Judgments

Decision Information

Decision Content

T-1906-85
R. M. Pateman, both personally and in his capaci ty as lead underwriter for the Marine Underwrit ers of Lloyd's of London (Plaintiff)
v.
The Flying Tiger Line Inc., Republic Airlines Inc., Air Canada, A.S.C. Air Cargo Service Inc. and Dimerco Express (Taiwan) Corp. (Defendants)
INDEXED AS: PATEMAN V. FLYING TIGER LINE INC.
Trial Division, Joyal J.—Montréal, February 16; Ottawa, June 12, 1987.
Practice — Parties — Joinder — Appeal from Senior Prothonotary's refusal to add insured as co-plaintiff on ground insured's right of action prescribed — Plaintiff paying insured for loss of goods during carriage by air — Plaintiff subrogated to rights of insured, commencing action in Federal Court at Montréal — Quebec law requiring insurer to sue in own name — Common law requiring insurer to sue in name of insured — Appeal allowed — Plaintiff entitled to relief and does not matter whether limitation run out against insured or whether R. 425 or R. 1716 applicable — Status of plaintiff raised in pleadings — R. 1716(2)(6) permitting Court to order addition of party whose presence required for final determina tion of all issues — Federal Court Rules, C.R.C., c. 663, RR. 424, 425, 426, 427, 1716 — Rules of Practice and Procedure of the Supreme Court of Ontario, R.R.O. 1980, Reg. 540, R. 136 — Carriage by Air Act, R.S.C. 1970, c. C-14, Schedule I, Art. 29.
Conflict of laws — Quebec law requiring insurer having subrogated claim to sue in own name — Common law requir ing insurer to sue in name of insured — Insurer commencing action in tort or for breach of contract of carriage in Montréal — Concern that if void in body of air law as to status, lex loci would apply — Application to add insured as co-plaintiff under R. 1716 — Defendants raising issues of plaintiffs status in pleadings — Addition of co-plaintiff necessary to ensure all matters in dispute completely determined — Federal Court Rules, C.R.C., c. 663, RR. 424, 425, 426, 427, 1716 — Rules of Practice and Procedure of the Supreme Court of Ontario, R.R.O. 1980, Reg. 540, R. 136.
Air law — Appeal from Senior Prothonotary's refusal to add insured as co-plaintiff on ground right of action by insured prescribed by Art. 29 of Warsaw Convention — Appeal allowed — Addition of insured not creating new cause of action — Single cause of action instituted in proper time — Addition of insured not defeated by limitation period in Art.
29 — Carriage by Air Act, R.S.C. 1970, c. C-14, Schedule I, Art. 29.
This is an appeal from the decision of the Senior Prothono- tary, refusing permission to add the insured, Yarrow Furs Inc., as plaintiff under R. 1716, and refusing leave to amend the statement of claim accordingly. He held that under Article 29 of the Warsaw Convention, the right of action by Yarrow Furs Inc. had become prescribed.
The plaintiff, under the terms of an insurance policy, paid Yarrow Furs Inc. for the loss of some fur coats during the course of their carriage by air. Under the contract of insurance, the plaintiff became subrogated to all the rights of its insured and sued the carriers in Federal Court at Montréal. Under the laws of Quebec, an insurer who has a subrogated claim must sue in his own name. At common law, the insurer must sue in the name of the insured. The defendants have raised the issue of the plaintiff's status in their pleadings.
Held, the appeal should be allowed.
Rules 1716, 424, 425, 426 and 427 are fail-safe systems to assure that notwithstanding procedural requirements, the proper adjudication of the real issues may be made and the ends of justice achieved.
The plaintiff is not seeking to correct the name of a party or to substitute a new party, but to add the insured as co-plaintiff as insurance against an ultimate determination by the Court as to the applicable law regarding status. The situation is covered by Rule 1716. The status of the plaintiff having been raised in the pleadings, the addition of a co-plaintiff is necessary "to ensure that all matters in dispute in the action may be effectu ally and completely determined and adjudicated upon".
