Other Practice Topics - Case Summaries
The database contains 29 case summaries relating to Other Practice Topics. 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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Security clearance — Port Worker — Stare Decisis
Canadian Maritime Workers Council v. Canada (Attorney General), 2020 FC 177
Précis: The Federal Court rejected Charter arguments against the power of the Minister of Transport to issue security certificates for those employed in security-sensitive positions at Ports in Canada.
Facts: The applicant argued that ss. 509 and 510 of the Marine Transportation Security Regulations (the “Regulations”) violated ss. 2, 7 and 15 of the Charter of Rights and Freedoms. Part 5 of the Regulations provides a broad power for the Minister of Transport to grant or cancel security certificates for workers in security-sensitive positions at ports in Canada. Certificates are issued after background checks which require worker information such as name, date of birth, gender, height, weight eye colour, place of birth, citizenship or permanent residence status, passport number, previous employers, post-secondary institutions and travel outside of Canada and the USA for more than 90 days. Based on that information, the Minister determines whether the port worker is a security risk to marine transportation. If the Minister is of the opinion that information is verifiable and reliable and there is sufficient verifiable and reliable information to determine that the applicant does not pose a risk to the security of maritime transportation, the Minister may grant a security clearance. This also includes the Minister’s consideration of the applicant’s association with members of a terrorist group or crime organization and whether there are reasonable grounds to suspect that the applicant may be suborned to commit an act or assist or abet any person to commit an act that might constitute a risk to marine transportation security. It was argued that the Regulations grant the Minister too much discretion and infringe upon the Charter rights of those applying for security clearance.
Decision: Application dismissed; s. 1 analysis not necessary.
Held: With respect to the s. 2(d) freedom of association argument, the Court noted that this argument was raised in the Federal Court of Appeal in Reference re Marine Transportation Security Regulations 2009 FCA 234 (“Reference”) where it was held that innocent associations would “not normally warrant the denial of a security clearance” since applicants may be interviewed to “assuage the Minister’s concerns”, and therefore there was no new legal issue raised by the applicant’s argument on this ground. In respect of the s. 7 Charter challenge, the Court found that the same argument was heard in the Reference decision, where the Federal Court of Appeal rejected that argument as s. 7 “would not cover any potentially adverse impact that a refusal of security clearance might have on an employee’s employment”. As such the doctrine of vertical stare decisis required the Court to apply the settled precedent. On the s. 15 Charter argument, the Court rejected the applicant’s argument that the Regulations create a disadvantage for port workers who have relatives or a spouse convicted of a crime. The Court noted that the applicant’s argument falls at the first stage of the s. 15 analysis as the Regulations did not create a distinction on the basis of an enumerated or analogous ground, as the Regulations are concerned with the degree of proximity between a port worker and certain individuals or groups, and “degree of proximity” is not a protected ground under s. 15 of the Charter.
Maritime - Navigation - Shipping - Interjurisdictional immunity - Federal
Desgagnés Transport Inc. v. Wärtsilä Canada Inc., 2019 SCC 58
Précis: The Supreme Court of Canada held that provincial law, and not Canadian maritime law, applied to a contract of marine engine parts so that the supplier of the parts was liable for the full quantum of damage.
Summary not yet available.
Cargo - Multimodal - Leg - Ocean - Terminal - Germany
Iamgold Corporation v. Hapag-Lloyd Ag, 2019 FC 1514
Précis: The Federal Court found that a loss of cargo on the road leg of the carriage was subject to the limitation of liability applicable to road carriage under German law.
Summary not yet available.
Maritime Jurisdiction - Third-Party - Bill of Lading
Elroumi v. Shenzhen Top China Imp & Exp Co. Ltd., 2019 FCA 281
Précis: The Federal Court of Appeal affirmed that claims against road carriers were not claims under Canadian maritime law.
Facts: The appellant appealed the decision of the Federal Court which held that it lacked jurisdiction to hear claims against road and rail carriers which were other contracts of carriage not part of the bills of lading. The appellant also sought to add the ocean carrier CMA CGM as third party.
Decision: Appeal Dismissed
Held: The Court upheld the lower Court’s decision on the basis that claim did not satisfy the Supreme Court of Canada's tripartite test as set out in ITO-Int’l Terminal Operators v. Miida Electronics. Specifically, the Court held that the underlying action was not within the jurisdiction of the Federal Court because, “A claim against a local road transporter or an operator of a warehouse distant from an ocean port is not a claim under Canadian maritime law.” The road transporter, therefore, is bound by provincial law.
