Simms v. Isen, 2005 FCA 161

Date: 20050506

Docket: A-127-04

Citation: 2005 FCA 161

CORAM:        DÉCARY J.A.

NADON J.A.

SEXTON J.A.

BETWEEN:

                                           STEPHEN SIMMS and MARLA SIMMS

                                                                                                                                          Appellants

                                                                           and

                                                                WILLIAM ISEN

                                                                                                                                        Respondent

                                         Heard at Toronto, Ontario, on January 13, 2005.

                                  Judgment delivered at Ottawa, Ontario, on May 06, 2005.

REASONS FOR JUDGMENT BY:                                                                                NADON J.A.

CONCURRED IN BY:                                                                                                  SEXTON J.A.

DISSENTING REASONS BY:                                                                                     DÉCARY J.A.

Date: 20050506

Docket: A-127-04

Citation: 2005 FCA 161

CORAM:        DÉCARY J.A.

NADON J.A.

SEXTON J.A.

BETWEEN:

                                           STEPHEN SIMMS and MARLA SIMMS

                                                                                                                                          Appellants

                                                                           and

                                                                WILLIAM ISEN

                                                                                                                                        Respondent

                                                    REASONS FOR JUDGMENT

NADON J.A.

[1]                This appeal raises two questions. The first one is whether the events which have given rise to the appellants' action in damages for personal injury constitute a maritime matter and, thus, fall within the jurisdiction of the Court. The second question, which depends on an affirmative answer to the first question, is whether the personal injury claim is one subject to the limitation of liability provisions of the Canada Shipping Act, R.S.C. 1985, c. S-9, as amended by an Act to Amend the Canada Shipping Act (Maritime Liability), S.C. 1998, c. 6 (the "Act").

[2]                With regard to the first question, I have read, in draft, the Reasons of my colleague Décary J.A. which lead him to conclude that the appellants' personal injury claim is not a Canadian maritime law claim and that, consequently, the Federal Court is without jurisdiction to hear and determine the respondent's action in limitation of liability.

[3]                For the reasons that follow, I arrive at a different conclusion. In my view, the appellants' claim is a Canadian maritime law claim and, as a result, it falls squarely within the ambit of the Federal Court's maritime jurisdiction.

[4]                At paragraph 98 of his Reasons, Décary J.A. says, inter alia, that "the accident has nothing to do with navigation, nor with shipping". I cannot agree with my colleague. In my view, he has taken much too narrow a view of the Federal Court's maritime jurisdiction. I am satisfied that the accident has a clear connection with shipping and navigation, and more particularly, with pleasure craft navigation.

[5]                The judge below, Madam Justice Snider, concluded that the appellants' personal injury claim was within the Court's maritime jurisdiction. At paragraphs 11 and 12 of her Reasons, she states her conclusion in the following terms:

[11]         The Simms submit that the incident that gives rise to this motion concerned the manipulation of a bungie cord to transport a cargo by trailer on land. It had nothing to do with navigation and shipping. I disagree. The hooks of the bungie cord were applied to the ship. The cord was used to secure an engine cover to the boat. The incident arose immediately following use of the boat on a lake and just before it would be transported to another lake. To my mind, this is an incident that occurred on land but is sufficiently connected to navigation and shipping to bring it within the admiralty jurisdiction of this Court (ITO International Terminal Operators Ltd., supra).

[12]        The Federal Court has held that the negligent stuffing of a container, while on land, for loading and carriage by sea is sufficiently connected with shipping so as to invoke admiralty jurisdiction (Peter Cremer Befrechtungskontor GMBH v. Amalgamet Canada Ltd., [1989] F.C.J. No. 136 (T.D.) (QL), aff'd [1990] F.C.J. No. 850 (F.C.A.) (QL)). If handling cargo on land for carriage by sea is sufficiently connected with shipping and navigation, I fail to see how handling of the ship itself is not. I conclude that this Court has jurisdiction to hear the motion before it. I will now turn to the issue of the statutory provisions upon which Mr. Isen seeks to rely.

In my view, Snider J. reached the correct conclusion.

[6]                At paragraphs 61 to 67 of his Reasons, Décary J.A. summarizes the law pertaining to the Federal Court's jurisdiction and, in particular, to its maritime jurisdiction. After identifying the three requirements necessary to support the Court's jurisdiction, Décary J.A. correctly states that the first and third requirements are met in this case, leaving only to decide whether the second requirement is met, which he formulates in the following terms:

[62]         ...

2.             The claim must be a "Canadian maritime law" claim, as this expression is defined in section 2 of the Federal Courts Act and as it has been interpreted by the Supreme Court of Canada;

[7]                Before concluding that the second requirement has not been met, Décary J.A. carefully reviews the concept of Canadian maritime law in the light of the Supreme Court of Canada's decisions in, inter alia: ITO - International Terminal Operators Ltd. v. Miida Electronics Inc., [1986] 1 S.C.R. 752; Whitbread v. Walley, [1990] 3 S.C.R. 1273; and Ordon Estate v. Grail, [1998] 3 S.C.R. 437.

[8]                In ITO, supra, the Supreme Court of Canada held that Canadian maritime law extended to torts occurring on land, if sufficiently connected to navigation and shipping. At paragraphs 20 to 22 of his Reasons, McIntyre, J., for the majority, explains the Court's conclusion in the following terms:

[20]         I would agree that the historical jurisdiction of the Admiralty courts is significant in determining whether a particular claim is a maritime matter within the definition of Canadian maritime law in s. 2 of the Federal Court Act. I do not go so far, however, as to restrict the definition of maritime and admiralty matters only to those claims which fit within such historical limits. An historical approach may serve to enlighten, but it must not be permitted to confine. In my view, the second part of the s. 2 definition of Canadian maritime law was adopted for the purpose of assuring that Canadian maritime law would include an unlimited jurisdiction in relation to maritime and admiralty matters. As such, it constitutes a statutory recognition of Canadian maritime law as a body of federal law dealing with all claims in respect of maritime and admiralty matters. Those matters are not to be considered as having been frozen by The Admiralty Act, 1934. On the contrary, the words "maritime" and "admiralty" should be interpreted within the modern context of commerce and shipping. In reality, the ambit of Canadian maritime law is limited only by the constitutional division of powers in the Constitution Act, 1867. I am aware in arriving at this conclusion that a court, in determining whether or not any particular case involves a maritime or admiralty matter, must avoid encroachment on what is in "pith and substance" a matter of local concern involving property and civil rights or any other matter which is in essence within exclusive provincial jurisdiction under s. 92 of the Constitution Act, 1867. It is important, therefore, to establish that the subject-matter under consideration in any case is so integrally connected to maritime matters as to be legitimate Canadian maritime law within federal legislative competence.

[21]         Turning to Miida's claim against ITO, it can be seen that it involves the negligence of a stevedore-terminal operator in the short-term storing of goods within the port area pending delivery to the consignee. The Reference re Industrial Relations and Disputes Act, [1955] S.C.R. 529">[1955] S.C.R. 529, established that the stevedoring function "is an integral part of carrying out the activity of shipping," (per Locke J. At p. 574). In that case, "stevedore" was employed as a compendious term by Kerwin C.J. to include the category of "shedmen". He defined the duties of shedmen, at p. 532, in these words:

The shedmen in general deliver cargo from the sheds to the tailboards of trucks or to railway car doors or receive cargo at these points and place it in the sheds and sometimes re-arrange the cargo in the sheds.

The work performed by the stevedores is also referred to by Locke J., at pp. 570-71. Part of that work involved the incidental storage of cargo:

Cargo of which immediate delivery is not taken by the consignee is placed in the company's shed and delivery subsequently taken from there by the consignees in trucks or railway cars.

It is clear, in my view, that such incidental storage by the carrier itself or by a third party under contract to the carrier is also a matter of maritime concern by virtue of the "close, practical relationship of the terminal operation to the performance of the contract fo carriage" (per Le Dain J. In the Court of Appeal). It may then be concluded that cargo-handling and incidental storage before delivery and before the goods pass from the custody of a terminal operator within the port area is sufficiently linked to the contract of carriage by sea to constitute a maritime matter within the ambit of Canadian maritime law, as defined in s. 2 of the Federal Court Act.

[22]         At the risk of repeating myself, I would stress that the maritime nature of this case depends upon three significant factors. The first is the proximity of the terminal operation to the sea, that is, it is within the area which constitutes the port of Montreal. The second is the connection between the terminal operator's activities within the port area and the contract of carriage by sea. The third is the fact that the storage at issue was short-term pending final delivery to the consignee. In my view, it is these factors taken together which characterize this case as one involving Canadian maritime law.

                                                                                                                  [Emphasis Added]

[9]                By reason of the proximity of the stevedores' shed to the St-Lawrence River, the connection between the stevedoring activities and the contract of carriage and the short-term storage of the goods, McIntyre J. concluded that the case should be characterized as "one involving Canadian maritime law".