Le Dain J. considered Rules 424 et seq. and 1716 in Hijos de Romulo Torrents Albert S.A. v. The 'Star Blackford", [1979] 2 F.C. 109 (C.A.). While admitting the difficulty on the facts of treating the matter as one of misjoinder under Rule 1716 or misnomer under Rule 425, His Lordship concluded that any necessary correction should be permitted if there was no preju dice to the other side in that the true plaintiff had been a party from the beginning. In the case at bar, the addition of the insured would not create a new cause of action. The cause remains a single cause of action instituted in proper time. Addition of the insured as co-plaintiff is not defeated by the limitation period in Article 29 of the Warsaw Convention. In any case, Rule 1716 provides the same kind of escape from a limitation trap as is provided by Rule 424. The authority for this is Ladouceur v. Howarth, which dealt with Rule 136 of the Rules of Practice and Procedure of the Supreme Court of Ontario, which covers substantially the same ground as Rules 425 et seq. and Rule 1716 of the Federal Court Rules. That Rule has always been interpreted so as to provide relief from the normal effects of limitation or prescription. The Ladouceur case was quoted with approval by the Supreme Court of Canada in Leeson Corpn. v. Consolidated Textile Mills Ltd. et al., which dealt specifically with the Federal Court Rules. In any case it does not really matter whether limitation has
ostensibly run out against the insured or whether the applicable rule may be found under the wording of Rule 1716 or 425. The plaintiff is plainly entitled to relief.
CASES JUDICIALLY CONSIDERED
APPLIED:
Ladouceur v. Howarth, [1974] S.C.R. 1111; Hijos de Romulo Torrents Albert S.A. v. The "Star Blackford", [1979] 2 F.C. 109 (C.A.).
REFERRED TO:
Witco Chemical Co. v. Town of Oakville et al., [1975] 1 S.C.R. 273; Leesona Corpn. v. Consolidated Textile Mills Ltd. et al., [1978] 2 S.C.R. 2; Dupuis v. De Rosa, [1955] Que. Q.B. 413.
COUNSEL:
Andrew J. Ness for plaintiff.
France Caron for defendants Air Canada and
The Flying Tiger Line Inc.
R. E. Reynolds for defendant A.S.C. Air
Cargo Service Inc.
Melville W. Smith for defendant Republic
Airlines Inc.
SOLICITORS:
Robinson, Sheppard, Borenstein & Shapiro, Montréal, for plaintiff.
Air Canada, Legal Department, Montréal, for defendants Air Canada and The Flying Tiger Line Inc.
Cerini, Salmon, Souaid & Reynolds, Mont- réal, for defendant A.S.C. Air Cargo Service Inc.
Smith, Lussier, Saint-Martin & Morin, Montréal, for defendant Republic Airlines Inc.
The following are the reasons for order ren dered in English by
JOYAL J.: This proceeding, as is sometimes the case in Federal Court actions, underlines interest ing problems of both substantive and adjective law. It surfaces as a conflict between the application of provincial laws to certain proceedings where
Canadian law, as that law has been defined by the courts, might otherwise be silent on the point.
The plaintiff before me is lead underwriter for Lloyd's of London, England. The plaintiff, under the terms of an insurance policy, paid Yarrow Furs Inc. a sum of $26,070 (US) for the loss of some fur coats during the course of the carriage by air of the fur coats from Taipei to Montréal.
Under the contract of insurance, the plaintiff became subrogated to all the rights of its insured, Yarrow Furs Inc., and accordingly, took action before the Federal Court in Montréal against the several carriers and their agents for the loss sustained.
And there, according to the plaintiff, is where the trouble begins. Under the laws of Quebec, it is necessary for an insurer who has a subrogated claim to sue in his own name. Under common law, however, the insurer, although exercising equitable or contractual subrogation rights, must neverthe less sue in the name of the insured.
The plaintiff is concerned that if in the body of law surrounding a claim under the Carriage by Air Act, R.S.C. 1970, c. C-14, and which incorporates [in Schedule I] the rules laid down in the Warsaw Convention of 1929, the right of action, notwith standing subrogation, remains with the insured, at least as nominal plaintiff, he might find himself out of court. I note in this respect that the defen dants, The Flying Tiger Line Inc. and Air Canada have raised the issue of the plaintiffs status in their pleadings.
On the other hand, should the action have been taken in the name of the insured, Yarrow Furs Inc., and should there be a void in the body of air law governing status where lex loci would apply, the insured might also find itself out of court, the rule in Quebec being that the right of action rests in the subrogee.
