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Miscellaneous Cases
SalvageSalvage – Jurisdiction over Aircraft – Protection of Finders' Rights Brooks Aviation Inc. v Boeing SB-17G, 2004 FC 710 This was an application by the Plaintiff for summary judgment in respect of a claim for salvage. The res was a B-17 aircraft that had crash landed on a lake in Labrador during the winter of 1947. The following year the aircraft sank during the spring thaw. The wreck was discovered by the Plaintiff in July 1998. The Plaintiff sought a declaration for the following relief: that the Federal Court had exclusive jurisdiction to determine the salvage claim; that the Plaintiff had a maritime lien; that the Plaintiff had possession of the res and that other parties are enjoined from interfering with the Plaintiff's salvage rights; and, that the Plaintiff was entitled to a full and liberal salvage award. On the question of jurisdiction the Court noted that the Federal Court had maritime jurisdiction and that the law of salvage was a traditional area of maritime law. The Court specifically considered whether section 449 of the Canada Shipping Act limits the law of salvage to aircraft on or over the seas, tidal waters or Great Lakes. The Court held, however, that this section did not limit the traditional maritime law which had been extended to aircraft. (Note: In reaching this conclusion the Court refused to follow a contrary decision Smith v Smith, [1979] 4 WWR 665.) The Court then turned to the salvage claims. It noted that a claim of salvage requires: that the res be in peril; that the salvor be a volunteer; and that the salvage be successful. The Court found that the res was in peril and that the Plaintiff was a volunteer but, as the aircraft had not yet been recovered, the salvage was not yet successful. Accordingly, the Court held that the Plaintiff did not yet have a salvage claim. However, the Court did indicate it was prepared to protect the Plaintiff's priority rights as finder of the res upon further application of the Plaintiff. Joinder of Parties – Owners of Salved Property Early Recovered Resources Ltd. v. Gulf Log Salvage Co-operative Association et al., 2003 FCT 549 This was a motion to add two associations of forestry companies who were owners of logs as either interveners or defendants in the Plaintiff’s action for salvage in respect of 17 unidentified logs from the BC coast. In the original action, the Province had been named as a Defendant but had a limited interest to stumpage fees which had likely already been paid prior to salvage. After noting that the style of cause should have been in rem to name the 17 unidentified logs, the Prothonotary held that the owners of the salved property, who would be liable for the salvage claim, should be defendants as they should have notice and be afforded the chance to protect their position. The two associations had an interest in rem in the logs (although ownership was unidentified) and an interest in protecting the existing log recovery system. The motion was granted adding the associations as defendants. Salvage Awards Cox v The "Trade Up", (February 20, 1998), No.T-466-95 (F.C.T.D.). This was a reference to determine a salvage award. The Plaintiff successfully salvaged the Defendant vessel which had been stranded on rocks. The salvor had retained two other vessels to assist him in the salvage and paid the owners of those vessels what the court considered "overgenerous" amounts. The Court noted that salvage awards "are intended to award a person who comes to the aid of a vessel in distress, and to reward that person handsomely so as to encourage persons to render aid in the future. Salvage awards are not intended to provide a living for the maritime community of the area in which salvage takes place." The Court ultimately awarded the Plaintiff $15,000.00 being 1.5 times the actual and prospective out of pocket expenses of the Plaintiff. Insurer - Whether Volunteeer General Accident Indemnity Company v. The "Panache IV",(October 31, 1997) No. T-1497-95 (F.C.T.D.) This case has a good discussion of salvage. The case involved a claim for a salvage award by the underwriter of the "Panache IV". The "Panache IV" had an insured value of $275,000.00 and sank in deep waters under suspicious circumstances. The underwriter, suspecting the vessel had been scuttled, undertook salvage efforts. After two failed attempts the underwriter was finally able to raise the vessel. The raising of the vessel provided crucial evidence that the vessel had, in fact, been scuttled. The salvage of the vessel cost the underwriter in excess of $307,000.00. The salved vessel was sold for slightly in excess of $30,000.00. The underwriters sought a salvage award out of the sale proceeds to defray some of the costs of the salvage. The mortgagee of the vessel, who was owed approximately $240,000.00, opposed the salvage award arguing that the underwriter was a party interested in the vessel and its services were not therefore rendered voluntarily such as to attract a salvage award. The Court, however, held that the underwriter was entitled to a salvage award and awarded the underwriter $12,000.00 plus additional expenses of $2,600.00. Jurisdiction - Rights of the Crown Ontario v Mar-Dive Corp., (December 20, 1996) Nos. 92-CU-60398, 92-CU-60588 & 92-CQ-21849 (Ont. Ct. Gen. Div.)
This very interesting case concerned a dispute over the ownership of and salvage rights to the S.S. "Atlantic", a double-sided wheeled paddle steamer that sank in 1852 on the Ontario side of Lake Erie. The competing claimants were the Crown in the Right of Ontario, Michael Fletcher, a diver who had found and marked the wreck in 1984, and various U.S. companies whose principals found the wreck in 1989. The U.S. companies removed various artifacts which they transported to California. They then commenced proceedings in California which resulted in a judgment granting them salvage rights and recognizing their "uncontested claim of title". The California District Court further issued an injunction against Fletcher who continued to dive on the wreck. The U.S. companies then sought to enforce this judgment in Ontario. The Ontario Court General Division, however, declined to do so. The Ontario Court held that the District Court of California did not have jurisdiction as there was no real and substantial connection with California. The Court further found that even if the California Court had jurisdiction the judgments were obtained by means of half-truths and artificiality and as such it would be against public policy to enforce them. The Court then went on to consider the claim of the Ontario Crown to ownership. The Court held that the "Atlantic" had been abandoned by her owners at the time of the sinking. It further held that the vessel became the property of the Crown either as owner of the lake bed in which the vessel had become embedded or pursuant to the Crown's Royal Prerogative which entitles it to all unclaimed wrecks.
Note: For cases involving injuries to Passengers see Carriage of Passengers. Personal Injury – Fishing Lodge – Defect – Failure to Warn – Limitation Cuppen v Queen Charlotte Lodge Ltd. et al, 2006 BCCA 443 affg. 2005 BCSC 880 The Plaintiff was a guest at the Defendant's fishing lodge. He was provided with a fishing boat by the Defendant and was injured while operating the boat. The trial Judge found that the boat veered suddenly and dramatically through no fault on the part of the Plaintiff. The Plaintiff was thrown against the starboard side of the boat and suffered a serious break to his right femur. The trial Judge found that the accident was caused by a defect in the boat but was not able to determine the particular defect and was therefore not able to conclude that the Defendant was negligent in equipping the boat with a defective steering system. The trial Judge further found, however, that a number of complaints had been made to the Defendant about the steering systems by previous guests and held that the Defendant was liable for failing to properly warn the Plaintiff about possible problems with the steering and for failing to take steps to address the complaints. A further issue in the case was whether the applicable limitation of liability was that contained in Part 3 of the Marine Liability Act (Limitation of Liability for Maritime Claims) or Part 4 of the Marine Liability Act (Carriage of Passengers). The trial Judge held that the limitation in Part 4 only applied where there was a contract of carriage and that in this case there was no such contract, the Defendant having merely provided the Plaintiff with a boat to fish. Accordingly, the applicable limitation was $1 million as provided in Part 3 of the Marine Liability Act. In result, the Plaintiff was awarded damages of an amount in excess of $300,000. An appeal by the Defendant to the Court of Appeal for British Columbia was dismissed on the grounds that the arguments on appeal related primarily to questions of fact. Personal Injury – Limitation Periods – Athens Convention – Extension of Suit Time – Application of Provincial Limitation Statutes MacKay v Russell et al., [2006] NBQB 350 The Plaintiff was a passenger on a whale watching vessel and was injured at sea when she tripped over a cooler while leaving the washroom on the vessel. The accident occurred on 3 August 2003 but action was not commenced until 20 July 2006. The Defendants brought this motion to dismiss the Plaintiff's claim on the grounds that it was statute-barred by the two year limitation period in the Athens Convention as enacted by the Marine Liability Act. The Plaintiff argued that the applicable limitation period was six years as provided the New Brunswick Limitation of Actions Act. Alternatively, the Plaintiff argued that the Court had the discretion to suspend or interrupt the running of the limitation period. The Court reviewed the decision of the Supreme Court of Canada in Isen v Simms, 2006 SCC 41 and concluded that the Plaintiff's claim was in pith and substance in relation to navigation and shipping and therefore governed by federal Canadian maritime law and not the provincial limitations statute. The Court then considered whether it had a discretion to suspend or interrupt the running of the limitation period. The Court referred to art. 16(3) of the Athens Convention which provides that “The law of the court seized of the case shall govern the grounds of suspension and interruption of limitation periods, but in no case shall an action under this Convention be brought after the expiration of a period of three years...”