[10]            Thus, the specific issue before us is whether the events which led to Mr. Simms' injuries are, to paraphrase McIntyre J.'s words in ITO, supra, sufficiently linked to navigation so as to constitute a maritime matter within the ambit of Canadian maritime law. In answering this question, it is important to keep in mind that the case before us is not, like ITO, supra, a commercial shipping case, but a case pertaining to pleasure craft navigation.

[11]            In Whitbread, supra, a pleasure craft grounded on rocks close to the eastern shore of Indian Arm, a body of water connected to Burrard Inlet, just north of the City of Vancouver. As a result of the grounding, Mr. Whitbread suffered severe personal injuries and sued the owner of the boat, who sought to limit his liability pursuant to the then Canada Shipping Act.

[12]            The issue before the Supreme Court was whether the tortious liability of owners and operators of pleasure vessels was a matter which fell within Parliament's jurisdiction over navigation and shipping. The Court, in giving an affirmative answer to that question, held that the owners of pleasure crafts could invoke the limitation of liability provisions of the Canada Shipping Act. In so concluding, the Supreme Court took the opportunity to reiterate that maritime law extended "to torts committed in the course of land-based activities that are sufficiently connected with navigation and shipping..." (see paragraph 25 of the Reasons).

[13]            It is also important to point out that, at paragraph 19 (p. 1289) of its Reasons in Whitbread, supra, the Supreme Court made it clear that to the extent that a tort occurs in a maritime context, it is "... governed by a body of maritime law within the exclusive legislative jurisdiction of Parliament ...". Once a tort is found to be sufficiently connected to navigation and shipping, any claim arising therefrom will be subject to Canadian maritime law.

[14]            In Ordon Estate, supra, the Supreme Court again reiterated, at paragraph 71, that the test for determining if a matter before the Court was a maritime law matter was whether the matter was "so integrally connected to maritime matters as to be legitimate Canadian maritime law within federal competence". Iacobucci and Major JJ.s, writing for the Court, went on to stateat paragraph 73 that the determination of whether a matter was so integrally connected to maritime matters depended on "... an examination of the factual context of the claim".

[15]            I now turn to the specific facts of the case before us and to the context in which they occurred, with a view to determining whether the matter under consideration is a maritime matter.

[16]            Prior to August 1, 1999, the appellant, Stephen Simms, and the respondent, who, to their credit, have remained friends throughout these unfortunate events, decided to go on a recreational boating trip to Lake Muskoka in Ontario. Their outing began early in the morning of August 1, when they left the respondent's cottage in the Orillia-Coldwater area of Ontario, where the respondent's vessel, a 1998 Mercruiser Calais Bowrider 17-foot vessel (the "boat"), was usually moored to a dock on a nearby lake. They departed from the respondent's cottage in a 1997 Pontiac motor vehicle, with the respondent's boat placed on a trailer hitched to the motor vehicle.

[17]            After their arrival at Gravenhurst, Ontario, they launched the boat into Lake Muskoka, using a public boat ramp. At the end of the day, the boat returned to the boat ramp and the respondent backed his motor vehicle and trailer into the lake, whereupon the boat was placed on the trailer. The respondent then moved the vehicle and trailer to level ground and the respondent proceeded to secure the engine cover, by way of a bungie cord, to prevent it from flapping in the wind during road transport. Unfortunately for Mr. Simms, the bungie cord slipped from the respondent's hands and struck him in the right eye.

[18]            The respondent, as owner of a vessel of less than 300 tons, commenced limitation proceedings in the Federal Court, relying, inter alia, on subsection 577(1) of the Act, which provides for a maximum liability of $1 million in respect of claims for loss of life or personal injury.

[19]            Thus, the alleged tort, as in ITO, supra, occurred on land. More particularly, it occurred near the Gravenhurst boat launch, shortly after the boat was taken out of the water, at which time the bungie cord, which caused the injuries to Mr. Simms, was being applied by the respondent to the engine cover, so as to enable the boat to be transported back to its usual mooring near the respondent's cottage.

[20]            In my view, the launching of a pleasure boat into a lake and its removal from the water after a day of navigation constitute land-based activities that are sufficiently connected with pleasure craft navigation and, thus, are subject to Canadian maritime law.

[21]            Contrary to commercial ships, which do not usually come out of the water, save when a ship must go into drydock for repairs and surveys, a pleasure craft will, as a matter of course, be removed from the water by its owner for a number of reasons: winter storage, road transport, maintenance and repairs, etc. In the present matter, the respondent's intention was to return his boat to its usual mooring near his cottage. It was therefore necessary, in the circumstances, for him to secure the engine cover. It then follows, in my view, that the securing of the engine cover is an integral part of the process of removing the boat from the water and, hence, so integrally connected with navigation as to engage Canadian maritime law.

[22]            No one argued before us that the securing of the engine cover had to be done on land. I have little doubt that that exercise could have been performed while the boat was still in the water. Had the injuries occurred while the boat was still in the water, it is unlikely that the jurisdictional issue would be before us. I mention this simply to make the point that, in my view, the connection between the events which led to Mr. Simms' injuries and navigation is not severed because the events occurred on land.

[23]            I should also state that I do not see, in the circumstances of this case, any relevance in the fact that the engine cover was secured for the specific purpose of preventing it from flapping in the wind during road transport. In ITO, supra, the fact that the goods were in a shed in the port of Montreal, waiting to be loaded into a truck for delivery to the consignee, was not found to be a relevant factor in determining whether there was a sufficient connection between the tort and navigation and shipping.

[24]            In Ordon Estate, supra, the Supreme Court clearly stated that the determination of whether a matter was "integrally connected to maritime matters" depended on an examination of the factual context of the claim. The facts and circumstances of this case, which I have set out above, lead me to conclude that the matter is so integrally connected to pleasure craft navigation as to constitute legitimate Canadian maritime law within federal legislative competence. I therefore conclude that the events which have given rise to the appellants' claim for damages against the respondent clearly fall within the Federal Court's maritime jurisdiction.

[25]            In concluding on this point, I should point out that Décary J.A., in his analysis concerning "Canadian maritime law", did not limit himself to those Supreme Court of Canada decisions which I have discussed above. He also dealt with the Supreme Court's decisions in Q.N.S. Paper Co. v. Chartwell Shipping Ltd., [1989] 2 S.C.R. 683, Monk Corp. v. Island Fertilizers Ltd., [1991] 1 S.C.R. 779, Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., [1997] 3 S.C.R. 1210, and Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustees of), [2001] 3 S.C.R. 907, as well as decisions of this Court, the Federal Court and, finally, decisions of both the Ontario Court of Appeal and the British Columbia Court of Appeal. I do not see the necessity of addressing those cases, save for one, since they turn mainly on their own facts. Whether or not they were correctly decided, in the light of the principles enunciated by the Supreme Court in ITO, supra, in Whitbread, supra, and in Ordon Estate, supra, I need not address.

[26]            I must, however, say a few words concerning Décary J.A.'s discussion, at paragraphs 58 to 60 of his Reasons, of the Ontario Court of Appeal's decision in Axa Insurance v. Dominion of Canada General Insurance Co., [2004] O.J. No. 4492. Unlike my colleague, I do not find Axa, supra, either instructive or relevant.

[27]            At issue before the Ontario Court of Appeal was the relative scope of each of Dr. Isen's three insurance policies, namely a standard automobile policy (the "Axa policy"), a boat liability policy (the "Dominion policy") and a homeowner's policy (the "Cooperators policy"). The first judge found that both the Axa and Dominion policies applied and that, consequently, both insurers had to respond. The judge, however, concluded that Dominion's policy provided excess coverage only and would, as a result, come into play after the coverage provided under the Axa policy had been exhausted. Finally, the judge concluded that the Cooperators policy did not apply by reason of the exclusions contained in the policy.

[28]            It is important to point out, as the Ontario Court of Appeal did in upholding the first judge, that Dominion conceded that its boat liability policy applied to the factual circumstances of the accident. At paragraph 7 of his Reasons for the Court, MacPherson J.A. noted that "... Dominion accepts that its policy applies to the Simms-Isen litigation, thereby imposing on Dominion duties to defend and indemnify."

[29]            In stating, at paragraph 60 of his Reasons, that "... the Axa decision is nevertheless instructive", Décary J.A. seems to rely on the fact that the Ontario Court of Appeal found that Axa's policy applied and that it was the primary policy, while concluding that Dominion's policy constituted excess coverage only. The Ontario Court of Appeal's decision clearly results from the wording of each policy and, in particular, the inclusion of an "excess coverage" clause in Dominion's policy. Thus, both the Axa and the Dominion policies were found to cover Dr. Isen.

[30]            With respect, it cannot, in my view, be said that Axa, supra, is somehow instructive or relevant in regard to the jurisdictional issue before this Court. That question was obviously not before the Ontario Court of Appeal and nothing in that Court's decision can be said to support either of the contending views before us on the jurisdictional issue.

[31]            I therefore turn to the second question, which I also propose to answer in the affirmative. Because of his conclusion on the jurisdictional issue, Décary J.A. does not ultimately make a determination on this point.

