St. Lawrence Seaway Management Corporation v. BBC Lena (Vessel)

St. Lawrence Seaway Management Corporation v. BBC Lena (Vessel)
Court (s) Database
Federal Court Decisions
Date
2018-10-12
Neutral citation
2018 FC 1026
File numbers
T-1621-16
Notes
Digest
Decision Content
Date: 20181012
Docket: T-1621-16
Citation: 2018 FC 1026
Ottawa, Ontario, October 12, 2018
PRESENT: The Honourable Madam Justice Strickland
BETWEEN:
THE ST. LAWRENCE SEAWAY MANAGEMENT CORPORATION
Plaintiffs
and
THE VESSEL “BBC LENA” FORMERLY “LENA J”
-AND-
THE OWNERS AND ALL OTHERS INTERESTED IN THE VESSEL “BBC LENA” FORMERLY “LENA J”
-AND-
SCHIFFFAHRTS UG
(HAFTUNGSBESCHRANKT) & CO. KG MS “LENA J”
Defendants
JUDGMENT AND REASONS
[1] The St. Lawrence Seaway Management Corporation (“Plaintiff”) manages and operates a bridge that was damaged when the vessel “BBC Lena” (formerly the “Lena J.”) collided with it. The Plaintiff brought a negligence action against the “BBC Lena”, its owners and all others interested in it, and Schifffaharts UG (Haftungsbeschrankt & Co. KG MS “Lena J.”) (collectively, the “Defendants”). The Defendants bring this motion for summary judgement (“Motion” or “Summary Judgment Motion”) seeking to dismiss the Plaintiff’s action on the basis that the Plaintiff’s losses constitute unrecoverable economic loss. While the Plaintiff agrees that this matter lends itself to disposition by way of summary judgment, it is of the view that the matter should be resolved in its favour.
Factual Background
[2] On September 30th, 2015, the “BBC Lena” (“Vessel”) collided with Bridge No. 19 (“Bridge 19” or the “Bridge”), which forms part of the St. Lawrence Seaway (“Seaway”). The collision caused severe structural damage to Bridge 19 necessitating significant repairs and halting passage over and through it for almost 6 months.
[3] The Plaintiff is a corporation without share capital that was established by the Government of Canada. It was incorporated by Letters Patent dated July 9, 1998, pursuant to the Canada Corporations Act, RSC 1970, c C-32, and was continued under the Canada Not‑for-profit Corporations Act, SC 2009, c 23. As such, the Plaintiff has the capacity, rights and powers of a natural person (Canada Not-for-profit Corporations Act, s 16(1)).
[4] For the purposes of this Motion, the Defendants accept that the Plaintiff was, at all material times, a not-for-profit corporation charged with the management and operation of the Seaway, including Bridge 19. This responsibility arises from s 80(5) of the Canada Marine Act, SC 1998, c 10 (or the “Act”), and a series of management agreements entered into by the Plaintiff and the Crown. These agreements make the Plaintiff responsible for causing any necessary repairs to the Bridge, to be conducted at its own expense.
[5] The Plaintiff commenced this action in rem against the Vessel and in personam against its owners and all others interested in it. It claims that the collision and the resulting damages were caused by the unseaworthiness of the Vessel with the actual fault and privity of the defendant owners, and the negligence of its officers and crew. Its Statement of Claim seeks approximately $1 million dollars of damages for the cost of repairing the Bridge. It also claims for loss of use of the Bridge, for indemnification for any actions from third parties arising from the Bridge’s closure, as well as for costs and pre- and post-judgment interest.
[6] The Defendants’ Statement of Defence puts the Plaintiff to strict proof of its claims. It also asserts that any losses and damages that the Plaintiff incurred constitute relational economic losses, which are not recoverable at law. In the alternative, the Defendants assert that any damages are excessive and exaggerated.
[7] On February 26, 2018, the Defendants filed a Notice of Motion for Summary Judgment under Rule 215 of the Federal Courts Rules, SOR/98-106 (“Rules”), seeking to have the Plaintiff’s negligence action dismissed. In the alternative, the Defendants ask that the Plaintiff’s claim for the repair costs be dismissed with costs and that the balance of the action, if any, continue to trial.
[8] In a nutshell, the Defendants’ position is that the Plaintiff’s damages are not accompanied by physical injury or damage to property owned by the Plaintiff, making the damages pure economic losses, which are only recoverable in limited circumstances. The Defendants argue that none of those circumstances are present in this matter.
