A-212-75
Santa Maria Shipowning and Trading Company
S.A. (Respondent) (Plaintiff)
v.
Hawker Industries Limited (Defendant)
and
Bethlehem Steel Corporation (Appellant)
(Defendant)
Court of Appeal, Jackett C.J., Urie J. and Hyde
D.J. Halifax, February 6, 1976.
Jurisdiction Maritime law—Practice—Whether Trial
Division wrongly exercised discretion as to whether statement
of claim should be struck out as disclosing no cause of action
within jurisdiction of Trial Division Appellant contending
that whole of contractual cause of action outside Canada
Whether an implied limitation on subject matter jurisdiction
of Court to subject matter arising within geographical limits
within which Court can exercise jurisdiction Federal Court
Act, s. 22(2)(n) and Rule 4/9.
Appellant appeals a decision of the Trial Division which held
that a cause of action was disclosed by the statement of claim
and that the question of jurisdiction should be determined on
the facts as found by the Trial Judge. Appellant contends that
the whole of the contractual cause of action is geographically
situated outside Canada and not within the jurisdiction of the
Trial Division. Such argument was based on an implied limita
tion on the subject matter jurisdiction of a Court to subject
matter arising within geographical limits within which the
Court can exercise jurisdiction.
Held, the appeal is dismissed. The statement of claim alleges
a contract and breach, and the matter seems to have been so
pleaded as to permit proof of facts which would bring the claim
within section 22(2)(n) of the Federal Court Act. In the
absence of any knowledge of authority, the Court is not per
• suaded that admiralty subject matter jurisdiction is subject to
implied geographical limitations. In the absence of express
limitation, there is no basis for implying geographical limita
tions on the Court's jurisdiction other than the necessity of
serving the defendant within the Court's geographical jurisdic
tion unless leave to serve ex juris is obtained. Secondly, the
cause of action was so ambiguously pleaded that it was open to
the Trial Judge to hold that the jurisdiction question should be
left until the real facts are established.
The Queen v. Wilfrid Nadeau Inc. [1973] F.C. 1045; Oy
Nokia Ab v. The Ship "Martha Russ" [1974] I F.C. 410;
Antares Shipping Corporation v. The Ship "Capricorn"
(not reported, S.C.), discussed.
APPEAL.
COUNSEL:
G. Black, Q.C., and P. J. MacKeigan for
appellant.
D. A. Kerr, Q.C., for respondent.
D. S. McInnes for defendant.
SOLICITORS:
Daley, Black, Moreira & Piercey, Halifax,
for appellant.
Stewart, MacKeen & Covert, Halifax, for
respondent.
McInnes, Cooper & Robertson, Halifax, for
defendant.
The following are the reasons for judgment
delivered orally in English by
JACKETT C.J.: This is an appeal from a judg
ment of the Trial Division.
On February 20, 1975, the respondent, Santa
Maria Shipowning and Trading Company, filed a
statement of claim in the Trial Division naming
Hawker Industries Limited (hereinafter referred
to as "Hawker") and the appellant, Bethlehem
Steel Corporation, as defendants.
That statement of claim alleges that the
respondent's head office is in Liberia, that its
principal place of business is in Bermuda, and that,
at relevant times, it was the registered owner of
the vessel Santa Maria. It alleges that Hawker is
engaged in shipbuilding and repairing and has a
place of business in Halifax, and that the appellant
is engaged in shipbuilding and repairing and has
its head office in the United States. The substan
tive allegations of the statement of claim, in so far
as they seem to me to be relevant, read as follows:
4. On or about the 5th day of December, 1972, the "SANTA
MARIA" sustained severe damage by ice and storm during the
course of a voyage in ballast from New York, U.S.A., to
Botwood, Newfoundland. The principal damage consisted of
loss of the vessel's rudder, leaving her with a fractured rudder
stock still in place. The vessel was towed to Halifax where she
arrived December 21, 1972. On that date, the Plaintiff entered
into an agreement with Hawker pursuant to which the vessel
entered Hawker's Halifax drydock for inspection. It was appar
ent that the vessel would require a new rudder stock and
rudder. The Plaintiff represented by its Classification Society
(the American Bureau of Shipping) and the Salvage Associa-
tion, London, on behalf of the vessel's hull underwriters, pre
pared certain specifications for the proposed work. The said
specifications, which were amended from time to time thereaf
ter as a result of further surveys, will be referred to at the trial
of this action for their full force and effect. The Plaintiff
delivered the said specifications to Hawker and the Plaintiff
and Hawker thereupon entered into a contract pursuant to
which Hawker undertook to perform the required work.
