This was an appeal brought by Haida Tourism Partnership doing business as West Coast Resorts (Haida) against an order of Coughlan AJ dated 21 December 2023, granting a motion brought by the Administrator of the Ship-source Oil Pollution Fund (the SOPF) to strike out Haida's claim for costs that Haida incurred to remediate an oil spill emanating from its vessel. The Associate Judge found that Haida failed to plead a basis in law for the Administrator's alleged liability and struck out Haida’s statement of claim without leave to amend.

On 8 September 2018, Haida's vessel, a sports fishing lodge or barge known as Tasu I, came loose from its moorings in Alliford Bay, Haida Gwaii, and drifted to a grounding point in Bearskin Bay, British Columbia, leaking a mixture of gasoline and diesel. The vessel was the only ship involved in the incident. Haida contacted the Canadian Coast Guard to advise them of the incident and made efforts, along with various other agencies, to remediate and minimise the potential oil pollution damage. Haida alleged that the grounding occurred because of intentional and wilful tampering with the vessel’s mooring lines by a third party or parties, with intent to cause damage.

On 27 December 2018, Haida submitted a claim to the SOPF for reimbursement of costs incurred in connection with steps taken to repair, remedy, or minimise oil pollution and related preventative measures. The claim was initially framed as a claim under s 101 of the Marine Liability Act SC 2001 c 6 (the MLA), but was eventually reframed as a claim under s 103 of the MLA.

On 4 August 2021, the Administrator issued a decision denying Haida's claim on the basis that a shipowner was not eligible to make a claim under s 103 of the MLA for its costs and expenses incurred to prevent, repair, remedy, or minimise ship-source oil pollution damage resulting from an incident involving solely its own ship. Haida brought a statutory appeal against the Administrator's decision. Strickland J heard and dismissed that appeal on 31 August 2022: see Haida Tourism Limited Partnership (West Coast Resorts) v Canada (Ship-Source Oil Pollution Fund) 2022 FC 1249 (CMI1979) (the Strickland decision).

Haida's current action under appeal asserted the same claim under a different statutory provision, s 101 of the MLA.

Held: Haida's motion and appeal are allowed. Haida is granted leave to amend its statement of claim within 30 days to articulate the legal foundation for its claim under s 101 of the MLA.

The statutory provisions relevant to this appeal are found in Pts 6 and 7 of the MLA. At the time of the grounding, the version of the MLA that came into effect on 8 June 2015 and remained in effect until 12 December 2018 was in force. Part 6 of the MLA is composed of two Divisions. Division 1 gives the force of law to certain international Conventions to which Canada is a contracting State. The three Conventions relevant to the present appeal are: (a) the CLC 1992; (b) the Bunkers Convention 2001; and (c) the Fund Convention 1992, plus the Supplementary Fund Protocol 2003. Broadly speaking, these Conventions, and related statutory provisions in Pt 6 that supplement the application of the Conventions, govern liability and funding for costs, expenses, losses, and damages resulting from ship-source oil pollution.

Division 2 of Pt 6 of the MLA is concerned with liability for ship-source oil pollution that is not addressed by the international Conventions referenced in Division 1. Two of the three Conventions referenced above (the Bunkers Convention and the CLC) and Division 2 include provisions that impose on a shipowner strict liability for pollution damage caused by its ship and, in some cases, costs and expenses incurred in respect of measures taken to prevent, repair, remedy, or minimise such damage. Also, those Conventions and Division 2 provide certain limited exceptions to the shipowner’s strict liability. One of those exceptions is where the occurrence or damage was wholly caused by an act or omission of a third party with intent to cause damage. Haida's position that it is entitled to recovery of its costs and expenses is based significantly on invoking that exception.

Part 7 of the MLA, entitled 'Ship-source Oil Pollution Fund', continues the SOPF and provides for the appointment, by the Governor in Counsel, of its Administrator and Deputy Administrator.

Haida has convinced the Court that a palpable and overriding error occurred in the application of the principle of issue estoppel in the order appealed. The order demonstrates a misinterpretation of the Administrator’s position on whether issue estoppel applied. The Associate Judge noted the Administrator’s acknowledgement that the Strickland decision represented obiter dicta, in that it had dealt with s 103 of the MLA while the current action purported to have been taken under s 101. However, the Associate Judge then noted the Administrator's submission that the Strickland decision should be applied, resulting in a dismissal of the action, and interpreted this submission as inviting the Court to apply the principle of issue estoppel.

This was an error. In the Administrator’s written representations on the motion to strike, after acknowledging that Strickland J’s s 101 analysis was obiter dicta in that it was not dispositive of the issue before her, the Administrator also identified its agreement with Haida that the Strickland decision did not estop Haida from bringing this action. Between relying upon a judicial decision to assert res judicata or issue estoppel principles and relying on the decision for its jurisprudential value, the Administrator’s position was clearly the latter. The Administrator expressly agreed with Haida that issue estoppel did not apply. Its position was that the obiter dicta analysis surrounding s 101 in the Strickland decision was jurisprudentially persuasive and should be adopted and applied on the motion to strike.

