T-1634-86
Watt & Scott Inc. (Plaintiff)
v.
Chantry Shipping S.A., the Ship Antje Schulte, its
manager, Atlantic Marine Limited, and any other
persons interested in said Ship, Burlington North
ern Railroad Company, Atlantic and Gulf Steve
dores of Alabama and Container Services Interna
tional Inc. (Defendants)
INDEXED AS: WATT & SCOTT INC. V. CHANTRY SHIPPING S.A.
Trial Division, Joyal J.—Montréal, January 26;
Ottawa, June 4, 1987.
Federal Court jurisdiction — Trial Division — Cargo car
ried from Brazil to U.S.A. by sea, and from there to Canada
by rail — Goods found damaged at destination — Jurisdiction
of Court to entertain negligence claim against railway — S. 23
Federal Court Act granting statutory jurisdiction over works
extending beyond limits of province — Railway Act body of
federal law nourishing statutory grant of jurisdiction —
Jurisdiction not "otherwise specially assigned" to Canadian
Transport Commission — Premature to determine whether
Court having jurisdiction under Federal Court Act, s. 22(2)(f)
as to claim against shipowners.
Railways — Cargo transported by rail from U.S.A. to
Canada, after carriage by sea from Brazil — Goods damaged
— Jurisdiction of Court to entertain negligence claim against
railway — Jurisdiction over international carriage of goods by
rail meeting tests in ITO—International case — S. 262(1)(c)
Railway Act imposing duty of care upon railway — Duty not
subject to Canadian Transport Commission's jurisdiction
Statutory right of action to aggrieved person under s. 262(7).
Maritime law — Carriage of goods — Cargo carried by sea
and rail — Found damaged at destination — Shipowners sued
— Federal Court Act, s. 22 conferring jurisdiction over claim
relating to carriage of goods on ship under through bill of
lading — Whether words "in transit to" final destination
indicative of through bill of lading matter of evidence to be
determined at trial.
Practice — Service — Shipowners sued because of damage
to cargo — Arguable case made out — Inquiry justified —
Forum conveniens issue met — Order for service ex juris
confirmed.
A cargo of nuts was shipped from Brazil on board the
defendant ship to the United States where it was off-loaded,
and from there transported by rail to Winnipeg, Manitoba by
the defendant railway company. Upon reaching Winnipeg, it
was found that the cargo had become infected with aflatoxin, a
carcinogen. The cargo had been certified as being aflatoxin-free
when it left Brazil. The plaintiff brought an action in damages
against, inter alia, the owners of the ship, the stevedoring
company which unloaded the cargo in the United States and
the railway company which carried it to Winnipeg. The railway
company applies for leave to file a conditional appearance to
object to this Court's jurisdiction. It contends that the Court
lacks jurisdiction ratione materiae and ratione personae over it.
The shipowners seek rescission of the order for service ex juris
on the grounds that there is no arguable case against them, that
the alleged tort had been committed outside the Court's juris
diction and that the plaintiff has failed to show forum
conveniens.
Held, the Court has jurisdiction to entertain the plaintiffs
claim against the railway company. The order for service ex
juris should be confirmed.
Section 23 of the Federal Court Act bestows concurrent
original jurisdiction on the Trial Division in all cases where a
remedy is sought under an Act of the Parliament of Canada in
relation to such matters as "works and undertakings ...
extending beyond the limits of a province ... except to the
extent that jurisdiction has been otherwise specially assigned".
Paragraph 92(10)(a) of the Constitution Act, 1867 specifically
confers federal jurisdiction over railways extending beyond the
limits of a province. The carriage of goods by interprovincial or
international rail is governed by the Railway Act and regulated
by the Canadian Transport Commission. The jurisdiction of the
Federal Court over the international carriage of goods by rail
therefore meets the tests set out by the Supreme Court of
Canada in the ITO—International case: (1) jurisdiction is
conferred by statute, namely section 23 of the Federal Court
Act; (2) there exists a body of federal law, the Railway Act,
which nourishes the statutory grant of jurisdiction; (3) the Act
which underlies the case falls within the scope of the term "law
of Canada" found in section 101 of the Constitution Act, 1867.
Of specific interest in meeting the last two tests is section 262
of the Railway Act. The plaintiffs claim is substantially that
the railway failed to exercise due care and diligence. Paragraph
262(1)(c) of the Railway Act imposes on a railway company a
statutory duty of care and diligence in receiving, carrying and
delivering all traffic. Subsection 262(7) grants every person
aggrieved by the refusal of the company to comply with the
requirements of the section a right of action. Although certain
provisions of section 262 require a prior determination by the
Canadian Transport Commission before an action in damages
may be claimed, the duty imposed by paragraph 262(1)(c) is
not the kind of duty subject to the Commission's jurisdiction. It
follows that the concluding words of section 23, which limit the
Court's jurisdiction over works extending beyond the limits of a
province where jurisdiction has been "otherwise specially
assigned", do not apply.