5. Hawker prepared drawings of the new rudder and rudder
stock. Hawker then ordered the forging for the rudder stock
from Trenton Steel Company, of Trenton, Nova Scotia. The
forging for the rudder stock was sent by Hawker to Bethlehem
for machining. The Plaintiff entered into a contract with
Bethlehem (which will be referred to at the trial of this action
for its full force and effect) for the said machining of the
rudder stock, the fabrication of a new rudder, and proper
mating of rudder and stock. Said work was completed by
Bethlehem on or about April 10th, 1973, and the new rudder
and stock, complete with pintles and palm bolts were sent by
road transport from Hoboken, New Jersey to Halifax, where
they arrived at Hawker's yard on April 13th, 1973.
6. The "SANTA MARIA" (which had been lying idle at Halifax
since the date of her arrival) entered Hawker's drydock on
April 12th, 1973, and on the arrival at Hawker's yard of the
new rudder and rudder stock, Hawker attempted to fit the
same into the "SANTA MARIA". As a result of its own negligence
(particulars of which are hereafter set out) Hawker was unable
to install the rudder, although several attempts were made over
the ensuing seven weeks. Eventually on June 1, 1973, the
Plaintiff advised Hawker of the cancellation of its contract with
Hawker, due to Hawker's negligence and inability to perform
the work, and the following day the vessel departed Halifax in
tow, with the new rudder and rudder stock on board, for
Bethlehem's yard in Hoboken, New Jersey, where she arrived
June 5, 1973. The work of installing the rudder and rudder
stock was undertaken by Bethlehem and said work was com
pleted on June 14, 1973.
7. The Plaintiff says that Bethlehem held itself out to be an
expert in the fabrication and machining of rudders and rudder
stocks and that the Plaintiff was entitled to and did rely upon
the said expertise of Bethlehem.
8. The Plaintiff says that Hawker held itself out to be an
expert in the repairing of ships and particularly in the installa
tion and proper fitting of rudders and rudder stocks, and that
the Plaintiff was entitled to and did rely upon the said expertise
of Hawker.
9. The Plaintiff says that Bethlehem failed to exercise the skill
and care which it had undertaken to exercise with respect to the
machining and fabrication of the said rudder stock and rudder,
and was negligent with respect thereto, and as a result of such
negligence, supplied the Plaintiff (and/or Hawker) with a
rudder and rudder stock which was not properly aligned, and
which was not in accordance with the aforesaid plans and
specifications, or dimensionaly within the tolerances which are
accepted as reasonable in the trade.
10. The Plaintiff says that Hawker failed to exercise the skill
and care which it had undertaken to exercise, and was negligent
in its attempts to prepare the vessel to receive the new rudder
and rudder stock, and was guilty of poor workmanship.....
11. The Plaintiff further says that Hawker supplied labour,
materials, and ship repair services which were faulty and
deficient to such an extent that the Plaintiff was required to
remove the vessel from Hawker's yard and, at substantial
additional expense, to have the work performed by Bethlehem
in New Jersey ....
