Date: 20001128
Docket: T-1692-99
BETWEEN:
BAYSIDE TOWING LTD., EUGENE
| BECKSTROM AND WILLIAM FRIZELL |
Applicants
- and -
CANADIAN PACIFIC RAILWAY COMPANY,
B.C. TEL AND RIVTOW MARINE LTD.
Defendants
REASONS FOR ORDER
GIBSON J.:
BACKGROUND
[1] On the evening of the 1st of June, 1999, Captain Eugene Beckstrom took charge, as relief master, of the tug boat "Sheena M", a 33.5 foot long steel tug of 9.99 registered tons, powered by twin 300 horse power diesel engines. At the time he took charge, the Sheena M was in the course of towing an unloaded scow up the Fraser river to a location at Mission, British Columbia where the scow was to be berthed. The Sheena M was then to take into tow a loaded chip scow, the "Rivtow 901", and return down river with the Rivtow 901. William Frizell was the sole deck hand on board the Sheena M.
[2] The up-river portion of the voyage proceeded without incident. The unloaded scow was berthed. The Sheena M then took into tow the Rivtow 901 which relied on tug boats for its movements and therefore was a "dumb" barge as that term is used in some of the case law which will be referred to later in these reasons.
[3] At an early stage in the down-river tow, the Sheena M and Rivtow 901 had to pass through the open swing-span of the Mission Railway Bridge that spans the Fraser river between the cities of Mission and Abbotsford, both in British Columbia. The transit through the open swing-span was not successfully completed. At approximately 12:40 a.m. on the 2nd of June, 1999, the starboard side, midship, of the Rivtow 901 hit the upstream side of the protection peer of the bridge and then hit the swing-span itself, dislodging it from its pivot and pushing it in a down-river direction.
[4] In the result, this action was commenced by Statement of Claim filed the 23rd of September, 1999 in which the plaintiffs seek, inter alia, a declaration that they are entitled to limit their liability in respect of the bridge collision to $500,000. plus interest to the date of constitution of a limitation fund pursuant to paragraph 577(1)(b) of the Canada Shipping Act1 (the "Act") and an order constituting the limitation fund pursuant to paragraph 581(1)(a) of the Act.
[5] On the 28th of October, 1999, Canadian Pacific Railway Company ("CPR") commenced an action in this Court against the plaintiffs herein, the owners and all others interested in the ship "Sheena M", the owners and all others interested in the ship "Rivtow 901" and Rivtow Marine Ltd. claiming, inter alia, general and special damages estimated to be in excess of five millions dollars arising out of the plaintiffs' navigation, management or operation of the Sheena M and Rivtow 901 that resulted in the collision of the Rivtow 901 with CPR's Mission Railway Bridge.
[6] By order dated the 2nd of November, 1999, Prothonotary Hargrave constituted an "interim" limitation fund in respect of the liability of the plaintiffs in this action and "...the Sheena M, and any person entitled to the protection of the limitation fund...". Prothonotary Hargrave further ordered that the establishment of the interim limitation fund and its quantum were "...without prejudice to the right of any defendant to argue, either at a trial, or hearing, that the interim limitation fund created [by his Order] is not properly constituted, including that it should be calculated based upon the combined tonnages of the Sheena M and the Rivtow 901". The application before this Court that gives rise to these reasons flows directly from the "without prejudice" reservation contained in Prothonotary Hargrave's order.
THE NATURE OF THE APPLICATION BEFORE THE COURT AND THE RELIEF REQUESTED
| [7] The applicants/plaintiffs seeks summary judgment pursuant to Rules 213(1) and 216 of the Federal Court Rules, 19982. The reliefs requested are the following: |
| (a) a declaration that the Plaintiffs are entitled to limit their liability to $515,183.44 [the quantum of the interim limitation fund established by the order of Prothonotary Hargrave earlier referred to] pursuant to s. 577(1)(b) of the Canada Shipping Act (C.S.A.); |
| (b) an order that the sum of $515,183.44 shall be paid into Court within seven (7) days of the date of the order, which sum shall constitute the limitation fund of the Plaintiffs pursuant to s. 581(1)(a) and the C.S.A.; |
| (c) the granting of an injunction against the defendants and any other party from commencing or continuing proceedings before any Court, tribunal, or other authority against the Plaintiffs and the ship "Sheena M" in respect of the incident of June 2, 1999; and |
| (d) costs of the action from November 2, 1999 [the date of Prothonotary Hargrave's order] onward payable by the Defendants Canadian Pacific Railway Company and Rivtow Marine Ltd. to the Plaintiffs on a solicitor and client basis payable forthwith after the assessment thereof pursuant to Rule 400(6)(b) or in the alternative, an order for increased costs pursuant to Rule 400(3). |
THE ISSUES
[8] In addition to the issues of whether or not this is an appropriate case for summary judgment, and, of course, of costs and the appropriate scale of costs, the applicants/plaintiffs identified the following issues: first, whether the damage caused by the collision on the 2nd of June, 1999 was caused by a "personal act or omission", with "intent to cause such loss", or "recklessly with knowledge that such loss would probably result"; and second, whether the limitation fund to be established should be based on the tonnage of the tug Sheena M alone in accordance with Prothonotary Hargrave's order constituting the "interim" limitation fund, or whether it should be based on the combined tonnages of the Sheena M and the dumb barge Rivtow 901.
POSITIONS OF THE RESPONDENTS/DEFENDANTS AND AGREEMENTS AT THE COMMENCEMENT OF THE HEARING
[9] The respondent/defendant BC Tel filed no material on the application for summary judgment and did not appear at the hearing before me. The respondent/defendant Rivtow Marine Limited filed a Memorandum of Fact and Law relating only to the issue of costs. With the consent of the Court, counsel for Rivtow did not appear at the hearing of the motion which was conducted at Calgary, Alberta, but it was agreed that, if and when the question of costs was reached during the course of the hearing, counsel for Rivtow would then take part by teleconference.
