The Bulk Carrier "Lantau Peak" Lawsuit
The Plaintiffs, mentioned-below, claim damages for negligence arising from the detention and delay in releasing the ship.
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This document: 2004 FC 501 (CanLII) Citation: Berhad v. Canada, 2004 FC 501 (CanLII) Parallel citations: [2004] 249 F.T.R. 161 Date: 2004-04-05 Docket: T-609-99
[Noteup] [Cited Decisions and Legislation]
Date: 20040405
Docket: T-609-99
Citation: 2004 FC 501
BETWEEN:
Budisukma Puncak Sendirian Berhad,
Maritime Consortium Management Sendirian Berhad
Plaintiffs
and
Her Majesty the Queen in the right in Canada, B.S. Warna and D.A. Hall
Defendants
REASONS FOR JUDGMENT
CAMPBELL J.
[1] On April 5, 1997, the bulk carrier Lantau Peak steamed into Vancouver harbour for two purposes: first to repair hull frames found to be detached during the voyage from Japan, and second, once those repairs were completed, to load coal for a return voyage to Japan. The captain knew that the ship would undergo a safety inspection upon arrival in Vancouver, but he could not have anticipated the impact that this routine procedure would have.
[2] Immediately after being berthed along side for repairs, the Lantau Peak was inspected by Canadian government steamship inspectors Mssrs. Warna and Hall and was ordered detained as a measure of Port State Control for safety at sea. The ship remained in detention until August 13, 1997, at which time it sailed in ballast to China for extensive hull repairs required by the terms of its release from detention.
[3] The single most important feature of the present action is the fact that the detention was imposed primarily on the basis that the ship's hull frames were wasted by corrosion beyond what was considered an acceptable limit; the limit imposed was 17% of the original thickness on construction. At the time of the detention, Inspectors Warna and Hall gave notice that the detention would remain in effect until the hull frames were repaired to this standard. The owners of the Lantau Peak objected, but in the end result, repaired under protest to a lesser standard imposed, which they still felt was unreasonable.
[4] The Plaintiffs claim damages for negligence arising from the detention and delay in releasing the ship. The Defendants defend primarily on the basis that Inspectors Warna and Hall were acting under a statutory authority conveyed by the Canada Shipping Act, and, thus, no claim for negligence lies.
[5] The"statutory authority" defence is advanced as a block to any finding of negligence respecting the conduct of Canadian steamship inspectors conducting Port State Control safety inspections of ships in Canadian waters. If this block does not exist in law, there is no impediment to a determination of liability under maritime tort law.
[6] For the reasons which follow, I find that the "statutory authority" block does not exist since the detention of the Lantau Peak was not under the authority of the Canada Shipping Act, the Defendants are liable in tort, and Inspectors Warna and Hall and their supervisors were negligent in the conduct of their duties with respect to the inspection and detention of the ship.
I. Factual Context
[7] In this Section of the reasons, I provide information about the Lantau Peak, and an outline of the story which focusses on "what" happened up to, during, and after her detention. What happened is not in issue; however, certain elements of "why" it happened certainly are. This latter issue is the focus of Section IV.
[8] Detailed written arguments have been provided by Counsel, which provide an accurate description of what occurred. In particular, the written "Closing Argument" of the Plaintiffs ("CAP") is a good source of this information, and for the purposes of efficiency in the telling, I quote it generously.
[9] As an addendum to their argument, Counsel for the Plaintiffs have prepared a "Chronology of Events", the accuracy of which is accepted by Counsel for the Defendants. The document, as amended for clarity and inserted below, provides particulars of important events respecting the detention and gives references to the location of evidence in the trial pertaining to the event described.
[10] During the course of the trial, a limited number of contested evidentiary issues arose and are the subject of oral and written argument; the decision on these issues was deferred to the production of these reasons. These contested issues are decided in the last part of this Section.
A . Port State Control
[11] The Lantau Peak was detained as a measure of "Port State Control", which is a regime of maintaining safety standards between maritime nations conducted by agreement. There are two agreements: the Paris Memorandum of Understanding governing the Atlantic, and the Tokyo Memorandum of Understanding ("the MOU") governing the Pacific. Canada is a party to both agreements.
[12] The written "Plaintiffs' Opening" statement at pp. 4-6 provides the following concise description of the basis for this activity:
The words "freedom of the seas" have been described as a fundamental element of international law from the initiation of legal relationships between nations. The concept leads through a universally accepted principle of freedom of navigation based on sovereignty and sovereign equality which is also recognized today as the prime basis for relationships between nations.
Freedom of navigation accords to each nation the right to permit ships to bear that country's flag. This principle leads directly to the long-accepted doctrine that the flag state has absolute command over the ship and the events occurring on board that ship. As Peter B. Payoyo said in his thesis "Port State Control in the Asia Pacific" at pages 5 and 6:
"That a state possesses this inherent right of power to confer upon a ship the privilege to fly its flag gives rise to the doctrine that only this state has supreme command over the ship and the events taking place therein. In the main, the laws of the flag state or the state of the ship's registry, to the exclusion of others, govern the ship and its affairs. Translated as "flag state supremacy" the doctrine conveys what still remains as one dominant traditional theme in the international law of the sea."
The rise of coastal state jurisdiction as a principle conflicting with the supremacy of the flag state has occurred within a relatively short period of time, within approximately 50 years. Such concerns as pollution, species preservation including fisheries and even national security, have caused states to extend their control to the exclusive economic zone often referred to as the 200 mile limit. Although most states including Canada will exercise full sovereignty over areas of their coastal waters out to 12 miles, some laws relating to pollution and resource management are extended to the full 200 miles. All are subject though to the right of innocent passage by foreign flag vessels.
The U.N. Convention on the Law of the Sea 1982 contains acknowledgements of the continuation of both positions, i.e. of the foreign flag vessel and the right to freedom of navigation and all that flows from that while still recognizing rights to the coastal state to protect its shores and its citizens. See Part XII of Convention - framework of states' rights regarding pollution see articles 218-223.
Port State Control is not the subject of an international convention or even universally accepted laws. It arises from an agreement ["MOU"] between a limited number of states negotiated and signed by the maritime authorities of those states. There is much controversy as to whether it is binding but leaving that issue to one side, it is not intended that the MOU either Paris or Tokyo take away the rights of a flag state to deal with its own ships. As G. Kasoulides stated in his work "The Port State Enforcement Regime Through International Organizations":
"The designation of the MOU in the form of a memorandum and not a convention and the fact that it was concluded among maritime authorities and not states indicates the willingness of the co-operating states to participate in a harmonized system of port state control (PSC) and exchange of information but not to enter into a new contractual and binding obligations."
B. The Lantau Peak ("the Vessel"), her owners, and managers
[13] The Plaintiffs' "Closing Argument" (pp.1-5) provides the following useful description of pertinent details of the Vessel and those closely associated with it:
The Plaintiff Budisukma Puncak Sendirian Berhad ("Budisukma") is a Malaysian company with an office in Kuala Lumpur, Malaysia. It was from the 9th of September 1996 the registered owner of the Vessel and continued in that capacity at all times relevant to this action (Agreed Statement of Facts (Exhibit P-2), paragraphs 1 and 3).
Budisukma and the second Plaintiff Maritime Consortium Management Sendirian Berhad ("MCM") are both wholly owned subsidiaries of Global Carriers Berhad ("Global") which is also incorporated and operating from its head office in Malaysia. Global was listed on the Kuala Lumpur Stock Exchange in April of 1996 as a public company (Agreed Statement of Facts, paragraph 2 and Transcript 388-389).
As of 1997 Global owned 23 ocean-going vessels including 7 product tankers, 10 bulk carriers and 6 container ships. In 1996 Global was taking steps to implement the International Safety Management ("ISM") Code which became mandatory worldwide on July 1, 1998 and to that end hired Commander Swa (Transcript p. 257 - 259). ISM provides an international standard for safe management and operations of ships and for pollution prevention and the implementation of a safety management system.
The Vessel is a gearless bulk carrier of length 249.18 metres, breadth 38.0 metres and depth 23.7 metres and is categorized as a "Capesize" vessel. The Vessel has a gross tonnage of 62,412, a register tonnage of 37,377 and a deadweight tonnage of 113,926 long tons. (Agreed Statement of Facts, paragraph 5)
The Vessel was built in 1977 in Japan under the supervision of the Japanese classification society Nippon Kaiji Kyokai ("Class NK"). The Vessel had been engaged in worldwide trading for Showa Line of Japan over her entire history and generally carried coal and iron ore from various source countries to Japan. (Agreed Statement of Facts and evidence of Captain Khoo)
The Vessel has nine cargo holds and above each hold is a cargo hatch which is opened for loading and discharging of the particular commodity being carried. From the tank top (the bottom of the hold) to the deck of the Vessel is about 21 metres.
The Vessel was purchased through MCM for its nominated company Budisukma by Memorandum of Agreement dated August 10, 1996 (Vol. 1, Tab 17). The purchase price was U.S. $6,550,000.
MCM took steps to transfer the Vessel to the Malaysian registry from the Panamanian registry. Statutory certificates were issued by Class on behalf of flag.