It is premature to determine whether the Court has jurisdic
tion under paragraph 22(2)(/) of the Federal Court Act to
entertain the plaintiffs claim as against the shipowners. Para
graph 22(2)(/) confers on the Trial Division jurisdiction over
matters involving admiralty law, including "any claim relating
to the carriage of goods on a ship under a through bill of
lading". The question whether the words "in transit to Win-
nipeg" appearing on the bill of lading sufficiently show that a
through bill of lading was intended is a matter of evidence
which should be determined at trial.
The Court is not limited to the elements of proof available at
the time the order for service ex juris was made: it may
consider all the available evidence which may have accumulat
ed in the meantime. The plaintiff has made out an arguable
case against the shipowners. The affidavit evidence as to the
condition of the cargo prior to boarding and upon discharge at
Winnipeg justifies the kind of inquiry requested of this Court.
The issue of forum conveniens has been met. In the absence of
any evidence from the defendants the Court could only specu
late as to what would be a proper forum.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.)
[R.S.C. 1970, Appendix II, No. 5] (as am. by Canada
Act 1982, 1982, c. 11 (U.K.), Schedule to the Consti
tution Act, 1982, Item 1), ss. 92(10), 101.
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s.
22 (l),(2)(/).
Railway Act, R.S.C. 1970, c. R-2, s. 262.
Railway Act, R.S.B.C. 1948, c. 285, s. 203(1)(c).
CASES JUDICIALLY CONSIDERED
APPLIED:
Anglophoto Ltd. v. The Ikaros, [ 1974] I F.C. 327
(C.A.); ITO—International Terminal Operators Ltd. v.
Miida Electronics et al., [1986] 1 S.C.R. 752; Price &
Pierce International Inc. and Sohn v. Finland Steamship
Co. Ltd., Ship Antares and Chase International (Hold-
ings) Inc. (1983), 46 N.R. 372 (F.C.A.).
DISTINGUISHED:
Cliffe v. Hull & Netherlands Steam Ship Co. (1921), 6
LI. L. Rep. 136 (C.A.); Kiist v. Canadian Pacific Rail
way Co., [1982] 1 F.C. 361; (1981), 37 N.R. 91 (C.A.).
CONSIDERED:
Patchett & Sons Ltd. v. Pacific Great Eastern Railway
Co., [1959] S.C.R. 271.
REFERRED TO:
Robert Simpson Montreal Ltd. (The) v. Hamburg-
Amerika Linie Norddeutscher, [1973] F.C. 1356 (C.A.);
Bensol Customs Brokers Ltd. v. Air Canada, [1979] 2
F.C. 575 (C.A.).
AUTHORS CITED
Carver's Carriage by Sea, vol. 1, 13th ed. by R. Colin -
vaux. London: Stevens & Sons, 1982.
Carver's Carriage by Sea, vol. 1, 12th ed. by R. Colin -
vaux. London: Stevens & Sons, 1971.
COUNSEL:
Rui M. Fernandes for plaintiff.
C. Turianskyj for defendant Burlington
Northern Railroad.
David Colford for defendant Chantry Ship
ping S.A.
SOLICITORS:
Beard, Winter, Gordon, Toronto, for plaintiff.
Kieran & Guay, Montréal, for defendant
Burlington Northern Railroad.
Brisset Bishop Davidson, Montréal, for
defendant Chantry Shipping S.A.
The following are the reasons for order ren
dered in English by
JOYAL J.: The Court is seized of a couple of
interlocutory matters which raise some interesting
issues.
THE BACKGROUND
These issues are basically related to a claim for
damage to a cargo of brazilian nuts. Some 1,920
heavy bags of these nuts having a value of some
$43,000 (U.S.) were ordered by the plaintiff, Watt
& Scott, from Ciex Comercio Industria E Expor-
tacao Ltda. in Brazil. These nuts were to be deliv
ered to Winnipeg, Manitoba. Before shipment,
however, it was necessary to have the cargo tested
for aflatoxin, a particular form of carcinogen
found in nuts. The nuts passed the test and a
certificate to this effect was duly issued.
The cargo left Brazil on or about June 11, 1985,
on board the Antje Schulte, jointly owned or
managed by the defendants Chantry Shipping
S.A. and Atlantic Marine Limited. The contract of
carriage was evidenced by two bills of lading No.
