Papers and Articles

Insuring Crew and Onboard Workers - Application of Workers Compensation Act to Shipboard Accidents Challenged  Western Mariner/Western Fish and Seafood April 2004

 The British Columbia Worker’s Compensation Act, and other similar legislation across Canada, has been described as a “historic trade-off” in which workers gave up their rights of legal action against their employers in exchange for compensation from the Worker’s Compensation Board (“W.C.B.). From the perspective of workers, the advantage gained from this legislation is that upon being injured, compensation is automatically paid to insured workers regardless of fault without the need for litigation and its associated risk, expense, and delay.  Injured workers also do not need to worry about the possibility of an insolvent defendant.  The main disadvantage of the legislation is the loss of the ability to recover compensation for pain and suffering. Since damage awards from courts for pain and suffering can be as high as $295,000, this can be a significant loss.  The corresponding advantage of the legislation from the perspective of employers is the bar to litigation pursuant to s. 10 of the Act, which protects them from the expense of litigation along with, presumably, lower W.C.B. premiums resulting from the fact that compensation for pain and suffering is not paid to workers. The corresponding disadvantage to employers is the exposure to higher premium assessments because of liability regardless of fault.

 Up until recently it has always been assumed that the Worker’s Compensation Act applies to accidents aboard ships. However, a recent case before the British Columbia Supreme Court has questioned this assumption.  In Laboucane v. Brooks et al. 2003 BCSC 1247, a shore based welder was injured as a result of an explosion that occurred while he was welding on a drum located at the back of a commercial fishing vessel moored in Prince Rupert Harbour.   It was alleged by the welder that the explosion was caused by the vessel owner failing to inspect and repair the vessel’s fuel supply system so as to ensure gasoline would not leak and by failing to properly vent the fuel system.  It was also alleged that the vessel owner was in breach of several safety related regulations passed pursuant to the Canada Shipping Act.  Although the welder received health care benefits as well as $163,633 in income loss benefits directly from W.C.B., he sued the vessel owner, presumably to recover compensation for pain and suffering.  At the same time, the W.C.B. sued the vessel owner in the welder’s name (pursuant to its right of subrogation) to recover the benefits that it had paid out to him.

 At a summary trial application, the vessel owner applied to dismiss the action of the welder (including W.C.B.’s subrogated action) on the basis that it was barred pursuant to section 10 of the Worker’s Compensation Act.  In response, the welder conceded the constitutional validity of the Worker’s Compensation Act, but relied upon the Supreme Court of Canada decision of Ordon v. Grail [1998] 3 S.C.R. 437 to argue that the bar to litigation in section 10 of the Act should be “read down” or held inapplicable to shipboard accidents involving negligence claims.  In Ordon v. Grail, the Supreme Court of Canada decided that several provincial laws of general application relating to the rights of family members of deceased persons to sue for their losses were constitutionally not applicable to negligence claims relating to boating accidents.  The court did so based upon its application of the “vital part” or “central core” test to hold that “[m]aritime negligence is a core element of Parliament’s jurisdiction over  maritime law” (para. 84). In doing so the Supreme Court indicated that the kind of maritime negligence claims which go to the central core of admiralty jurisdiction (so as to preclude the application of provincial law) are not limited to claims involving collisions or faulty navigation (para. 85 and 90).  Notwithstanding the Orden v. Grail decision, the court in Laboucane rejected the welder’s argument and upheld the applicability of the bar to litigation contained in the Worker’s Compensation Act based upon the doctrine of incidental effects.  This doctrine provides that where, pursuant to what is called the “pith and substance” test, there is a valid provincial law of general application, the provincial law may incidentally affect matters of federal jurisdiction.  By categorizing the accident as a personal injury claim arising out of a work place accident the court was able to uphold the legislation based upon this doctrine.  While it was argued (correctly in my view) that a valid law that incidentally affects a federal law might still be “read down” or be held inapplicable, the court declined to do so, apparently, because the accident did not involve the operation or navigation of the vessel.

 While this decision can be viewed as a victory for vessel owners in British Columbia, it is only a limited victory given the fact the welder was not involved in the operation or navigation of the vessel.  If the accident had involved a crewmember or even a guest while the boat was in operation, the bar to litigation might well have been held to be inapplicable.  In addition, given the clear language of Orden v. Grail, an appellate court in British Columbia (or trial court in another province) might decide a case with similar facts differently in the future.  From the perspective of insured workers this could be a win/win situation.     It is possible, they could be allowed to initially recover compensation from W.C.B. for income loss (regardless of the solvency of their employer) along with the other rehabilitative type services normally offered by W.C.B.  and then follow up with a law suit to recover their damages for pain and suffering and any other damages not covered by W.C.B.  From the perspective of vessel owners, if the Worker’s Compensation Act were held inapplicable to shipboard accidents they could find themselves in the unenviable position of paying W.C.B. premiums but not being able to take the benefit of those premiums.  In addition, they may experience increases in the cost of marine insurance.  Accordingly, if the applicability of s. 10 of the Worker’s Compensation Act were successfully challenged, the federal government would likely find itself under a lot of pressure to enact federal legislation similar to s.10.  The provincial government might also find itself under pressure to amend its legislation to prevent the W.C.B. from pursuing subrogated actions (in the names of injured workers) against vessel owners from whom it either directly or indirectly collects premiums. 

 In the meantime, it would be prudent for vessel owners to check with their insurers to ensure that they have insurance protection in place in the event that the bar to litigation provided by section 10 of the Worker’s Compensation Act is held to be inapplicable. 

 Brad Caldwell is a Vancouver based lawyer and former fisherman and towboat worker whose practice is primarily devoted to fisheries, maritime and insurance matters.