[10] Subject to what follows, the respondent/defendant CPR opposed the motion for summary judgment but, without filing its own cross-motion for summary judgment, requested the following reliefs:
| An Order or Declaration that: |
| (a) the Plaintiffs are entitled to limit their liability to an amount determined on the basis of the combined tonnage of the "Sheena M" and the "Rivtow 901", which fund will constitute the limitation fund of the Plaintiffs; |
| (b) the appropriate amount of the limitation fund to be determined by reference to a Judge or Prothonotary of this Court pursuant to Rule 153; |
| (c) Within seven (7) days following said determination; the Plaintiffs pay into Court the full amount of the limitation fund together with interest on the whole of the limitation fund, or alternatively, on the additional amount beyond the $515,183.44 secured by the AXA Guarantee, from June 2, 1999 to the date of payment in; |
| (d) Alternatively, the Plaintiffs are entitled to limit their liability to $515,183.44, and said amount to be paid into Court within seven (7) days of the date of the order, which sum will constitute the limitation fund of the Plaintiffs; |
| (e) CPR receive its costs of this proceeding on a party-and-party basis; |
| (f) Alternatively, the Plaintiffs receive their costs of this proceeding, other than those which the Plaintiffs incurred in proving those matters necessary to obtain their declaration of limitation of liability in this proceeding, on a party-and-party basis. |
[11] At the opening of the hearing on the applicants'/plaintiffs' motion, counsel for the applicants and for CPR expressed agreement that no facts relevant to the determination of the motion, and thus the action, were in dispute; the damage caused by the collision on the 2nd of June, 1999 was not caused by a "personal act or omission", with "intent to cause such loss", or "recklessly, with knowledge that such loss would probably result"; and that this matter was an appropriate case to be dealt with by summary judgment since, apart from the issue of costs, the sole remaining issue, that being whether the limitation fund should be based on the tonnage of the Sheena M alone in accordance with Prothonotary Hargrave's order of the 2nd of November, 1999 or on the basis of the combined tonnages of the Shenna M and the Rivtow 901, was a pure question of law.
[12] Finally, counsel for the applicants/plaintiffs agreed that the matter should proceed as if the respondent/defendant CPR had filed a cross motion for summary judgment on the basis that the reliefs requested in its Memorandum of Fact and Law, apart from costs, would be appropriate if it were to be successful with regard to the remaining issue of law.
ANALYSIS
| (1) An appropriate case for Summary Judgment? |
[13] Against the matters identified by this Court as being relevant to determination of the issue of whether disposition of an action by summary judgment is appropriate3, I am satisfied that this is an appropriate case for disposition by summary judgment and in that regard I am in agreement with the positions of counsel for both parties appearing before the Court. The hearing thus proceeded on that basis and, with the consent of counsel on behalf of the applicants/plaintiffs, as if there were before the Court a cross motion on behalf of the respondent/defendant CPR for summary judgment in its favour with reliefs being sought as described above.
| (2) Was the damage caused by the collision on the 2nd of June, 1999 caused by a "personal act or omission", with "intent to cause such loss", or "recklessly, with knowledge that such loss would probably result"? |
[14] As noted earlier in these reasons, counsel for the respondent/defendant CPR conceded that the damage was not caused by a "personal act or omission", with "intent to cause such loss", or "recklessly, with knowledge that such loss would probably result". If such were to be the case, then by virtue of Article 4 of the Convention on Limitation of Liability for Maritime Claims, 1976 concluded at London on November 19, 1976 as amended by the Protocol of 1996 to amend a Convention on Limitation of Liability for Maritime Claims, 1976 concluded at London on May 2, 1996 (the "Convention") that is Schedule VI to the Act as enacted by Chapter 6 of the Statutes of Canada, 1998 (the "amending Act"), the applicants/plaintiffs would be disentitled to limit their liability in any way. Counsel for the applicants/plaintiffs urged that, despite the concession by counsel for the respondent/defendant CPR, I should nonetheless deal with this issue. In light of the position of counsel for the respondent/defendant CPR, I decline the invitation of counsel for the applicants/plaintiffs and will treat this as an issue not before the Court. I will thus make no further comment on it.
| (3) Should the limitation fund in respect of this action be based on the tonnage of the tug Sheena M alone in accordance with the Order of Prothonotary Hargrave dated the 2nd of November, 1999 or should it be based on the combined tonnages of the tug and dumb barge Rivtow 901? |
[15] The seminal case in Canada on calculation of the quantum of a limitation fund in tug and barge situations is Rhône (The) v. Peter A.B. Widener (The)4, hereinafter "The Rhône". The facts of that matter were not dissimilar to those now before this Court. For the majority, Mr. Justice Iacobucci described them in the following terms at pages 505 and 506:
| On November 7, 1980, the moored ship, Rhône, owned by the respondent Vinalmar S.A. ("Vinalmar"), was struck by the barge, Peter A.B. Widener ("Widener"), at the Port of Montréal. The Rhône sustained damages in the agreed amount of $88,357.89, while the damages to the Widener were set at $49,200. |
| The Widener, owned by the respondent North Central Maritime Corporation ("North Central"), is a "dumb" barge, so called because it relies on tug boats for its movements. At the time of the casualty, the Widener was commanded by Captain Lyons and was being towed by four tugs. Two of these, the South Carolina and the Ohio, were owned by the appellant, Great Lakes Towing Company ("Great Lakes"). Two others, the Ste.Marie II and the Rival were owned by the respondent North Central, and McAllister Towing & Salvage Ltd., respectively. |
| The towage of the Widener had been arranged through an oral contract between North Central and Great Lakes and involved its towage from Duluth, Minnesota, to the Port of Montréal. Captain Kelch, master of the Great Lakes' tug Ohio, acted as de facto master of the flotilla. |
| ... . Owing to the navigational errors made by Captain Kelch relating to the speed at which the flotilla was travelling and the point at which they turned around St. Helen's Island and proceeded up river against the St. Mary's current, the Widener began to move off course as the flotilla entered the Port of Montréal. The tugs attempted to compensate for this but the Ohio's towing apparatus malfunctioned and the Widener began to drift towards the Rhône. Despite attempts to correct the Widener's angle of drift, the Widener collided with the Rhône. |
| As a result of this mishap, two actions were commenced. In the first, the owners of the Rhône, the respondent Vinalmar, sued everyone involved -- the barge owner and tug owners -- for damaging their ship. In the second, the owners of the Widener, the respondent North Central, sued the appellant Great Lakes for breach of its contract of towage. Great Lakes denied liability in both actions and counterclaimed for limitation of liability pursuant to s. 647(2) of the Canada Shipping Act. |
[16] Thus, substituting the Mission Bridge for the stationary ship The Rhône, and ignoring the involvement of multiple tugs in the case of The Rhône, the situations were very similar and the issues of limitation of liability and the basis of calculation of any limitation of liability were similar. The distinguishing feature, and more will be said about this later, is the enacting of the 1998 amendments to the Act that implemented the Protocol to the Convention.