The Vessel was "classed" for its full life by Class NK. Class NK is one of the largest classification societies in the world. It was established in Japan in 1899 in order to promote the regulation and development of shipping and ship building industries in Japan. The Society took its current name in 1946 and expanded significantly. In 1966 the Register of Ships for Class NK exceeded 10 million tons and by 1997 exceeded 100 million tons. By 2003 Class NK has more than 6500 vessels totalling over 111 million tons. The Society has general offices in Tokyo, London and in New York and has exclusive surveying offices in more than 90 locations in major ports of the world. Class NK was a founding member of IACS (the International Association of Classification Societies established in 1968). At the present time Class NK shares the position of being largest in the world with respect to ships and tonnage with one other classification society. (Direct Examination of Mr. Agaki and Exhibits P-15 and P16).
Class [is] an independent organization [that] provide[s] its services worldwide for a fee, and that it [is] the Vessel owner's obligation to do the required repairs to maintain class status.
The United Kingdom Mutual Steam Ship Assurance Association (Bermuda) Limited, the world's largest P & I underwriter (the "P & I Club"), accepted the LANTAU PEAK for insurance under the P & I Club Rules. This acceptance was after a series of surveys and exchanges with the Plaintiffs.
The condition of Vessel was monitored by a number of organizations, including flag state, Class NK, the protection and indemnity association insuring for liability (the P & I Club) and, finally, the Port State administrations in those countries where the vessel trades.
C. What happened?
Chronology of Events
March 1978
Lantau Peak constructed at Tsu Works, Japan
Volume 1, Tab 27
March 30, 1978
Lantau Peak entered with Nippon Kaiji Kyokai ("Class NK") Classification Society
Volume 1, Tab 27
March 30, 1978
Lantau Peak certified by Class NK in respect of cargo handling appliances, safety equipment, marine pollution prevention installations, and radio installation
Volume 1, Tab 28
January 25, 1996
Lantau Peak detained in Vancouver, British Columbia by Mr. Warna and Mr. Hall. Justification for detention is stated to be "SOLAS Ch. 1, Reg. 11, hatch combings corroded. Unseaworthy"
Volume 3, Tab 5, 6, 9
February 1, 1996
Lantau Peak released from detention in Vancouver by Mr. Warna
Volume 3, Tab 10
August 10, 1996
Time charter between BPS and Showa Line and N.P. Shipping
Volume 2, Tab 105
September 9, 1996
Lantau Peak purchased by Budisukma Puncak Sendirian Berhad from NP Shipping S.A.
Volume 1, Tab 19
September 17, 1996
New crew joins the Vessel including Captain Aloro at Hong Kong
Volume 2, Tab 116
September 20, 1996
Maritime Consortium Management Sendirian Berhad appointed ship's managers
Volume 1, Tab 20
November 6, 1996
Lantau Peak surveyed at Singapore by U.K. P & I Club for insurance purposes
Volume 1, Tab 21 and Volume 5, Tab 179
January 8, 1997
Lantau Peak inspected by Class NK at Shenzhen
Volume 1, Tab 25
January 20, 1997
Lantau Peak subjected to a Port State Control inspection at Port Hedland, Australia
Volume 1, Tab 26
February 7, 1997
Vessel at Kaoshung and surveyed further by P & I Club surveyors
Volume 5, Tab 195
February 20, 1997
Vessel arrived Newcastle, Australia to load cargo
Volume 2, Tab 109
February 27, 1997
Depart Newcastle, Australia for Kawasaki, Japan
Volume 2, Tab 109
March 3, 1997
Provisional Certificate of Malaysian Registry issued for the Lantau Peak
Volume 3, Tab 19
March 18, 1997
Vessel arrived Kawasaki, Japan
Volume 2, Tab 109
March 21, 1997
Class NK survey at Kawasaki, Japan
Volume 3, Tab 16
March 22, 1997
Showa Inspection at Kawasaki, Japan
Volume 2, Tab 111
March 23, 1997
Vessel departed Kawasaki, Japan for Vancouver, B.C.
Volume 2, Tab 109
April 5, 1997
Lantau Peak arrives at Vancouver, B.C. Commander Swa and repairer boarded with Mr. Warna and Mr. Hall.
April 5, 1997
Lantau Peak subjected to a Port State Control inspection by Mr. Hall and Mr. Warna at Vancouver, B.C. and detained
Volume 1, Tab 32, 33 and 34
April 5, 1997
Lantau Peak taken off-hire at 1520 hours
Volume 2, Tab 99, A33, and Volume 2, Tab 102H
April 7 and 8, 1997
Mr. Warna re-attends on the Vessel
Exhibit D-35
April 10, 1997
Flag State writes to Mr. Hall requesting the Vessel be released.
Volume 3, Tab 29
April 11, 1997
MCM writes to Mr. Hall, et al. advising of the cost difference for having the work done in China and Canada
Volume 3, Tab 30
April 15, 1997
Class NK issued at Vancouver, B.C. a Seaworthiness Certificate for the M.V. Lantau Peak
Volume 1, Tab 39
April 18, 1997
The Vessel's compass is swung and a certificate is issued confirming same
Volume 3, 35
April 18, 1997
Class NK Tokyo faxes Class NK Vancouver with a cc. to Class NK Seattle confirming, inter alia, their corrosion criteria of 25% for face plate and 7.5mm minimum for web. This was sent to Commander Swa and Capt. Khoo at the Sands Hotel in Vancouver the same day.
Volume 2, Tab 99 B39-B40
April 21, 1997
Class NK issued a further survey report from their Seattle office saying the Vessel was within Class
Volume 1, Tab 44
April 22, 1997
Without prejudice meeting held at the offices of the Defendants.
April 23-24, 1997
The Briefing Note is prepared by Mr. Warna, reviewed by Mr. Hall and Mr. Nelson and sent to Mr. Streeter by Mr. Nelson.
Volume 3, Tab 39, 44, and 47
May 1, 1997
Mr. Warna re-attends on the Vessel
Exhibit D-35
May 5, 1997
Mr. Warna re-attends on the Vessel
Exhibit D-35
May 5, 1997
Class NK issues a further Seaworthiness Certificate in respect of the Lantau Peak
Volume 1, Tab 55
May 6, 1997
Letter from Transport Canada confirming completion of work except disputed frames
Volume 3, Tab 71
May 8, 1997
Class NK writes to Malaysian Government setting out their corrosion criteria: 25% for face plate and minimum of 7.5 mm for web. This information is confirmed to have been received in Ottawa on May 13, 1997
Volume 1, Tab 63 and Volume 8, Tab 315, sub-tab 15
May 12, 1997
Campney & Murphy letter forwarding to Transport Canada, inter alia, Class NK setting out their wastage standards, confirmed to have been received in Ottawa on May 13, 1997.
Volume 1, Tab 64 and Volume 8, tab 315 sub-tab 15
May 13, 1997
Ottawa received and forwarded to Vancouver the material clearly setting out the Class Corrosion Standard
Volume 8, tab 315, sub-tabs 15 and 16
May 15, 1997
Mr. Jenkins, for Mr. Streeter writes to Malaysia still saying 180 frames are wasted beyond class standards
Volume 8, tab 315, sub-tab 19
May 23, 1997
MCM writes to Ottawa clarifying again the Class standard and stating none of the frames are wasted beyond those limits
Volume 8, tab 315, sub-tab 21
June 2, 1997
Capt. Khoo writes to Class NK proposing a draft letter for them to send to Mr. Streeter as he is still concerned Ottawa does not understand the class criteria
Volume 2, tab 99 D1
June 3, 1997
Class NK sends letter to Ottawa again clearly setting out the Corrosion Criteria
Volume 8, tab 315, sub-tab 22
June 18, 1997
Mr. Flood, a Naval Architect in Ottawa issues a memo saying, inter alia, that "arrangements should be made to allow the Vessel to depart for Shanghai" on 3 conditions
Volume 8, tab 315, sub-tab 26
July 2, 1997
The Vancouver file contains a draft of the letter signed by Mr. Streeter. Mr. Streeter's file doesn't contain the draft, only the final letter.
Volume 4, tabs 107 and 108 and Volume 8, tab 315, sub-tab 30
July 8, 1997
MCM advises Transport Canada they are considering towing the Vessel to China and asked to know Transport Canada's requirements
Volume 1, tab 73
July 11, 1997
Mr. Hall sends towing demands to the Plaintiffs, which including the posting of a $1,000,000 performance bond which would be forfeited to the Crown if repairs not completed with 150 days.
Volume 1, tab 74
July 17, 1997
Mr. Warna spends the entire day in the office working on the Lantau Peak file.
Exhibit D-35
July 17, 1997
A draft of Mr. Streeter's July 18 appeal decision is prepared in the Vancouver office.
Volume 4, tab 137
July 18, 1997
Mr. Streeter issues his decision using wording identical in many respect to the draft prepared in Vancouver on July 17. Mr. Streeter acknowledged he must have seen the July 17 draft, but it is not in his file Volume 8, tab 315
Volume 4, tab 138
July 30, 1997
Mr. Warna re-attends on the Vessel
Exhibit D-35
Various dates
The Plaintiffs do the requested work in Vancouver
August 11, 1997
Mr. Warna re-attends on the Vessel
Exhibit D-35
August 12, 1997
Lantau Peak released from detention
Volume 3, Tab 21
Undated
$13,000 invoice prepared on behalf of Mr. Warna and sent to the Vessel agent
Volume 4, Tab 152
August 13, 1997
Key Marine issues a completion report for all work required to be done by Defendants at Vancouver
Volume 1, Tab 78
Various dates
Vessel proceeded to China to do the repair work required by the Department of Transport. Repair word was completed on or about October 10, 1997
October 10, 1997
The Vessel was placed back on hire by the Charterers
Volume 2, Tab 102H
December 23, 2000
Lantau Peak sold
Volume 2, Tab 118
1. The principal players
[14] A limited number of principal players participated in the detention and release of the Vessel: for the Plaintiffs: Captain Aloro, Commander Swa, and Captain Khoo; and for the Defendants: Inspector Biant Warna, Inspector David Hall, Captain Phil Nelson, Mr. Bud Streeter, and Mr. Richard Day.
