Canada (Ship-Source Oil Pollution Fund) v. M.V. Matterhorn Limited

In Pollution (Ship Source) on (Updated )

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”.