Berhad v. Canada

Berhad v. Canada
Court (s) Database
Federal Court Decisions
Date
2003-08-20
Neutral citation
2003 FC 992
File numbers
T-609-99
Notes
Digest
Decision Content
Date: 20030820
Docket: T-609-99
Citation: 2003 FC 992
BETWEEN:
BUDISUKMA PUNCAK SENDIRIAN BERHAD,
MARITIME CONSORTIUM MANAGEMENT SENDIRIAN BERHAD
Plaintiffs
and
HER MAJESTY THE QUEEN
IN THE RIGHT IN CANADA,
B.S. WARNA and D.A. HALL
Defendants
REASONS FOR ORDER
HARGRAVE P.
[1] These reasons arise out of a failed motion to strike out the Statement of Claim. At the conclusion of the hearing I advised counsel that, in my view, there were two aspects. First, such an important and complex case involving, among other things, the overlap and interplay of various aspects of law, the Canada Shipping Act and particularly section 310, the Paris Memorandum of Understanding on Port State Control, the Tokyo Memorandum of Understanding on Port State Control in the Asia Pacific Region and the International Convention for the Safety of Life at Sea, 1974 (also referred to as the "SOLAS Convention"), ought not to be decided on a motion to strike out. Second, while I was of the view that the Plaintiffs did not necessarily have an easy case, it was far from plain and obvious that the Plaintiffs would certainly fail, at the hearing of the action, on any of the substantive points raised by the Defendants. I begin with some relevant background.
BACKGROUND
[2] The Lantau Peak is a 249.18-metre bulk carrier of 62,112 gross metric tonnes, built in 1978, owned by Budisukma Puncak Sendirian Berhad (Budisukma) and managed by Maritime Consortium Management Sendirian Berhad, both of Kuala Lumpur, Malaysia.
[3] Two Canadian steamship inspectors, employed by the Department of Transport, Messrs Warna and Hall, detained the Lantau Peak in Vancouver in early April 1997, primarily by reason of wastage of the ship's frames requiring, in the view of the steamship inspectors, major repair work, as a condition of release. The vessel's classification surveyor took the contrary view, that minor repairs having been completed and a certificate of seaworthiness having been issued, the vessel was fit to proceed on her voyage. Apparently Budisukma wished to move the vessel into a jurisdiction in which permanent repairs could be done more economically than in Vancouver. The Defendants refused to release the Lantau Peak.
[4] Major repair work was completed at Vancouver, at a higher cost than would have been the case in some offshore shipyards. The Lantau Peak departing Vancouver 13 August 1997. The Plaintiffs, in the present action, say that the Defendants were negligent in many ways, including as to inspection, as to criteria used to evaluate the condition of the Lantau Peak and generally in dealing with both the Plaintiffs and the Malaysian government. In the result the Plaintiffs now seek damages to recoup, among other things, additional cost of repair, port and other ongoing expenses, loss of use and cost of surveyors.
[5] The Defendants, some three years after the action was begun, moved to strike out the Statement of Claim, utilizing a 146-page argument, 319 pages of affidavit evidence and 14.61 kilograms of bound case material. This became, in part, subject of a 19 March 2002 Order, requiring that the written argument be reduced to 45 pages.
[6] The Defendants seek to strike out the Statement of Claim on the basis that it contains no reasonable cause of action, is scandalous, frivolous and vexatious and that it is an abuse of process. One is tempted to observe that if it takes 392 paragraphs of argument, 319 pages of affidavit evidence and 14.61 kilograms of case material to move to strike out an 8-page Statement of Claim which was answered quite coherently and concisely through a 9-page amended defence, which contains no reservations, there are probably serious doubts as to the substance of the motion and thus the Statement of Claim should stand and the action, which raises important issues, be allowed to proceed. This leads to a consideration of the motion, beginning with some procedural matters.
