A-1932-83
Yasuda Fire & Marine Insurance Co. Ltd.
(Appellant) (Plaintiff)
v.
The Ship Nosira Lin and Her owners (Nosira
Shipping Ltd.) (Respondents) (Defendants)
Court of Appeal, Pratte, Le Dain and Hugessen
B.—Quebec City, February 13; Ottawa, March 6,
1984.
Conflict of laws — Forum non conveniens — Appeal from
order striking statement of claim as Canadian court not
appropriate forum — Appeal allowed — Trial Division should
neither dismiss nor strike out action on ground of forum non
conveniens as circumstances may change resulting in Canadian
court becoming appropriate forum — No useful purpose,
served in striking statement of claim if nothing objectionable
therein.
Jurisdiction — Trial Division — Respondent contending in
action in rem against ship, statement of claim must expressly
allege ship beneficially owned by beneficial owner at time
cause of action arose — S. 43(3) Federal Court Act not
dealing with contents of statement of claim — Action in rem
impliedly asserting claim may be made in rem — Federal
Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 43(3) — Federal
Court Rules, C.R.C., c. 663, R. 1002(5).
Practice — Stay of proceedings — S. 50(1)(b) Federal Court
Act giving Court power to stay proceedings when in interest of
justice proceedings be stayed — Trial Judge wrong in consid
ering question whether action could be tried in more convenient
place than Canada — Test whether in interest of justice that
proceedings be stayed as stated in s. 50(1)(b) — Governing
principles stated in MacShannon v Rockware Glass Ltd,
[1978] 1 All E.R. 625 (H.L.) — Court must be satisfied there
is another forum in which justice can be done at substantially
less inconvenience or expense and stay must not deprive plain
tiff of legitimate personal or juridical advantage — No evi
dence of inconvenience and expense of proceeding in Canada
Appeal from Trial Division order striking out statement of
claim allowed — Federal Court Act, R.S.C. 1970 (2nd Supp.),
c. 10, s. 50(1)(b).
Appeal from order of Trial Division striking out statement of
claim on the ground that a Canadian court was not an appro
priate forum for the trial of the action. In the Trial Division the
respondent, in addition to pleading forum non conveniens,
argued that the action had not been regularly served and that
the Court lacked the jurisdiction to decide the question. The
last contention was based on the proposition that in an action in
rem against a ship, the statement of claim must expressly allege
that the ship is "beneficially owned by the person who was the
beneficial owner at the time when the cause of action arose".
The Trial Judge held that the action could be tried in a more
convenient place than Canada because neither the parties nor
the cause of action had any connection with Canada. He was
guided by the principle enunciated in Antares Shipping Corpo
ration v. The Ship "Capricorn" et al., [1977] 2 S.C.R. 422,
that is, that the overriding consideration must be the existence
of some other forum convenient and appropriate for the pursuit
of the action and for securing the ends of justice. The appellant
submits that the Trial Judge erred in concluding that the
appellant's action should not be tried in Canada or that he
erred in dismissing the action instead of staying it.
Held, the appeal should be allowed. The service argument
was without foundation as an affidavit of service was filed
showing that the statement of claim was served upon the ship in
the manner required by Rule 1002(5). As to the jurisdictional
argument, subsection 43(3) of the Federal Court Act does not
deal with the contents of the statement of claim. When a
plaintiff sues in rem he impliedly asserts that his claim may be
in rem. The Trial Division should neither dismiss an action nor
strike it out on the ground that the matter should be dealt with
by a foreign court since the circumstances which make it
appropriate that the case be tried in a foreign court may change
and a Canadian court may become an appropriate forum.
Paragraph 50(1)(b) of the Federal Court Act gives the Court
the power to stay proceedings when "it is in the interest of
justice that the proceedings be stayed". No useful purpose is
served by striking out the statement of claim where there is
nothing objectionable in the statement of claim itself. The Trial
Judge, in considering that the question to be answered was
whether the action could be tried in a more convenient place
than Canada, exercised his discretion on a wrong basis. The
real question stated by paragraph 50(1)(b) of the Federal
Court Act is whether it is in the interest of justice that the
proceedings be stayed. The governing principles, stated in
MacShannon y Rockware Glass Ltd, [1978] 1 All E.R. 625
(H.L.) are that the Court must be satisfied that there is
another forum in which justice can be done at substantially less
inconvenience or expense and the stay must not deprive the
plaintiff of a legitimate personal or juridical advantage.