Preliminary Matter - Confidentiality Order
[9] In its Notice of Motion for Summary Judgment, the Defendants seek, among other things, direction on the confidentiality of motion materials. In her Order dated April 4, 2018, Justice St-Louis addressed this issue. She also ordered that the sound recording available for the hearing (in camera) would be turned off and no recording by Court stenography or otherwise of oral argument would be made. The rational being that it would permit counsel the freedom to refer to confidential material when appearing before the Court without fear of jeopardizing the confidentiality of such materials. Justice St-Louis also stated that the whole of her Order was subject to the ultimate decision of the presiding Judge.
[10] With respect to the portion of Justice St-Louis’ Order that precludes sound recording of the proceeding, I am concerned that its effect is that there would be no record of the proceeding before me. In the event of an appeal, there would be no transcript of the hearing. In my view, this is not desirable. I also note that the Federal Court’s “Notice to the Profession, Pilot Project for Access to Digital Audio Recordings of Federal Court Proceedings” (2015), specifically envisions that confidentiality orders might apply to recordings of proceedings. In that event, the confidential information will either be redacted from the recording or, if redaction is impracticable, the recording will not be released. Accordingly, and as discussed with the parties at the commencement of the hearing, I permitted the hearing to be recorded, in the normal course, and will order that the recording be treated as confidential and that it shall only be released at my specific written direction.
The Availability of Summary Judgment - Rule 215
[11] Rule 215(1) states that if on motion for summary judgment the Court is satisfied that there is no genuine issue for trial with respect to a claim or defence, the Court shall grant summary judgment. Rule 215(2)(b) states that if the Court is satisfied that the only genuine issue is a question of law, the Court may determine the question and grant summary judgment.
[12] In Manitoba v Canada, 2015 FCA 57, the Federal Court of Appeal considered Rule 215 and, citing Burns Bog Conservation Society v Canada, 2014 FCA 170, held that there is no genuine issue if there is no legal basis for the claim based on the law or the evidence brought forward. The Court found that this was consistent with the Supreme Court of Canada’s decision in Hryniak v Mauldin, 2014 SCC 7, which held that there is no genuine issue if there is no legal basis to the claim or if the judge has the evidence required to fairly and justly adjudicate the dispute.
[13] For the purposes of this Summary Judgment Motion, the Defendants admit most of the relevant facts. Specifically, by way of an affidavit sworn on February 23, 2018 by Defendants’ counsel, Mr. David Colford (“Colford Affidavit”):
i) the Defendants admit that the Vessel collided with Bridge 19 in clear weather and in excellent visibility causing severe structural damage to the Bridge, halting passage over and through it, and that the Plaintiff incurred substantial costs and damages as a result (paras 5–8 of the Statement of Claim);
ii) the Defendants have not contested the allegations of fault contained in paragraph 9 of the Plaintiff’s Statement of Claim, but also have not admitted them, nor do they allege any facts that would excuse the Defendants’ failure to navigate the Vessel in a safe manner;
iii) the Defendants have been advised by Plaintiff’s counsel and believe that the Plaintiff has paid for repairs to Bridge 19, with the relevant documents and proof of payments being attached as an exhibit to Mr. Colford’s affidavit.The Defendants accept, for the purposes of the Motion, that the Plaintiff has made the payments described;
iv) the Defendants admit that Bridge 19 is a “Managed Asset” as defined within the management agreements described below.
[14] The Coldford Affidavit also states that the Plaintiff has not produced any documents relating to claims for loss of use of the Bridge or indemnification of third parties. In this regard, when appearing before me, Plaintiff’s counsel confirmed that the Plaintiff is not seeking damages in relation to its claims for loss of use of Bridge 19 or for indemnification of any third parties. As a result, the only losses at issue are the costs of the repairs to Bridge 19, which the Plaintiff has paid and seeks to recover from the Defendants.
[15] Given these admissions, there is really only one question to be resolved in deciding this Motion. That is, do the Plaintiff’s damages constitute relational economic losses and, if so, are they are recoverable.