12. The Plaintiff claims against the Defendants, jointly and
severally for all losses and/or damages arising out of or
attributable to the negligence complained of. The Plaintiff's
special damages are as follows:
(a) Paid to Bethlehem for drydocking and
installing and fitting the rudder and rudder stock,
arising directly out of the failure of Hawker to
perform the said work pursuant to contract $ 78,100.00
(b) Paid for towing expenses, Halifax to Hoboken 25,000.00
(c) Running expenses of the vessel during tow
3 days @ $1,700 per day 5,100.00
(d) Loss of Charterparty earnings from May 1,
1973 (when, at the latest, Hawker should have
completed the work) until June 14, 1973 (when
the work was completed by Bethlehem) plus 3
days for proceeding to the on-hire port, a total of
48 days @ $1,200 per day 57,600.00
(e) Vessel's running expenses for 48 days @
$1,100 per day 52,800.00
(f) 150 tons of fuel @ $30.00 per ton 4,500.00
TOTAL $223,100.00
The Plaintiff claims for judgment against the Defendants,
jointly and severally, for its special damages as above, and to
have an assessment made thereof, and for general damages,
interest in accordance with the practice of This Court, and for
cost of these proceedings.
On February 20, 1975, the Trial Division made
an ex parte order giving the respondent liberty to
serve a notice of the statement of claim on the
appellant in the United States. That order was
made under Rule 307, which reads in part:
Rule 307. (1) When a defendant, whether a Canadian citizen,
British subject or a foreigner, is out of the jurisdiction of the
Court and whether in Her Majesty's dominions or in a foreign
country, the Court, upon application, supported by affidavit or
other evidence showing that, in the belief of the deponent, the
plaintiff has a good cause of action, and showing in what place
or country such defendant is or probably may be found, may
order (Form 5) that a notice of the statement of claim or
declaration may be served on the defendant in such place or
country or within such limits as the Court thinks fit to direct.
(Form 6).'
On April 11, 1975, a notice of motion was filed
on behalf of the appellant returnable on April 22,
1975, for an order permitting the appellant "to file
a Conditional Appearance with the right to contest
the service of the Notice of the Statement of
Claim and the jurisdiction of this Court against
it". In support of the motion, an affidavit was filed
on the same day, reading in part:
2. THAT this action was instituted by the Plaintiff against the
Defendants on or about the 20th day of February, 1975;
3. THAT on or about the 18th day of February, 1975, the
solicitor for the Plaintiff applied ex parte before the Judge
presiding at the Federal Court, Ottawa for an Order to serve a
Notice of the Statement of Claim, ex juris, upon the Defend
ant, Bethlehem Steel Corporation, at Hoboken, New Jersey,
United States of America;
4. THAT I am instructed in this matter by H. M. McCormack,
one of the attorneys representing Bethlehem Steel Corporation;
5. THAT I am advised by the said H. M. McCormack, and
verily believe, that the service of a Notice of the Statement of
Claim was made on some official of Bethlehem Steel Corpora
tion between the 20th day of February, 1975 and the present
time;
6. THAT the Statement of Claim herein alleges the existence of
a contract made between the Plaintiff and the Defendant,
Bethlehem Steel Corporation, for the machining of a rudder
stock, the fabrication of a new rudder and proper mating of
rudder and stock;
7. THAT I have been provided with a copy of the contract
apparently referred to in the Statement of Claim dated the
23rd day of January, 1973 in the form of an offer made by
Bethlehem Steel Corporation and accepted by the Plaintiff. A
copy of the said contract is attached hereto and marked with
the letter "A";
8. THAT on its face, the contract is one having been made
between Bethlehem Steel Corporation, Hoboken, New Jersey
and Santa Maria Shipowning and Trading Co., Hamilton,
Bermuda;
9. THAT the only other reference in the Statement of Claim to
the defendant, Bethlehem Steel Corporation, is in Paragraphs 7
and 9 where the Plaintiff alleges that Bethlehem Steel Corpora
tion held itself out to be an expert in the fabrication and
machining of rudders and rudder stocks and that the Plaintiff
was entitled to and did rely upon the expertise of Bethlehem. In
paragraph 9, the Plaintiff alleges that Bethlehem failed to
' The authority for this Rule is found in section 46(1)(a)(vii)
of the Federal Court Act.
