League and Williams Lawyers

Tag: marine law

  • Marine Accident: Collision Regulations in Canada

    Marine Accident: Collision Regulations in Canada

    The Collision Regulations (ColRegs) under the Canada Shipping Act 2001 serve an important purpose in promoting the safe navigation of vessels in international, coastal and non-coastal waters. Like laws governing vehicles on land, these rules of the sea reduce the risk of collision by requiring predictable behaviour. Mariners expect other mariners to follow the ColRegs. These expectations, if met, lead to fewer collisions and greater efficiency in shipping. The vast majority of fatal marine accidents occur on commercial vessels, specifically in the fishing industry.

    Marine Collision in Québec

    In an incident at the Gouin Reservoir in Québec, a group of fishermen in a rowboat were hit by a larger boat. The fishermen were injured and their boat was severely damaged. As the larger boat was headed directly towards their rowboat, the fishermen stood up, waved their arms, whistled and shouted to get the attention of the boat’s captain. They had noticed the boat heading straight towards them from an estimated 1.5 km away. The rowboat was anchored in place, and would not have been able to move out of the way to avoid collision.

    The boat continued in its path, without any attempt to slow down or avoid the rowboat. In the last moments before impact, the fishermen jumped out of the rowboat and into the water. A third party that was also fishing, noticed the collision and headed to the scene to rescue the fishermen. They saw one of the fishermen at the bottom of the boat screaming in pain. He was eventually transported to the hospital, where he stayed for two days. He had injured his leg and shoulder, and claimed his shoulder continued to cause pain for four years after the incident.

    Federal Maritime Law: Who has the Presumption of Fault?

    Federal maritime law applies to all marine collisions in Canada.

    Since this was a collision between boats, federal maritime law applied to the case. The fishermen chose to sue the boat’s driver for the property damage and injuries sustained.

    When a moving ship collides with a stationary ship, the moving ship is presumed to be at fault. To defend this claim, the defendant had the burden of reversing the presumption of fault. The defendant argued that he didn’t see or hear the fishermen in the rowboat. Even after the collision, he thought that it was simply a rock or tree trunk that he hit. He claimed that since the boat was aluminum, the boat was difficult to see and the fishermen were not wearing brightly coloured life jackets to maximize visibility. The third party witness explained in court that the visibility was good at the time of the collision. They claimed that they had easily seen the small rowboat from approximately 1 km away.

    The Court’s Opinion

    The judge ruled that the defendant failed to fulfill his obligations according to the ColRegs. The defendant did not prove that this collision was the plaintiff’s fault, or that it was an unavoidable accident. The defendant caused the accident by not paying close attention, and wasn’t using the appropriate equipment to avoid such collisions. He wasn’t using GPS tools which could have detected the rowboat and alerted him before the collision. The court deemed the defendant’s negligence as the sole cause of the collision and awarded the plaintiffs about $50,000 in damages.

    How You Can Learn from This Case

    While the victims of the collision won their case and received compensation, it’s always preferable to avoid a collision all together. For those planning fishing trips with their friends, we encourage you to wear brightly coloured life jackets at all times on the water. Equipping yourself with loud whistles, or an air horn can help to prevent a marine collision. If you’re someone who operates a large vessel, even if you’re on a familiar route, always use the proper equipment to ensure no accidents take place. It can be difficult to spot small rowboats, however, with the proper equipment and awareness it should not be a problem.

    Looking for more information? Read our page on the basics of marine law.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

  • Private Mooring Buoys and Anchorages – How is the Wild West to be Regulated?

    Private Mooring Buoys and Anchorages – How is the Wild West to be Regulated?

    In 2015, BC’s highest court confirmed that the constitutional right to secure a vessel by buoy or anchor is limited to a “reasonable time, for a reasonable purpose”.  This decision, and the application of the law that will flow from it, is a significant cautionary marker for all those who rely on private anchorage and mooring buoys along the BC coast.  In what could easily fill a small book, this article will briefly summarize the issues and interested parties in what is, under the surface, one of the most controversial marine issues on our West Coast of Canada – private moorage.

    What makes the issue of anchoring/mooring controversial is that there are two very different ways of viewing the same fundamental right, the right of navigation.  On one hand, many vessel owners interpret the right of navigation, and its included right of anchoring/mooring, as a legal basis for storing their vessel at anchor, or on a buoy, for both short and long periods of time.  On the other hand, other vessel owners, upland property owners and other concerned parties, view anchoring/mooring to the seabed (or riverbed) as the use of common (public) property that should not be utilized such that it interferes with others’ use of the same resource (the waterway), or endangers life, property or the environment.  What makes matters worse is that the law remains less than clear on what reasonable anchoring/mooring is, and who is responsible for regulating it.  These issues are best understood by reviewing the following relevant parties: the Federal Crown, the Provincial Crown, local governments, upland property owners and vessel owners.

    The Parties: from the Queen to Vessel Owners

    Historically, the Federal Crown has been viewed as the de facto regulator of anchoring/mooring because of it exclusive jurisdiction over “navigation and shipping” under Canada’s Constitution.  While only partially correct, this view is likely even less correct under evolving law, as discussed below. The Federal Crown (through Transport Canada) partly regulates anchoring/mooring under two primary laws:  the Navigation Protection Act (“NPA”), and the Private Buoy Regulations (“PBR”).  The PBR applies to all private (non-governmental) buoys placed as aids to navigation (including mooring buoys) except for those used to mark fishing apparatuses, and sets out the shape, colour, size and responsibilities of those placing the private buoy.  The PBR does not restrict the location of mooring buoys.  The NPA applies to buoys used for moorage, which are defined as a “work” within the NPA, and is meant to ensure the placement of buoys do not interfere with vessel traffic.  That said, Transport Canada will rarely respond to complaints about anchoring/mooring unless the vessel or buoy impedes commercial vessel traffic or is a significant risk to general vessel traffic.

