[1995] 1 F.C. 407
T-1951-91
Taiyo Gyogyo K.K. (Plaintiff)
v.
The Owners and All Others Interested in the Ship “Tuo Hai”, Tianjin Ocean Shipping Co., and China Ocean Shipping Company (Defendants)
T-2058-91
Her Majesty the Queen (Plaintiff)
v.
(In Rem) The Ship “Tenyo Maru”, Her Owners, Taiyo Gyogyo K.K. and All Others Interested in Her; The Ship “Tuo Hai”, Her Owners, Tianjin Ocean Shipping Company and China Ocean Shipping Company, and All Others Interested in Her and (In Personam) Taiyo Gyogyo K.K., Tianjin Ocean Shipping Company, China Ocean Shipping Company, Tashiro Tadao, Chen Bing Tian (Defendants)
and
Administrator of the Ship-Source Oil Pollution Fund (Party by Statute)
T-1806-93
Tianjin Ocean Shipping Company, China Ocean Shipping Company and Chen Bing Tian (Plaintiffs)
v.
Taiyo Gyogyo K.K., Her Majesty the Queen, The Administrator of the Ship-Source Oil Pollution Fund, and all and every person or persons whomsoever, claiming or being entitled to claim in respect of damage or loss arising out of the collision between the Ship “Tuo Hai” and the Ship “Tenyo Maru” (Defendants)
Indexed as: Taiyo Gyogyo K.K. v. Tuo Hai (The) (T.D.)
Trial Division, Reed J.—Toronto, September 12; Ottawa, September 27, 1994.
Practice — Pleadings — Amendments — Motions to add specific allegations of negligence by Crown agents to general allegations already pleaded in statements of defence in action to recover costs of cleaning up oil spill after collision between two vessels, to counterclaim for damages and to plead indemnification by Crown in collision action — Motions allowed — Lack of jurisdiction not established — Amendments not alleging new cause of action as merely adding specificity to allegation of Crown’s negligence — Indemnification claims not statute barred as liability for indemnification by third party not commencing until liability of principal party established — Although counterclaims against Crown new causes of action, not out of time — Any prejudice caused by amendments outweighed by “justness” of allowing amendment.
Practice — Limitation of actions — Federal Court Act, s. 39 providing provincial laws relating to limitation of actions applying to proceedings against Crown with respect to cause of action arising in province, otherwise limitation period six years — If cause of action arising out of collision occurring outside territorial waters, limitation period six years — Two-year limitation period set by B.C. Limitation Act not applicable under s. 4 as counterclaims relating to subject matter of original action, and just to allow amendments — Any prejudice caused by amendments outweighed by “justness” thereof.
Federal Court jurisdiction — Trial Division — Motion to add specific allegations of negligence by Crown agents to general claims already pleaded in statements of defence, to counterclaim against Crown, to plead indemnification by Crown — Motions allowed — Lack of jurisdiction not established — Where cause of action occurred, whether B.C. Negligence Act applied properly addressed in argument after all evidence adduced — Inappropriate to refuse amendments on ground of lack of jurisdiction when case law, factual context unclear as to whether maritime law providing for liability by joint tortfeasors or based on contributory negligence.
Maritime law — Torts — Contributory negligence — Collision — Oil pollution of B.C. coast — Crown suing to recover clean up costs — Negligence on part of Crown agents (Coast Guard) alleged — Whether contributory negligence recognized in Canadian maritime law — Necessity for legislation to resolve uncertainty — Uncertain whether common law defences applied in maritime law case where contributory or joint negligence alleged.