CONSIDERATION
Procedural Matters
[7] The Defendants pleaded, as I say, quite concisely and clearly to the Statement of Claim without reserving, in their Defence, or in their Amended Defence the right to challenge the Statement of Claim as vexatious, scandalous, frivolous or an abuse: this failure to plead reservations bars the Defendants from challenging the Statement of Claim on the basis of those shortcomings, as set out in Proctor & Gamble Co. v. Nabisco Brands Ltd. (1985), 62 N.R. 364 (F.C.A.) at 366. In Nabisco the Court of Appeal noted that clauses 1(b) through (f), of what is now Rule 221(1) were not a basis on which to strike out a Statement of Claim when the moving party had already pleaded to the impugned allegations. The Court of Appeal observed that pleading over did not necessarily establish a bar to a motion to strike out for want of a reasonable cause of action, but that "the lengthy delay of over six months in bringing the motion to strike after pleading to the Statement of Claim, undoubtedly were among the factors which led ... [the motions judge] to deny the motion.... [to strike out].". In the present action, some two years after pleading over in their Defence, the Defendants tried, unsuccessfully, to amend their Defence to reserve the right to mount a broad Rule 221 striking out challenge.
[8] The Defendant's present motion seeks to strike out the Statement of Claim not only for want of a reasonable cause of action, but also as vexatious and abusive. The Plaintiffs then filed a motion to strike out the latter portion of the Defendants' motion. A motion upon a motion serves no useful purpose: the point that having pleaded to the statement of claim a defendant may not utilize all of the heads under Rule 221(1), except want of reasonable cause of action under Rule 221(1)(a), may be made in argument. That being the case I have looked upon the Plaintiffs' motion to strike out a motion and the motion record of the Crown in response as merely submissions on point, with the motion itself being adjourned indefinitely.
[9] The submissions on that adjourned motion go on to pick up the point made by the Court of Appeal in Nabisco, that delay can be a factor in dealing with want of jurisdiction. Appropriate here is a passage from Dene Tsaa First Nation v. Canada, heard 19 July 2001 resulting in an unreported 25 July 2001 decision of Mr Justice Hugessen in action T-705-97, 2001 FCT 820, in which he differentiated between a late motion alleging want of a cause of action and a late motion based on the remaining paragraphs of Rule 221:
3 In my view, the great weight of the case law in this Court is to the effect that a motion which is based on the subparagraphs of Rule 221 other than subparagraph a) must be brought before the defendant has pleaded over, or if brought after that time the plea itself must have contained a reservation with regard to the impugned paragraphs. I am satisfied to cite only one case in support of that proposition and that is the decision of the Court of Appeal in Proctor & Gamble Co. v. Nabisco Brands Ltd.
4 There is a reason for the rule, namely that where a motion to strike is based on paragraph a), that is to say that the statement of claim or the impugned paragraphs do not disclose a reasonable cause of action, the motion goes to the very heart of the action itself and it is appropriate that the Court should be able to deal with matters of that sort at any stage with perhaps only cost consequences flowing if the person making the motion does so on a late basis. However, where the motion is based on paragraphs b) to f) of the Rule, it is essentially a technical pleading matter and the policy of the Court is, and has for many years, been that parties should be encouraged to put those matters behind them at an early stage. If a party wishes to take issue on a technical basis with another party's pleading, that must be done as soon as possible in the proceedings, otherwise the party must hold his or her peace.
The Dene Tsaa decision was reversed, on a different aspect, reported as Prophet River Indian Band v. Canada (2002), 288 N.R. 157 (F.C.A.).
[10] Counsel for the Plaintiffs makes the point that this Court has, from time to time, denied a motion to strike for want of a reasonable cause of action when the defendant has delayed too long. In Control Data Canada Ltd. v. Senstar Corp. (1988), 23 C.P.R. (3d) 421 (F.C.T.D.) Mr Justice McNair felt that a four-year delay in bringing a motion to strike out for want of a reasonable cause of action "... smacks of being cavalier, if not oppressive" (page 426).
[11] Mr Justice Gibson in MacNeil v. Canada (2000), 183 F.T.R. 127 (F.C.T.D.) at 131 dealt with a motion in the striking out of a statement of claim, for want of a cause of action. He felt that the motion had been brought late, four years too late. He turned to Control Data Canada Ltd. (supra) and the above view of Mr Justice McNair, that the motion to strike "... smacks of being cavalier, if not oppressive", before going on to dismiss the motion.
