Pollution (Ship Source)
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.
Marine pollution is predominantly now governed by statute law but the common law can still have some application. The torts of nuisance, trespass and negligence and the Rylands v Fletcher doctrine still can have some application.
The main federal statutes that address pollution from ships are:
- Canada Shipping Act 2001, Parts 8 and 9
- Marine Liability Act, Parts 6 and 7
- Canadian Environmental Protection Act, 1999
- Fisheries Act
- Migratory Birds Convention Act, 1994
In addition, provincial pollution statutes may apply, although this is not clear.
Canada Shipping Act 2001, Parts 8 and 9
Parts 8 and 9 of the Canada Shipping Act do a number of things. Specifically:
- Prescribed vessels (oil tankers of 150 or more gross tons, other vessels of 400 gross tons or more that carry oil as cargo, groups of vessels (barges) with combined tonnage of 150 or more tons that carry oil) are required to have an arrangement with a pollution response organization and to carry pollution insurance.
- Prescribed oil handling facilities must have oil pollution prevention and emergency plans and an arrangement with a pollution response organization.
- Vessels are prohibited from discharging a pollutant (including oil and oily mixture, noxious liquid, sewage and sludge and garbage.
- Vessels are required to report the discharge of a pollutant.
- Pollution Prevention and Response Officers are authorized to board, inspect and detain vessels and may require security be posted before a vessel is allowed to leave.
- If a vessel or oil handling facility has discharged, is discharging or is likely to discharge a pollutant, the Minister may take measures to remedy, minimize or prevent pollution damage including the removal, sale, or destruction of vessel or the Minister may direct any person or vessel to take measures to remedy, minimize or prevent pollution (in which event compensation shall be paid to such person or vessel [except the polluter] by the Crown).
- If a vessel or person contravenes a provision of the Act, they are guilty of an offence and liable to a maximum penalty of $1 million and/or 18 months imprisonment (some provisions carry a lesser penalty). In some cases, more frequently of late, Administrative Monetary Penalties are applied instead of the offence procedure.
Marine Liability Act, Parts 6 and 7 (Oil and HNS)
The Marine Liability Act does the following:
- Enacts the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 and the International Convention on Civil Liability for Oil Pollution Damage, 1992 ( and the Supplementary Fund and Supplementary Fund Protocol), which provide for civil liability and certificates of financial responsibility and establish limitation amounts.
- Continues the Ship Source Oil Pollution Fund which is required to pay prescribed claims for oil pollution damage from a ship and authorizes the Administrator to commence subrogation proceedings against the wrongdoer.
- Provides for civil liability
against the owner of the ship for oil pollution damage caused by a discharge of oil from the ship. The owner is liable for clean-up costs and costs of measures to reinstate the environment. The liability is not dependent on proof of fault or negligence. The owner has very limited defences. The limitation period applicable to oil pollution damage claims from a ship is from three to six years depending on whether there was more than one occurrence.
The Marine Liability Act will, at a future date, also enact and include the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 2010, concluded at London on April 30, 2010 (the "HNS convention"). The HNS Convention will be addressed in Part 6 of the MLA and included as Schedule 9 to the MLA. The HNS Convention establishes a civil liablity and compensation regime similar to the International Convention on Civil Liability for Oil Pollution Damage but in respect of hazardous and noxious substances. The shipowner's liability under the HNS Convnention is limited to 100 million Special Drawing Rights (SDR) for bulk HNS and 115 SDRs for packaged HNS. The HNS Convention is not yet in force internationally and is therfore not yet part of Canadian maritime law.
Canadian Environmental Protection Act, 1999
The Canadian Environmental Protection Act, 1999 is a comprehensive anti-pollution statute that is based upon the "polluter pays" principle. It creates an offence for, among other things, the disposal of pollutants at sea. The directors and officers, Master, Chief Engineer and ship owner are all required to take reasonable care to ensure compliance with the Act and are deemed to be party to and guilty of any offence. The maximum penalty is $300,000 and/or imprisonment of 6 months if the Crown proceeds summarily or $1 million and/or imprisonment of 3 years if the Crown proceeds by indictment. In the event of a spill, any person who owns or has charge, management or control over the substance or causes or contributes to the spill is jointly and severally liable to pay clean-up costs and costs of restoring the environment. The defences under the Act are limited but a due diligence defence is available for some offences.
The Fisheries Act prohibits the deposit of a "deleterious substance" in waters frequented by fish and creates both civil and criminal liability for such a deposit. The offence is subject to a maximum penalty of $300,000 and/or imprisonment of 6 months if the Crown proceeds summarily or $1 million and/or imprisonment of 3 years if the Crown proceeds by indictment. Civil liability is absolute and does not depend on negligence. There are again very limited defences.
Migratory Birds Convention Act, 1994
The Migratory Birds Convention Act, 1994 prohibits the deposit of a substance that is harmful to migratory birds in waters frequented by migratory birds by any person or vessel and creates criminal liability for such a deposit. The offence is subject to a maximum penalty of $300,000 and/or imprisonment of 6 months if the Crown proceeds summarily or $1 million and/or imprisonment of 3 years if the Crown proceeds by indictment. Minimum fines of $500,000 and $100,000 are also created for vessels over 5000 tonnes. There is a due diligence defence available.
The database contains 31 case summaries relating to Pollution (Ship Source). 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.
Please note that to facilitate easier browsing and indentification of a relevant case on small devices, we have truncated the summaries which requires you to click "more" to view a full summary. If you wish to view these summaries without truncation, click here
Value of the Vessel - Pendente Lite - Buyer - Creditors - Appraisal
Canada (Ship-Source Oil Pollution Fund) v. Cormorant (Ship), 2019 FC 977
Précis: The Federal Court refused a motion for judicial sale of an arrested vessel pendente lite where the sale would not abate the costs or liabilities of its arrest.
