Judgments

[2000] 3 F.C. 127

T-1692-99

Bayside Towing Ltd., Eugene Beckstrom and William Frizell (Plaintiffs)

v.

Canadian Pacific Railway, B.C. Tel and Rivtow Marine Ltd. (Defendants)

Indexed as: Bayside Towing Ltd. v. Canadian Pacific Railway (T.D.)

Trial Division, Hargrave P.— Vancouver, January 28 and February 2, 2000.

Maritime law — Practice — Motion to strike out portions of defence in limitation of liability action — Limitation of liability under Canada Shipping Act (CSA) and 1976 Convention on Limitation of Liability for Maritime Claims — Damage caused by dumb barge, in tow of tug, to CPR bridge — Whether allegations of “wilful default” (as used in CSA) sufficiently close to “intent to cause loss or committed recklessly with knowledge of probable result” in Convention, Art. 4 — Whether, despite S.C.C. decision in The Rhône, limitation fund should be based, according to flotilla principle, on combined tonnages of tug, barge — Not obvious allegation of recklessness could not succeed — Allegation based on res ipsa loquitur struck as no longer applicable in Canada — Allegation of statutory breach struck as nominate tort of statutory breach not recognized in Canada.

The chip barge Rivtow 901, a dumb barge, in tow of Bayside Towing Ltd.’s tug, Sheena M, struck a CPR bridge, causing damages estimated at $5,000,000. An action to limit liability under the Canada Shipping Act and the Convention on Limitation of Liability for Maritime Claims, 1976 was commenced and a limitation fund constituted, based on the tonnage of the tug alone, in the amount of $500,000. CPR has elected to challenge both the right to limit liability and the amount of the limitation fund, arguing, under Article 4 of the Convention, that the wrongdoers’ conduct was such that they were not entitled to limit their liability. CPR also submitted that, in spite of the Supreme Court of Canada decision in Rhône (The) v. Peter A.B. Widener (The), the limitation fund should be based on the flotilla principle of limitation on the combined tonnages of the tug and the barge. This was a motion to strike out various portions of the defence as disclosing no reasonable defences.

The test for motions to strike, set out in Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, that it be plain and obvious that the pleading discloses no reasonable defence, places a heavy burden on the party seeking to strike out a pleading.

The part of the defence in which CPR refers to the actions of the crew and the owners of the tug, as being wilful defaults (the term used in subsection 564(3) of the Canada Shipping Act) will not be struck. Wilfulness may arguably be close to the test under Article 4 of the Convention, which is in terms of acts committed with intent to cause loss or acts committed recklessly with the knowledge of probable result. Although the argument may not be very strong, it is proper that Article 4 of the Convention be fully tested by the Court, with the assistance of counsel, so as to provide an important precedent.

However, the inclusion of allegations of wilful default on the part of the defendant, Rivtow Marine Ltd., cannot succeed. Rivtow’s actions are irrelevant to the issue, in a limitation action, of whether the wrongdoers engaged in conduct which bars them from limiting their liability. Allegations of reckless and negligent navigation, management or operation are struck as the test set out in Article 4 of the Convention has nothing to do with negligence, but is phrased in terms of recklessness and knowledge.

CPR’s submission that breaches of the standards in the Collision Regulations amount to recklessness and knowledge may be difficult to prove, but it is not clearly and obviously one which will not succeed. It should not be struck, except for the reference to the operators, master, officers and crew of the Rivtow 901, which has no relevance to the limitation proceeding.

The part of the pleading relying on the maxim res ipsa loquitur as prima facie evidence and proof of, among other things, wilful default and recklessness with intention to cause loss, or with knowledge that such loss would probably result, should be struck. First, the maxim merely raised a prima facie case of negligence, which is irrelevant in order to break limitation of liability under the 1976 Convention. Moreover, res ipsa loquitur is no longer applicable in Canada, even in respect of negligence: Fontaine v. British Columbia (Official Administrator), [1998] 1 S.C.R. 424.

The part of the pleading relying on the concept of statutory breach should also be struck. Mr. Justice Dickson, in R. in right of Canada v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205, stated that the nominate tort of statutory breach was not recognized in Canada, pointing out that breach of statute, where it has an effect upon civil liability, should be considered in the context of the general law of negligence.