11 and No. 12 dated June 2, 1985.
From Brazil, the ship proceeded to Mobile,
Alabama, where the cargo of nuts was off-loaded
and from there shipped by rail via the Burlington
Northern Railroad Company.
Upon reaching Winnipeg, it was found that the
cargo had become infected with aflatoxin. The
plaintiff took mitigating action, sold the cargo at a
discount price of some $14,000 (U.S.) and took
action to recover its loss. It estimated its loss
including cost of freight and other expenses at
some $65,000 (Cdn.).
The action was taken in this Court on July 11,
1986. It named as joint and several defendants the
ship Antje Schulte, its owners and managers,
Chantry Shipping S.A. and Atlantic Marine Lim
ited. It also named as defendants Atlantic and
Gulf Stevedores of Alabama which unloaded the
cargo in Mobile, Container Services International
Inc. which piggy-backed the cargo from the docks
to the railroad and finally, Burlington Northern
which carried the cargo to its Winnipeg destina
tion.
Subsequently, the plaintiff served its statement
of claim on Burlington Northern which has estab
lishments in both Winnipeg and Montréal. The
plaintiff also sought leave of this Court to serve ex
juris all the other defendants. Leave was granted
on September 8, 1986.
In due course, Burlington Northern applied for
leave to file a conditional appearance for purposes
of objecting to this Court's jurisdiction. Concur
rently, motions were launched by Chantry Ship
ping and Atlantic Marine praying that the order
for service ex juris on them be rescinded on the
grounds that there was no good arguable case
against them, that the alleged tort was committed
outside the Court's jurisdiction and that the onus
of establishing forum conveniens had not been
met.
All the issues were eventually argued at the
same time. They are issues which provoke interest
ing debate. They raise points of fact and law where
there is risk that a judicial pronouncement on
them will create far more a patchwork quilt of
dubious clarity than a finely woven and textured
cloth of undoubted scholarship. Burlington North-
eril's challenge to the Federal Court's jurisdiction
in particular conjures up twin scenarios of federal
admiralty law on the one hand and the Federal
Court's jurisdiction over railroads on the other. I
should deal first of all with this question and deal
with the ex juris matter later on.
THE COURT'S JURISDICTION
Before entering into a jurisprudential analysis of
this esoteric subject, I should review the evidence
before me.
(1) The Evidence
The contract of carriage for the Brazilian nuts is
found in two bills of lading numbered 11 and 12
respectively. Bill of lading No. 11 is for some 1841
bags of nuts and indicates Manaus, Brazil, as port
of loading and Mobile, Alabama as port of desti
nation. There is added on the face of the docu
ment, however, the notation "In transit to Win-
nipeg, Manitoba, Canada". Bill of lading No. 12 is
for some 80 bags of nuts and indicates the same
loading and destination points. The document con
tains no mention, however, of the cargo's ultimate
destination at Winnipeg.
There is also a freight waybill No. lA of Burl-
ington Northern covering the same cargo and
showing the destination as Winnipeg, Manitoba,
Canada. There is a notation that the cargo was
moving in bond through the U.S.
There was filed documentary evidence which
discloses that the cargo was inspected for aflatoxin
on May 30-31, 1985, the clearance certificate was
issued June 8, 1985, the bills of lading were issued
on June 2, 1985, the cargo was shipped on board
the Antje Schulte on June 12, 1985 and arrived in
Mobile on July 5, 1985. The cargo was held in
bond until July 16, 1985. On that date, the steve-
doring company delivered the cargo to Burlington
Northern and it finally reached Winnipeg on July
30, 1985. From the date of the inspection to the
date of delivery, some two months elapsed.
(2) The case for the plaintiff
Briefly stated, the plaintiff wants to know what
happened to its nuts. Purportedly, aflatoxin free on
May 30, 1985, the nuts arrived in Winnipeg in a
damaged condition. The plaintiff does not know
how, where or through whose negligence the
damage was caused. The plaintiffs counsel in his
affidavit affirms that its case is grounded on prin
ciples of negligence and that the plaintiff is en
titled to plead and rely on the doctrine of res ipsa
loquitur.
(3) The case for Burlington Northern
Burlington Northern's counsel in one affidavit
states his opinion that the Federal Court lacks
jurisdiction ratione materiae and ratione personae
over his client. He states in a subsequent affidavit
that on the basis of the allegations in the plaintiff's
statement of claim and on his analysis of the bills
of lading, the issue against Burlington Northern is
limited to the carriage of the goods from Mobile,
Alabama, to Winnipeg. He states that the plaintiff
has failed to provide evidence that the Federal
Court has jurisdiction over that issue.