Facts: The Port of Bridgewater (the “Port”) sought an order allowing the ex-Canadian naval vessel Cormorant (the “Vessel”) to be sold pendente lite, to authorize the Port to take any reasonable step to effect that sale, and for the proceeds to be paid into Court less legal and Marshall’s fees to satisfy claims that may be made following notification to potential claimants. The Vessel was subject to claims by both the Port and the Administrator of the Ship Source Oil Pollution Fund following its sinking and subsequent pollution in 2015. Ownership of the Vessel was a live issue. In 2009 the Vessel was sold through judicial sale by the Court to a Nevada-based corporation whose president was a one Neil Hjelle, which then attempted recommissioning of the Vessel. In 2013 those recommissioning efforts ceased, and Mr. Hjelle sold the Vessel for a sum of $10 to a Mr. Richard Welsford, acting in his capacity as a sole director of a numbered Nova Scotia limited company or as sole director of the Port. Neither the numbered company nor the Nevada based company were in good standing at the time of the sale. The Port argued that the sale was void as the Nevada company’s status had lapsed so that it was still the lawful owner until it ceased to exist, at which time the Vessel then passed in escheat to the province of Nova Scotia. The Nevada company and Mr. Hjelle argued the sale of the Vessel was valid and the ownership transferred to the either the Port or the numbered company.
The Vessel was appraised in 2017 for $40,000.00, but went on to note that it is “unlikely that the Vessel would be sold for even $40,000.00”. The parties to the motion agreed that the sale order should imposed conditions of removal of the vessel from the Port and disposed of or removed from Canada. The Port adduced no evidence of interested buyers. The Port further argued that the immediate sale of the Vessel was justified as it was a threat to navigation, the Canadian Coast Guard requested to inspect it as a “vessel of Concern” and that it appeared to be subject of the measures to remove or dismantle pursuant to the not-yet-in-force Wrecked, Abandonded or Hazardous Vessels Act (“WAHVA”). The Port, by affidavit of Mr. Welsford, stated that the sale or disposal of the vessel under WAHVA is likely to be less favourable to creditors than a sale the Port could obtain, and if the Court were to find the Port were the legal owners of the Vessel then it could be held liable for any additional costs of measures taken under WAHVA. Further deposed was that the Port harboured two other Vessels that, if the Port had obtained a writ of seizure of the Vessel, could all be marketed and towed to take advantage on an “economies of scale” basis.
The Nevada company, Mr. Hjelle and the Administrator opposed the order sought given the sale was unlikely to generate any material proceeds which would protect the creditors of the Vessel, and that the Port’s purpose in selling the Vessel would be to deflect any liability under WAHVA to the Port or the numbered company.
Decision: Motion dismissed.
Held: The Court looked to its own jurisprudence in The Essington II for guiding elements considering a sale pendente lite. In finding that no party wished to assert ownership of the Vessel, the only elements applicable were those that affect the creditors’ interests and the potential application of WAHVA as either a component of the creditors’ interest or as another “good reason” for a sale before trial. The Court had little evidence of the intrinsic value of the vessel despite the 2017 valuation report, which was concluded two years earlier and doubted that the vessel would be sold for even $40,000.00. The Court found no evidence tendered that would support the reasonable likelihood that any buyer could be found who would be willing or able to safely remove and/or dispose of the vessel, and in doing so judged unlikely that any significant proceeds can be obtained from the sale of the vessel, by auction or by private sale. More importantly, the Court was satisfied that judicial sale would deflect and displace future liabilities arising from the ownership. As WAHVA was not in force at the time of the judgment, the Court declined to opine on the Administrator’s arguments on that point.
Boom - Oil Pollution - Sank at Moorings - SSOPF
Canada (Ship-Source Oil Pollution Fund) v. M.V. Matterhorn Limited, 2019 FC 926
Précis: The Federal Court discontinued the plaintiff's action on the ground that the parties reached settlement on confidential terms out of Court.
Facts: On 10 August 2014 the uninsured, out of service tug “Matterhorn” (the “Vessel”) sank at her moorings and subsequently polluted the waters of Mount Carmel, Newfoundland and Labrador. At the time of sinking the Vessel was registered to the defendant M.V. Matterhorn Ltd., a company which purchased the Vessel n 2009, and was managed by the defendant Arctic Offshore international Inc. The sole director of M.V. Matterhorn Ltd., Mr. Dunphy, was also involved with several other defunct shipping companies, including Arctic Offshore International Inc. Another defendant, Mr. Miller, had also been involved with two of the defunct entities in which Mr. Dunphy had connections with, including the defendant M.V. Matterhorn Ltd. Mr. Miller had however divested himself of any interest in M.V. Matterhorn Ltd. in 2011 prior to the pollution incident. Mr. Miller was also the sole director of the defendant Miller Shipping Ltd., which owned and operated the ship repair facility at Mount Carmel where the Vessel sank.
Mr. Dunphy contracted with Mr. Miller to tow the Vessel to the facility, at which time there was a disagreement as to how much fuel was to be removed from the Vessel. The tow was eventually completed and the Vessel tied up at Mount Carmel on 17 July 2014 with several thousand litres of bunkers and lubes aboard. On 10 August 2014 the Vessel developed a list and the next day the Canadian Coast Guard called Mr. Miller and Mr. Dunphy and gave them instructions on how to boom the Vessel, as well as issuing Mr. Dunphy with a s. 180 Canada Shipping Act notice directing him to deal with the ongoing pollution incident. On 12 August 2016 Mr. Miller boomed the Vessel but there was no absorbent boom or ballast chains, and the Coast Guard contacted Mr. Dunphy to outline the deficiencies in the response. On 14 August 2014 an absorbent boom was installed, and after that date all attempts by the CanadianCoast Guard to contact Mr. Dunphy and M.V. Matterhorn Ltd. were unsuccessful. A year later the Canadian Coast Guard took a more active role in the pollution incident and approximately a year after that, the Coast Guard contracted to have the oil removed from the Vessel and the site. By 02 August 2016 no further oil sheens were observed and the containment boom was removed.
The Canadian Coast Guard presented its claim for compensation to the Administrator in the amount of $181,208.40, which the Administrator paid and then sought recovery of via subrogation into the rights of the Canadian Coast Guard pursuant to s. 106(3)(c) of the Marine Liability Act. Pursuant to s. 106(3)(d) of the Marine Liability Act, once the Administrator was subrogated into the rights of the Canadian Coast Guard, the Administrator was to “…take all reasonable measures to recover the amount of the payment from the owner of the ship, the international Fund, the Supplementary Fund or any other person liable…”
Decision: Action Dismissed.