    The Provincial Crown in BC is an important party to these issues because, since 1871, BC has had ownership of its “inland seas” (Strait of Juan de Fuca, Strait of Georgia, Johnstone Strait and the Queen Charlotte Strait), as well as ownership of the foreshore (area between low and high tide) and bays.  While all Canadians can enjoy the public right of navigation through these waters, there are laws related to the trespassing of these lands. For example, under the BC Land Act, it is an offence of trespass to occupy, possess, or use the seabed without lawful authority from the Province.  Individuals, including owners of property adjacent to the foreshore, cannot build or construct private moorage facilities on the foreshores or seabed without a lease or specific permission from the Provincial government.  Local governments (for example, cities, municipalities, and regional districts) have not historically been party to the issue of regulating anchoring and mooring.  This has recently changed, predominantly as local concern over managing abandoned (derelict) or hazardous vessels has increased.  BC Courts have ruled that, provided the seabed (lakebed or riverbed) is within the boundaries of the local government, the local government may enact bylaws that limit anchoring and mooring, provided the purpose of the bylaws is to manage land (the seabed and adjacent upland properties) and not manage navigation.  Importantly, the restriction to such bylaws is that they cannot interfere with anchoring or mooring for a “reasonable time, for a reasonable purpose”.  In 2015, the BC Court of Appeal (in Kelowna v. Newcomb) cited, with approval, an earlier decision of a BC court regarding anchoring:

    There is a common law right to navigation which includes the incidental right to anchor… This is not a right to anchor or moor permanently but it must be exercised reasonably as determined by the circumstances at the time of anchoring such as the weather, loading or unloading of the vessel, or the need for repairs to the vessel. The right to anchor therefore contemplates the right to do so for a reasonable time, for a reasonable purpose.

    Some local governments have begun attempting to indirectly define what a “reasonable time, for a reasonable purpose” is, by setting limitations on anchoring to, for example, less than 3 consecutive days, or not more than 4 days per month.  To date, no BC court cases have considered what is an appropriate limit, and undoubtedly, that limit will depend on the particular watercourse, and what use is made of it by the public.

    Upland property owners are also concerned about how the law is evolving.  The Provincial Crown generally recognizes an upland property owner’s right to have unobstructed access to deep water from their property, and hence has historically required an upland property owner’s consent before giving a lease or licence over adjacent seabed to a third party.  That said, the Provincial Crown does not generally regulate anchoring and mooring of vessels, and does not typically issue lease or licences for anchorage and mooring buoys.  As a result, there are many cases where neither the Federal Crown, the Provincial Crown nor a local government regulate anchoring/mooring in an area.  Many desirable bays have become congested with vessels whose owners store the vessel for longer than a “reasonable time, for a reasonable purpose,” impeding other’s use of the waterway, including upland property owners.

    In closing, while writing this article I came across the following post in a boating blog: “In BC, the government told me they don’t give water lease for private moorings, so anyone is free to use any mooring they please, legally.  I certainly do, after giving it a good shot of reverse to check it out”.  This post highlights an interesting misunderstanding held by many people, and why the right of anchoring/mooring can at times be a paradox.  Firstly, the Province does not issue leases for mooring buoys, but this does not mean that a mooring can be placed on Crown land (seabed) other than for a “reasonable time, for a reasonable purpose” without it being trespass.  After all, that anchor or buoy, if left for an unreasonable time or an unreasonable purpose, is utilizing common property and depriving others of such use.  Secondly, arguably that mooring buoy is the personal property of an individual, and attaching an unauthorized vessel to it is trespass to that person’s personal property.  The paradox is that, at the same time, that buoy may be trespassing on Crown seabed.  This begs the question – who is less in the wrong: the person trespassing on another’s buoy, or the owner of the buoy trespassing on public property?  These are issues that can only be answered definitively once the courts have considered them.

    Darren Williams is the principal lawyer at League and Williams and leads the personal injury, estate dispute and marine law practices of the firm.  This article was previously published in the August 2016 edition of Western Mariner.  He can be reached for comment at info@leaguelaw.com or 250-888-0002.  League and Williams offers free consultations.

  • The Collision Regulations (ColRegs): Guidelines, or actual rules?

    The Collision Regulations (ColRegs): Guidelines, or actual rules?

    Clearly the Collision Regulations under the Canada Shipping Act 2001 (the “ColRegs”) serve an important purpose in promoting the safe navigation of vessels in international, coastal and non-coastal waters.  Like laws governing motor vehicles on land, these rules of the road reduce the risk of damage through collision by requiring predictable behavior.  Mariners expect other mariners to follow the ColRegs, and these expectations if met lead to fewer collisions and greater efficiency in shipping.  That much is obvious.

    What is not obvious, however, is the extent to which a breach of the ColRegs may lead to a finding of legal liability for an accident.  More than a few mariners have expressed frustrations like, “He broke Rule 15, he must be completely responsible for the accident!  He has to pay for the damage!” only to find an insurance company, an employer, or a court disagree.

    While safety at sea is never a topic to be taken lightly, the title to this article comes, tongue in cheek, from the excuse given by Captain Hector Barbossa (a villain in Pirates of the Caribbean) as to why a pirate’s code of conduct did not apply to him.  Captain Barbossa said  “the code is more what you call guidelines, than actual rules”.  I do not want to appear to compare the seriousness of the ColRegs to something as fantastical as a pirate’s code of conduct, however, a modern court would say that if Captain Barbossa’s coy remark had been made in reference to the ColRegs, he would not be far off the mark.

    Before referring to two recent court decisions on this point, it is important to note some differences between civil claims and criminal proceedings, given that the ColRegs arise in each of these types of court cases.  Civil claims are lawsuits between private parties for compensation, for example, for personal injury or property damage arising from a collision.  These claims are common, and if not pursued directly by the person harmed, are often pursued by their insurer to recover the loss paid to their insured. Such civil claims are distinct from criminal proceedings under the Criminal Code or the Canada Shipping Act 2001, where it is the Crown seeking to punish a person in part to deter other members of society from committing similar wrongs.  Importantly, as can be seen in cases such as the sinking of the Queen of the North, a single act or omission by a mariner can lead to both civil claims for compensation by those harmed, as well as criminal proceedings for punishment by the Crown.

    On the criminal side, a breach of a ColRegs Rule could potentially lead to the Crown seeking a conviction for that particular breach of the regulation, however, prosecutions for single Rule breaches are rare.  Rather, often the breach of a Rule leads to a more serious event, and then the breach of the Rule is brought as evidence in support of a more serious charge under the Criminal Code, such as dangerous operation of a vessel, or as in the case of the Queen of the North, criminal negligence causing death.  As such, the breach of a ColReg Rule does not typically result in a criminal conviction, rather, the ColRegs act as guidelines which are used by the criminal court to measure the reasonableness of the mariner’s conduct in assessing guilt under the Criminal Code.

    An example of this principle playing out in criminal court came when the B.C. Court of Appeal recently (December 16, 2014) released its decision in R. v. Lilgert.  After the Queen of the North officer had been found guilty of criminal negligence causing death and sentenced to four years in prison, his legal team appealed the conviction.  One of the arguments (of several) advanced was that the trial judge erred in instructing the jury that the proper legal test they were to apply was that any breach of the ColRegs was a substantial departure from the practice of a reasonably prudent mariner.  The Court of Appeal dismissed the appellant’s argument in this way:  “as to the contention that the Collision Regulations were [incorrectly] treated as rigid rules rather than guidelines, this complaint cannot be supported when the evidence review of the judge is examined… In my view, the jury would not have taken from [the judge’s instructions] that any breach of the Collision Regulations would establish wanton or reckless disregard or a marked and substantial departure from the norm.  In other words, the Court of Appeal dismissed the argument the judge had incorrectly treated the ColRegs as strict rules rather than guidelines.

