Judgments

Decision Information

Decision Content

A-662-88
Beeco Invest K/S and Beeco Chartering A/S (Appellants) (Plaintiffs)
v.
The Queen in right of Canada and St. Lawrence Seaway Authority (Respondents) (Defendants)
INDEXED AS: BEECO INVEST K/S v. CANADA (C.A.)
Court of Appeal, Pratte, Marceau and Hugessen JJ.—Montréal, November 8; Ottawa, November 18, 1988.
Maritime law — Limitation of liability of owners of docks, canals or harbours — Lock wall of Welland Canal collapsing causing canal's closure — Plaintiffs owners of vessel suffering pure economic loss due to closure — Defendants filing coun terclaim seeking limitation of liability under s. 650 of Canada Shipping Act — Appeal from Trial Division decision refusing to strike counterclaim — Plaintiffs arguing s. 650 not sustain ing limitation of liability where no physical damage to vessel — S. 650 not restricted to physical damage — Parliament's intention to limit liability of dock, canal and harbour opera tors extending to interruption of services.
On October 14, 1985 part of the wall of lock number 7 of the Welland Canal collapsed necessitating the closure of the canal for several weeks. The owners of the vessel Project Orient claim damages against the Crown as a result of the closure. The defendants in their counterclaim seek to limit their liability under section 650 of the Canada Shipping Act. This appeal is against a Trial Division decision refusing to strike the counter claim as disclosing no cause of action. Joyal J. gave no reasons for order. The plaintiffs argue that under section 650 the Crown cannot sustain its counterclaim for limitation of liability as no physical damage was caused to the vessel.
Held (Pratte J. dissenting), the appeal should be dismissed.
Per Hugessen J. (Marceau J. concurring): The decision of the Supreme Court of Canada in Marwell was of no assistance as it dealt with former section 657, a predecessor to the provision in issue. The wording in the present section 650 differs substantially and the right to limit liability is now in respect of damages generally. Accordingly, loss or damage to a vessel includes loss or damage to the owners: The Cairnbahn,
[1914] P. 25. Under section 650, the Crown's limitation of liability extends to the interruption of canal services.
Per Pratte J. (dissenting): The issue is whether subsection 650(1) refers only to physical damage or loss on board a vessel as opposed to pure economic loss suffered by owners unable to use their ships. Section 647 of the Canada Shipping Act and the Supreme Court's reasons in Marwell are authority for the proposition that the Crown can limit its liability only with regard to physical damage.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Canada Shipping Act, R.S.C. 1952, c. 29, s. 657.
Canada Shipping Act, R.S.C. 1970, c. S-9, ss. 647, 650(1).
CASES JUDICIALLY CONSIDERED
APPLIED:
The Cairnbahn, [1914] P. 25.
DISTINGUISHED:
Marwell Equipment Limited and British Columbia Bridge and Dredging Company Limited v. Vancouver Tug Boat Company Limited, [1961] S.C.R. 43.
REFERRED TO:
Margrande Compania Naviera v. The Leecliffe Hall's Owners, [1970] Ex.C.R. 870.
COUNSEL:
Sean J. Harrington for appellants. Peter J. Cullen for respondents.
SOLICITORS:
McMaster Meighen, Montréal, for appellants. Stikeman, Elliott, Montréal, for respondents.
The following are the reasons for judgment rendered in English by
PRATTE J. (dissenting): I have read the reasons for judgment prepared by my brother Hugessen and regret not to be able to share his opinion.
The only question on this appeal relates to the meaning of the phrase "loss or damage .. . to any vessel or vessels, or to any goods, merchandise, or other things whatever on board any vessel or ves-
sels" in subsection 650(1) of the Canada Shipping Act.' Does that phrase refer only to loss of and physical damage to vessels, goods, merchandise or other things on board any vessel or does it also refer to the pure economic loss suffered by the owners of an undamaged ship who have been prevented from using her?
In my opinion, in its normal sense, that phrase refers only to the loss of or physical damage to vessels, goods, merchandise or things. This inter pretation is confirmed by a reading of section 647 of the Canada Shipping Act where the expression "loss or damage is caused to any property" is clearly used as referring only to loss of or damage to property. It is also confirmed, in my view, by the decision of the Supreme Court of Canada in Marwell Equipment Limited and British Columbia Bridge and Dredging Company Limited v. Vancouver Tug Boat Company Limited, 2 where it was held that the phrase "damages in respect of ... loss or damage to vessels" in the former section 657 of the Canada Shipping Act' meant compen sation for loss of or physical damage to vessels.
' R.S.C. 1970, c. S-9.
650. (1) The owners of any dock or canal, or a harbour commission, are not, where without their actual fault or privity any loss or damage is caused to any vessel or vessels, or to any goods, merchandise, or other things whatever on board any vessel or vessels, liable to damages beyond an aggregate amount equivalent to one thousand gold francs for each ton of the tonnage of the largest registered British ship that, at the time of such loss or damage occurring is, or within a period of five years previous thereto has been, within the area over which such dock, or canal owner, or harbour commission performs any duty or exercises any power; and a ship shall not be deemed to have been within the area over which a harbour commission performs any duty or exercises any power by reason only that it has been built or fitted out within such area, or that it has taken shelter within or passed through such area on a voyage between two places both situated outside that area, or that it has loaded or unloaded mails or passengers within that area.
2 [1961] S.C.R. 43.
3 R.S.C. 1952, c. 29. That section was the predecessor of the present section 647.
For these reasons, I would allow the appeal, set aside the order of the Trial Division and strike out the respondents' counterclaim, the whole with costs in both Courts.
* * *
The following are the reasons for judgment rendered in English by
HUGESSEN J.: On October 14, 1985, a part of the wall of lock no. 7 of the Welland Canal collapsed while the vessel Furia was in the lock. The result, apart from physical damage to the Furia, was the closing of the canal for a period of several weeks, until November 7, 1985. Since the Welland Canal is the only navigable connection for ocean-going vessels between lakes Erie and Ontario, all ships in the St. Lawrence Seaway system above the Welland Canal were prevented from moving out until the reopening.
