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.