Limitation of Liability in Maritime Law
Commentaries are intended as an introduction or overview of the topic. The commentaries for some topics are more detailed than others but none of them should be taken as a complete and full recitation of the law applicable to the topic.
Limitation of Liability
Note: Where a limitation amount is expressed in SDRs we have used an exchange rate of 1 SDR=Cdn$1.75. This rate does however fluctuate. The current rate of exchange can be found at various internet sites including here.
Limitation of liability is dealt with in Part 3 of the Marine Liability Act. Part 3 of the MLA implements the 1976 Convention on Limitation of Liability for Maritime Claims and the 1996 Protocol but with Canadian amendments and limits. These provisions originally became part of Canadian law on August 10, 1998 when they were enacted as amendments to Part IX of the Canada Shipping Act. Prior to 10 August 1998, Canada adhered to the 1957 limitation Convention which had lower limits but it was also much easier to break limitation. Immediately below is a brief summary of the limitation provisions of the Marine Liability Act.
Persons Entitled to Limit
As is well known, the 1976 Convention as amended by the 1996 Protocol regulates the limitation of liability of shipowners. Article 1 sets out the persons entitled to limit liability. They are: the owner, charterer, manager and operator of seagoing ships and salvors. Article 1(4) extends the right to limit to employees and agents of such persons. Article 1(6) extends the benefits to liability insurers of persons entitled to limit.
The MLA further extends the list of persons entitled to limit their liability beyond that allowed in the Convention. Section 25(1)(b) of the MLA extends the right to limit to owners, charterers, managers and operators of all ships and not just “seagoing” ships and further to any person with an interest in or possession of a ship. With these amendments the right to limit applies to pleasure craft on lakes and rivers as well as “seagoing” ships.
Claims Subject to Limitation
Article 2 of the Convention sets out the claims that are subject to limitation of liability. These are:
(a) claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connexion with the operation of the ship or with salvage operations, and consequential loss resulting therefrom;
(b) claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage;
(c) claims in respect of other loss resulting from infringement of rights other than contractual rights, occurring in direct connexion with the operation of the ship or salvage operations;
(e) claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship;
(f) claims of a person other than the person liable in respect of measures taken in order to avert or minimize loss for which the person liable may limit his liability in accordance with this Convention, and further loss caused by such measures.
Article 2(d), which is omitted from the above list, is "claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship". We have omitted it because Article 18 Convention allows states to make certain reservations as to the claims for which limiation of liability is available. In Part 3 of Schedule 1 to the MLA Canada has made such a reservation in respect of art. 2(d). Therefore, in Canada, there is no limitation of liability for wreck removal claims.
Article 3 sets out the claims excepted from limitation. The excepted claims are limited. They are: claims for salvage, claims for oil pollution damage governed by the 1969 Convention on Civil Liability for Oil Pollution, claims for nuclear damage, and claims by employees if the applicable law does not permit limitation.
Conduct Barring Limitation
Article 4 sets out the circumstances under which a person will lose their right to limit. In order to prevent a defendant from limiting his liability the plaintiff must prove that the loss resulted from the personal act or omission of the defendant “committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result”. This is a very strict test and the author is not aware of any case where the test has been met. In fact, the Supreme Court of Canada described it as "a virtually unbreakable limit" in Peracomo Inc. v. Telus Communications Co., 2014 SCC 29.
The general limits of liability are established by Article 6 of the Convention and by section 29 of the MLA. Section 29 of the MLA sets out special Canadian limits for vessels of less than 300 gross tons. For vessels of more than 300 gross tons the limitation amount is governed by the Convention. The table below summarizes the limits applicable to all claims with the exception of claims by passengers. The limits of liability for passenger claims is dealt with in Article 7 of the Convention and section 28 of the MLA. These limitations are dealt with in the next section.
Limitation Amounts - Non-Passenger Carriage
(1) The amounts apply to the aggregate of all claims arising on any distinct occasion.
(2) The amounts for ships over 300 tons derive from art. 6 of Schedule 1 to the MLA. For ships less than 300 tons, the amount is stipulated in s. 29 of the MLA.
(3) As as of 8 June 2015 the limitation amounts were increased pursuant to SOR/2015-98. These new amounts are indicated in the appropriate column.
(4) SDRs are converted to CDN$ at a rate of 1 SDR=CDN$1.75. This rate does however fluctuate. The current rate of exchange can be found here.
Ship’s Gross Tonnage
Claims For Loss of Life or Personal Injury (except passengers or persons carried on a ship)
(except passengers or persons carried on a ship)
Pre 8 June 2015
Post 8 June 2015
Pre 8 June 2015
Post 8 June 2015
Less than 300
300 - 2,000
3.02 million SDR (C$5.285 million)
1,000,000 SDR (C$1,750,000)
1,510,000 SDR (C$2,642,500)
2001 - 30,000
plus 800 SDR (C$1,400) for each ton over 2000
3.02 million SDR (C$5.285 million) plus 1,208 SDR (C$2,114) for each ton over 2000
plus 400 SDR (C$700) for each ton over 2000
1,510,000 SDR (C$2,642,500) plus 604 SDR (C$1,057) for each ton over 2000
30,001 - 70,000
plus 600 SDR (C$1,050) for each ton over 30,000
36,844,000 SDR (C$64,477,000) plus 906 SDR (C$1,585) for each ton over 30,000
plus 300 SDR (C$525) for each ton over 30,000
18,422,000 SDR (C$32,238,500) plus 453 SDR (C$793) for each ton over 30,000
48,400,000 SDR (C$85,400,000) plus 400 SDR (C$700) for each ton over 70,000
73,084,000 SDR (C$127,897,000) plus 604 SDR (C$1,057) for each ton over 70,000
24,200,000 SDR (C$42,350,000)
plus 200 SDR (C$350) for each ton over 70,000
36,542,000 SDR (C$63,948,500) plus 302 SDR (C$529) for each ton over 70,000
It should be noted that pursuant to Article 6(2) where the limitation amount applicable to a personal injury claim is insufficient to satisfy all such claims the amount applicable to property damage claims shall be made available to satisfy the personal injury claims. (This does not apply to vessels under 300 tons which are governed by s. 29 of the MLA, not the convention.)
Pursuant to Article 6(4) the limits of liability applicable to a salvor not operating from a ship are to be calculated according to a tonnage of 1,500 tons.
Limits of Liability for Fatalities and Personal Injuries to Passengers
The limits of liability for claims by passengers (including participants in adventure tourism activities as defined in s. 37.1(1) of the MLA) and persons carried on board a ship are set by Article 7 and by section 28 of the MLA. Article 7 establishes the maximum liability at 175,000 SDR (C$306,250) multiplied by the number of passengers the ship is authorized to carry by her certificate. This provision, of course, requires that a ship have a certificate. It is unworkable where the ship carries passengers but is not required to have, and does not have, a certificate. In such cases, section 28(1) of the MLA provides that the limitation amount is the greater of 2,000,000 SDR (C$3,500,000) and 175,000 SDR (C$306,250) multiplied by the number of passengers on board the ship. Sections 28(2) applies a similar limit to claims for loss of life or personal injury to persons carried on a ship “otherwise than under a contract of passenger carriage”. By virtue of the exceptions in section 28(3) these limits do not apply to the master, crew, stowaways and shipwrecked persons carried out of necessity. The passenger limitation amounts also do not apply to persons carried on ships used for pleasure purposes.
