Torts – Limitation of Liability – Calculation of damages for net damage

claim – consequently economic loss – unjust enrichment – punitive damages

Capilano Fishing Ltd. v. Qualicum Producer (The) 2001 BCCA 244 (B.C.C.A.)

This was a net damage case involving a claim for damages incurred by a vessel when its net was fouled by another vessel during a very short opening in the 1997 herring seine fishery. The issues raised by this case included the following: 

1. Recovery for contractual relational economic loss;

2. Limitation of Liability;

3. Restitution for unjust enrichment with an accounting of profits earned by the defendants; and

4. Punitive damages;

5. Quantification of damages.

At the trial level, Warren J. applied the former provisions of the s. 574 of the Canada Shipping Act to allow the defendants to limit their liability to approximately $40,000 dollars.

Although damages were limited to $40,000, the trial court also addressed the issue of how damages should be quantified.

With respect to unjust enrichment, the trial judge applied the reasons of Lowry J. in the “Cape Flattery” (1 December 1997) Vancouver C953623 (B.C.S.C.) to reject this claim.  With respect of quantification of the loss of fish, the court based its award upon the daily average of the vessels fishing in the area. In doing so, the court said “[f]rom time immemorial fish have been among the more elusive of prey. The only certain catch is the one stored on board.”

The trial court also rejected the claim for punitive damages.

With respect to contractual relation economic loss, the trial court followed the decision of Lowry J. in the “Cape Flattery” to allow the claim of members of a fishing pool who had an interest in the catch of the plaintiff vessel. However, it rejected the claim of a fish processor, which had supplied a licence to the plaintiff vessel at a discounted rate in exchange for the right to purchase its catch.

Upon appeal, the decision was varied as set out below.

With respect to limitation of liability, the court reversed the trial court and prevented the defendants from limiting their liability. In doing so, it adopted the following quote from Lowry J. in Savage Fisher (The) v. Prosperity (The) (2000) 78 B.C.L.R. (1124) (B.C.S.C.):

I would have considered that the owner or the charterer of a vessel that participates in a shotgun herring opening must be privy to damage to the property of others its vessel may cause. I say that because of the nature of the activity.  As indicated at the outset, large trawlers are operated in a high stakes competition for fish which forces them to maneuver (sic) at speed in close proximity.  Masters are encouraged to catch as much herring as they can in what is most often a very short period of time  . . . It is an activity where an owner’s instruction to exercise caution, end even to put safety first, must for all practical purposes be lost in the priority of making a large catch. As I said at the outset, it is a most unusual kind of maritime adventure – one that compels masters to sacrifice good seamanship for profit as happened in this case. [para. 51]

. . . I have difficulty seeing on what basis an owner or charterer that engages its vessel in that activity could meet the standard of care required to be permitted the privilege of limiting its liability. [para. 52]

With respect to quantification of damages, instead of basing it award on the daily average as did the trial court, the court made a larger award based upon ½ of the amount caught by the offending vessel. In doing so, the court considered the maxim omnia praesumuntur contra spoliatorem (all things presumed against a wrongdoer) as well as the fact that “[f]rom time immemorial fish have been among the more elusive of prey.  The only certain catch is the one stored on board” (para. 36).

With respect to the claim of a fish processor for the value of a herring licence given to the claimants at a discounted price in exchange for a promise by the claimants to sell their catch to the fish processor, the court was unable to find any evidence to support the claim, as the processor had led no evidence regarding its profits. The court also cautioned that it did “not wish to be taken as holding that such a claim for economic loss would lie” (para. 50).

With respect to the claim based on unjust enrichment, the court said “actions for negligence in the operation of vessels are actions for compensation for losses caused. There is no need to complicate such actions with notions of unjust enrichment” (para. 49). Similiarly, with respect to the claim for punitive damages the court said, “it is not for this Court to introduce into maritime law a concept which is unknown to it” (para. 49).

Torts – Application of Collision Regulations to “Shotgun Herring Opening” – Limitation of Liability

North Ridge Fishing Ltd. et al. v. The “Prosperity” 2000 B.C.S.C. 1124 (Lowry J.)

This case involved a collision between the net of the fishing vessel Savage Fisher (plaintiff) and the fishing vessel “Prosperity” in the 1997 herring seine fishery. This fishery was described by the trial judge as a “high stakes race . . . where from an opening ‘gun’, many vessels – sometimes dozens – would set their nets at speed in very close proximity during a short period of time.” The issues in this case included:

1. The application of Rule 15 (Crossing Situation) of the Collision Regulations;

2. Apportionment of fault;

3. Tonnage of fish caught; and

4. Limitation of Liability.

Rule 15

With respect to the application of Rule 15, the court ruled that this was not a crossing situation because “the Crossing Rule can only apply where what would be a give-way vessel can ascertain the future course of the stand-on vessel from observing her movement and making due allowance for the nature of the locality”.  In rejecting the application of the Crossing Rule, the court pointed out that the Crossing Rule must always be read with the Responsibility Rule (Rule 2), which refers to the precaution to be taken by ordinary seam or by the special circumstances of the case.

Apportionment of Fault

With respect to apportionment of fault, the court apportioned 75% of the fault to the plaintiff based primarily upon the “woefully inadequate” look out being kept by the vessel (there was no assistant in the wheel house).  In addition, the court found that the master of the plaintiff vessel also failed to exercise the caution that good seamanship dictated because he was being driven by his desire to maximize his catch.

The court also assessed 25% of the fault to the defendant vessel for not taking earlier measures to avoid the collision when it ought to have been apparent that one was going to occur.

Tonnage of Fish Caught

Given the uncertainties in the evidence regarding the amount of fish caught in the damaged net, the court followed the approach taken in two previous cases and made an award based upon the daily average of all of the vessels at the opening.

Limitation of Liability

Although the amount of the award made this issue largely academic, the court reviewed limitation of liability under the pre-1997 amendments to the Canada Shipping Act and found that it would have allowed the vessel to limit.  The court advised that it would have done so based upon two previous decisions of the court. However, it questioned the correctness of those earlier decisions by expressing the view that it would not have been prudent for any owner to allow its vessel to partake in such a shotgun style opening.

Editor’s Note: As a result of a change of management approach from an overall quota fishery to an individual (shared) quota type fishery, these types of high intensity shotgun openings no longer occur at same intensity as they used to on the British Columbia coast.