Environmental Assessment Process — Fish Mortality — Documents — Disclosure — Records
R. v. DP World Prince Rupert Inc., 2019 BCPC 302
Précis: The BC Provincial Court allowed an application in part for production of documents from government and third party sources relating to the approval of a marine terminal expansion and work related thereto.
Facts: The defendants brought an application for the order for inspection and production of all records in possession of DFO relating to authorization of the Prince Rupert Fairview Terminal Phase II Northern Expansion (the “Project”) and the federal assessment process under the Canadian Environmental Assessment Act 1992 from March 2008 through to 31 December 2013. The defendants/applicants also sought production of records in possession of DFO relating to the Fisheries Act authorization from 1 January 2014 to 5 November 2014. The types of documents requested included notes and memoranda, reports and articles, policies, notes to file, presentations, telephone and email calls between DFO staff. The underlying charges stemmed from marine dredging of intertidal and subtidal habitat for the Project which resulted in the death of some fish, an offence under s. 35(1) of the Fisheries Act. Although the defendants received an authorization to undertake the Project, that authorization did not explicitly allow for the killing of fish. It was contended by the defendants that DFO had considered the expected impact of potential fish mortality in granting the authorization. As such the defendants sought these documents to assist the Court in interpreting the authorization and whatever DFO examined for making its determination of the same.
Decision: Application allowed, in part.
Held: It was ultimately agreed by all parties that the application must meet the test for disclosure as was laid down in R v. O’Connor  4 S.C.R. 411 and therefore it was held an applicant seeking third party disclosure must show by evidence or information that the documents sought will likely be relevant to a material issue at trial. Based on the Court’s review of the application for disclosure it was held that the defendant Port was in possession of many, if not all, of the documents that range from 1 March 2008 to 31 December 2013. It was further held that it was “pure speculation” that DFO possessed documents connecting the statutory amendments with the Project in any way. The Court agreed with the defendants that documents in DFO’s possession would have considered fish mortality but held that the defendant Port was already in possession of such documents and did not satisfy the test for third party disclosure application. The application for production of all records in DFO possession from 1 January 2015 to 5 November 2014 was denied as DFO’s sworn, unchallenged evidence was that such records did not influence the authorization process. However, the co-accused’s application was granted and production of March 2008 to December 2013 records in possession of DFO was ordered.
Vessel — Invoices — Payment — Additional Work — Email
Nirint Inc. (Nirint Canada) v. Mega Throphy Ltd, 2019 FC 1015
Précis: The Federal Court held a vessel's owner liable to reimburse a ship's agent for charges it personally guaranteed and paid as a result of a failed Port State Control inspection and subsequent corrective work.
Facts: the plaintiff was ship’s agent for the vessel “Seren” and her owners while the vessel was in Canada and sought recovery of costs from the owners it paid out for work rendered to the vessel to correct deficiencies after the vessel failed a Port State Control inspection in November 2016 at the Port of Quebec. The work was completed in late December and the plaintiff personally guaranteed and paid the invoices relating to this work, including additional work rendered to the vessel without the approval or knowledge of the plaintiff or the vessel’s owners by Groupe Ocean Inc. (“Groupe”). Upon the plaintiff invoicing the owners for the additional work on 21 December 2016, the owners requested justification for the charges related to the additional work, ultimately requesting the assistance of the vessel’s P&I correspondent. On 22 December the vessel was served with a detention order from the Port and a warrant for arrest for unpaid supplier’s accounts. On 23 December the P&I correspondent contacted the plaintiff and said that Groupe’s invoices showed payment terms of 30 days and that the charges for the additional work were not immediately due and payable, so that Groupe should not be taking any action, and suggested the vessel sail as planned later that day so that the owners could sort out the disputed invoices in the coming weeks. The plaintiff secured release of the vessel that afternoon by arranging payment or guaranteeing payment to all creditors, with the exception of Groupe. Groupe then, at 3:30 pm on 23 December, threatened arrest unless it obtained a guarantee that the plaintiff would pay in full its invoices, including the disputed invoices. After a phone call from the owners, and by confirmation email at 4:24 pm that same day the owners instructed the plaintiff to take necessary and needful action for the vessel’s release and departure in order to prevent any further delay. The plaintiff ultimately agreed to guarantee Groupe’s invoices and confirmed discontinuance of the arrest proceedings. The vessel sailed from the Port in the late afternoon hours of 23 December, avoiding delay which would have been caused by the impending Christmas holidays that would have seen the vessel unable to depart from the Port until 28 December.
