For a slide show introduction to Marine Pollution in British Columbia prepared October 2008 click here.
Marine Insurance - Wreck Removal - Liability of Underwriters for Expenses - Sue and Labour
Universal Sales Limited v. Edinburgh Assurance Co. Ltd., 2012 FC 418,
The plaintiffs (the insureds) sought indemnity from the defendants (their insurers) for a settlement payment of $5 million made by them to the federal government related to the costs of raising the “Irving Whale”. The payment was made in settlement of a proceeding brought by the Crown for $42 million. The plaintiffs did not obtain the prior approval of their underwriters before making the settlement. The plaintiffs also claimed for sue and labour expenses of $3.6 million and defence costs of $1.8 million. The insurers denied coverage alleging the plaintiffs were not required to make the settlement payment and that there was no coverage under the policy.
Decision: Plaintiff awarded judgment, in part.
Held: With respect to the claim for sue and labour expenses, the trial Judge denied this claim on the basis that the expenses did not diminish or avert a loss under the policy. This was so because the estimated costs at the time the expenses were incurred were in excess of $21 million but the policy limit was only $5 million. Thus, the sue and labour expenses could not possibly have benefited the underwriter. With respect to the settlement payment, the trial Judge held that he was satisfied that the plaintiffs would have been held liable to the Crown in nuisance if the settlement payment had not been made. With respect to the claim for defence costs, the trial Judge was of the view that these should be apportioned between the plaintiffs and underwriters on the grounds that both benefited from these costs. He somewhat arbitrarily apportioned these defence costs 25% to underwriters and 75% to the plaintiffs.
Pollution - Fisheries Act - Deleterious Substance - Fine
R. v. Bolt, 2011 NLTD 20,
In this matter the defendant pled guilty to two charges of depositing a deleterious substance into waters frequented by fish and failing to report a spill contrary to the Fisheries Act. The facts were that a quantity of diesel fuel was spilled into the harbour while the defendant was refuelling his vessel. He was fined $10,000 for the depositing charge and $5,000 for the failure to report. The defendant appealed the fines. The Appellate Court dismissed the appeal noting that it would only interfere with the sentence if it was clearly unreasonable or demonstrably unfit, neither of which had been shown.
Bunkering – Pollution – Apportionment of Fault
FFS HK Ltd. v. P.T. 25 (Ship), 2010 BCSC 1675,
The issue in this case was the apportionment of fault for a spill that occurred in Vancouver Harbour during a bunkering operation which cost the vessel owner approximately $1 million. The owner/plaintiff accepted it was partially at fault in that one of the crew left open the valves to one of the ship‟s tanks and the crew failed to monitor the tank after bunkering commenced. However, the owner alleged that the crew of the bunkering barge was also at fault in that bunkers were transferred at a higher rate than agreed and the barge crew also failed to monitor the quantity transferred to the ship. The Court found that a bunkering operation is a joint operation with shared responsibilities and that the agreed transfer rate was a critical component of the transfer operation which should not be deviated from by the barge without clear and explicit instructions from the vessel. The Court found as a fact that the barge increased the transfer rate beyond that agreed and did not accept the evidence of the barge that the vessel asked for an increased transfer rate through hand signals. The Court further found that the increase in the transfer rate was a contributing cause of the spill. The Court then reviewed the faults of the two parties and held that they were equally at fault.
Pollution - Offences - Due Diligence
R. v. M/V “Kathy L” et al., 2010 BCPC 30,
This case concerned the sinking of a barge while it was being towed which resulted in escape of pollutants. Charges were laid against the owner of the barge as well as the towing company and the captain of the tug. The Court dismissed the charges against all defendants except for the owner of the barge. The Court found that the sinking was caused by unseaworthiness of the barge for which the owner was responsible. The unseaworthiness was not obvious to a casual observer and the Court rejected the arguments of the Crown that the tug captain should have done a more thorough inspection of the barge.