. The Court held that the phrase “law of the court seized of the case” referred to Canadian maritime law and not the law of New Brunswick. The Court noted that a three part test had been established to determine when an extension of a limitation period should be made under s. 572(3) of the Canada Shipping Act (which had been repealed by the Marine Liability Act) and that this was the appropriate test to apply. The test was: 1. did the Plaintiff have a valid prima facie case; 2. was the Defendant aware of the claim and would it suffer prejudice by an extension, other than the loss of the limitation defence; and 3. having regard to all the circumstances, was it in the best interest of justice that time be extended. Applying the first two parts of this test to the facts of the case, the Court found that the Plaintiff had a good prima facie case and that the Defendant would not be prejudiced by an extension. With respect to third branch of the test, the Court noted that the Defendants had been put on notice of the loss immediate after the accident and there had been discussions between counsel. In particular, on 11 February 2005 the Defendants' solicitors wrote to the Plaintiff's solicitors advising that they would call once they had reviewed documents that had been provided. They did not call until after the expiry of the two year limitation period. Considering all these factors, the Court held it was in the best interests of justice that the limitation period be interrupted or extended. It is noteworthy that the Court further approved of a general power at common law to extend a limitation period in “very peculiar” or “special” circumstances and held that such circumstances existed here as the short limitation period in the Athens Convention had not been addressed in a leading text on the law of limitation periods. Constitutional Law – Occupiers Liability Act – Personal Injury on Wharf Jackson v Fisheries and Oceans Canada, 2006 BCSC 1492 See the summary above under “Canadian Maritime Law” where it was held that the provincial Occupiers Liability Act applied to a slip and fall on a ramp leading to a wharf. Personal Injury - Burden of Proof - Limitation Period Ferguson v Arctic Transportation Ltd., (May 8, 1998) No.T-1941-93 (F.C.T.D.) This was an action for damages for personal injury. The Plaintiff was a Panama Canal Pilot. At the time of the accident he was one of three Pilots on board the barge "AMT Transporter", ex the "Arctic Tarsiut", when she was transiting the Panama Canal. He was injured when an emergency tow line secured to the sides of the barge apparently became snagged, whipped up and hit him. The Plaintiff alleged that the Defendants were negligent and the barge was unseaworthy in that the emergency tow line had been improperly secured. The trial judge, however, dismissed the Plaintiff's claim. She found that the barge had been prepared for transit through the canal by a reputable contractor, that the Panama Canal Commission had approved the method of securing the tow line and that the Panama Canal Commission inspectors had inspected the work after it was done. The trial judge further noted that at the time of the accident the barge was under the exclusive control of Panama Canal Commission employees. Accordingly, the trial judge found that the Plaintiff had failed to prove negligence or unseaworthiness. A second issue in the case concerned the applicable limitation period. The Defendant argued that the matter was governed by Panamanian law which provided for a one year limitation period. The Plaintiff argued that the matter was governed by section 275 of the Canada Shipping Act which provides that in the absence of a limitation period in the act itself the case should be governed by the law of the Port of registry (i.e.. Canada). The trial judge held that section 275 applied only to seamen working on Canadian ships and that it had no application to an accident involving a foreign pilot in foreign waters. Consequently, she found that the action was time barred. Personal Injury - Liability of Wharf Owner Hawkins v The "Margaret Elizabeth No.1" et al., (June 10, 1997) No.T-2515-94 (F.C.T.D.) This case concerned a 17 year old plaintiff who was injured when the rigging of a fishing vessel struck a light pole on a wharf causing it to fall and strike the Plaintiff. The Plaintiff brought this action against the fishing vessel. The fishing vessel in turn brought a third party action against the Crown as owner of the wharf. The fishing vessel was held 100% liable for the accident. The Court rejected the third party claim finding that the Crown was not aware of any defects in the light poles and that any defects were hidden and would not have been discoverable on a reasonable inspection. The Plaintiff was awarded in excess of $438,000.00. Water Skier - Contributory Negligence Martin v Derrach, (January 2, 1997) No. GSS 2303 (P.E.I.S.C.) This was a claim for personal injury damages arising out of a water skiing accident. The Plaintiff was being towed behind the Defendant's Jet Ski when she collided with an anchored boat and severely injured her right leg. Although there was no spotter aboard the Jet Ski, the parties agreed that the absence of a spotter was not causative. The Court held that the Jet ski driver clearly had a duty to take reasonable care for the safety of his skier and that this duty required he drive safely and on a course in which the skier would be safe from collision. The Court, however, found that the driver had done so and that the collision was caused by the skier deliberately choosing to ski a path in close proximity to the anchored power boat. In result, the action was dismissed. Charter PartiesCharters– Bailment – Waiver of Subrogation North King Lodge Ltd. v Gowlland Towing Ltd. et al., 2005 BCCA 557 affg. in part 2004 BCSC 460 This matter concerned liability for the sinking of the barge “Sea Lion VI”. The barge had been hired by the Plaintiff, the owner of the barge, to the first Defendant, a logging company, for use as an accommodation barge at a remote logging camp. One of the terms of the agreement was that the owner would provide a watchman. When the logging operations had ceased the second Defendant, the towing company, was retained to remove the log booms. In doing so the crew of the tug untied the port side mooring lines of the “Sea Lion VI” which had been tied to the log booms. Shortly thereafter the “Sea Lion VI” went aground and sank. The trial Judge found as a fact that the removal of the port lines caused the sinking. The trial Judge held that the contract between the owner and the logging company was one of bailment and that the logging company was liable for failing to promptly advise the owner when it became apparent that the barge was in danger. The trial Judge further held, however, that because the owner was required by the contract to provide a watchman it had the primary responsibility for the safe moorage of the barge. With respect to the liability of the towing company, the trial Judge held that the owner had committed a trespass by tying the barge to the log booms and that the duty owed by the towing company to a trespasser was to not intentionally harm the Plaintiff, act recklessly or without common humanity. He held that although the towing company did not act with reasonable care it did not breach these duties. In the result, the action against the towing company was dismissed and the liability for the sinking was apportioned 80% to the Plaintiff and 20% to the logging company. The owner appealed the dismissal of the action against the towing company and the logging company appealed the finding that it was 20% liable. The British Columbia Court of Appeal dismissed the appeal by the owner and allowed the appeal by the logging company. The Court of Appeal rejected the argument that there was an implied permission to moor to log booms, agreed that the tying of the barge to the boom sticks was an act of trespass and agreed that the duty owed to a trespasser was to act with common humanity. The Court of Appeal held that this duty had not been breached by the towing company. With respect to the appeal by the logging company, the Court of Appeal disagreed with the trial Judge that there was a contract of bailment. The Court of Appeal held that there was no transfer of possession of the barge, that the logging company had a mere licence to use the barge and that the contract between the owner and the logging company was a time charter. The Court of Appeal further held that there was no implied term in the charter that the logging company was to inform the owner of any dangers to the barge. Such a term was inconsistent with the requirement that the towing company keep a watchman on the vessel and was neither reasonable, in the circumstances, nor required to make the contract effective. Mareva Injunction – Breach of Charter Party Front Carriers Ltd. v Atlantic & Orient Shipping Corporation, 2006 FC 18 See the summary of this case above under “Practice”. Bareboat Charter – Liability of Owner Under Safe Working Practices Regulations R v M/S Apollo Tiger Shipping GmbH & Co. KG, 2005 NBPC 16 The registered owner of the subject vessel was charged with an offence under the Safe Working Practices Regulations passed pursuant to the Canada Shipping Act following an accident involving a crane on the vessel in which two stevedores were injured. The owner brought a non-suit motion following the conclusion of the Crown's case arguing that the vessel was under a bareboat charter at the time and that the definition of owner in the regulations did not include the registered owner under such circumstances. After extensively reviewing the definitions in the Canada Shipping Act and the regulations and noting the differences between the English and French versions of the definitions in the regulations the Court concluded that the definition of owner in the regulations did not extend to include the owner of a ship that was under a bareboat charter. Charter Parties