[16] I am satisfied that this issue can be determined summarily. No genuine issue for trial exists because the evidence before me is sufficient to permit me to fairly and justly adjudicate this question (see Leo Ocean S.A. v Westshore Terminals, 2015 FCA 282 (“Leo Ocean”)). And, even if this issue amounts to a genuine issue, it is a question of law, which I am able to determine, and, accordingly, I may dispose of the matter by summary judgment.
[17] To the extent that there remains any residual issue as to whether the repairs are excessive and exaggerated, as the Defendants assert as their only alternative defence, Rule 215(2)(a) permits the Court to grant summary judgment and to refer the issue of quantifying the loss to a referee pursuant to Rule 153.
Statutory and Contractual Framework
[18] To address whether the Plaintiff’s damages constitute relational economic losses, it is first necessary to understand the relevant legislative and contractual framework in this matter. This is comprised of the Canada Marine Act and the management agreements.
Canada Marine Act
[19] Section 2(1) of the Canada Marine Act defines the “Seaway”, which includes the locks, canals and facilities between the Port of Montreal and Lake Erie, and which is stated to be generally known as the St. Lawrence Seaway. Section 77 of the Act defines the “Authority” (referred to hereafter as the “Authority” or “SLSA”) as The St. Lawrence Seaway Authority, established by s 3(1) of the St. Lawrence Seaway Authority Act. The Authority, an agent of the Crown, was the predecessor entity to the Plaintiff.
[20] Part 3 of the Canada Marine Act concerns the Seaway. Section 78 sets out the objectives of Part 3 and s 79 deals with the powers of the Minister. Significantly, for the purposes of this matter, s 80(5) permits the Minster to enter into agreements in respect of the Seaway:
80(5) The Minister may enter into agreements in respect of all or part of the Seaway and the property or undertakings referred to in subsection (1) or (2) and those agreements may be with a not-for-profit corporation that accords a major role to Seaway users, in particular in the way in which directors of the corporation are appointed and in its operations, or, where the Minister considers it appropriate, with any other person or anybody established under an international agreement.
(6) An agreement may include any terms and conditions that the Minister considers appropriate, including provisions respecting
(a) the transfer of all or part of the property or undertakings referred to in subsection (1) or (2);
(b) the management and operation of all or part of the Seaway or the property or undertakings referred to in subsection (1) or (2);
(c) the construction, maintenance and operation of all or part of the Seaway;
(d) the charging of fees;
(e) the performance and enforcement of obligations under the agreement;
(f) the transfer of officers and employees of the Authority;
(g) the making of financial contributions or grants or the giving of any other financial assistance;
(h) the imposition of additional obligations of financial management; and
(i) where the agreement is with a body referred to in subsection (5), the application of any of the provisions of this Part relating to an agreement with a not-for-profit corporation or other person referred to in that subsection.
[21] Also of particular significance are s 91(1)(d) and s 91(2), which concern the taking of legal proceedings:
91 (1) Where an agreement entered into under subsection 80(5) so provides, the person who has entered into the agreement
(a) need not pay compensation in respect of the use of the property that is owned by Her Majesty and managed by the person;
(b) may, notwithstanding the Financial Administration Act, retain and use the revenue received in respect of the property for the purpose of operating the Seaway;
(c) may lease the property under the person’s management and grant licences in respect of it;
(d) shall undertake and defend any legal proceedings with respect to the management of the property; and
(e) shall discharge all obligations with respect to the management of the property.
(2) A civil, criminal or administrative action or proceeding with respect to any federal real property or federal immovable that a person who has entered into an agreement under subsection 80(5) manages, or any property that the person holds, or with respect to any act or omission occurring on the property, shall be taken by or against the person and not the Crown.
Management Agreements
[22] The Plaintiff’s rights and responsibilities concerning the management, operation and maintenance of the Seaway arise by way of three agreements:
i) The Framework Agreement, dated August 11, 1998 as between the Plaintiff, and the Crown as represented by the Minister of Transport;
ii) The Managed Asset Agreement, dated September 30, 1998, as between The Authority and the Plaintiff; and
iii) The Management, Operation and Maintenance Agreement, dated September 30, 1998, as amended, as between the Plaintiff, and the Crown as represented by the Minister of Transport.
(collectively, the “Agreements”).
Relevant portions of the Agreements are set out in Appendix A of these reasons. The Agreements explicitly state that they constitute agreements entered into pursuant to s 80(5) of the Canada Marine Act.
