Dockets: A-64-17
A-65-17
Citation:
2018 FCA 34
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CORAM:
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GAUTHIER J.A.
BOIVIN J.A.
DE MONTIGNY J.A.
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Docket:A-64-17
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BETWEEN:
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ADVENTURER
OWNER LTD.
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DOCKENDALE
HOUSE, WEST BAY STREET,
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P.O. BOX
CB-13048, NASSAU, BAHAMAS
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Appellant
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and
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HER MAJESTY THE
QUEEN IN RIGHT OF CANADA
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Respondent
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Docket:A-65-17
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AND BETWEEN:
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ADVENTURER
OWNER LTD., OWNER, AND ALL OTHERS INTERESTED IN THE SHIP M/V CLIPPER
ADVENTURER AND THE SHIP M/V CLIPPER ADVENTURER
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Appellants
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And
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HER MAJESTY THE
QUEEN IN RIGHT OF CANADA
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AND THE
ADMINISTRATOR OF THE SHIP-SOURCE
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OIL POLLUTION
FUND
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Respondents
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REASONS
FOR JUDGMENT
GAUTHIER J.A.
[1]
On January 27, 2017, Harrington J. of the
Federal Court dismissed Adventurer Owner Ltd.’s (Adventurer) action against Her
Majesty the Queen in Right of Canada (the Crown) for damages resulting from the
M/V Clipper Adventurer (the Clipper) grounding on a shoal in the Canadian
Arctic (2017 FC 105) (T-901-11). In its reasons, the Federal Court maintained
the Crown’s action in personam and in rem against Adventurer and
the Clipper for the costs and expenses it incurred to prevent marine oil
pollution damage (T-1149-12). Adventurer and the Clipper appealed from the
Federal Court’s decision with respect to both actions (A-64-17 and A-65-17). On
April 12, 2017, de Montigny J.A. issued an Order consolidating both appeals and
designating the appeal in file A-64-17 as the lead appeal.
[2]
For the reasons that follow, I have not been
persuaded that the Federal Court made a reviewable error. Hence, these appeals
should be dismissed.
I.
CONTEXT
[3]
The Federal Court made several detailed findings
of fact throughout its reasons (Federal Court reasons). I will only refer to a
few that situate where the grounding took place, what information those on
board the Clipper had and what warnings had actually been issued.
[4]
On August 27, 2010, the Clipper, sailing at full
speed, ran aground on a submerged and uncharted shoal in the Coronation Gulf in
the Canadian Arctic (Federal Court reasons at paras. 1, 13).
[5]
In the Arctic, surveying is essentially
opportunistic by nature; that is, it is done when the circumstances are
favourable. As such, “[l]ess than 10% of the vast
Arctic waters have been surveyed to modern standards” (Federal Court
reasons at para. 30). The Canadian Hydrographic Chart 7777 for “Coronation Gulf, Western Portion” covered the area
where the grounding occurred (Federal Court reasons at para. 13). Both this
chart and the other nautical publications carried on board the Clipper indicated
that with respect to the area where the Clipper chose to set her course, which
was well outside the main shipping corridor and the magenta coloured area on
Chart 7777, the chart only showed tracks and spot soundings that could be quite
old and mariners were notified to proceed with caution (Federal Court reasons
at paras. 14-16, 45). In fact, as noted by the Federal Court, there “are great many underwater shoals rising from a very rocky
bottom” (Federal Court reasons at para. 16).
[6]
The shoal on which the Clipper grounded was
discovered on September 13, 2007 by the M/V Sir Wilfrid Laurier, a Canadian
icebreaker (Federal Court reasons at para. 17). Following its discovery, a
Notice to Shipping (NOTSHIP) A101/07 was issued to signal its existence. Later
on, this NOTSHIP was replaced by NOTSHIP A102/07 on September 16, 2007 (Federal
Court reasons at paras. 21-22). NOTSHIP A102/07 was cancelled when a Notice to
Mariners (NOTMAR) was issued on October 8, 2010 (Federal Court reasons at para.
59).
[7]
After the customary 14 days of broadcasting
applicable in the Arctic region, NOTSHIPs remain available on the Canadian
Coast Guard’s (CCG) website or can be obtained from the CCG Centre (Federal
Court reasons at paras. 23-24). Moreover, these written NOTSHIPs are distributed
on a weekly basis to all interested parties who make a request in that respect.