Decision: Judgment awarded for the plaintiff.
Held: The Court found the owners expressly instructed the plaintiff to effect payment of Groupe Ocean’s invoices, which was entirely dispositive of the owner’s liability to reimburse the plaintiff for expenses incurred. As ship’s agent, its duty in the circumstances was to take reasonable steps to protect the owner’s interests, and it was reasonable for the plaintiff to guarantee payment of the invoices to stave off the arrest. The plaintiff was not negligent and did not cause the owner’s damage by failing to raise the 30 day payment terms with Groupe or its lawyer. The Court found that the plaintiff carried out its mandate by paying the invoices for the additional work and collect and provide the owners with the documents to support the charges, which owners did not question or establish that the additional work was not preformed, unnecessary or excessive in cost.
Boat - Helm - Ordinary mariner - Sailboat - Vessel
Diep v. Wuolle, 2019 BCCRT 541
Précis: The B.C. Civil Resolution Tribunal dismissed a claim for damages for repair of a sailboat that struck some rocks.
Facts: The applicant claimed the respondent crashed the applicant's sailboat into rocks on a voyage while bringing the sailboat into British Columbia. Both parties were on the sailboat at the time of the crash and had discussed the intended route and were assisted by GPS. At 23:00 when the applicant was below deck and respondent at the helm, the sailboat crashed into rocks. It was contended by the applicant that the respondent had complete control over the sailboat and was accompanying the applicant on the voyage due to his sailing experience, and ignored the intended route.
Decision: Claims dismissed.
Held: The evidence did not show the respondent ignored the intended route or that he intended to have complete control of the sailboat. Negligence was also not proven by the evidence, as the standard of care under maritime law was judged according to the standards of the ordinary mariner judged by reference to the situation as it reasonably appeared to them at the time, and not in hindsight. Further, no information of tides or their effect on the sailboat were available to the parties before the voyage, so the nature of the tide was not determinative of what reasonably appeared to the respondent at the time of the crash.
Marina - Mooring buoys - Decision-maker - Application
Trainor-Degirolamo v. British Columbia , 2019 BCSC 430
Précis: The British Columbia Supreme Court dismissed a challenge of the approval of a licence of occupation for a private marina.
Facts: This was a judicial review of the Defendant/Respondent Ministry’s decision to grant a licence of occupation over aquatic Crown land in 2018. In 2004 the local Council passed a resolution permitting the Defendant Strata to build a marina on Quarry Bay on Okanagan Lake. That resolution stipulated a policy that South Bay, a neighbouring area, would be closed to vessels and moorage buoys. The Quarry Bay marina was not built with a breakwater that the local Council had required the marina to be, and the marina was destroyed by a storm in 2010. In 2011, the Defendant Strata submitted an application and management plan for a 72 slip marina in South Bay (the “First Application”), citing that the wind direction at Quarry Bay was not suitable for moorage. In the interim, the Defendant Strata began installing moorage buoys in both Quarry Bay and South Bay, all of which were authorized by the federal Minister of Transport. The Defendant Ministry denied the First Application, on the basis that the Quarry Bay marina was not built according to the Council standards, and that the resolution had a policy of no South Bay marina development. As the number of mooring buoys increased to over 90 by 2015, it was mutually agreed that the mooring buoys were creating a hazard to safe navigation. This resulted in a second application to the Defendant Ministry in 2015 for a marina at South Bay (the “Second Application”). The Second Application received the support from the local Council, federal and provincial government agencies (D.F.O./Ministry of Environment) , and was ultimately approved in 2017 for a twenty year term.
The Plaintiff/Petitioners challenged the decision approving the Second Application, stating that the First Application decision should stand. The Petitioners challenged on grounds that the approval of the marina in South Bay was unreasonable, the Respondent ministry sub-delegated or fettered its discretion in approving the Second Application, and that the principles of procedural fairness were not complied with in making the decision.
Decision: Petition dismissed.
Held: The Court applied the Dunsmuir standard of reasonableness to the Respondent Ministry’s decision. In doing so, the Court found that the decision to depart from the First Application decision and reasons for doing so were within the range of acceptable outcomes, given that the decision was made in consideration of different studies, the protection of the environment, local government zoning and Indigenous consultation. The decision and reasons for the decision were transparent, justified and intelligible.
The Court rejected the Petitioner’s argument that the Respondent Ministry fettered its discretion by approving the Second Application based on the Council’s decision to permit moorage in South Bay. On the evidentiary record before it, the Court found that the decision to approve the Second Application was made in light of extensive reports, provincial and federal government approval, and were therefore not made solely on the basis of the Council’s approval.