(4) Findings
The ostensible statutory competence of the Fed
eral Court to deal with cargo claims is section 22
of the Federal Court Act [R.S.C. 1970 (2nd
Supp.), c. 10].
Subsection 22(1) reads as follows:
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.
Subsection 22(2) declares that without limiting
the generality of subsection 22(1) and for greater
certainty, the Federal Court Trial Division has
jurisdiction over some 19 classes of matters involv
ing admiralty law and including in paragraph
22(2)W:
22. (2) ...
(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; [My emphasis.]
Under that head, the question may be put: Is the
wording "in transit to Winnipeg" as found in bill
of lading No. 11 sufficient to show that a through
bill of lading was intended? The general rule is as
stated by Carver's Carriage by Sea, vol. 1, 13th
ed. by R. Colinvaux. London: Stevens & Sons,
1982, at page 374, where he distinguishes between
one contract of carriage which ends in tranship-
ment and the contracting carrier acts, after dis
charge from the ship, only as agent for the cargo's
owner in arranging the forwarding of the goods
and another contract of carriage where it is con
templated that in spite of transhipments, the con
tract holds through to final destination. "It
depends", says the author, "on the true construc
tion of the bill of lading into which category it
lies."
In the case before me, no inquiry can take place
at this time into the interpretation of bill of lading
No. 11 or of any intention which might be found
on the face of the document. That is a matter of
evidence which the Federal Court of Appeal in
Anglophoto Ltd. v. The Ikaros, [1974] 1 F.C. 327
in an analogous case, decided should be left to a
determination at trial. The issue before the Court
in that case was whether a stevedoring company in
receiving goods from a shipowner was thereafter
acting as agent for the shipowner or as agent for
the consignee of the goods. The Court of Appeal
decided that the facts before the Court on a juris
diction motion were not sufficient to make a deter
mination in law.
I find myself facing a similar situation and I
should be loath to inquire further. The question of
the Court's jurisdiction at this stage of the pro
ceedings cannot be finally determined. In other
words, the case relating to the meaning of the bill
of lading No. 11 is not so clear cut that I should
rule on the issue one way or the other and decide
whether it provides the necessary mantle to the
Court's jurisdiction under paragraph 22(2)(f) of
the Federal Court Act. I should leave that to the
trial judge.
I should also refer to the recent Supreme Court
of Canada decision in ITO—International Termi
nal Operators Ltd. v. Miida Electronics et al.,
[1986] 1 S.C.R. 752, dealing with the Federal
Court's jurisdiction over Canadian maritime law.
McIntyre J., in speaking for the majority of the
Court, provides an impressive review of the histori
cal antecedents to the development of maritime
law in Canada and concludes that there is now
encompassed in that body of federal law the
common law principles of tort, contract and bail-
ment and which law is uniform throughout
Canada. No doubt, a statement of this nature
appears to impinge upon bodies of law of exclusive
provincial authority or competence, but, as I read
McIntyre J., it does not make the application of
these principles any less valid. They are necessary
ingredients in the adjudication of maritime claims
and therefore within federal competence and, of
course, well within the Federal Court's fields of
jurisdiction.
The Supreme Court of Canada restated that the
jurisdiction of the Federal Court depends on there
being (1) a statutory grant of jurisdiction by Par
liament; (2) an existing body of federal law essen
tial to the disposition of the case which nourishes
the statutory grant of jurisdiction; and (3) law
underlying the case falling within the scope of the
term "a law of Canada" used in section 101 of the
Constitution Act, 1867 [30 & 31 Vict., c. 3 (U.K.)
[R.S.C. 1970, Appendix II, No. 5] (as am. by
Canada Act 1982, 1982, c. 11 (U.K.), Schedule to
the Constitution Act, 1982, Item 1)].
In finding that the Federal Court had jurisdic
tion over a stevedoring company and terminal
operator, the Supreme Court in ITO—Interna-
tional Terminal Operators found that the mari
time nature of any case depends on (1) the prox
imity of the terminal operator to the sea; (2) the
connection between the terminal operator's activi
ties and the contract of carriage by sea, and (3)
the , fact that the storage at issue is short-term
pending final delivery carried out by the terminal
operator and within the area of the port. These
conditions being adequately met, the Supreme
Court found that maritime law prevailed and the
Federal Court had the required jurisdiction to hear
the case.
Broadly speaking, the Federal Court of Appeal
had reached a similar conclusion in Robert Simp-
son Montreal Ltd. (The) v. Hamburg- Amerika
Linie Norddeutscher, [ 1973] F.C. 1356. The
Court ruled that the discharge of cargo by steve
dores after completion of the sea voyage and their
handling of it into the possession of the consignee
was an essential activity in the carriage of goods
by sea. The Court found for competency under
both subsection 91(10) of the Constitution Act,
1867, "Navigation and Shipping" and under sub
section 22(1) of the Federal Court Act.