[8]
Neither those on board the Clipper nor her managers
in Florida made such a request. The Clipper’s chart agent in Canada updated the
vessel charts with NOTMARs. The said agent specifically mentioned that no
Temporary and Preliminary Notices to Mariners (T&P NOTMARs) were in force
for Chart 7777 and that they did not provide NOTSHIPs (Federal Court reasons at
para. 46). Thus, as a matter of fact, the Clipper did not have a properly
updated nautical chart on board.
[9]
As the Coronation Gulf is within an area covered
by the World Wide Navigational Warning Service of the International Maritime
Organization (IMO), CCG, which was responsible for such area, also issued what
is referred to as NAVAREA XVIII Warning 5/10 after the IMO service came into
effect in that region on July 1, 2010. This warning contained information
essentially similar to that used in NOTSHIP A102/07 and was broadcasted from
July 1 until August 20, 2010 (Federal Court reasons at paras. 41-42).
[10]
Fortunately, there was no loss of life (128
passengers and a crew of 69 were on board), but the Clipper was heavily damaged
(Federal Court reasons at paras. 2-4). There was little pollution from the ship
bunkers, but the Crown had nevertheless to incur costs and expenses to take
preventive measures (Federal Court reasons at para. 3).
[11]
Adventurer instituted an action against the
Crown on the basis that its servants were negligent, among other things, in
failing to issue a NOTMAR or a Preliminary NOTMAR in 2007 when the shoal was
discovered or in 2010 shortly after further hydrographic data were made
available through a survey carried out by a member of the Canadian Hydrographic
Service’s (CHS) while on board the M/V Wilfrid Laurier (Federal Court reasons
at paras. 31-32, 38-40).
[12]
The Crown sued Adventurer and the Clipper to
recover its costs. Although the Crown’s action was served on the Ship-source
Oil Pollution Fund (SOPF), no claim was paid by the SOPF and the Crown has been
provided with security by Adventurer (Federal Court reasons at para. 123). The
Administrator of the SOPF’s participation in the proceeding before the Federal
Court was limited and the Administrator did not participate at all in the
appeals. Both actions were tried together and the trial lasted more than 17
days.
II.
FEDERAL COURT DECISION
[13]
After a detailed review of the relevant facts,
the Federal Court described its task with respect to the negligence claim as
follows:
[82] In order to succeed in a negligence
claim, the plaintiff must establish that the defendant owed it a duty of care,
was in breach of that duty, and that the breach caused the damage claimed. […]
[14]
With respect to the Crown’s vicarious liability
pursuant to subparagraph 3(b)(i) and section 10 of the Crown
Liability and Proceedings Act, R.S.C. 1985, c. C-50, the Federal Court
noted that there was no duty on “any Crown servant to
seek out and discover uncharted shoals” such as the one involved here
(Federal Court reasons at para. 83). However, it found that, once the shoal had
been discovered, various Crown servants within the Department of Fisheries and
Oceans (more particularly those working in the CCG and the CHS) were under a
duty to warn mariners sailing in the Canadian Arctic waters, such as those on
board the Clipper, of the presence of the said shoal (Federal Court reasons at
paras. 60, 61, 83-88).
[15]
Turning to the question of whether Adventurer
had established a breach of the duty to warn, the Federal Court concluded that the
duty to warn the Clipper had been discharged by the issuance of NOTSHIP A102/07
(Federal Court reasons at paras. 8, 89, 93, 102).
[16]
Having so concluded, it held that it was not
necessary for it to consider whether those on board the Clipper should have
been aware of the NAVAREA XVIII Warning 5/10 issued in July and August 2010
(Federal Court reasons at para. 43).
[17]
The Federal Court also concluded that those on
board the Clipper had been negligent in setting up a course without the benefit
of the NOTSHIPs which they were required to consult (section 7 of the Charts
and Nautical Publication Regulations, 1995, S.O.R./95-149, and section 7 of
the Collision Regulations, C.R.C., c. 1416 (Chart Regulations)) and
in failing to pay heed to the warnings contained in the nautical publications that
had to be and were carried on board (Federal Court reasons at paras. 90-92, 102).