Captain Aloro:
Captain Aloro is a Philippine National who has extensive sea experience; he first sailed on deep sea vessels in 1962 and continuing until his semi-retirement in 1999. He is a Master Mariner and sailed as Master since 1980 for a number of shipping companies including Philippine President Line, Zim Line, Mitsui OSK, Showa and others. He has commanded container vessels, bulk carriers and other ships of varying sizes and ages.
Captain Aloro joined the "Lantau Peak" on September 17, 1996 shortly after it was acquired by the Plaintiffs. He was on board during the entirety of the detention of the Vessel in Vancouver.
Commander Swa:
Commander is a Malaysian National who has an extensive background in the marine industry. He joined the Malaysian Navy in 1972; attended the University of Technology of Malaysia and graduated with a Bachelor of Engineering in Mechanical Engineering in 1977; and attended the Royal Naval Engineering College in England and obtained a certificate in Applied Marine Engineering. For the Navy he: worked as a Marine Engineering Officer on transport vessels, in the planning office at the Ship Refit Office, and in the Offshore Patrol Vessel Building Project in Pusan, Korea for 2 years; attended college in Malaysia in 1988 in order to become a Commander in the Malaysian Navy; was placed in charge of fleet maintenance (hull, etc.) for the entire Navy, in 1991 was placed in charge of inspection of all vessels; and was posted to the Royal Navy Training School in 1993 as head of the technical training division and he remained there until mid 1996.
Commander Swa joined the Plaintiff MCM on November 1, 1996; his initial role was to organize their International Safety Management ("ISM) Program and was then appointed as the Inspectorate Engineer for the MCM fleet which meant visiting ships and inspecting their condition.
Commander Swa was asked to go to Vancouver to assist in repairing the detached frames. He was in Spain inspecting another MCM vessel and arrived in Vancouver the day before the Vessel where he remained for 39 days.
Captain Khoo:
Captain C.Y. Khoo is a Malaysian National who joined the Malaysian International Shipping Company as a deck cadet. He then completed his apprenticeship and ultimately obtained his Masters Foreign Going Certificate of Competency in 1990. He sailed as a Master on product tankers until 1993 when he joined the Plaintiff MCM.
Captain Khoo's initial position with MCM was as a Marine Superintendent in charge of fleet operations, which included the scheduling of movement of ships and related items. In January of 1994 he became the Operations Manager with the marine superintendent working for him. He remained in that position until the beginning of 1995 when he became Fleet Manager. During this time period MCM was acquiring other vessels. As Fleet Manager he was responsible for a number of matters including technical matters involving the maintenance, classification and insurance of MCM managed vessels. He remained as Fleet Manager until January of 1996 when he became "Fleet General Manager", a position he held until approximately 1999 when he was appointed the Chief Operating Officer of MCM.
Captain Khoo learned of the detention and the requirements imposed by the Port State Control inspectors in Vancouver, and, to provide assistance, he decided to travel to Vancouver and arrived on April 14, 1997.
Inspector Biant Warna:
Inspector Warna was appointed a steamship inspector in 1983 and has served in that capacity since that time. His professional training qualifications include completion of a four-year full time course of the Government of India Marine Engineering College, and a Canadian First Class Motor Steamship Certificate of Competency.
Inspector Warna's professional experience includes: from 1965 to 1977 on Convention bulk carriers and cargo ships as a watch keeping engineer, second engineer and chief engineer; from 1977 to 1978, as Chief Engineer of a Canadian Coast Guard ship; from 1978 to 1979, as Technical Training Officer - Engineering for the Canadian Coast Guard; from 1979 to 1983 as Senior Marine Surveyor - Training and Examinations; and from 1983 to the present as Senior Marine Inspector (Machinery) - Canadian Coast Guard / Transport Canada.
As a steamship inspector, Inspector Warna's duties include: Port State Control inspections; pollution investigations; examination of engineers for all levels of certificate of competency including chief engineers; as an expert, giving Port State Control seminars to Port State Control officers of member countries of the Paris and Tokyo Memorandum of Understanding, including Canada, Malaysia, South Korea, and Vietnam.
Prior to Canada becoming a member of the Paris Memorandum of Understanding, his duties included inspection of foreign ships carrying lumber on deck and tackle gear, Canadian ship inspections, and pollution investigations.
Inspector David Hall:
Inspector Hall was appointed a steamship inspector in 1988, has served in that capacity since that time, and is presently a senior surveyor. His professional training qualifications include a degree in philosophy from the University of Guelph, Ontario.
Inspector Halls's professional experience includes: prior to 1974, sailing as a steward on passenger ships and tankers; from 1974 to 1988 at sea in the engine room of various ships; from 1974 to approximately 1980, sailing with the Canadian Coast Guard and for a short time with Fisheries and Oceans, and for five years thereafter employed with Northern Transportation Company sailing out of Hay River in the Northwest Territories. His experience on ships has been in the capacity of oiler, engine room storekeeper, fourth engineer, third engineer, second engineer, and chief engineer. As an engineer, he sailed on Coast Guard vessels, tugs, and fisheries patrol boats.
Inspector Hall received his training as a steamship inspector on the job. Being a Port State Control Officer under the Paris MOU, required him to be a flag state surveyor for at least two years and under the Tokyo MOU a flag state surveyor for at least twelve months.
Captain Phillip Nelson:
Captain Nelson has an extensive and varied career in the shipping industry. From 1972 to 1987 he was at sea as a navigating cadet, and third and second officer on bulk carriers, oil product tankers, chemical tankers, and combination carriers trading world wide. For several years he sailed on the west coast of Canada and the United States. During the last 5 years of this experience he served as Master on oil tankers trading along the Atlantic coast of North America, including Canada's inland water ways.
Captain Nelson commenced his employment in the public service in 1987. During the 15 years that he was with Transport Canada Marine Safety, he was involved with all aspects of the positions of Marine Surveyor, Senior Surveyor, and Manager, and from 1997 to 2003, of Regional Director. In March 2003 he accepted the post of President of the Council of Marine Carriers in Vancouver.
At the time of the detention of the Lantau Peak, Captain Nelson was the immediate supervisor to Inspectors Warna and Hall.
Mr. Bud Streeter:
Mr. Streeter graduated from the Canadian Coast Guard College in Sydney, Nova Scotia in June, 1973, with a Diploma in Marine Engineering and a Fourth Class Combined Certificate of Competency as a Marine Engineer. He sailed nearly full time until June 1978. He obtained a First Class Certificate of Competency as a Marine Engineer, Motor Ships in March, 1978. Mr. Streeter has experience on board commercial, civilian, and government ships, including experience as Chief Engineer.
Mr Streeter taught engineering sciences and technologies to the First Class Level at the Canadian Coast Guard College between July 1978 and May 1981. He was also a non-exclusive surveyor to Lloyd's Register of Shipping for a time.
He was appointed as a Marine Machinery Surveyor to Canadian Coast Guard Ship Safety Branch in Sydney, N.S. in May 1981 and remained in the position, with a short stint at the Canadian Coast Guard College as an instructor to help with staff shortage until December 1985, when he was appointed Senior Surveyor in Charlottetown, PEI, responsible for Prince Edward Island and Les Iles de La Madeleine, Quebec.
In September 1987 Mr. Streeter accepted a position as Manager, Marine Technical with Marine Atlantic Inc., a large passenger ferry operator in Moncton, N.B. He was promoted to Director, Marine Technical in 1988 and to Vice President, Safety and Regulatory Affairs in January 1995.
In November 1996, Mr. Streeter was offered the position of Director, General Marine Safety, for the Government of Canada in Ottawa. He remained as the responsible person for marine regulatory matters for Canada until accepting employment with Lloyd's Register North America, Inc. in April 2002.
[15] Only Mr. Streeter testified concerning the decision making in Ottawa which went into the continuing detention of the Vessel in Vancouver, even though others were directly involved. The Plaintiffs pay particular attention to the participation of Mr. Richard Day who was acting Director, Policy and Planning under the direction of Mr. Streeter in Ottawa. The evidence indicates that Mr. Day was fundamentally involved in the decision making with respect to the continuing detention of the Vessel. However, even though available, and at times in the courtroom during the trial, he was not called to testify on behalf of the Defendants to provide explanations for the Ottawa office's conduct which, in part, caused the present action to be brought. As a result, the Plaintiffs have asked that I draw an adverse inference, being that there is no adequate explanation for the apparent negligent conduct of the detention of the Vessel after the Ottawa office became involved. This issue is addressed in Section IV below.
[16] The Plaintiffs also make special mention of Mr. Flood, who was a naval architect in the Ottawa office and was consulted in mid-June 1997 regarding the Vessel and who prepared an opinion concluding that the Vessel should, on certain conditions, be permitted to sail to China. Mr. Flood did not testify. Further mention is made about his participation in Section IV.