Because no evidence was adduced to show the inconvenience
and expense of proceeding in Canada rather than in Japan, it
was not possible to say that justice would be done in Japan at
substantially less inconvenience and expense than in Canada.
CASES JUDICIALLY CONSIDERED
APPLIED:.
MacShannon v Rockware Glass Ltd, [1978] 1 All E.R.
625 (H.L.).
DISTINGUISHED:
Magnolia Ocean Shipping Corporation v. The Ship
"Soledad Maria", et al., judgment dated April 30, 1981,
Federal Court—Trial Division, T-744-81, not reported.
CONSIDERED:
Antares Shipping Corporation v. The Ship "Capricorn"
et al., [1977] 2 S.C.R. 422.
REFERRED TO:
Atlantic Star (Owners) v. Bona Spes (Owner), [1974]
A.C. 436; [1973] 2 All E.R. 175 (H.L.); Castanho v.
Brown & Root (U.K.) Ltd. et al., [1980] 3 W.L.R. 991;
[1981] 1 All E.R. 143 (H.L.).
COUNSEL:
Vincent Prager for appellant (plaintiff).
Guy Vaillancourt for respondents (defend-
ants).
SOLICITORS:
Stikeman, Elliott, Tamaki, Mercier & Robb,
Montreal, for appellant (plaintiff).
Langlois, Drouin & Associés, Quebec City,
for respondents (defendants).
The following are the reasons for judgment
rendered in English by
PRATTE J.: This is an appeal from an order of
the Trial Division (Rouleau J.) [order dated
December 2, 1983, T-1607-83, not yet reported]
striking out the statement of claim filed by the
appellant on the ground that a Canadian court was
not an appropriate forum for the trial of the
appellant's action. Both parties have argued the
appeal as if that judgment had, in effect, dismissed
the action.
In the Court below, the respondent, in addition
to raising the plea of forum non conveniens had
argued that the action had not been regularly
served and that, in any event, the Court did not
possess the jurisdiction to decide it. In view of his
conclusion on the question of forum conveniens,
Rouleau J. did not express any opinion on these
two additional points.
The respondent's contention that the action had
not been regularly served was based on the
assumption that this action in rem, instead of
being served upon the ship Nosira Lin as required
by Rule 1002(5) [Federal Court Rules, C.R.C., c.
663], had been served on her master. At the
hearing of the appeal, that assumption was shown
to be without foundation when the appellant, pur-
suant to leave given by the Court, filed an affidavit
of service showing that, contrary to what had been
assumed by the respondent, the statement of claim
had in effect been served upon the ship in the
manner prescribed by the Rules.
As to the contention that the Trial Division
lacked the jurisdiction to hear the action, it was
based on the proposition that, in a case like this
one, the Trial Division does not possess the juris
diction to entertain an action in rem against a ship
unless the statement of claim expressly alleges that
the defendant ship is, as required by subsection
43(3) of the Federal Court Act [R.S.C. 1970 (2nd
Supp.), c.10], "beneficially owned by the person
who was the beneficial owner at the time when the
cause of action arose". In my opinion, subsection
43(3) does not support the respondent's proposi
tion since it does not deal directly or indirectly
with the contents of the statement of claim. When
a plaintiff sues in rem, he thereby impliedly asserts
that circumstances are such that his claim may be
made in rem. Therefore, it cannot be said that the
statement of claim of an action in rem which does
not contain an express allegation to the effect that
the requirements of subsection 43(3) are met fails
to disclose a cause of action within the jurisdiction
of the Court.
The sole real question raised by this appeal,
therefore, is whether the Trial Division was right
in striking out the appellant's statement of claim
on the ground that a Canadian court was a forum
non conveniens. On that point, counsel for the
appellant presented two arguments. First, he said
that, assuming that Rouleau J. was right in hold
ing that the appellant's action should not be tried
in Canada, he should not have struck out the
statement of claim or dismissed the action but
should, instead, have stayed the action; second, he
argued that the learned Judge erred in reaching
the conclusion that the appellant's action should
not be tried in Canada.
It is common ground that the Trial Division has
the power to stay an action on the ground that the
matter should be dealt with by a foreign court.
