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Supreme Court of Canada Limits the Application of the Canada Shipping Act
Published in the December 2006 issue of Transportation Notes - View Article
The Supreme Court of Canada has overturned decisions of the Federal Court of Canada and the Federal Court of Appeal relating to whether the limitation provisions of the Canada Shipping Act should apply to an injury sustained while securing a boat for the purposes of land transport.
On an August day in 1999, Mr. Isen and his friend, Dr. Simms, spent the day boating on Ontario’s Lake Muskoka. At the end of the day, Isen’s 17 foot motorboat was hauled out of the water and placed on a trailer to be towed home. Inside the boat was a an engine cover which had a tendency to blow open and flap in the wind when the boat was being towed on the highway. Consequently, Isen would secure it in place with a bungee cord. On the day in question, Simms was standing by the boat watching Isen secure the engine cover. The bungee cord slipped out of Isen’s hand and flew toward Simms, striking him in the eye and causing serious injury.
Simms sued for $2,000,000 and his wife sued for $200,000 pursuant to the Family Law Act. Isen sought a declaration from the Federal Court that in the event that he was found liable for the injury, he should be entitled to limit his liability to $1,000,000 pursuant to Section 577 of the Canada Shipping Act.
The Federal Court ruled that the accident was sufficiently connected to navigation and shipping to bring it within the ambit of maritime law because: (1) the hooks of the bungee cord were applied to a boat; (2) the cord was used to secure the engine cover of a boat; (3) the incident arose immediately following use of the boat on a lake; and (4) the incident occurred just before the boat was to be transported to another lake. The Federal Court of Appeal agreed.
The Supreme Court of Canada considered the leading Canadian cases which defined the ambit of Canadian Maritime Law, including ITO — International Terminal Operators Ltd. v. Miida Electronics Inc. (the “Buenos Aires Maru”) and Whitbread v. Walley. In the Buenos Aires Maru case, it was held that the theft of cargo from a warehouse operated by stevedores in the port area fell within Parliament’s jurisdiction over shipping. According to the Supreme Court of Canada, this is a reflection of the commercial reality that commercial shipping requires not only the carriage of goods by sea, but the movement of goods on and off of a ship. Whitbread v. Walley considered an accident involving a pleasure craft which was being navigated in Canadian waters. The Supreme Court pointed out that it was a practical necessity for Parliament to have jurisdiction over the tortious liability of pleasure craft for negligent navigation on Canadian waterways. As commercial ships and pleasure craft share the same navigational network across Canada, a uniform federal body of law governing the navigational “rules of the road”, standards of good seamanship, and any tortious liability resulting from the use of the waterways is necessary.
The Supreme Court went on to say that Parliament does not have jurisdiction over pleasure craft per se but only over their navigation. It is therefore necessary to determine if the allegedly negligent acts are integrally connected to navigation and shipping. In this case the Supreme Court held that the boat was being secured for transport on a provincial highway, which is an area of provincial jurisdiction. It was like any other piece of cargo. The fact that it happened to be a boat did not make the matter subject to Canadian maritime law. The Court agreed with Décary, J.A., who dissented in the Federal Court of Appeal and said:
“The accident occurred on land. The injury was caused on land by a person who was neither on the boat nor in the water. There is no contract for carriage of goods by sea. (continued, p. 2)
There are no goods at issue. Nothing has happened on water which could be said to be directly or even indirectly related to the accident. There is no issue as to the seaworthiness of the ship, the issue at best being one as to the roadworthiness of a boat being prepared on land for road transportation. There are no in rem proceedings. There are no concerns of good seamanship. There are no specialized admiralty laws, rules, principles or practices applicable. The accident has nothing to do with navigation nor with shipping. There is no practical necessity for a uniform federal law prescribing how to secure the engine cover from flapping in the wind when a pleasure craft is transported on land on a boat trailer. The sole factor possibly connected to maritime law is that the pleasure craft had just come out of the water and was still being secured on the trailer when the accident happened. This was not enough to constitute an integral connection with navigation and shipping and an encroachment of civil rights and property.”
Consequently, the Court ruled that the accident was not a matter of Canadian maritime law and was subject to provincial law. Simms could not limit his liability pursuant to the Canada Shipping Act.
Isen v. Simms, 2006 SCC 41 (CanLII)