[12] In the present instance there must be some balancing between, on the one hand, a motion to strike out that has been brought at a late date and, on the other hand, issues which have apparently not yet been canvassed and which are important, involving the scope of section 310 of the Canada Shipping Act, the impact of two international memoranda of understanding and the SOLAS Convention. A point to keep in mind here is that serious issues of law should not be determined by way of a summary motion to strike out unless the proceeding is so futile as to warrant such a drastic stroke: see for example Vulcan Equipment Co. v. Coats Co. (1981), 39 N.R. 518 (F.C.T.D.) leave to appeal to the Supreme Court of Canada refused (1981) 63 C.P.R. (2d) 261n, and Huzar v. Canada (1997), 139 F.T.R. 81 at 87 (F.C.T.D.).
[13] To summarize, it is not open to the Defendants to bring a motion to strike out pursuant to Rules 221(1)(c) and (f). While the motion to strike out for want of a reasonable cause of action has not been brought in a timely manner, it is proper in this instance that the motion be allowed to proceed. However, pursuant to Rule 221(2), I will not take into account the voluminous affidavit evidence except to the extent that it goes to jurisdiction.
Jurisdiction Over the Steamship Inspectors
[14] I turn first to the position of Messrs Warna and Hall, the steamship inspectors. The Deputy Attorney General has filed a defence both on behalf of the Crown and on behalf of Messrs Warna and Hall. There is no suggestion that the inspectors were on a frolic of on their own, but rather the Deputy Attorney General of Canada says, in paragraph 18 of the amended defence, that the steamship inspectors, in boarding and detaining the Lantau Peak "... were acting within a scope of their duties as Steamship Inspectors within the meanings of section 310 of the Canada Shipping Act ...". Section 310 of the Canada Shipping Act allows, among other things, a steamship inspector to board and inspect a ship, to detain the ship if considered unsafe and to question those in charge.
[15] Counsel for the Defendants made two interesting submissions as to the position of the steamship inspectors. First, the Crown says that there is no jurisdiction in the Court to hear the claims against the two steamship inspectors for various reasons including that they are not officers, servants or agents of the Crown, but exercise duties imposed strictly by Parliament and in any event the claim against the steamship inspectors is based on provincial tort law. The second proposition is that the Crown cannot be held liable for any negligence on the part of the inspectors because they are exercising independent discretion.
[16] Dealing first with the jurisdictional issue, I may treat it as want of a reasonable cause of action under Rule 221(1)(a), provided that there is a limited exception: I may look at affidavit evidence. Here I refer to Cairns V. Farm Credit Corp. (1991), 49 F.T.R. 308 (F.C.T.D.) and to MIL Davie Inc. v. Hibernia Management and Development Co. (1998), 226 N.R. 369 (F.C.A.) at 373.
[17] Further, for the purpose of this motion, I must take what is set out in the Statement of Claim, so long as it is not completely too far fetched, or incapable of proof, as deemed to have been proven: see for example Canada (Attorney General) v. Inuit Tapirisat of Canada, [1980] 2 S.C.R. 735 at 738 and 740. From the Statement of Claim we therefore learn that the two individual Defendants were employed by the Crown as steamship inspectors pursuant to Part V of the Canada Shipping Act; that they attended on board to conduct a safety inspection and subsequently detained the vessel, requiring the owner to make various repairs; and that the detention had the intended and immediate effect of stopping the vessel both from undertaking cargo work and from leaving Vancouver. From the defence it is clear that the legislative jurisdiction for the detention of the Lantau Peak is found in section 310 of the Canada Shipping Act and the International Convention for Safety of Life at Sea, 1974, of which Canada was a signatory, with accession in 1978.
[18] I also accept the Plaintiffs' submission that a claim arose on board a vessel, in Vancouver and that it relates to the use, operation, condition and repair of that vessel. However to find that the steamship inspectors, Warna and Hall, come within the jurisdiction of the Federal Court one must look to ITO-International Terminal Operators Ltd. v. Miida Electronics Inc., [1986] 1 S.C.R. 752 at 766 where the Court sets out the essential requirements to support jurisdiction in the Federal Court. These requirements are:
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. ...
