Date: 20050210
Docket: T-1694-04
Citation: 2005 FC 214
BETWEEN:
KONA CONCEPT INC.
Plaintiff
and
GUIMOND BOATS LIMITED
Defendant
REASONS FOR ORDER
PHELAN J.
[1] In this motion to strike, the Defendant has raised issues of whether the statement of claim is a nullity and whether this Court has maritime jurisdiction in respect of a non-maritime foreign judgment.
[2] Kona Concepts Inc. (Kona), a Hawaiian fishing company, commenced an action in this Court asking it to declare, by way of summary judgment, that a judgment of the United States District Court for the District of Hawaii for $402,213.48 (US) be recognized and enforced as a judgment of this Court or alternatively that this Court condemn the Defendant Guimond Boats Limited (Guimond), a New Brunswick ship building company, to pay Kona the Canadian dollar equivalent of the US amount.
[3] The US judgment arose from default proceedings in which Guimond first appeared in the US District Court and then withdrew from the action after losing a jurisdictional challenge.
[4] In the Statement of Claim, Kona pleads that it entered into a contract with Guimond for the design, manufacture and sale of a tuna fishing vessel. The essence of its claim is that Guimond breached the terms of the contract and that Kona secured a US District Court judgment to that effect.
[5] Guimond brings this motion to strike on the grounds that (a) Kona was a dissolved company when the Statement of Claim was issued and, (b) this Court lacks jurisdiction to recognize and enforce the US judgment.
STATEMENT OF CLAIM A NULLITY
[6] From the record, there is no doubt that Kona was dissolved. However, there is also no doubt that Guimond dealt with, and was paid by, Robert Morgan who held himself out as the principal of Kona Concepts. The record would suggest that Guimond was dealing with both an individual and a corporation interchangeably.
[7] While Guimond cites numerous authorities for the principle that a dissolved company has no status to commence legal proceedings, with respect, I am of the view that this case falls more in line with those decisions dealing with the misnaming of a party.
[8] In that regard the factors examined in L & A Management Ltd. v. Gentra Inc., [1999] O.J. No. 3862 aff'd [2001], O.J. No. 2850 are relevant. Most particularly, the Defendant knew who it was dealing with - Mr. Morgan/Kona Concepts; there is no prejudice to the Defendant; the Defendant has not filed its defence. This is a case where fairness dictates that the Court should permit substitution for the correct party.
[9] What the effect of such substitution may be on the US judgment is a separate matter which need not be resolved on this motion.
LACK OF JURISDICTION
[10] The Defendant says that this Court does not have the jurisdiction to recognize and enforce the US District Court's judgment. As a result, the Defendant asks this Court to strike the whole of the Statement of Claim.
[11] It is acknowledged that under American law, a ship building contract is not a matter of maritime law and, as a consequence, the US District Court's judgment is not one of a court exercising maritime jurisdiction.
[12] The Defendant says that, subject to limited exceptions found in the Federal Court's Rule 326, (none of which apply here), the Federal Court does not have the authority to recognize and enforce a foreign judgment. That function is reserved to the provinces, each of which has their own regime to deal with foreign judgments.
[13] It is important to consider that the issue, in this application to strike, is whether the absence of jurisdiction is "plain and obvious". I adopt the reasoning of Justice Reed in Hodgson v. Ermineskin Indian Band No. 942, [2000], F.C.J. No. 313 in which she held:
The "plain and obvious" test applies to the striking out of pleadings for lack of jurisdiction in the same manner as it applies to the striking out of any pleading on the ground that it evinces no reasonable cause of action. The lack of jurisdiction must be "plain and obvious" to justify a striking out of pleadings at this preliminary stage".
[14] In this application, the Defendant seeks to strike out the whole of the Statement of Claim on the basis that one of the remedies requested is outside this Court's jurisdiction. This is not an application to strike certain paragraphs in a pleading.
[15] The Defendant refers this Court to Mr. Justice Dubé's decision in Eurobulk Ltd. v. Wood Preservation Industries, [1980] 2 F.C. 245. However, this case must be applied with caution. It was decided before the latest Rule 326. It was also decided before the Supreme Court of Canada's decision in Antares Shipping Corp. v. The Capricorn et al, [1980] 1 S.C.R. 553 where the Court rejected the American approach to maritime law and where the Court adopted a more expansive view of the Federal Court's maritime jurisdiction under section 22 of the Federal Court Act. I do not see that this jurisdiction issue turns on either the 1879 City of Mecca case or the 1608 Weir's case.
[16] The Federal Court has jurisdiction in respect of "any claim arising out of a contract relating to the construction, repairs or equipping of a ship." (Federal Court Act section 22(2)(n). The Plaintiff has pleaded sufficient facts to arguably engage this Court's jurisdiction. For these purposes, the issue is not whether the US District Court was exercising maritime jurisdiction but whether this claim under Canadian law falls under Canadian maritime law. I find that, on the basis of the Federal Court Act provision and the facts pleaded, at least arguably, it does.
[17] With respect to the specific relief of recognition and enforcement of the US District Court judgment, that is a matter best left to the requested summary judgment motion. The status of the US judgment is in some doubt given the dissolution of the named plaintiff and what effect revival of the corporate entity may have on that judgment is unknown. The Court has, since the hearing, been advised that the U.S. judgment has been amended to name as Plaintiffs, Robert Morgan and Kona Concepts Inc. For the above reasons the significance of this amended judgment may be dealt with in some other proceeding.
[18] For these reasons the motion will be dismissed. The Plaintiff shall have thirty (30) days to serve and file an amended statement of claim, presumably naming the correct plaintiff.
[19] In the event that no such amendment is filed, the Defendant shall be entitled to costs of this motion (despite its result) against Langlois Gaudreau O'Connor. Otherwise, since it was reasonable for the Defendant to bring this motion because of the missteps by the U.S. Plaintiff, costs shall be in the cause.
[20] The parties may wish to consider whether this case should be case managed.
(s) "Michael L. Phelan"
Judge
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1694-04
STYLE OF CAUSE: KONA CONCEPT INC. v. GUIMOND BOATS LIMITED
PLACE OF HEARING: Fredericton, New Brunswick
DATE OF HEARING: December 13, 2004
REASONS FOR ORDER: Phelan J.
DATED: February 10, 2005
APPEARANCES:
Mr. John G. O'Connor FOR THE PLAINTIFF
Mr. Richard J. Scott, Q.C. FOR THE DEFENDANT
SOLICITORS OF RECORD:
Langlois Gaudreau O'Connor
Quebec, Quebec FOR THE PLAINTIFF
Allen Dixon Smith Townsend
Fredericton, New Brunswick FOR THE DEFENDANT