Adequacy of Compensation - Ship Source Oil Pollution Fund- Standard of Review
Canada v. Ship Source Oil Pollution Fund, 2008 FC 1094 ,
This was an action by the Crown challenging the adequacy of an offer of compensation made by the Administrator of the Ship Source Oil Pollution Fund pursuant to the provisions of the Marine Liability Act. The Crown incurred costs in excess of $220,000 to clean and destroy an abandoned tugboat and applied to the Administrator of the Ship Source Oil Pollution Fund for reimbursement of this amount. The Administrator offered the Crown only $20,000, arguing that if the Crown had acted reasonably it would have and could have pumped the contaminants from the vessel years earlier. As a preliminary issue, the Court had to consider the appropriate standard of review of a decision of the Administrator and the scope of the appeal. The Court held that the standard was one of reasonableness rather than correctness and that the Court must not substitute its decision for that of the Administrator unless an unreasonable conclusion has been demonstrated. The Court next considered whether the Crown had been negligent and concluded that it had been negligent in waiting five years before exercising its statutory powers to clean and destroy the vessel. This delay increased the claim unnecessarily. The Court next considered whether the Administrator had breached the rules of procedural fairness by failing to provide the Crown with an expert report which apparently quantified the loss at $20,000. The Court held that the expert’s report should have been provided to the Crown. In result, the Court ordered the Administrator to provide the report to the Crown and ordered the Administrator to make a second offer of compensation after receiving and considering any comments by the Crown.
Pollution - Discharge from Vessel – Offence
Newfoundland Recycling v. Her Majesty the Queen (Attorney General for Canada), 2008 NLTD 38,
This was an appeal from a judgment finding the Appellant guilty of depositing a deleterious substance (oil) in water frequented by fish contrary to the Fisheries Act. The offence occurred when a vessel that the Appellant had been dismantling for salvage sank at the wharf. The Appellant argued, inter alia, that it was not the owner of the vessel. The Court held, however, that ownership was not determinative. Rather, it was control that mattered and the Court held the trial Judge correctly found the Appellant had control.
Pollution - Ship Source Oil Pollution Fund
Canada v. Administrator of the Ship Source Oil Pollution Fund, 2007 FC 548 ,
This was an action by the Crown challenging the adequacy of an offer of compensation made by the Administrator of the Ship Source Oil Pollution Fund pursuant to the provisions of the Marine Liability Act. The issue in this application was whether the named Respondent should be the Administrator or the Attorney General of Canada. The Court held that the Administrator was properly named as the Respondent.
Pollution - Sentencing
R v. The “Tahkuna”, 2002 CanLII 54007,
This was an appeal of sentence imposed by a Provincial Court Judge. The Defendant ship was charged under the Oil Pollution Prevention Regulations of the Canada Shipping Act. The charges stemmed from a spill of approximately 1,000 litres of fuel during refuelling operations. The cause of the spill was that a valve in the overflow line had been inadvertently left open. The spill affected 1,500 feet of shoreline and the clean up costs, which were paid by the shipowner, amounted to $65,000.00. Under these circumstances, the Trial Judge imposed a fine of $20,000.00. The shipowner appealed the fine to the Newfoundland Court of Appeal arguing that the fine far exceed the range customarily imposed for similar offences. The Court of Appeal noted that it could only intervene to vary a sentence imposed at trial if the Trial Judge committed “an error in principle” leading to a sentence that was “demonstrably unfit”. Upon reviewing the circumstances, the Court of Appeal found no such error in principle and dismissed the appeal.