[19] The common approach to jurisdiction over a Crown employee is section 17(5)(b) of the Federal Court Act which provides, in part, that:
17(5) The Trial Division has concurrent original jurisdiction
...
(b) in proceedings in which relief is sought against any person for anything done or omitted to be done in the performance of the duties of that person as an officer, servant or agent of the Crown.
17(5) La Section de première instance a compétence concurrente, en première instance, dans les actions en réparation intentées :
...
b) contre un fonctionnaire, préposé ou mandataire de la Couronne pour des faits -- actes ou omissions -- survenus dans le cadre de ses fonctions.
Here, as pointed out by Sgayias on Federal Court Practice, Carswell, 2003 edition at page 70, resolution of the obvious question, whether a particular defendant is a servant of the Crown, does not resolve the issue of jurisdiction for a claim against such a servant must be supported by existing and applicable federal law. However counsel for the Defendants submits that there is no statutory grant of jurisdiction in the Federal Court against the steamship inspectors in any event. The argument here is that the doctrine or rule of independent discretion is applicable and thus, while the steamship inspectors are employed by the Crown, they are not servants of the Crown.
[20] The gist of the independent discretion rule is that if a Crown servant is exercising a power or a duty conferred on that servant by law, the Crown is not vicariously liable, for the servant in exercising an independent discretion is not acting in the course of his or her employment: see Hogg and Monahan on Liability of the Crown, 3rd edition, Carswell, 2000 at page 125. However, Hogg and Monahan have more to say about the rule:
The independent discretion rule has been severely criticized, and with justification. It originated in the long-discredited theory that vicarious liability depended upon the master having expressly or impliedly authorized the servant's tortious act. To be sure, a servant exercising a discretion conferred on him or her by statute is not subject to the control of the master to the same extent as other servants. But it is surely preferable to treat the servant's actions as within the scope of employment, so that the cost of any tortious damage is borne by the master. For this reason, the independent discretion rule has been abolished in all but a few jurisdictions.
(Page 126)
Hogg and Monahan here point out that the rule is based on long discredited theory and that the "... rule has been abolished in all but a few jurisdictions.". When Hogg and Monahan were writing, in 2000, the rule had not been abolished in British Columbia, Quebec and Canada. However the matter does not end there.
[21] In Baird v. The Queen, [1984] 2 F.C. 160 the Federal Court of Appeal dealt with and allowed an appeal from the Trial Division in which a statement of claim had been struck out for want of a reasonable cause of action. In Baird the Crown contended that it should not be liable for the wrongful acts and omissions of a servant who had an independent duty or discretion which had been imposed or conferred directly upon the servant by law and not by the employer's instruction. Mr Justice of Appeal Le Dain referred to the independent discretion rule as a rule found in the Australian cases, noted it had been strongly criticized and said, at page 186, that "... it is arguable ... that it should not be applied under the Crown Liability Act, despite the absence of a provision expressly excluding it similar to that found in the United Kingdom and Ontario statutes.".
[22] Given the strong views of both Hogg and Monahan on Liability of the Crown (supra) and of Mr Justice Le Dain in Baird (supra) I doubt that the Court would apply the independent discretion rule either to exclude the steamship inspectors from a position as servants of the Crown or to find that the Crown was not vicariously liable for the actions of Messrs Warna and Hall. Here I would also observe that section 306 of the Canada Shipping Act requires the Chairman of the Board of Steamship Inspection not only to supervise the steamship inspectors, but also to examine their reports and leaves the Chairman with the responsibility for seeing that the law relating to steamship inspection has been properly administered. The Chairman has the final say as to the issuance or withholding of certificates of inspection as set out in section 307(2) of the Canada Shipping Act. This is inconsistent with the concept of independent discretion on the part of steamship inspectors themselves. I am not prepared to assume that the Federal Court, even were it interested in applying independent discretion concept, would extend it beyond police officers and ship pilots, for while it is arguable that individuals in those categories do, in certain circumstances, have an independent discretion to exercise, a discretion which must be exercised on the spot and without any control or time to consult whatsoever, this differs from the situation of steamship inspectors who, while they have discretion, are certainly subject to direction from and review by their superior. To carry this further, I expect that both steamship inspectors and the steamship inspection service itself would be horrified at the thought of applying this rule because of its ramifications in the case of a steamship inspector injured in the course of his or her employment. Here I have in mind Griffiths v. Haines [1984] 3 NSWLR 653, an Australian decision, in which the court applied the independent discretion rule and held that because no master or servant relationship existed, between a police officer and his employer, that employer, the government, did not owe the police officer a duty to take reasonable care for his safety.
