A-243-76
Antares Shipping Corporation (Plaintiff)
(Respondent)
v.
The Ship Capricorn (alias the Ship Alliance),
Delmar Shipping Limited and Portland Shipping
Company Inc. (Defendants) (Appellants)
Court of Appeal, Ryan and Le Dain JJ. and Hyde
D.J.—Montreal, March 8 and 9, 1977.
Jurisdiction — Appeal from order refusing "D" leave to file
conditional appearance and stay of proceedings — Whether
proper exercise of discretion under Rule 401 — Whether Rule
1716 applied — Whether service ex juris properly ordered —
Whether Federal Court has jurisdiction ratione materiae —
Federal Court Rules 401 and 1716.
Defendant D argues that the Trial Division was not properly
exercising its jurisdiction under Rule 401 in refusing it leave to
file a conditional appearance in order to apply to have a stay of
proceedings pending the hearing of its motion to have the
proceedings set aside. D claims that Rule 1716 did not empow
er the Court to compel it to become a defendant in an action in
rem, that an arbitration agreement between the parties and the
institution of proceedings by the plaintiff against D in New
York were not disclosed at the ex parte proceedings for service
ex juris and that the Federal Court lacks jurisdiction ratione
materiae.
Held, the appeal is dismissed. Leave to file a conditional
appearance is not a right and the principle governing the
exercise of discretion under Rule 401, i.e., whether the defend
ant has raised a prima facie doubt as to the regularity of the
proceedings or the jurisdiction of the Court was adhered to.
The objection to joinder under Rule 1716 was not raised in the
Trial Division and therefore cannot be considered on appeal;
the objection to service ex furls has already been dealt with by
the Supreme Court on the ground that the Federal Court is the
only one capable of enforcing its judgment; and the question of
jurisdiction ratione materiae can be raised at any point in the
proceedings and did not have to be decided by the Trial
Division exercising its discretion under Rule 401.
APPEAL.
COUNSEL:
Guy Vaillancourt for plaintiff.
S. J. Harrington for Delmar Shipping
Limited.
Gilles de Billy, Q.C., for Portland Shipping
Co. Inc.
SOLICITORS:
Langlois, Drouin, Roy, Fréchette & Gau-
dreau, Quebec, for plaintiff.
McMaster, Minnion, Patch, Hyndman,
Legge, Camp & Paterson, Montreal, for
Delmar Shipping Limited.
Gagnon, de Billy, Cantin, Dionne, Martin,
Beaudoin & Lesage, Quebec, for Portland
Shipping Co. Inc.
The following are the reasons for judgment of
the Court delivered orally in English by
LE DAIN J.: This is an appeal from an order of
the Trial Division refusing leave to file a condition
al appearance. The issue is whether the Court
properly exercised its discretion under Rule 401 of
the Federal Court Rules, which reads as follows:
Rule 401. A defendant may, by leave of the Court, file a
conditional appearance for the purpose of objecting to
(a) any irregularity in the commencement of the proceeding;
(b) the service of the statement of claim or declaration, or
notice thereof, on him; or
(c) the jurisdiction of the Court, and an order granting such
leave shall make provision for any stay of proceedings neces
sary to allow such objection to be raised and disposed of.
There have been several steps taken and judg
ments rendered in the proceedings in which the
parties have become involved with reference to an
alleged agreement for the sale of the Ship
Capricorn (also known as the Ship Alliance) by
the appellant Delmar Shipping Limited to the
respondent Antares Shipping Corporation (herein-
after referred to as "Antares"), but it is sufficient
for present purposes to refer briefly to the general
nature of the action and to the judgments which
appear to have a bearing on the issue in this
appeal. Over three years ago, Antares instituted an
action in rem in which it concluded for a declara
tion that a sale of the ship by the appellant to the
respondent Portland Shipping Company Inc.
(hereinafter referred to as "Portland") was null
and void, and that in consequence the appellant
remained the owner of the ship; an order that the
appellant perform its obligations under the alleged
agreement for the sale of the ship to Antares; and
damages. By an order of the Trial Division under
Rule 1716 the appellant and Portland were added
as defendants in the action. Judgments of the Trial
Division and of this Court dismissing an applica
tion for an order for service ex juris on the appel
lant and Portland were reversed by the Supreme
Court of Canada, and pursuant to its judgment an
order for such service was issued by the Trial
Division. On being served the appellant applied for
leave to file a conditional appearance and for a
stay of proceedings of thirty days to enable it to
move to have the proceedings set aside on grounds
of objection falling within the terms of Rule 401.
The Trial Division dismissed the appellant's
application in the following terms:
Motion denied. Defendant Delmar has failed to show any
irregularity or lack of jurisdiction of this Court. Costs to the
Plaintiff.
The appellant contends that its grounds of
objection to the proceedings are such that the Trial
Division could not by a proper exercise of its
discretion under Rule 401 refuse leave to file a
conditional appearance. Those grounds of objec
tion, as formulated in the argument before this
Court, may be summarized as follows:
1. Rule 1716 did not empower the Trial Divi
sion to compel the appellant to become a
defendant in an action in rem, and, further, the
statement of claim, as amended pursuant to the
order of the Trial Division, was not endorsed
with a reference to the order, as required by
Rule 1716;
2. In the ex parte proceedings for an order for
service ex juris it was not disclosed to the courts
that the alleged agreement for the sale of the
ship contained a provision for arbitration, and,
further, that Antares had instituted proceedings
against the appellant in respect of the said
agreement in the State of New York;
3. The Federal Court lacks jurisdiction ration
materiae.
Leave to file a conditional appearance is not a
matter of right. In our opinion, the principal con
sideration which should govern the exercise of the
discretion under Rule 401 is whether the defend
ant has prima facie raised sufficient doubt as to
the regularity of the proceedings or the jurisdiction
ratione personae of the Court that justice requires
he be permitted to appear in such a manner as to
avoid any waiver of his objections. As we read the
reasons for the order of the Trial Division, the
Court came to the conclusion that there was not
sufficient prima facie merit in the objections
invoked by the appellant to warrant the granting
of leave to file a conditional appearance. We are
unable to find any reason for interfering with this
exercise of its discretion.
It was conceded in this Court that the objection
to the joinder of the appellant under Rule 1716
was not raised before the Trial Division. It cannot,
therefore, in our opinion, be a basis for holding
that the Trial Division failed to exercise its discre
tion properly.
In so far as the objection to service ex juris is
concerned, we cannot see how it could possibly
succeed in view of the judgment of the Supreme
Court of Canada. In our respectful opinion the
reasoning in that judgment turns essentially on the
conclusion that the jurisdiction of the Federal
Court is the only one in which a judgment could be
effectively enforced. The provision for arbitration
and the fact that a suit has been instituted in the
State of New York would not appear to have any
bearing on this consideration.
In so far as the objection to jurisdiction ratione
materiae is concerned, such an objection can be
made at any stage of the proceedings, and it is,
therefore, not an improper exercise of the discre
tion under Rule 401 to refuse leave to file a
conditional appearance for the purpose of making
such an objection.
For all of these reasons we are of the opinion
that the appeal should be dismissed with costs.
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.