SUPREME
COURT OF CANADA
Between:
Phoenix
Bulk Carriers Limited
Appellant
and
Kremikovtzi
Trade also known as Kremikovski Trade
Respondent
Coram:
McLachlin C.J. and Bastarache, Binnie, LeBel, Deschamps, Fish, Abella, Charron
and Rothstein JJ.
Reasons for
Judgment:
(paras. 1 to 5)
|
The Court
|
______________________________
Phoenix Bulk Carriers Ltd. v. Kremikovtzi Trade, [2007] 1
S.C.R. 588, 2007 SCC 13
Phoenix Bulk Carriers Limited Appellant
v.
Kremikovtzi Trade also known as Kremikovski Trade Respondent
Indexed as: Phoenix Bulk Carriers Ltd. v. Kremikovtzi
Trade
Neutral citation: 2007 SCC 13.
File No.: 31347.
2007: February 14; 2007: March 16.
Present: McLachlin C.J. and Bastarache, Binnie, LeBel,
Deschamps, Fish, Abella, Charron and Rothstein JJ.
on appeal from the federal court of appeal
Maritime law — Action in rem against cargo — Cargo
owner entering into contract of affreightment with carrier but shipping cargo
on vessel operated by another company — Carrier bringing in rem action against
cargo — Federal Court of Appeal erred in striking in rem statement of claim and
in setting aside arrest warrant of cargo — Arrested cargo “property
. . . subject of the action” within meaning of s. 43(2) of
Federal Courts Act — Federal Courts Act, R.S.C. 1985, c. F‑7,
s. 43(2) .
Courts — Federal Court — In rem jurisdiction —
Section 43(2) of Federal Courts Act granting in rem jurisdiction “against
the ship, aircraft or other property that is the subject of the action” —
Meaning of expression “subject of the action” — “Physical nexus” approach to
interpretation of s. 43(2) to be rejected in favour of “identifiability”
approach — Cargo “subject of the action” if cargo designated in contract of
affreightment alleged to be breached — Federal Courts Act, R.S.C. 1985, c. F‑7,
s. 43(2) .
Held: The appeal
should be allowed on the issue of in rem jurisdiction and the remaining
two issues remitted to the Federal Court of Appeal.
Cases Cited
Not followed: Paramount Enterprises International, Inc. v. An Xin Jiang (The),
[2001] 2 F.C. 551.
Statutes and Regulations Cited
Federal Courts Act,
R.S.C. 1985, c. F‑7, s. 43(2) .
APPEAL from a judgment of the Federal Court of Appeal
(Nadon, Sharlow and Malone JJ.A.), [2006] 3 F.C.R. 475,
345 N.R. 61, [2006] F.C.J. No. 9 (QL), 2006 FCA 1,
setting aside an order of Rouleau J. dismissing a motion to strike an
in rem statement of claim and to set aside a warrant of arrest. Appeal
allowed.
Peter G. Pamel, Jean‑Marie Fontaine and Rick Williams,
for the appellant.
John W. Bromley, for the respondent.
The following is the judgment delivered by
1
The Court — This appeal arises from the arrest of a cargo of coal on a ship.
The cargo was arrested as an interim security measure to secure the outcome of
an arbitration proceeding in London, England. The arbitration relates to an
alleged breach of a contract of affreightment (or charter party) dated July 27,
2005. The appellant alleges that, in breach of the contract, the respondent
loaded the cargo on a competitor’s ship, the “M/V Swift Fortune”, resulting in
a loss to the appellant of US$388,403.63.
2
The appellant commenced an action in rem against “The Cargo of
Coal loaded on the ship ‘M/V Swift Fortune’”, and in personam against
“The Owners of the Cargo and all others interested in the cargo of coal loaded
on the ship ‘M/V Swift Fortune’”. The appellant also sought, and received, a
warrant to arrest the cargo from the Federal Court, and after the warrant was
issued, caused the cargo to be arrested on board the “M/V Swift Fortune”. The
action itself has been stayed in favour of the arbitration proceedings in London.
3
The respondent brought a motion to set aside the warrant of arrest, and
to strike the in rem statement of claim. The motions judge, Rouleau J.,
dismissed the respondent’s motion. The respondent appealed to the Federal
Court of Appeal. The Federal Court of Appeal allowed the appeal on the basis
that it was bound by its earlier decision in Paramount Enterprises
International, Inc. v. An Xin Jiang (The), [2001] 2 F.C. 551, but it
indicated that it would have reached a different result but for the decision:
[2006] 3 F.C.R. 475, 2006 FCA 1. Whatever the merits of the practice that led
the Federal Court of Appeal to allow the appeal, its conclusion that s. 43(2)
of the Federal Courts Act, R.S.C. 1985, c. F-7 , was not satisfied in
this case cannot stand.
4
For the reasons given by Nadon J.A., we agree that the narrow “physical
nexus” interpretation of s. 43(2) should be rejected, in favour of an
“identifiability” test that asks whether the cargo is the cargo designated in
the contract of affreightment alleged to be breached. Applying this approach,
we are satisfied that s. 43(2) has been satisfied in this case.
5
Accordingly, we would allow the appeal on this point with costs
throughout, and remit the matter to the Federal Court of Appeal for consideration
of the two remaining issues.
Appeal allowed with costs.
Solicitors for the appellant: Borden Ladner Gervais,
Montréal.
Solicitors for the respondent: Bromley Chapelski,
Vancouver.