[17] At page 515 of The Rhône, Mr. Justice Iacobucci described two of the issues before the Supreme Court in the following terms:
| ... Second, do the limitation of liability provisions in the Canada Shipping Act apply to limit a shipowner's liability for the acts or omissions of its servant in directing a flotilla comprising vessels belonging to other shipowners? Third, in the event that the appellant is entitled to limit its liability under the Canada Shipping Act, what vessels must be taken into account in determining the extent of its liability? |
[18] Thus, what is commonly referred to as the "flotilla principle" and its application where ships, including a dumb barge, are in different ownership was clearly before the Supreme Court. As here, the owners of The Rhône contended that Captain Kelch was negligent, not only with respect to the navigation of his tug, the Ohio, but also with respect to the navigation of two of the other tugs and, parallel to the situation here before the Court, the dumb barge, The Widener.
[19] Mr. Justice Iacobucci referred at length to the decision of the English Court of Appeal in The Bramley Moore5. Referring to the reasons of Lord Denning, M. R., writing for the Court, Mr. Justice Iacobucci wrote at page 529 and following:
| He reasoned that, at least in the case of separate ownership, where only those on board a tug are negligent, the true cause of the damage is the improper navigation of the tug and not the tow. In those circumstances, the statute would apply without question to limit the liability of the tug owner. He reasoned at p. 436: |
| It can well be said that the owners of the tug were guilty of "improper navigation" of the barge -- in that they were in control of the movement of the barge through the water. But the section requires you also to look at the cause of the damage. That is clear from the words "by reason of". And in a case where those on the tug are negligent, and those on the barge are not, the cause of the damage is in truth the improper navigation of the tug, not the improper navigation of the barge. It is the tug which is the cause of all the trouble. That is, at any rate, the way in which these cases have been regarded in the past . . . . This must be on the assumption that the damage is "by reason of the improper navigation" of the tug, but not "by reason of the improper navigation" of the tow. |
| Second, Lord Denning found that, in any event, the argument that the tug owners' right to limit their liability was conditional on their being owners of the barge was dispelled by virtue of the 1958 amendment to the Act. This amendment expanded the scope of limited liability to also include damage caused to any property "through any other act or omission of any person on board the ship." Applying this statutory provision to the fact situation at hand, Lord Denning observed at p. 437: |
| If those on board the tug are negligent and those on board the tow are not, and the tow comes into collision with another vessel, then clearly the damage is caused through an "act or omission of any person on board the tug". If you insert the appropriate words into the section as now amended, it reads in this way: "The owners of a tug shall not, where damage is caused through any act or omission of any person on board the tug, be liable in damages" beyond an amount calculated on the tonnage of the tug. So read, it seems clearly to cover the case when those on the tug are negligent and those on the tow are not. It shows that the owners of the tug can limit their liability according to the tonnage of the tug. |
| Accepting for the sake of argument that the cause of the collision must be attributed to Captain Kelch's navigation not only of the Ohio but also the other vessels within the flotilla not owned by Great Lakes, the respondents' argument nonetheless fails on the clear words of s. 647(2)(d)(ii). This provision provides that Great Lakes, as owner of the Ohio, may limit its liability for damage caused to another vessel through "any other act or omission of any person on board [that] ship." Therefore, Great Lakes may limit its liability since the cause of the collision consisted of acts or omissions of Captain Kelch on board the Ohio. |
| Interpreting s. 647(2) in this manner to limit the appellant's liability accords not only with the clear words of the statute but also with the purpose underlying this section, namely, removing the threat of unlimited liability to a shipowner. In this regard, we should recall the role of limited liability for shipowners in the development of modern shipping enterprises and in the facilitation of insurance coverage: ... . As has often been observed, the origin of these limitation provisions rests with the desire to promote commerce and international trade by affording shipowners protection from the full impact and perhaps ruinous pecuniary liability arising from acts of navigation over which they have no personal control. |
| Certainly, a number of commentators have drawn into question the continued need for limited liability in this day and age of corporations and developed insurance markets: ... . However, whether this regime is responsive to modern realities is a question of policy to be determined by Parliament and not the courts whose task is to interpret and give effect to the intention of Parliament. In this regard, I consider the following comment by Lord Denning in The Bramley Moore, supra, at p. 437 apposite: |
| The principle underlying limitation of liability is that the wrongdoer should be liable according to the value of his ship and no more. A small tug has comparatively small value and it should have a correspondingly low measure of liability, even though it is towing a great liner and does great damage. I agree that there is not much room for justice in this rule; but limitation of liability is not a matter of justice. It is a rule of public policy which has its origin in history and its justification in convenience. |
| [citations and some portions of the text omitted] |
[20] Turning to the issue of the appropriate unit of limitation, that is to say on the facts of this matter, the tug alone, or the tug and tow, Mr. Justice Iacobucci wrote at p. 536:
| However, when the issue of limited liability came before the English Court of Appeal again in The Bramley Moore, supra, Lord Denning openly questioned the significance of common ownership in determining the extent of a shipowner's liability. In his opinion, where those on board a tug are negligent and those on a tow are not, the cause of damage is the improper navigation of the tug and not its tow. It is the tug which is the cause of all of the trouble. In this regard, Lord Denning drew into question the decision in The Ran ,... . He failed to see the relevance of common ownership and found there was "no logical ground" for this special exception allowing for liability to be assessed on the combined tonnage of tug and tow where both are commonly owned. In his opinion, it is only when those on board both the tug and tow are negligent and it is the combined negligence of both vessels which cause the damage that liability against the common owner of both vessels should be based on the combined tonnage of both tug and tow: i.e., The Harlow, ... . It is important to stress that Lord Denning's comments regarding common ownership were strictly obiter dictum since the tug and tow in that case were not commonly owned. [citations omitted] |