The s 101 analysis in the Strickland decision is obiter and does not give rise to issue estoppel in the present action. Strickland J engaged in an analysis of s 101 of the MLA, because Haida had argued that there was a linkage between ss 101 and 103. While the Administrator took the position that s 101 had no bearing on the function of s 103 and was irrelevant to the appeal, Strickland J addressed Haida’s arguments, arriving at the conclusions identified by the Associate Judge in her order. Strickland J conducted her analysis in keeping with the contextual component of statutory construction and ultimately agreed with the Administrator that ss 101 and 103 were separate and discrete avenues for the assertion of claims. As such, Haida's assertion that it had a defence under s 101(1)(b) did not come into play in the assessment of a claim under s 103(1). The interpretation of s 101 was not the question before Strickland J. The result did not turn on analysis or conclusions as to whether a shipowner can claim against the SOPF under s 101.

The Associate Judge made a palpable and overriding error in concluding that Strickland J's s 101 analysis was fundamental to her decision and gave rise to issue estoppel.

The Administrator describes ss 101 and 109 of the MLA as together implementing what is sometimes referred to as the 'last recourse' claims regime, so named because it applies where a claimant fails to recover from the owner of a ship from which pollution emanated. Section 101(1) makes the SOPF liable for damage caused by ship-source oil pollution, but only to the extent that one of a number of additional legal criteria is met. On the facts of the case at hand, the most relevant criterion is identified in s 101(1)(b), giving rise to liability on the part of the SOPF as follows:

Liability of Ship-source Oil Pollution Fund

101 (1) Subject to the other provisions of this Part, the Ship-source Oil Pollution Fund is liable for the matters referred to in sections 51, 71 and 77 in relation to oil, Article III of the Civil Liability Convention and Article 3 of the Bunkers Convention, if ...

(b) the owner of a ship is not liable by reason of any of the defences described in subsection 77(3), Article III of the Civil Liability Convention or Article 3 of the Bunkers Convention and neither the International Fund nor the Supplementary Fund are liable;

The Administrator argues that s 101(1) is not, by itself, a method of claiming compensation, as it lacks an internal mechanism by which compensation can be accessed. The Administrator takes the position that, while s 101(1) makes the SOPF liable, the SOPF is nevertheless not a legal person (s 92(1) of the MLA describing the SOPF as an 'account') and is not, in the MLA or elsewhere, given the capacity to sue or be sued. Rather, recovery against the SOPF pursuant to its liability under s 101(1) is achieved through the operation of s 109, which provides as follows:

Proceedings against owner of ship

109 (1) If a claimant commences proceedings against the owner of a ship or the owner’s guarantor in respect of a matter referred to in section 51, 71 or 77, Article III of the Civil Liability Convention or Article 3 of the Bunkers Convention, except in the case of proceedings based on paragraph 77(1)(c) commenced by the Minister of Fisheries and Oceans in respect of a pollutant other than oil:

(a) the document commencing the proceedings shall be served on the Administrator by delivering a copy of it personally to him or her, or by leaving a copy at his or her last known address, and the Administrator is then a party to the proceedings; and

(b) the Administrator shall appear and take any action, including being a party to a settlement either before or after judgment, that he or she considers appropriate for the proper administration of the Ship-source Oil Pollution Fund.

If Administrator party to settlement

(2) If the Administrator is a party to a settlement under paragraph (1)(b), he or she shall direct payment to be made to the claimant of the amount that the Administrator has agreed to pay under the settlement.

The Administrator describes its role in litigation, pursuant to the operation of s 109, as akin to a litigation guardian or other legal representative, acting on behalf of the SOPF. However, it emphasises that s 109 applies only in the context of a claim against the owner of a ship. Therefore, it would not apply to Haida's claim and, in the Administrator’s submission, the absence of recourse to s 109 precludes Haida having a claim against it under s 101. This submission and supporting analysis are consistent with the Court's obiter dicta analysis in the Strickland decision.

Haida accepts that it does not have recourse to the mechanism provided in s 109. However, it takes the position that it is available to Haida to pursue a suit against the SOPF directly under s 101. Haida notes that s 101(1) expressly imposes liability upon the SOPF (in relation to oil for matters referenced elsewhere in the MLA) and disagrees with the Administrator’s position that neither it nor the SOPF has the capacity to be sued under that section.

The question of statutory interpretation at issue in this action (ie, whether a shipowner can potentially have a cause of action against the SOPF or the Administrator under s 101 of the MLA) is clearly both complex and contentious. It is not plain and obvious that, with the benefit of amendments to better articulate its claim under s 101 of the MLA, Haida’s cause of action will fail.