[1994] 3 .F.C. 177
T-448-94
Oak Bay Marine Group, Oak Bay Marina Ltd. and Sealand of the Pacific Ltd. (Plaintiffs)
v.
Margaret Jackson and Floyd Jackson and All Other Persons Having Claims Against the Plaintiffs, the Ship “Ucluelet Princess” or the Fund hereby to be created (Defendants)
Indexed as: Oak Bay Marine Group v. Jackson (T.D.)
Trial Division, Strayer J.—Vancouver, March 7 and 25, 1994.
Maritime law — Practice — Motion to strike limitation of liability action commenced after judgment awarded for personal injuries sustained by passenger on defendant ship — Statement of defence not alleging limitation of liability — Although damage action alleging negligence of Master, crew, owner, operator of vessel, Trial Judge finding Master only negligent in navigation — Limitation action abuse of Court’s process — Overlapping evidence, argument in two actions — Inefficient use of parties’, Court’s resources — Current practice to include limitation action as counter-claim or bring separate action before or shortly after commencement of action for damages.
[lc.6]This was a motion to strike out this limitation of liability action on the ground that it was an abuse of the process of the Court. The plaintiffs were seeking to limit their liability under a judgment obtained by the defendants in the amount of $160,645.25 for personal injuries sustained by Mrs. Jackson while a passenger on the Ucluelet Princess. The statement of claim alleged negligent navigation, negligent organization of the voyage, failure to provide competent crew, failure to supervise the operation of the vessel, and failure to provide proper information to passengers before departure. Neither the statement of defence nor subsequent amendments pleaded limitation of liability. The Trial Judge found that the only negligence was with respect to the manner of navigation. This action to limit liability was commenced after judgment was awarded. The plaintiffs relied upon Canada Shipping Act, subsection 575(1) which limits a shipowner’s liability for damages where personal injury is caused to any person on the ship without his actual fault or privity. Section 576 deals with the procedure for asserting limitation of liability where “several claims are made or apprehended”.
Held, the motion should be allowed.
The limitation action was an abuse of the process of the Court. There would be a substantial overlapping of evidence and argument in the original damages action and the limitation action. The Trial Judge was not called upon to determine specifically whether there was any “fault or privity” on the part of the other defendants, within the meaning of the Canada Shipping Act, because the limitation of liability claim was not before him. The way to have such matters addressed with the least expenditure of resources of the parties and the Court would have been to have the limitation matter tried at the same time as the claim for damages. Prima facie it would be an abuse of the process of the Court to force the defendants herein and the Court to go through a new trial with respect to essentially the same facts.
The current practice is either for owners and operators of defendant vessels to include with their defence a counter-claim for the purposes of limiting liability, or to bring a separate action before, or shortly after, the commencement of the action for damages and then to have the two tried together. All the evidence is then heard at the same time by the same judge while the necessary witnesses are all present. The plaintiffs have not explained why this action was not commenced before, and there were no special circumstances justifying this manner of proceeding.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Canada Shipping Act, R.S.C., 1985, c. S-9, ss. 572(1), 575, 576, 577.
Federal Court Act, R.S.C., 1985, c. F-7, s. 39 (as am. by S.C. 1990, c. 8, s. 10).
Federal Court Rules, C.R.C., c. 663, R. 1012 (as am. by SOR/94-41, s. 10).
CASES JUDICIALLY CONSIDERED
DISTINGUISHED:
The Sisters (1876), 1 P.D. 281.
CONSIDERED:
Jackson v. Ucluelet Princess (The), [1994] F.C.J. No. 137 (QL); Paterson Steamships, Ltd. v. Robin Hood Mills, Ltd. (1937), 58 Ll. L. Rep. 33 (P.C.).
AUTHORS CITED
Roscoe, Edward Stanley. The Admiralty Jurisdiction and Practice of the High Court of Justice, 5th ed. by Geoffrey Hutchinson, London: Stevens& Sons Ltd., 1931.
MOTION to strike out the limitation of liability action commenced after judgment was awarded in the damages action, on the ground that it was an abuse of process of the Court. Motion allowed.
COUNSEL:
Thomas S. Hawkins for plaintiffs.
Gerald B. Stanford for defendants.