The Court also rejected the Petitioner’s argument that the Respondent Ministry failed in their duty of procedural fairness. It was clear to the Court that the Petitioners were involved throughout the approval process, had communication with the Ministry’s representatives, the opportunity to make submissions to the Council and also have specific questions answered by the Ministry. While noting that the approval of the Second Application may have impacted some individuals, the Court held the duty of procedural fairness was adequately complied with.
TSB Report - Request for Information - Passenger Eyewitnesses - Refusal to Comply with Notice
Mackenzie v. Canada (Transportation Safety Board), 2019 FCA 39
Précis: The Federal Court of Appeal held a notice requesting information of passengers on board a vessel that touched bottom was a reasonable use of the TSB's statutory powers.
Facts: The appellant sought to challenge the respondent’s request for information via notice (the “Notice”) relating to passengers on board a vessel when that vessel touched bottom in 2017. The respondent made this request under statutory authourity to investigate a marine occurrence under the Canadian Transportation Accident and Safety Board Act, 1989, c. 3. The appellant contended that the Federal Court erred in finding the information requested was relevant to the investigation, that the Court below failed to find the Notice was authorized by the investigating officer, and that the Court below failed to find the respondent had the relevant information as requested by the Notice.
Decision: appeal dismissed.
Held: The Federal Court of Appeal saw no merit in the case before it. The respondent issued the Notice in accordance with its mandate to advance transportation safety. In issuing the Notice, the information sought to be obtained formed part of the legitimate effort to obtain pertinent information regarding the marine occurrence. The Court below properly concluded the Notice was a reasonable use of the statutory powers available to the Respondent in discharging its legal mandate. No further issue was found by the appeal Court with respect to the authorizing officer or his geographical location. Further, the appellant was expected to have the information requested so there was no basis for this court to intervene.
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.
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.
Vessel - Canoe - Impairment - Dangerous Operation Causing Death - Criminal Code
R v. Sillars, 2018 ONCJ 816
Précis: The Ontario Court of Justice held that the definition of "vessel" when used in ss. 253(1)(a), 253(1)(b) and 249(1)(b) of the Criminal Code is inclusive of a canoe.
Facts: This was a ruling on whether a canoe is included in the definition of “vessel” when used in sections 214 to 320.1 of the Criminal Code. The accused was charged with impaired operation of a vessel causing death, operating a vessel with over 80 mg of alcohol in 100 mg of blood, dangerous operation of a vessel and criminal negligence causing death. Crown and defence took different positions on whether canoe was within the definition of “vessel” for criminal offences. The Code defines vessel in s. 214 as “a machine designed to derive support in the atmosphere primarily from reactions against the earth’s surface of air expelled from the machine”. Both counsel were in agreement -- and advised the Court -- that this was the first occasion in which the definition of “vessel” was to be litigated and decided. The Crown submitted that s.4(4) of the Code and s. 15(2)(b) of the Interpretation Act should be considered first to determine a word not defined in the Code, citing other Federal statutes in which “vessel” was defined which included the Canada Shipping Act, Navigation Protection Act, and the Public Harbours Port Facilities Act. Defence argued that since those other statutes were unrelated to criminal law, the definition of “vessel” should not be imported into the Code.
Decision: The Court found that the term “vessel” in s.253(1)(a), s. 251(b) and s.249(1)(b) of the Criminal Code includes a canoe.
Held: In reliance on s. 4(4) of the Code, the Court looked to other Federal statutes where the subject-matter was the same as that in the Code. In finding the subject-matter common to those statutes is the definition of “vessels” however propelled, the Court decided that a canoe fell within the term “vessel”. The Court agreed with Crown that the Code does not require other federal statutes to be related to criminal law to help define a term. The Court looked to the Hansard from 1961 which revealed that Parliament adopted offences from the Small Vessel Regulations and imported them into the Code, relying on the definition of “vessel” under the regulations, which included a canoe. A cross-jurisdictional analysis undertaken by the Court noted that the U.S. federal offence of “boating under the influence” pertained to all boats, ranging from canoes to the largest ships. The Court expressly rejected the defendant’s proposition that a person who is legally impaired and operating a vessel propelled by muscular power should not be punished for their conduct since it lacks the moral culpability to justify a criminal sanction.