[18]
Although this was not strictly necessary, the
Federal Court also found that, even in the absence of direct knowledge arising
from the NOTSHIP A102/07 or the NAVAREA XVIII Warning 5/10, those on board the
Clipper “should have known there were uncharted shoals”
and “should have proceeded through the islands at a much
slower speed in the wake of a zodiac with a portable echo sounder”
(Federal Court reasons at para. 102). In that respect, the Federal Court
accepted the opinion of one of the Crown’s experts.
[19]
The Federal Court held that Adventurer and those
in charge of the navigation of the Clipper were solely responsible for the
grounding of the ship (Federal Court reasons at paras. 8, 89 in fine).
[20]
The Federal Court dealt in obiter with
several issues relating to the apportionment of the damages claimed by
Adventurer and the date of conversion of foreign currency (US dollar to CDN
dollar).
[21]
With respect to the Crown’s claim for
reimbursement of the costs of preventive measures, the Federal Court concluded
that subsection 116(1) of the Marine Liability Act, S.C. 2001, c. 6 (MLA),
did not apply as the claim against the Clipper and Adventurer was not a claim under
Part 7 of the MLA. It awarded the Crown simple interest at 5%.
III.
ISSUES
[22]
Adventurer does not challenge the Federal Court’s
findings that it was negligent. Rather, it challenges the Federal Court’s
conclusion that the issuance of NOTSHIP A102/07 was sufficient to fulfil the duty
to warn identified by the Federal Court. What Adventurer seeks is an
apportionment (on the basis of 50/50) of the liability for the grounding and a
different conversion date which would enable it to benefit from the recent increase
in value of the US dollar.
[23]
With respect to the Crown’s claim, Adventurer argues
that the Federal Court should have applied section 116 of the MLA and awarded the
lower rate of interest (approximately 1%) it prescribes. That is so because
this claim, being covered by section 109 of the MLA, is a claim under Part 7 of
the MLA.
[24]
Adventurer acknowledged that should this Court not
accept its argument that the Federal Court erred in concluding that the Crown was
not liable for the grounding because there was no breach of the duty to warn,
there is no need for this Court to address the other issues it raises with
respect to causation, apportionment and the conversion date.
IV.
ANALYSIS
A.
Breach of Duty
[25]
It is trite law that the standards of review
applicable to these appeals are those set out in Housen v. Nikolaisen, 2002
SCC 33, [2002] 2 S.C.R. 235 (Housen).
[26]
Adventurer alleges that the Federal Court made
an extricable error of law in its application of the standard of care in this
matter. Thus, it submits that this Court should review the conclusion that the
duty to warn — which is not in dispute — had been discharged on a correctness
basis. I do not agree.
[27]
The Supreme Court of Canada dealt at length with
the standard of care, i.e. what constitutes a reasonable conduct in the
circumstances of a case, in Galaske v. O'Donnell, [1994] 1 S.C.R. 670 (Galaske).
The judges agreed that this normally involves a question of mixed fact and law.
There may well be rare cases where the trier of fact applied an incorrect legal
principle but, as noted by McLachlin J. (concurring) as she then was, the “standard of care is for the trial judge to determine on the
evidence” and “may vary from case to case”
(Galaske at 698).
[28]
In Housen, the Supreme Court confirmed
the views expressed in Galaske (at para. 31). Still in Housen
(at para. 36) and later on in Sattva Capital Corp. v. Creston Moly Corp.,
2014 SCC 53, [2014] 2 S.C.R. 633 at para. 54, the Supreme Court also warned
appellate courts to be cautious in finding an extricable question of law so as
to eliminate the deference due to the trier of fact. I understand from those
decisions that, when the legal principle is not readily extricable, an
appellate court should apply the more stringent standard of the palpable and
overriding error.