    In civil cases, there is no Crown seeking to convict a mariner for a breach of the Criminal Code or a regulation under the Shipping Act 2001.  Instead, private parties are suing one another for compensation for property damage or injury.  Typically, the claimant will allege the defendant was negligent in the navigation of a vessel.  In considering whether someone is negligent, the court must determine what the appropriate standard of care is in the circumstances, whether the mariner’s conduct fell below that standard, and if so, did the failure to meet the standard cause the accident.  In doing so, the court will often refer to the ColRegs as the appropriate standard of care for a mariner.  In other words, the court will use the ColRegs as a guideline for what a reasonably prudent mariner should do in the circumstances.

    An example of this principle playing out in civil court came in a 2014 decision of the B.C. Supreme Court that involved the collision of two pleasure crafts on Okanagan Lake.  In that case, a vessel underway collided with a waterski boat that had stopped to disentangle a towline from its leg.  The stopped vessel alleged it had the right of way as a vessel not under command, or otherwise towing (several people were waiting on an inner-tube tied to the end of the tangled tow line).  The vessel underway alleged the stopped vessel had a duty to avoid the collision and maintain an adequate watch, including using its horn to warn the vessel underway of its presence.   Each party alleged the other was negligent in causing the collision.  The court said the following:  “The test of negligence under maritime law is determined by the actions of the ordinary seaman, rather than the ordinary man”.  The court went on to say:  “An allegation of negligence because of a violation of the Collision Regulations must be considered in light of the principle that a mere breach of a statute, standard or rule is not equivalent to a finding of liability.  Standards and rules help to inform the Court of the standard of care and what accords with those standards”.  In other words, a breach of a ColReg does not lead to the immediate conclusion that the mariner’s conduct was negligent.

    All this being said, readers ought not interpret my comments to mean the ColRegs should not be treated as “rules” in the traditional sense of the word: directions to be respected and followed.  Clearly adherence to the ColRegs is immensely important to maintaining safety at sea.  The point to take from this article, however, is: do not assume that just because you have breached a ColReg that you will be found responsible in a civil or criminal court, and similarly, simply because someone else has breached a ColReg does not mean they will necessarily be responsible to you for your resulting damages.  The focus of the legal inquiry will typically come down to this question: to what extent does the breach of the ColReg demonstrate a sufficient departure from the conduct of a reasonably prudent mariner in the circumstances to warrant responsibility?  The answer will differ in every case.

    This article was originally published as “The Collision Regulations: “…more what you call guidelines than actual rules”?” in the February 2015 edition of the Western Mariner.  Darren Williams is a marine lawyer and principal lawyer at League and Williams LAW in Victoria B.C. and can be reached for question or comment locally 250-888-0002, or at info@leaguelaw.com

     

  • Estimates and Quotes – How Flexible or Binding are they?

    Estimates and Quotes – How Flexible or Binding are they?

    Quotes and Estimates – Important to Know the Difference

    It is common in marine industry, where vessels and equipment are continuously under repair or replacement, for the question to arise: is the cost of services and materials provided an estimate, or is it a quote?  Unfortunately, this question is often asked after the work is done and the purchaser of the services and materials has received a bill that is much higher than what they expected.  A dispute frequently ensues.  Liens are claimed, lawyers retained, vessels and equipment are seized or arrested, claims are opposed, and the wheels of justice may turn too slowly to satisfy many.

    Readers are well advised to understand, in advance of such problems, how the law determines whether an offer for services and materials is an estimate or a quote.  In a negotiation where a few words spoken or written can make the difference between a flexible estimate or a binding quote, knowing how to conduct yourself can save significant stress and money.

    Estimates versus Quotes:  Best Guesses versus Promises

    An estimate is a best guess of the cost of something the estimate is given for, whether it is for services or materials, or a combination of both.  By definition, an estimate has a degree of flexibility in its accuracy.  This flexibility, however, does not allow the person giving the estimate unlimited scope in its accuracy.  The courts have recognized that a person giving an estimate often does so in the context of holding themselves out as having expertise in providing the services and materials that are the subject of the estimate, and so the person receiving the estimate should be able to rely on the accuracy to a reasonable degree.

    For example, the principles discussed by the B.C. Supreme Court in Golder Associates v. Mill Creek Developments, while not a marine case, are relevant.  In that case, a company providing environmental engineering services sued a land developer for monies owed after it rendered invoices for work that exceeded, what it called an estimate, by 50%.  In the Golder case the court said:

    “…while an estimate for the cost of services to be provided is not a guarantee or warranty at law, it may have contractual effect, in essence setting a limit beyond which fees may not go”;

    and,

    “[weighing] in favour of an estimate having binding effect is the principle that although estimates are necessarily somewhat imprecise, persons in the business of providing work preceded by estimates should be able to do so with some accuracy”.

    Circumstances that are unforeseeable and outside the control of the person giving the estimate allow that person a greater degree of error in giving their estimate, particularly if the error relates to information within the knowledge of the person receiving the estimate that was not disclosed by them.  In the Ontario case of Kidd v. Mississauga Hydro the court said:

    “…the plaintiff here might well have been allowed, because of the vagueness of his estimate, a substantial margin of error.  But where the eventual figure is almost three times the original estimate, it is my view that the estimator should be held to that original figure.”

    In that case, there was nothing the court found that was unforeseeable and out of the estimator’s control that caused the final bill to be three times the estimate.

    On the other hand, a quote is a more precise promise of the cost of the services or materials.  Because it is a promise, a quote is binding.  However, I say “more precise” because, like the reasonable range of accuracy in an estimate, circumstances that are unforeseeable and outside the control of the person giving the quote, may allow that person to avoid being bound by the quote.

    The Objective Reasonable Bystander Test

    When dealing with disputes involving estimates and quotes “the Court must determine if the estimates were made in circumstances which imbue them with contractual effect and, if so, what margin of error may limit the extent to which the estimates are binding” (Golder Associates).  What did the parties agree was the reasonable margins of error in the estimate, or did the parties agree it was in fact a quote?

    Of course each party will tell their own story of what they believe was agreed and these stories invariably contradict each other and are often not reliable; after all, every case involves at least one side’s view that is not accepted by the court.  To avoid this, the law says it is not what a party subjectively believed the agreement to be that is determinative, but “what a reasonable man in the situation of the parties would understand the contract to be” (Aerovac v. Darwin Construction).  This is called the reasonable bystander test.