Parties’ Positions
Defendants’ Submissions
[23] Although the Plaintiff exclusively frames its action in tort, the Defendants’ written submissions begin by arguing that the Defendants do not have a contractual relationship with the Plaintiff arising from the Defendants’ payment of Seaway tolls. I take the Defendants to mean that the Plaintiff is therefore unable to recover its losses from the Defendants based on contract law principles. However, when appearing before me, Plaintiff’s counsel confirmed that the Plaintiff is not asserting a claim in contract. Accordingly, I need not address this point.
[24] The remainder of the Defendants’ submissions argue that the Plaintiff’s losses amount to unrecoverable relational economic loss.
[25] The Defendants begin by providing a history of the management of the St. Lawrence Seaway. They note that in 1951 the St. Lawrence Seaway Authority Act established the Authority. It was a Crown agent that acted on the Crown’s behalf of in the management and operation of Crown assets, including the facilities, the properties and the bridges used in the Seaway. Its constituting statute gave the Authority the right to act for and on behalf of the Crown, in its own name, with respect to the protection and defence of Crown interests in the Crown assets.
[26] In 1998, in an effort to commercialize certain marine activities, including Seaway operations, the Canada Marine Act was enacted. Under the Act, a not‑for‑profit corporation would now manage the Seaway. This corporation would assume for its own account all expenses and losses in relation to the Seaway, which, according to the Defendant, was in exchange for the right to charge tolls for the use of the facilities. The Plaintiff is such a corporation.
[27] Under its Agreements with the Crown, the Plaintiff assumed full responsibility for and sole risk of the management of Bridge 19 with respect to its operation, maintenance and repair. The Defendants submit that this liability extends up to a specified amount of $2.5 million.
[28] They argue that the Plaintiff’s damages arise as a function of its contractual obligation to repair the Bridge, rather than from property damage to the Bridge itself. Accordingly, the Plaintiff’s repair expenses constitute relational economic losses because they are purely financial damages that stem from damage to a third party’s property, specifically, the Crown’s property.
[29] As a general rule, the common law does not impose a duty of care to avoid causing relational economic losses to another party absent any injury or physical damage to person or property. There are exceptions to this rule. Recovery is permitted in cases of relational economic loss arising in situations in which (i) a contractual relationship gives the claimant a proprietary or possessory interest in the damaged property; (ii) the loss arises from a general average incident; or, (iii) the relationship between the claimant and the property owner constitutes a joint venture (CN v Norsk Pacific Steamship Co. “The Jervis Crown” [1992] 1 SCR 1021 (“Norsk”); Bow Valley Husky v Saint John Shipbuilding [1997] 3 SCR 1210 at paras 45–56, pp 1240–1246 (“Bow Valley”)).
[30] The Defendants argue that the Plaintiff’s claim does not fall within any of these exceptions.
[31] This is because the Agreements explicitly state that the Plaintiff is not in an agency relationship with the Crown. Nor are the two engaged in a joint venture. Instead, the Plaintiff’s relationship to the Crown is that of an independent contractor. This relationship can be contrasted to the Plaintiff’s predecessor, which was explicitly given agency status under its constituting statute.
[32] The Agreements also do not transfer to the Plaintiff any possessory or proprietary rights over the Managed Assets, which include Bridge 19, nor does the Plaintiff’s Statement of Claim allege that any such rights were prejudiced. Subsections 80(1) and (2) of the Canada Marine Act and Article 2 of the Managed Asset Agreement demonstrate that it was the intent of the legislators that any propriety or possessory rights held by the Plaintiff’s predecessor, the Authority, were to be transferred to the Crown.
[33] The Defendants also argue that the Canada Marine Act and the Agreements do not afford the Plaintiff with a right to recover purely economic losses.
[34] In that regard, as to ss 91(1) and (2) of the Canada Marine Act, which the Plaintiff argues affords it the authority to undertake and defend any legal proceeding with respect to the management of the property, the Defendants submit that these provisions do not assist the Plaintiff. This is because, interpreted purposively (Rizzo & Rizzo Shoes Ltd. (Re) [1998] 1 SCR 27 at para 21 (“Rizzo”)), taking into account the predecessor legislation, the purpose of the current Act, and the placement of s 91 within it, these sections only empower the Plaintiff to conduct itself and engage in legal proceedings to “protect Her Majesty’s interests, not the Plaintiff Corporation’s interests”. The Plaintiff’s power to act on behalf of the Crown only arises when the Crown’s property or interests in the property are engaged, not when there is an unexpected repair cost to the Plaintiff itself. As to s 91(1)(d), which states that the Plaintiff “shall undertake and defend any legal proceedings with respect to the management of the property”, here the Crown owns the damaged property, but has not suffered a loss. Only if the Crown had incurred the repair expenses would the Plaintiff have been able to institute proceedings against the third party wrongdoer to recover those losses - but the Agreements required the Plaintiff to incur the costs on its own account.
