Miscellaneous Maritime Cases

Ice Breaking Services Fee

The "Stormont" v. Canada, 2012 FCA 93, 

The issue in this case was whether the ice breaking services fee in the Oceans Act applied to the defendants who operated a truck ferry service utilizing tug and barge between Windsor, Ontario and Detroit, Michigan. The defendants argued, inter alia, that they did not have to pay the fee as it was not applicable to international voyages and that the Minister did not have the power to impose such fees. The defendants’ argument turned upon the interpretation of the Oceans Act. The trial Judge rejected these and other arguments on the basis of simple statutory interpretation. The defendants appealed.

Decision: Appeal dismissed.

Held: The applicable sections of the Oceans Act and Fee Schedule authorized an ice breaking fee on each transit to or from a Canadian port. The Minister was both authorized and required to provide icebreaking services and was entitled to charge a fee for such services.

Judicial Review – Application to Strike – Port Authority Powers

Adventure Tours Inc. v. St. John's Port Authority, 2012 FC 305, 

The applicant wrote to the St. John’s Port Authority advising he wished to resume providing a tour boat service and inquiring whether a licence was required. The Authority wrote back advising that they had agreements in place with tour boat operators and were not accepting any further applications. The applicant brought an application for judicial review arguing that the Authority had no right to require him to obtain a licence. The Authority brought this motion to strike the application.

Decision: The motion to strike was allowed.

Held: The letter from the Authority did not attract rights of judicial review.

Comment: A second issue in the case was whether the Authority was a federal body exercising a public function and therefore subject to judicial review. Although the Court did not need to address this issue, it held that the Authority was a federal body exercising a public function.

Canada Marine Act – Container Fee – Fair and Reasonable

Shipping Fed. of Cda. v. Vancouver Fraser Port Authority, 2012 FC 301, 

This was an application for judicial review challenging the ability of the Vancouver Fraser Port Authority to impose a fee on ship owners for container cargo. Section 49 of the Canada Marine Act specifically requires that any fees charged be “fair and reasonable”. The applicants alleged the fee charged was not fair and reasonable as ship owners receive no benefit for the infrastructure improvements for which the fee was assessed. The applicants further argued that the fee was an illegal tax as it was unconnected with any service.

Decision: Application dismissed.

Held: The Court held that the fee was a charge connected with a regulatory scheme and therefore a regulatory charge and not a tax. The Court further held that there was no requirement to link the fee with a service or benefit.

Application to remove barge from Foreshore

Western Forest Products Inc. v. O'Brien, 2011 FC 1528, 

The plaintiff in this matter held a foreshore lease granted by the province of British Columbia over certain foreshore lands. The defendant was the owner of a barge anchored within the foreshore lease without the permission of the plaintiff. The plaintiff brought this action and application for an interlocutory injunction compelling the defendant to remove the barge. The Court granted the injunction. The Court held that there was a prima facie case of trespass, and that any right of riparian passage the defendant had did not include long term fixed moorage. The Court further said that injunctions are the presumed remedy in situations of trespass.

Arbitration – Application to Set Aside Award – Bias

New World Expedition Yachts LLC  v. P.R. Yacht Builders Ltd., 2010 BCSC 1496, 

This was an application under the International Commercial Arbitration Act to set aside an award of an arbitrator relating to the construction of a ship. The applicant argued, inter alia, that the award should be set aside on the grounds that the arbitrator was biased. The bias allegations included that there were private communications with the arbitrator and that there was a close and familiar relationship between counsel and the arbitrator. With respect to the issue of private communications, the Court noted that the arbitrator was asked to act as both mediator and arbitrator and that any private communications took place in the context of the mediation. With respect to the relationship between the arbitrator and counsel, the Court noted that arbitrators are often chosen from practicing lawyers in a specialized area who know one another. The Court considered the fact that first names were used did not give rise to a reasonable apprehension of bias.

Arbitration - Appeal of Arbitral Award - Factors to be Considered

Lafarge Canada Inc. v. JJM Construction Ltd., 2010 BCSC 1168, 

The parties entered into four identical charter parties which required that disputes be settled by arbitration. Pursuant to the charter parties the charterer was to be liable for damage to the barges except for normal wear and tear and was also responsible for obtaining hull and machinery insurance naming the owner as an additional insured. The barges were returned with damage but not all of the damage was covered by the insurance that had been obtained by the charterer. At the arbitration the charterer argued that the agreement to insure relieved it of liability to pay the repair costs for the uninsured damage. The arbitrator disagreed, ruled in favour of the owner and ordered the charterer to pay damages of $650,000. The charterer then brought this application under the Commercial Arbitration Act of British Columbia for leave to appeal the arbitrator's decision. The Motions Judge considered the various factors relevant to an application for leave to appeal an arbitral award, namely, whether the issue was question of law and the importance of the issue to the parties or public. The Motions Judge held that the issue on appeal was a question of law that raised an important matter of principle and was of considerable financial consequence to the parties. The Judge further held it was not necessary for the applicant to show the arbitrator was "obviously in error". The test is whether there is sufficient substance to the proposed appeal to warrant its proceeding. In result, the Motions Judge allowed the application.

Harbour Dues - Unlawful Tax

Algoma Central Corporation v. Canada, 2009 FC 1287, 

The issue in this case was the validity of harbour dues in respect of public (regional) ports under the Canada Marine Act. The first issue was whether the case ought to have been brought by way of judicial review proceedings. The Court held that the case should have been so brought but nonetheless decided to hear the case on the merits. The second issue concerned whether the case was appropriate for summary judgment and the Court held that it was. The third issue was the validity of the harbour dues. The plaintiff‟s argument was that the dues were in the nature of a tax since the government provided no services and that pursuant to s. 53 of the Constitution Act only Parliament had the authority to levy a tax. The Court reviewed the Act and noted that the Minister‟s authority to charge fees was not contingent on services being provided. The Court further reviewed the relevant authorities on the distinction between a regulatory charge and a tax and held that the dues were a regulatory charge. The final issue was whether the practice of not charging similar dues to U.S. ships was discriminatory. On this issue the Court held that the Minister had broad discretion to distinguish between different users and that the exercise of this discretion was not a grounds to invalidate the dues.

Purchase Survey - Liability of surveyor

Perera v. De Groot et al, 2006 BCSC 1281,  2007 BCCA 242

In this matter the plaintiffs alleged that a surveyor retained to perform a pre-purchase survey of a sailing vessel had negligently failed to inform them of existing dry rot in the vessel. Approximately one year after the survey,the plaintiffs hired a second surveyor who found extensive dry rot in the vessel. At trial (2006 BCSC 1281) the Trial Judge found that the rot existed at the time of the initial survey and that the surveyor was negligent in not finding it and reporting it. The Judge awarded the plaintiffs the value of the vessel less salvage plus insurance costs and $3,000 for loss of use. On appeal (2007 BCCA 42), the Court of Appeal held that there was no evidence upon which the Trial Judge could conclude that the rot existed at the time of the initial survey. Accordingly, the appeal was allowed and the claim against the surveyor dismissed.

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.”

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.

Wage Claims - Set-off

Prior  v. The "Talapus", 2000 CanLII 15911, 

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, 1998 CanLII 8429, 

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, [1998] 4 FC 140, 

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), 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.

Arbitration - Review of Award - Buyer Beware

Killam  v. Brander-Smith, 1997 CanLII 2387, 

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, [1996] 1 FC 149, 

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.

Manufacturers Duty to Warn

Seamaid Fishing Ltd. v. 328174 B.C. Ltd., 1995 CanLII 254, 

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.