SOLICITORS:
Campney & Murphy, Vancouver, for plaintiffs.
Gerald B. Stanford, Victoria, for defendants.
The following are the reasons for order rendered in English by
Strayer J: This is a motion by the defendants to strike out this limitation of liability action on the grounds that it is scandalous, frivolous or vexatious, that it constitutes a departure from a previous pleading, or that it is otherwise an abuse of the process of the Court. The motion also calls for the action to be struck out in respect of the plaintiffs, Oak Bay Marine Group and Oak Bay Marina Ltd., because they are not shipowners of the ship “Ucluelet Princess”. This action was filed in the Court on March 2, 1994. In it, the plaintiffs seek to limit their liability under a judgment obtained by the defendants Mr. and Mrs. Jackson in action T-1865-90 in which, on February 4, 1994 [[1994] F.C.J. No. 137 (QL)], judgment was rendered in their favour against the present plaintiffs and others in the amount of $160,645.25 plus interest and costs.
The background of these two actions is that while Mr. and Mrs. Jackson were passengers for purposes of fishing on the “Ucluelet Princess” on May 16, 1989, Mrs. Jackson suffered a severe fall. The vessel was headed into a large wave and when it cleared the crest of the wave it dropped into the following trough, throwing the Jacksons in the air and then causing them to fall. As a result of her fall, Mrs. Jackson suffered a broken hip and other injuries. On June 28, 1990, the Jacksons commenced an action in this Court against the present plaintiffs plus certain others, including not only the owners and operators of the vessel but also those responsible for organizing and managing the excursion and accommodation package of which the voyage in question was a part. Without going into details, it is fair to say that that statement of claim alleged not only negligent navigation but also negligent organization of the voyage including the decision to set out on the day in question, failure to maintain the vessel in a seaworthy condition, failure to provide competent crew, failure to supervise the operation of the vessel, and failure to provide proper information to passengers before departure.
The statement of defence filed by the defendants in that action, plaintiffs in the present action, while denying liability said nothing concerning limitation of liability. Amendments to the statement of defence were later sought and obtained but none concerned limitation of liability.
That case was tried in June, 1993, the trial occupying six days. The Court did not, of course, have before it any pleadings concerning limitation of liability.
On February 4, 1994, judgment was given for the Jacksons in the amount of $160,645.25. On March 2, 1994, this limitation action was begun.
The Trial Judge, MacKay J., specifically held that there was no negligence on the part of the defendants with respect to the decision to put out to sea. His only finding of negligence was with respect to the manner in which the Master of the vessel navigated. In brief, he found that the Master should have throttled back his engines much more rapidly when he saw the large wave approaching. There seems to be no other finding of negligence on the part of anyone.
Plaintiffs in the present action, almost five years since the accident and almost four years since the Jacksons sued them, have now commenced an action to limit their liability under section 575 of the Canada Shipping Act[1] alleging that their liability is limited to $116,802. They assert the right to bring their limitation action at this time. They rely on subsection 575(1) of the Canada Shipping Act, which provides in part as follows:
575. (1) The owner of a ship, whether registered in Canada or not, is not, where any of the following events occur without his actual fault or privity, namely,
(a) where any loss of life or personal injury is caused to any person on board that ship …
liable for damages beyond the following amounts: …. [Emphasis added.]
The limitation of liability is then to be calculated on the basis of the ship’s tonnage.
The only provision of the Canada Shipping Act dealing with procedure for asserting such limitation of liability is the following:
576. (1) Where any liability is alleged to have been incurred by the owner of a ship in respect of any loss of life or personal injury, any loss of or damage to property or any infringement of any right in respect of which his liability is limited by section 575 and several claims are made or apprehended in respect of that liability, the Admiralty Court may,
(a) on the application of that owner, determine the amount of his liability and distribute that amount rateably among the several claimants;
(b) stay any proceedings pending in any other court in relation to the same matter; and
(c) proceed in such manner and subject to such regulations as to making persons interested parties to the proceedings, excluding any claimants who do not come in within a certain time, requiring security from the owner and the payment of any costs, as the court thinks just. [Emphasis added.]