In my view, the real breakthrough in the ITO—
International Terminal Operators decision is the
finding that the body of Canadian maritime law
includes certain principles of the common law
which are applied to the exclusion of provincial
laws should the latter be in conflict with them.
The Supreme Court's reasoning, nevertheless
did extend the field of maritime law to stevedoring
duties and responsibilities on the indicia of their
proximity, of their close relationship to the con
tract of carriage and of their short duration.
Quaere whether these tests may be applied with
respect to Burlington Northern's carriage of the
goods from Mobile to Winnipeg. More important
ly, however, may there be another basis on which
the Federal Court's jurisdiction, independent of or
separate from the statutory jurisdiction found in
paragraph 22(2)(f) of the Federal Court Act may
be founded. Another look at the statute to deter
mine this is warranted.
Section 23 of the Federal Court Act gives the
Trial Division concurrent original jurisdiction in
certain specified fields. The text of the section
reads as follows:
23. The Trial Division has concurrent original jurisdiction 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 an
Act of the Parliament of Canada or otherwise in relation to any
matter coming within any following class of subjects, namely
bills of exchange and promissory notes where the Crown is a
party to the proceedings, aeronautics, and works and undertak
ings connecting a province with any other province or extending
beyond the limits of a province, except to the extent that
jurisdiction has been otherwise specially assigned. [My
emphasis.]
The words I have underlined show a similarity
of expression with that found in subsection 22(1)
of the Federal Court Act. Where subsection 22(1)
deals specifically with navigation and shipping,
section 23 seemingly bestows concurrent jurisdic
tion in other fields of federal competency as well,
especially, for purposes of this case, over "works
and undertakings ... extending beyond the limits
of a province".
Federal legislative competency over such works
and undertakings are found in subsection 92(10)
of the Constitution Act, 1867. Paragraph
92(10)(a) of that same section specifically confers
federal jurisdiction over railways extending beyond
the limits of the province. Where, as here, it is
evident that Burlington Northern is a railway
undertaking extending beyond the limits of
Manitoba into the middle of Alabama, that the
carriage of goods by interprovincial or internation
al rail is governed by the Railway Act, R.S.C.
1970, c. R-2, and regulated by the Canadian
Transport Commission, in such case the jurisdic
tion of the Federal Court over the international
carriage of goods by rail seems to subscribe to the
tests laid down by the Federal Court of Appeal in
Bensol Customs Brokers Ltd. v. Air Canada,
[ 1979] 2 F.C. 575 as restated by the Supreme
Court of Canada in the ITO—International Ter
minal Operators case, i.e. (1) a statutory grant of
jurisdiction under section 23 of the Federal Court
Act; (2) an existing body of federal law which
nourishes the statutory grant of jurisdiction,
namely the Railway Act together with the mass of
Transport Commission regulations dealing with
traffic, tolls and tariffs; (3) the law underlying the
case before me falling within the scope of the term
"law of Canada" found in section 101 of the
Constitution Act, 1867.
Of specific interest in meeting the last two tests
is section 262 of the Railway Act. I should
reproduce that section in full:
262. (1) The company shall, according to its powers,
(a) furnish, at the place of starting, and at the junction of
the railway with other railways, and at all stopping places
established for such purpose, adequate and suitable accom
modation for the receiving and loading of all traffic offered
for carriage upon the railway;
(b) furnish adequate and suitable accommodation for the
carrying, unloading and delivering of all such traffic;
(e) without delay, and with due care and diligence, receive,
carry and deliver all such traffic;
(d) furnish and use all proper appliances, accommodation
and means necessary for receiving, loading, carrying, unload
ing and delivering such traffic; and
(e) furnish such other service incidental to transportation as
is customary or usual in connection with the business of a
railway company, as may be ordered by the Commission.
(2) Such adequate and suitable accommodation shall include
reasonable facilities for the junction of private sidings or pri
vate branch railways with any railway belonging to or worked
by the company, and reasonable facilities for receiving, for
warding and delivering traffic upon and from those sidings or
private branch railways, together with the placing of cars and
moving them upon and from such private sidings and private
branch railways.
(3) If in any case such accommodation is not, in the opinion
of the Commission, furnished by the company, the Commission
may order the company to furnish the same within such time or
during such period as the Commission deems expedient, having
regard to all proper interests; or may prohibit or limit the use,
either generally or upon any specified railway or part thereof,
of any engines, locomotives, cars, rolling stock, apparatus,
machinery, or devices, or any class or kind thereof, not
equipped as required by this Act or by any orders or regulations
of the Commission made within its jurisdiction under the
provisions of this Act.