Return of Vehicles to Canada - Jurisdiction to Order Return - Theft - Intervenor Status
Mercedes-Benz Financial Services Canada Corp. v. Maersk Line A/S, 2018 FC 1119
Précis: The Federal Court dismissed a motion for injunctive relief when the applicant failed to satisfy the legal test thereof.
Summary not yet available.
Stay - Jurisdiction - Rem Proceedings - Turbines - Vessel
OpenHydro Technology Canada Ltd. (Re) v. , 2018 NSSC 283
Précis: A provincial court may defer to the Federal Court to adjudicate existing in rem claims against a bankrupt.
Facts: While under Bankruptcy and Insolvency Act proceedings, on 23 October 2018 Openhydro requested that the BIA proceedings be converted to the Companies’ Creditors Arrangement Act with the issuance of an Initial Order and a Charging Order, seeking a 30 day stay of proceedings. The stay was opposed by creditors which had preexisting Federal Court actions against the Scotia Tide, a vessel owned by Openhydro, and an offshore turbine control center owned by Openhydro, on the ground that if there was to be a stay it should be decided by the Federal Court and not the Nova Scotia Supreme Court. Those opposed creditors did not object to the issuance of the Initial Order or Charging Order except with respect to the scope and application of the proposed stay of proceedings, which is part of the CCAA process to allow arrangement of the insolvent company to creditors.
Decision: Initial Order and Charging Order granted, subject to decision on the scope of the temporary stay.
Held: In reliance on the S.C.C. decisions of Holt Cargo Systems and Antwerp Bulkcarriers, the Court found that the Federal Court continues to have jurisdiction over the in rem claims advanced by the respondents, despite the on-going CCAA proceedings. In doing so, the Court looked at the decision in Sargeant III  BCSC 767 to reconcile CCAA proceedings with Federal Court actions, deciding that each court should exercise their respective jurisdictions cooperatively. Key to this was Federal Court in rem proceedings pre-dated the CCAA stay and Initial Order request. Accordingly, the Court found that the in rem proceedings were exempt from the stay created by the Initial Order and requested the Federal Court for aid and recognition.
Simplified Action - Default Judgment - Marine Engine - Interest
2955-9820 Québec Inc. v. Construction Navale Atlantique Inc., 2018 FC 1079
Précis: The Federal Court awarded default judgment for damages caused by a negligently designed and constructed marine engine when the defendant did not file and serve a statement of defence.
Facts: In this simplified action, the plaintiff sought default judgment and claimed for the cost to replace the motor in its vessel the “Tommy Francois”. Due to the alleged negligent design and construction of the engine’s muffler, the plaintiff alleged rain water entered and subsequently damaged the motor. Expert evidence was tendered that supported that allegation, specifically that the angle of the muffler was set at an incorrect angle leading to an ingress of rain water.
Decision: Judgment for the plaintiff.
Held: the judge found that the defendant was properly served and did not file a response within 30 days of being served. In default, the defendant was liable for the amount claimed. Interest was awarded at 5%, citing the decisions of the Federal Court in Adventurer Owner Ltd. and the Federal Court of Appeal in Platypus Marine Inc. v. Tatu (Ship).
Charters - Bunkers - Bankruptcy of OW Bunkers - Liens - Practice - Interpleader - Parole Evidence – Appeals - Standard of Review
Canpotex Shipping Services Limited v. Marine Petrobulk Ltd., 2015 FC 1108 2017 FCA 47
Précis: The Federal Court of Appeal held that the trial Judge erred in relying upon parole evidence when interpreting bunker supply contracts and further held that the error was sufficiently serious so as to constitute an error in principle justifying review to the standard of correctness.
Facts: Canpotex obtained bunkers from OW Bunkers (“OW”) for two foreign registered vessels that it chartered. The bunkers were actually supplied by the defendant, Marine Petrobulk (“MP”), a Canadian bunker supplier. MP invoiced OW for the bunkers and OW invoiced Canpotex. Before any of the invoices were paid, OW became insolvent and subsequently bankrupt. Pursuant to various court orders and agreements, any sums owing to OW were to be collected by ING, its receivers. MP and ING both claimed entitlement to payment of the amounts owing by Canpotex in respect of the bunkers supplied. Canpotex brought this action and, pursuant to a consent order made by the Prothonotary under Rule 108, deposited the amount owing into a trust account. Canpotex then brought this application for a declaration that the payment of the funds into trust extinguished its liabilities and any in rem claims against the vessels. MP and ING each brought their own applications for declarations that they were entitled to the funds. ING also opposed the relief requested by the plaintiff.
