Canada v. Berhad

In Miscellaneous Maritime Law Topics on (Updated )

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.”