The part of the pleading challenging the purported demise of the flotilla principle in Rhône (The) should not be struck. That case was, to some degree, the product of the wording of section 647 of the Canada Shipping Act as it then was. That provision is no more, but, for vessels under 300 tons, as is the case of the Sheena M, it was replaced by section 577, which parallels, although it does not completely reflect, section 647. Also, the work by Davison and Snelson, The Law of Towage, was referred to as standing for the proposition that under the 1976 Convention, there is less reason to restrict the limitation fund to the tonnage of the tug alone. So, while the argument may be thin, it is not plainly and obviously one which will fail.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

An Act to amend the Canada Shipping Act (maritime liability), S.C. 1998, c. 6, ss. 2, 26.

Canada Shipping Act, R.S.C. 1970, c. S-9, s. 647(2).

Canada Shipping Act, R.S.C., 1985, c. S-9, ss. 564(3), 574 (as am. by S.C. 1998, c. 6, s. 2), 577 (as am. idem), 647, Sch. VI (as enacted idem, s. 26).

Collision Regulations, C.R.C., c. 1416.

Convention on Limitation of Liability for Maritime Claims, 1976, as amended by the Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims, 1976, being Sch. VI of the Canada Shipping Act, R.S.C., 1985, c. S-9 (as enacted by S.C. 1998, c. 6, s. 26), Art. 4.

Maritime Conventions Act, 1914 (The), S.C. 1914, c. 13.

CASES JUDICIALLY CONSIDERED

APPLIED:

Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959; (1990), 74 D.L.R. (4th) 321; [1990] 6 W.W.R. 385; 49 B.C.L.R. (2d) 273; 4 C.C.L.T. (2d) 1; 43 C.P.C. (2d) 105; 117 N.R. 321; Operation Dismantle Inc. et al. v. The Queen et al., [1985] 1 S.C.R. 441; (1985), 18 D.L.R. (4th) 481; 12 Admin. L.R. 16; 13 C.R.R. 287; 59 N.R. 1; Lawrence v. R., [1978] 2 F.C. 782 (1978), 42 C.C.C. (2d) 230 (T.D.); Fontaine v. British Columbia (Official Administrator), [1998] 1 S.C.R. 424; (1998), 154 D.L.R. (4th) 577; 46 B.C.L.R. (3d) 1; 41 C.C.L.T. (2d) 36; 34 M.V.R. (3d) 165; R. in right of Canada v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205; (1983), 153 D.L.R. (3d) 9; [1983] 3 W.W.R. 97; 23 CCLT 121; 45 N.R. 425.

CONSIDERED:

Reed & Co. Ltd. v. London & Rochester Trading Company, Ltd., [1954] 2 Lloyd’s Rep. 463 (Q.B.); Bramley Moore, The, [1964] P. 200 (C.A.); Rhône (The) v. Peter A.B. Widener (The), [1993] 1 S.C.R. 497; (1993), 101 D.L.R. (4th) 188; 148 N.R. 349.

REFERRED TO:

R. v. Barnier, [1980] 1 S.C.R. 1124; (1980), 109 D.L.R. (3d) 257; [1980] 2 W.W.R. 659; 51 C.C.C. (2d) 193; 19 C.R. (3d) 371; 31 N.R. 273; Lower Similkameen Indian Band v. Allison (1995), 99 F.T.R. 305 (F.C.T.D.); Copperhead Brewing Co. v. John Labatt Ltd. (1995), 61 C.P.R. (3d) 317; 95 F.T.R. 146 (F.C.T.D.); West Hill Redevelopment Co. v. The Queen, [1987] 1 C.T.C. 310; (1987), 87 DTC 5210 (F.C.T.D.); Comr. Of Police of the Metropolis v. Caldwell, [1982] A.C. 341 (H.L.); Reg. v. Lawrence (Stephen), [1982] A.C. 510 (H.L.); Sir Joseph Rawlinson, The, [1972] 2 Lloyd’s Rep. 437 (Adm. Ct.).

AUTHORS CITED

Davison, Richard and Anthony Snelson. The Law of Towage, London: Lloyd’s of London Press, 1990.

Sullivan, Ruth. Driedger on the Construction of Statutes, 3rd ed. Toronto: Butterworths, 1994.