    In a recent case involving a well-known vessel, the Pacific Yellowfin, an American shipyard sued for amounts the shipyard claimed owing for refastening and re-caulking of the vessel’s hull.   The owner of the vessel had requested a “reasonably accurate estimate” and the shipyard responded with a first estimate and then later a second estimate marked “Final Estimate” with a fax letter referring to the Final Estimate as a “quote”.  Some of the items on the Final Estimate were marked “T&M” for time and materials, but the disputed items were not marked “T&M”, and the shipyard maintained it understood the agreement was that those disputed items did not need to be charged at the amount estimated on the Final Estimate, but rather could be charged at a greater amount if the time and materials expended warranted it.  The court reviewed the documents, and found that “an objective reasonable bystander would conclude that [the shipyard] offered to perform the work and charge the prices for the disputed items that he set out in the Final Estimate” rather than the actual time and materials incurred.

    Best Practices for Suppliers and Buyers

    There are, in my view, several best practices that may be employed by suppliers and buyers to ensure their version of the terms of an agreement is the one the court would find an objective reasonable bystander would also have (ie. the one the court decides is the actual agreement).

    Firstly, for both suppliers and buyers, always confirm the agreement in writing for later reference, even if (worst case scenario) it is just an email or a text.  If the agreement is for a quote, or an estimate, call it by that name – be explicit.  Always use consistent language in your communications from the beginning of negotiations to the end of billing, and do not mix up words like “estimate” and “quote”.

    Secondly, if you are a supplier providing an estimate or a quote, list any factors that might cause the estimate or quote to change, and if they do change, report them to the buyer as soon as possible.  Generally, avoid giving a quote unless the financial upside justifies the risk of being bound to the quote.

    Lastly, if you are a buyer, don’t be shy of asking for a quote rather than an estimate.  Make sure the quote is in writing and refers to itself as a “quote”. If after work starts, the supplier begins to refer to the quote as an estimate, correct them in writing.  Finally, do not withhold information from the supplier that you know would affect the accuracy of their estimate or quote, because otherwise you may not be able to rely on it.

    Darren Williams is the principal lawyer at League and Williams Law Corporation in Victoria B.C. and can be reached for question or comment locally at 250-888-0002, or at info@leaguelaw.com.  Article was previously published in the September 2015 edition of Western Mariner‘s Legal Net.  

  • Is an Apology an Admission of Fault?

    Is an Apology an Admission of Fault?

    For Landlubbers, No, for Mariners, Perhaps

    In February of 2001, while conducting a demonstration for civilian observers nine miles off the Hawaiian island of Oahu, the U.S. nuclear submarine Greeneville performed an emergency ballast blow and surfaced directly beneath the Japanese fisheries training vessel Ehime Maru, slicing its hull port to starboard.  The 191 foot Ehime Maru sank in less than 7 minutes with the loss of nine crew members.  The captain of the Greeneville asked to travel to Japan to apologize in person to the families of the victims, but the U.S. Navy declined his request until nearly two years later, after a court of inquiry was convened and found him guilty of dereliction of duty. The Japanese government and the families of victims expressed outrage at the perceived lack of remorse of the captain.

    In July of 2012, the captain of the wrecked cruise ship Costa Concordia was interviewed on Italian television and was reported to have said “when there’s an accident, it’s not just the ship that’s identified or the company. The captain is identified and so it’s normal that I should apologize as a representative of this system”.  In this statement, the captain appears to skirt an outright personal apology for the grounding that is believed to have killed 32 people, presumably concerned that such an apology would be construed as an admission of personal fault, and rather apologized “as a representative of this system”.

    These tragic incidents are important to this article because they demonstrate how different cultures, and laws, perceive the meaning of an apology.  Japanese culture, for example, sees an apology as a sign of remorse and an intention to repair a relationship, but not as an admission of fault.  On the other hand, North Americans and Europeans typically see an apology to be an acknowledgment of wrongdoing, and an admission of guilt.  “Why should I apologize, it wasn’t my fault”, or “how can it not be his fault, he apologized” are common statements reflecting this perspective.

    Concern that an apology is an admission of fault has led to many governments enacting laws that say our apologies cannot be used against us in a court of law.  After such laws appeared in the United States and Australia years prior, B.C. was the first Canadian province (in 2006) to enact legislation that prevents such statements from being relied on in court as evidence that the person making the statement was at fault.  In 2012, the only Canadian provinces or territories not to have enacted such legislation are New Brunswick and Quebec.  The federal government also has not enacted an apology law.

    Importantly, while these provincial laws (sometimes called “safe harbour” laws because they protect the person making the apology) may be effective for non-marine accidents and resulting apologies, it is unlikely that these provincial laws offer the same protection to mariners.

    Why Apology Laws?

    Lawyers generally advise their clients not to apologize for the very reason that many cultures interpret such apologies as admissions of fault and may expose their client to legal action and financial harm.  However, there are other concerns that motivate this advice.  Many insurance policies include terms which void the policy if fault is admitted by the insured.  As well, an insured has a duty to the insurer not to prejudice the insurer’s ability to defend a claim against the insured, and an apology may be viewed as a breach of this duty, jeopardizing the insurance coverage.

    However, there are several studies, mostly conducted by the medical profession and their insurers that show a simple apology can reduce litigation, promote the early resolution of disputes, and even lower the amount disputes are settled for.  In 1994, a U.S. study found that 37% of those interviewed would not have started medical malpractice suits had they received an apology.  In 1987, after losing two medical malpractice cases that cost a total of US$1.5 million, the Veterans Affairs Medical Center adopted an apology policy, which was later credited with preventing all but three cases from going to trial over 17 years, and reducing average settlements from a national average of $98,000 to only $16,000.  In Canada, the government has a keen interest in reducing the number of cases that require court time, so the effect of protecting people who chose to apologize has been given significant attention in recent years.

    The B.C. Apology Act

    In 2006, the B.C. government passed the Apology Act, which provides:

    • an apology does not constitute an express or implied admission of fault or liability by the person in connection with that matter;
    • an apology does not void, impair or otherwise affect any insurance coverage that is available;
    • an apology must not be taken into account in any determination of fault or liability in connection with that matter; and,
    • evidence of an apology made by or on behalf of a person in connection with any matter is not admissible in any court as evidence of the fault or liability.