[17] With the exception of certain elements of Inspector Warna's evidence which will be detailed in Section IV, I can find no sufficient reason to doubt the credibility of the persons who testified during the trial.
2. Evidence of the condition of the Vessel prior to its arrival in Vancouver
[18] A primary feature of the present action is the evidence of the condition of the Vessel, as opposed to its actual condition, when it arrived in Vancouver, and what Inspectors Warna and Hall, and supervisors Nelson and Streeter did with this evidence.
[19] I agree that the evidence proves, without contradiction, the Plaintiff's following assertion:
There was nothing haphazard or careless about the continuing maintenance program for the Vessel. All required repairs were done in accordance with directions from surveyors or as a result of the regular maintenance program on board. At no time prior to the Vessel's arrival in Vancouver on the 5th of April 1997 was any suggestion made by any Port State Control authority, the classification society, the P & I Club, the crew, or the owners, that the Vessel was not safe to continue to sail in the state which had been observed by numerous well-qualified and experienced inspectors. The Vessel was Class maintained at all times and all statutory certificates (SOLAS and others) were valid and in force on arrival in Vancouver (see: List of Survey Status at Vol. 1, Tab 29 and statutory certificates at Vol. 3, Tab 16). Indeed Mr. Warna and Inspector Hall allowed the Vessel to sail in a loaded condition in January 1996 despite many frames having wastage beyond 17%. (POA, p.6)
a. the 1996 detention
[20] In January 1996, while under the previous ownership, the Vessel was inspected by Inspectors Warna and Hall in Vancouver, and was found to be "unseaworthy", primarily on account of defective hatch covers due to corrosion. The Vessel was detained, and after the required work was completed, the detention was lifted and the Vessel sailed. It is important to note that, at that time, the Vessel was allowed to sail in a loaded condition even though many frames were wasted beyond 17%.
b. inspections of the Vessel conducted between the date of purchase by the Plaintiffs and the date of detention
[21] As substantiation of the proved assertion that there was nothing haphazard or careless about the continuing maintenance program for the Vessel, as outlined in the "Chronology of Events", inspections of the Vessel in early 1997 were conducted on January 8th, 20th , 27th , February 7th, March 21s t, and March 22nd . The following narrative explains these events in respective order:
The Captain was onboard during Class and P & I surveys done shortly after the acquisition of the Vessel by the Plaintiffs. He was initially given a list of maintenance items to be attended to and he confirmed the completion of those items as the work was done (Vol. 1, Tab 21 and Transcript 129-131).
[Captain Aloro] recalled the U.K. P & I Club's surveyors attending in Singapore and going into the Vessel's holds (Transcript p. 131 and Vol. 5, Tab 179). Those surveyors commented on the condition of the holds in their survey report (Vol. 5, Tab 179, paragraph 4). They said there "was no evidence of any serious corrosion/wastage" and Capt. Aloro agreed those observations were consistent with his observations (Transcript p. 133, line 16-20).
The Vessel after being inspected on behalf of Class NK in Shenzhen, China (Vol. 1, Tab 25), proceeded to Port Hedland, Australia where it was inspected by a Port State Control officer (Mr. Kenneison) who was onboard for approximately 24 hours (Vol. 1, Tab 26). Captain Aloro recalled Mr. Kenneison first checking the appropriate certificates and then attending in the holds before loading operations were commenced (Transcript 135-136). Some deficiencies were identified by the Port State Control inspector but they were rectified prior to the Vessel's scheduled departure, except for two which were to be repaired later. [The inspector checked the holds, but did not note any wastage or corrosion (CAP, p.6)]. Consequently, the Vessel left Australia as planned fully laden with a cargo of coal destined for Taiwan.
The Vessel was re-inspected in Taiwan on behalf of the P & I Club and all was found to be in order (Transcript p. 138, line 25 - 141, line 9 and Vol. 2, Tab 195, p. 2). The P & I surveyors found the "inner frames, bulkheads and tank tops all in apparent good condition", which was consistent with the Captain's recollection of the condition of the Vessel.
In addition to the various survey reports by Class and P & I underwriters, the crew maintained daily working reports which were signed and approved by the Master (Vol. 2, Tab 109, Transcript p. 141-143). Those reports record activities such as hold cleaning and regular maintenance issues.
The Vessel returned to Newcastle, Australia to load coal (Transcript 143, line 17 - 144, line 4). The Vessel then sailed to Japan from Australia with a cargo of coal (Transcript p. 141, line 7-12).
The Vessel arrived at Kawasaki anchorage on March 18, 1997 and berthed the next day on March 19, 1997.
The charterer, Showa Line, had an inspection of the Vessel in Kawasaki (Vol. 2, Tab 111, p. 2). That inspection took place on March 21, but all the cargo had not yet been discharged from the Vessel and there was no mention by that inspector regarding the condition of the holds (Transcript p. 148, line 1-12).
There was also a Class survey that was done on March 21, 1997 (Vol. 3, Tab 16, p. 5 and Transcript p. 149, line 14- 150, line 12). That surveyor identified some deformed frames in Hold 1 which were to be attended to at the next docking survey. There is no mention of observations in the other holds, but it should be remembered cargo operations were not complete at that time. (CAP, pp.7-9)
c. the detached frames
[22] The story of the detention of the Lantau Peak has to do with her transverse hull frames.
[23] During the voyage from Kawasaki, Japan to Vancouver in late March 1997, while in the process of cleaning the Vessel's holds, the crew noted that there were detached frames in Holds 3 and 9. As a result, arrangements were made through the ship's agent in Vancouver to conduct repairs upon arrival, and Commander Swa travelled to Vancouver to meet the ship and to supervise the repairs.
[24] To provide an understanding of the general construction of the Lantau Peak, and, in particular, the function of the hold frames, Counsel for both sides agree to the inclusion in these reasons of the following narrative and diagram. Of particular importance are paragraphs 11 and 12 (Exhibit Y for Identification, pp.1-8):
GENERAL DESCRIPTION OF M/S LANTAU PEAK
5. The vessel is a steel hull, single screw combination ore/bulk carrier built in 1978 by Nippon Kokan's Tsurimi Shipyard in accordance with Nippon Kaiji Kyoki (NKK), the Japanese Classification Society. At the time of the detention the M/S Lantau Peak was in class with NKK [also referred to as Class NK].
6. There are nine cargo holds forward of the engine room. Corrugated transverse watertight bulkheads separate the holds. The accommodation is arranged in a deckhouse located above the engine room at the aft end of the vessel....
Vessel Particulars:
Length, O.A. 260.000 Meters
Length, B.P. 248.000 Meters
Breadth, Molded 38.000 Meters
Depth, Molded 23.700 Meters
Scantling Draft (mld.) 16.720 Meters
Summer Load Draft (ext) 16.736 Meters
Deadweight 115,754 Tonnes
Builders Nippon Kokan, Tsurimi S.Y.
Date of Build/No. March, 1978
Classification Society NKK
ID No. 780777
STRUCTURAL ARRANGEMENT OF M/S LANTAU PEAK
7. The midship section of the vessel ...indicates a conventional ore/bulk carrier configuration with double bottom and sloping bilge hopper, and sloping topside tanks. The double bottom tanks, which also include the bilge, and the topside tanks are used for carrying fuel oil and ballast water. The structural components for this type of configuration are shown in Figure 3, [see below] which depicts the structure of a typical ore/bulk carrier.
8. The main deck, side shell in way of the topside tank, and the bottom of the topside tank of the M/S Lantau Peak are longitudinally framed. Longitudinal framing is where the structural members that stiffen the plating are oriented in the longitudinal (fore and aft) direction. The Bottom shell, tank top, bilge hopper and lower side shell are also longitudinally framed. The primary functions of these longitudinal frames are to support the plating to which they are attached and to stiffen the plating against the buckling effects of longitudinal compressive stress resulting from hogging and sagging of the hull, which is a normal occurrence for all ocean going vessels.
9. Hogging results when the buoyancy is greater than the weight over the mid-length of the vessel and the buoyancy is less than the weights at the ends. Hogging stresses the top members of the vessel in tension and the bottom members in compression. When the weight along the mid-length of the vessel is greater than the buoyancy and the weight at the ends is less than the buoyancy the vessel will sag. Sagging results in compression in the top members and in tension in the bottom members.
10. Deep transverse webs support the longitudinal stiffeners. In the topside tank and the bilge areas these webs form a ring around the inside perimeter of the area. In the double bottom the webs are attached to and span between both the bottom shell and the inner bottom and are referred to as solid floors. There are also longitudinal webs attached to and spanning between both the bottom shell and the inner bottom. These are girders and they work in conjunction with the solid floors to form a grid that supports the bottom of the cargo hold against the weight of the cargo when loaded and against the pressure of the sea when the hold is empty.
11. The side shell in way of the cargo holds is transversely framed. The hold frames provide vertical stiffening for plating that is minimally affected by hogging and sagging bending stresses. The hold frames strengthen the side shell against forces exerted by cargo in the hold, external pressure from the sea, and also acts along with the shell plating as a column supporting weight from above such as water ballast in the topside tank. The hold frames are supported at their bracketed connections to the bottom of the topside tank and the top of the bilge hopper.
