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CIVIL PROCEDURE - Courts - Jurisdiction - Federal courts

Wednesday, February 19, 2020 @ 8:39 AM  

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Appeal by the plaintiffs from a decision staying their action against the Crown on the ground that the Federal Court lacked jurisdiction over a third-party claim that the Crown had commenced. The appellants operated a refuelling and related business out of premises located within an airport on lands originally leased from the Crown. The lease provided that disputes with respect to it were to be adjudicated in the Federal Court. The airport was then transferred to a municipality which assumed the Crown’s obligations under the lease with the appellants. The appellants then sued the Crown for alleged tortious conduct of the municipality, alleging that the lease was an aviation document under the Aeronautics Act and that the Crown failed to comply with its obligations under that Act. In its third-party claim, the Crown sought contribution and indemnity from the municipality under the indemnity agreement executed at the time of the transfer and the Ontario Negligence Act for any amounts it might be obliged to pay the appellants. The Federal Court judge determined that there was no body of federal law that was essential to the disposition of the third-party claim but that federal law was only incidental to the claim against the municipality, which was insufficient to found Federal Court jurisdiction.

HELD: Appeal dismissed. The presence of the forum selection clause in the lease did not determine the Federal Court’s jurisdiction over the third-party claim. The relevant issue was whether the claim that was advanced relied to an essential extent upon federal law. It was the nature of the claim and not of the undertakings involved that was relevant. While the factual backdrop to the third-party claim might well be the operation, maintenance and management of the airport by the municipality, this did not define what the essence of the claim was. The third-party claim was a contractual claim for indemnity as well as a claim for contribution and indemnity in tort and under the Ontario Negligence Act. The acts complained of in the statement of claim of illegal distress, intentional interference with contractual relations and misrepresentation were all tort-based claims. None of these claims depended to any extent on the Aeronautics Act or on the regulations under that Act.

744185 Ontario Inc. (c.o.b. Air Muskoka) v. Canada (Transport), [2020] F.C.J. No. 10, Federal Court of Appeal, E.R. Dawson, D.G. Near and M.J.L. Gleason JJ.A., January 7, 2020. Digest No. TLD-February172020005