Précis: The Federal Court surprisingly held that the sale of a vessel in Quebec was governed by the Quebec Civil Code.
The plaintiff purchased a vessel from the defendant, Her Majesty the Queen in Right of Canada, and later discovered that the model of the engine in the vessel was not as had been described by the defendant. The plaintiff therefore commenced these proceedings against the defendant for breach of contract. The defendant denied breaching the contract but also commenced proceedings against the surveyor who was allegedly responsible for the erroneous description. The error in the description was a single digit in the model number. The offer to purchase described the engine as a model 3612 whereas it was, in fact, a model 3512, which was about four times heavier and produced three times the horsepower of the 3612 model. Notably, the offer to purchase and the sale documents correctly identified the horsepower of the engine. The terms of sale also provided that the sale was “as is, on the spot” and that there were no warranties of quantity, nature, character, quality, weight, size or description.
The issues in the case were characterized as follows:
(1) What is the applicable law?
(2) Did the defendant breach the contract?
(3) If the defendant did breach the contract, is the surveyor liable?
Decision: Action dismissed.
Held:
(1) The applicable law could be Canadian maritime law or the law of the Province of Quebec, where the sale took place. The Supreme Court of Canada has not specifically ruled on the question of whether contracts for the sales of vessels are governed by Canadian maritime law. There is no close connection between the transfer of ownership of a vessel and maritime law and nothing to indicate that the objectives of uniformity or compliance with international conventions require the ouster of provincial law. This is one reason why various cases have in the past applied provincial law to property disputes. The decision of the Supreme Court of Canada in Canadian Western Bank v Alberta provides a new approach to interjurisdictional immunity and paramountcy. The application of provincial law would not impair federal jurisdiction over navigation and shipping. The applicable law is therefore the Civil Code of Quebec.
(2) Turning to the issue of whether the defendant had breached the contract, art. 1716 of the Civil Code contains implied warranties of ownership and quality but these were not breached as the vessel was adequately described overall. The result might have been different if the plaintiff had advised the defendant that the model number was an essential component. Further, absent fraud or misrepresentation, the conditions of sale being “as is, on the spot” and without warranties were a complete defence.
(3) The liability of the surveyor need not be addressed but, given the finding of the applicable law, the Federal Court probably has no jurisdiction to deal with the claim against the surveyor.
Comment: Given the recent decision of the Supreme Court of Canada in Marine Services International Ltd. v Ryan Estate, 2013 SCC 44, there is perhaps some justification for holding that the Quebec Civil Code could apply to a sale of a vessel. However, any implication that the sale was solely governed by provincial law would not be correct. Sales of vessel are clearly also governed by Canadian maritime law, at least in part, as any review of Part 2 of the Canada Shipping Act, 2001 will confirm. Moreover, in Wärtsilä Canada inc. c. Transport Desgagnés inc., 2017 QCCA 1471,at paras.108-111, Mainville J.A. seems to doubt the correctness of this decision, saying it is contrary to jurisprudence of the Supreme Court of Canada.