Société Telus Communications et al. v. Peracomo Inc. et al.,

• Jurisdiction: Federal Jurisdiction (Canada)
• Judge: Harrington, J.
• Citation: (2011), 389 F.T.R. 196 (FC),2011 FC 494
• Court: Federal Court (Canada)
• Date: 04 February 2011

Telus Com. Soc. v. Peracomo Inc. (2011), 389 F.T.R. 196 (FC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2011] F.T.R. TBEd. AP.048

Société Telus Communications and Hydro-Québec and Bell Canada (plaintiffs) v. Peracomo Inc. and Réal Vallée and the owners and all other persons interested in the Fishing Vessel Realice and the Fishing Vessel Realice (defendants) and Royal and Sun Alliance Insurance Company of Canada (third party)

(T-1343-07; 2011 FC 494; 2011 CF 494)

Indexed As: Société Telus Communications et al. v. Peracomo Inc. et al.

Federal Court

Harrington, J.

May 6, 2011.

Summary:

A snow crab fisherman, who was master of a fishing vessel Realice, cut a submarine fibre optic cable belonging to Telus Communications et al., while conducting fishing operations on the St. Lawrence River. Repair costs approached $1,000,000. Telus et al. took action in personam against the vessel owner (Peracomo Inc.) and the master, and in rem against the fishing vessel. The defendants instituted third party proceedings against their underwriters, Royal and Sun Alliance Insurance Co., who denied coverage.

The Federal Court allowed the Telus action against the defendants. The court held that the defendants had lost their insurance coverage because of the wilful misconduct of the vessel's master.

Insurance - Topic 8582.1

Marine insurance - The risk - Exclusions - Wilful misconduct - A snow crab fisherman, who was master of a fishing vessel, cut a submarine fibre optic cable belonging to Telus Communications, while conducting fishing operations on the St. Lawrence River - Telus sued the fisherman, the vessel and the vessel owner - The defendants instituted third party proceedings against their underwriters, who denied coverage claiming that the defendants lost their coverage because of wilful misconduct (Marine Insurance Act, s. 53(2) - Telus, hopeful of collecting on its judgment, for that purpose submitted that there was no wilful misconduct by the insured - The Federal Court held that there was wilful misconduct in this case - The master's conduct was in marked departure from the norm and so the insureds/defendants lost the benefit of the policy - The court stated that the Marine Insurance Act, unlike other statutes, did not permit a third party to claim against an underwriter, an underwriter who was precluded from raising as a defence the conduct of the insured - See paragraphs 10 and 89 to 92.

Interest - Topic 5008

Interest as damages - Prejudgment interest - Entitlement - Admiralty claims - A snow crab fisherman, who was master of a fishing vessel, cut a submarine fibre optic cable belonging to Telus Communications, while conducting fishing operations on the St. Lawrence River - Telus sued the fisherman, the vessel and the vessel owner (the defendants) - The Federal Court found the defendants financially liable - The court noted that in admiralty cases pre-judgment interest was actually an item of damages and the court had broad discretion - The court (Harrington, J.) stated that "All things being equal, interest runs at a commercial rate from the date of loss. As commercial rates have been low I grant simple interest at the annual rate of 5 percent as set out in the Interest Act. To simplify matters, I take the date of loss as being 27 July 2006, the date on which IT-International Telecom's repair invoices were settled ..." - See paragraphs 11, 93 and 94.

Shipping and Navigation - Topic 1164

Masters - Liability of master - Negligence - A snow crab fisherman and master of a fishing vessel got his cage anchor caught in a Telus Communications' submarine fibre optic cable, while fishing on the St. Lawrence River - The master believed the cable was not in use and cut it with a saw - Repair costs approached $1,000,000 - Telus sued the fisherman, the vessel and the vessel owner - The Federal Court held that the cause of the loss was the master's intentionally and deliberately cutting the cable - The loss was not caused by a lack of notice on Telus' part, the fact that the cable was not buried or that the cable was hooked by a snow crab anchor - The master owed a duty of care to the plaintiffs - He was in breach thereof, and so was liable for the resulting damage - The vessel owner was liable for the master's action, both vicariously and personally, as this was a one-man company owned by the master - The ship was also liable in rem - Telus was not contributorily negligent - Any lack of notice by Telus was not causative - See paragraphs 6, 13 to 54.

Shipping and Navigation - Topic 5351

Collisions and groundings - Negligence - Duty of ships - Telecommunications cables - [See Shipping and Navigation - Topic 1164 ].

Shipping and Navigation - Topic 5749

Collisions and groundings - Damages - Limitations on liability (incl. Convention on Limitation of Liability for Maritime Claims, 1976) - A snow crab fisherman, who was master of a fishing vessel, cut a submarine fibre optic cable belonging to Telus Communications, while conducting fishing operations on the St. Lawrence River - Telus sued the fisherman, the vessel and the vessel owner - The defendants claimed that if they were found liable, their liability was limited to $500,000 (Marine Liability, s. 29) - The plaintiffs argued that the defendants could not rely on s. 29 because the loss resulted from their "personal act or omission committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result" (Convention on Limitation of Liability for Marine Claims, 1976, art. 4) - The Federal Court, noting that this was the first Canadian case involving art. 4, discussed that provision - The court held that "loss" within the meaning of the Convention included physical damage - However it was not enough that there be a "loss" at large - Restrictions applied - Here, the loss was caused by the personal act or omission of the master and was caused intentionally - While recklessness was not in issue, the court opined that the master was reckless in the extreme - The defendants were, therefore, not entitled to limit liability - See paragraphs 9 and 58 to 88.

