Standby in Canada Requires Coasting Trade License

The Coasting Trade Act requires foreign vessels to apply for license if they wish to engage in the coasting trade - i.e. sailing between 2 Canadian ports or engaging in work of a commercial nature in Canadian waters. A license will only be issued if there is no "suitable" and "available" Canadian ship to do the work. At it's core, it is a protectionist piece of legislation designed to protect Canada's shipping industry. 

In the case of Global Marine v Canada, 2020 FC 414, Global Marine had a foreign flagged cable laying ship, the "Cable Innovator", on standby in Canada. It was on standby so it could perform cable work on an as required basis in the Northern Pacific Ocean - often outside of Canada. The key facts were summarized by the Court as follows: 

[3]  The “Cable Innovator”, and its predecessor vessels, have been based in Victoria Harbour in Victoria, British Columbia, for many years.  Global Marine asserts that this has been the case for the past 30 to 40 years.  Pursuant to the NAZ Contract, the “Cable Innovator” must at all times be ready, manned and equipped to respond within 24 hours to notification from a NAZ Member of the need for a cable repair.  Global Marine is paid a repair and maintenance service rate when mobilized to perform such services.  It is also paid an annual fee in return for which it makes the “Cable Innovator”, its crew and equipment, available to perform the work under the NAZ Contract, which includes the costs of the “Cable Innovator” when on standby. Global Marine reports that the vast majority of the work performed by the “Global Innovator” is outside Canada, and since 2012, less than 3% of the vessel’s operating days were on projects in Canadian waters.

The question before the Court was whether Transport Canada's decision that a coasting trade license was required was correct. In other words, is a ship on standby engaged in a "commercial activity" bringing it within the scope of the Coasting Trade Act?

The Court sided with Transport Canada stating that: 

[103]  Global Marine submits that the ordinary meaning of “marine activity of a commercial nature” does not include sitting idle on standby and that Transport Canada’s interpretation, which concluded otherwise, was unreasonable.  It reaches this view on the basis that “marine” qualifies an “activity”, the latter being defined by the Concise Oxford English Dictionary, 12th ed, as “a condition in which things are happening or being done” or, alternatively, as “as action taken in pursuit of an objective”.  Similarly, that the word “action” relates to “the process of doing something to achieve an aim”.  Global Marine argues that the ordinary meaning of “marine activity” does not include a being on standby, which is a “static activity”, not in and of itself directed at accomplishing a purpose.

[104]  I agree with Transport Canada’s submission that Global Marine approaches its analysis of the phrase on a dissective basis.

[105]  In applying the ordinary meaning rule, interpretation starts with ordinary meaning – reading the words in their grammatical and ordinary sense.  But, “[i]nterpreters are obliged to consider the total context of the words to be interpreted in every case, no matter how plain those words seem upon initial reading” (Ruth Sullivan, Sullivan on the Construction of Statutes, 6th ed (Markham, ON: LexisNexis Canada, 2014) at §3.7 ).  The grammatical and ordinary sense of words in a statutory provision is not determinative, rather, the section must be read in its entire context and that: “This inquiry involves examining the history of the provision at issue, its place in the overall scheme of the Act, the object of the Act itself, and Parliament’s intent both in enacting the Act as a whole, and in enacting the particular provision at issue” (Chieu v Canada (Minister of Citizenship and Immigration), 2002 SCC 3 at para 34).

[106]  Further, in view of the description of the services/activity described in the C47 application and the vessel’s obligation under the NAZ Contract to provide dedicated 24/7 service, it is clear that the standby services are, as Transport Canada suggests, inextricably linked to the vessel’s repair services.  The vessel must be prepared to respond at all times.  To do so, it must assume a standby posture.  While Global Marine suggests that this is a “static” activity, which is not in and of itself directed towards accomplishing a purpose, it remains an activity. It is static only in the sense that the ship is alongside and not undertaking repairs.  It is an active state of readiness.  Moreover, the standby posture is an action taken in pursuit of an objective — that objective is to permit the vessel to respond within 24 hours to any notification of the need for a cable repair and thereby meet its contractual obligations.  Indeed, the NAZ Contract provides for both an operational daily rate for repairs and an annual fee.  Repair work and dedicated readiness are not separately contracted for.  It was not unreasonable, in these circumstances, for Transport Canada to find that the ordinary meaning of “marine activity of a commercial nature” included the standby service of the “Cable Innovator”.

The case can be found here:

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