[35] Further, s 9.01 and 12.01 of the Managed Assets Agreement make it clear that it was the intention of the parties that the Plaintiff repair any damages to the Managed Assets, which include Bridge 19, at its own cost and for its own account. In this regard, the Management, Operation and Maintenance Agreement is significant as it contains no indemnity by the Crown to the Plaintiff, in the event that the Plaintiff is unable, as a matter of law, to recover compensation from a third party for repairs carried out pursuant to the Plaintiff’s management, operation and maintenance responsibilities if those repairs amount to less than $2.5 million. In this matter, the Plaintiff paid $909,009.54 for the repairs on its own account and has no recourse under the Agreements for reimbursements from the Crown. Nor is there any evidence that the Crown has suffered a financial loss. According to the Defendants, had the loss exceeded $2.5 million, then section 14 of the Management, Operation and Maintenance Agreement, which pertains to catastrophic events, would have applied. Otherwise, there is no provision for the Plaintiff to be indemnified by the Crown for money it spends on repairs. Thus, the intention of the parties was that the Plaintiff’s losses below $2.5 million are for its own account and at its own risk with respect to third party recovery.
[36] The Defendants emphasize that the Agreements do not purport to grant to the Plaintiff a right to claim relational economic loss, opposable against third parties, which at law the Plaintiff would not otherwise have.
[37] Finally, the Defendants acknowledge that s 122(1) of the Canada Marine Act gives the Plaintiff the benefit of a lien on a ship, but submit that a lien can only be exercised for an amount owing; it does not create a debt. Rather, its purpose is to give priority over other claims in the event of a debt. Here, the Plaintiff is owed nothing at law, because it is claiming relational economic losses.
Plaintiff’s Submissions
[38] The Plaintiff submits that a review of the relevant provisions of the Agreements and the Canada Marine Act clearly establishes that all, or essentially all, of the Crown’s rights and responsibilities in connection with the relevant assets, including Bridge 19, were conferred upon it and, therefore, the Plaintiff has all necessary powers to commence these proceedings and obtain full indemnification. The Agreements refer to and were intended to implement the objectives of the Canada Marine Act. Together, the legislation and the Agreements serve to transfer rights and responsibilities in respect of certain specified assets, including Bridge 19, from the Crown to the Plaintiff. This is demonstrated by the preamble and s 3.01.01 of the Framework Agreement; Articles 2.01.03, 2.01.04, 2.02.01(a), 2.02.02, 2.02.03, 9.01.01, 9.02.02, and 12.01.02 of the Managed Asset Agreement; and s 91(1)(d) and s 91(2) of the Canada Marine Act. Significantly, this transfer of the Crown’s rights and obligations included the maintenance and replacement of the subject assets and obliges the Plaintiff to act as would a “prudent owner” of the assets. These provisions demonstrate that the Plaintiff is to take the place of the true owner, being subject to the same obligations and exercising the same rights as would the true owner.
[39] Additionally, pursuant to ss 91(1)(d) and 91(2) of the Canada Marine Act, where an agreement has been entered into pursuant to s 80(5) of that Act, as is the case in this matter, the person who has entered into the agreement, here the Plaintiff, exercises the rights of the Crown, explicitly including the right to commence and defend proceedings.
[40] Accordingly, it is the Plaintiff’s position that it is not necessary to determine whether the sums the Plaintiff claims constitute relational economic losses. Under the Agreements and the Act, the Plaintiff has the exclusive obligation to repair and replace certain property, including Bridge 19. The entire risk of damage to such assets is placed on the Plaintiff, which stands in the place of the true owner. As a result, the Plaintiff is the only party that sustained losses or damages as a result of the collision. The Agreements and the Act also leave no doubt that the Plaintiff has the full and exclusive right to commence proceedings seeking to recover sums from parties that cause damage to such property.
