T-2406-86
Elias Metaxas, et al. (Plaintiffs)
v.
The Ship "Galaxias" and all others interested in
the Ship "Galaxias" (Defendants)
INDEXED AS: METAXAS V. GALAXIAS (THE) (T.D.)
Trial Division, Addy J.—Vancouver, January 18;
Ottawa, March 8, 1990.
Conflict of laws — Choice of law — Maritime law —
Severance pay — Greek ship, manned by Greek crew, arrested
in Vancouver — Crew released from employment — Entitled
to severance pay — Appeal from referee's report on reference
as to quantum ordered by Trial Division Judge — Whether
referee erred in law in calculating quantum in accordance with
lex loci contractus (Greek law) rather than lex fori, (Canadian
maritime law) — Appeal dismissed — General conflict of laws
principle quantification of damages in ordinary contract cases
to be decided as procedural matter in accordance with lex fori
— However, Code of Greek Maritime Law (CGML), s. 76,
providing fixed formula for determining amount payable to
crewmen upon termination of employment according to dis
tance from home port, constituting integral part of substantive
law governing crew's rights — Therefore, according to Canada
Shipping Act, s. 274, calculation of compensation must be
governed by CGML, s. 76 — To preserve and promote interna
tional trade, admiralty courts should, whenever possible, apply
law of flag to determine rights of crew with regard to employ
ers as crew essential and integral part of ship — Unjust if
crews' conditions of employment and compensation for breach
of contract vary from port to port — Proper application of
conflict of laws to recognize right of Greek citizens hired in
Greece as crew aboard Greek ship to protection by Greek
maritime law — Application of Greek law herein not offending
public policy of Canada and not so manifestly unjust as to
require Court to intervene under equitable jurisdiction.
Maritime law — Contracts — Severance pay — Greek ship,
manned by Greek crew, arrested in Vancouver — Crew
released from employment — Entitled to severance pay —
Appeal from referee's report on reference as to quantum
ordered by Trial Division Judge — Appeal dismissed —
According to conflict of laws principles, Code of Greek Mari
time Law, s. 76, providing fixed formula for determining
severance pay according to distance from home port, must
govern calculation of compensation — Application of lex fori
unjust as crew's conditions of employment and compensation
upon severance would vary from port to port.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Canada Labour Code, R.S.C. 1970, c. L-1.
Canada Shipping Act, R.S.C. 1970, c. S-9, s. 274.
Code of Greek Maritime Law, ss. 74, 76, 78.
Interpretation Act, R.S.C., 1985, c. I-21, ss. 10, 11, 12.
CASES JUDICIALLY CONSIDERED
APPLIED:
The "Nonpareil" (1864), BR. & L. 354; Fernandez v.
"Mercury Bell" (The), [1986] 3 F.C. 454; (1986), 27
D.L.R. (4th) 641; 66 N.R. 361 (C.A.).
CONSIDERED:
Chaplin v. Boys, [1969] 2 All E.R. 1085 (H.L.); Livesley
v. Horst, [1924] S.C.R. 605; [1925] 1 D.L.R. 159;
D'Almeida (J.) Araujo Lda. v. Sir Frederick Becker &
Co. Ld., [1953] 2 Q.B. 329; The "Leoborg", [1963] 2
Lloyd's Rep. 128 (Adm. Div.).
AUTHORS CITED
Castel J.-G. Canadian Conflict of Laws 2nd ed. Toronto:
Butterworths, 1986.
Cheshire G. C. Private International Law 4th ed. Oxford:
Clarendon Press, 1952.
COUNSEL:
David F. McEwen for Baseline Industries Ltd.
Marshall Bray and Bradley M. Caldwell for
the crew of the Galaxias.
A. S. Marinakis for Naftikon Apomachicon
Tameion—N.A.T.
SOLICITORS:
McEwen & Company, Vancouver, for Base
line Industries Ltd.
McMaster & Company, Vancouver, for the
crew of the Galaxias.
Marinakis & Company, Vancouver, for Naft -
ikon Apomachicon Tameion—N.A.T.
The following are the reasons for judgment
rendered in English by
ADDY J.: One of the claimants against the
proceeds paid into court in this action, namely
Baseline Industries Limited, is appealing a report
on a reference in this matter held pursuant to an
order of Mr. Justice Joyal of December 10, 1987.
The learned referee, Charles E. Stinson, pro
duced a detailed and well-reasoned report in which
the facts and the applicable legal principles were
reviewed and analyzed at some length.
The facts, as they relate to this appeal, are
undisputed. The defendant ship was registered in
Greece and the crew were all hired there and
sailed with the ship to Canada to be employed at
the Expo '88 in Vancouver. The ship was subse
quently arrested in Vancouver and as a result the
crew were released there from their employment.
The sole issue under appeal is whether the
referee erred in law in calculating the amounts due
and payable to the crew upon severance of their
contracts of employment in accordance with the
lex loci contractus, namely Greek law, or whether
calculations should have been made according to
the lex fori, i.e., Canadian maritime law. Expert
evidence was led as to Greek law and there is no
dispute as to its provisions. The specific area of
dispute relates solely to what is termed quantifica-
tion of the amount, in other words, how the actual
amount to be paid on severance is to be calculated.