Owners of Docks Canals and Ports
Section 30 of the MLA includes special limitation provisions applicable to owners of a dock, canal or port including any person having the control or management of the dock, canal or port and any ship repairer using the dock, canal or port. Such persons are entitled to limit their liability for loss caused to a ship or to any cargo or property on board the ship. The limitation amount is calculated by multiplying $1,000 by the tonnage of the largest ship to have used the dock in the last five years but is subject to a minimum of $2 million. As with claims under the Convention, the right to limit liability is lost if it is proved that the loss resulted from the personal act or omission of the person seeking to limit and “committed with intent to cause the loss or recklessly and with knowledge that the loss would probably result”.
The database contains 22 case summaries relating to Limitation of Liability in Maritime Law. The summaries are sorted in reverse date order with 20 summaries per page. If there are more than 20 summaries, use the navigation links at the bottom of the page.
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Collisions - Claim for Repair & Business Interruption - Summary Trial - Cause of Action
Graymar Equipment (2008) Inc. v. Cosco Pacific Shipping Ltd., 2018 FC 974
Précis: The Federal Court ordered the defendant to pay damages arising from a collision between their moving container ship and a stationary scow.
Facts: On 28 October 2016 the Cosco Pacific was involved in an allision striking a stationary scow, the FRPD Rupert, and a derrick, the T.L. Sharpe, both of which were owned by the plaintiff Graymar and on charter to the plaintiff Fraser River. The scow and the derrick were part of a construction operation to extend a dock at the Fairview Container Terminal in Prince Rupert. The T.L. Sharpe was damaged, and it took eight days to repair. The Cosco Pacific had a pilot onboard who admitted liability and had a consent judgment entered against him for $1000.00 under his statutory limit of liability plus interests and costs. The plaintiffs claimed $513,955.53 for cost of repair, business interruption due to lost business of another derrick, the Peter D. Anderson, supervisory, construction and administrative staff expenses for those on site an additional eight day, and indirect costs for maintaining facilities, access roads, offices and project security for those additional eight days. With liability admitted, quantum proceeded by way of summary trial.
Decision: The defendants were jointly and severally liable to pay combined damages and pre-judgment interest of $485,506.89 to the plaintiff Fraser River. Failing payment, the Cosco Pacific is ordered to be sold with Fraser River to be paid out of the proceeds thereof.
Held: Fraser River had standing as bailee in possession to sue for both the cost of repair and business interruption. Graymar, as owner, had standing to sue for the cost of repair, but suffered no loss.
Without any contest by the defendants as to the cost of repairs, the Court accepted the cost of repairs of the T.L. Sharpe as $187,865.5. The $31,320.00 reduction in the plaintiffs’ claim arose after it was discovered in examination that the Peter D. Anderson was not idle for the whole 8 days. The defendants argued that the plaintiffs did not prove what business the Peter D. Anderson would have had and at what rate, which was said to be necessary for establishing a claim of business interruption and additional expenses with reasonable certainty in the shipping context. Yet, the defendants took no position on the cost of repairs for the Peter D. Anderson, and the Court allowed the claim less $31,320.00 for a total of $186,544.00.
As for costs to staff, the defendants argued that evidence including payrolls should have been tendered by the plaintiffs. Dismissing that argument, the Court found that on a motion for summary trial, such evidence is not needed and would be “excessive” to require evidence from the payroll master, as the project director’s affidavit contained the required evidence to support the claim. Without any cross-examination or other evidence tendered by the defendants, the Court found that no evidence of pay-stubs would be required. In reducing the overhead from 15% to 10%, the Court allowed the claim of $87,183.82 for supervisory construction and administrative staff expenses.
The claim for project security, maintenance of access roads and facilities and offices was disallowed as the Court could not say with any certainty that Fraser Rivers presence on site was extended solely due to the Costco Pacific. As the project with a joint venture between Fraser River and another contractor, it was not clear when Fraser River’s work was actually completed.
Limitation of Liability - Persons Entitled to Limit - Independent Contractors
J.D. Irving Limited v. Siemens Canada Limited, 2016 FC 287
Précis: Independent contractors of the ship owner are not entitled to limit liability pursuant to the provisions of the LLMC convention.
Facts:Irving contracted with Siemens to transport cargo by tug and barge. During the loading of the cargo at Saint John, New Brunswick, the cargo fell off the barge. MMC provided naval architectural and consulting services to Irving in relation to the loading and transport of the cargo pursuant to a contract between it and Irving. The actual services were provided by Mr. Bremner who was the owner and principal of MMC. In a decision reported at 2016 FC 69, the Federal Court held that Irving had the right to limit its liability but deferred any decision on the limitation rights of MMC and Bremner. This application was by MMC and Bremner for a determination of their rights to limit liability pursuant to the Marine Liability Act and Art. 1(4) of the Convention on Limitation of Liability for Maritime Claims, 1976, as amended by the Protocol of 1996 (collectively, the “Limitation Convention”).
Decision:MMC and Bremner are not entitled to limit their liability.
Held:Art. 1(4) of the Limitation Convention extends the right to limit liability to “any person for whose act, neglect or default the shipowner or salvor is responsible”. MMC and Bremner argue that Art. 1(4) extends the right to limit to subcontractors of the shipowner provided the shipowner is responsible at law for the actions of the independent contractor. MMC and Bremner rely upon the non-delegable obligation of a shipowner to provide a seaworthy vessel and assert that an independent contractor who renders a ship unseaworthy saddles the shipowner with liability. Thus, they say they are persons for whom Irving is responsible within the meaning of the Limitation Convention. However, a contractual relationship between two independent entities does not give rise to vicarious liability unlike the relationship between employer and employee or principal and agent. Moreover, Bremner was not an employee or agent of Irving but of MMC. The text writers acknowledge that Art. 1(4) could be interpreted broadly or narrowly. Some suggest it could be interpreted to apply to independent contractors whereas others disagree. The Travaux Préparatoires suggests that it was not intended to extend the right to limit liability to independent contractors. Accordingly, given it was not intended to extend the right to limit to subcontractors and given that the contractual relationship between Irving and MMC did not attract vicarious liability, MMC and Bremner are not entitled to limit their liability.
Comment: This case is very notable as it is believed to be the only case that has directly considered and ruled on this issue.
Limitation of Liability – Onus of Proof - Whether precise cause of the loss needs to be proven
J.D. Irving Limited v. Siemens Canada Limited, 2016 FC 69
Précis: The right of a ship owner to limit liability for damage to cargo when a barge capsized was upheld.