Cases Noticed:

Evans v. Bartlam, [1937] A.C. 473 (H.L.), refd to. [para. 38].

Miida Electronics Inc. v. Mitsui O.S.K. Lines Ltd. and ITO-International Terminal Operators Ltd., [1986] 1 S.C.R. 752; 68 N.R. 241; 28 D.L.R.(4th) 641, refd to. [para. 48].

Donoghue v. Stevenson, [1932] A.C. 562 (H.L.), refd to. [para. 49].

Lennard's Carrying Co. v. Asiatic Petroleum Co., [1915] A.C. 705 (H.L.), refd to. [para. 50].

R. v. Canadian Dredge & Dock Co. et al., [1985] 1 S.C.R. 662; 59 N.R. 241; 9 O.A.C. 321; 19 D.L.R.(4th) 314, refd to. [para. 50].

Canadian National Railway Co. et al. v. Norsk Pacific Steamship Co. and Tug Jervis Crown et al., [1992] 1 S.C.R. 1021; 137 N.R. 241; 91 D.L.R.(4th) 289, refd to. [para. 55].

Bell Telephone Co. of Canada v. Montreal Dual Mixed Concrete Ltd. et al., [1959] R.L. 425; 23 D.L.R.(2d) 346 (Que. C.A.), refd to. [para. 56].

Air Canada v. Canada (1989), 28 F.T.R. 148 (T.D.), refd to. [para. 56].

Doyle v. Olby (Ironmongers) Ltd. et al., [1969] 2 All E.R. 119 (C.A.), refd to. [para. 57].

Whitbread v. Walley et al., [1990] 3 S.C.R. 1273; 120 N.R. 109; 77 D.L.R.(4th) 25, refd to. [para. 59].

Stag Line Ltd. v. Foscolo, Mango and Co., [1932] A.C. 328 (H.L.), refd to. [para. 62].

Ship Rhone v. Ship Peter A.B. Widener et al., [1993] 1 S.C.R. 497; 148 N.R. 349; 101 D.L.R.(4th) 188, refd to. [para. 63].

Ship Heidberg, Re, 1993 DMF 731 (Bordeaux Trib.), refd to. [para. 74].

Ship Heidberg, Re, 2005 DMF 839 (Bordeaux C.A.), refd to. [para. 74].

MSC Mediterranean Shipping Co. S.A. v. Delumar BVBA and others; Ship MSC Rosa M, Re, [2000] 2 Lloyd's Rep. 399 (Q.B.), refd to. [para. 79].

Goldman v. Thai Airways International Ltd., [1983] 1 W.L.R. 1186 (C.A.), refd to. [para. 80].

Nugent and Killick v. Goss (Michael) Aviation Ltd., [2000] 2 Lloyd's Rep. 222 (C.A.), refd to. [para. 81].

Compania Maritima San Basilio S.A. v. Oceanus Mutual Underwriting Association (Bermuda) Ltd.; Ship Eurysthenes, Re, [1976] 2 Lloyd's Rep. 171 (C.A.), refd to. [para. 82].

Schiffahrtgesellschaft MS "Merkur Sky" mbH & Co. KG v. MS Leerort Nth Schiffahrts GmbH & Co. KG; Ship Leerort, Re, [2001] 2 Lloyd's Rep. 291 (C.A.), refd to. [para. 85].

Margolle and another v. Delta Maritime Co. and others; Ship Saint Jacques II and Ship Gudermes, Re, [2003] 1 Lloyd's Rep. 203 (Q.B.), refd to. [para. 85].

McCulloch v. Murray, [1942] S.C.R. 141; [1942] 2 D.L.R. 179, refd to. [para. 91].

Bell Telephone Co. of Canada v. Ship Mar-Tirenno, [1974] 1 F.C. 294 (T.D.), affd. [1976] 1 F.C. 539; 71 D.L.R.(3d) 608 (C.A.), refd to. [para. 93].

Alcan Aluminium Ltd. et al. v. Unican International S.A. et al. (1996), 113 F.T.R. 81 (T.D.), refd to. [para. 94].

Statutes Noticed:

Convention on Limitation of Liability for Maritime Claims, 1976, art. 4 [para. 9].

Marine Insurance Act, S.C. 1993, c. 22, sect. 53(2) [para. 10].

Marine Liability Act, S.C. 2001, c. 6, sect. 29 [para. 9].

Authors and Works Noticed:

Bacon, Francis, Collection of Some Principal Rules and Maxims of the Common Law (1630), generally [para. 46].

Griggs, Patrick, Williams, Richard, and Farr, Jeremy, Limitation of Liability for Maritime Claims (4th Ed. 2005), generally [para. 73].

Strathy, George R., and Moore, George C., The Law and Practice of Marine Insurance in Canada (2003), p. 108 [para. 91].

Counsel:

Michel Jolin and Jean Grégoire, for the plaintiffs;

Jean-Claude Dufour, for the defendants;

Jean-François Bilodeau, for the third party.

Solicitors of Record:

Langlois Kronström Desjardins, LLP, Quebec, Quebec, for the plaintiffs;

Dufour Jacques Dufour, LLP, Baie-Comeau, Quebec, for the defendants;

Robinson Sheppard Shapiro, LLP, Montreal, Quebec, for the third party.

This case was heard in Québec, Québec, on January 31 to February 4, 2011 and February 7, 8 and 10, 2011, before Harrington, J., who originally delivered the following decision dated April 27, 2011, in both official languages; however, the release date was changed to May 6, 2011, by amendment.