Nord-Deutsche Versicherungs Gesellschaft,
United Kingdom Mutual Steam Ship Assurance
Association Limited and Fischer Bearings Manu
facturing Limited (Suppliants)
v.
The Queen (Respondent)
and
Koninklijke Nederlandsche Stoomboot-Maat-
schappij N.V. Netherlands Steamship Company
(Third party)
Trial Division, Noël A.C.J.—Montreal, Novem-
ber 4; Ottawa, December 22, 1971.
Maritime law—Limitation of shipowner's liability—
Canada Shipping Act, R.S.C. 1970, c. S-9, s. 648—Proce-
dure—Federal Court Rule 1012.
A proceeding to limit a shipowner's liability under the
Canada Shipping Act should be by originating motion or
application in a simple matter but by statement of claim in
complex cases where the right to limit may be contested.
MOTION.
A. S. Hyndman, Q.C., for suppliants.
B. M. Deschênes and P. M. Troop for
respondent.
J. Brisset, Q.C., for third party.
Non A.C.J.—This is a motion whereby sup
pliants Nord-Deutsche Versicherungs Gesell-
schaft and United Kingdom Mutual Steam Ship
Assurance Association Limited, The Hull & P.
& I., insurers of the vessel Transatlantic, move
for directions in respect of a number of matters
which shall be mentioned hereafter and request
that this Court order that:
(a) the present suppliants, together with the
owners of the Transatlantic namely, Posei-
don Shiffahrt G.M.B.H. be given leave to
institute proceedings against Her Majesty the
Queen, the respondent, by way of limitation
of liability, the whole within such delays and
subject to such conditions as may be deemed
appropriate;
(b) pending a decision on the right of the
present suppliants and the owners of the
Transatlantic to limit liability in accordance
with Canadian law, the parties continue with
the calculation of the damages sustained by
the present suppliants but that the payment of
such damages be postponed until judgment
has been rendered on the question of whether
the respondent is entitled to deduct from such
damages a full twenty per cent (20%) of such
other amount as it will have to pay for the
property damage sustained by the suppliant
Fischer Bearings Manufacturing Limited, the
third party Koninklijke Nederlandsche
Stoomboot-Maatschappij N.V. and such sup
pliants in other actions arising out of the
collision who have sustained property
damage and who have filed suit;
(c) the resolution of the matters referred to in
paragraphs (a) and (b) need not and should
not in any way prejudice the rights of the
suppliant Fischer Bearings Manufacturing
Limited as representative of the whole of the
cargo on board the Transatlantic who should,
in any event, be paid the full amount of their
damages as directed by the Supreme Court of
Canada as soon as the award of such dam
ages becomes known.
The matters involved herein which have
given rise to the present motion can be briefly
set down as follows. By judgment pronounced
April 27, 1971, the Supreme Court of Canada
maintained in part the appeal of the Crown and
allowed the latter to deduct from the damages
found payable to the present suppliants (The
Hull & P. & I. Insurers) twenty per cent (20%)
of such amount as is found payable to the third
suppliant, namely, Fischer Bearings Manufac
turing Limited, the latter as representative of all
the cargo on board the M/V Transatlantic. The
figures are still under negotiation but it would
appear that the amount, together with interest
which will be payable by the Crown to the
suppliant, Fischer Bearings Manufacturing Lim
ited, will be approximately $3,222,975.83 of
which 20% would be $644,595.17.
In action bearing number T-314-71, being the
action wherein the owners of the vessel Hermes
are the suppliants, the damages sustained by the
said owners have been agreed with counsel for
the Crown in the amount of $277,614.91 of
which 20% would be $55,522.98.
The owners of the Transatlantic, namely
Poseidon Shiffahrt G.M.B.H., have been made
a party to the said action number T-314-71 by
way of third party notice produced May 10,
1967, in which third party notice the Crown
calls upon the owners of the Transatlantic to
indemnify it with respect to any damages which
it has to pay the owners of the Hermes. In the
light of the judgment of the Supreme Court of
Canada, it is possible that the Crown will have
to pay the owners of the Hermes 70% of the
agreed damages of $277,614.91 and will include
in its claim against the present suppliants 20%
of the damages sustained by the Hermes or
$55,522.98.
Counsel for the present suppliants points out
that the Supreme Court of Canada, and in par
ticular the Honourable Mr. Justice Ritchie, has
stated that "the liability to make good the
damage occasioned by this collision should be
borne ... 20% by those responsible for the
M/V Transatlantic" and has referred to the
present suppliants as "the representatives of the
owners of the Transatlantic". Counsel
therefore submits that in virtue of the above
dicta or findings of the Court, the identification
of the present suppliants with the owners of the
Transatlantic is necessarily implied.