[29]
I also do not accept Adventurer’s submission that
the present matter is akin to the one in Rhône (The) v. Peter A.B. Widener
(The), [1993] 1 S.C.R. 497, where the trial court had improperly
characterized the legal test to determine whether a person was the “directing mind” of the corporation. In this case, the
Federal Court correctly noted that the issue before it was whether the issuance
of NOTSHIP A102/07 fulfilled the duty of those working in CCG and CHS to warn
mariners of the presence of the shoal discovered in 2007. The Federal Court
clearly understood that, according to Adventurer, the standard of care required
more than this NOTSHIP (Federal Court reasons at para. 89; see also at paras. 38-40,
63-71, 90, 95, 98-100).
[30]
For Adventurer, the error in principle becomes
evident when one considers the Federal Court’s finding at paragraph 40 of the
reasons. It argues that the Federal Court’s acceptance of its evidence as to
what should have occurred once CHS approved the NOTMARs drafted by Mr. Leyzack
to replace NOTSHIP A102/07 (Federal Court reasons at paras. 38-40) was
determinative of the case. For Adventurer, the finding of fact at paragraph 40 should
necessarily have resulted in a finding that the duty to warn had been breached
because a NOTMAR should have been issued in June 2010.
[31]
There is no legal principle that a failure to
satisfy the level of services set by internal management as its target is
determinative of the standard of care applicable in all circumstances. It is
clearly a relevant factor to consider in assessing the reasonableness of one’s
conduct, but it is the task of the trier of fact to determine the weight to be
given to it after considering all the circumstances of the case.
[32]
On my reading of the reasons as a whole, I
understand that the Federal Court did consider Adventurer’s evidence relevant,
but it did not agree with Adventurer’s core proposition that the factual
finding it made with respect to what should have occurred if internal
management expectations had been met was determinative of the standard of care
applicable to the specific duty to warn that arose from the discovery of the
shoal.
[33]
This is not a case where no warning was given of
the presence of the shoal. This is also not a case where a local warning given
by means of a NOTSHIP would normally be duplicated by issuing an additional
document such as a NOTMAR, for once a NOTMAR is issued, any previous NOTSHIP is
cancelled; these means of informing mariners are not meant to coexist. This is
also not a case involving any misrepresentation by anybody working in the
Department of Fisheries and Oceans.
[34]
On the facts before it, which included for
example that the shoal was well outside the well-travelled courses (Federal
Court reasons at para. 27), the Federal Court was entitled to consider other
factors and circumstances such as whether the actual warning given to mariners
through the issuance of NOTSHIP A102/07 was a suitable and reasonable warning
that all those concerned at the Department of Fisheries and Oceans could
reasonably expect mariners to use and consider while sailing in the Coronation
Gulf in August 2010.
[35]
Mariners have their own duty of care at common
law. They must have on board and make use of up to date charts and nautical
publications. This duty is informed by the local regulations that apply to the
waters they chose to sail in.
[36]
In addition to subsection 1(1) of the Collision
Regulations that define NOTSHIP and NOTMAR and section 7 of the Chart
Regulations, which treats these two types of documents on an equal footing,
the Federal Court heard copious evidence about how these means of conveying
important information to mariners are used. There is ample evidence in the
evidentiary record to support the Federal Court’s conclusion that the issuance
of NOTSHIP A102/07 fulfilled the duty to warn mariners of the presence of this
shoal (see the Crown’s compendium and the additional evidence referred to in
the Crown’s memorandum). I have not been persuaded that the Federal Court made
a palpable and overriding error in concluding effectively that this was a
suitable and reasonable warning in this case (objective test).
[37]
Having concluded that the judge did not err in
finding that the there was no breach for which the Crown should be held liable,
it is not necessary to deal with the other arguments of Adventurer with respect
to causation, apportionment and the appropriate date of conversion of the
foreign currency in which the damages were incurred. These questions could not
be determinative of the appeals.
B.
Rate of Interest
[38]
The last issue to consider is whether the Federal
Court made a legal error by not applying subsection 116(1) of the MLA, because
a copy of the proceedings against Adventurer had to be served on the
Administrator of the SOPF pursuant to section 109, which is found in Part 7 of
the MLA.
[39]
This is a question of statutory interpretation
that is subject to the standard of correctness (Housen at para. 8; Canadian
National Railway Co. v. Canada (Attorney General), 2014 SCC 40, [2014] 2
S.C.R. 135 at para. 33). In my view, the Federal Court correctly concluded that
subsection 116(1) of the MLA was not applicable in the present circumstances.