(4) Such traffic shall be taken, carried to and from, and
delivered at the places aforesaid on the due payment of the toll
lawfully payable therefor.
(5) Where a company's railway crosses or joins or ap
proaches, in the opinion of the Commission, sufficiently near to
any other railway, upon which passengers or mails are trans
ported, whether the last mentioned railway is within the legisla
tive authority of the Parliament of Canada or not, the Commis
sion may order the company so to regulate the running of its
trains carrying passengers or mails, and the places and times of
stopping them, as to afford reasonable opportunity for the
transfer of passengers and mails between its railway and such
other railway, and may order the company to furnish reason
able facilities and accommodation for such purpose.
(6) For the purposes of this section the Commission may
order that specific works be constructed or carried out, or that
property be acquired, or that cars, motive power or other
equipment be allotted, distributed, used or moved as specified
by the Commission, or that any specified steps, systems or
methods be taken or followed by any particular company or
companies, or by railway companies generally, and the Com
mission may in any such order specify the maximum charges
that may be made by the company or companies in respect of
any matter so ordered by the Commission.
(7) Every person aggrieved by any neglect or refusal of the
company to comply with the requirements of this section has,
subject to this Act, an action therefor against the company,
from which action the company is not relieved by any notice,
condition or declaration, if the damage arises from any negli
gence or omission of the company or of its servant.
(8) The Commission may make regulations, applying gener
ally or to any particular railway or any portion thereof, or may
make an order in any case where it sees fit, imposing charges
for default or delay by any company in furnishing accommoda
tion, appliances, or means as aforesaid, or in receiving, loading,
carrying, unloading or delivering traffic, and may enforce
payment of such charges by companies to any person injurious-
ly affected by the default or delay; and any amount so received
by any person shall be deducted from the damages recoverable
or recovered by such person for the default or delay; and the
Commission may, by order or regulation, determine what cir
cumstances shall exempt any company from payment of any
such charges. [My emphasis.]
The key provision in section 262 is found at
paragraph 262(1)(c) where a statutory duty is
imposed on a railway company to "without delay,
and with due care and diligence, receive, carry and
deliver all such traffic". I think it is fair to say that
this statutory duty is but the codification of the
common law responsibility imposed on any carrier.
The plaintiff's claim, as against Burlington North
ern, is substantially that the railway failed to
exercise due care and diligence. The fact that
section 262 of the statute has not been specifically
pleaded should be no bar at this stage of the
proceedings to the application of that section on
the issue of jurisdiction.
Of further relevance is subsection 262(7) where
a right of action is conferred on any person
aggrieved by any neglect or refusal of the company
to comply with the requirements of section 262
from which action the company is not relieved by
any notice, condition or declaration if the damage
arises from any negligence or omission of the
company or of its servant. I cannot think of a
statutory right of action more clearly expressed.
Much might be made of the other provisions of
section 262 where a prior determination by the
Canadian Transport Commission might be
required before an action in damages might be
claimed. I would refer specifically to the Commis
sion's authority under subsections 262(3), (5), (6)
and (8) with respect to accommodation, to facili
ties, to the ordering of specific works or to im
posing charges for demurrage. None of these, in
my view, limits the scope of the right of action
conferrred for want of due care in receiving, carry
ing and delivering traffic as provided in paragraph
262(1)(c) of the statute.
The same provisions of the Railway Act were
reviewed in 1981 in the Federal Court of Appeal
case of Kiist v. Canadian Pacific Railway Co.,
[ 1982] 1 F.C. 361; (1981), 37 N.R. 91. In that
case, the Court of Appeal hit hard on the question
of the Federal Court's jurisdiction under section
23 of its statute, as supported by the Railway Act
and the Canadian Wheat Board Act. One of the
issues was the application of the concluding words
of section 23 "except to the extent that jurisdiction
has not been otherwise specially assigned". Certain
provisions of section 262 confer jurisdiction on the
Canadian Transport Commission. I have referred
to this earlier and have concluded that the "duty
of care" imposed on a railway company would not
be the kind of duty which, as compared to other
duties, is subject to Commission jurisdiction.
Le Dain J. at pages 373 F.C.; 105 N.R. of the
judgment said:
Subsection 262(7) of the Railway Act gives an aggrieved
person an "action" for damages for neglect or refusal to comply
with the requirements of the section. The word "action" con
notes a proceeding in the courts. It is to be contrasted with the
use of the words "application" and "complaint" with reference
to proceedings before the Commission under the Railway Act:
see section 48 of the National Transportation Act.