These were motions to amend pleadings. The three actions herein related to a collision between the Tuo Hai and Tenyo Maru and to damages claimed as a result of oil pollution. Taiyo and Tianjin were the defendants to the Crown’s action for recompense for the cost of cleaning up the oil pollution damage. Both sought to amend their statements of defence to the pollution action to add specific allegations of negligence by Crown agents (failure by members of the Canadian Coast Guard, Vessel Traffic Services, to warn by radio transmission from the shore) to the general claims already pleaded. They also sought to amend their pleadings in the collision action (Taiyo versus Tianjin) to plead indemnification by the Crown for any damage to the other party caused by the Crown, and in the pollution action to add a counterclaim against the Crown for damages suffered. The Crown opposed all amendments on the grounds that: (1) the Court had no jurisdiction to make an award of contributory negligence in that, the collision having occurred outside territorial waters, the B.C. Negligence Act did not apply, and because maritime law did not provide for such a claim; and (2) the amendments sought to assert an independent and new cause of action now statute barred.
Held, the motions should be allowed.
A lack of jurisdiction was not established. The question of where the cause of action arose and whether British Columbia legislation applied would be more properly addressed in argument after all the evidence had been adduced.
More importantly, the extent to which there may be a lacuna in Canadian maritime law, with respect to liability by joint tortfeasors or based on contributory negligence was unclear. Given the unsettled nature of the case law and the unavailability of a settled factual context, it would be inappropriate to refuse the amendments to the pleadings on the ground that the Court had no jurisdiction to grant the awards sought.
The amendments did not allege a whole new cause of action, now statute barred, in so far as the defence to the pollution action was concerned. Negligence on the part of the Crown was alleged in the defence from the beginning and the amendments merely added specificity to those allegations. The claims for indemnification were not statute barred. Liability for indemnification by a third party does not commence until liability on the part of the principal party has been found. The counterclaims against the Crown in the pollution action were for damages arising directly as a result of the accident and as a result of the alleged negligence of the Crown. As such, they are new causes of action. Federal Court Act, section 39 provides that the laws relating to the limitation of actions which are in force between subject and subject in a province apply to proceedings by or against the Crown with respect to a cause of action arising in that province. In all other cases the limitation period is six years. Thus, if the cause of action arose outside the province of British Columbia, the limitation period was six years. The claims were commenced well within that period. If the limitation period were governed by the British Columbia legislation, the two-year limitation period was still not applicable. Paragraph 4(1)(a) of the Limitation Act provides that the two-year time limit did not apply to counterclaims relating to or connected with the subject matter of the original action. Under subsection 4(4) a Court may allow amendments of pleadings which include a new cause of action when the Court considers it just to do so. To the extent that actions by the Crown may have contributed to the collision, claims by the defendants arising therefrom are connected to the subject matter of the original action. The circumstances fell directly within the exception described in paragraph 4(1)(a), but in any event the amendments should be allowed pursuant to subsection 4(4). Any prejudice caused by the amendments would be outweighed by the “justness” of allowing the amendment. The amendments to the statement of defence in the pollution action alone will dictate that all relevant evidence concerning the Crown’s involvement will be before the Court. The issues will be fully litigated and decided whether or not the counterclaim is allowed. That the Crown will be exposed to increased financial liability arising from the counterclaim did not weigh heavily enough in the balance to justify denying the amendment. It was not until the consolidation of the pollution and collision actions last May and the attendant discoveries that the defendants became fully aware of the potential claim.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Canada Shipping Act, R.S.C., 1985, c. S-9, s. 565.
Federal Court Act, R.S.C., 1985, c. F-7, s. 39 (as am. by S.C. 1990, c. 8, s. 10).
Limitation Act, R.S.B.C. 1979, c. 236, s. 4.
Negligence Act, R.S.B.C. 1979, c. 228.
CASES JUDICIALLY CONSIDERED
CONSIDERED:
Bow Valley Husky (Bermuda) Ltd. et al. v. Saint John Shipbuilding Ltd. et al. (1994), 118 Nfld. & P.E.I.R. 271 (Nfld. S.C.T.D.).
REFERRED TO:
United States, The (1865), 12 L.T.R. 33 (P.C.); B.C. Hydro and Power Authority v. Kees van Western et al. and District of Kitimat et al., [1974] 3 W.W.R. 20 (B.C.S.C.).