exercise the skill and care which it had undertaken to exercise
with respect to the machining and fabrication of the said
rudder stock and rudder, and was negligent with respect thereto
and that as a result of such negligence, supplied the Plaintiff
with the rudder and rudder stock which was not properly
aligned and which was not in accordance with the plans and
specifications, or dimensionally within the tolerances which are
accepted as reasonable in the trade;
10. THAT I am informed by the said H. M. McCormack, and
verily believe, that Bethlehem Steel Corporation does not do
business in any place in Canada;
11. THAT the Federal Court of Canada has no jurisdiction over
the Defendant, Bethlehem Steel Corporation, in this matter for
the reasons set forth in the foregoing paragraphs hereof. In
addition, there has been no breach of contract or any negli
gence of the Defendant, Bethlehem Steel Corporation, or its
employees, alleged to have occurred within the jurisdiction of
this Court;
12. THAT the Defendant, Bethlehem Steel Corporation, seeks
to have the service of the Notice of the Statement of Claim
against it set aside;
13. THAT apart from the foregoing, the Defendant, Bethlehem
Steel Corporation, says that even if service of the Notice of the
Statement of Claim was properly allowed, this Court does not
have jurisdiction over the claim made against Bethlehem Steel
Corporation as the subject matter is not within any of the
subjects over which the Federal Court of Canada has
jurisdiction.
The Exhibit to that affidavit is in the form of a
letter, dated January 23, 1973, from the appellant
to the respondent "Attention: Mr. P. A. Margaro-
nis", the body of which reads:
Subject: S/S "SANTA MARIA"
Gentlemen:
We hereby agree to carry out the following work in accord
ance with accepted marine practice, and as set forth in our
attached specifications dated January 23, 1973, except as modi
fied by the general clause above, for the sum of:
EIGHTY-SEVEN THOUSAND FOUR HUNDRED DOLLARS
($87,400.00)
and to complete same in FIFTY-SIX (56) CALENDAR DAYS.
OR
for the sum of:
NINETY-THREE THOUSAND FOUR HUNDRED DOLLARS
($93,400.00)
and to complete same in FORTY-EIGHT (48) CALENDAR DAYS
DELIVERY: F.O.B. Hoboken Yard, Hoboken, New Jersey.
which letter is endorsed "Authorized to proceed on
(48) CALENDAR DAYS BASIS" (apparently signed
by Mr. Margaronis) and has attached thereto a
document reading:
January 23, 1973
SANTA MARIA SHIPOWNING & TRADING CO.
P.O. Box 501
Hamilton, Bermuda.
SUBJECT: S/S "SANTA MARIA"
FABRICATION OF RUDDER AND MACHINING OF RUDDER STOCK.
Fabricate one (1) rudder in accordance with Bethlehem
Hoboken Drawing No. S2968.
Machine rudder in way of palm face, keyway and bore for six
(6) palm bolts.
Machine in way of two (2) pintles, boring for taper and
machine inner and outer seating surfaces.
Take delivery of Owner-furnished "as forged" rudder stock and
vessels existing tiller arm.
Machine stock in accordance with Halifax Shipyards Drawing
No. HD-453, Sheet 3.
Furnish and install bronze sleeve on rudder stock as indicated
on above drawing.
Provide eyebolt at top of stock.
Machine upper end of stock to fit existing tiller and provide, fit
and install key.
Fit palm of stock to mating palm of rudder.
Bore and ream for six (6) palm bolts.
Provide and fit six (6) palm bolts and nuts.
Provide and fit key in palm.
Provide and fit to rudder two (2) pintles complete with bronze
sleeves and nuts.
Rudder to be sandblasted and prime coated.
Palm faces, bore of pintle fits, pintles, palm bolts and machined
surfaces of stock to be coated with preservative.