[40]
The Crown’s claim arose under Article 3 of the Convention
on Civil Liability for Bunker Oil Pollution Damage, 2001 (March 23, 2001, Can.
T.S. 2010 No. 3) (Bunkers Convention), which is one of the ten articles
of the Bunkers Convention that were given force of law in Canada
by section 69 of the MLA. Articles 1 to 10 of the Bunkers Convention are
included at Schedule 8 of the MLA. These articles provide for the liability of
a shipowner for oil pollution damage resulting from bunker spills which are
defined to include the costs of preventive measures. Before us, Adventurer took
the firm position that the right of the Crown to claim the costs of the
preventive measures against it arises under section 71 of the MLA and Article 3
of the Bunkers Convention, both of which are found in Part 6 of the MLA.
[41]
Pursuant to section 109 (located in Part 7 of
the MLA), if a claimant commences proceedings against an owner of a ship or its
guarantor in respect of a matter such as one covered by Article 3 of the Bunkers
Convention, or sections 71 or 77 of the MLA, “the
document commencing the proceedings shall be served on the Administrator”
of the SOPF and “the Administrator shall appear and
take any action” which “he or she considers
appropriate for the proper administration of the [SOPF].” Adventurer
argues that, even though the right of the Crown to sue for the preventive costs
arises under Part 6, the Crown’s obligation to serve its proceedings on the
Administrator is sufficient to bring the claim within the scope of subsection
116(1) of the MLA which is applicable to “a claim under
this Part.”
[42]
Despite the fact that both parties made scant
submissions in their memoranda and at the hearing in respect of the statutory
interpretation of subsection 116(1), this Court must still perform a purposive
analysis, as this is the approach mandated by the Supreme Court of Canada (Rizzo
& Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27 at para. 21). I have done
so even if the present matter does not warrant extensive comments.
[43]
Thus, the words “a claim
under this Part” (en français « aux demandes en recouvrement de créance présentées en
vertu de la présente partie ») in subsection 116(1) must be
construed by considering them in their entire context and their grammatical and
ordinary sense harmoniously with the scheme of the MLA and particularly of
Part 7, the object of the MLA, and the intention of Parliament.
[44]
Part 7 of the MLA is entitled “Ship-source Oil Pollution Fund.” Its main purpose is
to establish (or continue as the SOPF exists since 1989) a Canadian
compensation scheme based on the “polluter pays”
principle to compensate the victims of oil pollution by ship, subject to
certain conditions and limitations, including time limitation to present their
claim.
[45]
Part 7, among other things, sets out the account
of the SOPF (section 92), and deals with the appointment of its Administrator
and Deputy Administrator (sections 94, 95). It provides for the governance of
the SOPF (sections 120-124).
[46]
It provides for the liability of the SOPF in
respect of certain claims arising from ship-source pollution in various
circumstances including when the liability of the shipowner is provided for under
Part 6 such as sections 71 and 77, or under Article 3 of the Bunkers
Convention and the said owner is financially unable to pay, or in the event
of a mystery spill from a ship source. It deals specifically with certain claims
for loss of income (sections 101, 103, 107).
[47]
Part 7 gives various powers to the Administrator
of the SOPF including the right to be part of a settlement in an action against
a shipowner or its guarantor in respect of matters concerning the SOPF (section
109), and to sue a shipowner or his guarantor after being subrogated to the
rights of a claimant (paragraphs 106(3)(c), (d)). It also gives
the Administrator the right to sue a shipowner and a ship in order to obtain
guarantees before or after a claim is made against it (paragraph 102(1)(b)).
Part 7 also deals with certain matters in respect of the International Fund and
the Supplementary Fund, but these provisions are not truly relevant for our
purpose other than to say that in certain cases, the SOPF may have to present a
claim to these funds and even sue them if they fail to respond to a valid
claim.
[48]
Section 116 is found in a subpart of Part 7
entitled “Levies to be paid to the Ship-source Oil
Pollution Fund, the International Fund and the Supplementary Fund.”