AUTHORS CITED
Canada. Dept. of Justice. Eliminating Outmoded Common Law Defences in Maritime Torts.
MOTIONS to amend statements of defence to add specifics to the general allegation of negligence of Crown agents in the pollution action, to plead indemnification against the Crown in the collision action, and to counterclaim against the Crown for damages suffered. Motions allowed.
COUNSEL:
Peter Bernard and Gary Wharton for Taiyo Gyogyo K.K. (plaintiff in T-1951-91, defendant in T-2058-91 and T-1806-93).
J. D. L. Morrison and Mark Sachs for The Owners and All Others Interested in the Ship Tuo Hai, Tianjin Ocean Shipping Company and China Ocean Shipping Company (defendants in T-1951-91 and T-2058-91, plaintiffs in T-1806-93).
Gunnar O. Eggertson, Nancy E. Oster and George C. Carruthers for Her Majesty the Queen (plaintiff in T-2058-91).
David F. McEwen for Administrator of the Ship-Source Oil Pollution Fund (party by statute in T-2058-91, defendant in T-1806-93).
SOLICITORS:
Campney & Murphy, Vancouver, for plaintiff.
Bull, Housser & Tupper, Vancouver, for The Owners and All Others Interested in the Ship Tuo Hai, Tianjin Ocean Shipping Company and China Ocean Shipping Company (defendants in T-1951-91 and T-2058-91, plaintiffs in T-1806-93).
Deputy Attorney General of Canada for Her Majesty the Queen (plaintiff in T-2058-91).
McEwen, Schmitt & Co., Vancouver, for Administrator of the Ship-Source Oil Pollution Fund (party by statute in T-2058-91, defendant in T-1806-93).
The following are the reasons for order rendered in English by
Reed J.: These reasons relate to motions to amend pleadings to allege responsibility by Her Majesty the Queen (the Crown) for some acts which are at the core of the three related actions: T-1951-91, T-2058-91 and T-1806-93. The three actions relate to a collision between the vessels Tuo Hai and Tenyo Maru and to damages claimed as a result of oil pollution which occurred along the coast of British Columbia. The three actions, for ease of reference, are referred to as the collision action, the pollution action and the limitation of liability action. The last is not relevant for present purposes since the amendments sought do not relate to that action.
The various parties to the actions will not be described in detail, because it is not necessary. The following simplification suffices for present purposes. The plaintiff in the collision action, the owner of one of the vessels, will be referred to as “Taiyo.” The defendants in the collision action are those having interests in or who are connected to the other vessel. They will be referred to collectively as “Tianjin.” The Crown is the plaintiff in the pollution action, seeking recompense for the cost of cleaning up the oil pollution damage. Taiyo and Tianjin are the defendants to the Crown’s suit. I should also note that in the collision action Tianjin has sued Taiyo by way of counterclaim and thus Tianjin and Taiyo are plaintiff and defendant respectively in that counterclaim.
Both Taiyo and Tianjin seek to amend their statements of defence to the pollution action to specifically allege acts by agents of the Crown as a cause, of the damage that arose. The Crown agents are members of the Canadian Coast Guard, Vessel Traffic Services. The statements of defence in the pollution action, already filed by Taiyo and Tianjin, contain general allegations of negligence against the Crown. That of Tianjin refers to the Negligence Act, R.S.B.C. 1979, c. 298. That of Taiyo simply asserts that if it is found to have any liability, that liability should be nullified in proportion to any negligence which occurred as a result of the actions of persons for whose conduct the Crown was responsible. In my view, it is correct to characterize the amendments sought to the statements of defence, in this regard, as the addition of specific allegations of negligence to the general claims which have already been pleaded.
Taiyo and Tianjin seek to amend their pleadings in the collision action. They each seek to plead that if found responsible for any of the damage which arose to the other party, indemnification should be paid by the Crown to the extent that any proportion of that damage was caused by the Crown. Taiyo and Tianjin seek to issue third party notices to the Crown.