MOTION to strike out various portions of the defence in an action by which the plaintiffs seek to limit their liability for the damages they caused when the Rivtow 901, a dumb barge, in tow of Bayside Towing Ltd.’s tug, Sheena M, struck a CPR bridge. Motion allowed in part.

APPEARANCES:

David F. McEwen for plaintiffs.

William M. Everett for defendant, Canadian Pacific Railway.

Doug G. Morrison for defendant, Rivtow Marine Ltd.

SOLICITORS OF RECORD:

McEwen, Schmitt & Co., Vancouver, for plaintiffs.

Lawson Lundell Lawson & McIntosh, Vancouver, for defendant, Canadian Pacific Railway.

Bull, Housser & Tupper, Vancouver, for defendant, Rivtow Maritime Ltd.

The following are the reasons for order rendered in English by

[1]        Hargrave P.: The plaintiffs have commenced an action by which they seek limitation of liability under the Canada Shipping Act [R.S.C., 1985, c. S-9] and under the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims, 1976 [being Sch. VI of the Canada Shipping Act, R.S.C., 1985, c. S-9 (as enacted by S.C. 1998, c. 6, s. 26)], which I will refer to as the 1976 Convention, adopted by Canada in legislation assented to 12 May 1998 [S.C. 1998, c. 6, s. 2].

[2]        The plaintiffs are said to have done some $5,000,000 damage to the CPR bridge at Mission, British Columbia, when the chip barge Rivtow 901, a dumb barge, in tow of Bayside Towing Ltd’s tug, Sheena M, struck the bridge on 2 June 1999.

[3]        The plaintiffs commenced this action in September of 1999 and subsequently constituted a limitation fund, an interim fund as the CPR expressed some concern over the appropriate amount of the fund, based on the tonnage of the tug alone, in the amount of $500,000, pursuant to Court order on 2 November 1999.

[4]        Many authors, and indeed some judges in other jurisdictions, have commented that the intent of the 1976 Convention is that, in return for the benefit to injured claimants of much higher limits of liability, the trade-off to wrongdoing shipowners and crew members is a limitation of liability that is, for practical purposes, unbreakable.

[5]        The CPR had the option of accepting, with any other claimants, a prorata share of the fund. Instead the CPR has elected to challenge, among other things, both the plaintiffs’ right to limit liability which may be lost pursuant to Article 4 of the 1976 Convention:

Article 4

Conduct barring limitation

A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.

and the amount of the limitation fund. The CPR submits that the limitation fund should, contrary to Rhône (The) v. Peter A.B. Widener (The), [1993] 1 S.C.R. 497, which was decided on the basis of the previous limitation legislation, be based on the flotilla principle of limitation on the combined tonnages of the active tug and the dumb barge.

[6]        The plaintiffs now move to strike out various portions of the defence on the basis that they disclose no reasonable defences, but are pleadings which clearly and obviously will fail.

[7]        These reasons confirm my determinations given at the hearing of this matter on 28 January 2000, as to some of the plaintiffs’ motion to strike out portions of the defence of the Canadian Pacific Railway Company (the CPR) and set out reasons on those portions of the motion upon which I reserved.

ANALYSIS

[8]        In determining whether various portions of the defence ought to be struck out I have kept in mind that the test in Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, at page 980, that it be plain and obvious that a pleading discloses no reasonable cause of action, or no reasonable defence, places a heavy onus on the party seeking to strike out a pleading. It is a difficult test to satisfy. While other cases have provided a gloss on the term “plain and obvious”, including characterizing such a pleading as beyond doubt forlorn, or futile or a pleading leading to no result, those phrases are explanatory. Indeed, Madam Justice Wilson, in Hunt, also uses phrases such as “radical defect” and looks at a pleading to determine whether it is “fit to be tried”. These explanations add nothing to the test. Nor are they cumulative in effect. The plain and obvious test remains as the measure to apply. I have also kept in mind that a novel approach, or an argument upon which it is difficult to succeed, are not grounds for striking out. And all the more so when the proceeding is a limitation action, a well known concept in itself, but in this instance one of the first such proceedings under the new Canadian limitation of liability legislation. As such it may involve serious issues of law, or uncertain points of law, which ought not to be determined on an interlocutory motion to strike out a pleading.