[21] He continued at pages 537 and 538:
| With the decisions in The Bramley Moore, ... and The Sir Joseph Rawlinson, it must now be regarded as settled in English jurisprudence that common ownership of a tug and tow is irrelevant for purposes of the limitation of liability provisions of the Act: ... . Regardless of ownership, liability is limited according to the vessel found to be negligent. |
| Although English jurisprudence has expressly cast doubt on the correctness of finding the owner of a tug and tow liable to the extent of their combined tonnage, when the issue came before this Court again in Kathy K, ... liability was assessed against the common owner of a tug and tow for the negligent navigation of the tug on the basis of the tonnage of both vessels. Without elaborating on its reasons, this Court merely stated that it agreed with the trial judge that liability should be based on the aggregate tonnage of the wrongdoing mass (i.e., the tug and tow). ... [citations omitted] |
[22] Thus, implicitly at least, Mr. Justice Iacobucci would appear to have affirmed the continued validity of the "flotilla principle" or "wrongdoing mass" doctrine in Canadian law, where there is common ownership, notwithstanding the doubt cast on it by English jurisprudence. He concluded at pages 540 and 541:
| It is apparent that there exists a difference of opinion between Canadian and English courts in interpreting what is essentially the same statutory provision. The respondents seek to extend the wrongdoing mass principle developed in the context of tug and tow cases to the case at hand. However, for purposes of this appeal I do not believe it necessary or appropriate to resolve this divergence of opinion between Canadian and English courts given my view that the respondents' argument can also be dismissed under the existing wrongdoing mass doctrine. |
| It is important to highlight that the jurisprudence on this issue has never extended so far as to require that all the vessels within a flotilla belonging to an impugned shipowner be taken into account in determining the extent of that shipowner's liability: ... The intent of s. 647(2) is to limit liability for navigational errors according only to the tonnage of those vessels causing the alleged damage. Apart from the vessel responsible for the overall navigation of a flotilla, only those vessels of the same shipowner which physically caused or contributed to the resulting damage form the unit for which liability is limited: ... As already mentioned, the South Carolina was absolved of any fault in this case. Only the Ohio and the Widener were found to have been negligent. Moreover, it does not appear from the findings of the courts below that the South Carolina contributed to the collision in any manner other than in following Captain Kelch's instructions with respect to the location of the turn and the speed at which it travelled. Said differently, it did not physically contribute to the collision in any manner. The resulting damage to the Widener and the Rhône would have arisen notwithstanding the role of the South Carolina. In light of these facts, the South Carolina cannot be held to be a "guilty" vessel or part of the "wrongdoing mass". |
| In my view, it would be stretching the principles of causation beyond their proper limits to hold a vessel not physically causing the impugned damage nor responsible for the navigation of the vessel which in fact physically caused the damage to be part of the "wrongdoing mass". While it may appear to be unjust to limit a shipowner's liability to only one vessel when it has a second vessel which may be used to satisfy a plaintiff's loss, we must remember, as Lord Denning pointed out in The Bramley Moore, ... that the rationale for limitation of liability rests on public policy concerns and not necessarily on considerations of justice. As stated above, the purpose of these limitation provisions generally is to promote international trade and merchant shipping by giving shipowners the protection of limited liability. In my opinion, it would be counter to the intent of these limitation of liability provisions to include within the unit of limitation a helper tug not committing a fault of its own or otherwise physically causing the impugned damage. Therefore, I am of the view that liability should be limited only to the tonnage of the Ohio. [citations omitted] |
[23] Thus, at the time of the decision of the Supreme Court of Canada in The Rhône, I conclude that the flotilla principle or the concept of "wrongdoing mass" remained alive and well in Canada, notwithstanding that it may no longer have been the law in England, but its life and wellness applied only in circumstances of common ownership of the vessels comprising the "wrongdoing mass", as well as common causation, and this, in its totality, by reason of public policy concerns and not necessarily on considerations of justice.
[24] The relevant provisions of the Act that were before the Supreme Court of Canada when it considered The Rhône, were cited in the reasons for decision as the following:
647. . . .
647. . . .
(2) The owner of a ship, whether registered in Canada or not, is not, where any of the following events occur without his actual fault or privity, namely,
(2) Le propriétaire d'un navire, immatriculé ou non au Canada, n'est pas, lorsque l'un quelconque des événements suivants se produit sans qu'il y a ait faute ou complicité réelle de sa part, savoir:
(d) where any loss or damage is caused to any property, other than property described in paragraph (b), or any rights are infringed through
(i) the act or omission of any person, whether on board that ship or not, in the navigation or management of the ship, in the loading, carriage or discharge of its cargo or in the embarkation, carriage or disembarkation of its passengers, or
(ii) any other act or omission of any person on board that ship;
liable for damages beyond the following amounts, namely,
(d) avarie ou perte de biens, autres que ceux qui sont mentionnés à l'alinéa b), ou violation de tout droit
(i) par l'acte ou l'omission de toute personne, qu'elle soit ou non à bord du navire, dans la navigation ou la conduite du navire, le chargement, le transport ou le déchargement de sa cargaison, ou l'embarquement, le transport ou le débarquement de ses passagers, ou
(ii) par quelque autre acte ou omission de la part d'une personne à bord du navire;
responsable des dommages-intérêts au-delà des montants suivants, savoir
(f) in respect of any loss or damage to property or any infringement of any rights mentioned in paragraph (d), an aggregate amount equivalent to 1,000 gold francs for each ton of that ship's tonnage.
f) à l'égard de toute avarie ou perte de biens ou de toute violation des droits don't fait mention l'alinéa d), un montant global équivalent à 1,000 francs-or pour chaque tonneau de jauge du navire.
649. (1) Sections 647 and 648 extend and apply to
649. (1) Les articles 647 et 648 s'étendent et s'appliquent
any person acting in the capacity of master or member of the crew of a ship and to any servant of the owner or of any person described in paragraph (a) to (c) where any of the events mentioned in paragraphs 647(2)(a) to (d) occur, whether with or without his actual fault or privity.
