In the early morning of 13 August 2003, a commercial water taxi, the Coastal Launch, owned by Finn Marine Ltd and operated by Mr Godfrey, the owner of Finn Marine Ltd (the defendants), ran into Nose Point on Salt Spring Island at speed because Mr Godfrey had fallen asleep. At the time of the collision the Coastal Launch was on its way to pick up paying customers. Mrs Gundersen (the plaintiff) was on board as a non-paying guest and was asleep in a bed in the aft port area of the vessel. When the collision occurred, the plaintiff was thrown from her bunk and was badly injured.

The defendants applied for a declaration that the limit of their liability to the plaintiff, as a gratuitous passenger, was governed by the provisions of Pt 4 of the Marine Liability Act, SC 2001, c 6 (the Act). If so, the defendants’ monetary obligation to the plaintiff would be limited to 175,000 units of account or approximately CAD 300,000 depending upon the prevailing rates of calculation.

The plaintiff submitted that if there was any monetary limit on the liability of the defendants to her, it was governed by Pt 3 of the Act at 2,000,000 units of account of approximately CAD 3.4 million depending upon the prevailing rates of calculation. In the alternative, the plaintiff submitted that the application of art 13 of the Athens Convention 1974 (the Convention), which has the force of law by s 37 of Pt 4 of the Act, precluded the defendants from relying on the protection of any otherwise applicable limitation provision.

Held: The plaintiff’s claims are subject to the limitation provisions of the Convention. Article 13 of the Convention does not preclude the defendants from relying upon the limitation provision.

The case falls to be determined by the interpretation of disputed provisions of the Act concerning a matter of domestic maritime law. In Orden Estate v Grail [1998] CanLII 771 (SCC) (CMI971) the Supreme Court determined that the Federal Court, Trial Division and Provincial Courts of superior jurisdiction have concurrent jurisdiction over fatal maritime accident claims. Therefore the issues must be decided in the maritime law context.

Parliament’s stated purposes in enacting the Act are important to the interpretation of the provisions as issue. Under the heading 'Description and Analysis' in relation to Pt 3 the legislative history records that Pt 3 of the Bill would re-enact the existing provisions of the Canada Shipping Act that relate to the limitation of liability for maritime claims that are based on the Convention on Limitation of Liability for Maritime Claims 1976 as amended by the 1996 Protocol (LLMC 1996).

Concerning Pt 4, the legislative history states that existing legislation dealt only with global limitation of liability for maritime claims, including passenger claims, but did not deal with the basis on which liability might be established. Thus claimants could establish shipowners' liability to passengers only in accordance with the ordinary rules of negligence. Canadian legislation did not prevent shipowners from contracting out of liability for loss of life or personal injury caused by their fault or negligence by inserting the appropriate clause into contracts of carriage. Such exemptions were null and void in the United States, France and Great Britain. Thus there was considerable uncertainty concerning the liability of shipowners for loss of life or personal injury to passengers. The Department was concerned that a major marine disaster in Canada would generate a strong public reaction and expectations for the Government to act quickly and decisively to ensure that adequate compensation was available. Accordingly, the Bill proposed, in Part 4, to establish a new regime of shipowners’ liability to passengers to ensure that in the event of a loss, particularly a major one, the claimants would have a guarantee of compensation, at least up to a certain level. The regime would be based on the Convention as amended by the 1990 Protocol.

For the purposes of Pt 4, cl 35 would define the term 'Convention' to mean the Athens Convention 1974 and the term 'Protocol' to mean the 1990 Protocol to amend that Convention. The Convention would apply to all maritime claims for loss or life or personal injury to passengers and its key elements are the basis of liability, limitation of liability and shipowners' defences. Clause 36 would extend the meaning of certain expressions in the Convention. The definition of the term 'ship' would be extended so that the Convention would be made applicable not only to seagoing vessels but also to ships operated on lakes and inland waters of Canada. The meaning of 'contract of carriage' would be expanded so that the Convention would be made applicable to the contracts of carriage of passengers and their luggage in freshwater. Also, in the application of the Convention under Pt 4, art 19 of the Convention (which establishes the relationship between the Athens Convention and other international Conventions governing the limitation of liability of shipowners) would apply to owners of all ships, whether seagoing or not.

