In October 1999, two submarine fibre optic cables were laid across the St-Lawrence River. One of the cables was the Sunoque I, co-owned by Société Telus Communications and Hydro-Québec, with Bell Canada having a right of use in it (the plaintiffs). Mr Réal Vallée is a fisherman and sole shareholder of the company Peracomo Inc, which is the owner of the fishing vessel Réalice (the defendant).

At the time of the incident, the defendant was fishing for snow crab in the St-Lawrence River. The fishing technique involves laying cables on the river bottom measuring approximately one mile in length with cages attached approximately every 400 feet. The cables are secured at both ends by anchors which are attached to buoys to mark their location and to identify the owner of the cages. The anchors must be lifted from the river bottom to haul the cages and unload the catch. Often these anchors become entangled with debris such as lost crab cages, ship lines and other abandoned items. The defendant said that this would happen seven or eight times a year. The season extends from mid April to early June.

In 2005, one of the defendant’s cage string anchors got hooked on something at the bottom of the river. He managed to pull a brown cable with a diameter of approximately one inch close to the surface and released the anchor. This was the Sunoque I. A short time after this, the defendant visited Église Saint-Georges, a former church which is now a museum. There he saw a chart illustrating an abandoned underwater cable, part of which was resting on the river bottom within the fishing zone. The defendant said the word ‘abondonné’ was written across the chart. He concluded that this was the brown cable that he had hooked with his anchor. The maps on board the Realice were outdated and none of them contained any indication of the Sunoque I.

On 6 June 2006, the defendant was fishing again for snow crab. Once again the defendant lifted the Sunoque I with his string cage anchor. This time the defendant ‘had had it with this cable’ and decided to cut it. Once it was cut, one of the ends stayed trapped in the defendant’s equipment while the other end sank to the bottom. A few days later, one of the defendant’s anchors got hooked in the Sunoque I and once again the defendant cut the cable.

Some weeks later, the defendant read a newspaper article reporting that a Telus cable had been deliberately cut and authorities were seeking the culprit. The defendant came forward, and contacted his lawyer and insurers. The insurers denied liability.

The Réalice was found liable in rem and arrested. To prevent the sale of the ship before judgment, the defendant undertook to maintain the vessel so that it would not become a wasting asset.

There were five issues to be decided. First, whether the defendant is liable; secondly, if the defendant is liable, what is the quantum of damages; thirdly, if the defendant is liable, whether he is entitled to limit liability; fourthly, whether the defendant has lost his insurance cover; fifthly, the issue of costs.

Held: Judgment for the plaintiffs. The cause of the loss was because the defendant cut the cable with an electric saw, not because of lack of notice on the part of Telus, or that the cable was not buried or that the cable was hooked by the crab anchor.

The defendant owed a duty of care to the plaintiffs. He was in breach of that duty and is liable for the resulting damage. There was no contributory negligence on the part of Telus. It is unfortunate that they did not give notice to the Fishing Association of Zone 17 (where Mr Vallée was fishing) but this failure to give notice was not causative. The defendant does not contest the claim for damages.

The defendant is entitled to limit his liability to CAD 500,000 unless the plaintiffs prove that the loss resulted from his 'personal act or omission committed with the intent to cause such loss, or recklessly and with the knowledge that such loss would probably result' in accordance with art 4 of the Limitation of Liability for Maritime Claims Convention 1976 and the 1996 Protocol (LLMC 1996).

Peracomo, as owner of the Realice, and Mr Vallée, as the master, are eligible to limit in accordance with art 1 of the LLMC 1996. That limitation extends to an action in rem against the ship itself. For many years, both in Canada and elsewhere, the right to limit was based upon the LLMC 1957. Shipowners and others were entitled to limit liability with respect to events occurring without their 'actual fault or privity'. If the LLMC 1957 were still in force today in Canada, the limitation fund would be just over CAD 30,000. The LLMC 1976 reflects a trade off: higher limits, but limits that are more difficult to break. The burden of proof to demonstrate conduct barring limitation is now on the plaintiff, not the defendant shipowner.

This is the first time that art 4 of the LLMC 1996 has come up for decision in Canada. It is important to put the provision in context. Under LLMC 1957, the words 'actual fault or privity' were found to denote something personal or blameworthy to a shipowner as opposed to a constructive fault rising from the doctrine of respondeat superior (The Rhône v The Peter AB Widener [1993] 1 SCR 497 (CMI1006)). Today it is not enough that there be something personal and blameworthy; there must also be an intention to cause such loss or reckless conduct with knowledge that such loss would probably result.

In the Athens Convention 1974, a carrier is not entitled to limit liability 'if it is proved that the damage resulted from an act or omission of the carrier done with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result'. Under the Hague-Visby Rules, liability is lost 'if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result'. Under the Hamburg Rules liability is lost 'if it is proved that the loss, damage or delay in delivery resulted from an act or omission of the carrier done with the intent to cause such loss, damage or delay or recklessly and with knowledge that such loss, damage or delay would probably result'. The CLC 1992 provides that no claim can be made against the shipowner other than in accordance with the Convention 'unless the damage resulted from their personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result'.

The Conventions are not entirely consistent in their use of language and there can be a distinction between loss and damage. However, 'loss' in art 4 of the LLMC 1996 certainly includes physical damage. Unlike an ordinary negligence action, in order to succeed under art 4 of the LLMC 1996 the plaintiff must prove that the defendant’s personal act or omission was committed either with intent to cause such loss or recklessly and with knowledge that such loss would probably result. The loss here is the diminution in the value of the cable, not the cost of repair. Telus was under an obligation to mitigate its loss, which it did by repairing the cable. Mr Vallée intended the actual damage. He just did not think the cable would be repaired because he thought it had no value.

If recklessness were in issue (which it is not), Mr Vallée was reckless in the extreme. Recklessness connotes a mental attitude or indifference to the existence of the risk. 'Such loss' was considered in The Leerort [2001] 2 Lloyd's Rep 291 and refers to the loss that actually resulted and is the subject of the claim. In this case, Mr Vallée’s act was reckless and committed with knowledge that the loss which actually occurred would likely result. It was a certainty. Therefore the defendant is not entitled to limit liability.

The underwriters submit that there was wilful misconduct on the part of the defendant for the purposes of s 53(2) of the Marine Insurance Act SC 1993. Wilful misconduct is more than mere negligence. It implies either a deliberate act intended to cause harm or such blind and uncaring conduct that one could say the person was heedless of the consequences. Mr Vallée’s conduct was in marked departure from the norm and so the assureds have lost the benefit of the policy.

The defendant is liable to the plaintiffs for CAD 1,213,320.07 (including pre and post-judgment interest at the rate of 5% per annum).

[For the appeal to the Federal Court of Appeal, see Peracomo Inc v Société Telus Communications [2012] FCA 199 (CMI672).]