The appellant's first argument is that, in such a
case, the Court should neither dismiss the action
nor strike out the statement of claim. I agree.
Paragraph 50(1) (b) of the Federal Court Act gives
the Court the power to stay proceedings when "it
is in the interest of justice that the proceedings be
stayed". Under this paragraph, the Court may
clearly stay an action which, in its view, should be
brought in a foreign court. However, in such a
case, the Court should not normally dismiss the
action since the circumstances which make it
appropriate that the case be tried in a foreign
court may change with the result that a Canadian
court may become an appropriate forum. More
over, in similar circumstances, the Court should
not, either, strike out the statement of claim since
no useful purpose would be achieved by such an
order in a case where there is nothing objection
able in the statement of claim itself. These con
siderations probably explain why, apart from the
decision under attack and the order made by the
Trial Division in the case of the Soledad Maria, 2 I
have been unable to find any decision dismissing
an action or striking out a statement of claim on
the ground that the matter should proceed before a
foreign court.
The appellant's main argument was that the
learned Judge below was wrong in deciding that
the appellant's action should not be tried in
Canada. Counsel acknowledged that the Judge
had a discretion to exercise but he argued that his
discretion had been exercised on a wrong basis.
The principles which guided the Judge in the
exercise of his discretion appear from the following
passage of his reasons [at pages 3 and 4]:
Although it is clear that the maritime jurisdiction of this
Court is not confined to matters arising within Canada, I may
exercise my discretion; in connection therewith, I should look to
what is the paramount consideration, that is the forum of
convenience. The question to be addressed is whether or not
there is another forum, more convenient, than this one to
entertain the suit. Forum of convenience calls for proper bal
ance between the convenience of all the parties and the incon
venience of trying the case in one country, when the cause of
action has arisen in another.
' Unless the circumstances are such that the action is really
vexatious.
2 Magnolia Ocean Shipping Corporation v. The Ship "Sole-
dad Maria", et al., unreported decision of the [Federal
Court—] Trial Division, Marceau J., April 30, 1981, Court
File No. T-744-81. The circumstances in that case were very
different from those of the present case.
The general principles that apply are aptly referred to by Mr.
Justice Ritchie in Antares Shipping Corporation v. The Ship
"Capricorn" et al., reported in [ 1977] 2 S.C.R. 422 at 447-448:
In determining whether or not the Federal Court was
justified in refusing to exercise its discretion in the present
case, consideration must be given to the application of the
doctrine of forum conveniens, and although the Federal
Court does not appear to have given any consideration to this
phase of the matter, it appears to me, as it apparently does to
Laskin C.J., that this is the most important question to be
determined on this appeal. The factors affecting the applica
tion of this doctrine have been differently described in vari
ous cases, to some of which reference will hereafter be made,
and they include the balance of convenience to all the parties
concerned, including the plaintiff, the undesirability of tres
passing on the jurisdiction of a foreign state, the impropriety
and inconvenience of trying a case in one country when the
cause of action arose in another where the laws are different,
and the cost of assembling foreign witnesses.
In my view the overriding consideration which must guide
the Court in exercising its discretion by refusing to grant
such an application as this must, however, be the existence of
some other forum more convenient and appropriate for the
pursuit of the action and for securing the ends of justice.
Each such case must of necessity turn upon its own particu
lar facts and it appears to me that when considering whether
or not a more appropriate forum was available to the appel
lant, the salient facts disclosed by the record may be summa
rized as follows .... [Emphasis added.]
It is obvious that this action is between foreigners, relating to
a foreign ship, seeking enforcement of an agreement entered
into in a foreign country. There is no suggestion of any
Canadian involvement in the dispute. The discontinuance of the
action in Canada is not likely to cause any harm to any
defendants or any other interested parties.
As I understand his reasons, the Judge of first
instance considered that the question he had to
answer was whether the action could be tried in a
more convenient place than Canada and, in spite
of his reference to the judgment of the Supreme
Court of Canada in the Capricorn, he answered
that question in the affirmative for the sole reason
that, in his view, neither the parties nor the cause
of action had any connection with Canada. In
deciding in this manner, the Judge, in my opinion,
exercised his discretion on a wrong basis.
