile of the owners may be;
(c) in relation to all claims whether arising on the high
seas or within the limits of the territorial, internal or other
waters of Canada or elsewhere and whether such waters
are naturally navigable or artificially made so, including,
without restricting the generality of the foregoing, in the
case of salvage, claims in respect of cargo or wreck found
on the shore of such waters; and
He argues this is a claim for damage to goods
carried in or on a ship (the Martha Russ), and
the nexus for jurisdiction is that the goods
arrived in British Columbia.
The defendants say that if the plaintiff's con
tention on the facts here is correct, then it
follows this Court has jurisdiction over any
cargo damage claim, regardless of where the bill
of lading was issued or its terms were to be
performed, regardless of where the damage
occurred, regardless of where the defendant
resides, so long as the goods in question ulti
mately arrive in Canada. Their counsel says that
cannot be the law' . I agree.
In my view, on the facts here jurisdiction
cannot be found in section 22 of the Act. As can
be seen, subsection 22(1) provides that the Trial
Division of this Court has jurisdiction in all
cases in which "a claim for relief" is made by
virtue of Canadian maritime law (as defined in
section 2) or any other law of Canada relating to
navigation and shipping. Subsection 22(2) spells
out more precisely the heads of jurisdiction.
The words used are ". jurisdiction with
respect to any claim ..." The subsection does
not in words purport to assert jurisdiction over
persons. The construction of paragraph 22(2)(h)
contended for by the plaintiff, to my mind,
requires reading into the paragraph that the
jurisdiction is not only over the claim but over
the person of someone who may have been an
author of the damage or loss alleged, whether or
not that author was or is within the geographical
jurisdiction of the Court at any time.
There must be, in this case, some other fact
or facts, apart from the ultimate arrival of the
goods here, which allows this Court to assert
jurisdiction over these foreign defendants. At
the conclusion of oral argument, I requested
counsel to advise me if there were any Canadian
or English decisions in which Admiralty Courts
had asserted jurisdiction in a case similar to the
one here. Counsel for the plaintiff submitted a
list which he suggested was illustrative of situa
tions where Admiralty Courts had assumed
jurisdiction over foreigners involving incidents
which occurred on the high seas or in foreign
waters. I do not propose to deal with each case
individually. On examination, while the incident
giving rise to the claim occurred on the high
seas or in foreign waters, the Court in each of
the cases listed took jurisdiction over the
foreigner on long recognized principles, for
example, breach of a charterparty within the
geographical jurisdiction, residence in the juris
diction of the owners of a vessel, the coming
into the geographical jurisdiction of a vessel and
her arrest there. The examples I have given are
not exhaustive, but illustrate what I take to be a
basic principle in asserting jurisdiction over
foreigners: that there must be some legal nexus
between the foreign defendants and the ter
ritorial jurisdiction of the Court. This nexus
must arise from some act, conduct, or agree
ment by the foreign defendant which is or can
be related in personam to the territorial jurisdic
tion of the Court.
Rule 307(1) of the Rules of this Court pro
vides that service of notice of a statement of
claim may be made on a defendant who is out of
the jurisdiction, and by that I think is meant the
geographical jurisdiction. Rule 307 has no
provisions, as do the rules of many of the
superior courts of the provinces and as do the
Rules of the Supreme Court in England', setting
out the cases in which leave to serve process
out of the jurisdiction may be granted. General
ly speaking, the cases in which service out of
the jurisdiction of a writ in personam issued in
the Admiralty Court in England may be allowed,
are governed by the provisions of Order 11, r.
1 3 . Paragraph (g) of the rule allows service ex
juris where there has been- breach of a contract
in the jurisdiction regardless of where the con
tract was made. Paragraph (h) similarly allows
service ex juris where the action is founded on a
tort committed within the jurisdiction.
I now propose briefly to review the rules
respecting service out of the jurisdiction in
effect in the former Exchequer Court, including
its Admiralty side. Section 18 of the Admiralty
Act, R.S.C. 1970, c. A-1, defined the jurisdic
tion of the Court. Subsection (3) provided, in
part, that the Court had jurisdiction to hear any
claim relating to the carriage of goods in a ship,
or in tort in respect of goods carried in a ship.
Section 20 of the Act set out the registries in
which actions could be brought. I shall quote
only paragraphs (1)(a), (e) and (f):
20. (1) An action may be instituted in any registry when,
(a) the ship or property, the subject of the action, is at the
time of the institution of the action within the district or
division of such registry;
(e) the action is in personam and is founded on any
breach or alleged breach within the district or division of
such registry, of any contract, wherever made, that is one
within the jurisdiction of the Court and, according to the
terms thereof, ought to be performed within such district
or division; or
(f) the action is in personam and is in tort in respect of
goods carried on a ship into a port within the district or
division of such registry.
I think it significant the jurisdiction under the
Admiralty Act was restricted even as to the
particular Admiralty district where the action
could be brought.
Paragraph 31(1)(a) of the Act conferred
power on the judges of the Exchequer Court to
make rules and orders regulating practice and
procedure including, inter alia, "... the service
of a writ of summons or other process out of
the jurisdiction of the Court or out of the ter
ritorial jurisdiction of any district judge ..."
Subsection 18(7) provided that where there was
no special provision in the Admiralty Act or the
Admiralty Rules, then the practice and proce
dure of the Exchequer Court might be appli
cable. Rule 20 of the Admiralty Rules dealt with
service out of the jurisdiction, and I set it out in
full:
20. Service out of the jurisdiction of a writ of summons
or notice of a writ of summons or a third party notice, may
be allowed by the court whenever:—
(a) Any relief is sought against any person domiciled or
ordinarily resident within the district or division in which
the action is instituted;
(b) The action is founded on any breach or alleged breach
within the district or division in which the action is
instituted of any contract wherever made, which accord
ing to the terms thereof ought to be performed within
such district or division;
(c) Any injunction is sought as to anything to be done
within the district or division in which the action is
instituted;
(d) Any person out of the jurisdiction is a necessary or
proper party to an action properly brought against some
other person duly served within the district or division in
which the action is instituted;
(e) The action is in tort in respect of goods carried on a
ship into a port within the district or division of the
registry in which the action is instituted.