- Negotiation - Concluded Agreement Armonikos Corp. v Saskatchewan Wheat Pool, 2002 FCT 799 The issue in this case was whether a charter party had been concluded between the brokers acting for the parties. The Defendant argued that no charter party had been agreed because there had not been a meeting of the minds regarding a significant term, notably, whether the vessel to be chartered was certified by the International Transport Workers Federation. The court held, however, that the broker for the Defendant had not been particularly attentive to this issue and had confirmed the charter party without the inclusion of an ITF clause. Further, the court held that the broker for the Defendant did not view the absence of an ITF clause as an impediment to the charter party and, once the issue was squarely raised, agreed to a charter party with a modified ITF clause. As a consequence of the court’s finding that there was a binding charter party, the court stayed the present action in favour of London arbitration pursuant to an arbitration clause in the charter party. Charter Parties
- Negotiation - Concluded Agreement Champion International v The “Sabina”, 2002 FCT 1122 Again the issue in this case was whether there was a concluded agreement between the parties. The Plaintiff and Defendant, through their respective agents, had entered into negotiations for the carriage of the Plaintiff’s cargo. All substantial matters had been agreed with the exception of lay days and quantity of cargo which were characterized as “loose ends” by the Defendant. However, before these “loose ends” were dealt with the Defendant advised the Plaintiff that it had received another offer to time charter the ship which it intended to accept. The Plaintiff sued for breach of contract. The court agreed with the Plaintiff that although a formal contract was never signed there was agreement on the substantive terms and there was therefore an agreement which was breached by the Defendant. Charter Parties - Set-off Barber Dubai Shipping Agencies Co. v Angel Maritime Inc., 111 ACWS
(3d)3 This was a dispute over fees payable to a broker by a shipowner. The charter party provided for daily demurrage which had been unpaid by the charterer. The shipowner attempted to set-off the unpaid demurrage from the fees payable to the broker. Both at first instance and on appeal the court held that the shipowner was not entitled to claim a set-off. Bareboat Charter - Liability of Owner North Ridge
Fishing Ltd. v The "Prosperity" et al., This was an appeal from a summary trial application. The appeal arose out of a net cutting incident that occurred during the roe herring fishery. The Plaintiff alleged that the Defendant vessel "Prosperity" negligently cut its net during the fishery resulting in a loss of fish. At the time, the "Prosperity" had been chartered for the entire 1997 herring season. A term of the agreement provided that only three named individuals were permitted to operate the vessel. One of those individuals did, in fact, operate the vessel. At issue in the summary trial and on appeal was whether the agreement was a charter by demise and the effect of such a charter by demise on the liability of the owner. The Court of Appeal held that the agreement did amount to a charter by demise as the owner effectively relinquished custody, possession and control over the "Prosperity" to the charterer. The fact that the charterer was required to appoint one of three named individuals to operate the vessel did not detract from this conclusion since it was the vessel’s insurer that required this condition and the owner had no right to chose which of the three named individuals would be appointed. The Court of Appeal further held that as all of the crew were appointed by the charterer, there was no vicarious liability on the part of the owner. A second issue on the appeal was whether the owner was negligent in failing to properly train the master or in holding him out as being properly trained. The Court of Appeal agreed with the Trial Judge that an owner of a ship under bareboat charter had no duty to train those manning the vessel and that simply agreeing to have the ship operated by one of three individuals was not a representation as to the training of those individuals. In the result, the appeal and the action against the owner was dismissed. Charter Party - Option to Purchase - Substantial Performance Sail Labrador Ltd. v The "Challenge One", [1999] 1 S.C.R. 265, (S.C.C.). This was an appeal from the Federal Court of Appeal. The Appellant/Plaintiff had entered into a 5 year charter party with the Respondent/Defendant. The terms of the charter party included an option to purchase the vessel at the end of the five year term subject to "full performance" of its obligations under the charter party. Clause 10 of the charter party specified an annual payment and clause 11 provided that the annual payment was to be paid in seven monthly instalments. The practice of the parties was for the Plaintiff to provide the Defendant with seven post dated cheques at the beginning of each year. Due to an error by the Plaintiff's bank, the first cheque for the fifth year was returned insufficient funds. The Defendant then wrote to the Plaintiff advising that the option to purchase was void. The Plaintiff immediately rectified the non-payment and all subsequent payments were made on time. Pursuant to clause 25 of the charter party, the Defendant also requested that the Plaintiff provide it with all of the log books for the vessel. The Plaintiff failed to do so. At the conclusion of the charter term, the Plaintiff attempted to exercise the option to purchase but the Defendant took the position that the option was void because of the late payment and the failure to provide the log books. At trial, the trial judge held that the Plaintiff had substantially performed its obligations under the charter party and was entitled to exercise the option to purchase. On appeal, the Federal Court of Appeal held that a party exercising an option to purchase must strictly comply with the conditions of the option and that, as the Plaintiff had not done so, it was not entitled to exercise the option. On further appeal, the Supreme Court of Canada held that the option to purchase was part of a bilateral agreement between the parties comprising both the charter and the option. As a bilateral contract the doctrine of substantial compliance was applicable and the court found that there had been substantial compliance by the Plaintiff. Further, the court held that the words used in the option were not precise enough to make time of the essence of the contract. On the issue of the Plaintiff's failure to provide the log books the court noted that pursuant to section 26 of the Canada Shipping Act the log books must remain on the vessel. Therefore, the court held that all the Plaintiff was required to do was to make the logs available for inspection on the vessel. In result, the appeal was allowed. Charters - Brokerage Fee Spellacy v. Marine Management Inc., (February 4, 1998), No.4141, (Nfld. S.C.) The issue in this case was the brokerage fee to which the Plaintiff was entitled. The Plaintiff had negotiated a two year charter of a tug at $1,100.00 per day with an option to purchase for $900,000.00. The option to purchase was exercised. The Plaintiff argued that he was entitled to a 5% commission on the basis that he was acting for both parties to the transaction and, pursuant to industry practice, was therefore entitled to a double fee. The Court held, however, that he acted only for the owner of the tug and was therefore only entitled to a fee of 2.5% of the sum of the total charter payments and the purchase price. Charter Hire- Demurrage - Set-Off Halla Merchant Marine Co. Ltd. v. The "Lok Maheshwari" et. al., (February 26, 1997) No. T-279-96 (F.C.T.D.) This was an application for summary judgment by the disponent owner of the Defendant ship against the charterer for charter hire. The charterer defended the application on the grounds that it had a right of set off in respect of a claim for demurrage. The Court held that there was no valid right of set off because the hire claim was for a different time period than the demurrage claim. The disponent owner was not, however, completely successful. The Court held that there was a genuine issue for trial in respect of some of the periods for which hire was claimed. Charter party - Cancellation - right to damages Melsa International Inc. v. Adecon Shipping Lines Inc. et.al., (April 11, 1997), No. T-2185-96 (F.C.T.D.)
This was an application by the defendant for summary judgment dismissing the Plaintiff's action. The Plaintiff's action was for breach of a charter-party agreement. The Plaintiff and Defendant had entered into a charter-party agreement in the Gencon form. The Defendant was not able to meet the agreed upon loading date and, as a consequence, the Plaintiff exercised its right to cancel the charter-party and found another vessel to carry the cargo. The Plaintiff claimed the difference in the freight payable under the two charter parties. The Defendant argued that pursuant to the charter-party the Plaintiff's remedy was to cancel the charter and that it had no right to claim damages. The Court reviewed the authorities and noted that a charterer who cancels a charter-party has a claim in damages if the failure of the ship to arrive by the
cancelling date was a result of a breach on the part of the shipowner of his obligation to load by a particular date. In result, the Court found that there was a genuine issue for trial and dismissed the motion for summary judgment.