The question of precisely where the line is to be
drawn between procedural and substantial aspects
of damages still remains somewhat hazy and the
principles governing the application of the lex loci,
as opposed to the lex fori, have not been rendered
any clearer by the oft-quoted case of Chaplin v.
Boys, [1969] 2 All E.R. 1085 (H.L.). What
amounts to a jesuitical distinguo would be of great
help in attempting to reconcile the principles of
conflict of laws, which the learned law lords
appear to have accepted in principle, with their
ultimate finding to the effect that the heads of
damages were to be determined according the lex
fori.
As stated by Duff J. in Livesley v. Horst, [ 1924]
S.C.R. 605: The concept of procedure is a compre
hensive concept and involves not only process and
evidence but also methods of execution, rules re
limitations, etc. In the case of D'Almeida (J.)
Araujo Lda. v. Sir Frederick Becker & Co. Ld.,
[1953] 2 Q.B. 329, Pilcher J., quoting with
approval from Cheshire's Private International
Law, 4th ed., at pages 659-660 states that in
contracts, remoteness of damage and heads of
damage are governed by foreign law but quantifi-
cation of damage, that is, the method by which
compensation for an actionable loss is calculated is
governed by the law of the forum. This is the rule
normally applied by our courts in general contract
cases.
In the present case, it is fully admitted that the
issue of whether severance would be payable to the
crew was properly decided by the referee in
accordance with the Greek law since it is a sub
stantive matter. What counsel for the appellant is
objecting to, is that the amounts were calculated in
accordance with the law of the flag. He argued
that, as this was strictly a procedural question, the
lex fori should prevail. There are English authori
ties regarding ordinary contract cases to which the
appellant referred which do support this proposi
tion. General approval of the principle can also be
found in Castel's Canadian Conflict of Laws, 2nd
ed., page 134, paragraph 73. Counsel for the
appellant argues therefore that the referee should
have ignored evidence on what quantum payable
on severance would have been allowed in Greece
and consider only the appropriate quantum which
Canadian courts might allow as severance pay for
employment in similar situations.
According to the Greek statutory provisions of
the Code of Greek Maritime Law, there is a fixed
formula for determining in terms of additional
days pay, the amount of monies payable to crew
men in addition to ordinary earned pay, in the
event of severance. The amount varies according to
the distance from the home port. The formula
applies to all cases regardless of circumstances and
the law provides that the fixed number of addition
al days payable for severance are to be considered
as if they were days actually worked on the ship.
Compensation provisions applicable to the present
case are to be found in articles 74, 76 and 78 of the
Code of Greek Maritime Law. Article 76, which is
the most relevant, reads as follows:
Compensation under the preceding article shall, amount to
fifteen days' wages.
If the contract of engagement is terminated abroad, the
compensation shall be doubled in respect of a port in the
Mediterranean, the Black Sea, the Red Sea or Europe, and
trebled in the case of any other port.
The entitlement to extra days' pay as compensa
tion for severance under Greek law does not arise
out of a contractual entitlement to same in the
form of either liquidated damages or a penalty
but, on the contrary, the Greek statutory provi
sions governing the fixed amount of days to be
paid for severance applies to all Greek ships with
out exception, regardless of contract stipulations to
the contrary.
The basic reason for requiring that procedural
matters be determined by the law of the forum is
that judges and court officials as well as counsel
are not trained or equipped to conduct trials other
wise than by applying such matters as the rules of
practice and procedure and the rules of evidence
that they have at their disposal. This surely cannot
be the reason here. It is difficult to conceive a
simpler manner of determining compensation for
severance than that provided for in article 76 of
Code of Greek Maritime Law.
One finds the following passages in Castel's
Canadian Conflict of Laws, 2nd ed., paragraphs
58 and 59:
58. Nature of procedure
The concept of procedure refers to the "mode of proceeding by
which a legal right is enforced as distinguished from the law
which gives or defines the right, and which by means of the
proceeding the court is to administer, the machinery as distin
guished from the product.
59. Characterization
The characterization of a particular rule, whether foreign or
domestic, as substantive or procedural, cannot be done in the
abstract. The solution depends upon the objectives to be
achieved by the court in the case that is pending before it. The
general objectives of conflict of laws must also be taken into
consideration. Procedure and substance are not clear-cut and
unalterable categories. Their contents may vary from case to
case. The line that may be drawn between substance and
procedure is not the same for all times and for all purposes.
Logical analysis is of little help here. Practical and policy
considerations seem to be paramount.
In The Leoborg, [1963] 2 Lloyd's Rep. 128
(Adm. Div.), which involved claims by a Swedish
crew from a Swedish ship, Mr. Justice Hewson,
sitting in admiralty, applied the Swedish law
throughout for the detailed calculations and quan-
tification of the compensation due seamen for
wages including severance claims. No mention was
made of English law. The persuasiveness of this
authority, however, might be somewhat diminished
by the fact that the claims of the seamen were
undefended and the motion was for a judgment by
default.