Facts:Siemens entered into a contract with Irving for Irving to transport heavy cargo. To effect the transport Irving chartered a barge and a tug and retained a marine consultant (“MMC”) to provide architectural and consulting services. While in the process of loading, a piebce of the cargo loaded on a transporter fell off the barge and into the harbour at Saint John, New Brunswick. Siemens commenced various proceedings in the Ontario Superior Court (for $45 million) against Irving and its various subcontractors. Irving commenced this proceeding in the Federal Court for a declaration that it was entitled to limit its liability to $500,000 under the Marine Liability Act and the Convention on Limitation of Liability for Maritime Claims, 1976, as amended by the Protocol of 1996 (collectively, the “Limitation Convention”).
Decision:Irving is entitled to limit its liability.
Held:Siemens argues that Irving and its subcontractors are not entitled to limit their liability as they acted recklessly and with knowledge that the loss of the cargo would probably result, within the meaning of Art. IV of the Limitation Convention. In essence, Siemens argues that Irving knew the barge was too small and was unsuitable to transport the cargo. It further argues that during loading the transporter on which the cargo was loaded veered off the centreline which was not marked and that Irving “knowingly deviated from the load plan in critical respects with knowledge of the consequences”. The evidence establishes that the barge used was, in fact, suitable for the intended move. Further, although the stability calculations and load plan prepared by MMC assumed a divided aft peak ballast tank, based on the expert evidence, this did not render the barge unstable or unsuitable for the planned load-out and voyage. The capsize was due to a number of contributing factors, each of which alone had a minimal effect. The contributing factors included: the cargo was loaded slightly off centre; the aft peak tank was unsealed which reduced the GM of the barge; and, hydraulic manipulation of the transporter decks which raised the centre of gravity. Some combination of these and possibly other factors caused the loss.
There is a presumptive right to limit liability and a very high burden on the party seeking to break limitation to establish that the loss resulted from: (i) the personal act or omission of the person seeking to limit liability, (ii) committed recklessly and, (iii) with knowledge, (iv) that such loss, (v) would probably result. “The contracting states to the Limitation Convention intended the fault requirement to be high resulting in a virtually unbreakable right to limit liability”. The evidence presented does not establish that Irving or its subcontractors acted recklessly and with knowledge that the loss would probably result. They did not know that the combination of factors outlined above would probably result in the loss of the cargo. They took steps to ensure the safe loading of the cargo. Siemens argues that recklessness and knowledge should be inferred from the fact that Irving cannot establish the precise cause of the loss and relies upon cases decided under the Warsaw Convention relating to the carriage of goods by air. The air carriage cases are distinguishable. Here, Irving presented a wealth of direct evidence regarding the circumstances of the loss and it is not appropriate to infer recklessness and knowledge. Article IV of the Limitation Convention requires actual conscious knowledge. It has not been established that Irving and its subcontractors had subjective knowledge that the loss would probably result from their acts or omissions. Accordingly, Irving is entitled to limit its liability.
Comment: This case is notable for its comments with respect to the very high burden upon a person attempting to break limitation, noting that it is a virtually unbreakable limitation. See also the companion decision, 2016 FC 287, for the right of the Irving subcontractors to limit their liability.
Collisions – Cutting of Submarine Cable – Liability – Limitation - Meaning of "Such Loss" - Insurance – Wilful Misconduct
Peracomo Inc. v. Telus Communications, 2012 FCA 199 2014 SCC 29
Précis: The Supreme Court of Canada overturned a decision of the Federal Court of Appeal in which a vessel operator was held to be disentitled to the benefit of limitation of liability. The Supreme Court of Canada held that limitation of liability was available to the operator who had intentionally cut a submarine cable. However, the operator’s conduct did constitute “wilful misconduct” within the meaning of the Marine Insurance Act and, as a consequence, the loss was excluded from the insurance coverage.
Facts: The respondent was the owner of two submarine cables on the bottom of the St. Lawrence River. The appellants were the corporate owner and operator of a fishing vessel. The operator snagged one of the submarine cables belonging to the respondent while fishing. The operator cut the cable with a saw believing that it was not in use. A few days later he snagged the cable a second time and did the same thing. The respondent commenced these proceedings alleging negligence and damages of approximately $1 million to repair the cable. The appellants denied liability saying insufficient notice had been given of the location of the cables and that, in any event, the cables should have been buried. The appellants further disputed the damages and claimed the right to limit liability. A further issue was whether the appellants’ insurance coverage was jeopardized by reason of “wilful misconduct” on the part of the appellants.
At trial (reported at 2011 FC 494), the trial Judge found that the cables were included in notices to mariners and were shown on navigation charts and that it was the duty of the appellants to be aware of them. The trial Judge further found that it was not practical to bury the cables and held that the sole cause of the loss was the intentional and deliberate act of the appellant operator. With respect to damages, the trial Judge held that the respondent was entitled to damages in the nature of superintendence and overhead and allowed 10% for this. The trial Judge then turned to limitation of liability and noted that to avoid limitation the respondent had to prove a personal act or omission of the appellants committed either “with intent to cause such loss” or “recklessly and with knowledge that such loss would probably result”. The trial Judge held, for the first time in Canada, that this test had been met and the appellants were not entitled to limit liability. The trial Judge said that the operator had intentionally cut the cable and that the loss was the diminution in value of the cable, not the cost of repair. The trial Judge said the operator intended the very damage that occurred but just did not think the cable would be repaired. The trial Judge further held that the operator was “reckless in the extreme” and that the loss was a certainty. Turning to the insurance issue, the trial Judge referred to authorities that established wilful misconduct “implies either a deliberate act intended to cause the harm, or such blind and uncaring conduct that one could say that the person was heedless of the consequences”. The trial Judge had little difficulty in concluding this test had been met and the insurance coverage void.
On appeal (reported at 2012 FCA 199), the Federal Court of Appeal agreed with the trial Judge on the issue of liability finding, among other things, that the appellants ought to have used up-to-date charts which disclosed the existence of the cable. A liability issue raised on appeal that does not appear to have been raised at trial was whether the operator could be jointly and severally liable with the corporate appellant. The operator argued that he should not be liable as his acts were those of the corporation. However, the Court of Appeal said that employees, officers and directors are personally liable for their tortious conduct causing property damage even when their actions are pursuant to their duties to the corporation. Concerning the limitation issue, the Court of Appeal also agreed with the trial Judge that the appellants intended to physically damage the cable and that it did not matter whether they were aware of the actual loss that would result. Finally, on the insurance issue, the Court of Appeal was not persuaded the trial Judge had made an error in concluding that the conduct of the appellants was "a marked departure from the norm and thus misconduct". Further, the Court of Appeal agreed that this misconduct was the proximate cause of the loss. The appellants appealed to the Supreme Court of Canada. There were three issues on the appeal:
1. Is the operator personally liable?
2. Are the appellants entitled to limit their liability?
3. Was the loss caused by wilful misconduct such that it is excluded from coverage under the insurance policy?
Decision: Appeal allowed, in part. The appellants were entitled to limit liability but the loss is excluded from the insurance coverage.
