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Liability Limits and Gratuitous Passengers
Published in the December 2008 issue of Transportation Notes - View Article
A recent decision from the British Columbia Supreme Court has held that the liability limits in the Marine Liability Act, S.C. 2001, c. 6 (the “Act”) with its inclusion of the liability limits in the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974, 1463 U.N.T.S. 19 (the “Athens Convention”), applies to a gratuitous passenger in a marine accident. The decision also provides an interesting discussion of the difficulty in breaking those limits.
The plaintiff, Gundersen, was on board the “Coastal Launch”, a commercial water taxi operated by the defendant, Godfrey and owned by his company Finn Marine Ltd., when it collided into Nose Point on Salt Spring Island, causing serious injuries to both Gundersen and Godfrey. At the time of the collision, the water taxi was on its way to pick up paying customers and Gundersen was on board as a non-paying guest.
Gundersen brought an action for damages for personal injury. The defendants applied for a declaration that the limit of their liability to Gundersen as a gratuitous passenger is governed by Part 4 of the Act. The issues resolved in the decision are as follows: 1) Is the monetary extent of the defendants’ liability governed by the provisions of Part 4 of the Act as submitted by the defendants, which limits liability to 175,000 “units of account”, or approximately CDN $300,000? Or, is the monetary extent of the defendants’ liability governed by the provisions of Part 3 of the Act, as submitted by the plaintiff, which limits liability to two million “units of account”, or approximately CDN $3.4 million? 2) Does Article 13 of the Athens Convention, which has the force of law in Canada under s. 37, Part 4 of the Act, preclude the defendants from relying upon the limitation provisions of the Act, as submitted by the plaintiff in the alternative?
Godfrey is an experienced seaman qualified to operate the Coastal Launch as a commercial water taxi. Gundersen is a friend of Godfrey who had been with him on the water taxi for most of the working day on the day of the incident. The working day started at 10 a.m. and ended sometime after midnight the next day, when the collision occurred. It was also found on the balance of probabilities that the collision occurred because Godfrey fell asleep at the helm.
Gundersen argued that Part 4 of the Act which incorporates Article 7 of the Athens Convention (and its liability limit of 175,000 units of account) cannot apply because at the time of the collision, she was neither a “passenger” nor a “person” to whom those provisions could apply. She submitted that while s. 37(a) of Part 4 of the Act does extend the application of the liability provisions of the Athens Convention to “passengers” under a contract of carriage in domestic waters, s. 37(b) does not do so with respect to non-paying “persons” (such as the plaintiff) “otherwise than under a contract of carriage” because s. 37(b) does not include the words “from one place in Canada to the same or another place in Canada” as found in s. 37(a). As a result of this gap, the liability provisions in Part 4 are inapplicable and therefore as a person aboard a vessel which did not require a certificate under Part 4 of the Act being carried “otherwise than under a contract of carriage” solely in Canadian waters, the plaintiff’s claims are limited to 2 million units of account as per Part 3. Furthermore, Gundersen argued that because Parts 3 and 4 consist of a “patchwork” of domestic and international maritime regulations and conventions with many inconsistencies and ambiguities, any ambiguities should be resolved in favour of the maintenance of a person’s common law rights and that the Athens Convention is subordinate to other legislation and conventions. Gundersen also submitted that any limit on her claims must also fall under the provisions of the Convention on Limitation of Liability for Maritime Claims, 1976 (the “General Limitation Convention”) which provides a general limit of 2 million units of account for a ship with a tonnage not exceeding 2,000 tons (Article 6) and a limit for passenger claims of 175,000 units of account multiplied by the number of passengers which the ship is authorized to carry according to the ship’s certificate (Article 7).
The defendants submitted that the Act, the Athens Convention and the General Limitation Convention should be interpreted as comprehensive marine liability legislation. Furthermore, Parliament deliberately extended the applicability of the Athens Convention into domestic waters by s. 37 of Part 4 of the Act and deliberately extended its scope to include individuals other than “passengers” by using the term “person” to include those aboard a vessel being operated for a commercial purpose “other than under a contract of carriage”, while excluding masters, crew and employees. Any overlap between the Athens Convention and the General Limitation Convention arises only where the total amount payable to all claimants under the Athens Convention would exceed the global fund under the General Limitation Convention in which case, a shipowner may limit such claims to the amount of the global fund liability limit through a pro rata scaling of each claim. As well, s. 37(1) of Part 4 of the Act establishes that Articles 1-22 of the Athens Convention “shall have the force of law in Canada” and Article 14 of the Athens Convention provides that no action for damages for death or injury to a passenger shall be brought against a carrier otherwise than in accordance with the Convention. Since the Athens Convention and Part 4 of the Act were specifically intended to regulate liability concerning the carriage of passengers and persons it should, as the more specific law, take precedence over the general provisions of the General Limitation Convention.