Wharfs – Safe Berth – Tug and Tow – Damage to Barge – Bailment Mercury Launch & Tug Ltd. v. Texada Quarrying Ltd. 2006 FC 464 The barge “MLT HWY” was damaged when she broke her moorings in extreme weather and grounded upon nearby rocks. The Plaintiff was the owner of the barge, which had been moored at the Defendant's facility for the loading of a cargo of crushed stone. The Plaintiff's tug, which had towed the barge to the facility, was moored to a buoy 0.75 miles from the facility awaiting the completion of the loading. The contract between the Plaintiff and the purchaser of the cargo, who was not a party, provided, inter alia, that the Plaintiff was to have the care, custody and control of the barge at all times. The Plaintiff alleged that the Defendant was a bailee of the barge and had the onus of proving the absence of fault on its part. The Plaintiff further alleged that the Defendant had failed to provide a safe berth, failed to provide sufficient mooring lines and failed to monitor the weather or advise it of developing bad weather. The Court noted that bailment involved a transfer of possession and required a high degree of physical control over the chattel and further noted that the Defendant had accepted the barge at its berth, had assumed responsibility for providing lines, had monitored and adjusted the lines, and maintained a barge loader at the berth to keep an eye on the barge. The Court further noted, however, that the Master of the tug knew he was responsible for deciding whether the barge should leave the berth because of bad weather and that the Plaintiff expected the Master to make this decision. The Court said that if the barge had been manned or if the tug had remained at the berth she would have had no difficulty in concluding there was not a bailment. The fact that the tug was 0.75 miles away and moored to a buoy did not alter this conclusion. In the Court's view “the keys to the barge were not delivered to” the Defendant and there was no bailment. The Court further said that even if there had been a bailment it would not have reversed the onus of proof as it was not a “pure bailment”. The Court next considered the various allegations regarding safe berth and negligence. The Court concluded that the berth was not unsafe merely because the barge had to be removed in bad weather as this was a well known fact. The Court rejected the other allegations of negligence, finding that the cause of the loss was the failure of the Master of the tug to monitor the deteriorating weather at the dock and his failure to remove the barge from the dock. Marinas – Moorage – Wrongful Seizure – Damages - Loss of Use of Pleasure Craft – Punitive Damages Mosquito Creek Marina v Malecek, 2006 BCPC 139 In this matter the Defendant had moored her pleasure vessel at the Plaintiff's marina for a number of years. During that time moorage was paid, sometimes in cash, to the marina's bookkeeper. The bookkeeper had apparently not been recording all payments received and was fired. The new bookkeeper after reviewing the books determined the Defendant owed $15,000 in back moorage and, when the Defendant refused to pay, had her boat removed from the water as incentive for her to pay. The vessel was damaged when it was being removed from the water. The marina brought this action for the moorage allegedly owed and the Defendant counter-claimed for the damage to her vessel, loss of use during the wrongful seizure and for punitive damages. The claim for moorage was dismissed on the grounds that the marina was unable to establish any amount owing. The counter-claim for the damage to the vessel was allowed including an award for the diminution in the value of the vessel as a consequence of the damage. The counter-claim for loss of use during the wrongful seizure was also allowed in the amount of $1,000. The claim for punitive damages was, however, dismissed on the grounds that the marina believed it had some authority to remove the vessel. Immigration – Deportation Costs – Liability of Agent Colley West Shipping Company Ltd. v Minister of Citizenship and Immigration, 2006 FC 1419 This was an application for judicial review of a decision ordering the Applicant to pay the costs of deporting a stowaway who had entered Canada illegally. The Applicant provided services to tramp ships on a fee for services basis and had been the agent for the ship that brought the stowaway to Canada. The issue was whether the Applicant was an “agent” of the shipowner within the meaning of s.148 of the Immigration Act and therefore liable for the costs of deportation. The Court noted that there are different types of agency relationships and agents and held that the term “agent” in the Act should not be broadly interpreted to include agents such as the Applicant with limited mandates. In result, the application was allowed and the demand for payment was quashed. Ship Building – Quantum Meruit – Wrongful Arrest Intertech Marine Limited v Menendez (The “Nautica”), 2006 FC 1445 The Plaintiff and the Defendant entered into a series of agreements for the construction of a pleasure yacht by the Plaintiff for the Defendant. During the construction the parties also discussed the possibility of entering into an arrangement to use the yacht being built to promote sales of further yachts. In anticipation of this happening the Plaintiff said that it chose to forego billing various costs during the construction. The arrangement to sell further yachts never materialized and the Plaintiff provided the Defendant with a final billing of almost $250,000 which the Defendant refused to pay. This action was then brought by the Plaintiff who also arrested the yacht. The Defendant counter-claimed for costs relating to the wrongful arrest of the yacht. Upon reviewing the various agreements between the parties, the trial Judge noted that the final agreement contained a clause stipulating that the Plaintiff would complete the yacht for a fixed price. Although the Plaintiff's evidence was that this clause had been inserted for the “Bank”, the trial Judge found the clause to be determinative. The Plaintiff also argued that it was entitled to the amount based on quantum meruit principles. The trial Judge held, however, that in order for the Plaintiff to recover on quantum meruit principles it was necessary that there be at least an agreement in place to the effect that the costs of Plaintiff would be recovered from the sale of sister yachts. She found as a fact that there was never any such agreement reached. In result, the Plaintiff's claim was largely dismissed except for a few items that were legitimately “extras”. With respect to the counter-claim, the Judge dismissed the counter-claim as it was conceded that the arrest was not unlawful if even a small amount was awarded to the Plaintiff. Enforcement of Foreign Judgements – Proper Test – Attornment – Application of Provincial Statutes Morgan v Guimond Boats Ltd., 2006 FCA 401 rev'g 2006 FC 370 In this matter the Plaintiff, a resident of Hawaii, commenced proceedings against the Defendant, a New Brunswick company, in Hawaii in relation to a contract for the design, manufacture and sale of a boat. The Defendant unsuccessfully contested the jurisdiction of the Hawaiian courts, filed a Statement of Defence to the action and participated in a pre-trial conference before withdrawing from the action. The Plaintiff subsequently obtained a default judgment against the Defendant and then brought this action and motion for summary judgement to enforce of the U.S. judgment. The Defendant contested the motion on the ground, inter alia, that the U.S. Court was without jurisdiction. At first instance, the motions Judge held that the appropriate test was whether there was a “real and substantial connection” with the foreign jurisdiction and noted that a fleeting or relatively unimportant connection will not be enough. The motions Judge further held that the connection with Hawaii was such a fleeting or unimportant connection given that the preliminary contract negotiations between the parties, the execution of the work, the delivery of the boat and the payment for the boat all occurred in New Brunswick and the contract was governed by the law of New Brunswick. The Plaintiff's main argument was that the Defendant had attorned to the jurisdiction of the Hawaiian courts. On this issue the motions Judge said that the law of attornment was in a state of flux and suggested that attornment could only bolster an otherwise real and substantial connection. In result, the motion for summary judgment was dismissed. On appeal to the Federal Court of Appeal, however, the Court of Appeal held that attornment to a foreign court was not simply a factor to take into account in determining whether there was a real and substantial connection with the foreign court but was determinative. The Court of Appeal further held that the Defendant had attorned to the Hawaiian courts by filing a defence and participating in settlement conferences. Accordingly, the Court of Appeal allowed the appeal and recognized the foreign judgment. (A noteworthy issue dealt with by the motions Judge but not addressed in the Court of Appeal was whether the Foreign Judgments Act of New Brunswick had any application. The motions Judge held that the statute, being a provincial statute, can have no application to Canadian maritime law, even in the absence of applicable federal legislation.) Port State Control – Wrongful Detention – Liability of Steamship Inspectors Canada v Berhad, 2005 FCA 267 This matter concerned the liability of Canada Steamship Inspectors for their alleged negligence and wrongful detention of the vessel “Lantau Peak”. The facts were that the “Lantau Peak” arrived at Vancouver on 5 April 1997. It was intended to repair hull frames found to be detached during the voyage from Japan and then to load a cargo of coal. Upon arrival the vessel was inspected by Canada Steamship Inspectors and was ordered detained as a measure under Port State Control for safety at sea. The reason for the detention was that the hull frames were wasted and corroded beyond the acceptable limit of 17%. The owner objected to the detention but ultimately repaired the vessel to a lesser standard. The ship remained in detention until 17 August 1997 notwithstanding that the vessel met its classification requirement and its flag state petitioned for its release. The primary defence to the claim of the Plaintiff was that the inspectors were acting under a statutory authority given by the Canada Shipping Act and were therefore immune from suit. At trial the Judge held that the provisions of Canada Shipping Act and Regulations, in particular s. 310 authorizing detention of vessels, did not apply to foreign flag vessels engaged on international voyages. He found that the detention was pursuant to the Tokyo Memorandum of Understanding on Port State Control, with reliance on the Safety of Life at Sea Convention, however, the MOU did not have the force of law and could not be considered a “legal authority” to detain a ship. The trial Judge found the Defendants had been negligent in failing to conduct a detailed inspection of the ship, in the reporting of observations and evidence to the Chairman of the Board of Steamship Inspectors, in failing to properly supervise inspectors and by unduly delaying the review of the detention order. In result, the trial Judge found the Defendants liable for damages