(1) The Federal Court of Appeal correctly held that the operator was personally liable even though he was carrying out his corporate duties.
(2) The Federal Court of Appeal took too narrow a view of the intent requirement under art. 4 of the Convention on Limitation of Liability for Maritime Claims. The Federal Court of Appeal held that if the operator knew he was cutting a cable that the intent requirement is satisfied. This undermines the Convention’s purpose to establish a virtually unbreakable limit on liability and does not accord with its text. The conduct barring limitation is expressed in restrictive language. The person is entitled to limit liability unless it is proved that “the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result”. There is some dispute in the authorities as to how specifically the loss must have been intended. Some authorities say the “very loss” intended must have resulted. Other authorities say it is sufficient if the resulting loss was the “type of loss” intended. We do not have to take a firm position on this issue as, on either view, the appellants are entitled to limit their liability. The trial Judge found as a fact that the operator thought the cable was useless. The operator did not think his actions would damage someone’s property or necessitate the repair of the cable. Therefore, there was neither “the intent to cause such loss” or “knowledge that such loss would probably result”.
(3) The policy of insurance covered the appellants in respect of their liability for damage to any fixed or movable object arising from an accident or occurrence. The policy was subject to s.53(2) of the Marine Insurance Act which excludes coverage for any loss attributable to the “wilful misconduct” of the assured. The standard of fault under s. 53(2) is not the same as the standard under the Convention. Both the purposes and the texts are different. The essence of wilful misconduct includes not only intentional wrongdoing but also conduct exhibiting reckless indifference in the face of a duty to know. The findings of fact by the trial judge make it clear that the operator’s conduct constituted wilful misconduct. He had a duty to be aware of the cable and “he failed miserably in that regard”. His conduct exhibited a “lack of elementary prudence”. His actions were “far outside” the range of conduct expected of a person in his position. He was aware he was cutting a submarine cable and had knowledge of the risk that he could be cutting a live cable. His conduct is consistent with indifference to the risk in the face of his duty to know. The fact he believed the cable was not in use is beside the point. “To hold otherwise is to conflate recklessness with intention.” Wilful misconduct does not require either intention to cause the loss or subjective knowledge that the loss will probably occur. “It requires simply misconduct with reckless indifference to the known risk despite a duty to know.”
Comment: This is obviously a critically important case on limitation of liability and what is required to actually break limitation. The decision confirms that limitation under the LLMC convention 1976 is virtually unbreakable.
Tug and Tow - Vicarious Liability of Vessel for Damage caused by Tug - Collisions - Limitation of Liability
Grieg Shipping A/S v. Fortune Marine Ltd. (The Dubai Fortune), 2012 FC 1110 2013 FCA 218
Précis: The Federal Court of Appeal confirmed the trial judgment that, in the circumstances, the vessel was not vicariously liable for the negligent acts of the master of the tug.
The ship “Star Hansa” was safely moored at her berth when her propeller was struck by the tug “Tiger Shark 2”. At the time, the “Tiger Shark 2” was one of three tugs assisting in the berthing of the “Dubai Fortune”. The “Dubai Fortune” was under the command of a compulsory pilot. As a consequence of the incident the plaintiff, the owner of the “Star Hansa” brought proceedings claiming damages of $2.7 million from the owner of the “Dubai Fortune” as well as the owner of the three tugs. The plaintiff and the owner of the tugs settled the action as between them by the payment of the limitation fund of $500,000 and the proceedings against the tugs were discontinued. The settlement was conditional on the plaintiff being able to pursue the claim against the owner of the “Dubai Fortune” on the basis that the “Dubai Fortune” was vicariously liable for the negligence of the Master of the “Tiger Shark 2”. It was admitted that there was no negligence on the part of the pilot and that the “Dubai Fortune” was entitled to limit its liability. The only issues were whether the “Dubai Fortune” was vicariously liable for the negligence of the Master of the “Tiger Shark 2” and, if so, whether the limitation fund was to be calculated on the basis of the tonnage of the “Dubai Fortune” or that of the “Tiger Shark 2”. At trial (2012 FC 1110) the action was dismissed. The trial Judge held the imposition of vicarious liability requires justification which, in the case of an employer-employee relationship, is founded in the control the employer has over the manner in which the employee does his work. This control test applied to tug and tow cases and the question of whether the tug or tow has control was held to be a question of fact. The focus of the inquiry is the relevant negligent act and who was entitled to give orders or directions as to how the work should be done to prevent it. The trial Judge said in this case the pilots gave only general orders to the tugs and gave no orders at all to the “Tiger Shark 2”. The negligent act was the manner in which the “Tiger Shark 2” was manoeuvred. The trial Judge said the evidence was overwhelming that the control test had not been made out. As the “Dubai Fortune” was not vicariously liable for the negligence of the “Tiger Shark 2”, the trial Judge did not need to consider the limitation issue. The Plaintiff appealed.
Held: Appeal Dismissed.
Decision: There was no reviewable error on the part of the trial Judge.
Limitation of Liability - Jurisdiction - Concurrent Cases - Stay of Limitation Proceedings - Establishment of Limitation Fund - Enjoining Superior Court
Siemens Canada Limited v. J.D. Irving, Limited, 2011 FC 791 2012 FCA 225
Précis: The Federal Court of Appeal upheld the decision of the trial Judge enjoining proceedings in a provincial superior court while a limitation action was proceeding.
Two steam turbine rotors were dropped into the waters of the harbour of St. John, New Brunswick in the course of being loaded onto a barge for transport. Siemens, the owner of the turbines, commenced proceedings in the Ontario courts for approximately $45 million against the carrier and a naval architect who provided consulting services to the carrier. The carrier and naval architect brought this action in the Federal Court for a declaration that their liability was limited to $500,000. Siemens brought applications (1) for an order staying the limitation proceedings on the basis that its claims were not governed by Canadian maritime law and the Federal Court was without jurisdiction; (2) for an interlocutory stay pursuant to s. 50 of the Federal Courts Act arguing that the Ontario proceedings were broader in scope than the Federal proceedings and that there was a risk of inconsistent findings if both proceedings were allowed to continue; and (3) for a final stay on the basis the carrier and naval architect were not entitled to limit their liability pursuant to Art. 4 of the Convention on Limitation of Liability for Maritime Claims. (Article 4 provides that a defendant is not entitled to limit liability if the loss resulted from the personal act or omission of the defendant “committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result”.) Siemens relied upon an expert report for evidence that the carrier was reckless. The motions Judge dismissed all of Siemen’s applications. She held that it was “clear” that “the nature of Siemens’ claim is essentially maritime law” and that the Federal Court accordingly had concurrent jurisdiction with the Ontario Superior Court. Concerning the application for an interlocutory stay, the motions Judge noted that a stay order was discretionary and that the appropriate test was whether the continuation of the action would cause prejudice to Siemens and whether a stay would cause an injustice to the carrier and naval architect. She held that Siemens had not demonstrated that it would be prejudiced if the stay was not granted. On the other hand, the motions Judge expressly found that a stay would work an injustice to the carrier and the architect who had “a presumptive right to limit liability”. On the issue of the final stay, she held it was premature to determine such an issue and that a full trial would be required before a party could be denied the right to limit liability.