12. The hold frames are constructed in a "T" configuration. The stem of the T is the web plate of the frame. The top of the T is the faceplate of the hold frame. The hold frames are different sizes depending on which hold they are located in. Holds 1, 3, 5, 7,and 9 are designed for carrying ore, which is a very heavy cargo. When ore is carried in these holds, the vessel can be at full draft while Holds 2, 4, 6 and 8 are empty. The frames for holds 2, 4, 6, and 8 have to be stronger than the frames for holds 1, 3, 5, 7, and 9 due to greater external pressure from the sea without internal cargo pressure to help counteract the sea loads. Hold 6 can also be used as a ballast tank. With No. 6 filled with ballast water and the vessel at ballast draft [because of ] the internal pressure from the ballast water the frames require additional strength.
The hold frame sizes are:
Holds 1, 3, 5, 7, and 9
Web 525mmx 12mm
Face plate 150mm x 25mm
Holds 2, 4, and 8
Web 550mmx 14mm
Face plate 150mm x 25mm
Hold 6
Web 800mmx 14mm
Face plate 200mm x 25mm
[25] In the above diagram, which is Figure 2 referred to in the above description, the hold frames are the vertical members on each side: one is labelled on the left side just above the label for the "bilge hopper". The present action concerns 137 frames replaced in Vancouver and 671 replaced in China.
3. The detention itself
[26] Upon arrival of the Vessel in Vancouver, Inspectors Warna and Hall boarded to carry out a Port State Control inspection. They split the responsibilities; Inspector Warna inspected the hull and machinery, while Inspector Hall attended to safety equipment requirements. Inspector Hall did not go into the holds of the ship, and effectively did not participate in the decision to detain the Vessel for hull deficiencies, except to sign the detention order itself.
[27] Prior to the Vessel's arrival in Vancouver, Inspectors Warna and Hall were advised of the detached frames, but since there was no question that they would be repaired, the Vessel was not detained for that reason. Inspector Warna only went into Holds 1, 3, and 9 and only did a cursory visual inspection of each. The Vessel's safety certificates were all in order. The detention was based on one minor deficiency respecting the compass, and three perceived major problems, one in particular respecting the condition of the hull frames due to corrosion.
[28] The "circumstances of detention" noted on the "Detention Order" dated April 5, 1997 were "Structural Deficiencies, SOLAS, Ch.1, Reg. 11" (Vol 1, Tab 34). The accompanying "Form B: Report on Inspection in Accordance with the Memorandum of Understanding on Port State Control" completed on April 5th (Vol 1, Tab 33) contains the following statements respecting the items for which the Vessel was detained:
Magnetic compass to be adjusted & swung...
No. 1 hold aft bulkhead port and stbd side vertical main frame side stiffeners wasted at the base to be cropped and renewed. Several other side main frame face plates and frame side stiffners [sic] damaged affected section to be repaired.
All side vertical frames with sections exceeding 17% wastage in Holds no. 1, 2, 3, 4, 5, 7, 8, & 9 as listed in the Hull Condition Report dated January 9-11, 1995 to be cropped and renewed.
All deck plating with doublers between all hatch coamings to be permanently repaired (ie no doublers) instead plate inserts. [Emphasis added]
[29] On April 8th, a further "Form B: Report on Inspection" (Vol 3, Tab 27) was completed containing the following passage:
As agreed to, all highlighted sections exceeding wastage 17% in the Special Survey Thickness Report Number S/2 995/95 dated April 12 to 21st, 1995 of Shin Toyo Engineering Private Limited Singapore. Ship side vertical frames in Holds No. 1, 2, 3, 4, 5, 7, 8 & 9 to be cropped and renewed.
[30] The Shin Toyo Report (Exhibit P-4) provides detailed ultrasound readings of the thickness of the steel of the hold frames as of the date it was prepared being during a special survey in 1995. The essential fact to be taken from the "Report on Inspection" documents prepared by Inspector Warna is that the Vessel was detained until all its hold frames stated to be wasted beyond 17% were repaired; the only exception were the frames in Hold 6 which, because it is used as a ballast tank, is not subject to as much corrosion.
[31] There is no question on the evidence that no one on behalf of the owners ever agreed to repair to 17%.
4. Undisputed events before release
[32] The "Chronology of Events" discloses the following principal undisputed features of the efforts made from the Plaintiffs' side to have the Vessel released from detention, and understood as having been made on the Defendants' side:
1. The owners of the Vessel, through their various representatives, argued that the requirement to repair to the 17% wastage standard was unreasonable.
2. At the request of the owners, the Vessel's flag state, Malaysia, requested release.
3. In an attempt to have the 17% standard changed, the owners argued that the Class NK requirement should be the standard applied.
4. In support of the owner's position, shortly after the detention, Class NK confirmed the precise Class corrosion standard for hull frames being 25% of the original for the face plate and 7.5 mm minimum thickness for the web.
5. Captain Khoo agreed to conduct repairs to a certain level in Vancouver, but with a request that the balance of the repairs be conducted in Shanghai. The argument made by the owners was that, since repairs are much cheaper in China, the Vessel should be allowed to sail in ballast to Shanghai whereupon the required repairs would be undertaken.
6. In support of the owner's position, Class NK supplied certificates and calculations attesting to the belief that the Vessel was in good order to make a trans-Pacific voyage to China.
6. An alternate proposal of having the Vessel towed in ballast to Asia for repairs was considered.
7. As it was understood that Mr. Streeter, being the Chairman of the Steamship Board under the Canada Shipping Act and most senior surveyor with overriding authority to change the 17% standard applied by Inspector Warna, the owners applied to him for relief. Inspector Warna provided Mr. Streeter with a briefing note outlining his justification for the detention.
5. Disputed events before release
[33] An important feature of the events in the early stage of the detention of the Vessel is a meeting held on April 22nd between persons from both sides of the dispute to see if an accommodation could be reached. This meeting was held on the specific condition, imposed by Counsel for the Defendants, that anything said during the meeting would be without prejudice and held in strict confidence. During the trial, references were made to what might have been said in, and around the time of, the meeting on two issues: what was said by the Plaintiffs' side about the Class NK standard for hull frame corrosion, and what was said on the Defendants' side about a change of the repair standard from 17% wastage to 25% wastage. As it stands, I find there is no admissible or reliable evidence on the record on either issue.
[34] There is evidence that in late April, the Defendants were under the impression that the Class NK standard was 25%. However, the evidence clearly establishes that as of May 13, 1997, the Defendants had notice of the precise Class NK standard. On May 8th, Class NK wrote to the Marine Department of Peninsular Malaysia reconfirming the seaworthiness of the Vessel to make a ballast voyage to China for repairs and also confirming the Class NK rules which stipulate that the face place corrosion limit is 25% of original, and the minimum thickness of the web plate is 7.5 mm. By fax dated May 12, 1997, the Class NK letter of May 8th along with the Class NK survey report of April 21st and the Class NK seaworthiness certificate of May 5th, were sent to Bill Henderson at Ship Safety Transport Canada in Ottawa. (Vol. 8, Tab 315, sub-tab 15). The "received" stamp confirmed receipt on May 13th of both the fax and the Class NK letter of May 8th. That information was sent by Ottawa to Vancouver on May 13, 1997 (Vol. 8, Tab 315, sub-tab 16).
[35] I do not put any weight on any possible criticism of the Plaintiffs if the Defendants might not have known of the precise Class NK standard until May 13th because, as discussed in Section IV below, the Defendants had no intention of accommodating the Class standard in releasing the detention, whatever it was.
[36] As to the issue of an alleged change in the standard during the period of detention, I find that the following contents of Mr. Streeter's final decision of July 18, 1997 (Vol 8, Tab 36) is conclusive proof that, until the writing of the letter, the standard remained as that originally imposed by Inspector Warna, being 17%:
JUL 18 1997
Captain C.Y. Khoo
Maritime Consortium Management Sdn. Bhd. (282453-W)
No. 68C, Kompleks Damai, Jalan Lumut Off Jalan Ipoh
50400 Kuala Lumpur, Malaysia
Dear Capt. Khoo:
SUBJECT: M.V. "LANTAU PEAK"
We have given due consideration to your letter dated July 15, 1997. The information you provided has been reviewed and we have had consultations with our Pacific Regional Office.
Following our extensive review of the situation, we should like to advise you of the outcome of our deliberations.
(1) In the event m.v. "LANTAU PEAK" is to be towed to Shanghai, the list of requirements provided to you by the Regional Director - Pacific Region must be complied with.
(2) We believe that the one million dollar bond is reasonable.
(3) If you intend to proceed to Shanghai in ballast, we ask that all frames with web wastage of 33% or higher in hold numbers 4, 5, 7, and 8 be renewed prior to departure from Vancouver.
(4) Upon arrival in Shanghai all pending items from the Port State Control inspection reports of April 5 and 8, 1997 are to be complied with. After due consideration, we have raised the wastage limit of 17% to 25%. The same requirements will apply if you intend to repair the vessel in Vancouver for the purpose of loading or SOLAS Certificate validity continuation.
We agree that this time of year is the most opportune to transit the Pacific Ocean and would recommend weather routing.
The fact that you have taken the initiative to come to Canada to work closely with us is appreciated and trust that we can collectively determine how best m.v. "LANTAU PEAK" [sic] can safely undertake the ballast voyage to Shanghai.