plus interest in the amount of almost $6 million. On appeal, the judgment of the trial Judge was set aside. The Federal Court of Appeal held that s. 310 of the Act did apply and authorized the detention of foreign ships. The Court of Appeal further held that decisions of Steamship Inspectors are discretionary and that the standard of review of such decisions is at least one of reasonableness. (Indeed, the Court of Appeal noted that strong arguments could be made in support of a standard of patent unreasonableness.) The Court of Appeal held that a “decision will be unreasonable only if there is no line of analysis within the given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived” and further noted that deference should be given to the expertise and experience of Steamship Inspectors. Applying this standard and after extensively reviewing the evidence, the Court of Appeal held that the actions of the Steamship Inspectors were reasonable and the detention of the ship was proper. In concluding, the Court of Appeal said: “The trial judge did not have the power to review the merits of the decisions taken by the Steamship Inspection Service and the Chairman, and to substitute his views for theirs as to safety. It belonged to them, not to the court, to appreciate the acceptability of the risk to human life and the marine environment.” Ship Repair – Negligence – Mitigation Deep Shore Marine Contracting Inc. v The “Polish Princess”, 2005 FC 1469 The Plaintiff, a ship repairer, brought this action to recover the amount of unpaid invoices. The Defendant counter-claimed alleging the Plaintiff damaged his vessel by failing to protect it from the elements and further alleging that the Plaintiff unreasonably delayed in completing the repairs causing him to lose a sale of the boat. The Prothonotary decided the issues in favour of the Plaintiff holding that the amounts of the invoices were properly owing by the Defendant to the Plaintiff, that there was no damage caused to the vessel while in the possession of the Plaintiff and that any delays were caused by the Defendant's failure to pay instalments. Additionally, the Prothonotary held that the Plaintiff had failed to mitigate any damage caused to the vessel by promptly repairing same and that the arrest of the vessel by the Plaintiff did not excuse the Defendant from its obligation to mitigate. Registration of Foreign Judgments – Antedating Orders Trans-Pacific Shipping Co. v Atlantic & Orient Trust Co. Ltd. et al., 2005 FC 566 In this unique matter a foreign arbitration award had been ordered to be registered by a Prothonotary. Subsequently, in another proceeding, it was determined by the Federal Court of Appeal that Prothonotaries did not have jurisdiction to register such awards. Accordingly, a motion was brought to re-register the award nunc pro tunc. The Defendant challenged the registration and the antedating of the order. The challenge to the registration was based upon the fact that the affidavit in support of registration merely attached a copy of the award and contained a statement by the affiant, based on information and belief, that no impediment to registration was known. It was argued that this material was not in compliance with the requirements of Rule 329 (which requires “an exemplified or certified copy of the foreign judgment” and a statement that the applicant “knows of no impediment to registration”). The motions Judge noted that there was an apparent departure from the requirements of Rule 329 but held that “in the unique circumstances” there was sufficient evidence to comply with the rule. Regarding the antedating of the order, the motions Judge noted that there was a power to antedate orders to avoid injury to a litigant by an act of or delay by the court. The motion Judge held that this test had been met as it was the court that had initially assigned the matter to the Prothonotary. Pilotage – Ferries Navigation Madeleine Inc. v Canada, [2005] FCA 10 The issue in this case was whether the ship “C.T.M.A. Vacancier” which operated on a route from the Iles-de-la-Madeleine to Montreal was a “ferry” within the meaning of the Pilotage Act and the Laurentian Pilotage Authority Regulations and therefore exempt from compulsory pilotage. The Federal Court of Appeal reviewed the relevant statutory provisions and dictionary definitions of “ferry” and concluded that the exemption was for traditional “ferry” vessels whose routes cut across the navigation channels in the St. Lawrence River. The “C.T.M.A. Vacancier”, in contrast, travelled over 340 miles following the channel throughout its length and was, therefore, not exempt from compulsory pilotage. Fishing and Recreational Harbours Act – Seizure and Sale of Vessel Canada v Cote, 2005 CanLII 33542 In this matter a vessel had been moored in an area of the harbour controlled by the municipality and the owner had refused to move the vessel when requested to do so. The municipality then seized and detained the vessel and brought this application for the sale of the vessel under s.19 of the Fishing and Recreational Harbours Act. The Court allowed the application and ordered the vessel sold by public tender with the proceeds to be paid to cover the costs of sale and the costs of the seizure and maintenance of the vessel. Unauthorized Sale of Vessel – Damages In this matter the Plaintiff commenced proceedings for a declaration that he was the owner of a yacht, for an order declaring a purported sale of the yacht null and void and for damages against the Defendant for the unauthorized sale of the yacht. The Defendant did not appear at the hearing and the only evidence given was that of the Plaintiff. The facts were that the Plaintiff and Defendant entered into an arrangement whereby the Defendant was permitted to charter the Plaintiff's yacht and retain the charter moneys. In exchange the Plaintiff would receive the benefit of the upkeep of the yacht by the Defendant. In furtherance of the arrangement the Plaintiff executed a Power of Attorney and Appointment of the Defendant as Captain. The arrangement continued for many years although there was an apparent dispute between the parties as to whether the Plaintiff owed the Defendant money for maintenance and capital expenditures. The Defendant executed a bill of sale of the yacht to a third party which prompted the present action. The Court held that the bill of sale was executed without the consent or authority of the Plaintiff and was null and void. Accordingly, the Court granted the Plaintiff a declaration that he was the owner of the yacht. However, the Plaintiff's many claims for damages were refused by the Court on various grounds including that they were not properly proven. Fire – Res Ipsa Loquitur – Damages Strachan v The “Constant Craving” et al., 2003 FCT 86 This was an action by the Plaintiffs against the Defendants in negligence for damage caused to the Plaintiffs' vessel when the Defendant's vessel caught fire. The Plaintiffs established through expert evidence that the cause of the fire was the ignition of gas fumes in the Defendant's vessel. The source of the fumes was a rusted gas tank and the source of the ignition was an automotive battery charger. The Court considered the application of the res ipsa loquitur doctrine but concluded that the issue of the Defendant's negligence had to be determined on the evidence. The Court, however, had little difficulty in concluding the Defendant was negligent. On the issue of damages the Court held that the Plaintiffs were entitled to recover both the cost of repairs and the diminution in value of their vessel. Additionally, the Court awarded the Plaintiffs $1,500 each in damages for loss of use of their vessel. Finally, the Court considered whether the collateral benefit rule ought to apply to reduce the Plaintiffs' damages. This was an issue because the repair costs were initially paid by the Plaintiffs' insurer but, in subsequent proceedings between the insurers and the Plaintiffs, the insurers relinquished their right of subrogation. Thus, the Plaintiffs stood to be reimbursed twice for the cost of repairs. The Court held that this was a matter of private insurance which was a recognized exception to the collateral benefit rule. Ship repairer’s liability – Fire damage – Faulty Repair Fiddler Enterprises Ltd., et al v. Allied Shipbuilders Ltd., 2003 FCT 463 A fire occurred in the funnel of a fishing vessel in the vicinity of the exhaust mufflers/silencers. The Plaintiff owners alleged that during repairs to the vessel’s exhaust system the Defendants had installed an inadequate gasket and had not allowed for expansion and contraction in the system. The issue in the case was the origin of the fire. The Plaintiffs’ expert said that the leaking exhaust gasses due to the faulty repair ignited unburned hydrocarbons in the exhaust gasses. The Defendants' expert said that the source of ignition was diesel fuel spilled from a fuel tank vent line that terminated inside the funnel. The Court held that the Plaintiffs, who had the burden of proving the cause of the fire, had failed to show conditions under which the exhaust gasses could have ignited. They also failed to show that soot which had built up in the funnel could have ignited. The Court did not accept that the Defendants' theory of a fuel spill from the vent line had been proven either but, as the Plaintiffs carried the burden of proof, the claim failed. Refund of Excise and Sales Tax on Diesel Fuel Seaspan International Ltd. v Canada, 2002 FCT 675 This case concerned the interpretation of section 23(8)(c) of the Excise Tax Act and in particular whether the Plaintiff was entitled to a refund of tax paid on diesel fuel used to generate electricity on board its vessels. The Court held that the Plaintiff was entitled to a refund of tax. Ship
Repair - Negligence - Damages Matson
Navigation v Victoria Shipyard Co., 2001 BCSC 1344 The Plaintiff in this matter claimed that the Defendant Shipyard had obstructed a vent with sandblast grit in the No. 5 port wing ballast tank while sandblasting during a refit. As a result of the obstruction, the ballast tank became over-pressurized during ballasting operations and significant damage was caused to the hull. Upon inspection approximately 76 pounds of compacted sand blast grit was found inside and completely blocking the vent. It was not disputed that the sandblast grit came from the Defendant’s sandblasting operations of the ballast tank. The Defendant nevertheless argued that it was not liable. The Defendant alleged that the damage was wholly or partly caused by the Plaintiff in that: the vents were fitted with flash screens which was unusual and permitted the accumulation of sandblast grit; the Plaintiff had specifically instructed the Defendant to sandblast the vents as well as the tank; that the Plaintiff failed to properly maintain the vents; and the Plaintiff failed to check the vents. The Court rejected all of these arguments. The Court found: that the presence of flash screens are to be anticipated and that they were easily detected; that the Plaintiff had not instructed the Defendant to sandblast the vents and that there was a substantial body of credible evidence that the vents should not have been sandblasted; that there was no lack of maintenance on the part of the Plaintiff; and that the Plaintiff had no obligation to check the vents before ballasting. In result, the Court found the Defendant solely liable for the damage. The Plaintiff was awarded damages for temporary and permanent repairs and expenses, for lost charter income, for interest expense and price fluctuations during the delayed delivery of the cargo and compound prejudgment interest. Marinas - Exclusion Clauses
