Canada v. Ship Source Oil Pollution Fund

This was an action by the Crown challenging the adequacy of an offer of compensation made by the Administrator of the Ship Source Oil Pollution Fund pursuant to the provisions of the Marine Liability Act. The Crown incurred costs in excess of $220,000 to clean and destroy an abandoned tugboat and applied to the Administrator of the Ship Source Oil Pollution Fund for reimbursement of this amount. The Administrator offered the Crown only $20,000, arguing that if the Crown had acted reasonably it would have and could have pumped the contaminants from the vessel years earlier. As a preliminary issue, the Court had to consider the appropriate standard of review of a decision of the Administrator and the scope of the appeal. The Court held that the standard was one of reasonableness rather than correctness and that the Court must not substitute its decision for that of the Administrator unless an unreasonable conclusion has been demonstrated. The Court next considered whether the Crown had been negligent and concluded that it had been negligent in waiting five years before exercising its statutory powers to clean and destroy the vessel. This delay increased the claim unnecessarily. The Court next considered whether the Administrator had breached the rules of procedural fairness by failing to provide the Crown with an expert report which apparently quantified the loss at $20,000. The Court held that the expert’s report should have been provided to the Crown. In result, the Court ordered the Administrator to provide the report to the Crown and ordered the Administrator to make a second offer of compensation after receiving and considering any comments by the Crown.