Damages arising out of employment contracts,
as distinct from damages arising out of ordinary
tort or contract claims, are normally recognized by
our legislators and our courts as constituting a
special branch of the law. A great many employ
ment claims are covered by special labour legisla
tion and the contractual rights themselves are
frequently founded on collective agreements. Sea-
men's wages and emoluments have been con
sidered as constituting an even more distinct cate
gory. We find for instance in The `Nonpareil"
case (1864), BR. & L. 354, the following state
ment at page 356:
If there be a doubt as to the interpretation of a seaman's
contract, the contract is to be interpreted favourably to the
seaman.
Section 274 of the Canada Shipping Act, R.S.C.
1970, c. S-9, which might well constitute a codifi
cation of the common law, reads as follows:
274. Where in any matter relating to a ship or to a person
belonging to a ship there appears to be a conflict of laws, then,
if there is in this Part any provision on the subject that is
hereby expressly made to extend to that ship, the case shall be
governed by that provision; but if there is no such provision, the
case shall be governed by the law of the port at which the ship
is registered.
Whether it be a codification of the common law
or not, section 274 is now a statutory provision of
our maritime law. It is to be noted that the section
stipulates that the case shall be governed by the
law of the port at which the ship is registered.
The case of Fernandez v. 'Mercury Bell" (The),
[1986] 3 F.C. 454 (C.A.), involved a claim in
Canada by Philippine sailors engaged as a crew
aboard a Liberian ship. One of the questions to be
decided was whether the Canada Labour Code
[R.S.C. 1970, c. L-1] should govern in lieu of the
law of the flag. Marceau J., in delivering reasons
in which Hugessen J. and Lacombe J. concurred,
had this to state at page 459 of the report:
There is no doubt that to determine the rights of seamen
against the owners of the ship on which they are serving, which
is the subject matter of the action, the law of the ship's port of
registry is to be looked at. This is required by "the well-estab
lished rule of international law that the law of the flag state
ordinarily governs the international[sic]* affairs of a ship"
(McCulloch v. Sociedad Nacional de Marineros de Honduras,
372 U.S. 10 (1963), at page 21), a rule formally confirmed in
section 274 of the Canada Shipping Act, R.S.C. 1970, c. S-9,
as amended, which reads as follows: [His Lordship then quotes
section 274 mentioned above]
That this action must be disposed of on the basis of the law of
Liberia is therefore without question.
* "International" in the above quotation from the McCulloch
case should read "internal".
Section 10 of our Interpretation Act [R.S.C.,
1985, c. I-21] requires that effect be given to every
enactment according to its true spirit. Section 11
indicates that the expression "shall" is to be con
strued as imperative and section 12 requires that
every enactment be given such fair, large and
liberal construction and interpretation as best
ensures the attainment of its objects.
On reading section 274 of the Canada Shipping
Act in the light of those principles and bearing in
mind that it deals with admiralty matters, I am of
the view that where it is stated that the "case shall
be governed" by the law of the flag, it must be
taken to include article 76 of the Greek Code of
Maritime Law, notwithstanding the general princi
ple of conflict of laws to the effect that quantifica-
tion of damages in ordinary contract cases, is to be
decided as a procedural matter in accordance with
the law of the forum.
I consider that article 76 of the Greek Code of
Maritime Law constitutes an integral part of the
substantive law governing the rights of the crew
and I consider it to be the type of law contemplat
ed by section 274 of the Canada Shipping Act.
Any question of conflict, if any conflict indeed
exists, in respect to the amount payable on sever
ance to the crew is removed by the terms of that
section.
Altogether apart from the specific provisions of
section 274 I feel that, because of the importance
of encouraging commercial exchanges between
nations and of the resulting importance of protect
ing and preserving the international character of
shipping, where the rights of the crew are involved
and where there exists any real doubt as to wheth
er the law of the flag or that of the forum is to be
applied, admiralty courts should, whenever possi
ble, apply the law of the flag to determine the
rights of the crew with regard to their employers
for nothing can constitute a more essential or
integral part of a ship than the crew which sails it.
It would be unjust and unfair for the crews of
ships to expect that their conditions of employment
and the compensation to which they would be
entitled in the event of a breach of contract by the
ship's owners or charterers, might vary with each
port at which the vessel may call. It would consti
tute nothing less than a stultification of conflict of
laws to refuse to recognize the right of Greek
citizens hired in Greece as crew aboard a Greek
ship, to the protection specifically conferred upon
them by the maritime law of Greece as specifically
provided in a statute of that country.
In this particular case the application by this
Court of the relevant statutory provisions of Greek
law to determine the amount due the crew does not
create a situation which might be characterized as
offending public policy in Canada or as being so
manifestly wrong or unjust as to require the Court
to invoke its equitable jurisdiction in order to vary
the ultimate result. Even if one were relying on the
test of fairness for determining compensation, an
extra 45 days' pay as compensation for a crewman
who has been dismissed from his employment half
way around the globe, could never be considered as
unfair.
The appeal will be dismissed with costs of the
appeal payable by Baseline Industries Limited.
The report of the referee Charles E. Stinson, dated
December 27, 1989, is hereby confirmed and the
judgment shall issue accordingly.
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