Held: This action was brought on 08 August 2017, in which M.V. Matterhorn Ltd., Mr. Dunphy and Mr. Miller were among the named defendants, whom also declined to pay the sum of $181,208.40 and declined responsibility for the pollution incident. After pleadings had closed, all parties agreed to mediate which took place on 28 November 2018. The mediation resulted in agreement to resolve the dispute, however the terms of settlement were confidential. The parties did consent, however, to seek from the Court a consent order with reasons setting out the uncontested facts and the legal regime which the parties agreed applied to those facts. It was further agreed by the parties that the circumstances and facts regarding the pollution incident were to become part of reported reasons as it is “beneficial and valuable to the Administrator, as it will permit the Administrator to use this case in her education and outreach efforts”.
Restoration - Dissolution - Company - Without Prejudice - Wharf
British Columbia v. The Administrator of the Ship-source Oil Pollution Fund, 2019 BCCA 232
Précis: The B.C. Court of Appeal affirmed the decision of the lower Court to restore a company without prejudice to rights acquired in the interval between dissolution and restoration.
Facts:The Province of British Columbia (the “Province”) appealed against an order of the B.C. Supreme Court ( BCSC 793) that restored the registered corporate owner of the vessel Chilcotin Princess (the “Vessel”) on terms that the restoration of the company was without prejudice to the rights of acquired by persons, including the Administrator of the Ship Source Oil Pollution Fund (the “Administrator”), in the interval between dissolution of the company and restoration. The registered corporate owner was dissolved on 06 January 2014 and was restored on 14 May 2018. During that time the Vessel vested with the Province pursuant to s. 344 of the Business Corporations Act, S.B.C. 2002, c. 57, with the Administrator presenting its claim for reimbursement during that same time. The Province appealed to restore the company on terms of “with prejudice”, the effect of which would have the registered owner, rather than the Province, liable for reimbursement costs to the Administrator.
Decision: Appeal dismissed.
Held: Under the Business Corporations Act, the purpose of “without prejudice” was to preserve legitimate claims of third parties that arose during the interval between dissolution and restoration. The Court found that the claim for reimbursement by the Administrator was a legitimate claim that arose in the interval between dissolution of the company and restoration. The Administrator was not seeking a tactical claim that arose only because of the dissolution of the corporate owner. The Court of Appeal rejected the Province’s argument that the Marine Liability Act was intended to create a “polluter pays” regime and that the B.C. Supreme Court judge should have exercised his discretion to order the restoration with prejudice based on that “polluter pays” regime. In doing so, the Court of Appeal found the Marine Liability Act imposed liability for the expense of preventing or minimizing pollution damage as an incident of ownership, imposing that liability on the person who has the rights of the owner of the ship with respect its possession and use at the time clean up expenses are incurred. Acceptance of the Province’s argument, the Court held, would amount to a request to rewrite the Marine Liability Act so as to impose liability on another entity other than the person who has for the time being, either by law or by contract, the rights of the owner of the ship with respect to its possession and use.
Vessel - Tow - Seaworthy - Pollution Damage - Oil
Beasse v. Canada, 2019 FC 768
Précis: The Federal Court dismissed a claim against the Canadian Coast Guard for loss of a vessel during a tow operation it organized.
Facts: The plaintiff brought a motion for summary trial against the defendant Canadian Coast Guard (“CCG”) for loss of his tug “Elf”, which sank on 17 January 2014 during a tow operation arranged by the CCG. Elf was 112 years old, unregistered, un-licenced and uninsured, and had also sank once before on 14 January 2014 (nb: liability for that sinking was rendered by the Court in 2018 FC 39 where it was determined the plaintiff was at fault) causing oil pollution. The tow operation called for three tow phases which would see Elf taken from Squamish to Shelter Island Marina. Phase I and II of the tow went as planned, and phase III commenced at approximately 4:15 am on 17 January 2014. Phase III was conducted by Valley Towing Ltd. (“Valley”) and the tow vessel “Seatow”. One of the Seatow deckhands climbed onto the Elf, confirmed that the pump did not need to be used, untied Elf from the phase II towing vessel and secured Elf to the Seatow using a polyline, attaching portable lights to Elf’s port, starboard and stern side before returning to the Seatow. He then replaced the polyline with a bridle and winch tow. At this time the deckhand heard his on-board colleague say that the Elf was in trouble. The deckhand then re-boarded the Elf, turned on the pump, and noticed the stern deck was flooding. He retrieved the port and starboard light but for safety reasons did not retrieve the stern light and scrambled back onto the Seatow. The Elf sank minutes later at approximately 4:35 am on 17 January. The CCG did not consider raising the Elf due to the extreme financial cost of doing so and also determined that the estimated quantity of oil did not require deployment of further resources. The plaintiff claimed that CCG failed to ensure Elf was seaworthy before towing it, breached its bailment duties, was negligent, and that the defendant hampered the plaintiff’s evidence as it did not raise the Elf after the second sinking.
Decision Motion dismissed.
Held: The Court found that the CCG was acting under the legislative authourity of s. 180 of the Canada Shipping Act which did not create a bailment, but permitted the CCG to take Elf and do whatever it considered necessary to prevent further pollution damage. The plaintiff’s argument that he was unable to provide any evidence as a result of the CCG not re-floating the Elf after the second sinking was rejected by the Court. On the issue of seaworthiness, the Court found that a tug has a duty to ensure the tow is more or less ready to be towed but this duty does not extend to the seaworthiness of the tow. Conversely, if any duty was owed it would be that of the vessel owner to provide a seaworthy tow. The Court held that the CCG had taken reasonable steps to determine if Elf was ready to be towed and had no further duty to ensure the vessel was seaworthy, and as a result the CCG acted reasonable and with due diligence at all times after taking control of the Elf after the first sinking. Further, the Court found no evidence that Valley failed to exercise due diligence in providing a seaworthy tug to conduct the tow or that Elf’s sinking was caused by the lack of seaworthiness of the tug conducting the tow.
Shipbuilder Defects - Due Diligence Defence - Discharge of Fuel Oil -
R. v. M/V Marathassa, 2019 BCPC 13
Précis: The Provincial Court of British Columbia acquitted the defendant ship of all charges in relation to a discharge of oil from the ship in April 2015.