A critical issue was the relevant contractual documents that applied to the purchases. This issue arose because Canpotex and OW had negotiated a Fixed Price Agreement that included as Schedule 3 a set of terms and conditions. However, because market conditions were not favourable, no purchases were made by Canpotex under this agreement. Rather, the parties were agreed that all purchases made by Canpotex were “spot purchases” not subject to the Fixed Price Agreement. Nevertheless, Canpotex led evidence and argued that Schedule 3 of the Fixed Price Agreement was intended to and did apply to “spot purchases”. This issue was important because Schedule 3 to the Fixed Price Agreement provided that “where the physical supply of the fuel is being undertaken by a third party… these terms and conditions shall be varied accordingly”. In contrast, OW’s General Terms and Conditions, which were referred to in the bunker confirmations, provided that “where the physical supply of the Bunkers is being undertaken by a third party which insists that the Buyer is also bound by its own terms and conditions… these Terms and Conditions shall be varied accordingly”.
At first instance (2015 FC 1108), the motions Judge: (1) allowed the plaintiff's interpleader application; (2) ordered that the full amount of MP’s invoice be paid out of the funds held in trust; (3) ordered that the balance of the funds in trust be paid to OW/ING; and (4) declared that the in personam liability of the plaintiff and the in rem liability of the vessels would be extinguished upon the payments being made. In reaching this result, the motions Judge accepted the evidence of Mr. Ball of Canpotex that the purchases were subject to Schedule 3 of the Fixed Price Agreement. He further held that pursuant to Schedule 3 of the Fixed Price Agreement the terms and conditions were varied to include MP’s Standard Terms and Conditions. He then applied MP’s Standard Terms and Conditions and held that the plaintiff and OW were both customers of MP and were jointly and severally liable to pay it for the bunkers delivered. OW/ING appealed.
Decision: Appeal allowed. The matter is referred back to the Judge for reconsideration.
Held: Interpleader relief is available where “two or more persons make conflicting claims”. The claims must pertain to the same subject matter, must be mutually exclusive and must be such that the applicant faces an actual dilemma as to how he should act. The only claims here that are conflicting and can give rise to interpleader relief are the contractual claims of OW and MP. The assertion of a maritime lien against the vessels by MP under s. 139 of the Marine Liability Act is not a conflicting claim as it is a claim against the vessels and their owners not Canpotex. It was wrong for the trial Judge to extinguish the shipowners’ liability in relation to any s. 139 claim.
The Judge erred in considering Mr. Ball’s evidence which led him to err in concluding that Schedule 3 of the Fixed Price Agreement applied to the purchases at issue. There is nothing in the contractual documents to support his oral evidence. The trial Judge should not have used that oral evidence to replace or overwhelm the words used in the contractual documents. “The parole evidence rule precludes admission of evidence outside the words of the written contract that would add to, subtract from, vary, or contradict a contract that has been wholly reduced to writing.” In failing to follow the principles of contractual interpretation the Judge erred in law and, although errors of contractual interpretation are normally errors of mixed fact and law and not subject to a standard of correctness, this error constitutes an extricable error in principle and is subject to the standard of correctness. Therefore, this matter is referred back to the trial Judge for reconsideration.
Offshore Interiors Inc. v. Worldspan Marine Inc., 2016 FC 27 2016 FCA 307
Précis: The Federal Court will not require parties to litigate issues in another court. The priorities as between the builder and purchaser/mortgagee depend on the wording of the contractual documents.
Facts:Worldspan and Sargeant entered into a vessel construction agreement (“VCA”) for the construction of a yacht by Worldspan for Sargeant. Disputes arose during the course of construction which resulted in the vessel being arrested by Offshore, an unpaid supplier of materials and services. Various claims were filed against the vessel including claims by Sargeant and Worldspan. Sargeant claimed $20 million based on a builder’s mortgage granted to it by Worldspan to secure the advances made by Sargeant to Worldspan towards the construction of the vessel. Worldspan claimed $5 million in respect of amounts alleged to be due and owing to it by Sargeant and which it further alleged were secured by the VCA with a priority above the builder’s mortgage. The vessel was eventually sold by the Federal Court for $5 million, leaving a substantial shortfall. Meanwhile, a petition under the Companies Creditors’ Arrangement Act was filed by Worldspan and suits and countersuits were filed by Worldspan and Sargeant in the British Columbia Supreme Court.