[41] Further, the Defendants’ interpretation of s 91 of the Canada Marine Act imports language into that provision that conflicts with the text, spirit and objectives of that Act, is contrary to the principles of statutory interpretation (Williams v Canada (Public Safety and Emergency Preparedness), 2017 FCA 252 at paras 41–42), and renders s 91 futile. Specifically, there is no basis for the Defendants’ suggestion that s 91 only authorizes legal proceedings to protect Crown property and Crown interests on behalf of the Crown. Neither the Agreements nor s 91 make any mention of the Plaintiff commencing proceedings “on behalf of the Crown”. Rather, s 91 confers on the Plaintiff the exclusive right to commence proceedings and recover amounts that it will necessarily have incurred itself in carrying out its obligations under the Agreements, notably the obligation to repair and replace property damaged by third parties. As the Crown has transferred to the Plaintiff all risks and responsibilities relating to loss of assets, including Bridge 19, proceedings that the Plaintiff commences under s 91 will necessarily be for its own account, not on the Crown’s behalf. Accordingly, the Plaintiff has all necessary rights and powers to commence the present proceedings and to seek full indemnification from the Defendants. Judgment should be granted to the Plaintiff on this basis alone, there is no need to consider whether the Plaintiff’s losses are relational economic loss.
[42] In any event, the Plaintiff’s losses do not constitute unrecoverable relational economic losses. Relational economic losses arise where one party (the property owner) suffers a loss due to damage to its property, while another party (the plaintiff) suffers a separate and distinct financial prejudice. In contractual relational economic loss, the distinct financial prejudice suffered relates to disruption or interference with the performance of a contract (Philip H. Osborne, The Law of Torts, 5th ed (Toronto: Irwin Law, 2015) at page 202 (“Osborne”)). Here the Plaintiff’s losses can be differentiated from relational economic losses.
[43] First, by way of the Canada Marine Act and the Agreements, the true owner of Bridge 19, the Crown, suffered no loss or damage as the risk of loss and the duty to repair were transferred to the Plaintiff. Second, the sums claimed by the Plaintiff do not result from disruption or interference with the performance of its contracts with the Crown, but rather represent the actual damages sustained in order to repair the damaged property. That is, the losses that the Crown would have sustained but for the transfer of risk and responsibility. This is particularly relevant in distinguishing this matter from the Norsk decision, upon which the Defendants rely. In that case, the Supreme Court of Canada considered whether economic losses, in addition to the property damage sustained and collected by the owner of the damaged bridge, were recoverable. In this matter, the Plaintiff is seeking the equivalent of the sums awarded to bridge owner in Norsk and no other parties are alleging that they have sustained distinct or consequential damages.
[44] The Plaintiff also stresses that this distinction is all the more crucial in light of the policy considerations underpinning the general exclusionary rule against recovery of relational economic loss as set out by Justice La Forest in Norsk (p 1051–1052). None of those policy concerns have application in this matter. Instead, they mitigate in favour of permitting the Plaintiff to recover.
[45] Further, even if this Court were to determine that the concept of relational economic loss is generally applicable to the sums claimed in this matter, those sums fall within one of the categories that have been recognized as recoverable; that is, where the claimant has a possessory or proprietary interest in the damaged property (Bow Valley at para 48). Here, at the very least, the Canada Marine Act and the Agreements establish that the Plaintiff has a possessory interest in Bridge 19 (Osborne at p 206). It has far more than a non-exclusive right to use the Bridge, as was CN’s circumstance in Norsk. Rather, the Plaintiff has full control over and responsibility for the Bridge and is the sole party charged with its repair and replacement. The Agreements require that the Plaintiff act as would a prudent owner. In this regard, the Plaintiff notes that claims of a bareboat charter are generally considered the most obvious example of recoverable relational economic loss based on a proprietary or possessory interest (Osborne at p 206). It submits that, in this situation, the Plaintiff’s relationship to the Bridge even more closely resembles the role of the owner of the Bridge than does the relationship of a bareboat charterer to the ship it has chartered.
[46] Finally, the Plaintiff submits that the Defendants’ motion implicitly challenges the constitutional validity, applicability, and operability of s 91 of the Canada Marine Act, and must be dismissed because the Defendants have not served notice on the Attorneys General as required by s 57 of the Federal Courts Act, RSC 1985, c F-7.
