Fraser River Pile & Dredge v. Can-Dive, (1999) 245 N.R. 88 (SCC)

• Judge: Gonthier, Cory, McLachlin, Iacobucci, Major, Bastarache and Binnie, JJ.
• Court: Supreme Court of Canada
• Case Date: Thursday February 25, 1999
• Jurisdiction: Canada (Federal)
• Citations: (1999), 245 N.R. 88 (SCC);[1999] CarswellOnt 1927;[1999] CarswellBC 1927;47 CCLT (2d) 1;[1999] 3 SCR 108;127 BCAC 287;1999 CanLII 654 (SCC);11 CCLI (3d) 1;245 NR 88;176 DLR (4th) 257;[1999] ACS no 48;67 BCLR (3d) 213;50 BLR (2d) 169;90 ACWS (3d) 786;[1999] 9 WWR 380;[1999] SCJ No 48 (QL)

Fraser River Pile & Dredge v. Can-Dive (1999), 245 N.R. 88 (SCC)

MLB Headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [1999] N.R. TBEd. SE.006

Fraser River Pile & Dredge Ltd. (appellant) v. Can-Dive Services Ltd. (respondent)

(26415)

Indexed As:Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd.

Supreme Court of Canada

Gonthier, Cory, McLachlin, Iacobucci, Major, Bastarache and Binnie, JJ.

September 10, 1999.

Summary:

The owner of a derrick barge sued the charterer for damages arising from the loss of the vessel while under charter. The trial judge, in a decision reported in 9 B.C.L.R. (3d) 260, allowed the action and found the charterer liable. The charterer appealed.

The British Columbia Court of Appeal, in a decision reported at 98 B.C.A.C. 138; 161 W.A.C. 138, allowed the appeal and dis­missed the action against the charterer. The owner appealed.

The Supreme Court of Canada dismissed the appeal.

Common Law - Topic 3224

Variation - Judicial variation - To meet changing circumstances - The Supreme Court of Canada stated that "[i]t is by now a well-established principle that courts will not undertake judicial reform of this mag­nitude [wholesale abolition of a doc­trine], recognizing instead that the legisla­ture is better placed to appreciate and accommo­date the economic and policy issues involved in introducing sweeping legal reforms. That being said, the corol­lary principle is equally compelling, which is that in appro­priate circumstances, courts must not abdi­cate their judicial duty to decide on incremental changes to the com­mon law necessary to address emerging needs and values in society" - See para­graphs 43 to 44.

Contracts - Topic 1168

Formation of contract - Privity of contract - Exceptions - Insurance law - [See first Contracts - Topic 9001].

Contracts - Topic 9001

Rights and liabilities of strangers to con­tract - Privity of contract - Exceptions - A derrick barge owned by Fraser River sunk while under charter to Can-Dive - Fraser River recovered its claims for the loss from its insurers - The insur­ance policy contained a waiver of subrogation clause which stated that the insurers waived any right of subrogation against, inter alia, "any char­terer(s)" - Fraser River and the insurers agreed that they intended to bring an action against Can-Dive in negligence and Fraser River waived any right it might have pursuant to the waiver of subrogation clause with respect to Can-Dive - Fraser brought an action against Can-Dive - The Supreme Court of Canada held that Can-Dive, as a third party beneficiary under the insurance policy pursuant to the waiver of subrogation clause, was entitled to rely on that clause to defend against the insurer's subrogated action on the basis of the prin­cipled exception to the privity of contract doctrine.

Contracts - Topic 9001

Rights and liabilities of strangers to con­tract - Privity of contract - Exceptions - The Supreme Court of Canada set out the threshold requirements for the purposes of introduc­ing a new, principled exception to the doctrine of privity of contract as it applied to third party benefi­ciaries: (a) the parties to the contract must intend to extend the benefit in question to the third party seek­ing to rely on the con­tractual provision; and (b) the activities performed by the third party seeking to rely on the contrac­tual provision must be the very activities contemplated as coming within the scope of the contract in general, or the provision in particular, as deter­mined by reference to the intentions of the parties - See para­graph 32.

Contracts - Topic 9123

Rights and liabilities of strangers to the contract - Rights of third parties - Revoca­tion or deletion of - A derrick barge owned by Fraser River sunk while under charter to Can-Dive - Fraser River recovered its loss from its insurers - The insurance policy con­tained a waiver of subrogation clause whereby the insurers waived any right of subrogation against, inter alia, "any char­terer(s)" - Fraser River and the insurers agreed to bring an action against Can-Dive and Fraser River waived any right it might have pursu­ant to the waiver of subrogation clause with respect to Can-Dive - The Supreme Court of Canada held that Fraser River's agreement with the insurers did not effectively delete the third party benefit from the contract - Fraser River and the insurers could not unilateral­ly revoke Can-Dive's rights once they had crystallized into an actual benefit in the form of a defence against an action by the insurers - When Can-Dive's rights crystal­lized, it became for all intents and pur­poses a party to the initial contract for the purpose of relying on the waiver of subrogation clause - See paragraph 36.

Insurance - Topic 2891

Subrogation - Action by insurer - Bars - Waiver - [See first Contracts - Topic 9001 and Contracts - Topic 9123].

Shipping and Navigation - Topic 889

Charter of ships - The charterparty - Lia­bility for loss of ship - Insurance clause - Effect of - [See first Contracts - Topic 9001].

Cases Noticed:

Vandepitte v. Preferred Accident Insurance Corp. of New York, [1933] A.C. 70 (P.C.), disagreed with [para. 9].

London Drugs v. Kuehne & Nagel Interna­tional Ltd., [1992] 3 S.C.R. 299; [1993] 1 W.W.R. 1; 143 N.R. 1; 18 B.C.A.C. 1; 31 W.A.C. 1, appld. [para. 9].

Scott v. Wawanesa Mutual Insurance Co., [1989] 1 S.C.R. 1445; 94 N.R. 261; 59 D.L.R.(4th) 660, refd to. [para. 15].

Imperial Oil Ltd. and Wellman-Lord (Alberta) Ltd. v. Commonwealth Con­struction Ltd., [1978] 1 S.C.R. 317; 12 N.R. 113; 1 A.R. 161; 69 D.L.R.(3d) 558, consd. [para. 16].

Thomas & Co. v. Brown (1899), 4 Com. Cas. 186, refd to. [para. 16].

Watkins v. Olafson et al., [1989] 2 S.C.R. 750; 100 N.R. 161; 61 Man.R.(2d) 81; 61 D.L.R.(4th) 577; [1989] 6 W.W.R. 481; 39 B.C.L.R.(2d) 294; 50 C.C.L.T. 101, refd to. [para. 44].

R. v. Salituro, [1991] 3 S.C.R. 654; 131 N.R. 161; 50 O.A.C. 125; 68 C.C.C.(3d) 289, refd to. [para. 44].

Counsel:

David F. McEwen, for the appellant;

D. Barry Kirkham, Q.C., and Gregory J. Tucker, for the respondent.

Solicitors of Record:

McEwen, Schmitt & Co., Vancouver, British Columbia, for the appellant;

Owen, Bird, Vancouver, British Columbia, for the respondent.

This appeal was heard on February 25, 1999, before Gonthier, Cory, McLachlin, Iacobucci, Major, Bastarache and Binnie, JJ., of the Supreme Court of Canada. The fol­lowing judgment of the Supreme Court was delivered in both official languages by Iacobucci, J., on September 10, 1999.