Facts: On 8 April 2015 the newly built m/v Marathassa (the “vessel”) discharged fuel oil into the waters of English Bay, Vancouver. The vessel’s owners did not attorn to the jurisdiction of the Provincial Court and so this proceeding was against the vessel only. The vessel was charged with several strict liability environmental offences, which included a charge of discharging a pollutant into English Bay, a charge of discharging a substance harmful to migratory birds, and two charges of failing to implement its shipboard pollution emergency plan by failing to take samples of the fuel oil in the water and assist with the containment of the discharge of oil. The vessel ran a due diligence defence to the strict liability charges.
Decision: m/v Marathassa acquitted of all charges.
Held: Upon inspection by Transport Canada Inspectors, the cause of the fuel oil discharge was not readily apparent. Eyewitness testimony revealed that there was fuel oil visible around the m/v Marathassa from around 16:30 on 8 April 2015 and into the next day. A marine diver retained by the m/v Marathassa conducted his own investigation, from which it was deduced that there was a significant amount of fuel oil in a passage compartment which was connected to an overboard discharge pipe normally used to discharge non-toxic fluids from the vessel. Fuel oil should not have been able to travel from the pipe passage compartment to the discharge pipe under normal operating conditions. The Court held that the cause of the discharge was not foreseeable to the crew or Transport Canada until after the marine diver conducted his investigation and reported to the Chief Engineer, that oil may have leaked through a defective valve and towards the discharge pipe. The defect in the value was caused by loose or missing bolts which housed fuel alarm sensors on the inside of the pipe passage compartment. Fuel oil could be seen around the housings of the sensors and seeming from the fuel tank.
The Court found that the flag, classification society, design and construction of the ship were all of the highest standard, and the m/v Marathassa was built to include pollution prevention equipment not required by international convention. The Court further found that the crew of the m/v Marathassa had the required certification, training and sea service, as well as ISM codes in place at the time of the leak. Crew familiarization was noted by the Court, which met and exceeded the industry standard. On the whole, the evidence clearly established that the crew were properly trained to operate the vessel and underwent constant testing and monitoring to ensure their duties in accordance with industry standards. Fuel oil soundings were validly relied upon by the Captain and Chief Engineer and were not indicative that any fuel oil was missing from the vessel. All bunkering operations were conducted according to the ISM Manual, and all alarms were investigated and reported by the crew as required. While the Court inferred that the pipe passage alarm may have been operating sporadically, it was not foreseeable to the owner or crew that the alarm should have sounded since the crew regularly tested all the alarms throughout the voyage to Vancouver. In the Court’s own words, “the hazards of improperly installed alarms and of debris in a valve were simply not foreseeable” given that the m/v Marathassa was a new ship.
The Court applied the R v. Syncrude  ABPC 229 factors to conduct a reasonable care analysis, reasoning that since the vessel was built by the one of the highest ranking shipbuilding communities in the world, chose a flag state with high standards and safety requirements, classed the vessel with high ranking surveyors (who inspected and approved the design of the vessel), designed a safety management system that passed external audit, met and exceeded statutory requirements for pollution prevention, retained crew members who were familiar with the safety systems and ISM manual, had a crewing agency verify the training certificates and sea service of all the crew, had an established process for bunkering operations, had a process for sounding contained areas, had a process for watching pollution during cargo control washing exercises and a process for watching for pollution in general by deck watch which was recorded in the official log book, the m/v Marathassa took all reasonable steps to avoid the fuel spill on 8 April 2015. For the charge of failing to follow the Ship Oil Pollution Plan under s. 188 of the Canada Shipping Act, 2001, the Court found that the Crown had not proved beyond a reasonable doubt that the m/v Marathassa did not take reasonable steps to assist with the containment of spilled oil.
Registered Owner - Summary Judgment - Reasonable Costs
Canada (Ship-Source Oil Pollution Fund) v. Dodds, 2019 FC 144
Précis: The Federal Court granted summary judgment in favour of the plaintiff against the registered owner defendant.
Facts: The plaintiff commenced this subrogated, summary trial action against the defendant seeking judgment for $382,353.33 for, inter alia, preventing pollution damage from the sinking of and discharge of oil from the ship “Ryan Atlantic II”, formerly named “Cape Rouge”. The plaintiff relied on the Transport Canada Vessel Registry to plead that the defendant was the owner of the ship. The defendant argued he was not the owner of the ship at the time of the spill and clean up, contending that he sold the ship in 2010 to a Mr. Bisson, adducing evidence in the form of two bills of sale and bank draft. It was contended that the ship was not registered due to a mistake by Mr. Bisson in completing the registry documents. The defendant did not cross examine the plaintiff on the “reasonable” costs of clean up for the pollution damage, or adduce any evidence to dispute the sum claimed.
Decision Judgment for the plaintiff.
Held:The defendant made only oral submissions and tendered no evidence by way of affidavit, leading the Court to determine that the bills of sale and bank draft had no present evidentiary value. The Court looked to s.91 of the Marine Liability Act for the definition of “owner” and also s. 43 of the Canada Shipping Act to determine that the defendant was the owner of the ship. The Court then went on to consider whether there was a genuine issue for trial arising from the amount claimed by the plaintiff, holding that the plaintiff had shown there was no genuine issue for trial for the amount claimed.
Sinking and Discharge of Oil - Summary Judgment - Reasonable Costs
Canada (Ship-Source Oil Pollution Fund) v. Dodds, 2019 FC 146
Précis: The Federal Court granted summary judgment in favour of the plaintiff against the registered owner defendant, despite the vessel being under arrest at the time of sinking.
Facts: The plaintiff brought this subrogated, summary trial action seeking judgment in the amount of $839,863.02 for, inter alia, minimizing and preventing pollution damage from the sinking and discharge of oil from the ship “Farley Mowatt” between 24 June 2015 and 5 August 2015. The plaintiff contended that under Part 6 of the Marine Liability Act, the defendant was at all times the unregistered owner of the ship. The defendant argued that access to the wharf where the ship was located was denied by the Port Authority, claiming that the Port Authority was the last person in immediate possession and control of the ship. The defendant did not file any affidavit evidence, with the plaintiff filing an affidavit with exhibits outlining the clean-up steps taken by the Canadian Coast Guard to contain the spill, and invoices for that work. A memorandum of fact and law was also filed by the plaintiff, which referenced Part 6 of the Marine Liability Act. The plaintiff relied on an earlier decision of the Federal Court which concerned the ship in question, where the defendant was named as owner of the ship. The plaintiff contended on that basis that the defendant was the owner of the ship at the time of sinking and pollution.