Analysis
[47] In my view, this matter essentially comes down to the nature of the contractual relationship between the Plaintiff and the Crown.
[48] Accordingly, it is necessary to first analyse the relevant provisions of the Canada Marine Act and the Agreements to ascertain the nature of the resultant relationship between the Crown and the Plaintiff. That relationship must then be assessed in the context of the jurisprudence pertaining to relational economic loss. In taking this approach, I will address the Plaintiff’s right to pursue its claim; whether this right is restricted; whether the intent of the Agreements was to exclude recovery by the Plaintiff; whether the Plaintiff’s losses are relational economic loss; and, if so, whether they are unrecoverable.
i. Does the Canada Marine Act, as implemented by the Agreements, afford the Plaintiff the right to pursue claims?
[49] Section 80(5) of the Canada Marine Act permits the Minister to enter into agreements in respect of the Seaway, which agreements can be with a not-for-profit corporation. Pursuant to s 80(6), such an agreement can include any terms and conditions that the Minister considers appropriate, including, by way of s 80(6)(b), provisions respecting the management and operation of all or part of the Seaway, or property and undertakings referred to in s 80(1) or s 80(2) (property directed to be transferred from the Authority to the Minister or other specified entity, and then otherwise transferred by the Minister). Section 80(5) agreements can also contain provisions as to the performance and enforcement of obligations contained therein (s 80(6)(e)).
[50] Where an agreement entered into pursuant to s 80(5) so provides, the person who has entered the agreement shall undertake and defend any legal proceedings with respect to the management of the property (s 91(1)(d)) and shall discharge all obligations with respect to the management of the property (s 91(1)(e)). Section 91(2) states that “a civil proceeding…with respect to any federal real property or immovable that a person who has entered into an agreement under s 80(5) manages, or any property that the persons holds, or with respect to any act or omission occurring on the property, shall be taken by or against the person and not the Crown.” Thus, to the extent that the provisions of the Agreements implement s 91(1)(d) and (e), the Canada Marine Act places a positive obligation on the Plaintiff to undertake legal proceedings concerning the management of the property and to discharge all of its obligations with respect to the managed property. The implementation of provisions incorporating s 91(2) requires that civil proceedings pertaining to property managed pursuant to a s 80(5) agreement shall be taken by or against the Plaintiff, and not by the Crown.
[51] It is clear from the preamble and Article 3.01.01 of the Framework Agreement that it was effected to implement the intent of the Canada Marine Act, being that the management, operation and maintenance of the Seaway by the Crown, through the Authority, would cease and would be transferred to the Plaintiff, in accordance with the Management, Operation and Maintenance Agreement and such other agreements as may be entered into by the parties.
[52] Similarly, Article 2.01.03 of the Managed Asset Agreement explicitly acknowledges that it, and the other instruments as defined therein, constitute agreements entered into pursuant to s 80(5) of the Canada Marine Act and are to be interpreted having regard to the objectives set out in s 78 of the Act. Significantly, Article 2.01.04 states as follows:
2.01.04 Her Majesty and the Corporation hereby acknowledge and agree that all civil, criminal and administrative actions and proceedings with respect to the Assets shall be taken by or against the Corporation and not Her Majesty pursuant to Subsection 91(2) of the Act.
[53] The Managed Asset Agreement does not include a provision obliging the Plaintiff to undertake legal proceedings in respect of the management of the property as permitted and contemplated by s 92(1)(d). However, it does implement and require that any civil proceedings shall be brought by (and against) the Plaintiff and not the Crown, as explicitly contemplated by s 91(2) of the Canada Marine Act.
[54] The Managed Asset Agreement also obliges the Plaintiff to manage, operate, maintain, repair, acquire and replace the Managed Assets at its own cost and expense, as would a prudent owner (Article 2.02.01(a)); to pay when due all Costs (as defined), charges, expenses and outlays of every nature whatsoever and whether extraordinary or ordinary, and whether foreseen or unforeseen, relating to the Managed Assets (Article 2.02.02); to assume at its own cost and expense the full and sole responsibility for the repair, replacement and maintenance of the Managed Assets (Article 9.01.01); and, at its own expense, to put and keep or cause to be put and kept the Managed Assets in a Fully Operational State (as defined) during the term of the agreement and to make or cause to be made all necessary maintenance and repair, ordinary and extraordinary, foreseen or unforeseen, structural or non-structural in order to keep the Managed Assets Fully Operational, as would a prudent owner (Article 9.02.01). Similarly, the Plaintiff is obliged, at its own expense, to repair, replace, restore or reconstruct any Managed Assets that are wholly or partially damaged or destroyed (Article 12.01.02).