Yours sincerely,
Bud Streeter
Director General
Marine Safety
[Emphasis added]
[37] In oral argument, Counsel for the Defendants suggested that Captain Khoo had agreed to a 25% wastage standard of repair. No admissible evidence was referred to substantiate this suggestion. The evidence is very clear that Captain Khoo had agreed to accommodate the Defendants' demands to have some repairs done in Vancouver and to have the balance done in China, but not to the standards being demanded by the Defendants.
[38] By the third week in April, Captain Khoo was getting nowhere with the Vancouver office of Transport Canada in his attempts to have the Vessel released. As a result, by letter dated April 21st, he wrote directly to Ottawa. In his letter he addressed the high cost of doing repairs in Vancouver compared to Shanghai, and argued for release based on the evidence of Class NK that the Vessel was safe to make a single voyage to Shanghai for repairs. He specifically said this (Vol. 1, Tab 43):
The class is of the opinion that the vessel complies with class recommendations as set out in the "Seaworthiness Certificate" issued on 15 April 1997, some of the deficiencies to be rectified here before commencement of the voyage and the remaining items to be completed at the next port.
The letter ended with this statement:
We hereby wish to appeal to your good office to lift the detention of the vessel and allow her to proceed on the proposed voyage to Shanghai. We undertake to conduct the necessary repairs in Vancouver to rectify the items as recommended by class before commencement of the voyage and to complete all the remaining items at the next port in Shanghai.
[39] In his evidence at trial, Captain Khoo confirmed that he was essentially indicating that he would comply with the Class NK requirements (Transcript, Vol. 3, p.505).
[40] In the course of the trial, Counsel for the Defendants made a point concerning the "Seaworthiness Certificate" and Captain Khoo's statement. In the portion of the Certificate headed "Narrative", the surveyor, Mr. Koshino, essentially repeats the deficiencies upon which the detention order was based, including the 17% order made. The detached frames are also mentioned. The Certificate then goes on to state that upon repair to some minor items, but including the detached frames in Holds 3 and 9, and proper loading and provisioning of the Vessel, and caution being taken to take have a fair weather passage, the Vessel would be in suitable condition to proceed to Shanghai for permanent repairs. The permanent repairs recommended referred to items mentioned in the narrative, being needed repairs to frames in Hold 1, temporary deck repairs, and the following (Vol.1, Tab 39):
Most hold frames in all cargo holds except No. 6 cargo hold were worn down in excess of 17% of original thickness, according to the previous thickness measurement report No. S/2995/95 dated April 12th to 21st 1995, provided by Shin-Yoyo Engineering Pte. Ltd.
In my opinion, Captain Khoo's statement and the Certificate when read in context cannot be taken to mean that Captain Khoo agreed in any way to the requirements imposed by the detention. That is, he was not agreeing to repairs to any standard set by Transport Canada, including 17%, but was agreeing to repairs to Class NK standards, which by that time, he well understood to be 25% wastage for the face plate, and 7.5 mm thickness for the web (Transcript, p.497).
[41] Later in the giving of his evidence, Captain Khoo provided a greater understanding of his state of mind in agreeing to meet the recommendation in the Seaworthiness Certificate. Captain Khoo felt he was compelled to agree to repair to Transport Canada's requirements because cooperation between the Port State Control Authorities to the MOU would mean that, if he did not, he could not engage in shipping in the Pacific region. The passage that provides clarity is as follows (Transcript, Vol. 3, pp.538-539):
Okay, so if I understand what you're saying correctly, is that with or without a bond, you have to do the work Transport Canada requires, otherwise you would not be able to use the LANTAU PEAK in the Pacific Region, is that right?
A That's correct. I believe worldwide.
Q Okay, and why do you say that's so? In other words, how would the Canadian port state control officers prevent you from operating the LANTAU PEAK in China, for example, if you didn't do what they required you to do?
A Yes, the port state control in China would not allow us to leave, and because they will have to verify that we have done accordingly.
Q Was it your intention to do the work in China if the vessel was allowed to sail?
A Yes, sir.
THE COURT: Well "work", what work?
MR. SWANSON: The work required by the government.
Q Even, Captain --
THE COURT: Let him answer.
MR. SWANSON: Oh, sorry.
A Yes, My Lord?
THE COURT: Was it your intention -- were the vessel to go to China, was it your intention to have it repaired according to Transport Canada's specifications?
A That's right, sir, that was the intention.
THE COURT: On this point, I thought I heard you say earlier that your intention was to have it repaired according to class specifications. Do I have it wrong?
A Yes, of course the idea was to repair to the class requirement, My Lord, but if the port state control of Transport Canada continue to insist on this, there is no way that the class was able to challenge this, My Lord.
THE COURT: In fact you didn't want to repair it to Transport Canada's specifications.
A That is correct, My Lord.
THE COURT: Okay, I understand.
6. Compliance with the terms of release
[42] Mr. Streeter changed the standard from 17% to the following: the Vessel's frames corroded beyond 33% would have to be repaired in Vancouver before the detention would be lifted, but on condition that upon release, the Vessel would sail to China where the remaining hull frames corroded beyond 25% would be repaired.
[43] As has just been shown, Captain Khoo felt he had no choice but to agree. As a result the Vessel did proceed to Shanghai whereupon the repairs were carried out according to Mr. Streeter's decision.
[44] Thus, under protest, the owners agreed to Mr. Streeter's conditions of release, followed the requirements set, and have sued for damages as a result of the detention. Section IV below deals with the finding of liability, and Section V deals with damages.
7. Conclusion
[45] All of the Plaintiff's arguments with respect to repairing to Class NK standards fell on deaf ears. From the moment Inspector Warna issued the detention order, to the moment Mr. Streeter revised it, the 17% standard remained in place.
D. Contested evidentiary issues
1. The detached frames fax
[46] On the way to Vancouver the detached frames were discovered. There is no conclusive evidence as to what caused this condition. On the speculation in the evidence, there are only two options: corrosion, or mechanical damage caused by equipment used in the unloading of coal in Japan. The Defendants argue for a finding that the cause of the damage is corrosion. The only evidence they have to maintain this position is a fax.
[47] After the detached frames were found, Captain Aloro sent a fax on April 3, 1997, to the charter's agent in Vancouver, SMI Marine. The fax is a diagram of the inside structure of the hull of the ship identical to the one included in these reasons in Section I, but with two additions. On the diagram itself there were 4 frames on the right hand side blackened out with the notation "hold frame" and the following words typewritten across the top (see Vol. 9, Tab 3, Vol. 7, 283):
Blacken hold frame which you can see below is already detached from its weld and separated from starboard shell plating due to heavy corrosion should be cropped out and renew: Hold no. 3 between Frame No. 234 to 237, length about = 2.5 to 3.0 meters, opening about = 10 to 15 cm.; Hold No. 9 between Frame No. 69 to 72, length about = 1.5 to 2.0 meters, opening about = 5 to 6 cm.
[48] As a result of receiving the fax, the agent wrote to the charterer, Showa Line Tokyo, on April 3rd respecting the Lantau Peak and made the following statement (Vol. 7, 283):
We have just been informed by master today that owners are intending to effect repairs to vessel at Vancouver prior to loading at Roberts Bank. According to the Master he informs that 4 frames in holds 3 and 9 are already detached from their welds to some extent and separated from the starboard side shell plating due to heavy corrosion and should be cropped out and renewed.
[49] Captain Aloro was firm in his evidence at trial: the crew first observed the detached frames while cleaning the holds as the Vessel was underway between Japan and Vancouver; the Chief Officer inspected the detached frames and prepared the fax; Captain Aloro sent the fax; he, Captain Aloro, did go into the holds once with the Chief Officer to inspect the detached frames; and he accepted the statement of the Chief Officer printed on the fax.
[50] The Defendants argue that the evidence should be taken to prove that the frames detached due to corrosion. I do not accept this argument. First, the opinion that appears on the fax is the inadmissible hearsay opinion of the Chief Officer who was not called to testify. Second, while the evidence indicates that Captain Aloro accepted what the Chief Officer said about the details of the attachment because he trusted him (Transcript, Vol. 2, pp.237-238), on the whole of the evidence, I find that this acceptance does not go to accepting the Chief Officer's opinion on the reason for the detachment. On this point it is important to note that, in his evidence, Captain Aloro offered speculation that the cause of the detachment might have been due to the frames coming into contact with the unloading of equipment in Japan, and did offer an opinion of his own: "if only for heavy corrosion, I don't think the frames will be detached" (Transcript, Vol. 1, p.186). And finally, obviously, the statement in the agent's fax to the charterer attributed to Captain Aloro proves nothing.
[51] The Defendants called Mr. Don Rogers of SMI Marine the agents for Showa Lines, the Vessel's charterers, to somehow assist in attempting to prove that the statement on the contested fax regarding corrosion, as the cause of the detached frames, came from Captain Aloro. Of course, since all Mr. Rogers did was receive the fax, he is in no position to offer evidence on the truth of its contents. I find that Mr. Rogers did not offer any useful evidence with respect to any issue for determination in this action.
2. The C.R. Cushing Report
[52] The negligence allegations in the present case centre on the decision made by Inspectors Warna and Hall on April 5, 1997 to detain the Vessel, the continuing decision made to retain her in detention, and the final decision made by Mr. Streeter on July 18, 1997, concerning her release. That is, as set out in the analysis in Section IV below, the focus of the Plaintiffs' claim is on the quality of the decisions made. Indeed, the evidence available to the decision makers respecting the seaworthiness of the Vessel is important to evaluate in order to judge the quality of the decisions made. However, in my opinion, the actual seaworthiness of the Vessel is not an issue for determination.