Pollution - Offences
R v. Glenshiel Towing Co. Ltd., 2001 BCCA 417,
On December 16, 1997, the tug “Glenshiel” was found heeled over and submerged at her mooring in False Creek, Vancouver. As a result of the sinking a considerable amount of diesel fuel escaped from the vessel into the water and the owner was charged pursuant to s. 668 of the Canada Shipping Act with discharging a pollutant. At trial, the accused was acquitted on the grounds that the Crown had failed to prove sufficient evidence to support a conviction. On appeal, the Crown argued that all it needed to prove to support a conviction was that the pollutant emanated from the ship. The accused argued that it was incumbent on the Crown to prove that the accused caused the discharge. The Judge on appeal agreed with the accused holding that the Crown must prove some causal link between the accused and the discharge of the oil before liability will arise, at which point the onus shifts to the accused to prove due diligence. On further appeal, the Court of Appeal held that the offence was a strict liability offence which carries a conviction upon mere proof of the prescribed act. The Crown was not required to prove that an act or omission of the master or some other person on board the ship caused the discharge. All that is required is proof beyond a reasonable doubt that the discharge occurred. Thereafter, the onus shifts to the accused to prove that all due care was taken to avoid the discharge.
R v. The Point Vibert,  N.S.J No. 147,
This is a rare case in which a ship was found not guilty for discharging a pollutant. The Court found that although the pollutant emanated from the ship the cause of the pollution was the failure of shore based personnel to stay at their posts. Specifically, the procedure set up for the fuelling operation was for the shore based personnel to operate the control valve as instructed by the crew. During the course of the fuelling operation it was apparent that the rate of flow was too great and the crew shouted to the person operating the valve to restrict the flow. However, that person had inexplicably left the valve unattended with the result that the fuel overflowed. Under the circumstances, the Court held that the discharge occurred as a result of events outside the control of the vessel or the crew.
Pollution - Limitation Periods
Canada v. J.D. Irving Ltd.,  2 FC 346,
This decision disposes of motions for summary judgement brought by the various Defendants. The matter arose out of the sinking of the "Irving Whale", a tank barge, on September 7, 1970, while under tow of the tug "Irving Maple" from Halifax, Nova Scotia to Bathurst, New Brunswick. At the time of the sinking she was loaded with 4,297 long tons of Bunker C fuel oil. Immediately after the sinking a quantity of oil was discharged from the barge and 32 kilometers of coast line was contaminated. Clean up operations continued until November, 1970. Thereafter, small quantities of oil intermittently leaked from the barge. The barge was kept under surveillance until 1994 when the Minister of Transport decided that the sunken barge should be raised to avoid an inevitable catastrophe. The barge was successfully raised on July 30, 1996, at a cost of $42,000,000.00. On July 29, 1997, the Government of Canada commenced this action to recover the costs of raising the barge. The action was commenced against the owners and charterers of the "Irving Whale" and "Irving Maple" and against the Ship Source Oil Pollution Fund and the International Oil Pollution Compensation Fund 1971. The action against the owners and charterers was based on the statutory liability of an "owner" imposed by 677(1) of the Canada Shipping Act and on the torts of negligence and nuisance. The actions against the Ship Source Oil Pollution Fund and the International Oil Pollution Compensation Fund 1971 was pursuant to Part XVI of the Canada Shipping Act.
The various Defendants brought motions for summary judgement. The significant issues were:
On the first issue the Court held that the Plaintiff's statutory cause of action against the "owner" was time barred by subsection 677(10). Subsection 677(10) provides for a limitation period of 3 years from the date of the damage and 6 years from the date of the "occurrence" that caused the damage. The Plaintiff argued that these limitation periods did not apply because the claim was for "preventative measures" rather than pollution damage. In the alternative, the Plaintiff argued that since the claim was for "preventative measures" the word "occurrence" as used in subsection 677(10) should be interpreted as meaning the taking of "preventative measures" or the time when the Plaintiff first had reasonable grounds for believing such measures were necessary. The Court rejected the Plaintiff's arguments and held that the word "occurrence" could only mean the sinking of the barge. In result the Plaintiff's statutory action against the "owner" was time barred.
On the issue of whether the action in tort against the "owner" was time barred, the owner relied on section 681 of the Canada Shipping Act (which provides that the owner of a "Convention ship" is not liable for the matters referred to in subsection 677(1). The Court, however, noted that there was doubt as to whether the "Irving Whale" continued to be a "Convention ship" as the owner had abandoned ownership after the sinking. The further Court noted that the torts of negligence and nuisance may be of a continuing nature and that there was an absence of evidence on the motion as to the nature of the torts and when they may have been committed. The Court therefore allowed the Plaintiffs actions in negligence and nuisance to continue.