Clause 37(1) of the Bill would give arts 1-22 of the Convention the force of law in Canada. Article 18 of the Convention specifically prohibits the contracting out of liability. Clause 37(2) of the Bill would extend the application of the Convention to the carriage by water, under a contract of carriage, of passengers and their luggage from one place in Canada to the same or another place in Canada; and the carriage by water, otherwise than under a contract of carriage of passengers and their luggage. Exceptions would be made for the master of the ship, a member of the crew of the ship, or any other person employed or engaged in any capacity on board a ship on the business of the ship, and a person carried on board a ship other than a ship operated for a commercial or public purpose.

The relevant provisions of the Convention which apply to the consideration of this issue include arts 1.2, 1.4, 2, 3, 7 11, 14, and 19. The relevant provisions of the LLMC 1996 include arts 1.1, 1.2, 1.4, 2.1, 6.1, 7, and 9.

The plaintiff submitted, first, that art 7 of the Convention cannot apply to limit her claim because, at the time of the collision, she was neither a 'passenger' nor a 'person' to whom those provisions could apply. Second, any limit upon her claim must come under the LLMC 1996. The plaintiff further submitted that art 2 of the Convention must be interpreted as applying to the international carriage of passengers unless specifically expanded by domestic legislation to apply in Canadian waters. Although s 37(a) extended the application of the provisions of the Convention to 'passengers' under a contract of carriage, it did not do so with respect to non-paying 'persons' (such as the plaintiff) 'otherwise than under a contract of carriage' because s 37(b) does not include the words 'from one place in Canada to the same or another place in Canada, either directly of by way of a place outside of Canada'.

The defendants submitted that the provisions of the Act should be interpreted as comprehensive liability legislation that allows shipowners and their insurers to have a clear indication of the limits of the losses for which they might be liable in Canadian waters, but, as a trade-off for that clarity and limitation, precludes any 'contracting' out of liability and also establishes a regime of presumed liability for fault or neglect of carriers under art 3 of the Convention that reverses the onus of proving the carrier’s liability. Parliament has deliberately extended the applicability of the Convention into domestic waters and has deliberately extended its scope to include individuals other than 'passengers' as defined by the Convention by using the term 'person' to include those aboard a vessel being operated for a commercial purpose 'other than under a contract of carriage', while excluding masters, crew, and employees from such inclusion.

The defendants argued that if there is any possible overlap between the Convention and the LLMC 1996, it arises only in circumstances where the total amount payable to all claimants under the Convention would exceed the global fund calculated in accordance with art 7 of the LLMC 1996, in which case, under the LLMC 1996, a shipowner may limit such claims to the amount of the global fund liability limit through a pro rata scaling of each claim.

The defendants contended that art 19 of the Convention specifically allows this further limitation for the benefit of shipowners in providing that the Convention 'shall not modify the rights or duties of the carrier'. Other than through art 19 of the Convention and the provision of art 7 of the LLMC 1996 and the global limitation fund, the LLMC 1996 does not have priority over the Convention's limits on passenger liability because s 37(1) of the Act establishes that arts 1-22 of the Convention 'shall have the force of law in Canada'; and art 14 of the Convention provides that '[n]o action for damages for the death of or personal injury to a passenger ... shall be brought against a carrier ... otherwise than in accordance with this Convention'. Section 37(2)(b) further specifically provides that articles 1-22 of the Convention also apply in respect of 'the carriage of water, otherwise than under a contract of carriage, of persons or of persons and their luggage'.

Under the Convention, the definition of 'passenger' excludes non-paying guests. Accordingly at common law a person in the plaintiff’s position would not be monetarily limited in her right to recover damages from a shipowner, its agents or employees for their negligent acts. It is also true that she would not have the reverse onus provisions of art 3 of the Convention.

