Précis: The Federal Court of Appeal upheld a decision of the Federal Court wherein it was determined that the limits of liability under the MLA applicable to “passengers” apply only to persons on board the ship seeking to limit liability.
The plaintiffs brought this action for limitation of liability under Part 3 of the Marine Liability Act. The plaintiffs were the owners of a fishing lodge that offered their guests the use of boats and motors. The defendants were a family of four who were guests at the lodge. During the defendants’ stay at the lodge they were involved in a collision between two of the plaintiffs’ boats. The first boat was operated by one of the plaintiffs and had two of the defendants as passengers. The second boat was operated by one of the defendants with the fourth defendant as a passenger. The defendants in the second boat were injured. The main issue in the case was whether the applicable limitation was under s. 28 or s. 29 of the MLA. At the time s. 29 applied to “passengers” of ships of less than 300 gross tons and provided a limit of liability of at least 2 million SDRs (approximately CDN$3 million). Section 28 applied to all ships of less than 300 gross tons except passenger claims under s. 29 and provided for a limit of liability of $1 million. (The limitations of Part 4 of the MLA, which implements the Athens Convention, were not applicable as the defendants were not passengers “under a contract of carriage”.) The term “passenger” is a defined term in Part 3 of the MLA and includes a person carried on board a vessel “operated for a commercial or public purpose”. The parties apparently presented arguments relating to whether the vessels were used for commercial purposes. However, at trial, the Judge pointed out that this argument was misplaced. The trial Judge noted that the two defendants who were injured were not aboard the vessel operated by one of the plaintiffs. Therefore, regardless of whether the vessels were used for a commercial purpose, the injured defendants were not passengers vis-a-vis the plaintiffs and the s. 29 limitation did not apply. Accordingly, the limitation applicable was $1 million under s. 28. The trial Judge further dealt with a subsidiary issue of whether the limitation amount included interest and costs and held that it did not. The defendants appealed to the Federal Court of Appeal arguing that the limitation should have been under s. 29.
Decision: Appeal dismissed.
Held: The appellate Court agreed that s. 29 of the MLA had no application as the injured parties were not on board the first boat. The Court noted that Art. 7 of the Convention on Limitation of Liability for Maritime Claims, from which s. 29 of the MLA is derived, favoured the interpretation that s. 29 applies only to persons on board the ship seeking to limit liability. A cross-appeal from the trial Judge’s decision that the limitation amount was exclusive of interest and costs was abandoned. The Court said this was a question to be left for another day.
Comment: This case concerns sections 28 and 29 of the Marine Liability Act but the Reasons for Judgment refer to the section numbers as they existed in 2006. This can be confusing for anyone familiar with the current numbering because the section numbers have since been transposed. What was s. 28 is now s. 29 and vice versa. To be consistent with the Reasons and to avoid adding to the confusion, I have decided to use the 2006 section numbers in this summary