[9]        In paragraph 7 of the defence, in a plea which the CPR hopes might lead to a bar to limitation, the CPR refers to the actions of the plaintiffs, the crew and the owners of the tug, as being wilful defaults. A wilful default is not the term used in the 1976 Convention as constituting conduct barring limitation. Rather the 1976 Convention refers to acts or omissions committed with an intent to cause harm, and to actions taken recklessly with knowledge of the result. However, the CPR is able to point to subsection 564(3) of the Canada Shipping Act which, in certain circumstances, deems a breach of the collision regulations a wilful default.[1] Wilful has many dictionary meanings, including that something be done in a reckless manner, or a designed manner, purposely, intending the result which comes about. Wilful also has the connotation of a positive act, as opposed to a negative act leading to negligence which arises merely from heedlessness or nonfeasance. These concepts of wilfulness may be close to the test under Article 4 of the 1976 Convention which, as I say, is in terms of acts committed with intent to cause loss or acts committed recklessly with the knowledge of the probable result.

[10]      Still dealing with the meaning of wilfulness I recognize that the wording used in Article 4 of the 1976 Convention differs from that set out in subsection 564(3) of the Canada Shipping Act, the latter being as follows:

564. …

(3) Where any injury to a person or damage to property arises from the non-observance by any vessel or raft of any of the Collision Regulations, the injury or damage shall be deemed to have been occasioned by the wilful default of the person in charge of that raft or of the deck of that vessel at the time, unless it is shown to the satisfaction of a court that the circumstances of the case made a departure from the regulation necessary. [Emphasis added.]

Counsel for the plaintiffs submits that, as a primary cannon of construction, where different words are used in legislation, parliament must clearly have intended a different meaning or test in each case: see for example R. v. Barnier, [1980] 1 S.C.R. 1124, at page 1135 and Driedger on the Construction of Statutes, Butterworths, 3rd ed. 1994, at pages 164-165. Yet, to be fair to the CPR, subsection 564(3) of the Canada Shipping Act, deeming wilful default, is Canadian legislation. The 1976 Convention is an international convention, arising out of a conference in London in 1976, which has set wording in it on a take or leave it basis, as to most provisions, including Article 4.

[11]      It may be difficult for the CPR to convince a judge that a breach of the collision regulations and the application of subsection 564(3) of the Canada Shipping Act, leading to a deemed positive act of wilfulness, which can also mean an act done in a reckless manner, intending the result, bars limitation under Article 4. But it is proper that Article 4 be fully tested by the Court, with the assistance of top counsel, so as to provide an important precedent. This being said, there is a portion of paragraph 7 of the defence which plainly and obviously cannot succeed.

[12]      The inclusion of allegations of wilful default on the part of the defendant, Rivtow Marine Ltd. (Rivtow), plainly and obviously cannot succeed. Certainly I must accept the facts set out in the defence to be true, but allegations based on facts, or allegations based on presumptions of law, are not similarly deemed to be true: see for example Operation Dismantle Inc. et al. v. The Queen et al., [1985]1 S.C.R. 441, at page 455 and Lawrence v. R., [1978] 2 F.C. 782 (T.D.), at page 784:

As a general rule, the Court is bound in an application such as this to assume the truth of the facts alleged in the statement of claim. That does not pertain when the allegation of fact is really a proposition of law. It is for the Court, not the pleader, to say what the law is.

[13]      Returning to the place of Rivtow, in the present instance it is as a defendant. The plaintiffs do not allege that Rivtow contributed to the accident. Rivtow’s actions are irrelevant to the issue, in a limitation action, of whether the plaintiffs in this action engaged in conduct which bars them from limiting their liability. Certainly Rivtow, which itself suffered damage to its dumb barge in the hands of the plaintiffs, may have a claim against the plaintiffs, but that is not a basis on which the CPR can allege, in the plaintiffs’ limitation action, that Rivtow is unable to limit because of conduct. Perhaps, if liability can be brought home to Rivtow, through its dumb barge towed by a tug belonging to someone else, Rivtow might in the future bring its own limitation action. However, it is premature to try to break limitation as against Rivtow in the limitation action of Bayside Towing and the tug’s master and mate.

[14]      As I have already noted, part of paragraph 7 is good, however the aspect of allegations of wilful default against Rivtow can lead to nothing. Plainly and obviously they will not succeed in this proceeding. Therefore paragraph 7 is struck out, with liberty to the CPR to amend.

