March 2009

Limitation of liability for a passenger on a vessel: Gundersen v. Finn Marine Ltd. 2008 BCSC 1665

Between 12:00 midnight and 2:00 a.m. in the early morning of August 13, 2003, the M.V. Coastal Launch ran into Nose Point on Salt Spring Island at speed, causing severe physical damage to the vessel as well as serious personal injuries to the plaintiff Emma Gundersen and the defendant Alex Godfrey. At the time of the collision the Coastal Launch was owned by the defendant Finn Marine Ltd. It was being operated by Mr. Godfrey, the owner of Finn Marine Ltd., as a commercial water taxi on its way to pick up paying customers, and Ms. Gundersen was onboard as a non-paying guest.

The issue at trial was whether Finn Marine Ltd. and the other defendants could limit their liability pursuant to Part 4 of the Marine Liability Act, S.C. 2001 (the "Athens Convention"). This limitation would be equivalent to 175,000 "units of account" or about $300,000. Ms. Gundersen was a friend of Mr. Godfrey and had been on the Coastal Launch with him for most of the working day of the accident. She was asleep in a bed in the aft port of the vessel at the time of the collision.

The evidence adduced also established that when the vessel was being operated, it was for a commercial purpose and that for the purposes of the limitation legislation the vessel had a gross tonnage of less than 300 tons. The judge found that the cause of the accident was that Mr. Godfrey fell asleep at the helm. The judge determined that he was to apply Canadian maritime law to the accident. The court reviewed the provisions of the Marine Liability Act and the Athens Convention contained therein as a schedule.

The court concluded that the monetary value of Ms. Gundersen's claims was limited by the provisions of Part 4 of the Marine Liability Act and Article 7 of the Athens Convention. The court discussed the interplay between the limits of the Athens Convention (Part 4 of the Act) and the general limitation provisions applicable in all circumstances (Part 3 of the Act). The court held that 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 court also held that 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."

On the second issue of whether the action of falling asleep at the helm established that Mr. Godfrey acted "with intent to cause the damage" suffered by Ms. Gundersen, or that he acted "recklessly and with knowledge that such damage would probably result" disentitling him to limitation of liability (per Article 13 of the Athens Convention), the court found that the onus was on the claimant to establish these acts or omissions.

Justice Davies stated, "the onus upon Ms. Gundersen, to prove that the defendants cannot rely upon the monetary limitation provisions of the Athens Convention by reason of Article 13 is a heavy one, emanating from the commercial and insurance trade-offs which gave rise to both the Athens Convention and the General Limitation Convention that have, through the passage of the Act, now been given statutory effect under Canada's domestic maritime law."

The court concluded that the "evidence adduced on this application does not establish that Mr. Godfrey intentionally caused the injuries suffered by her by falling asleep." The court also was not prepared to find that falling asleep constituted gross negligence and amounted to reckless behaviour disentitling Mr. Godfrey from limitation of liability. The court noted that the case law established that the question of whether Mr. Godfrey knew that the injuries suffered by Ms. Gundersen would probably result from his acts or omissions must be determined by application of a subjective test.

The court also noted that "the authorities further establish that, to lose the protection of the limitation provisions of the Athens Convention by reason of conduct running afoul of Article 13, Ms. Gundersen must also prove that Mr. Godfrey had foresight of the very loss that occurred, not merely of the type of loss. See: "The Leerort", [2001] 2 Lloyd's L.R. 291 (C.A.) at ¶13 ["The Leerort"]. There is no evidence before me concerning what Mr. Godfrey knew at the time of or even shortly before the collision. It would indeed be impossible to prove that a sleeping person was acting with subjective knowledge or foresight."

Rui Fernandes

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