The plaintiffs, Wells Fargo Equipment Finance Co and C&C Machine Movers & Warehousing Inc, are the lessor and lessee of a truck loaded onto a barge, the MLT-3 (previously known as the Bell Copper No 3). The defendants are: (i) the barge; (ii) the barge's owner, Cosulich Group Investments Inc (Cosulich); (iii) the barge's bareboat charterer and subsequent owner, Mercury Launch & Tug Ltd; (iv) the tug towing the barge, the Mercury XII, (v) the tug's owner, Mercury Launch & Tug Ltd; and (vi) the tug's captain, Neil Paterson.

An accident occurred when the truck was being backed onto the barge. The mooring ropes onshore were not secured to the barge. The barge was held in place solely by the backward thrust of the tug. Due to the tide, the barge moved away from shore and despite applying the air brakes, the front end of the truck fell into the water. Efforts were made to salvage the truck but the barge turned sideways and the entire truck fell into the water.

The issues were: (i) whether Cosulich, the owner of the barge at the time of the incident, who had bareboat chartered and subsequently sold the barge to Mercury Launch & Tug Ltd, was liable to the plaintiffs; and (ii) whether the Hague-Visby Rules (set out in Sch 3 of the Marine Liability Act, SC 2001, c 6 (MLA)) and the time bar in art 3.6 of the Rules apply.

Held: Cosulich is not liable. The Hague-Visby Rules and the time bar do not apply.

On the first issue, the Judge found that there was no admiralty action in rem against the barge and consequently no admiralty action in personam against Cosulich. Section 43(3) of the Federal Courts Act, RSC 1985 c F-7, extinguishes the Court’s in rem admiralty jurisdiction in respect of several claims under s 22(2) where ownership of the vessel has changed between the date of the incident and the date the action was commenced. The plaintiff attempted to argue that a claim for damage caused by a ship under s 22(2)(d) was not extinguished by s 43(3). The Judge held that the phrase 'damage caused by a ship' is a term of art in maritime law and that the damage must not only be a direct result or natural consequence of something done by those engaged in the navigation of the ship, but the ship itself must be the actual instrument by which the damage was done. In the present circumstances, neither the barge nor the tug was the actual instrument (whether by physical contact or otherwise) of damage done to the truck. The damage was done by the actions of the tug's captain, in particular, his failure to moor the barge. No admiralty action in rem or in personam arose against the owner Cosulich.

As to the second issue, the Hague-Visby Rules have been given the force of law in Canada by sections 43(1) and 43(2) of the MLA. Section 43(1) makes reference to art 10 of the Hague-Visby Rules, which sets out the circumstances in which the Hague-Visby Rules apply. Section 43(2) of the MLA extends the application of the Hague-Visby Rules respecting 'contracts for the carriage of goods' to those dealing with delivery of goods from one place in Canada to another place in Canada unless there is no bill of lading and the contract stipulates that the Rules do not apply. Article 1.b of the Hague-Visby Rules defines a contract of carriage as a contract covered by a bill of lading or similar document of title. The Hague-Visby Rules therefore only apply to contracts contained in or evidenced by a bill of lading. Harrington J considered what constitutes a 'bill of lading' in Timberwest Forest Corp v Pacific Link Ocean Services Corp, 2008 FC 801 [13]-[14] (CMI1076).

The 'contracts for carriage of goods' in respect of which s 43(2) of the MLA makes the Hague-Visby Rules applicable, are therefore contracts which are incorporated into or evidenced by a bill of lading or a similar document of title. If there is no bill of lading or similar document, then s 43(2) does not make the Hague-Visby Rules applicable to carriage of goods from one place in Canada to another place in Canada. In short, there must be a document; oral contracts not evidenced by or incorporated into a bill of lading or similar document are not caught by s 43(2) of the MLA.

Article 3.6 of the Hague-Visby Rules precludes an action against a carrier and the ship that is not brought within one year of the delivery date.

In this case, the action was commenced more than one year from the date of delivery of the goods. However, there was no written contract, or any document evidencing a contract. The oral contract was for use of the tug and barge on an hourly basis. No bill of lading was issued and none was intended to be issued. The Hague-Visby Rules and hence the time bar in art 3.6 do not apply.

[For the unsuccessful appeal to the Federal Court of Appeal, see Mercury XII (Ship) v MLT-3 (Belle Copper No 3) (CMI1153).]