[23] In summary, Crown counsel fails to convince me that the independent discretion rule would be applied to the two steamship inspectors. I have reached this conclusion notwithstanding the oath taken by steamship inspectors pursuant to section 303 of the Canada Shipping Act as to impartiality in execution of the duties assigned to the offices of steamship inspectors and the various rights and liberties given to steamship inspectors, including under section 310 of the Canada Shipping Act. It is reasonably arguable that there is jurisdiction over the steamship inspectors, Messrs Warna and Hall, pursuant to section 17(5)(b) of the Federal Court Act which grants concurrent original jurisdiction over acts or omissions done in the performance of their duties by an officer, servant or agent of the Crown. However the approach of the Plaintiffs to jurisdiction does not end with section 17(5)(b).
[24] Counsel for the Plaintiffs also submits that steamship inspection and the relations between vessel owners and steamship inspectors fall within the statutory grant of jurisdiction in section 22(1) of the Federal Court Act, as a matter of navigation and shipping, with the relations between owner and inspector coming within the definition of Canadian maritime law. This is certainly an arguable second approach to the need for a statutory grant of jurisdiction.
[25] There is also the jurisdiction granted by section 22(2)(e) of the Federal Court Act over claims for damage sustained by a ship. Here I have in mind the sort of case which was presented by the owners in Hindustan Steamship Shipping Co. Ltd. v. Siemens Brothers & Co. [1955] 1 Lloyd Rep. 167, which hinged upon the issue of reasonable care in providing equipment and instruction and the duty to warn the plaintiff of dangers inherent in an electric telegraph. While the plaintiff failed in the Hindustan case, Mr Justice Willmer observed that there was nothing static about the question as to what amounted to reasonable care. Assuming, as I must for the purposes of striking out for want of a reasonable cause of action, that the pleadings are proven and that steamship inspectors did not take reasonable care, but were negligent and in breach of duty owed to the Plaintiffs, as set out in paragraph 16 of the Statement of Claim, there may well be jurisdiction for the resulting damage sustained by the ship pursuant to section 22(2)(e) of the Federal Court Act. Thus there are several reasonable arguable routes which could well provide the statutory grant of jurisdiction necessary to satisfy the first branch of the test in the Miida Electronics case.
[26] I now turn to the second branch of the Miida Electronics test, being the existence of a body of federal law essential to the case and which nourishes the statutory grant of jurisdiction. The Defendants say that the law to be applied is provincial tort law and not federal law. The concept of a tort and tort law is not to be, invariably, attributed to provincial law, is a point made by Chief Justice Laskin, writing for the Court in Rhine v. The Queen, [1980] 2 S.C.R. 442 at 447. In the Rhine case the Chief Justice found that there was a statutory framework and that what was at stake was the administering of federal legalisation, a matter well within the jurisdiction of the Federal Court. In the present instance the Canada Shipping Act and specifically those portions relating to safety, to steamship inspectors, to inspection of ships, and to detention of ships, provide a detailed statutory framework.
[27] The second approach is that the principles of tort form a part of Canadian maritime law, to be applied by the Federal Court. An appropriate starting point is the Miida Electronics case (supra) at page 774 where Mr Justice McIntyre rejects the confinement of a historical approach to Canadian maritime law and points out that the definition in section 2 of the Federal Court Act, of Canadian marine law, assured that it would include an unlimited jurisdiction in relation to maritime and admiralty matters, interpreted in the modern context of commerce and shipping, with the limitation that there must not be encroachment on matters which are, in pith and substance, matters of local concern involving property and civil rights, or any other provincial matter. He felt it was "... 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." (loc. cit.). This test was adopted by Madam Justice McLachlin as she then was, in Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., [1997] 3 S.C.R. 1210 at 1257. She referred to Whitbread v. Wally, [1990] 3 S.C.R. 1273 at 1289 for the proposition that "... tortious liability which arises in a maritime context is governed by a body of maritime law within the exclusive legislative jurisdiction of Parliament".