In order to get himself out of this dilemma and facing a challenge to his status as disclosed in the
statement of defence, the plaintiff applied to the Senior Prothonotary for an order under Rule 1716 of the Rules of this Court [Federal Court Rules, C.R.C., c. 663] permitting the addition of the insured Yarrow Furs Inc. as plaintiff and for leave to amend the statement of claim accordingly. On January 14, 1987, the Senior Prothonotary refused the application on the grounds that under Article 29 of the Warsaw Convention, the right of action by Yarrow Furs Inc. had become prescribed. The plaintiff appeals from that ruling.
With respect, I should allow the appeal. Rule 1716 and Rules 424, 425, 426 and 427 cover substantially the same fields of relief where certain technical deficiencies or mistakes or inadvertences require rectification. I interpret these rules as fail- safe systems to assure that notwithstanding proce dural requirements, the proper adjudication of the real issues may be made and the ends of justice be achieved. Substantive and equitable consideration should not become the handmaidens of formalistic rules so as to defeat these primary purposes.
In the matter before me, the issues facing the defendants are clearly defined. The statement of claim discloses the status of the plaintiff as insur er. The name of the insured, Yarrow Furs Inc., is also disclosed, and throughout the several allega tions in the statement of claim, it is patently clear that the action is one in tort or for breach of a contract of carriage to which Yarrow Furs Inc. is a party.
Admittedly, what might otherwise be material to the issue before me is the application of Rule 424 which allows amendments even though a par ticular period of limitation has expired. These amendments are those covered under Rule 425 dealing with correcting the name of a party even though the effect is ostensibly to substitute a new party, or Rule 426 with respect to the capacity in which a party sues or Rule 427 dealing with other amendments covered under Rule 424 even though such amendments add or substitute a new cause of action.
The relief which the plaintiff seeks is not to correct the name of a party or to substitute a new party, but to add the insured as co-plaintiff, as insurance, so to speak, against an ultimate deter mination by the Court as to the applicable law respecting status. It is not surprising therefore that the application before the Senior Prothonotary was made pursuant to Rule 1716 which speaks ostensi bly of misjoinder or nonjoinder of a party. It says in Rule 1716(1) that "No action shall be defeated by reason of the misjoinder or nonjoinder of any party; ..." It continues to say in paragraph (b) of Rule 1716(2) that the Court may order a person to be added as a party whose presence before the Court is required for final determination of all issues and the concluding words of the Rule specifically refer to the requirement of consent whenever a plaintiff is to be added.
It appears to me that this is the applicable rule. The plaintiff requires that the insured, Yarrow Furs Inc., be added as a co-plaintiff and this is what Rule 1716(2) seems to cover.
It might be argued that the addition of Yarrow Furs Inc. as co-plaintiff is not necessary to ensure that all matters in dispute be determined. Yarrow Furs being contractually bound under its subroga- tion agreement with the plaintiff to furnish all assistance required for the purpose of exercising all the rights and remedies subrogated to the plaintiff, its participation as a party would not be required.
I should interpret Rule 1716 in broader terms than that. I should find that the status of the plaintiff having been raised in the pleadings, the addition of a co-plaintiff is necessary "to ensure that all matters in dispute in the action may be effectually and completely determined and adjudicated upon".
Rules 424 et seq. and Rule 1716 were the subject of a comparative review by Le Dain J. of the Federal Court of Appeal in Hijos de Romulo Torrents Albert S.A. v. The "Star Blackford", [1979] 2 F.C. 109. His Lordship admitted the difficulty on the facts before him of treating the
matter as one of misjoinder, under Rule 1716 or of misnomer under Rule 425.
The plaintiff in that case had sued on its own behalf for damages to goods covered by four sepa rate bills of lading. After the period of limitation had expired, it was found that the plaintiff was only entitled to claim under one bill of lading and an application was made pursuant to Rule 1716 to add ab initio and nunc pro tunc three new plain tiffs entitled to claim under the other three bills of lading. The Trial Judge [[1978] 2 F.C. 189], in denying the application, found that Rule 1716 could not apply as its scope was limited to matters of misjoinder or nonjoinder. Concurrently, he found that Rule 425 could not apply either as it would strain its application making a clear case of nonjoinder one of a mistake curable by the correc tion of the name of the party.