[15]      In paragraph 8 of the defence the CPR alleges that the Rivtow 901 struck and damaged the bridge as a result of the reckless and negligent navigation, management or operation of the defendant Rivtow and also by the reckless and negligent navigation, management or operation by the plaintiff Bayside. This paragraph suffers from two fatal flaws. First, it is primarily concerned with the actions of Rivtow which, as I have pointed out, are irrelevant. Second, the CPR alleges only reckless and negligent navigation. The test set out in Article 4 of the 1976 Convention not only has nothing to do with negligence, but also is phrased in terms of recklessness and knowledge. Paragraph 8 is struck out with leave to amend if the CPR believes it is able to show recklessness and knowledge, or an intended act on the part of Bayside and the crew members.

[16]      In paragraph 10 of its defence the CPR sets the particulars of the conduct of the plaintiffs which it says constitutes conduct which is a bar to limitation of liability. For the most part the wording leading up to 37 specific particulars is drawn from Article 4 of the 1976 Convention. There is an allegation of negligence in paragraph 10, however, that, in my view, falls into the category of a mere surplus statement from which no prejudice flows: see for example Lower Similkameen Indian Band v. Allison (1995), 99 F.T.R. 305 (T.D.), at page 311, there referring to Copperhead Brewing Co. v. John Labatt Ltd. (1995), 61 C.P.R. (3d) 317 (F.C.T.D.).

[17]      Without being exhaustive in categorization, the particulars are, to a large extent, derived from the Collision Regulations [C.R.C., c. 1416], including the good seamanship aspect of the Regulations, while others relate to manning, maintenance and supervision. The plaintiffs say that breaches of any of the standards alleged in the particulars amount only to negligence and therefore such pleas plainly and obviously cannot succeed, here referring to Prothonotary Preston’s reasons in West Hill Redevelopment Co. v. The Queen, [1987] 1 C.T.C. 310 (F.C.T.D.). To the contrary, the CPR submits that if the particulars are proven, they will establish recklessness and knowledge.

[18]      Certainly, knowledge of the damage to the CPR bridge which might flow from the particular breaches set out by the CPR is a reasonable given. Whether these breaches amount to recklessness is more problematical.

[19]      Mr. Justice Devlin, as he then was, dealt with a concept of recklessness in Reed & Co. Ltd. v. London & Rochester Trading Company, Ltd., [1954] 2 Lloyd’s Rep. 463 (Q.B.), at issue there being the reckless supply of an unseaworthy barge pursuant to the London Lighterage Clause, the barge, Niagara, being described by Mr. Justice Devlin [at page 467] as “elderly but not (if I may so put it) senile”. Mr. Justice Devlin points out that recklessness is more than mere negligence or inadvertence and that while it is not necessarily a criminal or even morally culpable matter, it does mean the deliberate running of an unjustified risk (at pages 475-476):

The term “recklessly,” I think, does not really give rise to much difficulty. It means something more than mere negligence or inadvertence. I think it means deliberately running an unjustifiable risk. There is not anything necessarily criminal, or even morally culpable, about running an unjustifiable risk; it depends in relation to what risk is run; it may be a big matter or it may be a small matter. If I go out on a cold afternoon and forget to take my overcoat with me, that may be mere inadvertence, and not recklessness at all; it may be carelessness and not recklessness. If I decide that I will not take my overcoat with me although I know quite well that I may catch cold if I do not, I run the risk of catching cold, and I run that risk deliberately, although it may not be a very serious matter. I think that is the sort of recklessness that has to be considered in this case. It does not involve, in the circumstances of this case, a reckless disregard of human life, or anything of that sort, but it is sufficient that in relation to the cargo which the barge is intended to carry, the company, or somebody in it who is in this connection responsible, should be deliberately running an unjustifiable risk of this kind of cargo being damaged.