The carrier also brought an application for an order enjoining the Ontario action pursuant to s. 33(1)(c) of the Marine Liability Act. The motions Judge noted that the language of s. 33 was very broad and that the availability of the enjoining remedy illustrated “the value attached to the importance of adjudicating all issues relevant to the constitution and distribution of a limitation fund in one forum”. She said the large discrepancy between Siemens’ damage claim and the limitation amount was a significant factor in favour of enjoining the Ontario action. She also noted that there would be significant cost savings for all parties if the Ontario action was enjoined. Ultimately, having regard to all the facts, she concluded that it was appropriate to enjoin the Ontario proceedings and have all issues determined in the Federal Court. Siemens appealed.
Decision: Appeal dismissed.
Held: With respect to the issue of the Federal Court’s jurisdiction, the motions Judge made no error of law in concluding the Federal Court had jurisdiction. The grant of maritime jurisdiction to the Federal Court is very broad. “It is indisputable that Siemens’ claim arises from the movement of goods onto a ship...Siemens’ claim against Irving and MMC is clearly of a maritime nature.” With respect to the applications for stays, Siemens argued the Federal Court had no power to enjoin until the right to limit liability had been determined. This argument was rejected as being directly contrary to section 33(1) of the Marine Liability Act, the raison d’etre of which “is clearly to allow a shipowner against whom a claim has been made or where one is apprehended to have the Federal Court determine whether or not he can limit his liability”. The Court next rejected an argument that the Federal Court cannot enjoin a proceeding where a limitation fund is not needed or a vessel is not arrested saying that there was no merit in this argument. Finally, the Court considered the appropriate test applicable under s.33(1) of the Marine Liability Act and concluded that the test is that of “appropriateness”, a broad and discretionary test entitling the court to make an order enjoining proceedings where it is of the view that it would be appropriate. The motions Judge correctly applied this test when enjoining the Ontario proceedings. The circumstances that lead to the conclusion the motions Judge made no error include: the Federal Court is the only court that can adjudicate the right of the defendants to limit their liability; the defendants have a presumptive right to limit their liability; the limitation issue is the “fundamental issue” between the parties; and the dispute will likely be resolved when the right to limit liability is determined. In these circumstances, it would not be reasonable to permit the Ontario action to proceed and there is no prejudice to Siemens in temporarily preventing it from continuing the Ontario action.
Limitation of Liability - Pleasure Craft - Collisions - Interest - Passengers
Buckley v. Buhlman, 2012 FCA 9
Précis: The Federal Court of Appeal upheld a decision of the Federal Court wherein it was determined that the limits of liability under the MLA applicable to “passengers” apply only to persons on board the ship seeking to limit liability.
The plaintiffs brought this action for limitation of liability under Part 3 of the Marine Liability Act. The plaintiffs were the owners of a fishing lodge that offered their guests the use of boats and motors. The defendants were a family of four who were guests at the lodge. During the defendants’ stay at the lodge they were involved in a collision between two of the plaintiffs’ boats. The first boat was operated by one of the plaintiffs and had two of the defendants as passengers. The second boat was operated by one of the defendants with the fourth defendant as a passenger. The defendants in the second boat were injured. The main issue in the case was whether the applicable limitation was under s. 28 or s. 29 of the MLA. At the time s. 29 applied to “passengers” of ships of less than 300 gross tons and provided a limit of liability of at least 2 million SDRs (approximately CDN$3 million). Section 28 applied to all ships of less than 300 gross tons except passenger claims under s. 29 and provided for a limit of liability of $1 million. (The limitations of Part 4 of the MLA, which implements the Athens Convention, were not applicable as the defendants were not passengers “under a contract of carriage”.) The term “passenger” is a defined term in Part 3 of the MLA and includes a person carried on board a vessel “operated for a commercial or public purpose”. The parties apparently presented arguments relating to whether the vessels were used for commercial purposes. However, at trial, the Judge pointed out that this argument was misplaced. The trial Judge noted that the two defendants who were injured were not aboard the vessel operated by one of the plaintiffs. Therefore, regardless of whether the vessels were used for a commercial purpose, the injured defendants were not passengers vis-a-vis the plaintiffs and the s. 29 limitation did not apply. Accordingly, the limitation applicable was $1 million under s. 28. The trial Judge further dealt with a subsidiary issue of whether the limitation amount included interest and costs and held that it did not. The defendants appealed to the Federal Court of Appeal arguing that the limitation should have been under s. 29.
Decision: Appeal dismissed.
Held: The appellate Court agreed that s. 29 of the MLA had no application as the injured parties were not on board the first boat. The Court noted that Art. 7 of the Convention on Limitation of Liability for Maritime Claims, from which s. 29 of the MLA is derived, favoured the interpretation that s. 29 applies only to persons on board the ship seeking to limit liability. A cross-appeal from the trial Judge’s decision that the limitation amount was exclusive of interest and costs was abandoned. The Court said this was a question to be left for another day.
Comment: This case concerns sections 28 and 29 of the Marine Liability Act but the Reasons for Judgment refer to the section numbers as they existed in 2006. This can be confusing for anyone familiar with the current numbering because the section numbers have since been transposed. What was s. 28 is now s. 29 and vice versa. To be consistent with the Reasons and to avoid adding to the confusion, I have decided to use the 2006 section numbers in this summary
Jurisdiction – Personal Injury During Boat Trailering - Limitation of Liability
Isen v. Simms, 2006 SCC 41
The Defendant was injured when a bungee cord that was being used to secure the engine cover of a small pleasure boat slipped from the hands of the Plaintiff shipowner and struck the Defendant in the eye. At the time of the incident the pleasure boat had just been removed from the lake and was on a trailer being prepared for road transportation. The Defendant commenced proceedings against the Plaintiff in the Ontario Supreme Court for damages in excess of $2,000,000. The Plaintiff commenced this action in the Federal Court to limit his liability to $1,000,000 and brought this application under Rule 220(1)(c) of the Federal Court Rules to determine a question of law, namely: whether the facts and circumstances constituted “claims arising on any distinct occasion involving a ship with a tonnage of less than 300 tons” pursuant to section 577(1) of the Canada Shipping Act. The Defendant contested both the jurisdiction of the Federal Court and the substantive relief sought. The Federal Court and the Federal Court of Appeal both held that the claim was a maritime law claim that was subject to the limitation of liability. On appeal to the Supreme Court of Canada, the Supreme Court held that the matter was governed by provincial law, that the Federal Court was without jurisdiction and that the limitation was not applicable. In reaching this conclusion Rothstein J. noted that Parliament did not have jurisdiction over pleasure craft per se and that the Court must look at the allegedly negligent acts “and determine whether that activity is integrally connected to the act of navigating the pleasurecraft on Canadian waterways such that it is practically necessary for Parliament to have jurisdiction over the matter”. Although he agreed with the Federal Court of Appeal that launching of pleasurecraft and their retrieval from the water would be within Parliament's jurisdiction over navigation, he did not agree that the securing of the engine cover with a bungee cord was part of the retrieval process. He stated that the securing of the engine cover had nothing to do with navigation and everything to do with preparing the boat to be transported on provincial highways.