Lastly, in the pollution action, both Taiyo and Tianjin seek to amend their respective pleadings to add a counterclaim, against the Crown. They claim damages suffered directly by each, to the extent that such was caused by the Crown’s negligence. In the case of Taiyo, the damages claimed are those arising from (1) the loss of its vessel; (2) the loss of fishing income arising from the loss of the vessel and (3) any amounts it may be required to pay for oil pollution damage which occurred along the coasts of the state of Washington. In the case of Tianjin damages are claimed as a result of (1) the repairs needed to its vessel, (2) the loss of the use of the vessel and (3) any potential liability it might have to third parties as a result of the accident.
As I understand the Crown’s argument, it opposes all the amendments, on two main grounds: (1) the Court has no jurisdiction to make awards of contributory negligence in cases such as the present; (2) the amendments seek to assert an independent and new cause of action which is now statute barred.
With respect to the argument that there is no jurisdiction in this Court to make a contributory negligence award, that argument is based, in part, on the fact that the ship collision occurred outside the territorial waters and therefore it is alleged that the Negligence Act of British Columbia does not apply. The argument is also based on an argument that maritime law does not provide for such a claim. Reference was made to a Department of Justice Discussion Paper entitled Eliminating Outmoded Common Law Defences in Maritime Torts and to the decision in Bow Valley Husky (Bermuda) Ltd. et al. v. Saint John Shipbuilding Ltd. et al. (1994), 118 Nfld. & P.E.I.R. 271 (Nfld. S.C. T.D.).
I am not persuaded that a lack of jurisdiction on the part of the Court has been demonstrated with such certainty that a refusal to accept the amendments is justified.
Firstly, whether or not the cause of action arose outside the territorial waters is a matter that cannot be decided in a factual vacuum. The collision apparently occurred in that location but the alleged negligence, as I understand it, is a failure to warn by radio transmission from the shore. The question of where the cause of action arose and whether the British Columbia legislation applies is a matter more properly addressed in argument after all the evidence has been adduced, e.g., when it is known exactly where the accident occurred and the facts surrounding the Crown’s alleged negligence and where that occurred.
More importantly, the extent to which there may be a lacuna in Canadian maritime law, with respect to liability by joint tortfeasors or based on contributory negligence, is not clear. The Bow Valley decision provides no authorities for the conclusion reached therein and I understand it to be under appeal. I note as well that the unpublished Department of Justice paper, which is relied upon, indicates that the existence and scope of the alleged lacuna is uncertain. That paper recommends legislation to “clear up any lingering uncertainty” (page 1). It refers to jurisprudence where contributory negligence claims have been allowed, e.g., United States, The (1865), 12 L.T.R. 33 (P.C.) (referred to at page 6 of the Justice paper). The paper states that the decisions “illustrate why it is now uncertain whether the common law defences will … be applied by the courts in … [a] claim involving contributory or joint negligence arising out of a maritime cause of action other than a collision” (page 10). Apportionment in the case of collision between ships is provided for by the Canada Shipping Act, R.S.C., 1985, c. S-9, section 565. Given the unsettled nature of the jurisprudence and the unavailability of a settled factual context, I am not persuaded that it is appropriate to refuse to accept the amendments to the pleadings on the ground that this Court has no jurisdiction to grant the awards sought. This is more properly the subject for argument after all the evidence is in, at trial.
With respect to the argument that the amendments allege a whole new cause of action which is now statute barred, that is not true in so far as the defence to the pollution action is concerned. As noted above, negligence on the part of the Crown was alleged in the defence from the beginning and the amendments do no more than add specificity to those claims.
In so far as the claims for indemnification, by Tianjin as defendant in the collision action, and by Taiyo as defendant to the counterclaim are concerned, there can be no argument that these claims, also, are not statute barred. The liability for indemnification, by a third party, does not commence until liability on the part of the principal party has been found; see B.C. Hydro and Power Authority v. Kees van Western et al. and District of Kitimat et al., [1974] 3 W.W.R. 20 (B.C.S.C.). The amendments are not statute barred and the third party notices may issue.
