Kirby Offshore Marine Pacific LLC v. Heiltsuk

In Admiralty Practice, Limitation of Liability in Maritime Law, Stays of Proceedings on

Facts: In October 2016 an articulated tug and barge ran aground in waters near lands subject to Indigenous title claims, spilling diesel fuel and lubes from the tug into the sea. An action was commenced in the B.C. Supreme Court by the Indigenous band in October 2018 asserting its title to the lands and water-covered lands where the spill occurred. In May 2019, the owners of the tug and barge commenced limitation proceedings in the Federal Court pursuant to the LLMC 1976 seeking to limit its liability for the spill. The Indigenous band then applied to the B.C. Supreme Court for an order confirming its jurisdiction to adjudicate the claims to title, and also filed a motion in the Federal Court limitation action seeking to stay that action on jurisdictional grounds. The owner applied in the Federal Court to enjoin the Indigenous band from continuing the B.C. Supreme Court action.

Decision: Indigenous band enjoined from the B.C. Supreme Court Action; Motion seeking to stay limitation action is dismissed.

Held: The Court noted that the proper test for enjoyment is appropriateness as set out in s. 33 of the Marine Liability Act, and it is a discretionary taking into account all of the relevant circumstances. The Federal Court has exclusive jurisdiction relating to the constitution and distribution of a limitation fund pursuant to Articles 11 and 13 of the LLMC and s.32(1) of the Marine Liability Act. The Court held that the limitation act will determine only whether the owner is entitled to limit its liability pursuant to the Bunkers Convention and LLMC. If the owner is entitled to limit,  questions of liability and damages would be removed from the B.C. Supreme Court litigation.  The Indigenous band seeks a determination of title and rights in the B.C. Supreme Court action which would found a constitutional challenge to the limitation provisions of the Marine Liability Act. In recognizing that shipowners are entitled to set up one limitation fund and have all claims against that fund brought in one proceeding in one court, the Court held that claims beyond the shipowner’s right to limit liability would defeat the purpose of limitation proceedings.