The judge held that the monetary value of Gundersen’s claims is limited by the provisions in Part 4 of the Act and Article 7 of the Athens Convention. He noted that while the Athens Convention’s definition of “passenger” excludes non-paying guests and accordingly at common law, a person in Gundersen’s position would not be monetarily limited in her right to recover damages, it is also true that she would not have the benefit of the reverse onus provisions of Article 3 of the Athens Convention, if it did not apply; thus, the submission that any ambiguities in the provisions of the Act should be resolved in the plaintiff’s favour carry less weight. In any case, the judge held that there is no real conflict or overlap between the provisions of Parts 3 and 4 of the Act. The judge accepted the defendants’ submission that any possible overlap between the Athens Convention and the General Limitation Convention arises only where the total amount payable to all claimants under the Athens Convention would exceed that of the global fund calculated under the General Limitation Convention. The judge noted that although there are no cases directly on point, at least three cases have considered the applicability of the Athens Convention limits in respect of personal injury claims subject to the Act. Such cases lead to the conclusion that in cases involving injury to passengers and in this case, a non-paying passenger, Athens Convention limits, rather than General Limitation Convention limits, will apply except in those circumstances in which Article 7 of the General Limitation Convention is relied on by the carrier. The judge relied on the cases of Cuppen v. Queen Charlotte Lodge, 2005 BCSC 880, MacKay v. Russell (2007), 284 D.L.R. (4th) 528 and Frugoli v. Services Aériens des cantons de L’Est Inc., 2007 QCCS 6203 for support for the following propositions respectively: the higher liability limits of Part 3 of the Act will not apply when what is at issue is liability for carriage of passengers by water in respect of which Part 4 and the Athens Convention limits will apply; the Athens Convention applies to carriage of passengers where the vessel is being operated for commercial or public purposes to all passengers regardless of whether they are aboard under a contract of carriage; s. 37(2)(b) of the Act does not differentiate between a domestic passenger under a contract of carriage and a “person” aboard a vessel in gratuitous circumstances. The judge concluded that s. 37(2)(a) and s. 37(2)(b) of Part 4 of the Act should be read harmoniously so that domestic gratuitous passengers on a vessel operated for a commercial purpose are subject to the same limitations of liability that apply to domestic paying passengers under a “contract of carriage”, and to read otherwise would lead to anomalous results and would be contrary to Parliament’s intention in enacting comprehensive legislation to domesticate an international maritime convention.
Having decided that Gundersen’s claims are subject to the limitation provisions of Part 4 of the Act, the judge also had to determine whether the defendants are precluded by their conduct from relying on those provisions. Article 13 of the Athens Convention provides that the carrier is not entitled to the benefit of the limits of liability if it is proved that the damage resulted from an act or omission of the carrier or its servants and agents, “done with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result.” The plaintiff submitted that Godfrey’s action in falling asleep at the helm after a long work day and travelling at night at speed, disentitled the defendants to the protection of the limits in Article 7. The judge held that international maritime jurisprudence supports the principle that the onus is upon Gundersen to prove that her loss arose from acts or omissions that Godfrey committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result and that such an onus is a heavy one. It was found that the evidence did not establish that Godfrey “intentionally” caused the injuries suffered by falling asleep. As for whether Godfrey “acted recklessly and with knowledge” that the injuries suffered by Gundersen would probably result by falling asleep, having overviewed the authorities on the interpretation of these words, it was held that the test is whether Godfrey’s actions in falling asleep in the circumstances constitute “gross negligence”. Interestingly, the judge found that he could not conclude on the basis of the record whether the sleep came upon Godfrey “gradually” or “suddenly” and therefore could not conclude that the plaintiff discharged her onus that Godfrey acted with gross negligence. The judge noted that if it could be established that sleep came on gradually, a stronger case could be made for a finding that Godfrey ought to have taken some action to avoid what occurred. On the other hand, if sleep came on suddenly, Godfrey would not have had the opportunity to do anything in anticipation of falling asleep and while his conduct would be negligent, it would not be grossly negligent. It was also held that Gundersen failed to establish that Godfrey knew that the injuries suffered by Gundersen would probably result from his acts or omissions, which involves a subjective test requiring proof of some foresight on the part of Godfrey of the very loss that occurred, not merely the type of loss. Again, the judge concluded that there was insufficient evidence of Godfrey’s knowledge during or before the collision and it would be “impossible to prove that a sleeping person was acting with subjective knowledge or foresight.” Further, the judge held that the “foresight” analysis suggested by the case of “The Leerort”, [2001] 2 Lloyd’s L.R. 291 (C.A.) is engaged as of the time that Godfrey embarked upon the voyage that night, and includes a subjective analysis of not only whether Godfrey expected to fall asleep or took a calculated risk that he would not do so, but also whether, assuming he did fall asleep, he expected as the outcome of so doing that Gundersen would probably suffer the harm that she did. The judge found that while the injury that did occur was a “possible consequence” of falling asleep, it was not a “probable result” as many things could have happened even after Godfrey fell asleep which would render the actual result no less foreseeable than other possibilities, i.e.: he might have woken up without incident or veered away from Nose Point or struck debris. Accordingly, the plaintiff could not avail herself of the provision in the Athens Convention which precludes the defendants from relying on its limits due to the operator’s conduct.
Gundersen v.Finn Marine Ltd. , 2008 BCSC 1665