[28] It is also useful to refer to Schibamoto & Co. v. Western Fish Prod., Inc., [1990] 1 F.C. 542, in which Mr Justice of Appeal MacGuigan, writing for a strong court, characterized as unsustainable an objection that Canadian maritime law had narrow bounds:
However, the appellants' contention that the respondent's counterclaim for the destruction of a fish processing business by fraud, deceit, conspiracy and breach of contract is a matter of provincial law rather than of Canadian maritime law is completely unsustainable in the light of ITO. Since the law of contract and of torts falls under Canadian maritime law, to the extent that it is required, it cannot be maintained that certain parts of those bodies of law are not matters of maritime law. On the authority of ITO Canadian maritime law is the existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of authority.
In the present instance at issue is clearly a maritime matter and thus Canadian maritime law, as applied by the Federal Court, is that body of law essential to dispose of the case. There is no question that a second part of the Miida Electronics test has been met in this instance, for there is an existing body of federal law to nourish the statutory grant of jurisdiction.
[29] I turn to the third part of the Miida Electronics test, being that the law underlying the case must be a law of Canada. Often the second and third branches of the Miida Electronics test are intermingled. Here I would only add that there is nothing to suggest either that the subject matter is within the exclusive competence of the provincial government or that the matter of steamship inspection and steamship inspectors do not come within the term navigation and shipping as used in the Federal Court Act. I am not prepared to deny the Plaintiffs their day in court, as against the steamship inspectors, Messrs Warna and Hall, on the basis of want of jurisdiction.
Jurisdiction of the Court Generally
[30] Having dealt with jurisdiction over the individual steamship inspectors, I now turn to question of whether the Court has jurisdiction to determine this matter generally, or whether it ought to have gone to the Minister of Transport for a decision. Here I must keep in mind that the proceeding is not judicial review of a decision or decisions, but is a claim for damages arising from a decision or decisions in part pursuant to the Canada Shipping Act, but also very clearly based on the SOLAS Convention. The SOLAS Convention provides, among other things, for control of ships by local government when they are in a foreign port. Chapter I, Regulation 19(f) of SOLAS explicitly recognizes the duty to exercise such control with discretion so as not to unduly inconvenience an owner:
(f) When exercising control under this regulation all possible efforts shall be made to avoid a ship being unduly detained or delayed. If a ship is thereby unduly detained or delayed it shall be entitled to compensation for any loss or damage suffered.
f) Dan l'exercise du contrôle en vertu de la présente règle, il convient d'éviter, dans toute la mesure du possible, de retenir ou de retarder indûment le navire. Tout navire qui a été retenu ou retardé indûment par suite de l'exercice de ce contrôle a droit à réparation pour les pertes ou dommages subis.
[31] The Crown makes reference to portion of section 307 Canada Shipping Act, as follows:
307. (1) Any matter in dispute arising under this Act between the owner of a ship or any other interested party and a steamship inspector may be referred by either of them to the Chairman, who shall decide on the matter himself, or, if he considers that the circumstances warrant it, shall refer it to the Board for a decision.
...
(3) Where the owner of a ship or any other interested party is dissatisfied with any decision given by the Chairman or by the Board under subsection (1), or where any matter in dispute arises under this Part between the owner of a ship or any other interested party and the Chairman or the Board, the owner or party may refer the matter to the Minister, who shall finally decide the matter.
The Crown refers to section 307 of the Canada Shipping Act as if it were a complete code. Section 307 does, of course, ignore the damages for delay provision, 19(f) in SOLAS. Appeals of matters within section 307 are in writing: see section 307(4). The Defendant submits that appeals must be within section 307 and may not sound in an action in this Court.