It will be noted that this appears to apply only where “several claims are made or apprehended” and says nothing as to whether or when a separate action may be taken by the owner for this purpose. It only refers to acting “on the application of that owner.” The only rule of Court [Federal Court Rules, C.R.C., c. 663, as am. by SOR/94-41, s. 10] specifically applicable, Rule 1012, says nothing as to when and in what circumstances that “application” may be made.
This motion to strike the action to limit liability raises a very difficult question as to when such actions should be commenced. Unfortunately the subject was not exhaustively canvassed in argument. The plaintiffs in the present action assert in effect that such action can be brought at any time and that it is quite proper to wait until after an action against the vessel and its owners has been decided and liability has been established. On the other hand it is argued for the defendants in the present action, the successful plaintiffs in the first action, that the limitation action cannot now be entertained for various reasons. I shall now turn to those reasons.
It is argued that the limitation action is impermissible now because it involves matters which are res judicata. Without having an opportunity to examine this exhaustively, I am not able to say at this stage that such is the case. It appears to me that the limitation action essentially focuses on whether the event in question occurred without the “fault or privity” of the owners. This may well be an issue different in some respects from the allegations of liability in the first action. Given the implicit recognition by section 576 of the Canada Shipping Act that there can be concurrent proceedings alleging, and seeking limits to, liability, the plea of res judicata may not be available. For reasons which will appear below, I do not think it necessary to decide the issue.
The defendants in the present action also argue that the rules of pleading require that the plaintiffs should, as defendants in the first action, have pleaded there the limitation of liability provided by the Canada Shipping Act as a defence. Similarly they contend that the plaintiffs’ pleadings in this action are inconsistent with their pleadings in the damage action. There is a good deal of force to these arguments, but it appears that as a matter of practice the courts have not regarded limitation of liability as a defence but rather as a cause of action. If it is to be raised in the same proceeding as the original action for damages, it is pleaded as a counter-claim. Otherwise it is made the subject of a separate action. The logic or fairness of this is not apparent in a case such as the present. It may however be explicable in situations where there are several real or potential claimants against the owner, some of them perhaps yet unknown. As I am deciding the matter on another basis I need not consider further the pleadings issue.
The defendants in the present action further state that even if the plaintiff, Sealand of the Pacific Ltd., as owner of the “Ucluelet Princess”, may invoke the protection of subsection 575(1), the other plaintiffs in the limitation action cannot as they are not owners of the ship in question. I think having regard to the provisions of section 577 that the other plaintiffs are equally covered as operators of the vessel. I find it unnecessary to deal further with this issue.
I believe the more telling position of the defendants is that a limitation action in these circumstances is simply an abuse of the process of the Court. It seems clear to me that there would be a substantial area of overlapping of evidence and argument in the original damage action and the limitation action. The damage action itself alleged negligence not only on the part of the Master and crew of the vessel, but also on the part of certain other defendants including the owner and operators of the vessel, as to the way in which the enterprise was organized and managed. The learned Trial Judge was obliged to consider all of these allegations and he concluded that the operative negligence was that of the Master. Because the limitation of liability claim was not before him in the pleadings he was not however called upon to determine specifically whether there was any “fault or privity” on the part of the other defendants, within the meaning of the Canada Shipping Act. Yet had a limitation claim been introduced into those proceedings either by way of counter-claim or by way of the joinder of a limitation action with the damages action, then with little or no extra time and effort such findings could have been made. From any common sense point of view, the way to have such matters addressed in respect of this accident with the least expenditure of resources of the parties and the Court would have been to have the limitation matter tried at the same time as the claim for damages. Prima facie this suggests to me that it is now an abuse of the process of the Court, at this stage of matters, to force the defendants in the present action and the Court to go through a new trial with respect to essentially the same facts. I am also troubled, although prescription has not yet been pleaded by the defendants herein, with the amount of time which has elapsed since the accident in question. Subsection 572(1) of the Canada Shipping Act required that the Jacksons bring their action against the plaintiffs and others in the present case within two years from the date of injury, namely within two years from May 16, 1989. That action was accordingly brought in June, 1990. The present action was commenced some four years and nine months after the incident. I am unable to find any specific limitation period with respect to commencing actions for limitation of liability. Arguably it is the same as for the claim for damages, in which case this action is out of time. It may be that pursuant to section 39 of the Federal Court Act [R.S.C., 1985, c. F-7 (as am. by S.C. 1990, c. 8, s. 10)], either a limitation statute of British Columbia would apply (if this accident happened within the province, which I doubt) or else the residual limitation period of six years would apply. I have heard no argument on this matter. It troubles me, however, to contemplate a system in which the injured party must sue within two years of the incident but the shipowner or operator can sue at any time or perhaps up to six years from the accident. One would assume that the same considerations concerning difficulties of proof after the passage of time would apply equally in both cases. This is another factor in guarding against abuses of the process of the Court.