[32]            I agree with Décary J.A. that, contrary to the submissions made by the parties to the judge below and to us in appeal, the relevant provisions of law regarding the determination of the second question are subsections 577(1) of the Act and paragraph 1(a) of Article 2 of the Convention on Limitation of Liability for Maritime Claims, 1976, as amended (the "Convention") which, for ease of reference, I hereby reproduce:

[33] I also agree entirely with Décary J.A.'s analysis (see paragraphs 55 and 56 of his Reasons) as to why the question stated by the learned Prothonotary was flawed. Like my colleague, I am of the opinion that the word "claims" which appears in subsection 577(1) of the Act must be read in the light of paragraph 1(a) of Article 2 of the Convention and, more particularly, in light of the words "claims ... occurring ... in direct connection with the operation of the ship ...".

[34] Thus, the question is whether the personal injuries suffered by the appellant, Stephen Simms, occurred in direct connection with the operation of the respondent's boat. In my view, there can be no doubt about the answer to that question.

[35] Firstly, I turn to the words "in direct connection with". The Oxford Compact Thesaurus, 2001, 2d ed., Oxford University Press, at p. 161, provides the following meaning for the words "in connection with":

in connection with: regarding, concerning, with reference to, with regard to, with respect to, respecting, relating to, in relation to, on, connected with, on the subject of, in the matter of, apropos, re, in re.

[36] The French text of paragraph 1(a) of Article 2 of the Convention uses the words "en relation directe avec". Le nouveau petit Robert, 1996, texte remanié et amplifié sous la direction de Josette Rey-Debove et Alain Rey, at p. 1915, defines, inter alia, the word "relation" as follows:

II. Lien, rapport. ... A. 1. Rapport, connexion, corrélation ... 2.. Caractère de deux ou plusieurs choses entre lesquelles existe un lien = rapport; liaison. Établir une relation entre deux phénomènes. Metre deux événements en relation. Ce que je dis n'est pas de relation avec ce qui précède. ...

This meaning is in line with that given to the words "in connection with" in the Oxford Compact Thesaurus, supra, which, amongst other things, associates these words with the words "relating to" or "in relation to".

[37] In Mantini v. Smith Lyons LLP (2003), 64 O.R. (3d) 505, the Ontario Court of Appeal had occasion to interpret the words "in connection with", albeit in a different context. The Court, after referring to a decision of the Ontario Divisional Court in Denison Mines Ltd. v. Ontario Hydro, [1981] O.J. No. 807 (QL) (Div. Ct.), had no hesitation in concluding that these words had a "very broad meaning" (paragraph 19 of the Reasons). I cannot but agree with that statement.

[38] Although the words "direct" and "direct(e)" found in the English and French texts of paragraph 1(a) of Article 2 of the Convention restrict somewhat the breadth of the words "in connection with", I am still satisfied that these words have a broad meaning.

[39] I now turn to the words "the operation of the ship" and "avec l'exploitation [du navire]". The Compact Oxford English Dictionary of Current English, 2d ed., edited by Catherine Soanes, at pages 602 and 603 defines "operation" as follows:

1. the slide bars ensure smooth operation: functioning, working, running, performance, action. 2. the operation of the factory: management, running, governing, administration, supervision. 3. a heart bypass operation: surgical operation. 4. a military operation: action, activity, exercise, undertaking, enterprise, manoeuvre, campaign. 5. Their mining operations: business, enterprise, company, firm; informal outfit.

                                                                                                          [EMPHASIS ADDED]

[40] With respect to the French word "exploitation, Le nouveau petit Robert, supra, at p. 865, provides, in part, the following definition:

1. Action d'exploitation, de faire valoir une chose en vue d'une production (cf. mise en valeur). Exploitation du sol, d'un domaine = 1. culture, mise en exploitation d'une terre. Méthodes, systèmes, modes d'exploitation = faire-valoir, fermage, métayage. « L'homme a mis en exploitation à peu près tout l'espace don't il pouvait espérer tirer partie » (Gide). Exploitation du sous-sol, d'une mine. Exploitation d'un brevet = Action de faire fonctionner en vue d'un profit. Exploitation d'une ligne aérienne, d'une ligne de chemin de fer. Exploitation concédée par l'État à une société privée = concession. comptab. Compte d'exploitation générale: compte exposant les charges et produits tirés à l'activité courante d'une entreprise. inform. Systèmes d'exploitation: ensemble de programmes constituant le logiciel de base d'un ordinateur et assurant la gestion des divers logiciels = aussi superviseur. cin. Visa d'exploitation d'un film. [...]

[41] Le Robert & Collins Super Senior / Grand dictionnaire français-anglais/anglais français, 2000, 2e éd., Dictionnaires Le Robert, Paris, at page 177 (français-anglais), translates the French word "exploitation" as follows:

a, (= action) (mine, sol) = working, exploitation; (enterprise) running, operating - mettre en exploitation (domaine, ressources) = to exploit, develop - frais/méthodes d'exploitation - running or operating costs/methods - satellite en exploitation = working satellite - copie d'exploitation (ciné) - release print (also visa).

                                                                                                                   [Emphasis added]

[42] I conclude that the words "occurring ... in direct connection with the operation of the ship", found in paragraph 1(a) of Article 2 of the Convention, are broad enough to encompass the appellants' claims. Firstly, I am satisfied that the injuries suffered by Mr. Simms occurred as a result of the operation of the respondent's boat. In my view, the "operation of the ship" necessarily includes all activities arising from the running of the ship in a general sense, such as the launching of the boat into water, its navigation and its removal from water. Hence, claims for personal injury will not be limited to those which arise by reason of injuries caused by the vessel itself, such as collisions between two or more ships, the striking of a dock or other object by a ship, etc.

[43] Secondly, the words "in direct connection with" must also be given a broad interpretation. In my view, there is a clear link between Mr. Simms' injuries and the operation of the respondent's boat, and that link is a direct one.

[44] To conclude, I am therefore of the opinion that the events which have given rise to the appellants' claims, by reason of their integral connection to pleasure craft navigation, constitute Canadian maritime law claims and, consequently, the Federal Court has jurisdiction to hear and determine these claims. I am also of the opinion that since the personal injuries suffered by Mr. Simms occurred in direct connection with the operation of the respondent's boat, the appellants' claims are subject to the limitation of liability provisions of the Act.

[45] I would therefore dismiss the appeal and answer the stated question, which I have reformulated, as follows:

Q.      Do the facts and circumstances that gave rise to an incident which caused personal injury to Stephen Simms on August 1, 1999 constitute "claims in respect of personal injury occurring in direct connection with the operation" of the respondent's ship, pursuant to section 577(1) of the Act and paragraph 1(a) of Article 2 of the Convention?

A.     Yes.

[46] The respondent shall be entitled to his costs.

                                                                                         "M. Nadon"

                                                                                                      J.A.

"I agree.

J. Edgar Sexton J.A."

DÉCARY J.A. (dissenting)

[47] The appellants Simms have commenced an action in the Ontario Superior Court of Justice, claiming damages against the respondent, Dr. Isen, as a result of a personal injury sustained by co-appellant Dr. Stephen Simms on August 1, 1999. The respondent has denied any liability and in any event he pleads that he is entitled to limit his liability to a maximum of $1,000,000.00 pursuant to section 577 of the Canada Shipping Act (R.S.C. 1985, c. S-9, as amended by an Act to Amend the Canada Shipping Act (maritime liability), S.C. 1998, c. 6).

[48] The respondent, therefore, pursuant to section 581 of the Act, has brought an action in the Trial Division of the Federal Court (now the Federal Court) for a declaration that his maximum liability, as a result of the claim of the co-appellant Dr. Simms, is limited to the amount of $1,000,000.00.

[49] In the Federal Court, the parties have agreed, as permitted by rule 220(1)(c) of the Federal Court Rules, 1998 (now the Federal Courts Rules), to have the Court determine a question "stated by the parties in the form of a special case ... in lieu of the trial of the action." The question was formulated as follows by Prothonotary Tabib:

Do the facts and circumstances that gave rise to an incident which caused personal injury to Stephen Simms on August 1, 1999 constitute "claims arising on any distinct occasion involving a ship with a tonnage of less than 300 tons", pursuant to section 577(1) of the Canada Shipping Act?

[50] The stated question was answered in the affirmative by Madam Justice Snider. She found that the incident at issue was within the realm of Canadian maritime law and that the limitation of liability provisions of the Act applied as the incident was one "involving a ship" within the meaning of section 577 of that Act.

[51] Hence the within appeal by the appellants, who are the defendants in the Federal Court, but the plaintiffs in the Ontario Superior Court of Justice.