Dryburgh v Oak Bay Marina (1992) Ltd., 2001 FCT 671
This was an action for damages caused to a pleasure craft when docks at the Defendant marina broke apart during a severe wind storm. The claim was against the marina and its President. The Plaintiff alleged that the marina was poorly designed and constructed and that the President oversaw the design and construction. The Defendants argued that they were protected by an exclusion clause in the moorage contract signed by the Plaintiff. The exclusion clause provided:
“All
vessels, boathouse and ancillary equipment of the Owner stored or moored on the
Company’s premises shall be solely at the Owner’s risk, and the Company
shall not be responsible under any circumstances for any loss oher caused by negligence of the Company, its servants or agents or
the acts of third parties, or otherwise.” On the face of the contract were the names of three entities, one of which was the Defendant marina. There was a mark in the box next to the name of the Defendant Marina. The Plaintiff argued that the exclusion clause did not apply to relieve the Defendants of liability because the identity of “Company” was ambiguous, the clause did not extend to past defects in design or construction of the marina, and the clause did not apply to the Defendant President. On the first point the Prothonotary held that it was clear that the contract was between the Plaintiff and the Defendant marina. On the second point, the Prothonotary noted that the exclusion clause was very broadly worded. It referred to any loss or damage without limitation. The Prothonotary held that to interpret the contract in the manner suggested by the Plaintiff would be to distort the contract and produce an unrealistic result not in accord with commercial reality. On the final point, the Prothonotary held that the President was protected by the test set out by the Supreme Court of Canada in London Drugs Ltd. v Kuehne & Nagel Ltd., [1993] 1 W.W.R. 1, in that, by implication it was intended that the benefit of the exclusion clause would extend to the President and the President was acting in the course of his employment. In the result, the exclusion clause was enforced and the Plaintiff’s claim was dismissed. An appeal by the Plaintiff was dismissed for substantially the same reasons as given by the Prothonotary. The Appeal Judge did note that he found it difficult to accept that the term “Company” as used in the exclusion clause should be interpreted to include the Defendant’s President but, given the decision of the Supreme Court of Canada in London Drugs Ltd. v Kuehne & Nagel Ltd. he concluded that view was not open to him. Sale of Vessel - Entitlement to Commission
Clifts
Marine Sales(1992) Ltd. et al. v Moorco Inc. et al., 2001 FCT 1369 This was a claim
by a yacht broker for commission. The Defendant denied the broker was entitled
to a commission as the Listing Agreement had been terminated and the vessel was
sold to a person who had not been introduced by the broker. The Prothonotary
found, however, that the Defendant terminated the Listing Agreement to sell the
vessel himself and that the Defendant knew, or was wilfully blind, to the fact
that the purchaser was purchasing the vessel on behalf of a person introduced by
the broker. The Prothonotary therefore held that the yacht broker was the
effective cause of the sale and was entitled to a commission of 10%. The
Prothonotary was not satisfied, however, with the evidence as to the purchase
price of the vessel since the price was paid in cash in paper bags. He therefore
based the commission on a previous arms length offer. Breach of Contract of Sale - Parole Evidence
Sproule v The “Compass Rose II”, 2001 FCT 1304
This was an action
by the Plaintiff to recover the balance of $25,000.00 alleged to be owing on a
written contract of purchase and sale of a vessel. The defence was that there
had been an oral variation of the written contract whereby the Plaintiff agreed
to accept a lesser amount in return for prompt payment. The Plaintiff argued, inter
alia, that the parole evidence rule applied to prohibit proof of an oral
agreement that contradicted the written contract. The Court, however, held that
the parole evidence rule had no application since the Defendant did not seek to
adduce extrinsic evidence to add to, subtract from or vary the meaning of the
written agreement but merely claimed that the agreement had been amended
verbally. The Court found that there had been such an amendment and dismissed
the action. Immigration - Deportation Costs - Liability of Agent
Greer
Shipping Ltd. v Canada, 2002 FCA 80 This was an appeal from a decision of the Trial Division holding the agent of the ship liable for the costs of deportation of a crew member who deserted the ship while at Vancouver in 1992. The appeal turned on the definition of “transportation company” in the Immigration Act. The Federal Court of Appeal noted that the statutory definition had been changed in 1993 from “persons carrying or providing for the transportation of persons” to “persons carrying or providing for the transportation of persons or goods”. The Court of Appeal held that the old definition applied and that under the old definition a cargo ship was not a “transportation company”. Accordingly, the appeal was allowed and the agent was not liable for the costs of deportation. Immigration - Deportation Costs - Liability of Agent March Shipping v Canada, 2002 FCT 1294 This was a request for judicial review of the filing of a certificate under the Immigration Act
requiring the Applicant to post security in the amount of $120,000.00. The certificate was filed
against the Applicant as the agent for the owner of a ship. The ship owner became insolvent and
eight crew members deserted. The Applicant argued that it was not liable as it had ceased acting
as agent for the ship owner upon the insolvency of the ship owner and prior to the desertion of
the crew members. The Court held, however, that the Applicant was liable. The Court noted that
the term “transportation company” in the Act should be given a broad interpretation and further
noted that the Applicant had not advised the Ministry of Citizenship and Immigration that it had
ceased acting as agent. Stevedoring
Services - Liability of Agent Logistec
Stevedoring Inc. v Amican Navigation Inc. et al., 2001 FCT 681 This was an action
by the Plaintiff stevedoring company to recover $240,000.00 in stevedoring
charges. The Defendants were the shipowner and the shipowner’s general agent.
The shipowner did not appear at the trial and default judgment was given against
it. The agent argued that it had contracted with the Plaintiff as agent only and
was therefore not personally liable to the Plaintiff. On the particular facts of
the case, the Court held that the agent was personally liable to the Plaintiff.
The Court noted that, although some of the agent’s correspondence with the
Plaintiff identified it as the “general agent” for the shipowner, the agent
failed to indicate to the Plaintiff that it was contracting “as agent only”. Liability
for Bunkers Allocation of Payments Trans
Tec Services Inc. v The “Lyubov Orlova”, 2002 FCA 275, affirming 2001 FCT 958 This was an appeal from a summary
trial application in which the Plaintiff’s claim was dismissed. The Plaintiff
had supplied bunkers to the defendant ship pursuant to a contract between the
Plaintiff and the charterer. The Defendant was a sub-charterer who had paid to
the Plaintiff the amounts said to be owing in respect of bunkers. The payments
specified that they were for the amounts owing in respect of bunkers delivered
to the defendant ship. The Plaintiff, however, applied the payments to other
invoices owing to the Plaintiff by the charterer. The Plaintiff argued it was
entitled to do so by the terms of its contract with the charterer. The motions
Judge held, however, that the contract between the Plaintiff and charterer did
not bind the Defendant and held that by retaining the payments the Plaintiff
accepted the payment terms of the Defendant. On appeal, the Federal Court of
Appeal agreed with the motions Judge that the Plaintiff’s conduct made it
clear that it accepted the funds in full payment of the claims against the
Defendant ship. Fishing
Contracts 458093
BC Ltd. v Dietterle et al., 2001 FCT 823 This case
concerned the interpretation of an agreement between the Plaintiff and Defendant
relating to the roe herring fishery. The Plaintiff alleged an agreement between
it and the Defendant fishermen the terms of which required the Plaintiff to
lease the Defendant fishing licences and to provide specific services such as
packing and trucking. In return, the Defendant would fish exclusively for the
Plaintiff. The agreement further specified how the profits from the fishing
would be split between the parties but was silent on what would happen in the
event of a loss. Precisely such an event occurred after the 1997 fishery and the
Plaintiff sought to recover from the Defendant a portion of the loss. The
Prothonotary dismissed the Plaintiff’s claim holding that there was no
provision in the contract imposing personal liability on the foss and that the Plaintiff had failed to establish a “long
standing and consistent practice” that such losses were shared. Forfeiture
- Fisheries Act R v Ulybel Enterprises Ltd., 2001 SCC 56 This case concerned the interpretation of the forfeiture provisions of the Fisheries Act. Specifically, the issue was whether, upon conviction for a Fisheriforfeiture of the proceeds of sale of a vessel sold under the jurisdiction of the Federal Court of Canada. The Supreme Court of Canada thoroughly reviewed the forfeiture provisions of the Fisheries Act and concluded that s. 72(1) did authorize the forfeiture. Breach of Transportation Agreement Transport Navimex Canada Inc. v Canada, (February 4, 2000) No. A-27-98 (F.C.A.), [2000] F.C.J. No. 161 In this matter the Defendant, Transport Canada, had invited the submission of bids to transport cargo to Greenland. The Plaintiff submitted a bid to carry the cargo on the "Glencoe" which was accepted by the Defendant. After acceptance, the Defendant increased the amount of cargo it wuot; was capable of carrying the increased cargo and brought this action for breach of contract claiming the costs of chartering the "Glencoe", expenses and lost profits. At trial, the Trial Judge held: (1) that the "Glencoe" was not capable of carrying the increased cargo; (2) that the Defendant had unlawfully and without justification terminated the contract with the Plaintiff; but (3) that the Plaintiff had not suffered any damages. The Plaintiff appealed the first and third findings. On appeal, the Federal Court of Appeal held that the first finding was one of faon the Trial Judge’s assessment of expert evidence and that the judge made no "palpable and overriding" or "specific and identifiable" error. Accordingly, this finding was affirmed. However, the third finding that the Plaintiff had suffered no damages was reversed. This finding was based on the fact that the Plaintiff had not personally chartered the "Glencoe". The Court of Appeal held that as the Defendant never