[32] Section 307(1) provides that disputes arising under the Canada Shipping Act, between an owner and a steamship inspector "... may be referred by either of them to the Chairman, who shall decide upon the matter himself or, if he considers that the circumstances warrant it, shall refer it to the Board for a decision." (emphasis added). The Board of Steamship Inspection is, by section of 304, "composed of the steamship inspectors and such other persons as the Minister may appoint.". Thus we have apparent mechanism for referring matters, in writing, to the Chairman of the Board of Steamship Inspection, being the person who also supervises the steamship inspectors. The Chairman may then refer the matter to the Board of Steamship Inspection, if he feels that the circumstances so warrant. A second, or perhaps it is third level of appeal if the Chairman has referred a matter to the Board of Steamship Inspection, is provided by section 307(3) governing disputes between an owner and the Chairman or the Board which permits the owner to refer the matter to the Minister for a final decision:
(3) Where the owner of a ship or any other interested party is dissatisfied with any decision given by the Chairman or by the Board under subsection (1), ... the owner ... may refer the matter to the Minister, who shall finally decide the matter.
(emphasis added)
[33] A first observation about this review system, under section 307 of the Canada Shipping Act, is that it is certainly incestuous, a point which has bearing when looking at the exhaustion of an alternative remedy as a pre-condition to a court proceeding. Second, what is set out in the Canada Shipping Act is a review system, not a procedure leading to damages, as provided for under SOLAS. Third, the review system may be merely an option in that disputes may be referred to the Chairman of the Board of Steamship Inspection. The Chairman, only if he considers the circumstances warrant, has an obligation to go to the Board of Steamship Inspectors for a decision. The final step under section 307 is that the ship owner may refer the matter to the Minister.
[34] The term "may" may be discretionary or alternatively non-discretionary. Sullivan and Driedger on the Construction of Statutes, 2000 edition, Butterworths, makes the point at page 57 that:
When a statutory power is conferred using the word "may", the implication is that the power is discretionary and that its recipient can lawfully decide whether or not exercise it. After all, if the legislature wish to impose an obligation, it could easily have used "shall" instead of "may".
Sullivan, the current author of Construction of Statutes, acknowledges that while "may" implies a discretion, that does not preclude an obligation, but rather one must look at the statute or the circumstances which might expressly or impliedly oblige the exercise of the power which has been granted (page 58). In this instance, looking at contextual factors, including that the discretionary system set out in the Canada Shipping Act does not provide for an award of damages, as in section 19(f) of SOLAS, it is certainly arguable that the appeal provisions in Canada Shipping Act are not mandatory.
[35] To accept that only the Minister may consider disputes between steamship inspection and ship owners is also to misconstrue the nature of claim of Plaintiffs by characterizing it as an application for judicial review. Rather, the Plaintiffs claim is, as I have pointed out, a claim for damages. The case is not for a simple review of the merits of the detention order, but rather of whether the inspection, leading to the detention order, was carried out properly and whether the decision, that the vessel must remain in detention, was arrived at negligently. Thus there is a need to examine the system as a whole, the manner in which the inspection took place and the subsequent conduct on the part of the Defendants. Here a passage from Just v. British Columbia, [1989] 2 S.C.R. 1228 is relevant. In Just Mr Justice Cory, in examining the duty of care applicable to public authorities considered, as an example, inspection of lighthouses, in the context of the policy decision, which is not applicable here, but then went on to indicate when an inspection scheme might be looked at by the courts:
On the other hand, if a decision is made to inspect lighthouse facilities the system of inspections must be reasonable and they must be made properly. See Indian Towing Co., 350 U.S. 61 (1955). Thus once the policy decision to inspect has been made, the Court may review the scheme of inspection to ensure it is reasonable and has been reasonably carried out in light of all the circumstances, including the availability of funds, to determine whether the government agency has met the requisite standard of care.
(Page 1243)
In the Just case at issue was the inspection of a rock slope above a highway by Department of Highways officials. The Supreme Court observed, as set out in the above quotation, that once there was a decision to inspect, it was open to the court to review the scheme of inspection as to reasonability and the manner in which it was carried out, in the light of all of the circumstances. Mr Justice Cory then elaborated on that concept, at page 1247, by saying that:
... Once a duty of care that is not exempted has been established the trial will determine whether the government agency has met the requisite standard of care. At that stage the system and manner of inspection may be reviewed.