[52] The applicable legislation, at the relevant time, was the Act to Amend the Canada Shipping Act (maritime liability), S.C. 1998, c. 6. That Act was in force between May 12, 1998 and May 10, 2001 when the Marine Liability Act took effect (S.C. 2001, c. 6). Its relevant provisions read:

[53]            The relevant provision of the Convention on Limitation of Liability for Maritime Claims, 1976, as amended, (the Convention) is Article 2, paragraph 1(a):

[54]            The relevant provisions of the Federal Court Act (as it was then referred to) are:

[55]            I wish to observe, from the start, that this case was argued before the Federal Court and before this Court on a wrong legal footing. Even though the question as phrased by Prothonotary Tabib referred to "claims arising on any distinct occasion involving a ship with a tonnage of less than 300 tons," the very words of subsection 577(1) of the Act, the debate between the parties was restricted to the words "involving a ship." That was, in my respectful view, a significant legal error which tainted the reasons for judgment of the learned Judge as well as the written and oral submissions of counsel before us.

[56]            Simply put, the words "involving a ship," which have no equivalent in the French text, only serve to describe the ship to which the provision applies, i.e. a ship with a tonnage of less than 300 tons. These words do not qualify the "claims" and do not import into the Act a variance from the requirements, under paragraph 1(a) of Article 2 of the Convention, that claims subject to a limitation of liability are claims "in respect of ... personal injury ... occurring ... in direct connection with the operation of the ship." Properly read, and I see no ambiguity in its wording, subsection 577(1) simply refers to claims (under the Convention) that arise on any distinct occasion (so as to ensure that each distinct incident carries with it the opportunity for the shipowner to limit his responsibility) where the ship to which the claims relate has a tonnage of less than 300 tons. The words "involving a ship" are redundant because, as is evident from its very nature, the subsection applies to shipowners. Subsection 578(1), for example, does not use the words "involving a ship" even though it is implicit that the claims involve a ship. There being no inconsistency between subsection 577(1) of the Act and paragraph 1(a) of Article 2 of the Convention with regard to the nature of the claims at issue, subsection 575(3) of the Act which states that the Act prevails in the event of an inconsistency does not come into play. The debate, therefore, should have focussed on the words "claims" in subsection 577(1) of the Act and "direct connexion with the operation of the ship" in paragraph 1(a) of Article 2 of the Convention.      

Facts

[57]            The facts have been agreed upon by the parties. I find it useful to reproduce the agreement in its totality, except for the last paragraph which refers to some attached photographs.

3.      At all material times the plaintiff William Isen was the owner of a 1998 Mercruiser Calais Bowrider 17 food vessel bearing registration #25E12907, hereinafter referred to as "the ship".

4.      The ship had a gross tonnage of less than 300 tons.

5.      The ship was normally moored to a dock on a lake adjacent to a cottage property owned by William Isen in the Orillia-Coldwater area of Ontario ("the Isen cottage").

6.      The ship was equipped with a stern drive engine and propulsion system. Access to the engine and the drive shaft was obtained through an opening at the very stern of the interior of the ship. The engine opening was covered by a piece of wood, which was covered with padded vinyl and served as a seat when access to the engine was not required. The cover was hinged at the stern end and, in order to access the engine and drive shaft, the cover would be lifted up.

7.      When the ship was being transported on a boat trailer, the wind would have the effect of causing the engine cover to blow upwards and flap in the wind. The Plaintiff therefore employed the use of a flexible stretch rope, commonly known as a bungee cord, to secure the engine cover from flapping in the wind. The bungee cord had two metal hooks at either end. One of the hooks on the end of the bungee cord was attached to a cleat on the gunwale of the port side of the ship. The bungee cord was then stretched across the interior of the ship and the other end of the bungee cord was attached to a cleat on the gunwale of the starboard side of the ship. This would have the effect of securing the engine cover.

8.      The Plaintiff had purchased a bungee cord separately from his purchase of the ship. The bungee cord was approximately 3 fee long, when not under any tension or stress. It had metal hooks on either end. It is not known exactly where the bungee cord was purchased.

9.      The particular bungee cord which was involved in the incident of August 1, 1999 was used only when the ship was being trailered on the highway. When the bungee cord was not in use, it was stored on the ship.

10.    Prior to August 1, 1999 the Plaintiff and the Defendants, who were and remain personal friends, made an arrangement to embark on a recreational boating trip on Lake Muskoka in the Province of Ontario.

11.    The Plaintiff transported the ship by way of boat trailer hitched to a 1997 Pontiac Transport motor vehicle from the Isen cottage along Highway 11 to the Town of Gravenhurst, Ontario. Upon reaching the Town of Gravenhurst, Ontario, the ship was launched into Lake Muskoka using a public boat ramp.

12.    The ship was used to transport the Plaintiff and the Defendants at various times, to and from various locations, during the course of the day on August 1, 1999.

13.    On the morning of August 1, 1999 the Plaintiff secured the engine cover of the ship using the bungee cord. After the day of activities on Lake Muskoka was concluded, the ship was returned to the boat ramp in Gravenhurst.

14.    After arriving at the boat ramp, the Plaintiff backed the 1997 Pontiac Transport motor vehicle, with the attached trailer, into the waters of Lake Muskoka whereupon the ship was placed upon the trailer. The Plaintiff then moved the vehicle and trailer, with the ship on same, to level ground where he then re-attended to the ship.

15.    The Plaintiff took the bungee cord from the ship's storage, went to the starboard side near the stern, fastened the hook of one end of the bungee cord to a cleat on the starboard stern gunwale of the ship, stretched the bungee cord across the width of the ship and hooked the other end of the bungee cord into the cleat on the port stern gunwale.

16.    The defendant, Stephen Simms was standing near the starboard side of the ship. The Plaintiff was standing near the port side of the ship. The Plaintiff was in the process of checking if the bungee cord was secure on the port cleat. While bungee cord was under tension, the port side end slipped from the finger of the Defendant. The port side end of the bungee cord flew across the ship and struck the defendant Stephen Simms in the right eye.

17.    The defendant, Stephen Simms sustained personal injury as a result of being struck in the right eye by the metal end of the bungee cord.

18.    At the time that the one end of the bungee cord struck the defendant Stephen Simms in the right eye, the other end was still attached to the starboard stern gunwale cleat.

19.    The Defendants have commenced an action in the Ontario Superior Court of Justice bearing Court File No.: 00-CV-917044 CM, at Toronto claiming damages against the plaintiff as a result of the personal injury sustained on August 1, 1999. The defendant Stephen Simms has claimed damages in the amount of $2,000,000.00 plus pre-judgment interest. The defendant Marla Simms has claimed damages in the amount of $200,000.00, plus pre-judgment interest, pursuant to the terms of the Family Law Act, R.S.O. 1990 c.F-3.

20.    The Plaintiff in this action has denied that he is liable to the Defendants for the injuries sustained on August 1, 1999.

21.    The Defendants have sought damages against the Plaintiff in excess of $1,000,000.00 and have not agreed to limit their claim to the maximum amount of $1,000,000.00.

22.    The 1998 Mercruiser Calais 17 foot Bowrider vessel is a "ship" as the term is defined in Section 576(3) of the Canada Shipping Act, as amended by an Act to Amend the Canada Shipping Act (maritime liability), S.C. 1997-1998, C.-6.

23.    The Plaintiff is a "shipowner" as that term is defined in Section 576(3) of the Canada Shipping Act, as amended by an Act to Amend the Canada Shipping Act (maritime liability), S.C. 1997-1998, C.-6.

[58]            Paragraph 19 of the Statement of Facts must be complemented by a reference to a recent judgment of the Ontario Court of Appeal rendered on November 4, 2004, Axa Insurance v. Dominion of Canada General Insurance Co., Co-Operators Insurance Company, Stephen Simms, Marla Simms and William Isen, [2004] O.J. No. 4492. The parties are the very insurance companies which are involved in the present litigation and with whom Dr. Isen (the respondent in our case) is insured. The Axa policy is a standard automobile policy with a $1,000,000.00 limit; the policy insures both Dr. Isen's motor vehicle and trailer. The Dominion policy is a boat liability policy, also with a $1,000,000.00 limit, which insures both the boat and the trailer. The Co-Operators policy is Dr. Isen's homeowner's policy, also with a $1,000,000.00 limit, which covers some watercraft when the damage does not arise directly or indirectly out of the use or operation of a motor vehicle or trailer. The issue before the Ontario Court of Appeal was to determine the insurance coverage issues early in the Simms-Isen litigation.

[59]            In confirming the judgment of Matlow J., MacPherson J.A. found that the Axa policy applied and was the primary policy, notably on the basis that "the securing of a cushion to a boat on a trailer attached to an automobile as a safety precaution necessary to prepare the boat for proper transport on a highway, is an activity related to the ownership, use and operation of the automobile and trailer" (at para. 20). MacPherson J.A. further found that the Dominion policy - which Dominion had conceded applied in the circumstances - was only excess coverage, i.e. "it is triggered only after Axa's policy limit of $1,000,000.00 is exhausted" (at para. 22). MacPherson J.A. finally found that the Co-Operators policy excluded the incident from its coverage.

[60]            While not binding and not directly on point, the Axa decision is nevertheless instructive. I note that counsel for the respondent has not suggested that the matter before us is one of marine insurance.