On April 21, 1975, there was filed, on behalf of
the respondent, an affidavit reading:
I, HUGH K. SMITH, of Halifax, in the County of Halifax,
Province of Nova Scotia, make oath and say as follows:
1. THAT I am the solicitor for the Plaintiff.
2. THAT the Defendant Hawker Industries Limited commenced
an action against the Plaintiff on or about the 21st day of
August, 1973.
3. THAT the evidence in the action of Hawker Industries Lim
ited v. Santa Maria Shipowning and Trading Company S.A. et
al. will be common to the evidence in the action herein.
4. THAT Donald A. Kerr, Q.C., of Halifax aforesaid is the
solicitor for the Plaintiff Santa Maria Shipowning and Trading
Company S.A. in that action brought by Hawker Industries
Limited.
5. THAT I have been advised by Mr. Kerr and do verily believe
that Mr. Kerr conducted Discovery Examination of one Jeffrey
Jordan, Mechanical Superintendent of the Halifax Shipyards
for Hawker Industries Limited, on Thursday, April 17, 1975.
6. THAT the Court Reporter who took down the Discovery
Examination of Mr. Jordan on April 17, 1975 delivered to me
today a true copy of this examination. Attached hereto as
Exhibit "A" are a series of questions and answers from that
Discovery Examination.
The questions and answers attached to that affida
vit indicate that, according to the officer being
examined for Hawker in the action by Hawker
against the respondent, there was "something
wrong" with the rudder or rudder stock supplied
by the appellant and that the appellant, in accord
ance with shipyard practice, had sent a representa
tive to "see what's wrong" and "try to repair it".
On April 21, 1975, an order was delivered orally
by the Trial Division reading, in part, as follows:
The statement of claim herein is founded in contract and in
tort. In my view it discloses a cause of action, but the allega
tions therein should be made more specific. Since no statements
of defence have been filed the plaintiff shall file an amended
statement of claim, which it has undertaken to do, within 7
days of the date hereof.
I am also of the view that the question of jurisdiction must be
predicated upon the facts which will be disputed. The facts
should therefore be first determined by the trial judge.
Accordingly the motion is dismissed, as being premature, but
the defendant, Bethlehem Steel Corporation, shall have the
costs of this motion.
On April 28, 1975, the respondent filed an
"Amended Statement of Claim".
On April 28, 1975, the appellant filed a notice
of appeal from the Trial Division order of April
21, 1975.
One of the difficulties in connection with the
appeal arises from the fact that the Trial Division
order that is the subject matter of the appeal is,
apparently, not a disposition of the only applica
tion written notice of which appears in the record.
In this connection, counsel for the appellant and
respondent, at the end of the argument of the
appeal, filed a document in this Court reading as
follows:
AGREEMENT:
1. No appeal was taken against the issuance of the Order for
service ex juris by Heald J.
2. Cattanach J. summarily allowed Bethlehem's motion to file
Conditional Appearance and thereupon invited counsel to
address themselves to the question of the Court's jurisdiction
over Bethlehem.
3. Cattanach J. decided that a cause of action was disclosed by
the Statement of Claim, as against Bethlehem.
4. Cattanach J. decided that the question of jurisdiction should
be determined on the facts as found by the Trial Judge.
This appeal is from the findings set out in 3 and 4 above.
As far as I am aware, the only preliminary method
of determining whether a statement of claim dis
closes a cause of action against a defendant (apart
from seeking an order for the determination of a
question of law before trial) is an application to
strike out the statement of claim as against the
defendant on the ground that it does not disclose a
cause of action against the defendant, under Rule
419(1)(a), which reads as follows:
Rule 419. (1) The Court may at any stage of an action order
any pleading or anything in any pleading to be struck out, with
or without leave to amend, on the ground that
(a) it discloses no reasonable cause of action or defence, as
the case may be,
In the circumstances, I assume that the judgment
appealed against dismissed an application, made
orally by the appellant, to strike out the statement
of claim as against the appellant on the ground
that it did not disclose a cause of action against the
appellant within the jurisdiction of the Trial Divi
sion. I propose to deal with the appeal on that
assumption with the result that all evidence must
be ignored by virtue of Rule 419(2), which reads:
(2) No evidence shall be admissible on an application under
paragraph (1)(a).