Decision Judgment for the plaintiff.
Held: The defendant made only oral submissions and tendered no evidence by way of affidavit, and did not provide any evidence to the contrary to refuse the amount claimed by the plaintiff. No cross examination of the affidavit evidence or exhibits was made by the defendant. The Court looked to Rule 483 of the Federal Court Rules which provides that arrest of a ship does not affect an owner’s responsibility for the ship nor possession of the ship. The Court then noted s.91 of the Marine Liability Act for the definition of “owner” and also s. 43 of the Canada Shipping Act to determine that the defendant was the owner of the ship. The Court then went on to consider whether there was a genuine issue for trial arising from the amount claimed by the plaintiff, holding that the plaintiff had shown there was no genuine issue for trial for the amount claimed.
Vessel Registry - Ownership - SSOPF - Sale and Transfer of Ownership - Third Party Legal Owner
Canada (Ship-Source Oil Pollution Fund) v. Dr. Jim Halvorson Medical Services Ltd., 2019 FC 35
Précis: The Federal Court held that the registered defendant owner was not liable for oil spill clean up costs as it was not the the legal owner of the vessel at the time of sinking.
Facts: On 27 September 2014 the barge Crown Forest 84-6 sank near Zeballos, British Columbia, leaking fuel and other contaminants into the surrounding waters. The Canadian Coast Guard responded to the spill, and total clean up costs came to $67,348.81. The Coast Guard presented its expenses to the Administrator of the Ship Source Oil Pollution Fund and a total of $71,698.27 was reimbursed, inclusive of interest. The Administrator then sought to recover the cost from the Crown Forest's registered owner, the defendant Dr. Jim Halvorson Medical Services Ltd., and Dr. Halvorson in his personal capacity as the Administrator sought to pierce the corporate veil. A third party was also joined to the action.
In September 2012, the defendant had sold the vessel to the third party defendant for $1, under an "Intent to Purchase" document. That document provided that "upon payment of the purchase price the purchasers shall have possession of the asset and bear legal responsibility for the asset". Upon completion of the sale, neither the defendant nor the third party had registered the barge in the third party's name with the Canadian Register of Vessels. As such, the vessel continued to be registered in the name of the defendant medical company.
Decision: Action dismissed. The third party was the legal owner of the vessel at the time of sinking, and the defendant medical company is not liable to the Administrator for the clean up costs.
Held: The Court began by noting s. 75 of the Marine Liability Act defines "owner" as "the person who has for the time being, either by law or by contract, the rights of the owner of the ship with respect to its possession and use". Importantly, the court found nothing in s. 75 ties ownership of a vessel to the registration of title in the Canadian Register of Vessels. The Court went on to note the statutory provisions under s. 46(2) of the Canada Shipping Act which impose an obligation on an owner to ensure that a vessel is registered (if not a pleasure craft, wholly owned by qualified persons and not registered), as well as s.58(1)(b) which states the authorized representative of a Canadian vessel is required within 30 days after a change in ownership of the vessel to notify the Chief Registrar of that change. Importantly, however, the Court found that the Canada Shipping Act does not set out any formalities that must be complied with before title to a vessel will pass to a new owner. The Court went on to hold that while the Canada Shipping Act does address the consequences that flow from the failure to register a change in ownership of a vessel, it does not provide that the registered owner of a vessel remains liable for pollution damages under the Marine Liability Act after a vessel has been sold to a third party.
The cornerstone of the Courts' reasons are worth reciting in full:
 Importantly, there is no suggestion in either the Canada Shipping Act, 2001, or the Regulations enacted thereunder, that title to a vessel will not pass to a purchaser if the transaction is not registered in the Canadian Register of Vessels. Nor is there any suggestion in the Act (or in the Marine Liability Act for that matter) that a prior owner of a vessel will continue to be responsible for damages caused by the vessel as long as that individual or entity is recorded in the Register as the owner of the vessel.
The Court then turned to examine the conveyance of title to the vessel by the September 2012 transaction, which the Court decided in accordance with the law of contract. There was an offer to sell the vessel, the offer was accepted by the third party, and consideration was paid to the defendant vendor. Therefore, it was the third party and not the defendant who was the owner and had rights to possession and use after September 2012.
Pollution - Dissolved Corporate Owner - Liability of Province
British Columbia v. Administrator of the Ship-source Oil Pollution Fund, 2018 BCSC 793
Précis: The province was permitted to restore the corporate owner of a derelict vessel but the restoration was without prejudice to the subrogated rights the SSOPF had acquired against the Province while the corporate owner was dissolved.
Facts: The Administrator of the Ship-source Oil Pollution Fund paid a claim by the Canadian Coast Guard for the costs and expenses incurred by it to remove oil and hydrocarbons from “Chilcotin Princess”. At the time the owner of the vessel, Inter Coast Towing Ltd., had been dissolved for failure to file annual reports and, as a result of the dissolution, the “Chilcotin Princess” vested in the province of British Columbia. The Administrator therefore commenced subrogation proceedings against British Columbia to recover the amounts it paid to the Canadian Coast Guard. The province responded with this petition to restore Inter Coast Towing Ltd. to the Register of Companies as if it had never been struck and dissolved.
Decision: The company is restored but without prejudice to the rights acquired by persons before the restoration.
Held: The Administrator does not oppose the restoration of Inter Coast Towing Ltd. but says that it must be without prejudice to the rights acquired during the dissolution of the company. The restoration of a British Columbia company is governed by s. 360 of the Business Corporations Act, S.B.C. 2002, c. 57. Generally, the restoration is without prejudice to the rights acquired before the restoration. The onus is on the province to prove the restoration should be with prejudice to such rights. The province has not discharged this onus.