Jurisdiction of the Federal Court

[61]            It is trite law that there are three essential requirements to support a finding of jurisdiction in the Federal Court:

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

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

3.              The law on which the case is based must be a "law of Canada" as the phrase is used in s. 101 of the Constitution Act, 1867.

                                                                [ITO - International Terminals Operations Ltd. v.

                                                                          Miida Electronics Inc., [1986] 1 S.C.R. 752

                                                                 (also referred to as The Buenos Aires Maru case)]

[62]            In the case at bar, the three requirements translate as follows:

1.          The Federal Court must have been granted jurisdiction by either the Canada Shipping Act or by section 22 of the Federal Courts Act.

2.          The claim must be a "Canadian maritime law" claim, as this expression is defined in section 2 of the Federal Courts Act and as it has been interpreted by the Supreme Court of Canada.

3.          The Merchant Shipping Act or the Federal Courts Act must be a "law of Canada ...".

[63]            The third requirement, clearly, is met.

[64]            The first requirement is also met, the Federal Court being expressly granted jurisdiction by the Canada Shipping Act to entertain a claim for a declaration of limitation of liability. It is not, therefore, necessary at this stage to decide whether the original claim is a claim for personal injury "occurring in connection with the operation of a ship" within the meaning of subsection 22(2)(g) of the Federal Courts Act. Indeed, the claim at issue before the Federal Court is not, properly speaking, that pertaining to the personal injury, but that pertaining to the limitation of liability.

[65]            It is, however, important to remember that the first requirement - a grant of jurisdiction - should not be confused with the second - a matter coming within the realm of Canadian maritime law. In ITO, McIntyre J. made it clear, at p. 772, that section 22(2) of the Act is "of no assistance" in determining whether a claim involves Canadian maritime law:

Even if a claim could be shown to fall within s. 22(2) the inquiry does not end there. That section does no more than grant jurisdiction and it does not create operative law. One must still be able to point to some applicable and existing federal law which nourishes the grant of jurisdiction.

(see, also, Kusugak, infra, at para. 46 and Newterm, infra, at para. 45)

[66]            As a result, the claims described in subsection 22(2) of the Act are to be read down, if necessary, so as to be constitutionally valid. Parliament could not, under the heading "navigation and shipping," in section 91(10) of the Constitution Act, 1867, grant the Federal Court jurisdiction with respect to matters which are in pith and substance within the competence of the provinces. I note that "navigation and shipping" has been translated into "la navigation et les bâtiments ou navires (shipping)" in the current (yet not official) translation of the former British North America Act, and into "la navigation et la marine marchande" in the Final Report of the French Constitutional Drafting Committee, dated December, 1990. The Federal Courts Act, in subsection 22(1), also uses the words "Navigation et marine marchande" and the Canada Shipping Act is, in French, "la Loi sur la marine marchande du Canada."

[67]            The same may be said, in my view, with respect to section 581 of the Canada Shipping Act. It grants the Federal Court jurisdiction with respect to claims of limitation of liability, but it goes without saying that, unless these claims are maritime claims, i.e. claims recognized in Canadian maritime law, the second requirement of the ITO test is not met. There is, for sure, "a body of federal law which nourishes the statutory grant of jurisdiction," in the sense that the concept of limitation of liability in maritime matters is known to, and developed in, Canadian federal law, but that concept cannot be expanded outside maritime matters. Section 581 of the Canada Shipping Act, as much as section 22 of the Federal Courts Act, has to be read down, if necessary, so as to be constitutionally valid. It cannot be used to limit one's responsibility in a non-maritime matter.

Canadian maritime law

[68]            The Supreme Court of Canada, in ITO, was dealing with a land-based tort with respect to recently unloaded goods that were stolen after delivery to a port warehouse. McIntyre J., for the majority, explained as follows why the claim, in his view, involved Canadian maritime law:

At the risk of repeating myself, I would stress that the maritime nature of this case depends upon three significant factors. The first is proximity of the terminal operation to the sea, that is, it is within the area which constitutes the port of Montreal. The second is the connection between the terminal operator's activities within the port area and the contract of carriage by sea. The third is the fact that the storage at issue was short-term pending final delivery to the consignee. In my view it is these factors taken together, which characterize this case as one involving Canadian maritime law.

                                                                                                                         [pp. 775-776]

He earlier had defined "Canadian maritime law" as comprising two categories:

1)          the first one includes (at p. 771):

"all that body of law which was administered in England by the High Court on the Admiralty side in 1934 as such law may, from time to time, have been amended by the Federal Parliament, and as it has developed through judicial precedent";

2)          the second one includes (at pp. 774, 775):

"an unlimited jurisdiction in relation to maritime and admiralty matters. As such, it constitutes a statutory recognition of Canadian maritime law as a body of federal law dealing with all claims in respect of maritime and admiralty matters. Those matters are not to be considered as having been frozen by The Admiralty Act, 1934. On the contrary, the words 'maritime' and 'admiralty' should be interpreted within the modern context of commerce and shipping. In reality, the ambit of Canadian maritime law is limited only by the constitutional division of powers in the Constitution Act, 1867. I am aware in arriving at this conclusion that a court, in determining whether or not any particular case involves a maritime or admiralty matter, must avoid encroachment on what is in 'pith and substance' a matter of local concern involving property and civil rights or any other matter which is in essence within exclusive provincial jurisdiction under s. 92 of the Constitution Act, 1867. It is important, therefore, to establish that the subject-matter under consideration in any case is so integrally connected to maritime matters as to be legitimate Canadian maritime law within federal legislative competence."

[69]            We are not concerned in this appeal with the first category, as the High Court on its Admiralty side did not have jurisdiction with respect to incidents happening on land.

[70]            The ITO decision led to much controversy. That controversy is very eloquently described in an article published in the University of British Columbia Law Review, "A definition of Canadian Maritime Law," (1996) 30 U.B.C.L. Rev. 137 by Professor William Tetley, Q.C., a leading admiralty author and practitioner. Reiterating in a more substantial way the view he had first expressed in 1988 ("The Buenos Aires Maru - Has the whole nature of Canadian maritime law been changed," (1988) 10 Sup. Ct. Law Review 399), he made the following observations which I quote to illustrate the delicate task that has been facing the courts since the ITO decision when determining whether a given incident falls within the realm of "Canadian maritime law":

¶ 1            In the last twenty years, the meaning of "Canadian maritime law" has undergone dramatic and traumatic changes. The drama has affected the lives and practices of maritime lawyers, judges, and legislators who have seen the power of the federal Parliament over "Navigation and Shipping" suddenly expand. At the same time, provincial jurisdiction over "Civil Rights" has been drastically reduced. The trauma has occurred in the political field, where the change is considered to be one more unnecessary inroad of "Ottawa" into provincial rights.

...

¶ 5        In summation, the widened concept of "Canadian maritime law" has brought confusion and lack of certainty into the practice of maritime law and commerce. It has also brought a flood of litigation on questions of jurisdiction. Although there are also lacunae in Canada's maritime law, there has been no appreciable benefit to the maritime industry or to Canadian society in general.

...

¶ 10      The unexpected expansion of Federal Court jurisdiction, as well as the expanded definition of "Canadian maritime law," is an interesting yet sad tale to be found in a few Supreme Court of Canada decisions.

...

¶ 67      In Quebec North Shore Paper, the Supreme Court of Canada stipulated that, with the exclusion of provincial law, an "existing and applicable" federal law must nourish Parliament's statutory grant of jurisdiction to any s. 101 court. In terms of admiralty matters, this changed the jurisdiction of the Federal Court of Canada, as well as that of the superior courts of the provinces. It engendered confusion among courts, attorneys and the public. It also contributed to the all-embracing concept of "Canadian maritime law" that culminated in the landmark The Buenos Aires Maru decision.

...

¶ 72      Fifthly, the far-reaching ambit that McIntyre j. assigned to the second category of Canadian maritime law - the "unlimited jurisdiction in relation to maritime and admiralty matters" - further compounds the problem. Courts must now try to assess whether a given dispute is "integrally" linked to modern commerce and shipping so as to warrant the application of this expanding corpus of maritime law. The integral connection test, necessarily subjective, has led to many solutions being discussed. These have involved the Federal Court in matters that prior to 1986 would almost certainly have been tried in provincial courts under provincial rules. As McIntyre J. himself recognized in The Buenos Aires Maru, the second branch of Canadian maritime law constantly threatens to clash with and to erode legitimate provincial spheres - mainly those of property and civil rights.

...

¶ 73      It is doubtful whether all this sweeping change has been beneficial to the Canadian confederation of provinces. Certainly, in a federal state such as Canada, uniformity of maritime law is desirable. However, if uniformity requires encroachment on fields such an insurance, agency, cargo damage occurring on land, sale, deposit and tendering, negligence and contributory negligence, and conflict of laws, the price of attaining such uniformity may be too high for Canada's young and still fragile federalism. Only a few years ago, the maritime bar and bench generally agreed that the above areas were exclusively within provincial domain. The expansionist approach to Canadian maritime law and the maritime jurisdiction of the Federal Court - in the name of "uniformity" of "Navigation and Shipping" law and practice from sea to sea - muddies the admiralty waters and upsets the delicate constitutional balance between federal and provincial rights. Furthermore, it reinforces apprehension in Quebec, even among non-separatists, over the burgeoning power of "Ottawa." The spectre of overreaching federal power is seen as menacing the purity and integrity of the civilian tradition and the legitimate competence of the Québec judiciary.