questioned the fact that the Plaintiff had chartered the "Glencoe" the Plaintiff did not have a duty to prove this fact. Further, and in any event, the Court of Appeal held that the evidence established that the Plaintiff had chartered the "Glencoe", albeit through a related corporation. As a result, the Court of Appeal held that the Plaintiff was entitled to damages for the chartering of the "Glencoe" and for the lost profit calculated on the basis of the cargo the "Glencoe" could have carried. Wage Claims - Set-off Prior v The "Talapus",(July 18, 2000) No. T-595-96 (F.C.T.D.), [2000] F.C.J. No. 1182 This was an action for unpaid seaman’s wages. The Defendant defended the claim, inter alia, on the basis that a set-off should be made for food and accommodations supplied to the crew. The Court did not allow the set-off for these items as the evidence did not support that they were to be an agreed deduction. Repairers Negligence Bevan v Gartside Marine Engines Ltd. et al., [2000] B.C.J. No. 528 (B.C. Prov. Ct.) See summary under Marine Insurance Repairers Negligence Altenburger v Buzaglo, [2000] O.J. No. 4438 (Ont. S.C.) This was an action by a boat repairer to recover the cost of repairs effected for storage costs. The Defendant argued that most of the repair work was unnecessary or not authorized and that the Plaintiff had caused damage to the boat while in his possession. The Court had little difficulty finding the Defendant liable for the repair costs which had been approved as fair and reasonable by a surveyor. The Court also found the Defendant liable for storage charges as the Plaintiff had specifically advised the Defendant that he would charge for storage. With respect to the Defendant’s counterclaim that the boat was damaged because the Plaintiff failed to cover it, the Court noted that the Defendant was aware the boat was not covered and could have covered it himself. Further, the Defendant was aware that marinas normally charge an additional amount to cover boats and the Defendant was not paying the Plaintiff. Accordingly, the counterclaim was dismissed. Vessel Storage - Bailment Laursen v Bemister, (1999), 47 C.C.L.T. (2d) 206, (B.C.S.C.) This was an action in negligence, breach of contract and bailment against the Defendant in respect of damage to the Plaintiffs' vessels that were stored in the Defendant's barn when the roof collapsed under a snow load. The action was dismissed. The court held that the Defendant was aware of the potential risk from snow accumulation but took reasonable steps, including daily inspections, to care for the Plaintiffs' property. Thus, the Defendant was not negligent and had complied with the implied term of the contracts that he would use reasonable care in storing the Plaintiffs' property. On the issue of bailment, the court held that the relationship between the Plaintiffs and Defendant was one of licence and not bailment. In reaching this conclusion the court found that the Plaintiffs had not provided the Defendant with access to their chattels nor the means of moving same and that the barn was open to all. Therefore, the court held, the Defendant did not have exclusive possession of the Plaintiffs' chattels, a necessary element of bailment. Vessel Construction and Design - Liability of Steamship Inspectors Glovertown Shipyards Ltd. v Hickey, [1999] N.J. No. 169, (Nfld. S.C.). This was an action by the Plaintiff shipyard to recover the balance owing on a ship construction contract with the Defendant purchaser. The purchaser alleged that the vessel was constructed with numerous defects that amounted to a fundamental breach of contract by the shipyard and rendered the ship not fit for the purpose for which it was intended and not of merchantable quality. The purchaser further counterclaimed against the shipyard and against the ship's designer and steamship inspectors alleging their negligence resulted in the loss of the vessel at sea. In a judgment of 216 pages the court held that the ship when delivered was seaworthy, fit for the purpose intended and was of merchantable quality. The court noted that, although a number of problems were experienced by the vessel after delivery, these problems were repairable and were all dealt with by the shipyard and/or by suppliers of equipment. Accordingly, the court found that there had been no fundamental breach of the contract by the shipyard and allowed the shipyard's claim for the balance of the purchase price. With respect to the counterclaim, the court found some negligence on the part of the shipyard and the designers of the vessel but held that this negligence was not causative of the loss of the vessel. The cause of the loss was determined to be due primarily to the negligence of the purchaser in selecting an unqualified Master and to the negligence of the Master in the management and navigation of the vessel. Additionally, the court found that the steamship inspectors were negligent in their failure to reasonably interpret and apply the regulations and provisions of the Tonnage Guidelines under the Canada Shipping Act. The court apportioned liability and costs 65% against the purchaser and Master and 35% against the steamship inspectors. Liability of Steamship Inspectors Nickerson v Canada, (May 5, 1999) No.T-2807-93 (F.C.T.D.) This was an action against two steamship inspectors for providing the Plaintiff with negligent advice. The facts were that the inspectors wrote a letter to the Plaintiff recommending, inter alia, that he coat the wood core of his vessel with a suitable wood preservative before applying fibre glass. The Plaintiff alleged that in reliance on this advice he purchased and applied creosote to his vessel. The Plaintiff was later advised that fibre glass would not bond to wood coated with creosote. Accordingly, the Plaintiff brought this action for damages in the amount of $500,000. Unfortunately for the Plaintiff, the court completely disbelieved him. The court found as a fact that the plaintiff did not creosote his vessel as he alleged. Further, the court held that even if the Plaintiff did creosote the vessel the inspectors were not liable. The inspectors merely advised the Plaintiff to apply a suitable wood preservative. The court held that the Plaintiff had the duty to make necessary inquiries to determine what a suitable preservative would have been. Finally, the court held that, in any event, the Plaintiff's vessel had deteriorated to such an extent that it was beyond repair and any advice given by the inspectors would have been to no avail. Sale of Vessel - Representations Grosvenor v Streifel, (May 13, 1999) Vancouver Registry No. C986282 (B.C.S.C.) This was an action for the unpaid balance of the purchase price of a used vessel. The Statement of Defence and Counterclaim alleged that the vendor had made false representations. Specifically, the purchaser alleged he was induced to enter into the transaction by a marine survey that was given to him by the vendor and by statements made by the vendor that the engines were in perfect condition. The court found, however, that the marine survey had been prepared more than one year prior to the transaction for insurance purposes and that it was provided to the purchaser to assist him with his financing. The court further found that the purchaser had used the vessel for two seasons and had done some work to the engines without ever complaining to the vendor or making a claim. This, the court found, was not consistent with the alleged representation. Accordingly, the action for the unpaid balance of the purchase price was allowed. Marinas - Interpretation of Contracts LeCleir Bros. Contracting Ltd. v Canoe Cove Marina Ltd., (March 5, 1999) Victoria Registry No.981904 (B.C.S.C.) This case concerned the interpretation of a marina moorage contract. The Plaintiff had moored his boat and boathouse at the Defendant marina for many years. The moorage agreement gave the Defendant the right the cancel the agreement and demand the immediate removal of the Plaintiff's personal effects. It also provided for a right of renewal upon 30 days. The Defendant damaged the Plaintiff's boathouse. As a consequence, the relationship deteriorated and the Defendant sent a letter purporting to terminate the agreement at the end of its annual term. In response, the Plaintiff purported to exercise the right of renewal. The Defendant argued that the renewal was ineffective as the agreement had been terminated. The court held that the letter terminating the agreement was ineffective as the Defendant had elected to allow the agreement to continue until the end of its terms. The court further held, however, that the renewal clause in the agreement was too vague and uncertain to be enforceable as it did not stipulate the rent payable. The court further held that the agreement was subject to the implied terms that it would not be terminated without good reason and that, in the event of termination, reasonable notice would be given. Marine Navigation Fees Canadian Shipowners Assoc. v Canada, (September 17, 1998) No.A-535-97 (F.C.A.) This was an appeal of a decision of the Trial Division in which the trial judge upheld the validity of the Marine Navigation Service Fees Regulations passed pursuant to the Financial Administration Act. The regulations provide for the payment of fees by commercial shipping, domestic and foreign, for marine navigation services provided by Canadian Coast Guard. The regulations were imposed as part of a policy of cost recovery instituted by the Government of Canada. The applicants argued that the regulations were not authorized by the Financial Administration Act, were discriminatory and were, in essence, a tax on commercial shipping. The trial judge, however, held that the regulations were made for valid reasons and in good faith and that the enabling statute impliedly authorized the creation of classes of users and the power to include or exclude certain types of ships from the payment of fees. The trial judge further held that the fees were not a tax and noted that the fees collected would not exceed the cost of providing the services. On appeal, the Court of Appeal in a short judgement indicated their approval of the reasons of the trial judge and dismissed the appeal. Wharfage Robin Maritime Inc. v Chemarketing Industries, (October 16, 1998) No.T-820-95 (F.C.T.D.) This was an action for wharfage dues. The Plaintiff, an agent for the vessel owner, paid wharfage dues to the Port of Montreal and sought reimbursement from the Defendant, the charterer of the vessel and consignee of the cargo. The Plaintiff claimed that it either paid the charges as agent for the Defendant or that it was entitled to be reimbursed pursuant to the terms of the charterparty between the Defendant and vessel owners. The Court held that the Plaintiff acted only as agent for the vessel owner and had never been appointed as agent for the Defendant. Further, the Court held that the claim for wharfage was made out of time as the terms of the charterparty required that any claims against the charterers be presented within 90 days of discharge. An alternate claim based on unjust enrichment was also dismissed. Breach of Sale and Brokerage Agreement Amirault v The "Prince Nova", (May 1, 1998) No.T-521-98 (F.C.T.D.) This was a motion to strike the Statement of Claim as being outside the jurisdiction of the court. The Plaintiff, a ship broker, alleged that it had entered into an option to