The Application of Provincial Sale of Goods Law to Maritime Proceedings

Earlier this month, the Supreme Court of Canada released its much anticipated decision in the case of Desgagnés Transport Inc. v. Wärtsilä Canada Inc.

The case dealt with the applicability of section 1733 of the Quebec Civil Code which provides that certain exclusions of liability are invalid. In this case, Desgagnes, who had purchased an engine from Wartsila that subsequently failed, argued that the Civil Code applies such that Wartsila could not rely on an exclusion clause in the sale contract. Wartsila, the manufacturer of the engine, argued the opposite - i.e - that because the claim was maritime nature, the Civil Code was inapplicable. 

The court concluded that the sale was maritime in nature and therefore a federal matter. However, it also concluded that provisions of the Quebec Civil Code could apply to maritime matters as long as there was no conflict with a validly enacted federal statute - which there was not. 

The Court concluded that:  

The federal power over navigation and shipping is not watertight and remains subject to this flexible understanding of the division of powers. A valid provincial enactment will be allowed to have incidental effects on a federal head of power unless either interjurisdictional immunity or federal paramountcy are found to apply. It follows that these doctrines must be applied to navigation and shipping in the same way as in all division of powers cases.

The sale of goods is a matter that comes plainly within the provincial power over property and civil rights under s. 92(13)  of the Constitution Act, 1867 . The mere fact that such a matter, in the context of a sale of marine engine parts, also falls under the navigation and shipping power does not undermine the validity of the relevant C.C.Q. provisions. 

In summary, this case adds to the line of cooperative federalism cases such as Ryan Estate and Canadian Western Bank. As such, the law is now well established that provincial law of general application can apply to a marine dispute as long as the law does not conflict with valid federal legislation. In other words, provincial law can fill in the blanks in a marine dispute.

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