Ruby Trading S.A. v. Parsons, docket A-90-00

                                        

Date: 20001121

Docket: A-90-00

CORAM:      ROTHSTEIN, J.A.,

         SEXTON, J.A.,

         EVANS, J.A.

BETWEEN:

     MYLES PARSONS, INTERNATIONAL TRANSPORT WORKERS

     FEDERATION, HABIBULA MUSTAFA, BAYRAM MON,

     KRASSIMIR STOYKOV and

     ANTON LITVICHKOV

     APPELLANTS

     (RESPONDENTS)

     - and -

     RUBY TRADING S.A.

     RESPONDENT

     (PLAINTIFF)

Heard at Vancouver, British Columbia, Tuesday, October 31, 2000

Judgment delivered at Ottawa, Ontario, on Tuesday, November 21, 2000.

REASONS FOR JUDGMENT BY:      SEXTON J.A.

CONCURRED IN BY:      ROTHSTEIN J.A.

     EVANS J.A.

                                        

Date: 20001121

Docket: A-90-00

CORAM:      ROTHSTEIN, J.A.,

         SEXTON, J.A.,

         EVANS, J.A.

BETWEEN:

     MYLES PARSONS, INTERNATIONAL TRANSPORT WORKERS

     FEDERATION, HABIBULA MUSTAFA, BAYRAM MON,

     KRASSIMIR STOYKOV and

     ANTON LITVICHKOV

     APPELLANTS

     (DEFENDANTS)

     - and -

     RUBY TRADING S.A.

     RESPONDENT

     (PLAINTIFF)

     REASONS FOR JUDGMENT

SEXTON, J.A.

INTRODUCTION

[1]      The essential issue in this case is whether the Federal Court of Canada has jurisdiction to entertain an action by a foreign ship owner against four of its foreign crew members and a Canadian Union and its representative for inducing breach of contract between the ship owner and the crew members; and against the union's representative and those crew members for conspiracy to cause economic harm.

FACTS

[2]      In outlining the background of this case, it should be understood that it is derived from the evidence in the record before Lutfy A.C.J. in the Trial Division. While I believe that the information provides necessary context to this decision, I wish to make it clear that I am not purporting to make any findings of fact. These will, of course, be left to the trial judge.

[3]      The Appellants Mustafa, Mon, Stoykov and Litvichkov, citizens of Turkey (Mon) and Bulgaria (the remaining three), were crew members on the Japan Rainbow II, a cargo ship registered in Panama and owned by the Respondent, a Liberian Corporation. On February 5, 2000, the vessel was tied up at the United Grain Growers' terminal in Vancouver harbour to take on a load of grain. The defendant crew members were all party to employment contracts with the ship's owners. These contracts were not subject to any collective bargaining agreement.

[4]      Some time around midday of February 5, the Appellant Parsons, an inspector for the Appellant International Transport Workers Federation (the "ITF"), an organization which represents crew members on ocean-going vessels, boarded the vessel and purported to represent Mr. Mon in seeking redress from the Respondent for a number of complaints related to his pay and repatriation to Turkey. In addition, Mr. Parsons demanded that Mr. Mon be paid $3,600 (U.S.), the alleged difference between the amount that he had been paid under his contract with the Respondent and what he would have received had he been paid under an ITF collective agreement. While negotiating with the Respondent's representative, Mr Parsons threatened to approach other crew members of the vessel and encourage them to also demand the back wages to which they would be entitled under an ITF contract. Over the course of the day, he did arrange to represent the three other Appellant crew members in making that demand.

[5]      At approximately 10:30 pm of the same day, a strike sign was posted on the ship. As a result, loading of the ship ceased. Among the demands of the four striking crew members were the signing of a collective bargaining agreement with ITF as the bargaining agent for the crew and the retroactive payment of wages in accordance with the standard ITF agreement rates.

[6]      Ruby Trading immediately commenced an action against the Appellants in the Federal Court, Trial Division. Based upon that action, Ruby Trading brought a motion seeking, inter alia, to enjoin the Appellants from picketing, communicating strike notices or otherwise disrupting the loading or movements of the Japan Rainbow II.

[7]      The motion was heard by Lutfy A.C.J. on February 6, 2000. On February 7, he ordered that the Appellants refrain from picketing or communicating strike notices with respect to the Japan Rainbow II and that the Appellant crew members depart the vessel pending repatriation. The order was to remain in effect for 14 days.