The appeal must, therefore, turn on the question
whether the Trial Division wrongly exercised its
discretion as to whether the statement of claim, in
its original form, should have been struck out as
against the appellant on an application under Rule
419(1)(a). 2
In the first place, it is to be noted that the
statement of claim does allege a contract between
the appellant and the respondent and a breach
thereof by the appellant; and, as was, in effect,
conceded by counsel for the appellant, the matter
would appear to have been so pleaded as to permit
2 For a discussion of the appropriate approach to such an
appeal, see The Queen v. Wilfrid Nadeau Inc. [1973] F.C.
1045.
the proof of facts that would bring the claim
against the appellant within section 22(2)(n) of
the Federal Court Act, which reads:
22. (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:
(n) any claim arising out of a contract relating to the
construction, repair or equipping of a ship;
What the appellant contends, however (and the
only contention really relied on by the appellant
during argument in this Court), is that it is clear
from the statement of claim that the whole of the
contractual cause of action so pleaded is geograph
ically situated outside Canada and is, therefore,
not within the jurisdiction of a Canadian court
and, in particular, is not within the jurisdiction of
the Trial Division. Such argument, as I understood
it, was based on an implied limitation on the
subject matter jurisdiction of a court to subject
matter arising within the geographical limits
within which the Court can exercise jurisdiction.
Counsel for none of the parties was able to refer
us to any authority that tended one way or another
on the question whether there is such an implied
limitation. Authorities concerning service ex iuris
and the recognition of foreign judgments would
not, as it seems to me, be of much help on the
question although it is worthy of note that this
Court in the Martha Russ case 3 made it clear that
it was not deciding that appeal on a question of
"jurisdiction" to authorize service ex iuris and
that the decision of the Supreme Court of Canada
in Antares Shipping Corporation v. The Ship
"Capricorn" of January 30 last provided for ser
vice ex iuris in a case in which the cause of action
would not seem to be situate in Canada any more
than, on the view taken by the appellant, the cause
of action in question here is situate in Canada.
(The question of the Court's "jurisdiction" in the
latter case would, as I understand it, still seem to
be open for consideration.)
3 [1974] 1 F.C. 410.
In the absence of any knowledge of authority
directly related to the question, I am not persuad
ed that admiralty subject matter jurisdiction is
subject to implied geographical limitations. In an
admiralty cause (and, as far as I am aware, in any
other cause in any court), in the absence of express
limitation, there is no basis for implying geograph
ical limitations on the Court's jurisdiction other
than the necessity of serving the defendant within
the Court's geographical jurisdiction unless leave
under appropriate authority is obtained to serve ex
iuris.
I am not, therefore, persuaded that the state
ment of claim here in question should be set aside
against the appellant under Rule 419(1)(a)
because the contractual cause of action pleaded
against the appellant is not within the Trial Divi
sion's jurisdiction. For that reason, the appeal
should, in my view, be dismissed with costs.
In any event, in my view, even if there is a
geographical limitation on the Trial Division's
jurisdiction under section 22(2)(n), as contended
for by the appellant, I am of opinion that the
application was dismissed in a proper exercise of
the Court's discretion. The cause of action was so
ambiguously pleaded that it would have been open
to the respondent to prove a contract that required
partial performance in Canada and to prove a
breach that was wholly or partly in Canada. That
being so, it was, in my view, open to the learned
Trial Judge to take the view, which apparently he
did, that the question of jurisdiction should be left
for decision until, in the ordinary course of events,
the real facts are established. For that reason also,
I think that the appeal should be dismissed with
costs.
* * *
URIE J. concurred.
* * *
HYDE D.J. concurred.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.