The real question to be answered on an applica
tion of this kind is stated by paragraph 50(1)(b) of
the Federal Court Act: is it in the interest of
justice that the proceedings be stayed? That ques
tion must be answered in the light of the principles
that were formulated by Lord Diplock in Mac-
Shannon y Rockware Glass Ltd, [1978] 1 All E.R.
625 (H.L.) at 630: 3
`In order to justify a stay, two conditions must be satisfied, one
positive and the other negative: (a) the defendant must satisfy
the court that there is another forum to whose jurisdiction he is
amenable in which justice can be done between the parties at
substantially less inconvenience or expense, and (b) the stay
must not deprive the plaintiff of a legitimate personal or
juridical advantage which would be available to him if he
invoked the jurisdiction of the English court' ... .
In applying these principles to the facts of this
case, it is necessary to bear in mind that the record
discloses the following facts:
1. The appellant claims compensation for dam
ages to a shipment of steel that was shipped
from Brazil to Japan on the respondent vessel
under bills of lading issued in Brazil;
2. the appellant is a body corporate of Japan;
3. the respondent vessel is presently owned,
crewed and managed in England;
4. the vessel was time-chartered by the owners
on a New York Produce Exchange form
charterparty dated at London, April 23, 1982,
for 22/24 calendar months to Messrs. PHS Van
Ommeren (Nederland) B.V. of Rotterdam, Hol-
land; disputes under that charterparty, to which
the appellant is not a party, were to be heard in
London;
5. in accordance with the terms of a sub-charter-
party, to which the appellant was also not a
party, the vessel proceeded to Santos, Brazil,
where she subsequently received the shipment
referred to in the statement of claim under bills
of lading evidencing a contract of carriage,
which bills of lading were issued in Santos,
Brazil;
3 That decision, in which Lord Diplock gave his interpreta
tion of the majority speeches in the Atlantic Star (Owners) v.
Bona Spes (Owner), [1974] A.C. 436; [1973] 2 All E.R. 175
(H.L.), was approved by the House of Lords in Castanho v.
Brown & Root (U.K.) Ltd. et al., [1980] 3 W.L.R. 991; [1981]
1 All E.R. 143, where Lord Diplock's formulation was charac
terized as a "distillation of principle". I do not see any incon
sistency between Lord Diplock's formulation and the decision
of the Supreme Court of Canada in Antares Shipping Corpo
ration v. The Ship "Capricorn" et al., [1977] 2 S.C.R. 422.
6. the said shipment was carried in accordance
with the contract of carriage from Santos,
Brazil, to Osaka, Japan;
7. the bills of lading incorporated the Hague
Rules of either the country of shipment (Brazil)
or of destination (Japan); therefore, either the
laws of Brazil or of Japan will have to be proven
at trial;
8. the trial will also have to concern itself with
the condition of the goods at the time of loading
in Brazil, while under way on the voyage, and at
the time of discharge in Japan;
9. Brazilian lawyers have been appointed by the
carriers to preserve their rights against the ship
pers, who apparently to overcome the imperfect
condition of the cargo at the time of loading in
Brazil issued a letter of indemnity in order to
obtain from the carrier clean bills of lading;
10. this action was served on the defendant
[respondent] vessel in the Port of Quebec;
11. the respondent vessel was not arrested by the
appellant as security satisfactory to the appel
lant was given on behalf of the vessel and her
owners by the bankers of the time-charterers;
that security took the form of a letter of credit
of the Chase Bank guaranteeing the payment of
any final judgment of any court of competent
jurisdiction;
12. the respondent owners have undertaken not
to contest the jurisdiction of the courts of Japan;
in addition, they have agreed that the prescrip
tion of the appellant's claim be extended so as to
expire 90 days after the decision of first
instance.
Neither the appellant nor the respondent seem
anxious to have this suit proceed in Brazil. The
question to be answered, therefore, is whether the
respondent has shown that justice would be done
between the parties in Japan at substantially less
inconvenience and expense than in Canada. No
evidence has been adduced to show the inconve
nience and expense of proceeding in Canada rather
than Japan. In these circumstances, while I am
inclined to think that there would be some advan
tage in proceeding in Japan, I am unable to say
that this advantage would certainly exist or, if it
exists, that it would be substantial.
For these reasons, I would allow the appeal, set
aside the order of the Trial Division and dismiss
the respondent's application. I would grant the
appellant its costs in both Courts.
LE DAIN J.: I agree.
HUGESSEN J.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.