à toute personne agissant en qualité de capitaine ou à tout membre de l'équipage d'un navire et à tout employé du propriétaire ou de toute personne don't font mention les alinéas a) à c) lorsque l'un quelconque des événements mentionnés aux alinéas 647(2)a) à d) se produit, qu'il y ait ou non faute ou complicité réelle de leur part.
(2) The limits set by section 647 to the liabilities of all persons whose liability is limited by section 647 and subsection (1) of this section arising out of a distinct occasion on which any of the events mentioned in paragraphs 647(2)(a) to (d) occurred apply to the aggregate of such liabilities incurred on that occasion.
(2) Les limites que l'article 647 impose aux obligations de toutes les personnes don't la responsabilité est restreinte par l'article 647 et le paragraphe (1) du présent article, qui découlent d'un occasion distincte où est survenue l'un ou l'autre des événements mentionnés aux alinéas 647(2)a) à d), s'appliquent à l'ensemble desdites obligations encourues à cette occasion.
[25] Mr. Justice Iacobucci's reasons note that the foregoing provisions, when he was writing, were represented in Chapter S-9 of the Revised Statutes of Canada, 1985, by the opening words of subsection 575(1) and paragraphs (d) and (f) of that subsection and section 577. The full text of subsection 577(1) of the Act, as it appeared in Chapter S-9 of the Revised Statutes of Canada, 1985, reads as follows:
577. (1) Sections 575 and 576 extend and apply to
577.(1) Les articles 575 and 576 s'appliquent:
(a) the charterer of a ship,
(b) any person having an interest in or possession of a ship from and including the launching thereof, and
(c) the manager or operator of a ship and any agent of a ship made liable by law for damage caused by the ship
where any of the events mentioned in paragraphs 575(1)(a) to (d) occur without their actual fault or privity, and to any person acting in the capacity of master or member of the crew of a ship and to any servant of the owner or of any person described in paragraphs (a) to (c) where any of the events mentioned in paragraphs 575(1)(a) to (d) occur, whether with or without his actual fault or privity.
a) à l'affréteur d'un navire;
b) à toute personne ayant un intérêt dans un navire ou la possession d'un navire, à compter du lancement de ce navire et y compris ce lancement;
c) au gérant ou à l'exploitant d'un navire ou tout agent d'un navire tenue responsable par la loi de dommages causés par le navire,
lorsque l'un quelconque des événements mentionnés aux alinéas 575(1)a) à d) se produit sans qu'il y ait faute ou complicité réelle de leur part, ainsi qu'à toute persone agissant en qualité de capitaine ou à tout membre de l'équipage d'un navire et à tout employé du propriétaire ou de toute personne don't font mention les alinéas a) à c) lorsque l'un quelconque des événements mentionnés aux alinéas 575(1)a) à d) se produit, qu'il y ait ou non faute ou complicité réelle de leur part. [mon accent]
[26] Following the decision of the Supreme Court of Canada in The Rhône, by chapter 6 of the Statutes of Canada, 1998, assented to on the 12th of May of that year, the heading preceding section 574 and sections 574 to 584 of the Act were repealed and replaced. The new provisions most relevant for the purposes of this matter are the following:
Limitation of Liability for Maritime Claims
Limitation de responsabilité en matière
de créances maritimes
574. The definitions in this section apply in this section and in sections 575 to 583.
"Convention" means the Convention on Limitation of Liability for Maritime Claims, 1976, concluded at London on November 19, 1976, as amended by the Protocol. Articles 1 to 15 of the Convention are set out in Part I of Schedule VI and Article 18 of the Convention is set out in Part II of that Schedule.
"Protocol" means the Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims, 1976, concluded at London on May 2, 1996. Articles 8 and 9 of the Protocol are set out in Part II of Schedule VI.
574. Les définitions qui suivent s'appliquent au présent article et aux articles 575 à 583.
« _Convention_ » La Convention de 1976 sur la limitation de la responsabilité en matière de créances maritimes conclue à Londres le 19 novembre 1976, dans sa version modifiée par le Protocole, don't les articles 1 à 15 figurent à la partie I de l'annexe VI et l'article 18 figure à la partie II de cette annexe.
« _Protocole_ » Le Protocole de 1996 modifiant la Convention de 1976 sur la limitation de la responsabilité en matière de créances maritimes signé à Londres le 2 mai 1996, don't les articles 8 et 9 figurent à la partie II de l'annexe VI.
575. (1) Articles 1 to 6 and 8 to 15 of the Convention have the force of law in Canada.
575. (1) Les articles 1 à 6 et 8 à 15 de la Convention ont force de loi au Canada.
...
...
3) In the event of any inconsistency between sections 576 to 583 and Articles 1 to 15 of the Convention, those sections prevail to the extent of the inconsistency.
(3) Les articles 576 à 583 l'emportent sur les dispositions incompatibles des articles 1 à 15 de la Convention.
576. ...
(3) The definitions in this subsection apply in this section, sections 577 to 583 and Schedule VI.
...
576. ...
(3) Les définitions qui suivent s'appliquent au présent article et aux articles 577 à 583 ainsi qu'à l'annexe VI.
...
"shipowner" means an owner, charterer, manager or operator of a ship, whether seagoing or not, and includes any other person having an interest in or possession of a ship from and including the launching of it.
« _propriétaire de navire_ » S'entend du propriétaire, de l'affréteur, de l'armateur ou de l'armateur-gérant d'un navire -- qu'il soit destiné ou non à la navigation maritime --, y compris toute autre personne ayant un intérêt dans le navire ou la possession du navire à compter du lancement de celui-ci et y compris ce lancement.
577. (1) The maximum liability of a shipowner for claims arising on any distinct occasion involving a ship with a tonnage of less than 300 tons, other than claims mentioned in section 578, is
(a) in respect of claims for loss of life or personal injury,_$1,000,000; and
(b) in respect of any other claims,_$500,000.
(2) For the purposes of subsection (1), a ship's tonnage is the gross tonnage calculated in accordance with the tonnage measurement rules contained in Annex I of the International Convention on Tonnage Measurement of Ships, 1969, concluded at London on June 23, 1969, including any amendments, whenever made, to the Annexes or Appendix to that Convention.
...