[55] Thus, by virtue of its obligations under the Managed Asset Agreement, the Plaintiff was required at its own expense, to repair the physical damage to Bridge 19, a Managed Asset, caused by the Defendants’ negligence.
[56] As to the Management, Operation and Maintenance Agreement, this agreement also explicitly states that it is made under s 80(5) of the Canada Marine Act (s 1.12). Section 3 sets out the Plaintiff’s responsibilities and obligations. They include that it shall manage, operate, maintain, repair and acquire and replace the Managed Assets and the Other Assets and Properties (as defined) in a competent, honest and commercially prudent manner (s 3.2); manage, operate, repair, acquire and replace the Managed Assets and the Other Assets and Properties in accordance with the Managed Asset Agreement and the Management, Operation and Maintenance Agreement (s 3.4(1)); immediately notify the Crown of any Claim, demand, right or cause of action asserted, threatened or instituted by or against the Plaintiff or the Crown which involves the Managed Assets and other described assets (s 3.4(3)); generally do and cause to be done all such acts, matters and things required to manage, operate, maintain, repair, acquire and replace the Managed Assets and the Other Assets and Properties in a competent, honest and commercially prudent manner (s 3.4(4)); and, all costs and expenses incurred by or on behalf of the Plaintiff in connection with its performance of its obligations under the Management, Operation and Maintenance Agreement shall be for the Plaintiff’s own account, the Crown having no responsibility for such costs and expenses as contemplated under the agreement or other Instrument (s 3.5).
[57] In sum, the provisions of the Canada Marine Act and the Agreements make it clear that responsibility for the management and operation of the Managed Assets, which include Bridge 19, lies exclusively with the Plaintiff. Further, that repair costs of the Managed Assets are to be incurred exclusively by the Plaintiff, which is obliged to keep and repair them as would a prudent owner, and to operate the Seaway in a commercially prudent manner. Further, any actions related to the Managed Asset must be brought by the Plaintiff. Read together and in whole, the Act, as implemented by the Agreements, grants to the Plaintiff the statutory right to pursue claims such as this action. And, as submitted by the Plaintiff, given that the Agreements transfer from the Crown to the Plaintiff all risks and responsibilities pertaining to Bridge 19, the practical effect of s 91(2) is that only the Plaintiff can, and has the exclusive right to, pursue claims for damages, as it has done in this matter. In my view, it is also commercially prudent for the Plaintiff to attempt to recover the cost of repairs incurred due to the negligence of a party such as the Defendants.
ii. Is the Plaintiff’s right to commence claims restricted to actions intended to protect the Crown’s interests?
[58] The Defendants submit that s 91 only authorizes the Plaintiff to commence proceedings to “protect Her Majesty’s interests—not the Plaintiff Corporation’s interests”. Significantly, in my view, s 91 contains no such wording or restriction.
[59] The Supreme Court of Canada has stated that the preferred approach to statutory interpretation is that set out by Elmer Driedger in Construction of Statutes (2nd ed 1983). Specifically, that: “Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament” (at p 87; also see Rizzo at para 21; Bell Express Vu Limited Partnership v Rex, 2002 SCC 42 at para 26). The Supreme Court of Canada has also cautioned against adopting an interpretation that is not supported by the text of a provision and that requires the Court to read in words that are simply not there, as this can amount to judicial rewriting of legislation under the guise of interpretation (Wilson v British Columbia (Superintendent of Motor Vehicles), 2015 SCC 47 at para 27 citing R v McIntosh, [1995] 1 SCR 686 at p 701; R v Hinchey, [1996] 3 SCR 1128 at paras 8–9 and 36; Canada (Information Commissioner) v Canada (Minister of National Defence), 2011 SCC 25 at para 40.).
[60] In my view, s 91(1)(d) and s 91(2) are clear and unambiguous and do not require reference to extrinsic evidence to determine the intent of the legislators (see: Professional Institute of the Public Service of Canada v Canada (Attorney General), 2012 SCC 71 at p