Criminal Proceedings - Pollution - Investigations - Unreasonable Search and Seizure
R v. MV Marathassa, 2018 BCPC 125
Précis: The court held that the Charter rights of the accused were infringed when Transport Canada inspectors seized evidence without a warrant.
Facts: In April of 2015 oil allegedly spilled from the ship “Marathassa” while at anchor in English Bay, Vancouver. Transport Canada Inspectors boarded the vessel and seized certain documents and evidence. The ship was later charged with various regulatory offences. During the course of the trial the Crown sought to introduce the evidence obtained from the vessel by the Transport Canada Inspectors. The accused applied to exclude the evidence on the basis that it was obtained in breach of the accused’s section 8 Charter rights which provide a right against unreasonable search and seizure.
Decision: The evidence is excluded.
Held:The first issue concerns the reason for the attendance of the Transport Canada inspectors on the “Marathassa”. The parties are agreed that if the inspectors were conducting a compliance inspection under s. 211 of the CSA, the seizures are lawful, however, if they were conducting an enforcement investigation under s. 219 (investigation into a shipping casualty or a contravention of regulation/statute), they were required to obtain a warrant or informed consent. The evidence is overwhelming that Transport Canada was conducting an enforcement investigation from the moment inspectors boarded the “Marathassa”. Therefore, a warrant or informed consent was required.
The second issue is whether there was a breach of the accused’s s. 8 Charter rights. This requires first that the accused establish it had an expectation of privacy. After the expectation of privacy is determined, the enquiry moves on to consider if the search was reasonable. Although the Marathassa was subject to inspections by Transport Canada and would have a diminished expectation of privacy on account of such inspections, it did have an expectation of privacy in relation to much of the conduct of the inspector. In respect of whether the searches were reasonable, there is a presumption that a warrantless search is unreasonable. The Crown has failed to discharge the onus on it of proving the search was reasonable.
The final issue is whether the admission of the evidence would bring the administration of justice into disrepute. This requires consideration of (i) the seriousness of the Charter-infringing conduct; (ii) the impact of the breach on the Charter-protected rights of the accused; and (iii) society’s interest in the adjudication of the case on its merits. In this case there was deliberate and repeated infringements of the accused’s charter rights which amounted to bad faith. The impact of these breaches was not trivial. Finally, considering that the exclusion of the evidence will not “gut” the prosecution's case and that the spill was “very, very small” a reasonable person would conclude that the evidence should be excluded.
Uncharted Shoal - Liability of Crown - Pollution- Liability of Vessel - Effect of Signed Treaties/Conventions - Damages - Breach Date Rule - Appeals - Standard of Review
Adventurer Owner Ltd. v. R., 2017 FC 105 2018 FCA 34
Précis: The Federal Court of Appeal upheld a decision of the Federal Court that: (1) the Crown was not liable for damages caused to a ship running aground on an un-charted shoal in the Arctic when the shoal had been the subject of a Notice to Shipping; and (2) the ship was liable to the Crown for the costs of pollution abatement.
Facts: The “Clipper Adventurer”, a small cruise ship, ran aground in the Canadian Arctic on 27 August 2010 while en route from Port Epworth to Kugluktuk. The shoal had been the subject of Notice to Shipping A102/07 issued in September 2007 but it had not been marked on the applicable chart. The chart being used by the vessel had been issued by the Canadian Hydrographic Service on 30 May 1997 and had been updated/corrected with Notices to Mariners but not with Notices to Shipping. The Canadian Hydrographic Service had intended to replace the Notice to Shipping with a Notice to Mariners but due to an apparent miscommunication this was not done.
As a consequence of the grounding, a number of the vessel’s double-bottomed tanks were breached resulting in a small amount of pollution. The vessel was re-floated on 14 September 2010, underwent temporary repairs in Canada and then sailed to Poland for permanent repairs. The plaintiff, the owner of the “Clipper Adventurer”, commenced this action against the Crown for the Canadian dollar equivalent of approximately US$13.5 million alleging that the Canadian Coast Guard and Canadian Hydrographic Service had failed to properly warn mariners of the danger and were in breach of their SOLAS obligations to publish, disseminate and update nautical information. The Crown counter-claimed under the Marine Liability Act and the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 for the costs and expenses incurred to prevent, repair, remedy or minimize oil pollution damage in the amount of CDN$468,000.
At trial, the action by the owner of the “Clipper Adventurer” was dismissed and the counter-claim of the Crown was allowed. The trial Judge held:
• There was no duty on the Crown to seek out and chart unchartered shoals but, once the presence of the shoal became known, the Canadian Coast Guard and Canadian Hydrographic Service were under a duty to warn mariners of its presence;
• The issuance of the Notice to Shipping A102/07 was sufficient to discharge the duty to warn imposed on the Crown. Pursuant to section 7 of the Charts and Nautical Publications Regulations, 1995 (SOR/95-149), it is the responsibility of Masters to ensure all charts “are correct and up-to-date based on information that is contained in Notices to Mariners, Notices to Shipping and radio navigation warnings”;
• The crew of the “Clipper Adventurer” were negligent in that they should have known there were unchartered shoals and should have proceeded at a slower speed; and
• With respect to the counter-claim of the Crown, liability does not depend on proof of negligence. Pursuant to section 77(3) of the Marine Liability Act, to escape liability the shipowner must establish that the occurrence was wholly caused by the negligence or other wrongful act of a government authority. Thus, even if there was contributory negligence on the part of the Crown, the shipowner would still be liable in full.
The ship owner appealed the finding that the issuance of Notice to Shipping A102/07 was sufficient to discharge the Crown’s duty to warn and also appealed a minor issue relating to interest.
Decision: Appeal dismissed.
Held: The appellant does not challenge the finding that it was negligent but only the finding that the publication of Notice to Shipping A102/07 was sufficient to discharge the Crown’s duty to warn. The appellant argues that this finding is an extricable error of law and therefore subject to the standard of review of correctness. This is not correct. Questions involving the standard of care are normally mixed questions of law and fact and reviewable only if there is a palpable and overriding error. Additionally, there is no issue of the trial Court having improperly characterized the legal test before it. The trial Court clearly understood the issue was whether Notice to Shipping A102/07 satisfied the Crown’s duty to warn. The trial Court held that it did and there was ample evidence to support this conclusion.