¶ 74      Perhaps the time has come to listen to the appeal of Dean André Braën. In the concluding paragraph of his work, Le droit maritime au Québec, he states:

À moins que la Cour suprême ne nuance, sinon n'écarte carrément son approche, nous croyons que le Parlement canadien doit intervenir pour rétablir l'intégrité de la tradition civiliste au Québec dans les affaires maritimes qui relèvent de la compétence. Il assurerait ainsi la pérennité du bijuridisme au Canada.

                                                                                                                      [Notes omitted]

[71]            Others have expressed similar views: H. Patrick Glenn, "Notes of Cases: Maritime Law - Federal Court Jurisdiction - Canadian Maritime Law," (1987) 66 Can. Bar Rev. 360; André Braën, "Le droit maritime au Québec" (Montréal : Wilson & Lafleur, 1992) and "L'arrêt ITO-International Terminal Operators Ltd. c. Miida Electronics Inc., ou comment écarter l'application du droit civil dans un litige maritime au Québec," (1986-87) 32 McGill L.J. 386; Pierre-Marc Couture-Trudel and Éric Labbé, "Le droit civil en matière maritime au Québec," (1997) 11 R.J.E.U.L. 3; Guy Lefebvre and Normand Tamaro, "La Cour suprême et le droit maritime : La mise à l'écart du droit civil québécois est-elle justifiable?," (1991) 70 Can. Bar Rev. 121; Guy Lefebvre, "L'uniformisation du droit maritime canadien aux dépens du droit civil québécois : lorsque l'infidélité se propage de la Cour suprême à la Cour d'appel du Québec," (1997) 31 R.J.T. 577; Guy Tremblay, "L'application du droit provincial en matière maritime après l'affaire Succession Ordon," (1999) 59 R. du B. 679.

Post ITO: Jurisprudence of the Supreme Court of Canada

[72]            The Supreme Court of Canada has had many occasions since ITO to apply the concept of "Canadian maritime law."

[73]            In Q.N.S. Paper Co. v. Chartwell Shipping Ltd., [1989] 2 S.C.R. 683, the Court found that a contract for stevedoring services entered into by an agent in Quebec was a claim involving Canadian maritime law. La Forest J. stated that:

In the present case, there is no question that we are dealing with maritime law. Section 22(2)(m) of the Federal Court Act ... expressly identifies stevedoring services as part of Canadian maritime law.

                                                                                                                                   [p. 695]

[74]            To the extent that it appears to confuse the granting of jurisdiction (section 22(2)) with the content of Canadian maritime law (section 2), Chartwelll Shipping may well contradict ITO. As noted by McIntyre J. in ITO, section 2 defines the content of Canadian maritime law and in that sense creates operative law, but same cannot be said of section 22.     In any event, the issue was not fully examined in Chartwell Shipping, the Court focussing, instead, on whether civil law principles were applicable in Canadian maritime law matters. It may be that "stevedoring" is a concept so much associated with maritime law that the Court never really asked itself whether the matter properly belonged to Canadian maritime law.

[75]            In Whitbread v. Walley, [1990] 3 S.C.R. 1273, the Court found that a claim for injury resulting from a pleasure craft striking rocks in tidal waters north of Vancouver was a claim in Canadian maritime law. La Forest J., writing for the Court, reminded at page 1290 that "a grant of jurisdiction to the Federal Court ... will only be valid and effective if some" applicable and existing federal law "is necessary to its exercise," a comment which, in my view, brings us back to McIntyre J.'s statement in ITO that section 22 of the Federal Court Act grants jurisdiction but does not create operative law. Commenting on the "Canadian maritime law" issue, La Forest J. notes that "the maritime law of England was not limited to torts committed on the British or high seas but extended to torts committed within the ebb and flow of the tide." He added,

Quite apart from judicial authority, the very nature of the activities of navigation and shipping, at least as they are practised in this country, makes a uniform maritime law which encompasses navigable inland waterways a practical necessity.

                                                                                                                                 [p. 1294]

I think it obvious that this need for legal uniformity is particularly pressing in the area of tortious liability for collisions and other accidents that occur in the course of navigation. As is apparent from even a cursory glance at any standard text in shipping or maritime law, the existence and extent of such liability falls to be determined according to a standard of "good seamanship" which is in turn assessed by reference to navigational "rules of the road" that have long been codified as "collision regulations" ... It seems to me to be self-evident that the level of government that is empowered to enact and amend these navigational "rules of the road" must also have jurisdiction in respect of the tortious liability to which those rules are so closely related.

                                                                                                                     [pp. 1295-1296]

... And I think it is clear that Parliament must, as a matter of practical necessity, have jurisdiction in respect of the tortious liability of pleasure craft as well as that of commercial vessels ... What I have said above as to the connection between tortious liability for negligent navigation and the navigational rules of the road comprised in the collision regulations would be just as applicable to the meeting of a pleasure craft and a commercial ship as it would be to the meeting of two commercial ships.

                                                                                                                                 [p. 1297]

[76]            In Monk Corp. v. Island Fertilizers Ltd., [1991] 1 S.C.R. 779, the parties had entered into a contract for the supply of products to be imported by ship. The Court (L'Heureux-Dubé J. dissenting) found that an action by the broker for demurrage, delivery of excess cargo and cost of renting shore cranes was a Canadian maritime law claim.

[77]            In Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., [1997] 3 S.C.R. 1210, a fire on an oil drilling rig had caused major damages. Canadian maritime law was found to apply:

This case involves tortious liability arising in a maritime context...    The rig was not only a drifting platform, but a navigable vessel ... 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.

                                                                                                                                [para. 85]

Policy considerations support the conclusion that marine law governs the plaintiffs' tort claim. Application of provincial laws to maritime torts would undercut the uniformity of maritime law.

                                                                                                                                [para. 88]

[78]            In Ordon Estate v. Grail, [1998] 3 S.C.R. 437, Iacobucci and Major JJ. revisited the ITO test:

"Canadian maritime law" as defined in s. 2 of theFederal Court Act is a comprehensive body of federal law dealing with all claims in respect of maritime and admiralty matters. The scope of Canadian maritime law is not limited by the scope of English admiralty law at the time of its adoption into Canadian law in 1934. Rather, the word "maritime" is to be interpreted within the modern context of commerce and shipping, and the ambit of Canadian maritime law should be considered limited only by the constitutional division of powers in the Constitution Act, 1867. 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: ITO, supra, at p. 774; Monk Corp., supra, at p. 795.

                                                                                                                               [at p. 489]

The incidents at issue in Ordon Estate were two boating accidents which had occurred on navigable waters within Ontario. In the first accident, a passenger had drowned after a pleasure boat had sank. In the second accident, a boating collision had resulted in deaths and serious injuries. The Court found that the fatal accident claims by dependants were maritime law claims.

[79]            While the Court was dealing with the constitutional applicability of some provincial statutes, the following observations are nevertheless useful in the case at bar:

The first step involves a determination of whether the specific subject matter at issue in a claim is within the exclusive federal legislative competence over navigation and shipping under s. 91(10) of the Constitution Act, 1867. Is the matter truly a matter of Canadian maritime negligence law? As stated by McIntyre J. in ITO, supra, at p. 774, and as restated by Iacobucci J. in Monk Corp., supra, at p. 795, it must be determined whether the facts of a particular case raise a maritime or admiralty matter, or rather a matter which is in pith and substance one of local concern involving property and civil rights or any other matter which is in essence within exclusive provincial jurisdiction under s. 92 of the Constitution Act, 1867. The test for making this determination is to ask whether the subject matter under consideration in the particular case is so integrally connected to maritime matters as to be legitimate Canadian maritime law within federal legislative competence. As is clear from this Court's recent jurisprudence on the issue, the answer to this question is to be arrived at through an examination of the factual context of the claim.

                                                                                                                         [pp. 491, 492]

...

This more general rule of constitutional inapplicability of provincial statutes is central to the determination of the constitutional questions at issue in these appeals. Maritime negligence law is a core element of Parliament's jurisdiction over maritime law. The determination of the standard, elements, and terms of liability for negligence between vessels or those responsible for vessels has long been an essential aspect of maritime law, and the assignment of exclusive federal jurisdiction over navigation and shipping was undoubtedly intended to preclude provincial jurisdiction over maritime negligence law, among other maritime matters. As discussed below, there are strong reasons to desire uniformity in Canadian maritime negligence law. Moreover, the specialized rules and principles of admiralty law deal with negligence on the waters in a unique manner, focussing on concerns of "good seamanship" and other peculiarly maritime issues. Maritime negligence law may be understood, in the words of Beetz J. in Bell Canada v. Quebec, supra, at p. 762, as part of that which makes maritime law "specifically of federal jurisdiction".