Personal Injury – Fishing Lodge – Defect – Failure to Warn – Limitation
Cuppen v. Queen Charlotte Lodge Ltd. et al, 2006 BCCA 443
The Plaintiff was a guest at the Defendant's fishing lodge. He was provided with a fishing boat by the Defendant and was injured while operating the boat. The trial Judge found that the boat veered suddenly and dramatically through no fault on the part of the Plaintiff. The Plaintiff was thrown against the starboard side of the boat and suffered a serious break to his right femur. The trial Judge found that the accident was caused by a defect in the boat but was not able to determine the particular defect and was therefore not able to conclude that the Defendant was negligent in equipping the boat with a defective steering system. The trial Judge further found, however, that a number of complaints had been made to the Defendant about the steering systems by previous guests and held that the Defendant was liable for failing to properly warn the Plaintiff about possible problems with the steering and for failing to take steps to address the complaints. A further issue in the case was whether the applicable limitation of liability was that contained in Part 3 of the Marine Liability Act (Limitation of Liability for Maritime Claims) or Part 4 of the Marine Liability Act (Carriage of Passengers). The trial Judge held that the limitation in Part 4 only applied where there was a contract of carriage and that in this case there was no such contract, the Defendant having merely provided the Plaintiff with a boat to fish. Accordingly, the applicable limitation was $1 million as provided in Part 3 of the Marine Liability Act. In result, the Plaintiff was awarded damages of an amount in excess of $300,000. An appeal by the Defendant to the Court of Appeal for British Columbia was dismissed on the grounds that the arguments on appeal related primarily to questions of fact.
Limitation of Liability – Personal Injury – Fault or Privity
Vukorep v. Bartulin, 2005 BCCA 142
In July 1998 the Plaintiff was injured on board the Defendant's pleasure craft when the vessel hit a wave from a passing ferry. At the time of the accident the vessel was being operated by the Defendant who was also the owner. The Defendant brought this application for a determination of whether he could limit his liability pursuant to s. 575 of the Canada Shipping Act. The trial Judge dismissed the application on the grounds that the Defendant failed in his capacity as owner to install after market handholds for passengers and that this brought the Plaintiff's injury within his “actual fault or privity” as owner. On appeal, the British Columbia Court of Appeal held that the trial Judge had erred by not considering whether the absence of handholds rendered the pleasure craft unseaworthy. The Court found as a fact that the installation of such handholds is not a common practice and accordingly held that the vessel was seaworthy. In the result, the appeal was allowed and the Defendant was entitled to limit his liability. (Note: The limitation provisions considered in this case were based on the 1957 Limitation Convention which was replaced in Canada on 10 August 1998 by Part 3 of the Marine Liability Act. The new provisions are based on the 1976 Convention on Limitation of Liability for Maritime Claims and the 1996 Protocol.)
Collisions – Liability of Owner – Limitation
Dixon v. Leggat, 2003 CanLII 21626 (ON CA)
A pleasure craft ran into a rock face in Lake Rosseau, Ontario. As a result of the accident two passengers were injured, one fatally. These actions were commenced against the owner of the pleasure craft and the driver of the pleasure craft, the owner’s brother. At trial, the trial Judge found the driver liable in that he was operating the vessel at an unsafe speed, failed to maintain a proper lookout, and failed to properly navigate the vessel. The trial Judge also held the Canada Shipping Act, in particular s. 566, created a statutory liability on the owner of the boat. On the issue of limitation, the trial Judge found that the operator could limit his liability but that the owner could not. The trial Judge's finding with respect to the liability of the owner of the vessel was appealed. The Ontario Court of Appeal held that the trial Judge erred in his interpretation of s. 566 of the Canada Shipping Act. The Court of Appeal noted that this section merely provided for joint and several liability where there were joint tort-feasors and did not impose liability where none otherwise existed. The Court of Appeal then considered other sections of the Canada Shipping Act also referred to by the trial Judge but held that neither individually nor collectively did they impose a statutory liability on the owner of a boat. The Court of Appeal did, however, confirm that an owner could be liable on the principle of respondeat superior or on the basis of ordinary principles of tort law. In result, the Court of Appeal returned the case to the trial division for a new trial on the issue of the owner's liability.
Collisions - Limitation - Damage to Fishing Net
Capilano Fishing Ltd. v. The "Qualicum Producer", 2001 BCCA 244
This was an action for damages suffered during the 1997 herring fishery when the Defendant's vessel cut the net of the Plaintiffs' vessel. The Plaintiffs claimed damages for the net, for the value of the lost catch and for the costs of fishing licences thrown away. The Defendants denied negligence and claimed the right to limit liability. On the issue of liability the trial judge found that the Master of the Defendant vessel was negligent in that he was aware of the Plaintiffs’ vessel yet manoeuvred his vessel in a direction that ultimately led to the collision. On the matter of limitation, the trial judge found that the Defendant vessel was well equipped and had a competent Master and crew and, therefore, held that the Defendants were without “fault or privity” and entitled to limit their liability to the amount of approximately $40,000.00. On appeal, the Court of Appeal upheld the finding on liability but overturned the finding on limitation. The appeal court adopted the reasoning from North Ridge Fishing Ltd. et al. v The “Prosperity” et al.,(2000) 78 B.C.L.R. (3d) 388 and held that any owner who permits his vessel to participate in the roe herring fishery is not entitled to limit liability since the fishery compels the sacrifice of safe navigation and good seamanship. (Note: This case was decided under the old limitation of liability regime. Under the new regime the limitation amount is substantially higher ($500,000.00 for vessels under 300 tons) and the owner is entitled to limit unless the claimant establishes a personal act or omission committed with intent to cause loss, or recklessly, with the knowledge that loss would probably result.)