At first instance (2016 FC 27), there were two motions before the Federal Court, one by Sargeant and another by Worldspan, both of which were dismissed. The motion by Sargeant was for an order that the in personam claims between it and Worldspan must proceed in the British Columbia Supreme Court leaving only the in rem claims to be addressed in the Federal Court. This motion was dismissed by the motions Judge on the grounds that Sargeant chose the Federal Court to adjudicate its in rem claims and that this must include the ability to address the underlying in personam liability. The motion by Worldspan was for an order that its claim for unpaid advances had priority over the builder’s mortgage claims. The motions Judge reviewed the various contract documents including section 12.1 of the VCA which provided that Sargeant’s first priority for advances was subordinate to “Builder’s right to receive payments pursuant to this Agreement”. Although Worldspan argued that this section created a condition that it be paid in full before Sargeant could exercise its mortgage security, the motions Judge held that this section merely gave Worldspan the right to deduct any amounts owed from the mortgage claim.
Worldspan appealed the dismissal of its motion.
Held: Although the appellant laid out a contractual interpretation that would support its appeal, the motions Judge adopted an equally plausible construction. There was evidence to support the construction adopted by the motions Judge and, therefore, there was no palpable and overriding error.
Personal Injury - Small Vessel Collision – Evidence - Effect of Guilty Plea in Criminal Proceedings – Adverse Inference
Banford v. Mitchelson, 2016 SKQB 328
Précis: The operator of a vessel involved in a collision is not precluded from denying liability where his guilty plea was entered for economic reasons. He was nevertheless found liable.
Facts:The plaintiff was a passenger in a small pleasure craft. She suffered personal injuries when a second pleasure craft collided with the boat in which she was riding. The collision occurred at night. The operator of the second boat was charged with dangerous operation of a vessel and pleaded guilty to the charge. In his defence to this civil action, the operator of the second boat denied he was involved in the collision.
Decision:Judgment for the plaintiff.
Held:The defendant has testified that he pleaded guilty to the criminal charge to avoid having to take additional time off work to defend the charge. In these circumstances, the defendant’s guilty plea is not determinative of civil liability. Nevertheless, based on the testimony of the witnesses, it is more likely than not that the defendant was the operator of the second boat and is liable for the injuries suffered by the plaintiff. The defendant’s failure to call his spouse, who was with him in his boat on the night of the accident, as a witness justifies the drawing of an adverse inference.
Vessel Damaged Falling from Cradle - Bailment - Exclusion Clause - Spoliation of Evidence - Survey Costs as Damages - Appeals - Interpretation of Contract is mixed Fact and Law
Forsey v. Burin Peninsula Marine Service Centre, 2014 FC 974 2015 FCA 216
Précis: The Federal Court refused to give effect to an exclusion clause on the grounds that it did not expressly or impliedly exclude negligence.
Facts: The plaintiff’s/respondent’s fishing vessel was lifted out of the water and placed on a cradle at the premises of the defendant/appellant for the purpose of repairs and maintenance. The cradle failed 13 days later causing the vessel to fall, as a consequence of which it was damaged. The respondent claimed against the appellant for the damages to the vessel and for the costs of fuel containment and clean up. The appellant denied liability saying the cradle was constructed by the respondent and further relied upon a sign that provided “Boats stored at Owner’s Risk” and an exclusion clause that provided:
“I understand and agree that the securing and locking of my boat is my responsibility, and not that of the said Marine Service Centre, or of its agents, servants, employees, or otherwise. Furthermore I agree to indemnify and save harmless the said Marine Service Centre and its officers, agents, employees, servants or otherwise from, any claims on my part with respect to the same.”
At first instance (2014 FC 974) the trial Judge held that a bailment was created and that the cradle had been constructed by the defendant. As bailee, the burden was on the appellant to prove that it was not negligent in relation to the fitness of the materials used to construct the cradle and the manner in which it was constructed. She held that this onus had not been discharged. In doing so she noted that the materials used to construct the cradle were disposed of by the appellant within 48 hours of the incident. She held that this gave rise to a presumption that the materials were intentionally destroyed, which was not rebutted, and an adverse inference that the materials were unfit. With respect to the exclusion clause, the trial Judge held that neither the sign nor the exclusion clause in the contract expressly or impliedly excluded liability for negligence. She also applied the rule of contra proferentum to the words “securing and locking” in the exclusion clause and held that they did not transfer responsibility for the safety of the vessel to the respondent. In result, the respondent was entitled to damages for the vessel (which was declared a constructive total loss), the containment and clean-up costs and the costs of a surveyor. The survey costs were recoverable notwithstanding they were not paid for by the respondent on the grounds that they were a natural and probable consequence of the tort. The appellant appealed.