There is no real conflict or overlap between the provisions of Pts 3 and 4 of the Act in relation to the plaintiff's claims. The defendants' argument that any possible overlap between the Convention and LLMC 1996 arises only where the total amount that would be payable to all claimants under the Convention would exceed that of the global fund calculated in accordance with art 7 of the LLMC 1996 is accepted. In such cases under the LLMC 1996 a shipowner may limit such claims to the amount of the global liability fund. Article 19 of the Convention (s 36(2) of the Act) does not modify rights and duties of carriers under other Conventions. One of the rights that is not modified is the limitation of a carrier’s liability to the amount constituted by the global fund under art 7 of the LLMC 1996.

In cases that involve personal injury to passengers (and, as in this case, a non-paying passenger), the Convention limits, rather than the LLMC 1996 limits, will apply except in those circumstance in which art 7 of the LLMC 1996 can be, and is, invoked by a carrier.

In Cuppen v Queen Charlotte Lodge 2005 BCSC 880 (CMI1024) this Court considered whether Pt 3 or Pt 4 of the Act was applicable in determining the liability limits of the defendant in respect of the plaintiff’s claims for personal injuries. This case should be read as supportive of the proposition that the higher limits of Pt 3 of the Act will not apply when what is at issue is liability for carriage of passengers by water in respect of which Pt 4 and the Convention limits will apply.

In Russell v Mackay 2007 NBCA 55 (CMI963) the New Brunswick Court of Appeal confirmed that Parliament chose through ss 36 and 37 of the Act to expand the Convention's scope to the carriage of passengers, both domestically and internationally, on all types of ships used for commercial or public purposes, whether on the high seas or inland lakes and rivers. It also applies to all passengers regardless whether they are aboard under a contract of carriage.

Although obiter dicta, the Court’s observations in Frugoli v Services Aériens des Cantons de L'Est Inc 2007 QCCS 6203 (CMI1030) support an interpretation of s 37(2)(b) of the Act that would not differentiate between a domestic passenger under a contract of carriage and a 'person' aboard a vessel in gratuitous circumstances.

Domestic gratuitous passengers on a vessel operated for a commercial purpose are subject to the same limitations of liability that apply to domestic paying passengers under a 'contract of carriage'. To read the provisions as providing a higher limit of liability to gratuitous passengers could result in the wholly anomalous result that a guest on a vessel operated for a commercial purpose that is involved in an injury causing event would be less limited in their recovery than paying passengers on the same vessel. Such an interpretation would be untenable and contrary to Parliament’s intention in enacting comprehensive legislation to domesticate an international maritime Convention.

The plaintiff submits that Mr Godfrey's actions in falling asleep at the helm of the Coastal Launch when travelling at night at speed, after working an excessively long day, disentitles the defendants to the protection of art 7, by virtue of art 13 of the Convention.

The defendants submit that the evidence adduced by the plaintiff is insufficient to establish that Mr Godfrey acted 'with intent to cause the damage' suffered by the plaintiff and does not establish that he acted 'recklessly and with knowledge that such damage would probably result', as required by art 13.

The onus upon the plaintiff to prove that the defendants cannot rely upon the monetary limitation provisions of the Convention by reason of art 13 is a heavy one. The evidence adduced does not establish that Mr Godfrey intentionally caused the injuries suffered by the plaintiff by falling asleep. The plaintiff has failed to establish on a balance of probabilities that the collision was caused by reckless behaviour. The plaintiff has not provided evidence concerning what Mr Godfrey knew at the time of or shortly before the collision. The evidence is capable of establishing that Mr Godfrey was negligent in undertaking the trip that evening, but it falls short of establishing subjective foresight of the consequences.

The defendants are entitled to a declaration that the monetary limit of the plaintiff’s claim is governed by art 7 of the Convention at 175,000 units of account. The plaintiff has not met the burden of proving that the defendants are precluded by art 13 of the Convention from relying upon the monetary limits established by art 7 of the Convention.