Limitation Proceedings - Calculation of Fund - Flotilla Principle
Canadian Pacific Railway Company v. The "Sheena M",  F.C.J. No. 1953
This action arose out of the collision between the unmanned barge, "Rivtow 901", in tow of the "Sheena M", and the Mission Railway Bridge. The Plaintiffs, the owners of the "Sheena M", brought this application for summary judgment for an order that they were entitled to limit their liability under s. 577(1)(b) of the Canada Shipping Act to $500,000.00 plus interest. The Defendant, the owner of the bridge, admitted that the collision was not caused by a "personal act or omission" or "with intent to cause such loss" or "recklessly with knowledge that such loss would probably result" and, therefore, the right of the Plaintiffs to limit liability was not in dispute. The sole issue was whether the limitation fund should be calculated on the tonnage of the tug, "Sheena M", alone or whether it should be calculated on the combined tonnage of the tug and tow. The leading Canadian case on this issue was recognized by all to be the decision of the Supreme Court of Canada in The "Rhone" v The "A.B. Widener",  1 S.C.R. 497, in which the Supreme Court affirmed that the limitation fund should be calculated on the combined tonnage of the tug and tow provided the tug and tow were in common ownership (the "flotilla principle"). In the absence of common ownership and where the barge was a "dumb barge", the fund was to be calculated on the basis of the tonnage of the tug alone. However, the limitation of liability regime in effect at the time of the decision in The "Rhone" was essentially that contained in the 1957 Convention on Limitation of Liability for Marine Claims. That regime was repealed by C.6 Statutes of Canada 1998, which implemented the 1976 Convention on Limitation of Liability for Marine Claims, with some modifications. Counsel for the Defendant argued that these changes to Canada’s limitation of liability regime had overtaken the decision of the Supreme Court of Canada in The "Rhone" and that the new regime should be interpreted as requiring the tonnage for limitation purposes to be calculated on the basis of the combined tonnage. Counsel for the Defendant pointed specifically to the new definition of "shipowner" in s. 576(3) of the Canada Shipping Act which includes "any person having an interest in or possession of a ship" and urged that by virtue of this definition the owners of the "Sheena M" were also owners of the "Rivtow 901". The Court, however, held that the new definition of "shipowner" was merely a substitution for former s. 577 of the Canada Shipping Act which had similarly extended the limitation of liability provisions to, inter alia, "any person having an interest in or possession of a ship". The Court therefore concluded that the legislation before it was essentially the same as was before the Supreme Court of Canada in The "Rhone". Counsel for the Defendant next argued that the "flotilla principle" was no longer valid because the new limitation of liability regime did away with concepts of "causative negligence" and "common ownership" . The Court also rejected this argument saying that the 1998 amendments showed no clear intent on the part of Parliament to change the existing Canadian "flotilla principle". In the result, the limitation fund was calculated on the basis of the tonnage of the tug alone.
Collisions - Liability - Limitation
North Ridge Fishing Ltd. et al. v. The Prosperity, 2000 BCSC 1124
This action arose out of a shotgun opening in the roe herring fishery, an event described by the Court as "a most unusual maritime adventure where, from an opening ‘gun’, many vessels -sometimes dozens- would set their nets at speed in very close proximity during a short period of time". During the course of the opening the Defendant vessel "Prosperity" cut the net of the Plaintiffs’ vessel "Savage Fisher" with the result that the Plaintiffs allegedly lost a substantial tonnage of fish. The issues in the case were who was at fault, damages and limitation of liability. On the issue of fault the Court first considered whether Rule 15 of the Collision Regulations (the crossing rule) had any application. The Court held this rule did not apply as the vessels were not actually crossing and neither master considered that they were. The Court next considered Rules 5 (look-out) and 7 (risk of collision). The Court held that there was an insufficient look-out on the Plaintiffs’ vessel which deprived the master of the ability to determine whether a risk of collision existed. With respect to the "Prosperity" the Court held that there was a sufficient look-out of two persons in the wheelhouse but that the master of the "Prosperity" failed to go astern or stop when he should have. The Court ultimately apportioned liability 75% to the Plaintiffs and 25% to the Defendants. Regarding the issue of damages, and specifically the tonnage lost as a result of the net cutting, the Court held that the best approach was to use the average catch of the vessels involved in the opening. Finally, the Court considered the issue of limitation of liability, which was recognized as probably a moot point given the apportionment of liability and assessment of damages. The Court noted that there were two prior decisions that had allowed limitation of liability under similar circumstances and stated that it would have followed those decisions and allowed limitation, if necessary. It is noteworthy, however, that in the absence of precedent the Court indicated that it would not have allowed the Defendants to limit liability. The Court indicated that the decision of an owner to engage in a shotgun herring opening would be sufficient by itself to disentitle the owner to limitation. (Note: In supplementary reasons issued December 6, 2000,  B.C.J. No. 2443, the Court dealt with the issue of costs. The Court awarded the Plaintiffs 25% of their party and party costs and awarded the Defendants 75% of their pre-trial costs (taxed at 70% of special costs) and 75% of their costs from the first day of trial. The special cost award in respect of pre-trial costs was because of delay by the Plaintiffs in the pre-trial proceedings.)
Limitation Proceedings - Stay of Action
Canadian Pacific Railway Company v. The "Sheena M" et al.,  4 FC 159
This is another action arising out of the collision between the barge "Rivtow 101" in tow of the "Sheena M" and a railway bridge. As a result of the collision $5 million in damage was caused to the bridge. Two actions were commenced following the collision; one by the owners of the "Sheena M" for limitation (the "limitation action") and the other by the Plaintiff for the damages occasioned by the collision (the "liability action"). This was an application by the owners of the "Sheena M" to stay the liability action pending the outcome of the limitation action and an application by the Plaintiff to consolidate the two actions. The court refused consolidation on the grounds that the two actions were incompatible for consolidation. The court noted that there were different issues, a conflicting burden of proof, and different standards of conduct at issue in the two actions. The court further noted that the limitation action should border on a summary procedure whereas the liability action would be a complex piece of litigation.
The Plaintiff raised two preliminary objections to the jurisdiction of the court to hear the stay application. First, the Plaintiff argued that the court was functus by reason of res judicata. This argument was based on the fact that the court had earlier made an order under section 581 of the Canada Shipping Act enjoining the Plaintiff and anyone else from commencing or continuing proceedings against the "Sheena M" interests in any court other than the Federal Court. The court held that it was not functus because enjoining an action and staying an action are two different proceedings and the same question is not decided on the two motions. The second preliminary objection raised by the Plaintiff was that section 581 of the Canada Shipping Act prevailed over section 50 of the Federal Court Act and section 581 did not provide for a stay. The court noted that the wording of section 581 had changed over time and that earlier versions specifically referred to a stay of proceedings. However, the court found that the drafters of the present wording of section 581 had enjoinment in mind and not stay. The court concluded that there was no conflict or tension between section 581 of the Canada Shipping Act and section 50 of the Federal Court Act. They dealt with different concepts.