[36] The Plaintiffs' submission, which is certainly arguable, is that incorrect or unreasonable conclusions by the inspectors go to determining whether or not the inspectors carried out the inspection in a reasonable manner. Taking another approach, the submission is to the effect that the nature of the conclusion which the inspectors reach may well indicate the manner in which inspections are conducted. Accepting this, the Plaintiffs submit that it is entirely proper for the Court to consider the merits of the detention and the subsequent conduct to the extent that those actions might be indicative of the manner in which the decision to detain the Lantau Peak was reached.
[37] Also relevant where an inspection is exercised without due care is Cervinus Inc. v. Canada (Minister of Agriculture) (2000), 198 F.T.R. 187 (F.C.T.D.). There Mr Justice O'Keefe considered allegations of negligence against the Crown in the case of wrongful removal and slaughter of two herds of New Zealand red deer. In reviewing that decision Mr Justice O'Keefe said, at pages 207 - 208:
[109] The standard of care due to the plaintiffs was also clearly breached here. There were no grounds whatsoever for forming a belief that the animals could be infected with E. cervi. The level of knowledge on the part of the Agriculture Canada officials as concerned E. cervi was clearly lacking. The plaintiffs were entitled to expect that no Order to remove would issue in such circumstances. If Agriculture Canada had considered the evidence properly, and made a decision only in accordance with the statute, they could not have ordered the removal of the deer from Canada.
[110] From G.(A.) v. B.C., supra at 149:
"... there can be no liability if the discretion is exercised with due care. There could only be liability if the person entrusted with discretion either unreasonably failed to carry out his duty to consider the matter or reached a conclusion so unreasonable as again to show failure to carry out the duty.
In the sense in which the term [due care] is there employed, there will have been want of due care only if there has been a failure to carry out the duty to consider t he matter, or if the conclusion reached is so unreasonable as to show a failure to carry out the duty."
That's what we have here--the decision reached is so unreasonable as to allow a finding of negligence to follow almost absolutely from the decision.
[111] Therefore, the Crown is liable to the plaintiffs for their proved damages, as a result of the Crown servants having had no reasonable grounds for believing that the herd animals, absent the dead three animals, were affected by a disease (E. cervi). Part and parcel of this, is that the decision, which the decision makers purportedly based on reasonable grounds, was negligent. There were no reasonable grounds. It is on this basis that the plaintiffs have been successful. ...
Mr Justice O'Keefe, found that negligent action, by inspectors who had no grounds for the decision, left the Crown open to damages. The Cervinus case is certainly applicable in the present instance on which to found a reasonable argument. I thus reject the concept that only the Minister of Transport may consider improper steamship inspections. However I will now turn to a brief consideration of the submission of the Crown that it ought to have the protection of a privative clause.
[38] Counsel for the Crown submits that the wording in section 307(3), that disputes be referred to the Minister, who shall finally decide the matter, applies as some form of a privative clause. Counsel for the Crown refers to Canada (AG) v. PSAC, [1993] 1 S.C.R. 941 in which the Supreme Court upheld a broad and multi-layered privative clause, but also noted, as pointed out by Mr Justice Cory at page 952, that the clause was explicitly included to make certain that board decisions "... should be final and conclusive and that courts should not have the power to interfere with them at will.". Influencing this approach was the view of Mr Justice Cory, at page 963, that the board or tribunal in that instance was created by Parliament in order to provide a speedy and final means of achieving a resolution of labour-management disputes. That is quite different from being points raised in the present instance, being an objective and measured consideration of damages and of Canada's obligations under SOLAS. Counsel for the Crown also refers to many other cases, all of them decisions of courts of England, however I do not see them as being particularly relevant given the Canada Safeway case to which I now turn. The Supreme Court of Canada, in Canada Safeway Ltd. v. R.W.D.S.U., Local 454 (1998), 226 N.R. 319 considered, in the context of an arbitration provision, the words "final and conclusive" and "binding upon the parties". The majority decision looked upon those words as not a tr