[49]
Section 116 of the MLA reads as follows:
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Claimants entitled to interest
116. (1) Interest
accrues on a claim under this Part against an owner of a ship, the
owner’s guarantor, the Ship-source Oil Pollution Fund, the International Fund
or the Supplementary Fund at the rate prescribed under the Income Tax Act for
amounts payable by the Minister of National Revenue as refunds of
overpayments of tax under that Act as are in effect from time to time.
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Droit aux intérêts
116. (1) Aux
demandes en recouvrement de créance présentées en vertu de la présente
partie contre le propriétaire d’un navire, le garant d’un propriétaire de
navire, la Caisse d’indemnisation, le Fonds international ou le Fonds
complémentaire s’ajoutent des intérêts calculés au taux en vigueur fixé en
vertu de la Loi de l’impôt sur le revenu sur les sommes à verser par le
ministre du Revenu national à titre de remboursement de paiements en trop
d’impôt en application de cette loi.
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Time from
which interest accrues
(2) Interest accrues on a claim under this Part
(a) if
the claim is based on paragraph 77(1)(a) or on Article III of the
Civil Liability Convention or Article 3 of the Bunkers Convention, from the
day on which the oil pollution damage occurs;
(b) if
the claim is based on section 51 or 71 or paragraph 77(1)(b) or (c),
or on Article III of the Civil Liability Convention or Article 3 of the
Bunkers Convention as they pertain to preventive measures,
(i) in the case
of costs and expenses, from the day on which they are incurred, or
(ii) in the case
of loss or damage, from the day on which the loss or damage occurs; or
(c) if the
claim is based on section 107, from the time when the loss of income occurs.
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Délais
(2) Les intérêts visés au paragraphe (1) sont calculés :
a) dans le cas d’une demande fondée sur
l’alinéa 77(1)a) ou sur l’article III de la Convention sur la
responsabilité civile ou l’article 3 de la Convention sur les hydrocarbures
de soute, à compter de la date où surviennent les dommages dus à la pollution
par les hydrocarbures;
b) dans le cas d’une demande fondée sur les
articles 51 ou 71 ou les alinéas 77(1)b) ou c) ou, à l’égard
des mesures de sauvegarde, sur l’article III de la Convention sur la
responsabilité civile ou l’article 3 de la Convention sur les hydrocarbures
de soute, à compter :
(i) soit de la
date où sont engagés les frais,
(ii) soit de la
date où surviennent les dommages ou la perte;
c) dans le cas d’une demande fondée sur
l’article 107, à compter de la date où survient la perte de revenus.
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(My
emphasis)
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(Je
souligne)
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[50]
Section 116 is only referred to in one other
section of the MLA, that is section 92 in Part 7, which deals with the credits
and charges to be made to the special account of the SOPF established in the
accounts of Canada.
[51]
Adventurer has not put forward any rationale as
to why Parliament would intend to limit the rate of interest payable by the
polluter when no payment by the SOPF is involved. The SOPF acts primarily as a
debtor rather than a creditor. It makes more sense that Parliament would want
to regulate the rate of interest payable by the SOPF, and thus recoverable when
it exercises its right of subrogation.
[52]
Two recent examples of a claim made against the
owner of a ship or its guarantor can be found in Administrator of the
Ship-source Oil Pollution Fund v. Beasse, 2018 FC 39 at paras. 1, 24, 45,
and Administrator of the Ship-Source Oil Pollution Fund v. Wilson, 2017
FC 796 at paras. 7, 8. In both cases, the SOPF was subrogated after having
compensated the CCG for a claim presented, among other things, under sections
77 and 103. In both cases, the Federal Court applied subsection 116(1) to
calculate the rate of interest that could be claimed by the SOPF.
[53]
Having duly considered all of the above, I
conclude that the claims against an owner of a ship or its guarantor referred
to in subsection 116(1) are claims by the SOPF against the said shipowner or
its guarantor. The right of the Crown to claim against Adventurer in this
matter is not a claim under Part 7.
V.
CONCLUSION
[54]
I have not been persuaded that the Federal Court
made any reviewable error in this matter and I propose to dismiss these appeals
with costs. In light of the Crown’s submissions, the said costs should be fixed
at one lump sum of $5,000.00 (all-inclusive) for both appeals.
"Johanne Gauthier"
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“I agree
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Richard Boivin J.A.”
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“I agree
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Yves de
Montigny J.A.”
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