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Case Summaries

Wharves and Marinas

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.

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.

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.

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.

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.

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.

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.

Ship Supplies and Suppliers

Supply of Goods and Services

Sealand Marine Electronics Sales & Services Ltd. v. Lukey’s Boat (Ship),  2009 FC 32

This was a simplified action for recovery of a balance owing on an invoice relating to the supply of electrical equipment to a vessel. The main factual issue in the case was whether when the order for the equipment was placed the price was to include a transducer. The Court found as a fact that there was no agreement to include a transducer and the Plaintiff was awarded judgment.

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.

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.

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.

Purchase and Sale of Vessels

Unauthorized Sale of Vessel – Damages

Gilling v Cox, 2004 FC 1743

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.

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.

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.

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.

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.

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.

Immigration

 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.

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.

Other

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.”

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.

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.

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.

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.

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.

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.

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.

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.

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.