Case information

Constitutional law - Division of powers - Maritime law - Scope - Courts - Federal Court - Jurisdiction - Contracts - Sale - Whether Canadian maritime law or the Civil Code of Québec applies - Whether the adjudication of a claim by a buyer for damages arising from a latent defect pursuant to a contract of sale of a marine engine or equipment supplied to a ship is governed by Canadian maritime law or whether it falls within provincial jurisdiction - In what circumstances (and by what criteria) should the choice as to whether federal or provincial laws apply be made - In characterizing the true nature of the matters in dispute to determine whether the subject-matter under consideration is “integrally connected with maritime matters”, whether the analysis should focus on the activity which gave rise to the breach of contract of sale, or on whether the object of the activity appears in a federal statute - If Canadian maritime law governs, whether provincial law can nevertheless apply incidentally - Whether art. 1729 and 1733 of the Civil Code of Québec are constitutionally inoperative in respect of a claim by a buyer for damages arising from a latent defect pursuant to a contract of sale of a marine engine or equipment supplied to a ship by reason of the doctrine of federal paramountcy - Whether art. 1729 and 1733 of the Civil Code of Québec are constitutionally inapplicable in respect of a claim by a buyer for damages arising from a latent defect pursuant to a contract of sale of a marine engine or equipment supplied to a ship by reason of the doctrine of inter-jurisdictional immunity - Constitution Act, 1867, ss. 91(10) & 92(13) - Federal Courts Act, R.S.C. 1985, c. F-7, ss. 2 & 22 - Civil Code of Québec, art. 1728, 1729 & 1733.

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In 2006, Desgagnés purchased marine engine parts for one of its vessels from Wärtsilä. The parts were delivered and installed in 2007. The engine failed in 2009, engendering damages of $5,661,830.33 for Desgagnés. The contract limited Wärtsilä’s liability in both scope and time. Desgagnés instituted proceedings against Wärtsilä for the recovery of its damages.

The Superior Court of Québec ordered Wärtsilä to fully indemnify Desgagnés, ruling that provincial law governed the dispute, and that the contractual limitations of liability were rendered inapplicable by the Québec Civil Code’s provisions on warranties. The majority of the Court of Appeal of Québec set aside the trial judgment, ruling that Canadian maritime law exclusively governed the dispute, and that the contractual limitations of liability were thus applicable. The dissent sided with the Superior Court’s conclusions.