                                                                                                                                   [p. 498]

                                                                                                                       [My emphasis]

[80]            Finally, in Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustees of), [2001] 3 S.C.R. 907, the Court found that the Federal Court was within its admiralty jurisdiction when it denied trustees in bankruptcy's application for stay of proceedings pertaining to the sale of a ship pending final disposition of the matter by the Superior Court of Quebec sitting in bankruptcy.

Post-ITO : The Federal Court of Appeal, the Federal Court and other Courts

[81]            This Court, the Federal Court and other Canadian courts have throughout the years been very much aware that the concept of "Canadian maritime law" must not be used to encroach on what is, in pith or substance, a matter falling within provincial competence.

[82]            In a case involving a swap of fishing licences in respect of fishing vessels, this Court recently ruled that the Federal Court's admiralty jurisdiction ought not to include essentially non-maritime matters under pretext of "modern context of commerce and shipping." In Radil Bros. Fishing Co. v. Canada (Department of Fisheries and Oceans, Pacific Region), [2002] 2 F.C. 219 (C.A.), I, for the Court, expressed the following views:

[53]          I do not read ITO and Monk as suggesting that the courts should readily expand the concept of "Canadian maritime law". Quite to the contrary, the Court was careful to ensure that the "foundation or source" of the claim was so "integrally connected with maritime matters" as to not be encroaching on what was, in pith or substance, a matter falling within provincial competence. This is not an easy requirement to meet, as is evidenced by the lengthy analysis both McIntyre J. in ITO and Iacobucci J. in Monk went through before finding in favour of the Court's jurisdiction and as is evidenced, also, by the dissenting opinions of Justices Beetz, Chouinard and Lamer in ITO and L'Heureux-Dubé in Monk. To the extent that any enlargement of the concept of "Canadian maritime law" is generally made at the expense of the provincial competence in the matter of "Property and Civil Rights in the Province", it is easy to understand the reluctance of civil law judges to include into federal maritime law matters that have traditionally not been associated with the context of commerce and shipping. It is indeed one thing to adjust, as the Supreme Court invites us to do, the maritime jurisdiction of the Federal Court to "the modern context of commerce and shipping", it is another to extend it, through the pretext of modernity, to claims the foundation or source of which was, and still is, essentially a non-maritime matter.

...

[60]          None of these cases is helpful to the appellant. Quite to the contrary, they tend to show that the Court will not assert its admiralty jurisdiction in agency claims unless the true essence of the contract relied upon is maritime. This is not the case here, where the sole factor possibly connected to maritime law is the fact that the licence with respect to which the agency contract was entered into happens to be issued in relation to an activity occurring at sea. There is no contract for carriage of goods by sea. There is no marine insurance. There are no goods at issue. Nothing has happened at sea. There is no issue as to the seaworthiness of the ships. The ships are not party to the action. There are no in rem proceedings. There are no shipping agents. There are no admiralty laws or principles or practices applicable. The claim, at best and incidentally, may be said to relate to the ability of a ship to perform certain fishing activities in accordance with requirements that have nothing to do with navigation and shipping and everything to do with fisheries.

[83]            In a case dealing with the enforcement of a foreign arbitral award arising from a breach of a charterparty, Compania Maritima Villa Nova S.A. v. Northern Sales Co., [1992] 1 F.C. 550 (C.A.), Stone J.A. wrote, at para. 24:

[24]          In my opinion, the creation of a cause of action for the recognition and enforcement of the foreign arbitral award in issue, arising as it does from a breach of the charterparty agreement for payment of demurrage, is a maritime matter or is so integrally connected to a maritime matter as to be legitimate Canadian maritime law. The award derives indirectly from the charterparty, and amounts, in reality, to a finding of validity and proper quantification of the demurrage claim.

[84]            In a case dealing with alleged misrepresentations by shipping agents, H. Smith Packing Corp. v. Gainvir Transport Ltd. (1989), 61 D.L.R. (4^th) 489 (F.C.A.), Desjardins J.A. wrote, at p. 494:

... The key issue before us is, therefore, whether the law and the contract of agency as between a shipper and a shipping agent where misrepresentations as to the conditions under which cargo was to be carried aboard a vessel by the carrier and misrepresentations as to the extent of insurance carried by the owner and the manager of the vessel, is so integrally connected with the contract of carriage by sea itself as to become either a matter falling into the class of subjects of shipping as this term is understood under s. 91(10) of the Constitution Act, 1867, (Agence Maritime Inc. v. Canada Labour Relations Board (1969), 12 D.L.R. (3d) 722, [1969] S.C.R.. 851 (S.C.C.)), or a matter necessary incidental to this class of subjects. In such cases, the law of agency would have a double aspect. Agency in its federal aspect would fall under federal jurisdiction.

In the case at bar, the representations by the shipping agents both with regard to the conditions of carriage of the cargo and its coverage by insurance arose because of the existence of the contract of carriage by sea. There would have been no occasion for them to occur had there not been such a contract. It would be hard not to concede that those representations were integrally connected with the contract of carriage by sea and with the shipping operation itself. In such circumstances, the law of agency becomes "a law of Canada" within the meaning of s. 101 of the Constitution Act, 1867.

[85]            In The CSL Group Inc. v. Canada, [1998] 4 F.C. 140 (F.C.A.), several shipping companies had sued the Crown for reimbursement of revenue loss due to restrictions imposed by the St. Lawrence Seaway Authority and necessitated by Coast Guard Ships' Crews being on strike, Marceau J.A. wrote, at paragraph 11:

[11]          It is true that one may have serious doubts about that view of the Judge, who seems to have taken for granted that the dispute was governed by maritime law. The wrongdoing alleged, it seems to me, has nothing to do with maritime law and the damages claimed, consisting solely of lost profits, are entirely unrelated to the appellants' ships or their cargoes, since they are essentially economic. There is no connection, even indirect, with the carriage of goods by sea that the Supreme Court held, in ITO - International Terminal Operators Ltd. v. Miida Electronics Inc. et al., [1986] 1 S.C.R. 752, at page 774 to be sufficient but essential if a situation is to fall under the heading of maritime law (because it is "integrally connected to maritime matters")...

[86]            In Ruby Trading S.A. v. Parsons, [2001] 2 F.C. 174 (F.C.A.), Sexton J.A. found that the Federal Court has jurisdiction to entertain an action by a foreign shipowner against four of its foreign crew members and a Canadian union for inducing breach of contract between the shipowner and the crew members, and against the union's representative and those crew members for conspiracy to cause economic harm. He wrote:

[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 seafarers), 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.

[87]            In Pakistan National Shipping Corp. v. Canada, [1997] 3 F.C. 601 (C.A.), losses had been incurred by reason of the collapse of cargo in stow during a sea voyage. Stone J.A. wrote, at paragraph 23:

... It would thus appear that the root of the claims in the main action for losses incurred by reason of the collapse of the plastic drums in stow during the voyage to Pakistan was the sufficiency of the drums themselves to withstand the conditions experienced by the ship. It should be noted that the third party claim is based on the negligent misrepresentation by the respondent that the plastic drums manufactured by it would be sufficient for sea transport. It is not based on the mere supplying of defective drums by the third party to the vendors of goods that were later carried in those drums on the ship. In my view, the third party claim is integrally connected to the Court's admiralty and maritime jurisdiction...

[88]            That decision was distinguished in Garfield Container Transport Inc. v. Uniroyal Goodrich Canada Inc., A-556-94, F.C.A., April 30, 1998, a case relating to unpaid charges claimed by a trucking company for road transportation of goods, where Denault J.A. found, at paragraph 4, that:

... the Appellant's action is not integrally connected to a maritime matter as it relates only to unpaid charges claimed by a trucking company for road transportation of goods.

[89]            In Matsuma Machines Corp. v. Melburn Truck Lines Ltd., A-213-96, F.C.A., March 12, 1997, Pratte J.A. held that a claim by the shipper and the receiver of cargo which was found upon delivery to be damaged, could be made in the Federal Court against the ocean carrier, but not against the truck carrier who had carried the container from Port Elizabeth to Mississauga and, then, to Oakville.

[90]            In Caterpillar Overseas S.A. v. Canmar Victory (The), [1999] F.C.J. No. 1829, A-488-98, where a company had undertaken to stuff goods in an ocean-going container, Létourneau J.A. found as follows:

¶ 2            The evidence filed reveals that the Third Party, Industrial Crating Inc., undertook to stuff goods in an ocean-going container, knowing that the container would be placed on board a ship in Montreal for passage across the Atlantic ocean. Indeed, it is alleged that the Third Party presented itself as a specialist in the loading and securing of cargoes in containers to be transported by sea (Affidavit of Ame Norsk, Appeal Book, Tab 8, page 2, paragraph 7). Such an undertaking is of maritime nature (McGregor Cory Cargo Services B.V. and Peter Cremer Befrachtungskontor GMBH et al., [1990] F.C.J. No. 850, F.C.A. no. A-279-89, September 11, 1990). It is integrally connected to maritime matters and intimately connected to the carriage of goods by sea.