One final issue concerned whether the trial Court correctly held that the interest rates under s. 116(1) of the MLA did not apply to the claim of the Crown. Section 116 only applies to claims under Part 7 of the MLA involving the Ship Source Oil Pollution fund. It has no application to a direct claim by the Crown against a shipowner.
Pollution - Clean up Costs - Defence of Deliberate Action by Third Party - Summary Judgment
Administrator of the Ship-Source Oil Pollution Fund v. Beasse, 2018 FC 39
Précis: The court held the defendant owner liable for pollution clean up costs following the sinking of a tug, rejecting the owner's allegation the sinking was due to the deliberate act of a third party.
Facts: The tug "Elf" sank on 14 January 2014 near Squamish, British Columbia causing pollution. The defendant tug owner was aware of the sinking but took no steps to raise the tug or to contain, minimize or clean up the pollution. Instead, he left it for Canadian Coast Guard to do these things. The tug was successfully raised and inspected by a surveyor and by a representative of the Coast Guard. Neither the surveyor nor the Coast Guard representative found any damage to the hull or the source of the water ingress that had caused the sinking. The tug was then towed to just off Port Atkinson where it was handed off to another tug. Shortly after the hand over the tug sank a second time in deep water. The expenses of the Canadian Coast Guard were paid by the Ship-source Oil Pollution Fund who then brought this subrogated action. and this application for summary judgement.
Decision: Judgement for the plaintiff.
Held: The main defence of the defendant is that the first sinking was caused by the act or omission of a third party done with intent to cause damage. The evidence relied upon in support of this third party involvement is that, when the tug was raised after the first sinking, the door was torn off its hinges and a padlock was missing. The defendant argues that this is not an appropriate case for summary judgement because the second sinking has resulted in a loss of the only evidence that could substantiate their case of third party involvement. The defendant alleges there has been spoliation of evidence. However, spoliation requires that the evidence be intentionally destroyed and there is no evidence of such intention here. Moreover, the inspections done of the tug following its raising after the first sinking found no evidence of third party involvement and no indication the door was locked at the time of the sinking. The sinking was due to the unseaworthiness of the tug. The defendant has failed to raise a genuine issue for trial.
Pollution - Offences - Service of Summons on Master - Service of Summons on Counsel
R v. Alassia New Ships Management Inc., 2018 BCPC 5
Précis: The court declared that service of a summons on the ship's Master was valid service on the accused operator of the ship.
Facts: The accused was the corporate manager/operator of the vessel "Marathassa" which was the alleged source of an oil spill in Vancouver Harbour. The accused had been charged with various offences in connection with the oil spill. The accused was served with the summons by serving the Master of another vessel also managed/operated by the corporate accused. That service has been the subject of various proceedings including a petition to quash the summons which was dismissed on 14 August 2017. The accused had not entered an appearance and the Crown now applied for an order for an ex parte trial.
Decision: Order granted.
Held: The Criminal Code permits service on a senior officer of a corporate accused. A senior officer is “a representative who plays an important role in the establishment of an organization’s policies or is responsible for managing an important aspect of the organization’s activities". The Master of a vessel qualifies as a senior officer of the accused within the meaning of the Criminal Code. Additionally, service of the Summons on counsel for the accused was also effective service.
Note: The decision of the British Columbia Supreme Court rendered on 14 August 2017 and relied upon in the above decision was later overturned by the British Columbia Court of Appeal (2018 BCCA 92). The reasons of the court of Appeal effectively invalidated the service of the Summons. Thus, this decision is effectively overruled and no longer good law.
Pollution - Offences - Service of Summons on Ship Manager - Certiorari - Prohibition
Alassia Newships Management Inc. v. British Columbia, 2017 BCSC 2181 2018 BCCA 92
Précis: The British Columbia Supreme Court dismissed an application for certiorari and prohibition relating to an order of a Justice of the Peace validating service of a summons against a ship manager by serving a Master of a managed ship. On appeal, the Court of Appeal held the ship manager had not been properly served and the Provincial Court was without jurisdiction.
Facts: In April of 2015 oil allegedly spilled from the ship “Marathassa” while at anchor in English Bay, Vancouver. An Information was subsequently sworn laying charges under various statutes against the “Marathassa” and against the applicant, her manager. A summons to appear was served on the applicant by personal service on the Master of the “Afroessa”, another ship managed by the applicant. At a hearing before the Justice of the Peace, the Crown advised the Court that the applicant had been served with the summons. The presiding Justice of the Peace confirmed the service and adjourned the matter to a future date. The applicant did not formally appear at that hearing to contest the service as such an appearance would have been an attornment to the Court’s jurisdiction. Subsequent to the hearing, the applicant applied to the Supreme Court of British Columbia for an order of certiorari quashing the order of the Justice of the Peace and for an order of prohibition prohibiting the Provincial Court from proceeding with the charges against the applicant until it had been properly served.
At first instance, the application was dismissed. The motions Judge held that certiorari and prohibition were available if the Justice of Peace had exceeded her jurisdiction but she had not done so by determining whether the service was valid. The ship manager appealed.
Decision: Appeal allowed.
Held: Section 703.2 of the Criminal Code, RSC 1985, c. C-46 permits service on an organization by serving “the manager, secretary or other senior officer of the organization or one of its branches”. The Master that was purportedly served was not a manager or secretary of the appellant and was not a “senior officer” since he did not play an important role in the establishment of its policies and was not responsible for managing an important aspect of its activities. The appellant was therefore not properly served under s. 703.2 of the Criminal Code. However, the Crown contends that service was nevertheless proper since the existence of the Summons came to the notice of the appellant. This is not correct. There is a distinction between notice in fact and notice in law. The notice given must be that which is authorized by law meaning service of a summons must be effected pursuant to s. 703.2. Accordingly, because the appellant was not properly served, the Justice of the Peace exceeded her jurisdiction. The Provincial Court is prohibited from proceeding with the prosecution until the appellant is properly served.
Default Judgment - Pollution
Administrator of the Ship-Source Oil Pollution Fund v. Wilson, 2017 FC 796
Précis: The Federal Court granted default judgement to the Ship-Source Oil Pollution Fund against the owner of a barge for expenses incurred to clean up and mitigate pollution.