As can be seen, the circumstances covered in
paragraphs (a) to (e) are, for practical purposes,
presently included in Order 11 of the English
rules; the wording may be different.
Section 75 of the Exchequer Court Act pro
vided for service out of the jurisdiction, as did
Rule 76. The wording of section 75 and Rule 76
are very similar to the wording of Federal Court
Rule 307. Neither the section nor the two rules I
have referred to go on to set out the class of
cases in which service ex juris may be
permitted.
All of the above brings me to the definition
"Canadian maritime law" in section 2 of the
Federal Court Act which reads as follows:
2. In this Act
"Canadian maritime law" means the law that was adminis
tered by the Exchequer Court of Canada on its Admiralty
side by virtue of the Admiralty Act or any other statute, or
that would have been so administered if that Court had had,
on its Admiralty side, unlimited jurisdiction in relation to
maritime and admiralty matters, as that law has been altered
by this or any other Act of the Parliament of Canada; . . .
In my opinion, the law administered by the
Exchequer Court on its Admiralty side means
the substantive law found in the Admiralty Act
and other statutes, including English statutes,
whereby jurisdiction over various types of
claims was set out. The Admiralty Rules were
not, in my view, substantive law administered
by the Exchequer Court, but adjective law, a
code of procedure to regulate the mode in which
successive steps in Admiralty litigation were
taken, and therefore do not fall within the mean
ing of Canadian maritime law. If I am correct in
this view, it follows that no assistance can be
gained from the definition "Canadian maritime
law" in section 2 to arrive at the extended
meaning which the plaintiff seeks to give to
paragraph 22(2)(h) of the Federal Court Act.
Even if Canadian maritime law could be held to
include the provisions of Admiralty Rule 20, the
facts presently before the Court do not fall
within any of the paragraphs, except perhaps
(d). I would be extremely doubtful this would be
a proper case in which to apply (cl).
Nor do I think the plaintiff can glean any
assistance from paragraph 22(3)(a) or (c).
Again, as I see it, there was no intention in
those paragraphs to assert jurisdiction over
foreigners generally. In my view, Parliament
intended by section 22 to include the jurisdic
tion over matters formerly found in several stat
utes and to clarify as much as possible what
those matters were. I think it fair to say that the
former statutes setting out the matters over
which the Admiralty Court had jurisdiction
were tortured and confusing. I do not believe
Parliament intended, by section 22, to confer a
jurisdiction over foreigners which did not exist
before. Historically, English courts only took
jurisdiction in cases where the defendant was
served with process within the jurisdiction. That
principle applied even if the defendant served
was a transient foreigner. In Admiralty, actions
in rem could be entertained only if the ship was
within the territorial waters of England. By the
Common Law Procedure Act of 1852, the
courts were given a discretionary power in cer
tain specified cases to summon absent defend
ants, whether English or foreign. That discre
tionary power is now contained in Order 11 of
the English rules 4 . As I understand it, the
Canadian common law courts and the Exche
quer Court on its Admiralty side, generally
speaking, adopted the English approach to
jurisdiction.
It is a long established principle that non-resi
dents should not lightly be impleaded in the
courts. I cite the following passage from the
judgment of Diplock L.J. in Mackender v. Feldia
A. G. [1967] 2 Q.B. 590 at 599:
The contract which is the subject-matter of these proceed
ings was undoubtedly made in England. The slip was ini
tialled in London and the policy signed on behalf of under
writers by the manager of Lloyd's policy signing office
there. The English High Court accordingly had power to
give leave to serve the writ upon the defendants outside the
jurisdiction, and unless service is set aside and the action
stayed, it will have jurisdiction to hear and to determine it.
But leave to serve a writ outside the jurisdiction is always
discretionary. The jurisdiction which the High Court claims
over defendants who are neither present nor ordinarily
resident in this country, when it grants leave under R.S.C.,
Ord. 11, is wider than any corresponding jurisdiction which
it recognises as possessed by a foreign court over defend
ants who are not present or ordinarily resident in the foreign
state. And because it is a claim which conflicts with the
general principles of comity between civilised nations, it is
one which should be exercised with caution. I cannot do
better than echo the words of Scott L.J. in George Monro
Ltd. v. American Cyanamid & Chemical Corporation [1944]
K.B.432,437:
Service out of - the jurisdiction at the instance of our
courts is necessarily prima facie an interference with the
exclusive jurisdiction of the sovereignty of the foreign
country where service is to be effected. I have known
many continental lawyers of different nations in the past
criticise very strongly our law about service out of the
jurisdiction. As a matter of international comity it seems
to me important to make sure that no such service shall be
allowed unless it is clearly within both the letter and the
spirit of R.S.C., Ord. 11.
For the reasons I have given, service of the
statement of claim on these defendants is set
aside, and the action as against them is stayed.
They are entitled to their costs of entering the
conditional appearance and of this motion.
2 See for example Order 11, rule 1 of the B.C. Supreme
Court Rules and the identically numbered rule of the Rules
of the Supreme Court in England.
3 See British Shipping Laws, vol. 1 (Admiralty Practice)
1964, paras. 480 et seq.
4 I have extracted portions of this history from Cheshire's
Private International Law (8th ed.) pp. 78-95.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.