577. (1) La limite de responsabilité du propriétaire d'un navire jaugeant moins de 300 tonneaux à l'égard de créances -- autres que celles mentionnées à l'article 578 -- nées d'un même événement est fixée à_:
a) un million de dollars pour les créances pour mort ou lésions corporelles;
b) cinq cent mille dollars pour les autres créances.
(2) Pour l'application du paragraphe (1), la jauge du navire est la jauge brute calculée conformément aux règles de jaugeage prévues à l'annexe I de la Convention internationale de 1969 sur le jaugeage des navires, signée à Londres le 23 juin 1969, y compris les modifications don't les annexes ou l'appendice de cette convention peuvent faire l'objet, indépendamment du moment où elles sont apportées.
...
[mon accent]
[27] By section 26 of the Statutes of Canada, 1998, chapter 6, (the "1998 amendments"), the Convention was added as Schedule VI to the Act.
[28] By reason of the 1998 amendments, counsel for the respondent/defendant CPR urged that the decision of the Supreme Court of Canada in The Rhône has been overtaken and that, on the facts of this matter including among them the separate ownership of the Sheena M and the Rivtow 901, this Court should now aggregate the tonnage of the Sheena M and the Rivtow 901 for the purpose of determining the quantum of the limitation fund of the applicants/plaintiffs in this matter. Counsel for CPR urged this result on two grounds: first, because the traditional Canadian "flotilla principle", at least impliedly endorsed by the Supreme Court of Canada in The Rhône, is satisfied in that, by reason of the definition "shipowner" in subsection 576(3) of the Act, the applicant/plaintiff Bayside Towing Ltd. was, at all relevant times, the "shipowner" of both the Sheena M and the Rivtow 901; and secondly, because the amended legislation creates a new Canadian "flotilla principle" under which "causative negligence" and "common ownership" are no longer relevant considerations.
[29] Counsel for the applicants/plaintiffs urged that I should reject the submissions of counsel for CPR on both counts on the basis of the intent underlying both the Convention and the 1998 amendments.
| (a) The traditional Canadian "flotilla principle" - is it satisfied on the facts of this matter? |
[30] In Limitation of Liability for Maritime Claims6, the authors wrote under the heading "Introduction" at page 3,:
| The International Conference on the Limitation of Liability for Maritime Claims took place in London between 1 and 19 November, 1976 under the auspices of the International Maritime Organization (IMO). It was generally accepted by those attending the Conference that the rules relating to the limitation of liability for maritime claims enshrined in the 1924 and 1957 Limitation Conventions required updating. It was agreed at the Conference that the limitation figures contained in the 1957 Convention needed to be increased and that the new limitation figures should be accompanied by a mechanism to accommodate problems of inflation. It was also agreed that the circumstances in which the right to limit should be forfeit needed reviewing. |
| It was recognised that the previous system of limitation had given rise to too much litigation and there was a desire that this should be avoided in future. There was agreement that a balance needed to be struck between the desire to ensure on the one hand that a successful claimant should be suitably compensated for any loss or injury which he had suffered and the need on the other hand to allow shipowners, for public policy reasons, to limit their liability to an amount which was readily insurable at a reasonable premium. |
| The solution which was finally adopted to resolve the competing requirements of claimant and defendant was (a) the establishment of a limitation fund which was as high as a shipowner could cover by insurance at a reasonable cost, and (b) the creation of a virtually unbreakable right to limit liability. |
| The text of the 1976 Convention finally adopted by the Conference therefore represents a compromise. In exchange for the establishment of a much higher limitation fund claimants would have to accept the extremely limited opportunities to break the right to limit liability. Under the 1976 Convention the right to limit liability is lost only when the claimant can prove willful intent or recklessness on the part of the person seeking to limit... . [citation omitted] |
[31] Article 1.2 of the Convention defines the term "shipowner" in words that are narrower than those reflected in subsection 576(3) of the Act, as enacted in the 1998 amendments to the Act. The basis for the broader definition "shipowner" in the 1998 amendments was explained at page 23 of a Transport Canada Discussion Paper entitled Limitation of Liability for Maritime Claims7 in the following terms:
| 60. It was already noted that the 1957 Convention has been extended to apply not only to shipowners but also to charterers, managers, operators and "any person having an interest in or possession of a ship". Article 1(2) of the 1976 Convention provides a similar scope of application but "person in possession, etc." is not mentioned. It is proposed, therefore, to modify Article 1(2) to include such persons so as to maintain the current scope of application of the CSA. [emphasis added] |
[32] On the 2nd of December, 1997, the Honourable David Collenette, then Minister of Transport, appeared before the Standing Senate Committee on Transport and Communications and made the following statement8:
| Bill S-4 also modifies some provisions of the Convention in order to better meet Canadian requirements, particularly in respect of the application to all ships and the application to any person in possession of a ship. These modifications have been done in conjunction with the definition of "shipowner" to ensure that the new regime will continue to apply to all vessels, sea going or not, and also to people who have possession of a ship - for example, ship repairers. [emphasis added] |
On the basis of the foregoing, counsel for the applicants/plaintiffs urged that I should not read too much into the definition "shipowner" enacted by the 1998 amendments and, in particular, I should not read into it an intent to extend the application of the "flotilla principle" in Canada.
[33] I am satisfied that I am entitled to rely on the foregoing statements as interpretive aids but they are, of course, not binding as to the intent of Parliament9.
[34] By contrast, counsel for CPR urged that the new definition "shipowner", extending as it does to "managers", "operators" and "other persons having possession" should be interpreted as signaling Parliament's intention to broaden the scope of persons who are considered "shipowners" for the purpose of combining tonnage under the traditional Canadian "flotilla principle". Counsel urged that I should adopt the "plain meaning" of the words used by Parliament in the new definition "shipowner".
