Siemens Canada Ltd (Siemens) entered into a contract with Atomic Energy of Canada Ltd (which was later assigned to New Brunswick Power Nuclear Corporation (NB PNC)) concerning the refurbishing and upgrading of the Point Lepreau Nuclear Generating Station. As part of the contract Siemens was to refurbish and upgrade a generator and provide NB PNC with three low-pressure modules, which comprised of an outer casing and internal low-pressure rotor. Siemens issued a purchase order to Irving Equipment, a division of J D Irving Ltd (JDI), for the transport of the equipment. JDI was to transport the generator rotor from Point Lepreau to alongside a ship located at Port of Saint John and back to Point Lepreau; and to transport the new rotors from alongside a ship to Point Lepreau.

In order to transport the new rotors, JDI entered a BIMCO Standard Barge Bareboat Charter Party with Superport Marine Services Ltd (Superport), the owner of the barge SPM 125, and chartered a tug also owned by Superport. JDI retained Maritime Marine Consultants (2003) Inc (MMC), to provide naval architectural and consulting services. Mr Don Bremner (Bremner) is the owner and principal of MMC. Siemens and/or their insurer retained BMT Marine and Offshore Surveys Limited (BMT), to provide marine surveying services for the move.

Each of the rotors were placed on a self-propelled transporter owned by JDI to roll on and off the barge. During loading the second transporter (T2) tipped to the starboard side of the barge, fell over and off the side into the sea, causing the first transporter (T1) to tip and the first rotor to also fall overboard.

Siemens sued JDI, BMT, MMC and Superport claiming breach of contract, negligent misrepresentation, negligence and/or gross negligence, failure to warn and damages in the amount of CAD 45,000,000. Siemens also claimed joint and several indemnification from JDI, MMC, BMT and Superport in respect of all claims made against Siemens by NB PNC.

A limitation action (as part of the wider litigation) was brought by JDI who sought to limit its liability for all claims related to the incident to CAD 500,000. Siemens asserted that the evidence established JDI and MMC acted recklessly. Therefore, art 4 of the Limitation of Liability for Maritime Claims Convention 1976 (the LLMC 1976) applied and they were barred from asserting their right to limit liability.

Held: Article 4 of the LLMC 1976 establishes a very high level of fault. The contracting states intended that the right to limit liability in the LLMC 1976 is virtually unbreakable. Recklessness in the context of art 4 requires subjective knowledge that the loss that actually occurred would probably occur.

Siemens did not establish that the barge was unstable and unsuitable for the intended purpose. JDI and MMC did not have actual knowledge that a combination of factors, including the unanticipated manner in which T2 was manipulated, would probably cause T2 to exceed its transverse stability limit and topple, thereby listing the barge to such an extent that the transverse stability of T1 was also exceeded causing it too to topple. Siemens did not establish that JDI’s personnel or Bremner possessed actual knowledge that the loss of the rotors would probably result.

JDI is a shipowner as defined by art 1.2 of the LLMC and is presumptively entitled to limit its liability for the loss of the rotors. Siemens did not establish the required reckless and with knowledge element of the art 4 bar to limitation.

JDI is entitled to limit its liability, including with respect to any of its affiliates and any person in its employment for whose act, neglect or default JDI is responsible, arising from the loss or the damage to cargo on October 15 2008 up to the amount of CAD 500,000.

[See also Siemens Canada Ltd v JD Irving Ltd (CMI695).]