    Why B.C.’s Apology Act does not Apply to Marine Accidents

    While no court case has yet considered this point, it is this lawyer’s opinion that provincial apology law cannot protect mariners from the effect of an apology given for a marine accident in the same way it protects apologies made for non-marine accidents.  For example, the master of a vessel apologizes to the crew of another vessel following a collision while tying-up, he then gets in his car and drives home, rear-ending another motorist at a red light.  As if his day did not go badly enough, the master gets sued by both the owner of the vessel he struck, and the motorist he rear-ended.  The B.C. Apology Act would mean the apology made to the motorist could not be used against the mariner in court, but the apology made to the crew of the vessel could be.

    The reason apology laws cannot protect mariners from their apologies relates to the federal government’s exclusive jurisdiction over navigation and shipping under the Canadian Constitution.  In recent years, Canadian constitutional law has developed to say a provincial law can apply in areas of federal jurisdiction, such as maritime law, but only if the provincial law does not directly conflict with federal law.  In a lawsuit involving a collision or other maritime accident, Canadian maritime law includes the right to rely on an apology at trial, but the provincial law directly conflicts with this right by saying the apology cannot be relied on.  This direct conflict means the provincial law would likely not apply to marine accidents.  Because the federal government has not enacted an apology law of its own, mariners can expect their apologies to be raised as evidence of their fault for a marine accident.  This is not to say mariners should never apologize, but in cases where legal action is possible, it is best to seek legal advice as to the best way to make that apology and what effect that apology might have.

    Originally published in 2012. Download the pdf of this article here.

    Darren Williams is a marine lawyer with League and Williams in Victoria BC.  He may be reached at 250-888-0002 or via email at info@leaguelaw.com.  

  • Zombie Ships – the Perils of Failing to Neutralize Your Vessel Ownership

    Zombie Ships – the Perils of Failing to Neutralize Your Vessel Ownership

    Captain Black decided to sell his tug and barge to a fellow from up the coast who wanted to start a dock building business.  His wife and warmer weather begged for Black’s attention.  Black signed the bills of sale and pushed them across the sticky galley table.  Hiding his delight, Black pulled the bank draft from the buyer’s oily fingers, shook hands briefly and smiled when the buyer said “I will take care of the rest”.  He stepped out of the galley door into the driving rain thinking he had put his old tug and barge behind him for the very last time.

    Many transactions involving the Canadian Register of Vessels (the “Ship Registry”), the small (commercial) vessel register and the vessel licensing system can be, and are, completed without legal help.  The sale and transfer of both pleasure and commercial registered and licensed vessels is common.  The forms and procedures required by Transport Canada are relatively straightforward and in most cases, with attention to detail, the process can go smoothly even for those unfamiliar with registration and licensing procedures.

    That said, it is not uncommon for the registration and licensing of vessels, particularly the transfer of recorded ownership, not to be completed successfully.  There are a variety of reasons for this (and even more potentially negative outcomes) that mariners are wise to be aware of, particularly if they chose to buy or sell a vessel without a lawyer’s oversight.

    Captain Black stirred his margarita slowly and ignored his wife grumbling about “some retirement” as he reached into her beach bag to silence his cell phone.  He had dismissed the first four calls that hour but clearly someone with no respect for Black’s new priorities was trying to reach him.  “Race Rocks ecological reserve”, “holed and hard aground”, “ crane and tanks of diesel aboard”, “registered owner”, “what is your plan”, was all Captain Black’s wife heard as she lowered her sunglasses and watched her husband’s face go from golden brown to pale yellow.  According to the coast guard back in Canada, Black still owned the tug and barge he had sold six months earlier, or at least what was left of them.

    What is a Zombie Ship?

    The concept of a zombie ship, but perhaps not the expression, is common.  A zombie ship is my term for a vessel whose ownership has been terminated but continues to be active without the control of the apparent (registered or licensed) owner.  In other words, zombie ships are vessels (both pleasure and commercial) that are possessed by a new beneficial owner that continue to wander the seas with the appearance of belonging to their previous owners, in many cases causing havoc.  Zombie ships are not a joke and in fact are a common problem.

    How and Why are Zombie Ships Created?

    Zombie ships are typically created when the purchaser of a vessel fails to successfully complete the paperwork necessary to transfer the vessel’s registration or licensing.  In most cases, the vendor is pleased to have disposed of the vessel in return for the purchase monies and does not consider the downstream consequences of the vessel remaining in their name.  There is often an assumption on the part of the vendor that the purchaser of the vessel will be eager to record themselves as the new owner of the vessel and therefore the vendor is safe to assume it will be done.  In many cases, this is a poor assumption and the vendor’s name is never removed from government records, even though their insurance on the vessel was long ago cancelled.

    There are several reasons the transfer of ownership paperwork may not be completed properly.  First, some purchasers are aware that both the Canada Revenue Agency and the B.C. Minister of Finance monitor vessel purchases that are recorded with Transport Canada as a means of tracking what tax is payable on the transfer.  Some purchasers believe they can avoid transfer tax by not recording the transfer and simply leaving the vessel in the vendor’s name.  Second, the registration documents may be rejected by Transport Canada due to errors, and the purchaser fails to follow up and correct the problem so the transfer is never finalized.  The vendor of the vessel does not normally receive notice from Transport Canada that their status as owner has changed, even if the paperwork is successfully completed, so the vendor has no idea whether the paperwork is properly completed unless they check the register.  Third, the purchaser simply may not appreciate they have to do anything to complete the record of their ownership beyond a handshake and the exchange of cash and keys on the dock.  Lastly, nefarious buyers intentionally choose not to change the recorded ownership so their illegal activities with the vessel appear to be carried out in the name of someone else.

    Why are Zombie Ships Dangerous?

    The resulting problem for the vendor is that while they are no longer in control of the vessel, they are exposed to many different liabilities because they remain the recorded owner of the zombie ship.  There are dozens of different offences and penalties under federal legislation that apply to the “owner” of the vessel regardless of whether that person remains the beneficial owner and in possession and control of the vessel.  For example, under section 177 the Canada Shipping Act 2001, an owner is “liable for all expenses incurred in respect of” a vessel detained for a suspected oil pollution offence.  Another example of legal exposure comes from the Fisheries Act, which provides penalties for the negative impacts any vessel (not just a fishing vessel) might have on fish or fish habitat.  Section 80 provides:  “every … owner, … or person actually in charge, either as occupant or servant, shall be deemed to be jointly and severally liable for any penalties or moneys recovered under any provision of this Act or the regulations”.

    Dealing with Zombie Ships

    The best way to deal with a zombie ship is to prevent it from becoming one in the first place.  If you are not working with a marine lawyer, you might do this by taking responsibility for filing the appropriate transfer documentation with Transport Canada; have the purchaser complete their portion of the documentation and provide it to you with the registration fees so that you can register the transfer yourself.  Alternatively, you can closely monitor the purchaser’s steps to record the transfer and confirm with the register the transfer has occurred.   Do not, however, simply assume the purchaser will successfully register the transfer without following up to ensure it has occurred, that is how zombies are allowed to come to life.

