The appellant, Siemens Canada Ltd (Siemens), was the shipper, and one of the respondents, JD Irving Ltd (Irving), was the carrier of the appellant's cargo (rotors) on a barge. Another respondent, Maritime Marine Consultants (2003) Inc (MMC), acted as marine architect to approve the barge's stability for the transportation and prepare a plan for the safe loading and securing of the rotors on the barge. MMC's work involved conducting a number of stability calculations. On 15 October 2008, during the course of loading, two rotors fell off the barge into the water. As a result, the rotors were significantly damaged. It was concluded that the incident arose from a failure to conduct a number of important calculations.

Following the incident, in accordance with the Marine Liability Act, SC 2001, c 6 (MLA), Irving and MMC commenced limitation actions in the Federal Court against Siemens. They sought a declaration that their liability for the incident was limited to CAD 500,000 plus interest and an order constituting a limitation fund. The Federal Court ordered the establishment of a limitation fund pursuant to arts 9 and 11 of the Convention on Limitation of Liability for Maritime Claims 1976 (the LLMC 1976). In addition, the Federal Court held that pursuant to s 29(b) of the MLA, the maximum liability for all claims was CAD 500,000 (See CMI3 and CMI117).

In the present action, Siemens claimed a sum of CAD 40,000,000 in damages against Irving and MMC for negligence and breach of contract. Siemens also claimed that both Irving and MMC should be precluded from limiting their liability pursuant to MLA.

Held: Appeal dismissed.

The provisions of the MLA at issue in this appeal, particularly those pertaining to the right to limit liability and the constitution and distribution of a limitation fund, are meant to give effect to the LLMC 1976 as amended by the Protocol of 1996 (the LLMC 1996). Therefore, arts 1-15 and 18 of the LLMC 1976 and arts 8 and 9 of the LLMC 1996 have the force of law in Canada.

Prior to Canada's adoption of the LLMC 1976 and LLMC 1996, the relevant provisions of the Canada Shipping Act gave effect to the International Convention Relating to the Limitation of the Liability of Owners of Seagoing Ships 1957 (the LLMC 1957). Under that regime, a shipowner, in order to limit his liability, had the burden of establishing that damage or loss caused by its ship did not result from its fault or privity. However, after the adoption of the LLMC 1976 and LLMC 1996, two major changes arise. First, by reason of art 4 of the LLMC 1976, the burden is now on a claimant seeking to prevent a shipowner from limiting its liability to demonstrate that the loss or damage 'resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result'. Second, by reason of art 15.2.b of the LLMC 1976, which allows State parties to regulate the limitation fund pertaining to vessels of less than 300 tonnes, Canada has set the limitation for such ships at CAD 500,000 for loss or damage other than loss of life or personal injury.

Turning to the provisions of the LLMC 1976 which are relevant to this appeal. Article 1.2 of the LLMC 1976 defines a 'shipowner' as the owner, charterer, manager, and operator of a seagoing ship. Article 1.4 provides that those persons for whose act, neglect or default a shipowner is responsible are entitled to avail themselves of the limitation of liability provided for in the LLMC 1976. It is pursuant to this provision that MMC asserts that it is entitled to limit its liability for the incident. Finally, art 1.7 provides that by invoking its right to limit its liability, a shipowner is not deemed to have admitted its liability. Article 4 sets out the circumstances which will lead to a shipowner losing its right to limit its liability, namely, 'that the loss resulted from its personal act or omission, committed with the intent to cause such loss, or recklessly and with the knowledge that such loss would probably result'. Articles 6-8 set out the limits of liability for loss of life or personal injury and for other claims and the manner in which these limits are to be calculated. Article 10.1 provides that a shipowner may invoke its right to limit its liability even though a limitation fund has yet to be constituted. Article 11 deals with the constitution of the limitation fund. In particular, art 11.1 provides that the fund shall be constituted in the sum of such of the amounts set out in arts 6 and 7 as are applicable to claims for which a shipowner may be liable. Article 11.2 sets out the ways in which the fund may be constituted and art 12 establishes how the fund is to be distributed among those persons who have made a claim against it. Article 13 provides that once a fund has been constituted, the persons who have made claims against it 'shall be barred from exercising any right in respect of any such claim against any other assets' of a shipowner on behalf of whom the fund has been constituted. Finally, for the purpose of this case, art 14 provides that all rules pertaining to the constitution and distribution of the fund 'and all rules of procedure in connection therewith, shall be governed by the law of the State Party in which the fund is constituted'.

According to arts 6, 7, 11, 13 of the LLMC 1976 and s 32(2) of the MLA, under Canadian law a shipowner has the right to choose the forum in which it will assert its right to limit, irrespective of the forum in which the claimant has filed or may file its action for damages. On the basis of the evidence, Irving is a shipowner as defined in art 1.2 of the LLMC 1976. Therefore, Irving is clearly entitled to assert its right to limit liability. Moreover, there is no evidence which would lead this Court to conclude that MMC's entitlement to limitation could not possibly succeed. Therefore, both Irving and MMC are entitled to set up the limitation fund and to have all claims against the fund in the Federal Court for the distribution of that fund.

In addition, s 33 of the MLA allows a shipowner, who may be entitled to limit its liability by reason of ss 28 or 29 of the MLA or arts 6.1 or 7 of the LLMC 1976, to apply to the Federal Court for: first, a determination of the amount of the liability; second, the constitution and distribution of a fund under arts 11 and 12 of the LLMC 1976. Section 33(1) of the MLA further provides that a shipowner may seek an order enjoining any person from commencing or continuing proceedings in any Court other than the Federal Court where a claim is made or apprehended against that shipowner in respect of liability that is limited by ss 28 or 29 of the MLA or arts 6.1 and 7 of the LLMC 1976. In this case, they have chosen the Federal Court. Thus, notwithstanding the fact that Siemens is entitled to commence its proceedings in this Court, Irving and MMC properly commenced their limitation proceedings in the Federal Court. As a result, the Federal Court is properly seized of those actions and can exercise the powers granted to it under s 33(1) of the MLA. Therefore, this Court does not have the jurisdiction to determine Siemens's claim. Consequently, the Federal Court made no error in enjoining Siemens from commencing or continuing proceedings before a court or tribunal other than the Federal Court. Hence, it would be unreasonable to allow Siemens to pursue its action before this Court.