In Mr. Justice Devlin’s examples there is a knowledge element. Recklessness was further considered by the House of Lords in Comr. of Police of the Metropolis v. Caldwell, [1982] A.C. 341 and in Reg. v. Lawrence (Stephen), [1982] A.C. 510. In both instances the context was the criminal law. However, in the latter recklessness was said to contain two elements. First, acting in such a manner as to create an obvious and serious risk; and second, doing so without giving any thought to the possibility of there being any such risk, or having recognized that there was risk involved, nevertheless decided to take the risk. These definitions are not inconsistent with Mr. Justice Devlin’s view of recklessness

[20]      I cannot say that the CPR’s case for recklessness, on the particulars set out in paragraph 10, is clearly and obviously one which will not succeed. It may well be a difficult argument to make. However, it is not a forlorn argument. Paragraph 10 will remain except as to the reference, immediately preceding the itemized particulars, “to the operators, master, officers or crew of the Rivtow 901”, which shall be removed as neither the wilful default nor the recklessness of Rivtow has any relevance in this limitation proceeding.

[21]      Paragraph 11 sets out the same particulars as are contained in paragraph 10, however the thrust of paragraph 11 is the relationship between wilful default and recklessness, on the one hand, and Rivtow on the other hand. As I have already pointed out the reference to Rivtow is irrelevant in these proceedings. It is a plea that will lead to nothing. It is a plea that plainly and obviously discloses no reasonable means by which to break limitation of liability as against the plaintiffs. Paragraph 11 is struck out.

[22]      Paragraph 12 of the defence relies on the maxim of res ipsa loquitur as prima facie evidence and proof of, among other things, wilful default and recklessness with intention to cause loss, or with the knowledge that such loss would probably result.

[23]      Res ipsa loquitur, as it applied at one time, merely raised a prima facie case of negligence. From this point of view, mere negligence being irrelevant in order to break limitation of liability under the 1976 Convention, so is the plea of that maxim. Moreover, in addition, res ipsa loquitur is no longer applicable in Canada, even in respect of negligence: see for example Fontaine v. British Columbia (Official Administrator), [1998] 1 S.C.R. 424, at page 435:

Whatever value res ipsa loquitur may have once provided is gone. Various attempts to apply the so-called doctrine have been more confusing than helpful. Its use has been restricted to cases where the facts permitted an inference of negligence and there was no other reasonable explanation for the accident. Given its limited use it is somewhat meaningless to refer to that use as a doctrine of law.

It would appear that the law would be better served if the maxim was treated as expired and no longer used as a separate component in negligence actions. After all, it was nothing more than an attempt to deal with circumstantial evidence. That evidence is more sensibly dealt with by the trier of fact, who should weigh the circumstantial evidence with the direct evidence, if any, to determine whether the plaintiff has established on a balance of probabilities a prima facie case of negligence against the defendant. Once the plaintiff has done so, the defendant must present evidence negating that of the plaintiff or necessarily the plaintiff will succeed.

[24]      Paragraph 12 also touches upon statutory breach. Again this does not help the CPR and here I would refer to R. in right of Canada v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205, at page 225, where Mr. Justice Dickson, as he then was, does not recognize the nominate tort of statutory breach, pointing out that it should be considered in the context of the general law of negligence:

For all of the above reasons I would be adverse to the recognition in Canada of a nominate tort of statutory breach. Breach of statute, where it has an effect upon civil liability, should be considered in the context of the general law of negligence. Negligence and its common law duty of care have become pervasive enough to serve the purpose invoked for the existence of the action for statutory breach.

[25]      As an alternative, the CPR offered to amend paragraph 12 to take out the reference to res ipsa loquitur as proof of wilful default and recklessness. This proposed amendment does not assist.

[26]      I am not convinced that paragraph 12 can be amended so as to leave any substance, with the removal of the res ipsa loquitur and statutory breach concepts. However, here I will give the CPR the benefit of the doubt: while paragraph 12 is struck out, the CPR may attempt an amendment.

[27]      Paragraph 13 sets out that as the result of wilful default, recklessness and several other things, which are surplus, committed with intent, or committed with knowledge that a loss would result, the CPR has suffered loss, damage and expense estimated in excess of $5,000,000. This paragraph would seem to refer back to paragraph 10 and as such, at least to the extent that paragraph 10 is viable, is a proper plea. It shall remain.

[28]      In paragraph 14 the CPR says that, as a result of all of this, both the plaintiffs and the defendant Rivtow are barred from limiting their liability pursuant to the Canada Shipping Act or the 1976 Convention. As I have pointed out the ability of Rivtow to limit its liability has no place in this proceeding. Paragraph 14 shall be amended to omit any reference to Rivtow.