    In closing, if you have sold a vessel in recent years you should check the Ship Registry, the small (commercial) vessel register or with the vessel licensing database to ensure the buyer completed the transfer of recorded ownership successfully.  If you have not done this, there may well be a vessel that looks like it belongs to you leaving a wake of destruction along the coast.  If you do find you are the recorded owner of a vessel that no longer belongs to you, immediately contact the buyer to complete the required paperwork.  If you cannot reach the buyer or they are not cooperative, seek the assistance of a lawyer qualified to neutralize the zombie ship, ideally a marine lawyer.

    Darren Williams is a partner at League and Williams Law Corporation in Victoria B.C. and can be reached for question or comment locally 250-888-0002, by emergency cell phone at 250-589-2174 or at dw@MarineLaw.ca.

     

  • Severance Pay and Marine Employee’s Right to Arrest their Employer’s Vessel

    Severance Pay and Marine Employee’s Right to Arrest their Employer’s Vessel

    Employees who are owed wages for working on a vessel hold a uniquely powerful position in their claims for severance because severance claims give rise to a maritime lien. A maritime lien is a special legal right that allows the employee to claim a priority for his severance pay over other debts that the employer owes in respect of the vessel. In other words, employees owed severance pay can sue the employer and the vessel, arrest the vessel, require the owner to post bail (money) in the amount of the employee’s severance claim before the vessel can be released from arrest, and where there are multiple creditors pursuing the employer, the maritime lien entitles the employee to be paid in priority to other creditors including prior registered mortgage holders. This is an unusual and powerful right that terminated employees in most other (non-employee) occupations do not have. It must be used carefully but should not be overlooked.

    At LaW we are experienced in pursuing wage claims against vessel owners. Call us today or email at info@leaguelaw.com for a free consultation. We care. 250-888-0002.

  • Tofino Marine Adventure Tourism Incidents

    Tofino Marine Adventure Tourism Incidents

    Marine “Adventure Tourism” Incidents – A Leviathan in Uncharted Waters

    The recent tragic capsizing of the Leviathan II, a whale watch vessel, sadly highlights one of the most uncharted areas of Canadian marine law that exists today.  When is a vessel engaged in an activity considered to be “adventure tourism” and how does being on a vessel engaged in “adventure tourism” affect the legal rights of its owners, operators and passengers when an incident occurs?  This is a question that courts in Canada have not yet had to answer, despite its importance and the growth of the “adventure tourism” industry.

    The Background – the Athens (Passenger) Convention

    As most readers will already be familiar with the general factual background of the capsizing of the Leviathan II, I will focus on outlining the legal backdrop of passenger claims for such incidents.

    The legal rights of passengers on non-pleasure vessels operated along Canada’s coastline (and within it rivers and lakes) are governed by the Marine Liability Act (“MLA”).  Enacted in 2001, the MLA adopted as law, with some modification, the international Athens (Passenger) Convention.  As a law, the Athens Convention represents a trade-off of rights between passengers and vessel owners/operators (for convenience I refer to them collectively as “owners”).  The Convention allows vessel owners to limit their financial responsibility to injured or deceased passengers (and their dependents) to approximately $320,000 per passenger, as well as a cumulative limit for multiple claims arising from one incident (this cumulative limit depends on the tonnage of the vessel).  In exchange, owners cannot demand the passenger waive their right to sue when they agree to sell the passenger passage on the vessel.  Such “waivers” are otherwise contained in the fine print of many activities we undertake everyday, from buying a ski-lift ticket to renting a bicycle.  Also, in exchange, in cases of shipwreck, collision, stranding, explosion, fire or defect in the ship, the passenger does not have to prove the incident was caused by the owner’s negligence; their fault is presumed.  In sum, the MLA balances the rights of passengers and their dependents to compensation for an incident with the financial vulnerability of vessel owners in order to protect an adequate and safe supply of public marine transportation in Canada; a country that boasts the longest coastline and greatest number of lakes in the world.

    The relevant twist to this legal regime came in 2009 when the MLA was amended, providing for an exclusion for “adventure tourism” activities.   This exclusion meant that if a vessel was engaged in an activity that met the definition of “adventure tourism” then the owner could include a waiver in its passenger contract (meaning the passenger waived their right to sue for injuries or death).  The corresponding compromise for the owner was that the owner could no longer limit their financial liability in the case of an incident to the same extent as they could before.  When this exclusion was enacted, there was likely a presumption on the part of vessel owners that it made no difference that they lost the right to a lower limit of financial responsibility because a diligent adventure tour operator would use an effective waiver in their ticket sales procedure.  In other words, a higher limit of financial responsibility did not matter because the waiver meant it would never be called on.  The exclusion provided greater legal and financial certainty to owners and their insurers.

    The Uncharted Law – When is an Activity “Adventure Tourism”?

    The exclusion for vessels engaged in adventure tourism activity is not as clear as it may first sound.  When is a vessel in fact participating in an “adventure tourism” activity, such that it can rely on a waiver to stop an injured passenger (or their dependents) from suing?  As the courts have yet to answer this question, these are uncharted waters.

    The MLA provides that an adventure tourism activity is one that fulfills all of the following conditions: (1) it “exposes participants to an aquatic environment”, (2) “normally requires safety equipment and procedures beyond those normally used in the carriage of passengers”, (3) is one where the “participants are exposed to greater risks than passengers are normally exposed to in the carriage of passengers” and (4) “its risks have been presented to the participants and they have accepted in writing to be exposed to them”.  Only if the activity meets all of these characteristics is it an “adventure tourism” activity in which the passenger can be bound to a waiver.

    What is interesting about these criteria?  It is not the first criterion; if you are on a boat on water, you are likely exposed to an “aquatic environment”.  The fourth criterion is also largely uncontroversial; it simply refers to whether the owner has presented the waiver to the passenger and the passenger has signed or otherwise agreed to it in writing.  It is the second and third criteria that will be the subject of legal argument.

    The second criterion requires that the activity be one that “normally requires safety equipment and procedures beyond those normally used in the carriage of passengers”.  This is problematic.  Simply put, what is normal?  Transport Canada regulates the minimum safety equipment for passenger vessels, but is that standard normal, or is what the industry participants adopt normal?  For example, there are many tour operators that provide their guests with exposure suits, such as passengers on open deck, rigid hull inflatable boats.  Is the provision of this equipment normal (even though it is not required by Transport Canada)?  If it is normal for this type of a vessel, then the second criteria is met and the operator may be conducting an “adventure tourism” activity and can rely on a waiver.  What about a vessel like the Leviathan II, which had enclosed and exposed passenger spaces and passengers were not provided with exposure suits or required to wear life jackets (in compliance with Transport Canada regulations).  Arguably, the passengers on the Leviathan II were not involved in an adventure tourism activity (and could not be bound by a waiver) because they did not require safety equipment and procedures beyond normal for a passenger vessel.