The third issue, whether Part XVI had retroactive effect, arose because Part XVI was not enacted until well after the sinking. The enacting legislation provided that it should apply to claims for expenses "regardless of the time of the occurrence that gave rise to the damage, loss, cost or expenses. The Court held that these words indicated a clear intent that the legislation should be applied retroactively.
The two remaining issues of whether the statutory claims against the Ship Source Oil Pollution Fund and the International Oil Pollution Compensation Fund 1971 were time barred were resolved against the Plaintiff. The Court held that these claims were time barred.
Pollution - Reasonable Doubt
R. v. The Elm, (May 5, 1998) Nfld. Prov. Ct.,
In this matter the "Elm", a lumber carrier, and her Master, Chief Engineer and Second Engineer were charged with various pollution offences. The charges arose when a Fisheries Surveillance aircraft observed an oil slick off the south coast of New Foundland on November 23, 1996. The slick was approximately 20 metres in width and 59 nautical miles long. The Fisheries aircraft followed the slick to the stern of the "Elm". The observers on the aircraft concluded that the oil was being discharged from the "Elm" even though they did not actually observe the discharge of pollutants from the ship. The ship vehemently denied the charges. The theory of the defence was that the slick had come from another vessel. Expert evidence was led indicating the course of the slick was slightly different from the course of the ship. Evidence was also led that the ship was well run and well equipped. The trial judge acknowledged that the facts raised a suspicion but acquitted the accused. In doing so the trial judge noted the absence of oil sample analysis that would have conclusively proven the oil slick had emanated from the "Elm".
Negligence of Refinery - Contributory Negligence
Newfoundland Processing Ltd. v. The "South Angela",,  1 FC 154,
The issue in this case was who was responsible for an oil spill that occurred at the Come By Chance Oil refinery. The spill resulted after the Defendant vessel had discharged its cargo of crude and was involved in a line draining process. The Court held that both the Plaintiff and Defendant were equally at fault. The Plaintiff was at fault in that the cause of the spill was a backflow from the refinery and there were no check valves in place which, although not required by law, would have made the Plaintiff aware of the backflow. The Defendant was at fault in that it had failed to close a valve which, if closed, would have prevented the backflow from entering the slop tank and overflowing into the sea. The Court further held that the contributory negligence of the Plaintiff was not a bar to recovery. In doing so the Court relied upon and adopted the reasoning of the Newfoundland Court of Appeal in Bow Valley (Husky) Bermuda v Saint John Shipbuilding Limited, (1995) 130 Nfld. & PEIR 92.
Availability of Absolute/Conditional Discharge
R. v. The "Front Climber",  N.B.J. No. 249, (N.B. Prov.Ct.),
The "Front Climber" pleaded guilty to a charge of pollution under the Canada Shipping Act. Approximately 25 to 30 litres of oil had been discharged in St. John harbour. The cause of the discharge was a failure to fully close a valve. The ship was fined $2,000. An interesting point in the case was whether the ship could be given an absolute or conditional discharge, in lieu of a fine. The Court held that the discharge provisions of the Criminal Code applied only to natural persons and were therefore not available to ships.
Prior Convictions - Sisterships
R. v. The "Argus",  N.B.J. No. 507,
The ship "Argus" pleaded guilty to an accidental discharge of 3 to 5 barrels of oil into the waters of St. John harbour. The cause of the discharge was a crew member opening the wrong valve. The Court analyzed the various factors that should be taken into account in sentencing and ultimately ordered a fine of $23,000. An interesting issue in the case was whether the Crown could introduce evidence of prior convictions against ships in the same ownership as the "Argus". The Court held that the "offender" was the ship and not its owner and, therefore, prior convictions against sisterships were not admissible.