¶ 3            The same can be said of the claims since the contract between the Third Party and Dan Transport Corporation was, as the Third Party notice alleged, for the loading, blocking and bracing of cargo in an Ocean Container.

[91]            In Newterm Ltd. v. Mys Budyonnogo (The), [1992] 3 F.C. 255, a ship was being spraypainted by her crew while moored at dock and damage was caused onto 400 cars stored nearby by drifting paint, Reed J. found that "the activity which allegedly gave rise to damage is an integral part of the activity of shipping and has a close, practical relationship to the navigation of the vessel and shipping" (at para. 24). She had earlier suggested the following test, at paragraph 22:

¶ 22          In any event, it seems to me that counsel for the plaintiff and the second defendant are right in suggesting that one should adopt a functional or operational test in determining when damage can be said to be "caused by a ship" for maritime law purposes. When the ship is afloat, the damage is the result of actions of the crew acting under directions of its master and those actions are integrally related to the operation of the ship, then the damage should be classified as "damage caused by a ship". This is an attractive formulation of the appropriate distinction.

[92]            In Kusugak v. Northern Transportation Co., 2004 FC 1696, an action for damages arising from the sinking of a vessel laden with a cargo of propane and building materials was commenced against, amongst others, the Commissioner of Nunavut. It was pleaded that the Emergency Measures Organization set up by Nunavut had failed to inform the appropriate authorities, including the Canadian Coast Guard, of the situation to ensure a timely search and rescue operation. Nunavut filed a motion to strike the proceeding against it on the basis that the Federal Court had no jurisdiction. In granting the motion and striking the proceeding, Heneghan J. held as follows:

[35]          The prevailing jurisprudence requires that there be an integral connection between the allegations raised in a statement of claim and Canadian maritime law. I refer again to the decision in Radil, supra where the Federal Court of Appeal said the following at page 242:

...

[36]          These principles apply in the present case. The Plaintiffs' claim against the Nunavut Defendants has nothing to do with the subject of navigation and shipping. These Defendants had nothing to do with the ship "Avataq". They were not engaged with the operation of that ship in any of the capacities identified in section 22(2)(g) of the Act. The claim against them is grounded solely in the common law principles of negligence, independent of the principles of Canadian maritime law, and is beyond the jurisdiction of the Court.

[37]          I do not accept the Plaintiffs' argument that the land-based activities of the Nunavut Defendants, that is for the provision of emergency aid, constitutes an integral link with maritime activities and Canadian maritime law. The primary role of the Nunavut Defendants is to administer their respective duties in the governance of Nunavut. The involvement of the Nunavut Defendants with maritime matters or shipping and navigation is merely incidental. The incidental connection is sufficient to support a finding that the Plaintiffs' claim arises from Canadian maritime law.

...

[41]          In my opinion, the maritime element of the Plaintiffs' claim vis à vis the Nunavut Defendants is the fact that the underlying incident involved the operation of a ship. That is insufficient to find that this fact gives rise to a claim in Canadian maritime law in the absence of any allegation that nay of the Nunavut Defendants had any involvement with, or responsibility for, the operation, control or possession of that ship.

[93]            In Dreifelds v. Burton (1998), 156 D.L.R. (4^th) 662 (Ont. C.A.), a person had died of an embolism while scuba diving from a boat. The claims of negligence were based on the preparation and conduct of the dive and not the operation of the charter boat. The Ontario Court of Appeal found that the dive was not integrally connected with navigation and shipping:

¶ 17          In my view, the jurisprudence I have referred to yields the conclusion that not every tortious activity engaged in on Canada's waterways is subject to Canadian maritime law. Only if the activity sued about is sufficiently connected with navigation or shipping that the case meets the test set out by McIntyre J. in I.T.O. which I have quoted above, will it fall to be resolved under Canadian maritime law.

¶ 18.         As the pleadings reveal, the issues to be resolved in this case focus almost exclusively on the alleged negligence in the preparation for and conduct of the dive in which Peter Dreifelds died. No negligence is alleged in the operation of the charter boat. Indeed, at the time of the accident, Mr. Driefelds was not connected to it in any way. Its use as a means of transportation to the dive site is of no relevance to the negligent acts alleged. Nor it is asserted that the negligent activities pleaded interfered with navigation in any way or affected the navigability of any waterway.

¶ 19.         It is therefore my opinion that the subject-matter of this case is not integrally connected with maritime matters and, as a consequence, it does not fall to be resolved under Canadian maritime law. It is a case about a scuba-diving accident, an activity which, in my view, is not sufficiently connected to navigation and shipping that maritime law extends to it. Rather, the "pith and substance" of this action is a matter of local concern requiring, therefore, that it be resolved pursuant to the relevant provincial legislation, the Family Law Act.

                                                                                                                        [Goudge, J.A.]

[94]            In Shulman v. McCallum, [1993] B.C.J. No. 1494, the British Columbia Court of Appeal found that Canadian maritime law applied where deaths had occurred as a result of a collision between a motorboat and part of a boom of logs placed in the waters of Comox Lake.

[95]            Coming to the defence of the learned Federal Court Judge, I hasten to note, with some amazement, that most of the cases referred to in paragraphs 73 to 80 and none of those referred to in paragraphs 82 to 94 of these reasons were quoted to her. Neither were they quoted to us.

[96]            The limitation of liability sought in this case is with respect to an incident which, in my respectful view, is clearly not "integrally connected with maritime matters" in the meaning of these words as they have been interpreted by the courts of this country. The fact that the incident involved a pleasure craft (Whitbread) does not transform this prima facie land incident into a maritime matter. One has to be careful not to confuse "shipping" ("marine marchande") with "ship." Many matters that relate to ships do not relate to shipping at all. Whitbread involved a pleasure craft striking rocks in tidal waters. La Forest J. referred to tortious liability "which arises in a maritime context" (para. 19) and "that arises as a result of the use of navigable waterways" (at para. 26). La Forest J. also refers to "the very nature of the activities of navigation and shipping ... [that] makes a uniform maritime law which encompasses navigable inland waterways a practical necessity" (at para. 27). In Ordon Estate, the Supreme Court referred to "the specialized rules and principles of admiralty law [which] deal with negligence on the waters in a unique manner, focussing on concerns of 'good seamanship' and other peculiarly maritime issues" (at p. 498).

[97]            The focus should be less on the fact that a "ship" was involved (of course pleasure crafts are less likely, on land, whether in storage, under repairs or during road transportation, to attract the application of maritime law principles), and more on the location where the incident occurred (of course, the further away from the navigable waters one gets the less likelihood of a maritime connection) and on the true essence of the incident.

[98]            As in Radil Bros. Fishing, I fail, here, to see how the true essence of the incident can be described as being maritime. The accident occurred on land. The injury was caused on land by a person who was neither on the boat nor in the water. There is no contract for carriage of goods by sea. There are no goods at issue. Nothing has happened on water which could be said to be directly or even indirectly related to the accident. There is no issue as to the seaworthiness of the ship, the issue at best being one as to the roadworthiness of a boat being prepared on land for road transportation. There are no in rem proceedings. There are no concerns of good seamanship. There are no specialized admiralty laws, rules, principles or practices applicable. The accident has nothing to do with navigation nor with shipping. There is no practical necessity for a uniform federal law prescribing how to secure the engine cover from flapping in the wind when a pleasure craft is transported on land in a boat trailer. The sole factor possibly connected to maritime law is that the pleasure craft had just come out of the water and was still being secured on the trailer when the accident happened. This, clearly, is not enough to constitute an integral connection with navigation and shipping and an encroachment of civil rights and property.

[99]            In the end, I reach the conclusion that the claim at issue is not a Canadian maritime law claim and that the claim in limitation of responsibility does not fall within the purview of the Canada Shipping Act.

[100]        I would allow the appeal, set aside the decision of the Federal Court and answer the stated question as follows:

Q.             Do the facts and circumstances that gave rise to an incident which caused personal injury to Stephen Simms on August 1, 1999 constitute "claims arising on any distinct occasion involving a ship with a tonnage of less than 300 tons", pursuant to section 577(1) of the Canada Shipping Act?

A.             No, as the facts and circumstances are not a maritime matter falling under the realm of Canadian maritime law.

The appellant should have his costs before this Court and before the Federal Court.

                                                                                                                                   "Robert Décary"

                                                                                                                                                      J.A.

                                                  FEDERAL COURT OF APPEAL

                            NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                                               A-127-04

STYLE OF CAUSE:                                                               SIMMS et al v. ISEN

PLACE OF HEARING:                                                         Toronto, Ontario

DATE OF HEARING:                                                            January 13, 2005

REASONS FOR JUDGMENT:                                            NADON J.A.

CONCURRED IN BY:                                                          SEXTON J.A.

DISSENTING REASONS BY:                                             DÉCARY J.A.

DATED:                                                                                  May 06, 2005

APPEARANCES:

SOLICITORS OF RECORD: