J.D. Irving Limited v. Siemens Canada Limited, 2016 FC 287 (2016-03-07)
Facts:Irving contracted with Siemens to transport cargo by tug and barge. During the loading of the cargo at Saint John, New Brunswick, the cargo fell off the barge. MMC provided naval architectural and consulting services to Irving in relation to the loading and transport of the cargo pursuant to a contract between it and Irving. The actual services were provided by Mr. Bremner who was the owner and principal of MMC. In a decision reported at 2016 FC 69, the Federal Court held that Irving had the right to limit its liability but deferred any decision on the limitation rights of MMC and Bremner. This application was by MMC and Bremner for a determination of their rights to limit liability pursuant to the Marine Liability Act and Art. 1(4) of the Convention on Limitation of Liability for Maritime Claims, 1976, as amended by the Protocol of 1996 (collectively, the “Limitation Convention”).
Decision:MMC and Bremner are not entitled to limit their liability.
Held:Art. 1(4) of the Limitation Convention extends the right to limit liability to “any person for whose act, neglect or default the shipowner or salvor is responsible”. MMC and Bremner argue that Art. 1(4) extends the right to limit to subcontractors of the shipowner provided the shipowner is responsible at law for the actions of the independent contractor. MMC and Bremner rely upon the non-delegable obligation of a shipowner to provide a seaworthy vessel and assert that an independent contractor who renders a ship unseaworthy saddles the shipowner with liability. Thus, they say they are persons for whom Irving is responsible within the meaning of the Limitation Convention. However, a contractual relationship between two independent entities does not give rise to vicarious liability unlike the relationship between employer and employee or principal and agent. Moreover, Bremner was not an employee or agent of Irving but of MMC. The text writers acknowledge that Art. 1(4) could be interpreted broadly or narrowly. Some suggest it could be interpreted to apply to independent contractors whereas others disagree. The Travaux Préparatoires suggests that it was not intended to extend the right to limit liability to independent contractors. Accordingly, given it was not intended to extend the right to limit to subcontractors and given that the contractual relationship between Irving and MMC did not attract vicarious liability, MMC and Bremner are not entitled to limit their liability.
Comment: This case is very notable as it is believed to be the only case that has directly considered and ruled on this issue.