[8]      The Appellants have appealed that order to this Court. They assert that the Court lacked the jurisdiction to grant the injunction; that even if the Court had jurisdiction, it erred in granting the injunction; and that they were denied natural justice at the hearing before Lutfy A.C.J..

[9]      While awaiting the hearing of the present appeal, the main action has proceeded in the Trial Division. The Appellants brought a motion in that forum to strike the Respondent's Statement of Claim for want of jurisdiction. That motion was denied by Hargrave P. on August 23, 2000. He held that the matter of jurisdiction had already been argued before the Associate Chief Justice on the motion for the injunction; that the question of jurisdiction was, therefore, res judicata; and that the remedy sought by the Appellants could only be obtained as a result of this appeal.

THE SCOPE OF THIS APPEAL

[10]      During the period in which the injunction was in effect, the Japan Rainbow II completed loading and departed Vancouver. As a result, the question of the appropriateness of the issuance of the injunction is now moot. Therefore, the Court declined, at the oral hearing, to deal with the following matters raised by the Appellants:

1.      Whether, in the test for the granting of an interlocutory injunction, the Respondent failed to establish irreparable harm;

2.      Whether, in the test for the granting of an interlocutory injunction, the Respondent failed to establish that the balance of convenience favoured the granting of the injunction;

3.      Whether the Appellants were denied natural justice and a fair hearing on the motion before Lutfy A.C.J.; and

4.      Whether the Appellant could introduce new affidavit evidence in support of the appeal.

[11]      Upon being so informed, all of the parties requested that this Court consider whether the Federal Court has jurisdiction to deal with the various claims contained in the Statement of Claim. These are:

1.      damages for breach of contract and conspiracy to cause intentional economic harm;

2.      an injunction restraining the defendants from interfering with the orderly operation of the vessel;

3.      an order that the defendants comply with s. 87.7(1) of the Canada Labour Code;

4.      an order removing the defendants from the vessel;

5.      punitive or exemplary damages; as well as

6.      interest and costs.

[12]      As I noted above, the issue of jurisdiction over the subject matter of the main action was addressed by Prothonotary Hargrave in his decision of August 23. The Appellants have launched an appeal from this decision in the Trial Division. That appeal has been held in abeyance, however, due to the parties' belief that the issue would be decided on this appeal. This belief seems to have been based on the Prothonotary's finding that the jurisdictional issue was res judicata as a result of Lutfy A.C.J.'s granting of the injunction.

[13]      While it is implicit in the order of the Associate Chief Justice that he considered that he had jurisdiction to issue the interlocutory injunction, there is no indication that he turned his mind to the question of whether the Court had jurisdiction to consider the other matters contained in the Statement of Claim, nor was there any reason for him to do so. As a result, were we to limit our consideration only to the question of the jurisdiction of Lutfy A.C.J. to grant the order, I do not believe that our determination would settle the issue of jurisdiction over the rest of the main action.

[14]      Although, strictly speaking, the issue of jurisdiction over the main action would not arise on this appeal, we have agreed, at the request of the parties, to deal with it rather than to send them back to the Trial Division on appeal from Prothonotary Hargrave. We believe that this is a just, expeditious and less expensive way to deal with the matter as we were assured by both sides that the matter would wind up before this Court again in any event; that they had fully canvassed the issue in their memoranda and were prepared to do so in oral argument; and that there were no facts in dispute relevant to the jurisdictional issue.

The Appellants' Submissions

[15]      I turn now to the submissions made by the Appellants before us. They argue that the Federal Court has no jurisdiction over the subject matter of the action for the following reasons:

1.      The Respondent's claim is based on the common law of tort and contract.

2.      The plaintiff's claims are all claims in personam. The plaintiff makes no claim in rem.

3.      The in personam claims of the Respondents in contract and tort do not fall within the maritime jurisdiction of the Federal Court.

4.      Alternatively, jurisdiction with respect to the claims in contract against the Appellant crew members (which allege, in essence, that they engaged in an illegal strike) is "specially assigned" to the Canada Industrial Relations Board pursuant to Div. VI of the Canada Labour Code. It is said that the CIRB has exclusive authority to determine whether an illegal strike exists.

5.      To the extent that the Respondent seeks to compel the Appellants to comply with section 87.7(1) of the Canada Labour Code, it must seek that relief from the CIRB to which exclusive jurisdiction has been specially assigned.

ANALYSIS

General

[16]      The general approach to determining whether the Federal Court of Canada has jurisdiction over a matter was articulated by the Supreme Court of Canada in ITO - International Terminal Operators Ltd. v. Miida Electronics Inc..¹ McIntyre J., writing for the majority, listed the following essential requirements to support a finding of jurisdiction in the Federal Court:

1.      There must be a statutory grant of jurisdiction by Parliament;

2.      There must be an existing body of federal law essential to the disposition of the case and which nourishes the statutory grant of jurisdiction; and

3.      The law on which the case is based is "a law of Canada" as the phrase is used in s. 101 of the Constitution Act, 1867.2

[17]      I propose to first discuss these three requirements within the general context of this case.

1. Statutory Grant of Jurisdiction

[18]      The first requirement arises out of the fact that the Federal Court is a statutory creation without inherent jurisdiction. In other words, the Court has no jurisdiction over a matter unless it is specifically assigned by statute.³

[19]      The Federal Court Act4 gives the Court jurisdiction over "Canadian maritime law":

22. (1) The Trial Division has concurrent original jurisdiction, between subject and subject as well 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

22. (1) La Section de première instance a compétence concurrente, en première instance, dans les cas -- opposant notamment des administrés -- où une demande de réparation ou un recours est présenté en vertu du droit maritime canadien ou d'une loi fédérale concernant la navigation ou la marine marchande, sauf attribution expresse contraire de cette compétence.

2. ..."Canadian maritime law" means the law that was administered by the Exchequer Court of Canada on its Admiralty side by virtue of the Admiralty Act, chapter A-1 of the Revised Statutes of Canada, 1970, or any other statute, or that would have been so administered if that Court had had, on its Admiralty side, unlimited jurisdiction in relation to maritime and admiralty matters, as that law has been altered by this Act or any other Act of Parliament.

2. ... « droit maritime canadien » Droit -- compte tenu des modifications y apportées par la présente loi ou par toute autre loi fédérale -- dont l'application relevait de la Cour de l'Échiquier du Canada, en sa qualité de juridiction de l'Amirauté, aux termes de la Loi sur l'Amirauté, chapitre A-1 des Statuts revisés du Canada de 1970, ou de toute autre loi, ou qui en aurait relevé si ce tribunal avait eu, en cette qualité, compétence illimitée en matière maritime et d'amirauté.

Thus, the first requirement is satisfied if the claims made by the Respondent fall within the body of Canadian maritime law and jurisdiction over them has not been specially assigned to some other court or adjudicative body.

2 & 3. Federal Law and "Law of Canada"

[20]      The Federal Court is created under s. 101 of the Constitution Act, 1867 as an "additional Court for the better administration of the Laws of Canada."⁵ A "law of Canada"for the purpose of s. 101 means a federal statute or some other body of federal law.

[21]      Sub-section 91(10) of the Constitution Act, 1867 grants Parliament authority over "Navigation and Shipping", and it is beyond question that Canadian maritime law, as defined in s. 2, of the Federal Court Act is a comprehensive body of federal law dealing with all claims in respect of maritime and admiralty matters.⁶ Given the claims made against the Appellants by the Respondent, it would appear that the common law of contract and tort are essential to the disposition of the case. As with the first requirement, then, the Court will only have jurisdiction if the relevant principles of the common law have been incorporated into Canadian maritime law.

[22]      The Courts have long held that the scope of Canadian maritime law is limited only by the constitutional division of powers such that, in determining whether or not any particular case involves a maritime or admiralty matter, encroachment on what is in pith and substance a matter falling within section 92 of the Constitution Act is to be avoided.⁷ The Supreme Court of Canada, beginning with the ITO case, has articulated the following test to determine whether the second and third requirements are met:

The test for determining whether a subject matter under consideration is within maritime law requires a finding that the subject matter is so integrally connected to maritime matters as to be legitimate Canadian maritime law within federal competence.8

[23]      I will now consider each of the Appellants' submissions seriatum.

Are the Contract and Tort Claims Part of Canadian Maritime Law

[24]      Based on the foregoing analysis, I believe that the only question remaining to be answered with respect to this submission is whether the subject matter of the tort and contract claims is so integrally connected to maritime matters as to be legitimate Canadian maritime law within federal competence. In answering this question, it is of assistance to refer to previous judicial decisions.