Facts: A barge was found adrift in high winds and in danger of sinking. The Canadian Coast Guard contacted one of the two owners of the barge about the situation, but the owner advised they were unable to rescue the barge. The Coast Guard retained a contractor to tow the barge to a safe moorage. The Coast Guard subsequently submitted a claim under the Marine Liability Act to the plaintiff, the Administrator of the Ship-source Oil Pollution Fund, for the costs incurred to salvage the barge. The claim was accepted and paid by the plaintiff after a small reduction. The plaintiff then demanded payment of the amount paid to the Coast Guard from the defendant owners of the barge. The defendants refused to pay. The plaintiff then commenced this action. The defendants failed to appear. The plaintiff brought this ex parte motion for default judgment.
Decision: Default judgment granted.
Held: The defendants were properly served and as owners of the barge they are liable under s. 77 of the Marine Liability Act for the reasonable expenses incurred by the Canadian Coast Guard to prevent, repair, remedy or minimize the oil pollution associated with the barge.
Payments - Whether Release and Subrogation Required
Canada (Ship-Source Oil Pollution Fund) v. Canada, 2017 FC 530
Précis: The court held that the Administrator of the Ship-source Oil Pollution Fund does not have the right to require a claimant to execute a Release and Subrogation Agreement as a condition precedent to payment of their claim.
Facts: A vessel was reported to the Canadian Coast Guard as sinking and discharging oil. In response, the Coast Guard contained the pollution from the vessel and later raised and removed the wreck. The Coast Guard subsequently submitted its expenses relating to the pollution prevention and wreck removal to the Administrator of the Ship-source Oil Pollution Fund pursuant to the provisions of Part 7 of the Marine Liability Act. The Administrator allowed a substantial portion of the claim but requested that the Coast Guard sign a Release and Subrogation Agreement before the claim was paid. The Coast Guard refused to sign the Agreement. The Administrator then brought this application for a determination as to whether it had the right to require a claimant to execute a Release and Subrogation Agreement as a condition precedent to payment of their claim.
Decision: The Administrator has no such right.
Held: Section 106 of the Marine Liability Act provides that once an offer from the Administrator has been accepted by a claimant, the Administrator must pay the claim “without delay”. Section 106 also addresses the release of claims and the rights of subrogation that flow upon payment. There is no requirement that a claimant execute a release or subrogation agreement.
Marine Insurance - Wreck Removal - Liability of Underwriters for Expenses - Sue and Labour
Universal Sales Limited v. Edinburgh Assurance Co. Ltd., 2012 FC 418
Précis: Underwriters were required to reimburse the assured for a settlement payment made in respect of an action for wreck removal costs.
The plaintiffs (the insureds) sought indemnity from the defendants (their insurers) for a settlement payment of $5 million made by them to the federal government related to the costs of raising the “Irving Whale”. The payment was made in settlement of a proceeding brought by the Crown for $42 million. The plaintiffs did not obtain the prior approval of their underwriters before making the settlement. The plaintiffs also claimed for sue and labour expenses of $3.6 million and defence costs of $1.8 million. The insurers denied coverage alleging the plaintiffs were not required to make the settlement payment and that there was no coverage under the policy.
Decision: Plaintiff awarded judgment, in part.
Held: With respect to the claim for sue and labour expenses, the trial Judge denied this claim on the basis that the expenses did not diminish or avert a loss under the policy. This was so because the estimated costs at the time the expenses were incurred were in excess of $21 million but the policy limit was only $5 million. Thus, the sue and labour expenses could not possibly have benefited the underwriter. With respect to the settlement payment, the trial Judge held that he was satisfied that the plaintiffs would have been held liable to the Crown in nuisance if the settlement payment had not been made. With respect to the claim for defence costs, the trial Judge was of the view that these should be apportioned between the plaintiffs and underwriters on the grounds that both benefited from these costs. He somewhat arbitrarily apportioned these defence costs 25% to underwriters and 75% to the plaintiffs.
Pollution - Fisheries Act - Deleterious Substance - Fine
R. v. Bolt, 2011 NLTD 20
In this matter the defendant pled guilty to two charges of depositing a deleterious substance into waters frequented by fish and failing to report a spill contrary to the Fisheries Act. The facts were that a quantity of diesel fuel was spilled into the harbour while the defendant was refuelling his vessel. He was fined $10,000 for the depositing charge and $5,000 for the failure to report. The defendant appealed the fines. The Appellate Court dismissed the appeal noting that it would only interfere with the sentence if it was clearly unreasonable or demonstrably unfit, neither of which had been shown.
Bunkering – Pollution – Apportionment of Fault
FFS HK Ltd. v. P.T. 25 (Ship), 2010 BCSC 1675
The issue in this case was the apportionment of fault for a spill that occurred in Vancouver Harbour during a bunkering operation which cost the vessel owner approximately $1 million. The owner/plaintiff accepted it was partially at fault in that one of the crew left open the valves to one of the ship‟s tanks and the crew failed to monitor the tank after bunkering commenced. However, the owner alleged that the crew of the bunkering barge was also at fault in that bunkers were transferred at a higher rate than agreed and the barge crew also failed to monitor the quantity transferred to the ship. The Court found that a bunkering operation is a joint operation with shared responsibilities and that the agreed transfer rate was a critical component of the transfer operation which should not be deviated from by the barge without clear and explicit instructions from the vessel. The Court found as a fact that the barge increased the transfer rate beyond that agreed and did not accept the evidence of the barge that the vessel asked for an increased transfer rate through hand signals. The Court further found that the increase in the transfer rate was a contributing cause of the spill. The Court then reviewed the faults of the two parties and held that they were equally at fault.
Pollution - Offences - Due Diligence
R. v. M/V “Kathy L” et al., 2010 BCPC 30
This case concerned the sinking of a barge while it was being towed which resulted in escape of pollutants. Charges were laid against the owner of the barge as well as the towing company and the captain of the tug. The Court dismissed the charges against all defendants except for the owner of the barge. The Court found that the sinking was caused by unseaworthiness of the barge for which the owner was responsible. The unseaworthiness was not obvious to a casual observer and the Court rejected the arguments of the Crown that the tug captain should have done a more thorough inspection of the barge.