[35] At first blush, the argument of counsel for the respondent/defendant CPR as to the impact of the new definition "shipowner" is attractive. That definition clearly and unequivocally extends the concept "shipowner" well beyond traditional concepts of ownership. However, I am satisfied that the definition should not be read in abstract from the fact that, in the previous iteration of the limitation of liability provisions of the Act, that is to say, the iteration that appeared in Chapter S-9 of the Revised Statutes of Canada, 1985, the substantive limitation of liability provisions were extended, not by the definition "shipowner", but by section 577 to apply, in addition to traditional owners, to charterers, to persons having an interest in or possession of a ship from and including the launching thereof and to managers or operators of a ship. In short, I conclude that the addition of the definition "shipowner", through the 1998 amendments, amounted to nothing more than a drafting device that, whether or not it clarified the provisions of the Act, shortened and simplified those provisions without effecting any change in substance. In effect, the law before me is in substance the same as the law that was before the Supreme Court of Canada in The Rhône.
[36] On the facts of The Rhône, the Supreme Court found that the traditional Canadian "flotilla principle" was not satisfied because there was no common ownership of the tug Ohio and the dumb barge Widener, whether or not they could be taken together to constitute a "wrongdoing mass". Based upon my conclusion that, in substance, the law has not changed since The Rhône was before the Supreme Court of Canada, I feel compelled to reach the same conclusion here as was reached there, that is to say, that against the traditional Canadian "flotilla principle", the limitation of liability should be calculated on the tonnage of the tug Sheena M alone and not on the combined tonnage of the Sheena M and the dumb barge Rivtow 901.
[37] In reaching this conclusion, I do not rely on the previously quoted aids to statutory interpretation drawn from circumstances surrounding the adoption of the Convention and its related protocol, and the further adoption of the Convention and related protocol into the Act in 1998. However, I derive satisfaction that the conclusion I have reached would appear to be consistent with the substance of those aids to interpretation.
| (b) Do the 1998 amendments create a new Canadian "flotilla principle" under which "causative negligence" and "common ownership" are no longer relevant considerations? |
[38] Counsel for CPR essentially urged that both Lord Denning and Justice Iacobucci acknowledge the lack of justice in the current "flotilla principle" and that Parliament, through the 1998 amendments to the Act, has provided the opportunity for this Court to shed that principle.
[39] For ease of reference, I repeat here the quotation from Lord Justice Denning in The Bramley Moore that appears in the reasons of Mr. Justice Iacobucci in The Rhône, supra, at page 532:
| The principle underlying limitation of liability is that the wrongdoer should be liable according to the value of his ship and no more. A small tug has comparatively small value and it should have a correspondingly low measure of liability, even though it is towing a great liner and does great damage. I agree that there is not much room for justice in this rule; but limitation of liability is not a matter of justice. It is a rule of public policy which has its origin in history and its justification in convenience. [emphasis added] |
[40] Mr. Justice Iacobucci, himself, appears to have shared Lord Justice Denning's concern when he wrote in The Rhône at page 541, and once again, this passage is repeated here as a matter of convenience:
| ... As stated above, the purpose of these limitation provisions generally is to promote international trade and merchant shipping by giving shipowners the protection of limited liability. In my opinion, it would be counter to the intent of these limitation of liability provisions to include within the unit of limitation a helper tug not committing a fault of its own or otherwise physically causing the impugned damage. Therefore, I am of the view that liability should be limited only to the tonnage of the Ohio. |
[41] Presumably, Mr. Justice Iacobucci would, like Lord Justice Denning, have said the same thing with respect to a dumb barge not in common ownership with the tug in question where the "unit of limitation" is restricted to the tug alone by reason of lack of common ownership.
[42] Counsel for CPR urged that, through the 1998 amendments made by Parliament that shifted the right to limit damage from a basis of damage caused by acts or omissions in the navigation or management of a ship to a regime where the right of limitation was for damage occurring in "direct connexion" with the operation of a shipowners' vessel, Parliament provided an invitation to the courts to rethink the traditional "flotilla principle" and urged that I should do so.
[43] Counsel cited Davidson and Snelson in The Law of Towage10 to the following effect:
| The change from a regime restricting the right to limit to damage caused by acts or omissions in the navigation or management of the ship to a regime where the right to limit exists "whatever the basis of liability may be" may have affected this issue. Although the principle stated by Lord Denning in The Bramley Moore, namely that limitation is a right based on policy and not on justice, undoubtedly holds good, the basis of the decision discussed above is the concept of causative negligence in the "navigation or management" of a vessel. Now that the party wishing to limit only has to show that liability arose "in direct connection with the operation of the ship" (Art. 2(1)(a)) there may be less reason to restrict the fund to the tonnage of the tug alone. Indeed, both the Court of Appeal in The Bramley Moore and Kerr J. in The Sir Joseph Rawlinson were, in a sense, compelled to adopt a restrictive approach by the dilemma that if the crew of the tug were navigating both tug and tow and the causative negligence was negligence in the navigation of both, then it necessarily followed that there would be unlimited liability in respect of the navigation of the tow, unless tug and tow were in common ownership. That dilemma has been removed by the much more open wording of the 1976 Convention. [emphasis added] |
I note that the learned authors speak in the conditional tense with regard to the effect that the Convention may have had.
[44] Davidson and Snelson, in the foregoing quotation, refer to the decision of Mr. Justice Kerr in The Sir Joseph Rawlinson. In that decision11, Mr. Justice Kerr wrote at page 445:
| In my judgment all of these submissions have great force. I am however driven to the conclusion that in the face of The Bramley Moore Mr. Thomas cannot succeed on these submissions in this Court and probably (though this is not for me to say) nowhere short of the House of Lords, for two reasons. |
| First, there is the passage by Lord Denning, giving the unanimous judgment of the Court of Appeal, about the effect of causation ... . It seems to me that on the basis of that passage the only causative negligence, which is the negligence to which one must look, must in cases such as this be regarded as negligence in the navigation of the tug, and not negligence in the navigation of the tow or negligence in the navigation of both the tug and tow. Accordingly, while it is apparently still correct to say that a person who negligently navigates a tug towing something may be negligent in the navigation both of the tug and the tow, in particular where the damage is caused wholly or at least in the present case partly by the tow, it seems to me that the effect of the decision of the Court of Appeal is that the causative negligence is in such cases to be treated as negligence in the navigation of the tug alone. I also consider that if this is the correct approach to the statutory position before 1958, then one cannot say that this has been altered by the 1958 Act. |
| The second reason why it seems to me that Mr. Thomas cannot in this Court succeed in his argument in the face of The Bramley Moore, and a very important one, is that if Lord Denning had been of the view that it could be said that the crew of The Bramley Moore was navigating both that tug and the barge in tow, and that the causative negligence was negligent navigation of both, then it would necessarily have followed that the owners of the tug could not have limited their liability at all. There would then have been unlimited liability in respect of the negligent navigation of the tow. That was indeed the dilemma of the argument with which the Court of Appeal was presented and which the Court overcame. It was certainly not part of the ratio of the decision of The Bramley Moore; in fact, it was the essence of the ratio of the decision of the Court of Appeal. [emphasis added] |
[45] While I am of the view that the submissions of counsel for CPR might be said, as did Mr. Justice Kerr on the case before him, to have great force, for different reasons, I am driven to the conclusion that in the face of the decision of the Supreme Court of Canada in The Rhône, and in light of the lack of any clear intention evident on the face of the 1998 amendments to the Act or any clear policy statement to the effect that the intention in enacting those amendments was to fundamentally alter the "flotilla principle" as it applied in Canada, counsel for CPR cannot succeed on this ground in this Court and probably, as Mr. Justice Kerr said, "(though this is not for me to say)" anywhere short of the Supreme Court of Canada.