    The third criterion is also problematic.  That criterion requires that “participants are exposed to greater risks than passengers are normally exposed to in the carriage of passengers”.  What risks are normal in the carriage of passengers?  “Normal” typically refers to an average or baseline.  Is this average risk based on the typical risks to passenger carriage in a geographic area, or on a type or size of vessel, or a combination of these factors?  Clearly the risks to passengers are different between carriage on the SeaBus across the Vancouver Harbour then on a transit aboard a small enclosed passenger vessel crossing Queen Charlotte Sound.  Are either normal?  Would the riskier transit mean that the owner of the vessel could bind the passenger to a waiver simply by requiring them to wear an exposure suit for example? There are countless different fact patterns that raise questions like these.

    Clarity in this area of law will only be charted when judges are asked to answer questions like the ones above.  Unfortunately, that clarity will only come as a result of lives lost or irreparably harmed.

    Darren Williams is marine lawyer specializing in injury claims and is a partner with League and Williams Law Corp, in Victoria B.C. Canada and can be reached for comment at dwilliams@leaguelaw.com, or 250-888-0002.  His emergency phone is 250-589-2174.

  • “A Very Stupid Thing” – A Mariner’s Limit of Liability and How it Can be Broken

    “A Very Stupid Thing” – A Mariner’s Limit of Liability and How it Can be Broken

    “[He] is a good man; a decent man; an honest man – a fisherman. However he did a very stupid thing. He cut the plaintiffs’ submarine fibre optic cable in two. It cost them almost $1,000,000 to repair it”.

    So begins the judgment in the recent Federal Court of Canada decision, Peracomo Inc v. TELUS Communications Co. (2014). This case is significant to mariners because it provides an important opportunity to understand limits of liability under marine law, and how these limits protect us. Mariners are wise to appreciate the protections offered by these limits of liability, as well as their liability insurance, and how both of these comforts can be lost resulting in financial disaster.

    The Peracomo Cable Cutting Case

    In Peracomo, Telus maintained a fibre optic cable that had been lawfully laid across the bed of the St. Lawrence River in 1999. The 44 gross tonne fishing vessel Realise, a snow crab long-liner, was owned by Peracomo Inc. and her master (as sole shareholder of Peracomo Inc.). In June of 2006, an anchor on one end of the Realise’s longline became caught on the fibre optic cable, and with much effort was pulled to the surface by the master who then used an electric saw to cut the cable free of the anchor. A few days later, the Realise’s longline anchor became caught on the same cable, and the master again cut the cable.

    Telus sued the vessel, the owner Peracomo Inc. and the master for the cost of repairing the cable, which was approximately $980,000. The master testified he believed the cable was not in use, despite the cable being marked on current charts. The vessel owner and master argued the cable should have been buried, but if they were at fault for the damage they were entitled to limit their liability to $500,000 under Canadian maritime law. Telus argued the owner and master had lost their right to limit their liability because the damage was intentionally caused. The vessel owner claimed on its liability insurance, and their insurer denied coverage maintaining the insurance did not cover damage due to the insured’s “willful misconduct”, as this was excluded under the Marine Insurance Act.

    The trial judge found the master had intentionally cut the cable, and the defendants were not entitled to limit their liability to $500,000 or require their insurer to cover the loss, because the damage was intentional. The Federal Court of Appeal agreed. The Peracomo case is important because it is the first Canadian case where the limitation of liability in a marine accident has been broken.

    What is a Limit of Liability, and Why?

    Aside from the Canada Shipping Act 2001, Canada’s core marine legislation is the Marine Liability Act (“MLA”). The MLA gives the force of law in Canada to various international conventions, including the International Convention on the Limitation of Liability for Maritime Claims 1976 (the “Liability Convention”). The Liability Convention is important because it puts a cap, or limit, on what can be claimed for a marine loss such as damage to property, or injury or death of a person.

    People entitled to limit liability under the Liability Convention are vessel owners, charterers, managers and operators (masters) and any person with an interest in the ship, as well the ship itself. The limitation covers accidents involving not just seagoing commercial vessels, but inland and recreational vessels as well. In the case of damage to property, the limit of liability is $500,000 for loss caused by a vessel under 300 gross tonnes. For vessels between 300 and 2,000 gross tonnes, the limit is currently CDN$1,493,000. For vessels between 2,001 and 30,000 tonnes the limit is CDN$1,493,000 plus $600 for every tonne over 2,000. The Canadian dollar value of the limit floats based on an International Monetary Fund unit called a Standard Drawing Right or SDR; the values provided are current as of September 4, 2012.

    There are various reasons these limits of liability exist, but one of the foremost reasons is to encourage marine enterprise. By establishing limits on liability, mariners are encouraged to engage in more business adventure and risk. Marine insurers, knowing that the liability of their customers is limited, can offer lower insurance premiums, making those adventures more economical for marine businesses to pursue. Clearly, if limitations of liability did not exist, the insurance premiums we pay would be significantly higher, as would our exposure to financial ruin in the event of a significant accident.

    How Can the Limit be Broken?

    Importantly, the Convention provides that the protection of the limitation of liability can be lost or broken, if the loss was caused by a personal act or omission (a failure to act) either “with the intent to cause such loss” or “recklessly and with knowledge that such loss would probably result”.  The limitation has historically been referred  to as an “unbreakable limit” for at least two reasons. Firstly, the loss must result from the “personal act or omission” of owners, charterers, managers and operators. Of course, many marine accidents occur because of the acts of an employee of the owner, in which case it is the not the personal act or omission of the owner or operator that caused the loss. In the Peracomo case, it was the owner and operator’s personal act that caused the loss when he cut the cable. The second reason the limitation has been difficult to break is the requirement that the loss be caused intentionally or recklessly with knowledge of the probable result.

    Intent is an obvious concept and needs no explanation. In the Peracomo case, the court found the master intended to damage the cable by cutting it to free his anchor. Although the master lost his right to limit his liability on that basis alone, the test for breaking the limitation being intent to cause damages “or” recklessly and with knowledge, so the court went on to discuss whether the master acted recklessly and with knowledge. What is reckless is not as clear as what is intentional. In Peracomo, the court held that recklessness meant an attitude or indifference to the existence of a risk, essentially “turning a blind eye to a risk”, and found that because the master had turned a blind eye to current charts that showed the location of the cable, so he was “reckless in the extreme”.

