Federal Court Decisions

     T-668-96

BETWEEN:

     MIL DAVIE INC.,

     Plaintiff,

     - and -

     HIBERNIA MANAGEMENT AND DEVELOPMENT COMPANY LTD,

     Defendant.

     REASONS FOR ORDER

LUTFY J.:

     An Order will issue staying the action on the ground of the lack of jurisdiction of the Federal Court of Canada in respect of the cause of action disclosed in the Statement of Claim.

     The Plaintiff seeks damages of $17,468,000 as the result of the defendant's decision to award to St. John Shipbuilding Ltd ("SJSL") the completion contract to finish the manufacturing of certain topside modules concerning the Hibernia oilfield project. The party which had originally won the tender process for the construction of the topside modules was being replaced. As the only other party to have bid for the original contract, the plaintiff alleges that the defendant's decision to award the completion contract to SJSL was made without seeking tenders, in bad faith and with malice.

     The plaintiff relies on subsections 36(1) and (3) of the Competition Act, R.S.C. 1985, c. C-34 ("Act") as the statutory grant of jurisdiction by Parliament in respect of this action:

36(1) Any person who has suffered loss or damage as a result of

(a) conduct that is contrary to any provision of part VI, or

(b) the failure of any person to comply with an order of the Tribunal or another court under this Act,

may, in any court of competent jurisdiction, sue for and recover from the person who engaged in the conduct or failed to comply with the order an amount equal to the loss or damage proved to have been suffered by him together with any additional amount that the court may allow not exceeding the full cost to him of any investigation in connection with the matter and of proceedings under this section.

                     ...

(3) For the purposes of any action under subsection (1), the Federal Court is a court of competent jurisdiction.

The plaintiff further relies on subsection 45(1), particularly paragraph 45(1)(c), as the provision of Part VI of the Act which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction (ITO - International Terminal Operators Ltd. v. Miida Electronics Inc., [1986] 1 S.C.R. 752):

45(1) Every one who conspires, combines, agrees or arranges with another person

(a) to limit unduly the facilities for transporting, producing, manufacturing, supplying, storing or dealing in any product,

(b) to prevent, limit or lessen, unduly, the manufacture or production of a product or to enhance unreasonably the price thereof,

(c) to prevent or lessen, unduly, competition in the production, manufacture, purchase, barter, sale, storage, rental, transportation or supply of a product, or in the price of insurance on persons or property, or

(d) to otherwise restrain or injure competition unduly,

is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten million dollars or to both.

     Finally, in asserting the application to this action of section 45 of the Act, the plaintiff relies on section 45, particularly subsection 45(1) and paragraph 45(3)(d), of the Canada-Newfoundland Atlantic Accord Implementation Act, S.C. 1987, c.3 ("Federal Accord Act"):

45 (1) In this section, "Canada-Newfoundland benefits plan" means a plan for the employment of Canadians and, in particular, members of the labour force of the Province and , subject to paragraph (3)(d), for providing manufacturers, consultants, contractors and service companies in the Province and other parts of Canada with a full and fair opportunity to participate on a competitive basis in the supply of goods and services used in any proposed work or activity referred to in the benefits plan.

...

(3) A Canada-Newfoundland benefits plan shall contain provisions intended to ensure that

                     ...

(d) first consideration shall be given to services provided from within the Province and to goods manufactured in the Province, where those services and goods are competitive in terms of fair market price, quality and delivery.

The plaintiff argues that these provisions set out "the structure of the market" (see the analysis of Gonthier J. in R. v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606 at 651-655) within which the defendant should have conducted its activities. It is the defendant's failure to do so which, in the plaintiff's submission, brings its conduct within the scope of section 45 of the Act.

     The plaintiff's submissions must fail, in my view, because its Statement of Claim falls far short of clearly alleging the factual basis for the kind of anti-competitive conduct contemplated by section 45 of the Act. In none of its 135 paragraphs, does the Statement of Claim disclose specific allegations of fact which come within section 45. Three paragraphs contain general allegations of anti-competitive activity:

113.      HMDC a donc agi de mauvaise foi et malicieusement envers MIL et a fait preuve de favoritisme et de pratiques restrictives de commerce contraires à la Loi sur la concurrence et au Plan de retombées en confiant le contrat pour terminer les travaux à SJSL;

124.      HMDC a donc agi de mauvaise foi et malicieusement envers MIL en étant partie à un complot avec SJSL pour restreindre indûment la concurrence et pour lui causer un préjudice;

126.      HMDC a agi de mauvaise foi et malicieusement en entamant, dès l'été 1994, des négociations en catimini avec SJSL qui n'avaient pour seul but et qui n'ont eu comme seul résultat que de restreindre la libre concurrence;

     However, these are mere bald assertions without accompanying specific allegations of fact. Accordingly, I have concluded that the Statement of Claim discloses no reasonable cause of action in relation to section 45 of the Act, the sole statutory grant of jurisdiction by Parliament upon which the plaintiff relies. Collier J. appears to have reached a similar conclusion in Pacific Western Airlines Ltd. v. The Queen, [1979] 2 F.C. 476 confirmed by the Court of Appeal at [1980] 1 F.C. 86 at 88, when he stated at p. 486:

One cannot, merely by baldly asserting, in a pleading, breach of certain Regulations said to be Canadian federal law,10 with nothing more, automatically invoke or attract the jurisdiction of the Court. Put another way, the deemed truth of paragraph 87 cannot support jurisdiction. The plea is deficient. I cannot see how jurisdiction can be bestowed by such a plea - one barren of any facts from which the question of jurisdiction or no can be determined.

     ...

    

10      But I assume, of course, for the purposes of the motion, the truth of the assertion.

     In the present case, it is difficult to envisage, even assuming the bad faith and malice alleged by the plaintiff, that the decision to award the completion of the contract to SJSL instead of to the plaintiff could have lessened, unduly, competition in the manufacture of topside modules. It is even harder to imagine how the defendant, the purchaser of the product and not one of the competing rivals capable of manufacturing it, could have conspired to lessen competition in this regard.

     Both parties take the position that section 23 of the Federal Court Act has no application to this case. Neither party denies the jurisdiction of the Supreme Court of Newfoundland to be seized of the action if it were issued in that province. Because of my finding concerning section 45 of the Act, I need not deal with the defendant's submissions concerning subsection 17(6) of the Federal Court Act and section 4 of the Federal Accord Act.

     The motion will be granted with costs against the plaintiff.

                         Allan Lutfy

                         Judge

Ottawa, Ontario

March 21, 1997