Mr. Justice Le Dain then went on to say [at
pages 374-375 F.C.; 105-106 N.R.]:
In the face of this long-established view as to the jurisdiction
to award damages for breach of a statutory duty similar to that
created by section 262, I think it would require very clear
language by Parliament to indicate an intention to assign such
jurisdiction to the Commission. Such explicit language was
used, for example, in England in section 12 of the Railway and
Canal Traffic Act, 1888 (51 & 52 Vict., c. 25), where it was
provided that where the Railway Commissioners had jurisdic
tion to hear and determine any matter "they may, in addition
to or in substitution for any other relief, award to any com
plaining party who is aggrieved such damages as they find him
to have sustained". I am unable, with respect, to agree with the
learned Trial Judge, that section 58 of the National Transpor
tation Act is sufficiently explicit or clear in this respect to have
the important effect of transferring the jurisdiction to award
damages for breach of the duty created by section 262 of the
Railway Act from the courts to the Commission. Whereas
section 262 expressly confers particular kinds of jurisdiction on
the Commission in subsection (3),(6) and (8), it is silent as to
where the right of "action" for damages created by subsection
(7) is to be exercised. Moreover, a distinction is made in
subsection (8) between "charges", which may be imposed by
the Commission, and "damages", the award of which is not
clearly assigned to the Commission. In my opinion it is not
sufficiently clear from section 58 of the National Transporta
tion Act, which deals in general terms with relief that may be
granted by the Commission although not requested, that Parlia
ment intended to modify the attribution of the jurisdiction to
award damages that results by implication from the terms of
section 262 of the Railway Act. I am, therefore, of the opinion
that the Federal Court has jurisdiction to award damages for
breach of the duty created by section 262. [My emphasis.]
It is, however, a broad statement which appears
to establish the Federal Court's jurisdiction over
any breach of duty under section 262 of the Rail
way Act without any limitation as to the Commis-
sion's prior determination by way of orders or
otherwise of the standards of some of the duties
imposed under the various heads of section 262.
The case before Le Dain J. was under paragraph
262(1)(a) where the duty on a railway company is
to furnish adequate and suitable accommodation
"for the receiving and loading of all traffic offered
for carriage upon the railway". After reviewing
extensive case law as to public policy consider
ations and which a regulatory body must apply in
these standards of duty, considerations which a
court would be loath to enter into, he concluded at
pages 381 F.C.; 112 N.R. as follows:
For these reasons I am of the opinion that the determination
of whether the respondent railways furnished adequate and
suitable accommodation for the carriage of grain for the Board
during the crop years 1977-1978 and 1978-1979 has been
specially assigned to the Commission, and that in the absence
of such a determination by the Commission the Federal Court
is without jurisdiction to entertain the appellants' claim for
damages.
The claim before me, however, is clearly found
ed on a breach of the duty of care imposed on a
railway company under paragraph 262(1)(c) and
my prior analysis or interpretation of the whole of
section 262 has led me to conclude that it is not
the kind of duty which faced the Federal Court of
Appeal and where the jurisdiction of the Federal
Court under section 23 of its statute would be
suspended if not ousted.
In finding for Federal Court jurisdiction on the
grounds that a breach of a duty of care triggers off
a right of action without involving Commission
determination of what that standard of duty might
be, I am comforted, albeit obliquely, by an earlier
decision of the Supreme Court of Canada in
Patchett & Sons Ltd. v. Pacific Great Eastern
Railway Co., [1959] S.C.R. 271.
In that case the Supreme Court of Canada had
occasion to deal with paragraph 203(1)(c) of the
Railway Act of British Columbia, R.S.B.C. 1948,
c. 285, and which is drafted in identical terms to
paragraph 262(1) (c) of the federal railway statute.
The section contains the same review or regulatory
process with respect to some of the duties imposed
on a railway company, the only difference with the
federal statute being that the statutory authority is
the B.C. Minister of Railways instead of the
Canadian Transport Commission.
The claim by the plaintiff in that case was that
the railway company was in breach of its duty to
carry traffic with due diligence. The narrower
issue before the Supreme Court of Canada was
whether this imposed an absolute duty or was
subject to the reasonableness rule. No argument
was raised that a British Columbia court's juris
diction to deal with that kind of breach was a
matter otherwise assigned to the Minister.
Throughout the proceedings from trial to subse
quent appeals, it appears to have been understood
that a court could deal with it.
