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.
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.