[29]      Paragraph 15 is a challenge to the concept set out by the Supreme Court of Canada in The Rhône, supra, which established that the relevant limitation tonnage is that of the tug alone and not tug and tow combined. In effect, The Rhône signalled the demise of the flotilla principle in Canada bringing the Canadian law into line with the English law.

[30]      The Supreme Court of Canada reached this decision on the basis of Bramley Moore, The, [1964] P. 200 (C.A.) in which Lord Denning, M.R. was of the view that where those on board the tug were negligent and those on the tow are not (or as in this instance the tow is a dumb barge) the cause of the damage is the improper navigation of the tug and not the tow. Lord Denning went on to say that he found there was no logical ground for the assessment of liability on the combined tonnage of tug and tow, even where both are commonly owned. This approach was followed by Mr. Justice Kerr in Sir Joseph Rawlinson, The, [1972] 2 Lloyd’s Rep. 437 (Adm. Ct.). This, and other cases which Mr. Justice Iacobucci touched upon in The Rhône, led to his summation that the jurisprudence on the issue of appropriate limitation tonnage, in a towage context, never extended to the tonnage of all the vessels in the flotilla being taken into account in order to determine limitation of liability.

[31]      The Rhône was, at least to some degree, the product of the wording of section 647 of the Canada Shipping Act, which, at the time, parallelled the English legislation which gave rise to the decisions in The Bramley Moore and in The Sir Joseph Rawlinson.

[32]      The Rhône was decided on the basis of what was then subsection 647(2) of the Canada Shipping Act [R.S.C. 1970, c. S-9], the effect of which was to calculate the limit of liability using the tonnage of the vessel or vessels causing the damage. As I have already noted, Mr. Justice Iacobucci, who wrote the majority judgment, pointed out that the jurisprudence on the issue of limitation for tug and tow had never extended as far as to require all vessels within the flotilla belonging to an impugned shipowner, to be taken into account when computing tonnage. Rather the intent was to take into account only the tonnage of the vessels causing the alleged damage and that apart from the vessel responsible for the navigation of a flotilla, only vessels in the same ownership, which physically cause or contributed to damage, formed the unit for which liability was limited: see page 541.

[33]      Section 647 of the Canada Shipping Act is no more. Yet, for vessels of under 300 tons, as is the case of the Sheena M, section 577 [as am. by S.C. 1998, c. 6, s. 2] of the Canada Shipping Act parallels, although it does not completely reflect, former section 647 of the Canada Shipping Act.

[34]      This approach by the CPR, that the flotilla principle ought now to apply, is at least a thin argument. Yet, counsel for the CPR refers to a passage from Richard Davison and Anthony Snelson in The Law of Towage, Lloyd’s of London Press, 1990, for the proposition that under the 1976 Convention there is less reason to restrict the limitation fund to the tonnage of the tug alone [at page 87]:

The change from a regime restricting the right to limit to damage caused by acts or omissions in the navigation or management of the ship to a regime where the right to limit exists “whatever the basis of liability may be” may have affected this issue. Although the principle stated by Lord Denning in The Bramley Moore , namely that limitation is a right based on policy and not on justice, undoubtedly holds good, the basis of the decision discussed above is the concept of causative negligence in the “navigation or management” of a vessel. Now that the party wishing to limit only has to show that liability arose “in direct connection with the operation of the ship” there may be less reason to restrict the fund to the tonnage of the tug alone. Indeed, both the Court of Appeal in The Bramley Moore and Kerr J. in The Sir Joseph Rawlinson were, in a sense, compelled to adopt a restrictive approach by the dilemma that if the crew of the tug were navigating both tug and tow and the causative negligence was negligence in the navigation of both, then it necessarily followed that there would be unlimited liability in respect of the navigation of the tow, unless tug and tow were in common ownership. That dilemma has been removed by the much more open wording of the 1976 Convention.

[35]      Whether or not Davison and Snelson are correct in suggesting the flotilla principle might be very much alive under the 1976 Convention, the result is that counsel for the CPR would not be embarrassed to argue for a combined tonnage limitation fund, that is the combined tonnage of the Sheena M and of the Rivtow 901. Thus the plea for a combined tonnage limitation fund is not plainly and obviously one which will fail. Paragraph 15 shall remain.

[36]      Success having been mixed, costs are in the cause. I thank counsel for excellent and substantial argument.

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