Under section 647 et seq. of the Canada
Shipping Act, R.S.C. 1970, c. S-9, the owner of
a ship, whether registered in Canada or not,
assuming the absence of actual fault or privity,
is not liable for damages„ in respect of any loss
or damage to property or any infringement of
any rights in excess of 1,000 gold francs for
each ton of the ship's tonnage and the equiva
lent in Canadian currency of 1,000 gold francs
was $71.60. The registered tonnage of the
Transatlantic was 3,215.96 and her gross ton
nage was 5,521.18 and although the deduction
for engine room space has not yet been ascer
tained, it is unlikely, according to counsel for
the suppliants, that the tonnage of the Transat
lantic for purposes of limitation of liability will
be much in excess of 4,000 tons which means
that her limit of liability would be approximate
ly $356,851.54. If, as a result of the payments
made to the suppliant Fischer Bearings Manu
facturing Limited and the owner of the Hermes,
the Crown seeks to deduct from the amounts
payable to the present suppliants an amount of
$644,595.17, such amount will be vastly in
excess of the limit of liability for property
damage of the owners of the Transatlantic by
$287,743.63.
I take the present application to be made
under Rule 1012 of the Rules of this Court
which sets down the procedure to be followed
when a party wishes to establish a right to
limitation of liability under section 647 of the
Canada Shipping Act.
Prior to the decision rendered in Margrande
Compania Naviera S.A. v. The "Leecliffe Hall"
[1970] Ex.C.R. 870, any party who wanted to
limit his liability merely took an action in limita
tion and if he established that he was entitled to
limit liability obtained a decree establishing the
amount of his liability. In the Margrande case I
explained why such a course of action although
permissible in the United Kingdom would not
necessarily be followed here, because the
procedure set down in Order 75 Rules 37, 38,
39 and 41 of the English Supreme Court had no
counterpart in our Rules. Furthermore section
648(1) of the Canada Shipping Act clearly
states that
648. (1) Where any liability is alleged to have been
incurred by the owner of a ship in respect of any loss of life
or personal injury, any loss of or damage to property or any
infringement of any right in respect of which his liability is
limited by section 647 and several claims are made or
apprehended in respect of that liability, a judge of the
Exchequer Court may, on the application of that owner,
determine the amount of his liability and distribute that
amount rateably among the several claimants; and such
judge may stay any proceedings pending in any court in
relation to the same matter, and he may proceed in such
manner and subject to such regulations as to making per
sons interested parties to the proceedings, and as to the
exclusion of any claimants who do not come in within a
certain time, and as to requiring security from the owner,
and as to payment of any costs, as the Court thinks just.
(Emphasis is mine.)
The manner in which a party seeking limita
tion should proceed depends always on the cir
cumstances of the case. If we are dealing with a
simple matter, it can be done by way of a
simple originating motion or an application; in
more complex cases involving possible contes-
tation of the right to limit, the best way may
well be the taking of an action by means of a
statement of claim, the production of a defence
and recourse if necessary to all the means of
obtaining information or admissions by way of
discovery of documents or of parties, particu
lars, etc.
The present case, of course, is one where I
believe the taking of an action is indicated.
According to counsel for the applicant this limi
tation is directed at a number of creditors
including the Crown and will require the deter
mination of some rather important questions
including the right of the applicant to limit its
liability against some of them. I should say here
that some of these matters are not easy of
solution and I have no intention of determining
these at this stage. Such questions, in my view,
can be better dealt with after they have been
properly and clearly set out in the proceedings
by all parties and have been exposed to the
testing and refining process of argument.
The greatest problem here, of course, is
whether because of the judgment rendered by
the Supreme Court of Canada the suppliants are
foreclosed from limiting their liability against
the Crown. Although this judgment does not
specifically say that the vessel Transatlantic or
its owners cannot limit their liability, it does say
inter alia that "the suppliant Fischer Bearings
Manufacturing Limited is entitled to the full
amount of its damages from the respondent and
the latter is entitled to deduct twenty per cent
of such amount from that which is allowed to
the other suppliants, representing the owners of
the Transatlantic ... ". This, according to
counsel for the Crown implies that the owners
of the Transatlantic cannot limit their liability
even if the Canada Shipping Act, by section
647 et seq. gives such a right.
In view of this contentious matter it is my
view that after issue has been joined in the
proceedings in the limitation action, the ques
tion as to whether the plaintiffs are entitled to
limit should, upon application, be made the sub
ject of a decision under Rule 474 of the Rules
of this Court.
It, therefore, follows that the applicant, the
present suppliants, together with the owners of
the Transatlantic may
(a) take whatever proceedings they may be
entitled to by way of an action in limitation
against all those parties who are entitled to
claim from them;
(b) pending a decision on the right of the
present suppliants and the owners of the
Transatlantic to limit liability, the parties may
continue with the calculations of the damages
sustained by the present suppliants, but the
payment of such damages is postponed until a
decision is rendered on the suppliants and the
owners of the Transatlantic's right to limit
liability against its creditors;
(c) payment of the damages to the representa
tives of the cargo on board the Transatlantic
shall also be postponed until after a decision
is rendered on the right of the suppliants or
the owners of the Transatlantic to limit their
liability.
The cost of this application shall be in the
cause.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.