[53] In the very late stage of the Defendants' decision making process, a firm of naval architects based in New York, C.R. Cushing & Co., was retained to produce a report on the actual seaworthiness of the Vessel. As an element of the evidence gathering for production of the report, a naval architect from the firm, Mr. Szilard Pantyik, carried out a close-up inspection of the frames in Holds 4, 5, 7, and 8 of the Lantau Peak on July 22nd, and 23rd. That evidence formed part of the evidentiary base upon which another naval architect in the firm, Mr. George Zinger, produced the report filed as Exhibit Y for Identification (the "C.R. Cushing Report). The C.R. Cushing Report was not available to the Defendants prior to the Vessel's release from detention, but was provided to Counsel for the Defendants prior to trial.
[54] In the trial, Mr. Pantyik gave evidence of his observations by teleconference from Budapest, Hungary, and Mr. Zinger attended in person.
[55] The Plaintiffs argue for admission of the C.R. Cushing Report to prove three facts: the nature of the process that can be undertaken in order to reach appropriate determinations of the strength of a ship; the actual strength of the Lantau Peak at the date of the production of the document; and that the Vessel was seaworthy to make the passage from Vancouver to China for repairs in July, 1997.
[56] The Defendants object to the admission of the C.R. Cushing Report on the ground that it is not relevant to the primary issue in the trial which is the quality of the decision making which took place. In addition, it is argued that Mr. Zinger's methodology in arriving at his opinion is faulty; in this respect Mr. Andrew Kendrick, a naval architect, produced an expert report and was called to testify.
[57] I find that the C.R. Cushing Report is relevant and should be admitted into evidence, but only for proof of the first of the three reasons it is tendered. That is, the Report is proof that, in the shipping industry, a professionalized, technical, and detailed analysis of hull condition data can result in a concrete and well supported opinion respecting the seaworthiness of a ship at any given point in time. In my opinion, Mr. Zinger's actual opinion accomplished by this kind of analysis with respect to the Lantau Peak is irrelevant because it played no part in the decision making which took place. As a result, I find Mr. Kendrick's evidence is irrelevant as well.
[58] However, I do find to be relevant an incidental statement made by both Mr. Zinger and Mr. Pantyik, being with respect to the 17% wastage limit applied by Inspector Warna. Both witnesses are naval architects, and both witnesses expressed a point of knowledge; neither had ever heard of the imposition of a 17% standard for hull frame corrosion. Indeed, Mr. Zinger expressed in his report that the setting of a 17% standard is unsupportable (Exhibit 4 for Identification, p.24).
3. The China survey completed after repairs
[59] At the time of repairs in China, a detailed ultrasound survey was conducted on the Vessel between September 4 and 15, 1997, by Nantong Ocean Ship Engineering Co. Ltd. The report of this survey is dated September 20, 1997, and is Exhibit P for Identification ( the "Nantong Report").
[60] The Defendants' argue for the admission of the Nantong Report to prove the actual condition of the Vessel at the time of detention so as to justify the detention. For the same reasons as provided above with respect to the C.D. Cushing Report, I find that the purpose for which it is tendered is irrelevant and, thus, it is inadmissible for that purpose.
[61] However, as I indicated during the course of the trial, I find that the Nantong Report is very relevant on the issue of damages. In oral argument, Counsel for the Plaintiffs' admitted that, on arrival in Vancouver, the Vessel should have been within Class with respect to the condition of the hull frames, and, as a result, agreed that the cost of repair in China of frames found not to meet Class NK standards would not be the responsibility of the Defendants. On this basis, as dealt with in Section V below, an important part of the argument on damages has focussed on the Nantong Report.
II. The Jurisdictional Question
Under what authority did Inspectors Warna and Hall detain the vessel
and under what authority was the detention maintained by them
and/or their supervisors?
[62] The Plaintiffs argue as follows:
The Plaintiffs allege in the Statement of Claim that the Defendants' requirements for the Vessel were excessive, that they were contrary to the position taken by the Class NK and the flag state, that is, the Government of Malaysia, and that the Defendants' conduct was contrary to the Canada Shipping Act and regulations, the duty contained in the international Convention for the Safety of Life at Sea 1974 and amendments and Protocol thereto. Further, the Plaintiffs state that the Defendants and each of them were negligent and in breach of their duty to the Plaintiffs in their conduct of the Port State Control inspection and detention of the Vessel (PCO, p.52).
[63] A primary element of the Defendants' defence to this action is that the detention was made pursuant to the provisions of the Canada Shipping Act R.S., 1985, c. S-9 ("the Act"), in particular, s.310 as quoted below, and that this fact acts as a block to the Plaintiffs' claims. The Plaintiffs maintain that, in fact, the detention was not made under the Act, and, in any event, in law, the detention could not be made under the Act, and, as a result, the block does not exist.
[64] On the basis of the following analysis, I agree with the Plaintiffs.
A. The international safety at sea regime
1. The International Convention for the Safety of Life at Sea, 1974 ("SOLAS")
[65] Canada is a Contracting Government to the Convention, but it is agreed that it is not part of the domestic law of Canada since it has not been made the subject of legislation passed by Parliament. Nevertheless, SOLAS is relevant because, as set out in Section I, the detention was purported to be pursuant to "Structural Deficiencies: SOLAS, Ch. 1, Reg. 11". Therefore, a basic understanding of the terms of the Convention is important.
[66] Article 1(b) reads as follows:
The Contracting Governments undertake to promulgate all laws, decrees, orders and regulations and to take all other steps which may be necessary to give the present Convention full and complete effect, so as to ensure that, from the point of view of safety of life, a ship is fit for the service for which it is intended.
[67] Chapter 1 of Part B of the Annex to the 1974 SOLAS Convention contains the following important provisions (Vol. 13, Tab 47):
Regulation 6
(a) The inspection and survey of ships, so far as regards the enforcement of the provisions of the present regulations and the granting of exemptions therefrom, shall be carried out by officers of the Administration [ie. the flag state]. The Administration may, however, entrust the inspections and surveys either to surveyors nominated for the purpose or to organizations recognized by it.
...
(d) When applicable, the Government of the port State concerned shall ensure that the ship shall not sail until it can proceed to sea, or leave port for the purpose of proceeding to the appropriate repair yard, without danger to the ship or persons on board.
Regulation 11
The condition of the ship and its equipment shall be maintained to conform with the provisions of the present regulations to ensure that the ship in all respects will remain fit to proceed to sea, without danger to the ship or persons on board.
Regulation 19
(a) Every ship when in a port of another Party is subject to control by officers duly authorized by such Government in so far as this control is directed towards verifying that the certificates issued under regulation 12 or regulation 13 of the chapter are valid.
(b) Such certificates, if valid, shall be accepted unless there are clear grounds for believing that the condition of the ship or of its equipment does not correspond substantially with the particulars of any certificates or that the ship and its equipment are not in compliance with the provisions of regulation 11(a) and (b) of this chapter.
(c) In the circumstances given in paragraph (b) of this regulation or where a certificate has expired or ceased to be valid, the officer carrying out the control shall take steps to ensure that the ship shall not sail until it can proceed to sea or leave the port for the purpose of proceeding to the appropriate repair yard without danger to the ship or persons on board.
(d) In the event of this control giving rise to an intervention of any kind, the officer carrying out the control shall forthwith inform, in writing, the Consul or, in his absence, the nearest diplomatic representative of the State whose flag the ship is entitled to fly of all the circumstances in which intervention was deemed necessary. In addition, nominated surveyors or recognized organizations responsible for the issue of the certificates shall also be notified. The facts concerning the intervention shall be reported to the Organization.
(e) The port State authority concerned shall notify all relevant information about the ship to the authorities of the next port of call, in addition to parties mentioned in paragraph (d) of this regulation, if it is unable to take action as specified in paragraphs (c) and (d) of this regulation or if the ship has been allowed to proceed to the next port of call.
(f) When exercising control under this regulation all possible efforts shall be made to avoid a ship being unduly detained or delayed. If a ship is thereby unduly detained or delayed it shall be entitled to compensation for any loss or damage suffered.
Regulation 12 requires the issuance of the certificates mentioned in Regulation 19(a). The certificates are listed in Regulation 12(a)(vii), together with the terms of their issuance as follows:
(vii) Passenger Ship Safety Certificates, Cargo Ship Safety Construction Certificates, Cargo Ship Safety Equipment Certificates, Cargo Ship Safety Radio Certificates and Exemption Certificates shall be issued either by the Administration or by any person or organization duly authorized by it. In every case, that Administration assumes full responsibility for the certificate.
