Date: 20000405
Docket: T-477-98
BETWEEN:
JOHN E. CANNING LTD.
Plaintiff
- and -
TRIPAP INC.
Defendant
REASONS FOR ORDER
LEMIEUX J.
| A. INTRODUCTION |
[1] The defendant, a newsprint manufacturer located at or near Trois-Rivières, Quebec, moves the Court in writing for summary judgment dismissing the action commenced by the plaintiff, a company engaged in buying and selling pulp wood located on Prince Edward Island. The basis for the defendant"s motion is this Court"s lack of jurisdiction to entertain the plaintiff"s action for reason the plaintiff"s claim does not fall within the scope of Canadian maritime law defined in section 2 of the Federal Court Act as interpreted several times by the Supreme Court of Canada.
| B. BACKGROUND |
[2] In March 1997, Tripap as buyer and John E. Canning Ltd. ("Canning") as seller, entered in a five-year agreement in which Canning agreed to sell to Tripap each year ending December 31st a minimum and maximum annual volume of wood measured in cubic metres stacked. Also covered were price, method of payment (for each cargo 75% upon arrival of the barge at Tripap"s dock and the remaining 25% after delivery of the goods) species of wood and grade, place and methods of measurement.
[3] Canning agreed to deliver all the wood at Tripap"s dock in the Province of Quebec. There was a term relating to the length of unloading operations with a provision "[I]f for any reason unloading is disrupted or delayed for reasons caused by the Buyer, the Buyer agrees to cover any additional costs incurred by the Seller as a direct result of the disruption or delay".
[4] Canning then entered into a five-year agreement with McKeil Marine Limited ("McKeil") for the carriage of the pulp wood to Tripap"s dock.
[5] In June 1997, Tripap terminated its agreement with Canning on the grounds Canning had failed to perform its obligations.
[6] On January 23, 1998, McKeil commenced in this Court action T-110-98 and named Canning as a defendant. The basis for the action is breach of the contract of carriage entered into in April 1997 and in particular termination of that contract "without cause on or about December 17th , 1997." McKeil claimed lost earnings and outstanding demurrage charges.
[7] On March 23, 1998, Canning commenced this action (T-477-98) with Tripap as defendant. Canning said it entered into a contract for the supply of wood in March 1997 which Tripap breached by terminating the contract on June 9, 1997, without cause or any other right or justification. Canning claimed damages including expenses covering barge and equipment expenses.
[8] On that same day, March 23, 1998, in the McKeil action (T-110-98), Canning defended and counterclaimed. It said McKeil fundamentally breached the contract of carriage on or about May 4, 1997, by failing to commence work pursuant to the preliminary schedule of work provided by Canning to McKeil. It alleged McKeil"s breaches caused it lost sales, among other damages.
[9] Also on that same day, March 23, 1998, Canning in action T-110-98 sent a third party notice to Tripap claiming that Canning had entered into the contract of carriage with McKeil "with the knowledge and concurrence of Tripap", that Tripap breached the Canning/Tripap contract by unlawfully terminating it which resulted in Canning being unable to satisfy its obligations to McKeil, the plaintiff in the action. Canning says Tripap, under the circumstances, is obligated to indemnify Canning.
| C. ANALYSIS |
[10] This motion for summary judgment only relates to this action (T-477-98) between Canning and Tripap. These reasons do not concern action T-110-98 where McKeil is plaintiff, Canning is defendant and plaintiff by counterclaim and Tripap is defendant by counterclaim.
| (a) Principles |
[11] This motion is to be determined according to the principles established by the Supreme Court of Canada in Monk Corporation v. Island Fertilizers Limited, [1991] 1 S.C.R. 779.
[12] In that case, Monk, an international resource broker, entered into a contract with Island for the supply of urea produced in Russia for delivery to three Canadian ports on the East Coast. Monk then entered into a charter-party with the owners of the vessel Super Spirit.
[13] Monk then commenced an action in this Court advancing claims for demurrage, delivery of excess cargo and the cost of renting shore cranes.
[14] Iacobucci J., for the Court, framed the approach in the following words at page 795:
| Applying the principles and approach of ITO to the case at bar, one must begin by asking whether the claims made by Monk are so integrally connected to maritime matters as to be legitimate Canadian maritime law within federal competence. To answer this question, it is important first to focus on the agreement between the parties in order to ascertain the nature and context of the claims in question, and second, to ascertain whether the claims are maritime under the ITO analysis. |
[15] He examined the agreement and found it had two aspects: one related to the sale of goods and the other maritime in nature. Iacobucci J. did not characterize these two aspects as separate contracts but rather "one contract which includes a number of different obligations or undertakings".
[16] He concluded the contract had many aspects which were maritime in nature such as all undertakings that relate to a contract of carriage by sea including the obligations of Island to unload upon delivery with a specified rate of discharge.
[17] He added, "[H]owever, . . . it is not enough to show that maritime undertakings are involved, rather it must be shown that the specific claims advanced are integrally connected to maritime matters" (p. 797), for otherwise, they fall outside of the scope of this Court"s jurisdiction.
[18] After carefully looking at each claim, Iacobucci J. found "[A]ll of Monk"s claims have as their source the obligation of Island to discharge the cargo..., which is normally associated with a contract of carriage by sea;" (p. 798) in other words, "the underlying activity to which the claim of Monk relate was the discharge of cargo, which was an obligation on Island arising from the contract of carriage aspects of the agreement between the parties and which had a maritime character" (p. 799).
| (b) Application to this case |
[19] Taking into account the approach and principles in Monk, supra, I am of the view Tripap succeeds and this Court has no jurisdiction to entertain Canning"s claim.
[20] Accepting, as I must on this type of motion, the truth of the allegations in Canning"s statement of claim and characterizing the March 1997 contract between the parties as involving several undertakings, some of which are maritime matters (the obligation of Canning to deliver by sea wood pulp to Tripap), the action by Canning, as framed, does not trigger the Court"s jurisdiction because the one claim advanced by Canning is not a maritime claim as defined by Monk, supra . The sole claim advanced is unlawful termination of a purchase and sale agreement and no damages are claimed in respect of a breach by Tripap having to do with the maritime aspects of the agreement, i.e. discharge or, in particular, problems arising in unloading, as in Monk, supra.
| D. CONCLUSION |
[21] For all of these reasons, summary judgment is granted, with costs, and this action is dismissed for lack of jurisdiction in this Court.
"François Lemieux"
J U D G E
OTTAWA, ONTARIO
APRIL 5, 2000