Précis: The Federal Court held that the plaintiff was entitled to recover losses for repair of a bridge under its operation and management that was struck by the defendants’ ship.
Facts: On 30 September 2015 the “BBC Lena” struck Bridge 19, a bridge which forms part of the St. Lawrence Seaway. The non-profit corporate plaintiff was at all times, pursuant to a s. 80(5) Canada Marine Act, S.C. 1998, c. 10 agreement with the Crown, charged with the management and operation of the Seaway, including the struck bridge. The plaintiffs claimed $1 million in damages for the cost of repairing the bridge, commencing actions in rem against the vessel and in personam against its owners and all others interested in it. The defendants’ submitted that the plaintiff’s damages were not accompanied by damage to property owned by the plaintiff, making the damages pure economic loss, recoverable only in certain circumstances, none of which cover the case at bar.
The case drew heavily on the agreement between the plaintiff and the Crown pursuant to ss. 80(5) and 91(1) of the Canada Marine Act. The defendants claimed that s.91 of the CMA meant the plaintiff can only conduct itself and engage in legal proceedings to “protect Her Majesty’s interests, not the Plaintiff Corporation’s interests”.
Decision: Plaintiff entitled to recover losses.
Held: The Court found that the matter boils down to the nature of the contractual relationship between the plaintiff and the Crown. Analyzing the CMA and jurisprudence on relational economic loss, the court decided the case in reference to the following points:
i. the plaintiff’s right to pursue its claim;
ii. whether the right is restricted;
iii. whether the intent of the agreements was to exclude recovery by the plaintiff;
iv. whether the plaintiff’s loses were relational economic loss; and if that last point was answered in the affirmative, whether the losses are unrecoverable.
On the first point, the court found that responsibility for the management and operation of the damaged bridge lies exclusively with the plaintiff. As the Crown transferred to the plaintiff all risks and responsibilities pertaining to the bridge, the plaintiff can and had the exclusive right to pursue claims for damages. The court went further to state it was also commercially prudent for the plaintiff to recover such costs due to negligence by parties such as the defendant.
On the second point, the court found that the rights of the plaintiff were not restricted to protecting crown property and crown interests on behalf of the crown. Neither s.91 of the CMA or the purpose of the act was to restrict the rights of the plaintiff. It would be contrary to the purpose of the act if the Plaintiff had no right of recovery in circumstances such as this case, as the purpose of the act is to manage the Seaway in a commercially sound manner.
On the third point, the court found that the agreement makes the plaintiff responsible for the bridge, its operation, management and repair at its own expense, operating the Seaway on a commercially sound basis and as a prudent owner would. The court found that in order for that to be accomplished, the plaintiff must be able to pursue actions to recover costs it incurs to repair damage to the assets under the agreement caused by the negligence of third parties. This authority stems from the CMA and is implemented by the agreements.
The fourth point provided the bulk of the judgment, for obvious reasons: The plaintiff’s claim did not fit neat within circumstances previously held as defining contractual relational economic loss. The judge resolved the issue by determining If the plaintiff’s repair cost damages fell within the possessory interest exception to the general presumption against recovery of relational economic loss. By virtue of s. 80(5) of the CMA and the agreements, the judge found that the Crown relinquished possession of the Seaway assets, and the plaintiff “stepped into the shoes of the Crown in all relevant respects, short of outright ownership”. Importantly, the plaintiff sought the costs of repairing the bridge, and not seeking recovery of loss of use. Thus as the plaintiff had exclusive possession of and a possessory interest in the bridge, the claim falls within the possession or proprietary interest exception and as such are recoverable relational economic losses