the "Prince Nova" with the corporate Defendant. the owner of the "Prince Nova". The alleged terms of the option were that it was to be exercised only after the Plaintiff found a buyer for resale and that the Plaintiff was to be paid a 5% commission on the initial sale price. The Plaintiff alleged that it had found a buyer who was willing to purchase the ship for US$1.85 million but that the Defendant entered into direct negotiations with the purchaser and ultimately sold the ship for US$1.4 million. The Plaintiff further alleged that the President of the Defendant had wrongly interfered with their economic relations by inducing the Defendant corporation to breach its contract with the Plaintiff. The Defendants admitted that the corporate Defendant had entered into a non-exclusive brokerage agreement with the Plaintiff with a 5% commission. The corporate Defendant further admitted it had given the Plaintiff an option to purchase but alleged that the option to purchase had expired. The motions judge noted, without deciding, that if the agreement was a mere brokerage agreement it might not fall within the court's jurisdiction. However, if the agreement was one relating to the sale of a ship, it would fall within the court's jurisdiction. Given the pleadings and the contradictory affidavits, the motions judge was not able to decide the true nature of the agreement and therefore dismissed the motion by the corporate Defendant. The motions judge did, however, allow the motion by the President of the corporate Defendant. The motions judge held that the claim against him was one in tort and was outside the jurisdiction of the court. Crown Liability - Closure of Seaway CSL Group Inc. v Canada, (July 3, 1998) No.A-1016-96 (F.C.A.) This matter was a test case in which the Plaintiff sought to recover substantial damages for delays experienced by its ships in the transit of the St. Lawrence Seaway during November and December, 1989. The delays were caused by a public service strike. Because of the strike ice breakers were not in service and the summer buoys were not removed. This resulted in restrictions on navigation being imposed including closure of sections of the river. Prior to the commencement of the strike, the Crown had the right to designate employees as necessary for the security of the public and if so designated those employees would have been required to perform their duties regardless of the strike. The Crown, in fact, had intended to designate Coast Guard crews but the designation was made out of time and was disallowed. The Plaintiff argued that the Crown's failure to designate the Coast Guard crews was negligent. At trial, the Court dismissed the Plaintiff's action. The trial judge held that the Crown had no obligation to designate employees for the purpose of preventing inconvenience or economic hardship and that the Crown employees who neglected to designate the relevant employees in a timely manner also owed no duty to the Plaintiff. On appeal, the Court of Appeal agreed with the trial judge that there was no duty owed. The Court of Appeal noted that the decision of the Crown as to whether to designate any employees was a policy decision and that a failure to designate was therefore not actionable. Breach of Contract of Sale - Specific Performance - Setting Aside Arrest Gleason v. The "Dawn Light" et.al., (January 29, 1998), No. A-438-97 (F.C.A.) This was a summary judgment application to dismiss the Plaintiff's claim for specific performance of an agreement of purchase and sale of the Defendant vessel and an application to set aside the arrest of the vessel. The Plaintiff alleged that the Defendant had agreed to sell the Defendant vessel to him but then sold it to the intervenor. The motions Judge held the evidence did not show the vessel was unique or irreplaceable and further held that the fact the vessel had been sold to a bona fide purchaser for value without notice was a strong discretionary reason not to grant specific performance. With respect to the application to set aside the arrest of the vessel, the Motions Judge held that the arrest could not be set aside as the Plaintiff still had a claim in damages for breach of contract. On appeal, the Court of Appeal held that the arrest ought to be set aside because the effect of the sale to a bona fide purchaser for value was that the vessel could not be used to satisfy any potential award of damages. Tonnage Regulations - Measurement of Tonnage Pacific Shipyards Ltd. v Canada (Board of Steamship Inspection), (May 23, 1997) No. T-A-58-96(F.C.A.) The issue in this appeal concerned whether the Trial Judge had correctly determined the proper regime for measuring the tonnage of ships under construction during the period from 1993-1994. The issue arose because of significant amendments to the Tonnage Regulations effective October 17, 1994. The Court of Appeal upheld the Trial Judge who held that the new guidelines applied to ships under construction as of October 17, 1994, if they had not reached a sufficient stage of construction by October 17, 1994, so as to permit one to determine their tonnage under the previous regime with some certainty. Contract of Sale - Failure to complete - solicitors Negligence McPhail's Equipment Co. v Prairie Warehouse Leasing Corp., (June 3, 1997) Vancouver Registry No. C933446 (B.C.S.C.) This was an action by the buyer of a yacht against the vendor for damages for conveying the yacht to a third party and, against the buyer's solicitor for negligence in the handling of the transaction. The Court found that the Defendant vendor deliberately attempted to avoid the sale to the Plaintiff because it had found a buyer who was willing to pay a higher price than the Plaintiff. The Court held that the Plaintiff was ready, willing and able to complete the sale except to the extent made impossible by the vendor's own failure to perform its obligations. The Plaintiff was awarded damages of $50,000 for the return of a deposit and $30,000 for lost profit on the resale of the yacht. With respect to the action against the Plaintiff's solicitor, the Court found that the solicitor had acted reasonably and did everything he possibly could have. Crimes - Extradition - Jurisdiction Romania v Cheng, (March 6, 1997) No. 128423 (N.S.S.C.) This is the decision of the Nova Scotia Supreme Court in the extradition hearing relating to the "Maersk Dubai"; a case involving allegations of murder on the high seas. Seven officers of the Taiwanese registered "Maersk Dubai" were accused of throwing Romanian stowaways overboard while en route to Canada. Canadian authorities arrested the seven officers in Halifax. The State of Romania charged all seven officers and brought proceedings to have them extradited. The issue was whether the Court had jurisdiction to extradite the officers. The Court held that it did not have jurisdiction to extradite because the Extradition Act requires that the offence occur in the jurisdiction of the requesting state. The alleged murders occurred at Sea, not within the jurisdiction of Romania, and the officers were therefore discharged. The Court noted that but for the lack of jurisdiction it would have committed all of the officers. Arbitration - Review of Award - Buyer Beware Killam v Brander-Smith, (February 28, 1997) No.A964074 (B.C.S.C.) This was an application to set aside an arbitration award. The arbitration concerned the sale of a 22 foot fibre glass boat. The purchaser alleged that the vendor had misrepresented the condition of the engine. The arbitrator held that the doctrine "buyer beware" applied and found in favour of the vendor. The Court upheld the arbitrator's decision. Necessaries Suppliers - Failure to Pay - Whether Discount to be deducted Calogeras Marine Inc. v Navihouse S.A., (September 18, 1996) No. T-2682-94 (F.C.T.D.) In this matter the Plaintiff ship chandler recovered the unpaid portion of an invoice relating to goods supplied to the Defendant vessel. The only issue was whether the Plaintiff was entitled to recover a discount that had been given to the Defendants. The Court held the discount was conditional on prompt payment by the Defendants and, since they did not pay the invoice in full when due they were not entitled to the discount. Marinas - Damage to Vessels - danger to Warn - Exemption clauses Swinburne et. al. v Dike et.al., (May 9, 1995), Vancouver Reg. No. C917404, (B.C.S.C.) This was a summary judgment application by a group of small vessel owners against a marina for damage caused to their vessels when the marina broke apart during a severe storm. In defence of the claims the marina relied upon an exclusion clause in the moorage contracts that exempted it from liability for "loss of or damage to any property of the owner". The Court held that this clause did not apply to vessels which, in other parts of the contract, were distinguished from other property. In doing so the Court relied upon the well established principle that exclusion clauses must be clear and unambiguous and that any ambiguity would be strictly construed against the person attempting to rely on the exclusion. The Court further held the exclusion clause was not sufficient to exculpate the marina from its duty to warn of the dangerous condition of the docks. Ship repair - Sale of Goods Act Gaudet v Gallien Boats Ltd., (January 23, 1995), No. GSC12753, (P.E.I. S.C.) This was an action against a boat builder for damages in negligence and for breach of the implied warranties under the Sale of Goods Act. The Defendant had installed a breather on the Plaintiff's engine. The motor was subsequently damaged when a nut from the breather became lodged in a piston. The Defendant was held liable for the damages. Manufacturers Duty to Warn Seamaid Fishing Ltd. v 328174 B.C. Ltd., (September 27, 1995), Vancouver Reg. No.C923584, (B.C.S.C.) This was an action in negligence for failure on the part of a manufacturer of rebuilt injectors to warn of defects in the injectors. In December, 1988, twelve fuel injectors, rebuilt by the Defendant, were installed in the Plaintiff's vessel. In April, 1989, one of these injectors failed after only 200 hours service when a tip broke off. In that same month another injector installed on a second ship also failed when a tip broke off. In August, 1990, another of the injectors in the Plaintiff's vessel failed when the injector tip broke off and serious engine damage resulted. The Court acknowledged that there was a duty to immediately warn of any defect or danger in the injectors. However, the Court found that the chances of a third injector failure were very remote and, accordingly, the manufacturer was under no duty to warn of this remote possibility. Seizure - Fishing Licence Joys v Canada, (October 4, 1995), No.A-467-94, (F.C.A.) This unusual case concerned whether a commercial fishing licence could be seized under the provisions of the Customs Act. The facts of the case were that the fishing vessel "Lloyd B. Gore" had been spotted by the U.S. Coast Guard returning from the South China Sea. The vessel was tracked and was ultimately seized with a cargo of marijuana. The vessel and her commercial fishing licence were subsequently declared forfeit. The vessel had a value of $85,000 and the licence had an estimated value of between $300,000 and $400,000. The Court of Appeal held, however, that the licence was not a "conveyance" under the Customs Act and was therefore not subject to forfeiture. |