Counsel for the plaintiffs herein argued, confidently, that this procedure is quite congenial to courts of admiralty. I have examined the authorities he cited and I am unable to find in them any specific rationalization of a system which involves duplication of litigation and possible discrimination in the operation of rules of prescription. The most recent treatise referred to was Roscoe’s, The Admiralty Jurisdiction and Practice of the High Court of Justice[2] The author at page 243 says that if an action is instituted against a shipowner he may, if the damage suit is decided against him, “then institute and proceed with a suit for limitation of liability.” The sole authority cited for this proposition is the 1876 English case of The Sisters.[3] I have examined this case and its facts are somewhat different from the present. In that case the accident in question happened on October 15, 1874. An action was brought against the vessel on February 2, 1875. The limitation action was commenced less than three weeks later, on February 22, 1875, although it was not determined until after liability had been established in the first action. I can find no discussion in the case as to why the two actions were not tried together. Given the respective dates there was obviously no problem concerning prescription and the existence of the second action was known to the parties and presumably to the Court during the trial of the first action. The most pertinent case concerning Canadian law and practice submitted on behalf of the plaintiffs was that of Paterson Steamships, Ltd. v. Robin Hood Mills, Ltd.[4] a decision of the Privy Council on appeal from Canada. In that case the accident occurred in November, 1929, and an action for damages was successfully brought. Apparently after judgment in that action the limitation action was brought in January, 1934. I can find nothing in the case to suggest that any objection was taken to this way of proceeding nor was any consideration given to this aspect in the decision of the Privy Council. At the same time I have reviewed current practice in this Court and the common procedure appears to be either for owners and operators of defendant vessels to include with their defence a counter-claim for the purposes of limiting liability, or to bring a separate action before or shortly after the commencement of the action for damages and then to have the two tried together. In both cases there is the great advantage of having all the evidence heard at the same time by the same judge while the necessary witnesses are all present.
For present purposes, I cannot and need not decide whether it is permissible in a proper case to await the decision in the damages action and then commence an action to limit liability. There may well be cases where this is sensible and proper, particularly where there may be claimants other than the plaintiff in the first damage action. But any right which a party seeks to assert in this Court under the Canada Shipping Act must be asserted in accordance with the rules of procedure of this Court. Those rules of procedure empower me to strike out an action which is an abuse of the process of the Court. On its face, this action will involve many of the same facts and some of the same issues before the Court in the original action for damages, T-1865-90. Almost five years has elapsed since the incident in question. The plaintiffs herein have not explained to me why this action was not commenced before. While I understand in some admiralty cases a limitation action may be commenced independently and sometimes even before any action for damages—for example where the owner or operator does not know how many claims may be brought or by whom they may be brought—in the present case no special circumstances to justify this manner of proceeding have been brought to my attention. There has been no doubt here from the beginning that the only plaintiffs were Mr. and Mrs. Jackson and the nature of their claim has been perfectly obvious, at least since June, 1990 when their action was commenced in respect of Mrs. Jackson’s personal injuries.
This action is therefore struck out as being an abuse of the process of the Court.
At the time when I heard this motion I also heard a motion by the plaintiffs herein to stay the execution of the judgment for damages in T-1865-90. I understand that the purpose of seeking a stay was to enable the plaintiffs in the limitation action to obtain directions as to how to proceed in it. As I am striking out that action the purpose of the stay no longer exists. I am therefore refusing that stay as well as ordering payment out of Court, as requested by the plaintiffs in T-1865-90, of $75,000 paid into Court by the defendants in that action. I note that the appeal period in that action has now expired.