On appeal, Le Dain J. commented as follows at page 112:
On the facts of this case it is admittedly difficult to draw the line between nonjoinder and misnomer. In view of the charac terization of the mistake by the appellant itself one should perhaps hesitate to interfere with the conclusion of the Trial Division. But the case is in my opinion one that so clearly calls for the assistance of the Court because of the complete absence of prejudice to the respondent that I am disposed to regard it as one of misnomer if that can be done without doing violence to that concept and the scope of Rule 425. [My emphasis.]
His Lordship, after referring to the Supreme Court of Canada decisions in Ladouceur v. Howarth, [1974] S.C.R. 1111; Witco Chemical Co. v. Town of Oakville et al., [1975] 1 S.C.R. 273; and Leesona Corpn. v. Consolidated Textile Mills Ltd. et al., [1978] 2 S.C.R. 2 quoted [at pages 8-9] the following from Dupuis v. De Rosa, [1955] Que. Q.B. 413 which was approved by the Supreme Court:
... if it can be seen from the substance of the proceedings that the true plaintiff has been a party to these proceedings from the beginning, even though it has been incorrectly described, this
plaintiff must be permitted to correct the error, to regularize the situation and to continue the proceedings.
I trust I am not too presumptuous in suggesting that one of the motives for Le Dain J.'s skilful handling of the issue before him was perhaps to bring the case within the protective umbrella of Rule 424. It could easily have been argued other wise that the addition of three plaintiffs constitu ted three new actions, the right to which had become defeated by prescription.
In the case before me, I should not believe that the umbrella provided by Rule 424 is required. The addition of the insured Yarrow Furs Inc. does not create a new cause of action. The cause remains a single cause of action instituted in the proper time. The addition of the insured as co-plaintiff is not defeated by the period of limita tion prescribed in Article 29 of the Warsaw Convention.
Even if it were otherwise, I would nevertheless find in the terms of Rule 1716 the same kind of escape from a limitation trap as is provided in Rule 424. My authority for this is in the Supreme Court of Canada decision in Ladouceur v. Howarth, previously cited, and which dealt with Rule 136 of the Rules of Practice and Procedure of the Supreme Court of Ontario [R.R.O. 1980, Reg. 540].
Rule 136, as it read before the Ontario Rules were substantially revised on January 1, 1985, reads as follows:
136.—(1) The court may, at any stage of the proceedings, order that the name of a plaintiff or defendant improperly joined be struck out, and that any person who ought to have been joined, or whose presence is necessary in order to enable the court effectually and completely to adjudicate upon the questions involved in the action, be added or, where an action has through a bona fide mistake been commenced in the name of the wrong person as plaintiff or where it is doubtful whether it has been commenced in the name of the right plaintiff, the court may order any person to be substituted or added as plaintiff.
(2) No person shall be added or substituted as a plaintiff or as the next friend of a plaintiff without his own consent in writing thereto being filed.
(3) Parties added or substituted as defendants shall, unless otherwise ordered, be served with the amended writ of sum-
mons, and the proceedings as against them shall be deemed to have begun only at the time when they are added.
That rule covers substantially the same grounds as are covered by Rules 425 et seq. and Rule 1716 of the Federal Court Rules. Although there is absent a provision similar to that found in Rule 424, the Ontario rule has always been interpreted so as to provide relief from the normal effects of limitation or prescription. In fact, the absence of a specific provision was not even raised in the Supreme Court in the Ladouceur case nor in Witco Chemical Co. (op cit.) which also dealt with Rule 136 of the Ontario Rules. Furthermore, the Ladouceur case was quoted with approval by the Supreme Court of Canada in deciding Leesona Corpn. v. Consolidated Textile Mills_ Ltd. (op cit.) which dealt specifically with the Federal Rules of Practice.
I should therefore conclude that for the purposes of determining the issue before me, it does not really matter whether limitation has ostensibly run out against the insured Yarrow Furs Inc. or whether the applicable rule may be found under the wording of Rule 1716 or of Rule 425. The plaintiff is plainly entitled to relief and his appeal from the Senior Prothonotary's order is allowed.
Costs shall be in the cause.
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