[25]      In the seminal case of ITO, the major issue before the Supreme Court was whether an action in negligence could be brought in the Federal Court by a plaintiff, a part of whose shipment of electronic calculators had been stolen from the defendant's warehouse after being shipped from Japan by another defendant. The majority held that the proximity of the terminal operation to the port of Montreal, the role of ITO in port activities, its connection to a contract of carriage by sea, and the fact that the storage was for only a short term after the calculators were unloaded from the ship, provided a sufficiently integral connection between the dispute and maritime matters to bring the matter within legitimate Canadian maritime law and the jurisdiction of the Federal Court.

[26]      The Bow Valley Husky v. St. John Shipbuilding Ltd. case involved a negligence action centred upon a defective ground fault circuit breaker (GFCB) system that caused a serious fire on board an oil drilling rig. McLachlin J., as she then was, writing for the Supreme Court of Canada, found that the subject matter was integrally connected to maritime matters:

This case involves tortious liability arising in a maritime context. The Court of Appeal, per Cameron J.A., held that "[t]he activities of the Bow Drill 3 are essentially maritime in nature, albeit a modern view of maritime activity" ... The rig was not only a drifting platform, but a navigable vessel. As Cameron J.A. put it [citation omitted], the rig "is capable of self-propulsion; even when drilling, is vulnerable to the perils of the sea; is not attached permanently to the ocean floor and, can travel world wide to drill for oil". Alternatively, even if the rig is not a navigable vessel, the tort claim arising from the fire would still be a maritime matter since the main purpose of the Bow Drill III was activity in navigable waters. The operation of the rig's heat trace system was hazardous because the GFCB system that was installed was not appropriate in the ungrounded marine context. The claims against the defendants for failure to warn included allegations that the defendants knew about the special marine material requirements such as non-combustibility or flame retardancy. The products liability issues in this case are clearly dominated by marine considerations.9

[27]      In Shibamoto & Co. v. Western Fish Producers, Inc.,¹⁰ this Court dealt with a contract for the processing of salmon and salmon roe on processing vessel. MacGuigan J.A., in the course of determining that the Federal Court-Trial Division had jurisdiction wrote the following:

However, the appellants' contention that the respondent's counterclaim for the destruction of a fish processing business by fraud, deceit, conspiracy and breach of contract is a matter of provincial law rather than of Canadian maritime law is completely unsustainable in the light of ITO. Since the law of contract and of torts falls under Canadian maritime law, to the extent that it is required, it cannot be maintained that certain parts of those bodies of law are not matters of

maritime law. On the authority of ITO Canadian maritime law is the existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of authority.11

[28]      Based on the principles set forth in the preceding cases, it is my conclusion that the claims advanced by the Respondent in the main action are sufficiently integrally connected with maritime matters as to be legitimate Canadian maritime law within federal legislative competence. The claims are that, the Appellant crew members were contracted and employed in a maritime matter - the operation of a ship. The Appellant Parsons, representing ITF (an organization which exclusively represents sea-farers), boarded the ship and while on board encouraged the crew members to breach their contracts. The Appellant crew members breached their contracts by refusing to work on the ship. As a result, the vessel's operations were disrupted - it was prevented from taking on its cargo, its putting to sea was delayed - and, consequently, the Respondent suffered a loss.

[29]      Therefore, subject to any conclusions I reach below, I believe that Lutfy A.C.J. had jurisdiction to make the order of February 7, 2000 and that the Federal Court has jurisdiction over the claims in contract and tort made by the Respondents in the main action.

Jurisdiction In Personam or In Rem

[30]      With respect to the submissions that the Court lacks jurisdiction over the claims because they are claims in personam as opposed to in rem, I note that, in addition to the grant of jurisdiction "between subject and subject" found in s. 22, s. 43 of the Federal Court Act provides that:

43. (1) Subject to subsection (4) [a provision that restricts in personam actions related to collisions between ships], the jurisdiction conferred on the Court by section 22 may in all cases be exercised in personam.

43. (1) Sous réserve du paragraphe (4), la Cour peut, aux termes de l'article 22, avoir compétence en matière personnelle dans tous les cas.

Thus, if the claims in tort and contract fall within the jurisdiction of the Court, that jurisdiction can be exercised in personam. See, for example, the cases discussed above.

Illegal Strike

[31]      The Appellant crew members submit that the claims of breach of contract against them amount to a claim that they were on an illegal strike. This is a matter which they say has been "specially assigned" to the Canadian Industrial Relations Board (CIRB) by the Canada Labour Code¹² and, thereby, removed from the jurisdiction of the Court. They base this submission upon

s. 91 of the Code and case law in which it has been held that applications for orders under the predecessor provisions to s.91 have been specially assigned to the Board.