    Fortunately, cases where a mariner loses their ability to limit their liability are rare. However, we should not take the limitation for granted and assume it is “unbreakable” as it is often called. In Peracomo, the court reminded us the limitation of liability provided under the MLA and the Liability Convention are a “privilege”. While most marine accidents occur as a result of an innocent mistake (simple negligence), anyone can have a bad day and do “a very stupid thing”.

    Originally published in 2012.

    Darren Williams is a marine lawyer with League and Williams in Victoria BC.  He may be contacted at 250-888-0002 or via email at info@leaguelaw.com

  • Boat Builders Beware: “Construction” of Foreign Vessels & Maritime Liens

    Boat Builders Beware: “Construction” of Foreign Vessels & Maritime Liens

    Canadian boat builders beware! If you are involved in the construction of a foreign vessel in Canada, you do not have the protection of maritime liens for the unpaid value of your goods and services. In 2012, the Federal Court of Canada released the decision in Comfact Corporation v. Hull 717, and clarified that amendments made to the Marine Liability Act in 2010 do not include protection for the value of goods and services rendered in constructing the vessel.

    “Hull 717”

    The background facts in the Hull 717 decision are not rare in the industry. Davie Yards Inc., a Quebec shipyard, was contracted by a Norwegian company to build Hull 717. Davie Yards sub-contracted the welding work on Hull 717 to Comfact Corporation. Comfact undertook the welding work, but before Comfact was fully paid, Davie Yards became insolvent and its assets, including Hull 717, were sold to unrelated parties. The Export Development Canada bank held a mortgage on the vessel and claimed that its mortgage ranked ahead of the money owed to Comfact. Because the proceeds of the vessel sale were less than the total amount of the mortgage and Comfact’s claim, the court had to determine which claim had priority to the proceeds of the vessel.

    What makes the Hull 717 decision important is that it is the first Canadian decision to consider how the law relating to maritime liens for construction work done on foreign vessels in Canada has changed in recent years, and it confirms that boat builders are not given the protection they might like.

    Why are Maritime Liens Useful?

    Why are maritime liens beneficial to a Canadian boat builder? Canadian maritime law provides a right to sue a vessel (as though it were a person) if the owner of the vessel is also personally liable for the claim.  This right to sue the vessel is called a statutory right in rem. The statutory right in rem is useful because if the owner is insolvent or cannot be found, a claimant can sue, arrest and sell the vessel to satisfy its claim. The claimant must show, however, that there was some behavior or attitude on the part of the owner that they intended to be liable for the goods or services supplied to the vessel. For example, a repairer could not contract with another repairer to take on part of their job without the knowledge of the owner, and then sue the owner and vessel when the other repairer did not pay their invoice. Another limitation of the statutory right in rem is that the claimant loses the right to sue the vessel if ownership changes hands before their claim is filed in court.

    While useful, the statutory right in rem is far less powerful than a maritime lien. Unlike a statutory right in rem, the maritime lien is not lost if ownership of the vessel changes hands before a claim is filed in court. A maritime lien claimant also has priority over many other types of creditors, including mortgages.

    How the Law Changed in 2010

    Prior to 2010, Canadian businesses that supplied goods and services to a vessel may have had a statutory right in rem against the vessel (if the owner was liable for the claim as well), but they did not have a maritime lien for the value of those goods or services. As the court stated, “the enactment of section 139 of the Marine Liability Act in 2010 changed Canadian Maritime Law. It created a maritime lien where none existed before”.

    That Canadian businesses did not have a maritime lien for their goods and services prior to 2010 was seen as unfair because, for example, under American maritime law the same type of claimant was given a maritime lien, which was recognized in Canadian courts. As a result, if a vessel came into Canada having had work completed in the U.S. and then had work done in Canada, the claim by the American business would outrank the claim by the Canadian business because the former was a maritime lien and the latter was not. This was the mischief that the 2010 amendment to the Marine Liability Act sought to correct.

    S.139 provides that a person carrying on business in Canada, has a maritime lien for “goods, materials, or services” wherever supplied to “foreign vessel” for its “operation or maintenance” including “stevedoring or lighterage” and for work relating to the “repair or equipping” of the vessel. As an aside, although an outdated term, readers may know that lighterage is the fee for moving cargo within a port, such as from ship to dock by barge. Immediate logic may have it that goods and services supplied to construct a vessel would be included in the protection offered by s.139 as they are goods or services supplied for the maintenance or equipping. Confact, who supplied welding services to Hull 717 argued such, but the court disagreed.

    Why Section 139 Does Not Apply to Vessel Construction

    The Hull 717 decision is important because in it, the court concludes that the value of the welding work completed on the hull did not fall within s.139. In arguing its claim was a maritime lien under s.139, Comfact maintained its services were for the “operation, maintenance, repair or equipping” of Hull 717, terms used in s.139. The bank replied the services were by way of vessel “construction” and there was a distinction between work related to the construction of a vessel, and work related to operating, repairing, maintaining or equipping”.

    The court noted its jurisdiction to adjudicate claims arising out of contracts for the “construction” of vessels was specifically described in section 22 of the Federal Courts Act, and further noted the absence of the same term in the Marine Liability Act. The court stated: “in my opinion, the answer to this case lies in the insertion of the word “construction” in section 22(2)(n) of the Federal Courts Act and its exclusion in section 139(2)(b) of the Marine Liability Act”. In essence, the court found that if parliament had wanted to provide claim for construction under s.139, they would have used the word “construction”. The court went on to say: “I cannot accept that the failure to mention “building” or “construction” in s.139(2)(b) of the Marine Liability Act was a slip. Parliament could not have intended to grant maritime liens to those engaged in the construction of a ship, such as the plaintiff in this case”.

    Assuming the court’s conclusion is correct, there are a variety of reasons parliament may have not intended to afford Canadian boat builders the protection offered by s.139. Two reasons raised by counsel in Hull 717 decision are that builders can retain title of the vessel until they are paid, or they can retain possession of the vessel. Alternatively, another partial reason is that given the intent of s.139 was to afford the same protection to Canadian suppliers as is given to their American counter-parts, a claim by a Canadian builder (as opposed to a repairer of a vessel built years previous) is less likely to face a competing claim by an American supplier, if the vessel was under construction in Canada and therefore had never left Canada. Undoubtedly, more cases will follow which further define the limits of protection given by this important section of the Marine Liability Act.

    Originally published in 2012 in Western Mariner.

    If you have a question about this topic or another legal issue, contact us for a legal consultation.  Reach us at 250-888-0002, or via email at info@leaguelaw.com.