I would not pretend that my observations on this
case provide the conclusive answer to the limita
tion contained in the concluding words of section
23 of the Federal Court Act. To my mind, how
ever, the case supports the general statement of Le
Dain J. in the Kiist case and gives credence to the
analysis of the whole of section 262 of the Railway
Act which I have earlier provided.
I conclude therefore that the Federal Court has
jurisdiction to entertain a claim against Burlington
Northern under section 262 of the Railway Act
and that the limitation clause in the concluding
words of section 23 of the Federal Court Act is no
bar to the Court proceeding with it.
ORDER FOR SERVICE EX JUR/S
I must now deal with this matter raised by the
defendants Chantry Shipping S.A. and Atlantic
Marine Limited. The original order for service ex
juris was issued by the Senior Prothonotary on
September 8, 1986. Subsequently, by order of
Pinard J. dated December 1, 1986, these defen
dants were authorized to file conditional appear
ances for the purpose of appealing the order for
service ex juris.
The case for the plaintiff is set out in an affida
vit dated August 4, 1986 which provides pertinent
information on both defendants as being residents
of Hamilton, Bermuda and having no formal place
of business in Canada except for their agent
March Shipping Limited of Montréal. The facts
are more elaborately set out in a further affidavit
of November 24, 1986 and in a third affidavit
dated January 21, 1987.
The grounds of appeals by the defendants from
the ex juris order directed to them as contained in
an affidavit dated October 27, 1986, are that the
alleged breach of contract or tort was committed
outside of the jurisdiction, that the plaintiff failed
to provide evidence that it had a good arguable
case and that the plaintiff had failed to provide
evidence that there was no other more convenient
or appropriate forum to pursue the action.
A further affidavit on the defendants' behalf
dated January 28, 1987 was filed and to which was
attached a February 13, 1986 report from the
insurance adjusters relating to the claims of loss
submitted by the plaintiff.
It could very well be that before the Chief
Prothonotary, the facts relating to the contractual
link between the plaintiff and the defendants and
to the disclosure by evidence that a reasonable
course of action exists, or to the issue of forum
conveniens, fell short of the mark. This might not
be surprising as an order of this nature is originally
issued ex parte and the real crunch as to the
appropriateness of it can only be tested when the
foreign defendant is served with the notice of claim
and decides to respond to it, as indeed the defend
ants have done in this case.
In such a situation, the Court is not limited to
the elements of proof available at the time the
order first issued. The case of Price & Pierce
International Inc. and Sohn v. Finland Steamship
Co. Ltd., Ship Antares and Chase International
(Holdings) Inc. (1983), 46 N.R. 372 (F.C.A.) at
page 376, is authority for the principle that the
Court may consider all the available evidence
which might have accumulated in the meantime.
On the issue of jurisdiction by reason of the
contract of carriage falling short of the require
ments set out in paragraph 22(2)(f) of the Federal
Court Act, I have already stated that such a
determination is premature at this time. Bill of
lading No. 11 is not clear. There is no evidence as
to what the parties meant in the use of the phrase
"In transit to Winnipeg, Manitoba, Canada". In
the case of Cliffe v. Hull & Netherlands Steam
Ship Co. (1921), 6 L1. L. Rep. 136 (C.A.) as cited
at page 172 of Carver's Carriage by Sea, vol. 1,
12th ed. by R. Colinvaux. London: Stevens &
Sons, 1971, the Court found that in a bill of
lading, the expression "To be forwarded from Hull
... to Manchester", did not make the bill a
through bill of lading and that in forwarding the
goods from Hull, the shipowners acted only as
forwarding agents. That expression, however, is
not the one before me and the evidence leading to
a determination of its proper intendment is not
before me either.
I should also find that the plaintiff has made out
an arguable case. The affidavit evidence filed as to
the condition of the brazilian nuts prior to board
ing on the Antje Schulte and as to their condition
upon their discharge in Winnipeg justifies the kind
of inquiry the plaintiff invites this Court to make.
The plaintiff might run into many pitfalls along
the way but it should not be precluded at this stage
from joining defendants aboard whose ship its
brazilian nuts were contractually carried from
Manaus, Brazil, to Mobile, Alabama, and, from
there by rail to Winnipeg.
I further find that the issue of forum conveniens
has also been met. The plaintiff's affidavit evi
dence indicates the calling of some nine witnesses
with an additional two witnesses from Brazil. In
the absence of any evidence from the defendants in
that respect, I am left to merely speculate as to
which would be a more proper forum.
The Senior Prothonotary's order of September
8, 1986 is confirmed except that the delay allowed
the defendants to file their statement of defence is
to run as of the date of the formal order issued
concurrently with these reasons.
Costs shall be in the cause.
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.