I turn then to the amendments which it is sought to make, by way of counterclaim, to the pollution action. As noted, the counterclaims against the Crown by Taiyo and Tianjin, respectively are for damages arising to each directly as a result of the accident and as a result of the alleged negligence of the Crown. As such, they are new causes of action. The Crown argues that as such those claims should have been pleaded earlier and they are now statute barred. It is argued that the British Columbia Limitation Act, R.S.B.C. 1979, c. 236 applies and that a two-year time limit is prescribed under that statute.
Section 39 of the Federal Court Act [R.S.C., 1985, c. F-7 (as am. by S.C. 1990, c. 8, s. 10)] provides that the laws relating to the limitation of actions which are in force between subject and subject in a province apply to proceedings by or against the Crown with respect to a cause of action arising in that province. In all other cases the limitation period is six years. Thus, if the cause of action arose outside the province of British Columbia, as the Crown argues is the case in order to escape the operation of the provincial contributory negligence statute, then, the limitation period is six years. The claims have been commenced well within that period.
On the other hand, if the limitation period is governed by the British Columbia legislation, then, as I read that statute, the two-year limitation period is still not applicable. Section 4 of the Limitation Act provides that the two-year time limit does not apply to counterclaims “relating to or connected with the subject matter of the original action.” Also, a Court is authorized to allow amendments to pleadings which include a new cause of action when “the Court considers [it] just” to do so. Section 4 of the Act states:
4. (1) Where an action to which this or any other Act applies has been commenced, the lapse of time limited for bringing an action is no bar to
(a) proceedings by counterclaim, including the adding of a new party as a defendant by counterclaim;
(b) third party proceedings;
…
under any applicable law, with respect to any claims relating to or connected with the subject matter of the original action.
…
(4) In any action the court may allow the amendment of a pleading, on terms as to costs or otherwise that the court considers just, notwithstanding that between the issue of the writ and the application for amendment a fresh cause of action disclosed by the amendment would have become barred by the lapse of time.
The Crown argues that the counterclaim is not related to or connected with the subject matter of the original action. I do not accept that argument. The original action concerns the costs of cleaning up the oil spill. That oil spill was caused by the ship collision. To the extent that actions by the Crown itself may have contributed to that accident, claims by the defendants arising therefrom are connected to the subject matter of the original action. In my view, the circumstances fall directly within the exception described in paragraph 4(1)(a). In addition, I would be prepared, in any event, to allow the amendment pursuant to subsection 4(4). The object of having responsibility for the accident determined in as complete a way as possible weighs heavily in favour of allowing the amendments to be made. In my view, it would be unjust to refuse to allow the amendments unless the Crown can demonstrate some over-balancing prejudice.
While counsel for the Crown argues that the amendments will create prejudice, I am not persuaded that this is of such a nature as to outweigh the “justness” of allowing the amendment. The amendments to the statement of defence in the pollution action, alone, will dictate that all relevant evidence concerning the Crown’s involvement will be before the Court. The relevant issues will be fully litigated and decided whether or not the counterclaim is allowed. The main prejudice to the Crown will be the exposure to increased financial liability arising from the counterclaim. I do not think that this weighs heavily enough in the balance to justify denying the amendment.
Counsel for the Crown argues that counsel for Taiyo and Tianjin had information from a very early date (shortly after the accident they heard recordings of the radio transcriptions) which should have led then to an enquiry into the Crown’s potential liability. It is argued that the failure to pursue such enquiry should lead the Court to refuse the amendments. Counsel for Taiyo and Tianjin, on the other hand, argue that it was not until the consolidation of the pollution action and the collision action, last May, and the attendant discoveries that they became fully aware of the potential claim. I accept that explanation.
For the reasons given, the motions to amend pleadings have been allowed.