The plaintiffs are the owners, charterers and operators of the vessel Project Orient. They claim against Her Majesty and the St. Lawrence Seaway Authority for damages said to have been suffered by them as a result of the closing of the canal. Their claim is not for physical damage to the Project Orient or to her cargo but for the loss which they suffered as a result of the canal being blocked. The defendants, in addition to defending the action, have filed a counterclaim by which they seek to limit their liability pursuant to section 650 of the Canada Shipping Act. 4 The present appeal is from a judgment of Joyal J., in the Trial Divi sion, refusing to strike out the counterclaim as disclosing no reasonable cause of action.
Unfortunately, Joyal J. did not give any reasons for the order which he made. We are accordingly left to deal with the matter without having the benefit of his opinion.
The relevant part of subsection 650(1) of the Canada Shipping Act reads as follows:
4 R.S.C. 1970, c. S-9.
650. (1) The owners of any dock or canal, or a harbour commission, are not, where without their actual fault or privity any loss or damage is caused to any vessel or vessels, or to any goods, merchandise, or other things whatever on board any vessel or vessels, liable to damages beyond an aggregate amount equivalent to ....
The position taken by the plaintiffs as appellants herein is that the quoted words cannot possibly sustain a limitation of liability in cases, such as the present, where there has been no physical damage caused to the vessel in respect of which the claim is made. They rely primarily upon the majority judg ment of the Supreme Court of Canada in the case of Marwell Equipment Limited and British Columbia Bridge and Dredging Company Limited v. Vancouver Tug Boat Company Limited, [1961] S.C.R. 43. In my view, however, that case is of no assistance to us here. In Marwell, the Supreme Court was dealing with the former section 657 of the Canada Shipping Act,' which was the prede cessor in a very substantially different form of the present section 647. The relevant passage of the former statute read:
657. (1) The owners of a ship ... are not ... without their actual fault or privity ...
(d) where any loss or damage is, by reason of the improper navigation of the ship, caused to any other vessel, or to any goods, merchandise, or other things whatsoever on board any other vessel;
liable to damages in respect of ... loss or damage to vessels, goods, merchandise, or other things ... to an aggregate amount exceeding....
Commenting on this text, Martland J., for the majority, said at pages 66-67:
Section 657 of that Act permits limitation of liability where, by reason of improper navigation of a ship, loss or damage is caused to another vessel, but only "in respect of loss or dam age" to that vessel. In my opinion the words just quoted are not used to define the wrongful act of the shipowner whose vessel causes damage. They are used to define that kind of damage in relation to which, the wrongful act having occurred, he may limit his liability. This he can only do in the case of a collision between vessels (apart from claims for loss of life or personal injury) where the damages are for loss of or damage to the
5 R.S.C. 1952, c. 29. As to the effect of the amendments made after Marwell, see Margrande Compania Naviera v. The Leecliffe Hall's Owners, [ 1970] Ex.C.R. 870.
other vessel or the goods, merchandise or other things on board it or on board his own vessel.
The wording of the present section 650 of the Canada Shipping Act differs in several important respects from that which was in issue in Marwell. In particular, the right to limitation is stated simply as being for liability "to damages" without specifying that such damages must be "in respect of" any particular kind of loss or damage. The condition of the limitation under subsection 650(1) is that any loss or damage has been caused to any vessel or any things on board any vessel. In my view, loss or damage to a vessel must include loss or damage to her owners and those having an interest in her. This is the effect of the decision of the Court of Appeal in The Cairnbahn, [1914] P. 25. In that case the relevant statutory provision talked of "damage or loss ... caused to one or more ... vessels, to their cargoes or freight, or to any property on board". The Court unanimously affirmed that these words extended to cover moneys which the vessel's owners had to pay as damages to a third party:
Further, 1 think that though the section refers to damage or loss caused to one or more of the vessels in fault, to their cargoes or freight, or to any property on board, this is only a figurative way of referring to the damage or loss caused to the persons interested in the vessels, their cargoes or freight, or any property on board. Loss cannot, with any propriety of language, be said to be caused to a vessel or other property, though it may well be said to be caused to those interested in the vessel or property in question. (Per Lord Parker of Waddington, at page 31.)
Though damage may be caused to a vessel, loss cannot be, nor is the phrase "damage is caused to a vessel" apt to express simply that the vessel is damaged. Loss is caused to the owners and charterers of the vessel, and damage is caused to them too when the vessel is damaged. 1 think the section regulates rights and liabilities between parties in fault and extends to pecuniary prejudice, which may accrue, legally and not too remotely, to persons interested in vessels by reason of the faulty navigation of persons for whom they are responsible. (Per Lord Sumner, at pages 32 and 33.)
It is further my view that loss or damage to a vessel is not limited to those cases where the vessel herself or her cargo are physically damaged. Why
should it be? Section 650 gives a right of limita tion to persons operating docks, canals or har bours. Such persons may be said in a general way to be providing services to vessels and it would seem to me that, if as a matter of policy Parlia ment has decided that they should have a right to limit their liability, such right must extend to the results of the interruption or suspension of such services as well as to any merely physical damage which may be occasioned to vessels during the course of their performance.
In the result, I am of the view that the Trial Judge was correct in not striking out the counter claim and I would dismiss the appeal with costs.
MARCEAU J.: I agree.
 You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.