Decision: Appeal dismissed.
Held: The two issues on appeal are whether the trial Judge erred in drawing an adverse inference for destruction of evidence and whether she erred in her interpretation of the exclusion clause. The appellant argues there was no evidence supporting an inference the cradle materials were intentionally destroyed and that the issue was not pleaded and was raised by the trial Judge propio motu. It argues that procedural fairness was breached as it was not given a chance to respond to the trial Judge’s theory of the case. The respondent, however, notes that the issue had been pleaded, raised in advance of the trial and was argued at trial. In the circumstances, there was no procedural unfairness. The true question is whether the trial Judge made a palpable and overriding error in concluding the appellant failed to rebut the inference of negligence. The appellant as bailee had the onus of proving it was not negligent which required it to prove the materials used to construct the cradle were in good condition. Having removed those materials, the appellant could not disprove the presumption of negligence. There was no need on the part of the trial Judge to find the appellant intended to destroy the materials.
With regard to the exclusion clause, the parties disagree as to the meaning of the words “securing and locking”. The appellant says these words refer to the placing of the vessel on the cradle whereas the respondent says they refer to the securing of lines, buoys and equipment and the locking of hatches, doors and windows. The trial Judge applied the contra proferentem rule of construction and, because it was clear the erection of the cradle was the responsibility of the appellant, held the words could not have had the meaning advocated for by the appellant. There is no basis to interfere with this holding. The main concern of contractual interpretation is to determine the parties’ intent and scope of their understanding. This is not a question of pure law but of mixed fact and law and can only be interfered with on appeal if there is a palpable and overriding error. There is no such error. Moreover, even if the word “securing” was given the meaning advocated for by the appellant, the clause would not protect it since it is not an exclusion clause. Once the appellant assumed the responsibility for securing the vessel, it was bound to secure it properly.
In Rem Actions - Arrest - Change of ownership - Issue Estoppel
Fingad Shipping Ltd. v. Ningbo Arts & Crafts Imp & Exp. Co. Ltd., 2015 FC 851
Précis: The court applied issue estoppel and struck an in rem action on the grounds that a French court had previously determined the owner at the time of the commencement of the action was not the same as at the time the cause of action arose.
Facts: The plaintiffs contracted with the defendant for the construction of several vessels, including the defendant vessel, the “Chemical Aquarius”. The contracts were subsequently cancelled and arbitral proceedings were held. In 2012 the “Chemical Aquarius” was sold by the corporate defendants. In 2013 the plaintiffs obtained arbitral awards against the corporate defendants, substantial portions of which were outstanding. In April 2015 the plaintiffs commenced a proceeding in France to enforce the arbitral awards and had the “Chemical Aquarius” arrested. On 7 May 2015 the French court lifted the arrest of the vessel. On 3 July 2015 the plaintiffs commenced this action in the Federal Court for the amounts outstanding and again arrested the “Chemical Aquarius”. The plaintiffs also commenced a separate application in the Federal Court for recognition and enforcement of the arbitral awards. The defendants then brought this application to strike the statement of claim or, alternatively, to set aside the arrest.
Decision: Application granted. The statement of claim is struck.
Held: To succeed in this application the defendants must show it is “plain and obvious” the statement of claim has no merit. The burden is high and the court should only strike a pleading in the clearest of cases. The facts pleaded are to be taken as true but the legal conclusions that are alleged to flow from such facts are not entitled to the same presumption. The defendants argue that the owner of the “Chemical Aquarius” at the time this action was commenced was different from the owner at the time of the events giving rise to the action and, therefore, there is no right of action in rem. In particular, the defendants argue that this issue was determined by the French court in a decision that gives rise to issue estoppel. The three pre-conditons for issue estoppel are: (1) the same question has been decided; (2) the judicial decision that creates the estoppel is final; and (3) the parties are the same in both actions. Conditions 2 and 3 are not disputed and the only condition at issue here is whether the French court decided the same issue. Although the French court was dealing with the 1952 Arrest Convention, the central issue in that decision was the same as the central issue in the present motion, namely, whether the ownership of the “Chemical Aquarius” had changed. The French court held the vessel could not be arrested because of the change in ownership. The issue was considered in full and the decision was final. The plaintiffs now say they have new evidence that was not considered by the French court. To allow new evidence would “permit parties to gut issue estoppel of any substantial meaning”. Accordingly, the conditions for issue estoppel are satisfied.