[46] As Mr. Justice Kerr wrote in the foregoing quotation:
| I also consider that if this is the correct approach to the statutory position before 1958 than one cannot say that this has been altered by the 1958 Act. |
Precisely the same must be said here in respect of the 1998 amendments to the Act. I conclude that any intent on the part of Parliament to modify the existing Canadian "flotilla principle" is not in the least clear from the words that Parliament adopted. Further, to the extent that I am entitled to rely on policy statements made in relation to the intent regarding the Convention and in relation to the 1998 amendments, any such policy intention would appear to be negatived by those statements.
[47] Counsel for CPR urged that I should be more bold because amendments to the Act, culminating with the 1998 amendments, represent an evolution in such a way that the limitation of liability provisions no longer reflect the original underlying policy of restricting a shipowner's liability only to the assets he owns, but instead, in the case of tug and tow, reflect a policy to determine a tug owner's liability based on the propensity of the vessels he is directly operating, those being, on the facts of this matter, the tug and dumb barge, to inflict damage. Counsel further urged that if Parliament's intent in the 1998 amendments was to continue to reflect the traditional policy of limiting liability only to vessels which are the "assets" of a shipowner, one would expect "shipowner" to be restricted to registered ownership, and the right to limit liability to be restricted to registered owner.
[48] Once again, I feel compelled to reject these submissions. The concept, as noted earlier, of liability on a rather broad definition of "shipowner" was not new with the 1998 amendments. The only change in this regard made by the 1998 amendments to the Act was, in my considered opinion, a drafting change and not a policy change.
[49] Based upon the foregoing analysis, I conclude that the submission on behalf of CPR that I should interpret the 1998 amendments to the Act as creating a new Canadian "flotilla principle" must also be rejected and the question as to whether the 1998 amendment to the Act reflect a new Canadian "flotilla principle" must, at least at the level of this Court, be answered in the negative.
CONCLUSION
[50] Based upon the foregoing analysis, this application for summary judgment will be granted and the first three reliefs sought by the applicants/plaintiffs and quoted in paragraph [7] of these reasons will be granted. Judgment will issue accordingly.
COSTS
[51] At the close of the hearing of the substantive aspects of this application, it was agreed by counsel then before the Court, particularly taking into account the absence of counsel for the defendant Rivtow Marine Ltd. and the uncertainty of the ultimate outcome, given that I indicated I was going to reserve my judgment, that it would be appropriate to reserve submissions on costs for another day. Judgment and reasons will be signed and distributed to counsel following which the Court will contact counsel with a view to arranging a brief teleconference to discuss the issue of how costs might best be dealt with. For the guidance of counsel, and given the outcome, it is the Court's view, subject to what counsel may have to say during a teleconference, that costs could reasonably be dealt with by written submissions provided on a relatively short time frame. However it is determined to deal with the issue of costs, following disposition with regard to that issue, a supplementary judgment, if required, will issue.
_____________________________
J. F.C.C.
Ottawa, Ontario
November 28, 2000
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1692-99
| STYLE OF CAUSE: BAYSIDE TOWING LTD. ET AL. v. CANADIAN PACIFIC RAILWAY COMPANY ET AL. |
PLACE OF HEARING: CALGARY
DATE OF HEARING: OCTOBER 26, 2000
REASONS FOR ORDER OF GIBSON, J.
DATED: NOVEMBER 28, 2000
APPEARANCES:
DAVID F. McEWEN FOR PLAINTIFFS
WILLIAM M. EVERETT FOR DEFENDANT
JAMES D. FRASER CANADIAN PACIFIC RAILWAY
SOLICITORS OF RECORD:
McEWEN, SCHMITT & CO. FOR PLAINTIFFS
VANCOUVER
LAWSON LUNDELL LAWSON & McINTOSH FOR DEFENDANT
VANCOUVER CANADIAN PACIFIC RAILWAY
BULL, HOUSSER & TUPPER FOR DEFENDANT
VANCOUVER RIVTOW MARINE LTD.
__________________
1 R.S.C. 1985, c. S-9, as amended.
2 SOR/98 - 106.
3 See: Granville Shipping Co. v. Pegasus Lines Ltd., S.A., [1996] 2 F.C. 853 (T.D.).
4 [1993] 1 S.C. R. 497.
5 [1963] 2 Lloyd's Rep. 429.
6 Patrick Griggs and Richard Williams, Limitation of Liability for Maritime Claims , 3rd ed. (London: Lloyd's London Press, 1998).
7 Discussion Paper: Limitation of Liability for Maritime Claims , Policy and Coordination, Marine Policy and Programs - March 1993 - TP 11577.
8 Proceedings of the Standing Senate Committee on Transport and Communications, 1st session, 36th Parliament, December 2, 1997.
9 See Canada (Attorney General) v. Mossop [1991] 1 F.C. 18 at 36 (C.A.); affirmed, [1993] 1 S.C.R. 554.
10 London: Lloyd's of London Press, 1990 at p. 87.
11 [1972] 2 Lloyd's Rep. 437 (Q.B.).
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