Dear Supreme Court: Please Reverse My Decision in Kremikovtzi Trade v Swift Fortune

We get the impression sometimes at law school that lower court judges can be either embarassed or irritated when their decisions are reversed by the Supreme Court of Canada (“SCC”). However, this won’t be the case if the SCC overturns the Federal Court of Appeal (“FCA”) decision in Kremikovtzi Trade v Swift Fortune (The), 2006 FCA 1 [Kremikovtzi], which comes before the SCC on Wednesday.


Briefly, the facts in Kremikovtzi are that Kremikovtzi entered into a contract with Phoenix for Phoenix to transport coal from Vancouver to Bulgaria. In breach of their contract, Kremikovtzi instead contracted to ship the coal to Bulgaria via another carrier. Phoenix filed a statement of claim and a warrant was placed on the cargo sitting on the other ship in Vancouver’s harbour. The jurisdiction to do so flows from s. 43(2) of the Federal Courts Act, RSC 1985, c F-7, which states that

(2) Subject to subsection (3), the jurisdiction conferred on the Federal Court by section 22 may be exercised in rem against … the property that is the subject of the action…

Judicial History

Kremikovtzi brought a motion to strike the statement of claim as it related to the cargo on the grounds that the coal was not “property that is the subject of the action.” The motion was granted by the Federal Court, but reversed by the FCA.

While reversing the trial decision, however, the FCA clearly invited the SCC to move in and overturn its own decision. Justice Nadon felt himself bound by a previous decision of the FCA on nearly identical facts where the cargo was indeed held not to be “the subject of the action.” Phoenix was asking the FCA to overturn its previous decision, and Justice Nadon felt that this was not the type of “exceptional case” involving a “manifestly wrong” decision in which the Court should overturn its precedent.

The SCC Position?

Justice Nadon leaves no doubt about his preferred position, however. I’ll leave you with the following unequivocal statements he left for the Supreme Court to consider when it deliberates on this case:

  • The Supreme Court of Canada will normally be the appropriate forum for correcting the errors of intermediate courts of appeal.”
  • I wish to add that were I not bound by Paramount, I would have been inclined to decide the issue in favour of Phoenix. Since I suspect that the issue before us is of some importance to the maritime community and, hence, that leave to appeal to the Supreme Court of Canada might be sought, it will be useful for me to elaborate as to why I believe Paramount was wrongly decided.
  • I am satisfied that Madam Justice Tremblay-Lamer’s approach [at trial] constitutes the correct interpretation of subsection 43(2) of the Act.
  • In my view, Décary J.A. [in the previous decision] has taken too narrow a view of the words “subject of the action.” … In my view, there is simply no basis for that approach. In other words, I cannot see any rationale for interpreting the words [as he did]…

Any doubts about what the SCC will do with this one? This question seems pretty easy to answer.

A more difficult question to answer is when is it appropriate for a court to reverse a precedent? If Justice Nadon feels a decision for which there is “simply no basis” nor “any rationale” is not “manifestly wrong,” when will such a decision ever come up? Or is he correct in saying that this should only happen in cases where the previous decision failed to consider a relevant statutory provision or precedent?

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