[32]      I do not believe that either the Labour Code, or the cases cited have application to this situation. To accept the crew members' submission in the circumstances of the case at bar would require me to accept that Parliament intended the Code to govern employment relations between a foreign ship owner and foreign crew members. I can find no indication that Parliament had such an intention, nor have the Appellants provided any authority for the proposition that Parliament could effectively legislate with respect to such an extra-territorial contract between foreign subjects.

Section 87.7 of the Canada Labour Code

[33]      The Appellants submit that the Respondent's request for an order requiring compliance with s. 87.7 of the Labour Code is also a matter which has been specially assigned to the CIRB. The relevant provisions read as follows:

87.7 (1) During a strike or lockout not prohibited by this Part, an employer in the long-shoring industry, or other industry included in paragraph (a) of the definition "federal work, undertaking or business" in section 2, its employees and their bargaining agent shall continue to provide the services they normally provide to ensure the tie-up, let-go and loading of grain vessels at licensed terminal and transfer elevators, and the movement of the grain vessels in and out of a port. ...

87.7 (1) Pendant une grève ou un lock-out non interdits par la présente partie, l'employeur du secteur du débardage ou d'un autre secteur d'activités visé à l'alinéa a) de la définition de « _entreprise fédérale_ » à l'article 2, ses employés et leur agent négociateur sont tenus de maintenir leurs activités liées à l'amarrage et à l'appareillage des navires céréaliers aux installations terminales ou de transbordement agréées, ainsi qu'à leur chargement, et à leur entrée dans un port et leur sortie d'un port.

(3) On application by an affected employer or trade union, or on referral by the Minister, the Board may determine any question with respect to the application of subsection (1) and make any order it considers appropriate to ensure compliance with that subsection.

(3) Sur demande présentée par un employeur ou un syndicat concerné ou sur renvoi fait par le ministre, le Conseil peut trancher toute question liée à l'application du paragraphe (1) et rendre les ordonnances qu'il estime indiquées pour en assurer la mise en oeuvre.

[34]      I decline to consider this submission. The respondent provided no indication that it intends to pursue the claim. Moreover, in my opinion, this matter is moot. Whether or not there was, indeed, a strike, the grain has been loaded, the vessel has left the port and the Appellant crew members have left the country.

CONCLUSION     

[35]      In summary, I believe that both the order made by Lutfy A.C.J. and the claims for damages in contract and tort raised in the Respondent's Statement of Claim are within the jurisdiction of the Federal Court. As a result, the Appeal is dismissed with costs.

     "J. Edgar Sexton"

     J.A.

"I agree

Marshall Rothstein J.A."

"I agree

John M. Evans J.A."

__________________

¹ [1986] 1 S.C.R. 752 [hereinafter ITO ].

² Ibid. at 766.

³ Ordon Estate v. Grail, [1998] 3 S.C.R. 437 at 474, para . 46 [hereinafter Ordon Estate].

⁴ R.S.C. 1985, c. F-7.

⁵      101. The Parliament of Canada may, notwithstanding anything in this Act, from Time to Time provide for the Constitution, Maintenance, and Organization of a General Court of Appeal for Canada, and for the Establishment of any additional Courts for the better Administration of the Laws of Canada.
         101. Le parlement du Canada pourra, nonobstant toute disposition contraire énoncée dans la présente loi, lorsque l'occasion le requerra, adopter des mesures à l'effet de créer, maintenir et organiser une cour générale d'appel pour le Canada, et établir des tribunaux additionnels pour la meilleure administration des lois du Canada.

⁶      Ordon Estate, supra note 3 at 489, para. 71. For a more comprehensive discussion of the definition in s. 2 of the Federal Court Act, see ITO, supra note 1 at 774ff.

⁷      See ITO , supra note 1 at 774, Monk Corp v. Island Fertilizers Ltd., [1991] 1 S.C.R. 779 at 795 [hereinafter Monk].

⁸      See Ibid. See also Bow Valley Husky v. St. John Shipbuilding Ltd., [1997] 3 S.C.R. 1210 at 1259 [hereinafter Bow Valley] and Ordon Estate, supra note 3 at 489, para. 71.

⁹ Ibid. at 1258, para. 85.

¹⁰ [1990] 1 F.C. 542 (F.C.A.).

¹¹ Ibid. at 560.

¹² R.S.C. 1985, c. L-2, as amended.