With respect to the merits of the stay application, the court considered whether the test for granting a stay was to be governed by the two part test of Mon-Oil v Canada, (1989) 27 F.T.R. 50 (i.e. that the continuation of the action would cause prejudice or injustice to the applicant and not mere inconvenience and that a stay would not be unjust to the other side) or the three part test of RJR MacDonald Inc. v Canada,  1 S.C.R. 311 (i.e. that there was a serious issue to be tried, that the applicant will suffer irreparable harm if the stay is not granted, and that the balance of convenience favours the stay). The court held that the two part test was the appropriate one where the court is asked to stay its own proceeding whereas the three part test is appropriate for stays of tribunals or stays pending appeal. Applying the two part test, the court held that it would be prejudicial to the applicants if the stay was not granted since the liability action would be lengthy and complex and would result in the shutting down of the applicant's operations. The court further held that it would be unjust if the limitation procedure under the 1976 Convention was not allowed to unfold as it should which would result in reduced litigation. The court further held that there was no prejudice to the Plaintiff in ordering the stay as the limitation proceeding might do away with the need for the liability action and the Plaintiff would have full discovery and full ability to do whatever investigations and hire whatever experts they required.
Limitation Proceedings - Pleadings
Bayside Towing Ltd. v. Canadian Pacific Railway Company,  3 FC 127
This was a limitation action by the owner of the tug "Sheena M" in relation to a collision between the barge "Rivtow 101" in tow of the "Sheena M" and a railway bridge owned by the Defendant. The Defendant challenged the right of the Plaintiff to limit liability pursuant to the 1976 Convention. The Plaintiff brought this application to strike out portions of the Statement of Defence. The court ordered that those portions of the Statement of Defence referring to faults allegedly committed by the owners of the tow be struck on the grounds that they were not relevant to whether the tug owner could limit liability. The court also struck out those portions of the Statement of Defence alleging mere negligence on the grounds that negligence has nothing to do with the test set out in Article 4 of the Convention for breaking limitation (i.e. personal act or omission committed with intent to cause loss, or recklessly, with the knowledge that loss would probably result). The court also struck out pleas of res ipsa loquitur, on the grounds that it was no longer applicable in Canada, and breach of statutory duty, on the grounds that it was not a recognized tort and was to be considered in the context of the general law of negligence. The court refused to strike out allegations of "wilful defaults", noting that concepts of wilfulness may be close to the test under the Convention. The court further refused to strike out an allegation that the tonnage for limitation purposes should be calculated on the combined tonnage of the tug and tow. The court doubted that the plea could succeed in the absence of common ownership of the tug and tow but it was not something that plainly and obviously would fail.
Right of Operator to Limit - Conversion Date
Cox v. Brown, 1996 CanLII 1463
This was a summary trial for a declaration that the Defendant was entitled to limit her liability under the Canada Shipping Act. The facts were that a small motor boat operated by the Defendant struck a swimmer in Okanagan Lake. At the time, the Defendant was operating the boat without the permission of the owner, the Defendant's father. (An action against the owner was dismissed by consent as a result of a summary trial application brought by the owner.) The Plaintiff argued that as the Defendant did not have the permission of the owner to operate the vessel she was not "acting in the capacity of master" and was therefore unable to limit. The Court, however, held that it was bound by the decision of the British Columbia Court of Appeal in Whitbread v Walley, (1988) 26 B.C.L.R. (2d) 120, a case in which the operator was entitled to limit notwithstanding that the vessel was being operated without the permission of the owner. (This case was, of course, appealed to the Supreme Court of Canada  2 S.C.R. 1273, on the issue of whether operators of pleasure craft generally could limit liability.) A second issue in this case was the appropriate date for converting gold francs to dollars where there had been no payment into Court. The Court held that the appropriate date was the date of judgment.
Towage Conditions - Limitation of Liability - Right of Tug to Limit
Meeker Log and Timber Ltd. et. al. v. The Sea Imp VIII, 1996 CanLII 2229
The British Columbia Court of Appeal rendered a short oral judgment from the bench dismissing an appeal and cross-appeal from the decision of Mr. Justice Peter Lowry, reported at 1 B.C.L.R. (3d) 320. The issues concerned the interpretation of standard towing conditions and limitation of liability pursuant to the Canada Shipping Act. The standard towing conditions were composed of multiple parts each of which contained a slightly different exclusion. They also incorporated parts of the Carriage of Goods by Water Act. The plaintiffs argued that the conditions when read as a whole, and with or without the incorporated provisions of the Carriage of Goods by Water Act, were so inconsistent and ambiguous that no effect could be given to them. The Trial Judge agreed and held the conditions were of no effect. On the limitation aspect of the case, the Trial Judge held that the tug owner was entitled to limit its liability as the cause of the accident was an error in navigation which the owner could not have guarded against. Both parties appealed. The Court of Appeal agreed with the Trial Judge's reasoning and dismissed both appeals. In result, the standard towing conditions were ruled invalid but the tug owner was entitled to limit its liability.
Liability - Unsafe Speed - Anchor lights - Contributory Negligence - Limitation - Owner/Master Entitlement to Limit
Conrad v. Snair, 1995 CanLII 4175
This case involved a collision at night between a Boston Whaler and an anchored unlit sailboat. As a result of the collision, a passenger of the Boston Whaler was seriously injured. The issues concerned the liability for the collision, contributory negligence, and limitation of liability. Both the trial Judge and the Court of Appeal found that the driver of the Boston Whaler was entirely at fault for the collision. The driver was found to have been traveling at an excessive rate of speed and failed to maintain a proper lookout. With respect to the sailboat, the trial Judge and the Court of Appeal held that there was no presumption of fault because of the failure to exhibit an anchor light. They further found that there was a local custom to not display anchor lights. The driver of the Boston Whaler also argued that his passenger was contributorily negligent in that she knew of his propensity to drive his boat in a particular manner. The Court of Appeal held that even if the master was known to be reckless, that would be an insufficient basis for a finding of contributory negligence. Although in light of these findings, the Court of Appeal did not need to decide whether contributory negligence on the part of the plaintiff would be a complete bar to damages, it nevertheless gave the opinion that if the Plaintiff had been negligent, the Provincial contributory negligence statute would apply to apportion damages. Finally, the driver of the Boston Whaler argued that he was entitled to limit his liability under the Canada Shipping Act because the accident occurred while he was acting in his capacity as master and not owner of the vessel. In lengthy reasons the Court of Appeal analyzed the problems that arise where the master is also the owner. Ultimately, the Court agreed with the trial Judge that the owner/master of the Boston Whaler was at fault as owner in failing to ensure his alter ego, the master, traveled at a safe speed.
Owner/Master Entitlement to Limit
Daniele v. Creglia, No. 4028-93, (Ont. Ct. Gen. Div.)
This was an action by a Plaintiff/passenger against an owner/master for damages for personal injury suffered when a small vessel crashed into a breakwater. The Court held that the owner/master was clearly negligent in travelling at an excessive rate of speed and in not maintaining a proper lookout. The only real issue was whether the owner could limit his liability pursuant to the Canada Shipping Act. The Court held that the Defendant as owner was not entitled to limit his liability because, knowing the practice and intention of his alter ego, the master, he failed to ensure his alter ego would travel at a safe speed.