2. The Memorandum of Understanding ("the MOU")
[68] As mentioned, Canada is a signatory to two Port State Control Memorandums of Understanding: the Paris Memorandum which controls Atlantic Ocean shipping, and the Tokyo Memorandum which controls Pacific Ocean shipping. The Memorandum of Understanding on Port State Control in the Asia-Pacific was signed in Tokyo on December 1, 1993, and April 11, 1994, by the following countries, referred to in the MOU as "the Authorities":
Australia
Canada
People's Republic of China
Fiji
Hong Kong, China
Indonesia
Japan
Republic of Korea
Malaysia
New Zealand
Papua New Guinea
Philippines
Russian Federation
Republic of Singapore
Solomon Islands
Thailand
Republic of Vanuatu
Socialist Republic of Vietnam
[69] The Preamble to the MOU states as follows (Vol. 6, Tab 219):
Recognizing the importance of the safety of life at sea and in ports and the growing urgency of protecting the marine environment and its resources;
Recalling the importance of the requirements set out in the relevant maritime conventions for ensuring maritime safety and marine environment protection;
Recalling also the importance of the requirements for improving the living and working conditions at sea;
Noting the resolutions adopted by the International Maritime Organization (IMO), and especially Resolution A682(17) adopted at its 17th Assembly, concerning regional co-operation in the control of ships and discharges;
Noting also that the Memorandum is not a legally binding document and is not intended to impose any legal obligation on any of the Authorities;
Mindful that the principal responsibility for the effective application of standards laid down in international instruments rests upon the administrations whose flag a ship is entitled to fly;
Recognizing nevertheless that effective action by port States is required to prevent the operation of substandard ships;
Recognizing also the need to avoid distorting competition between ports;
Convinced of the necessity, for these purposes, of an improved and harmonized system of port State control and of strengthening cooperation and the exchange of information;
...
[70] The following provisions of the MOU are most relevant to the present action:
Section 1 General
1.1 Each Authority that has accepted the Memorandum will give effect to the provisions of the present Memorandum.
...
1.3 Each Authority will establish and maintain an effective system of port State control with a view to ensuring that, without discrimination, foreign merchant ships calling at a port of its Authority, or anchored off such a port comply with the standards laid down in the relevant instruments as defined in section 2.
Section 2 Relevant instruments
2.1 For the purposes of the Memorandum, the following are the relevant instruments on which regional port State control is based:
1. the international Convention on Load Lines 1966;
2. the international Convention for the Safety of Life at Sea as amended;
3. the protocol of 1978 relating to the International Convention for the safety of Life at Sea, 1974
4. the international Convention for the Prevention of Pollution from Ships 1973, as modified by the Protocol of 1978 relating thereto;
5. the International Convention on Standards for Training, Certification and Watchkeeping for Seafarers, 1978, as amended;
6. the Convention on the International Regulations for Preventing Collisions at Sea, 1972;
7. the International Convention on Tonnage Measurement of Ships, 1969, and
8. The Merchant Shipping (Minimum Standards) Convention, 1976 (ILO Convention No. 147).
2.2 With respect to the Merchant Shipping (Minimum Standards) Convention, 1976 (ILO Convention No. 147), each Authority will be guided by the instructions in chapter 4 of the Asia-Pacific Port State Control Manual (hereinafter referred to as the "Manual"). The implementation of ILO Convention No. 147 will not require any alterations to structure or facilities involving accommodation for ships whose keels were laid down before April 1, 1994.
2.3 In the application of the other relevant instruments, each Authority will be guided by the standards specified in chapter 3 of the Manual.
2.4 Each Authority will apply those relevant instruments which are in force and are binding upon it. In the case of amendments to a relevant instrument each Authority will apply those amendments which are in force and which are binding upon it. An instrument so amended will then be deemed to be the 'relevant instrument' for that Authority.
...
2.6 When inspecting ships for provisions of the relevant instruments to which it is a Party, the Authority as the port State will not impose standards on foreign ships that are in excess of standards applicable to ships flying the flag of that port State.
Section 3 Inspection Procedures, Rectification and Detention
3.1 In implementing this Memorandum, the Authorities will carry out inspections, which will consist of at least a visit on board a ship in order to check the certificates and documents, and furthermore satisfy themselves that the crew and the overall condition of the ship, its equipment, machinery spaces and accommodation, and hygienic conditions on board, meets the provisions of the relevant instruments. In the absence of valid certificates, or if there are clear grounds for believing that the crew or the condition of the ship or its equipment does not substantially meet the requirements of a relevant instrument, or the master or crew are not familiar with essential shipboard procedure relating to the safety of ships or the prevention of pollution, a more detailed inspection will be carried out. Inspections will be carried out in accordance with the Manual.
3.2 Clear Grounds
3.2.1 The Authorities will regard as 'clear grounds' inter alia the following:
.1 a report or notification by another Authority;
.2 a report or complaint by the master, a crew member, or any person or organization with a legitimate interest in the safe operation of the ship, shipboard living and working conditions or the prevention of pollution, unless the Authority concerned deems the report or complaint to be manifestly unfounded; and
.3 other indications of serious deficiencies, having regard in particular to the Manual.
3.2.2 For the purpose of control, specific 'clear grounds' include those prescribed in paragraph 2.3 of IMO resolution A.787(19) contained in chapter 3 of the Manual.
3.2.3 Nothing in these procedures should be construed as restricting the powers of the Authorities to make measures within their jurisdiction in respect of any matter to which the relevant instruments relate.
...
3.6 Each Authority will endeavour to secure the rectification of all deficiencies detected. On the condition that all possible efforts have been made to rectify all deficiencies, other than those referred to in 3.7, the ship may be allowed to proceed to a port where any such deficiencies can be rectified. The provisions of 3.8 apply accordingly.
In exceptional circumstances where, as a result of the initial control and a more detailed inspection, the overall condition of a ship and its equipment, also taking the crew and its living and working conditions into account, are found to be substandard, the Authority may suspend an inspection.
The suspension of the inspection may continue until the responsible parties have taken the steps necessary to ensure that the ship complies with the requirements of the relevant instruments.
Prior to suspending an inspection, the Authority will have recorded detainable deficiencies in the areas set out in Appendix 1 of IMO resolution A.787(19) and ILO Convention deficiencies, as appropriate.
In cases where the ship is detained and an inspection is suspended, the Authority will, as soon as possible, notify the responsible parties. The notification will include information about the detention. Furthermore, it shall state that the inspection is suspended until the Authority has been informed that the ship complies will all relevant requirements.
3.7 In the case of deficiencies which are clearly hazardous to safety, health or the environment, the Authority will, except as provided in 3.8 ensure that the hazard is removed before the ship is allowed to proceed to sea. For this purpose appropriate action will be taken, which may include detention or a formal prohibition of a ship to continue an operation due to established deficiencies which, individually or together, would render the continued operation hazardous. In the event of a detention, the Authority will as soon as possible, notify in writing the flag State or its consul or, in his absence, its nearest diplomatic representative of all the circumstances in which intervention was deemed necessary. Where the certifying Authority is an organization other than a maritime administration, the former will also be advised.
Where deficiencies which caused a detention as referred to in paragraph 3.7 cannot be remedied in the port of inspection, the Authority may allow the ship concerned to proceed to the nearest appropriate repair yard available, as chosen by the master and agreed to by the Authority, provided that the conditions determined by the Authority and agreed by the competent authority of the flag State are complied with. Such conditions will ensure that the ship can proceed without risk to the safety and health of the passengers or crew, or risk to other ships, or without being an unreasonable threat of harm to the marine environment. In such circumstances the Authority will notify the Authority of the ship's next port of call, the parties mentioned in paragraph 3.7 and any other authority as appropriate. Notification to Authorities will be made in accordance with Chapter 7 of the Manual. The Authority receiving such notification will inform the notifying Authority of action taken.
If a ship referred to in paragraph 3.8 proceeds to sea without complying with the conditions agreed to by the Authority of the port of inspection:
1. that Authority will immediately alert all other Authorities, and
2. the ship will be detained at any port of the Authorities which have accepted the Memorandum, until the owner or operator has provided evidence to the satisfaction of the Authority of the port State, that the ship fully complies with all applicable requirements of the relevant instruments.
If a ship referred to in paragraph 3.8 does not proceed to the nominated repair port, the Authority of the repair port will immediately alert all other Authorities.
...
3.12 When exercising control under the Memorandum, the Authorities will make all possible efforts to avoid unduly detaining or delaying a ship. Nothing in the Memorandum affects rights created by provisions of relevant instruments relating to compensation for undue detention or delay.
[Emphasis added]
[71] Chapter 2 of the MOU specifically attaches Regulation 19 of SOLAS as quoted above as a "relevant instrument".
B. The domestic safety regime
1. The Canada Shipping Act
[72] The Act presently sets out a list of objectives, and while the version which was law at the time of detention did not contain the list, it is agreed that they set out the purpose of legislation both then and now:
Canada Shipping ActObjectives of Act
5. The objectives of this Act are to
(a) protect the health and well-being of individuals, including the crews of ships, who participate in marine transportation and commerce;
(b) promote safety in the marine transportation system;
(c) protect the marine environment from damage due to navigation and shipping activities;
(d) develop a regulatory scheme that encourages viable, effective and economical marine transportation and commerce;
(e) promote an efficient marine transportation system;
(f) ensure that Canada can meet its international obligations under bilateral and multilateral agreements with respect to navigation and shipping;
(g) encourage the harmonization of marine practices;
(h) provide an appropriate liability and compensation regime in relation to incidents involving ships; and
(i) establish an effective inspection and enforcement program.
R.S., 1985, c. S-9 , s. 5; 1998, c. 16, s. 3.
Loi sur la marine marchande du Canada
Objet
5. La présente loi a pour objet:
a) de protéger la santé et le bien-être de ceux qui participent au transport et au commerce maritimes, y compris l'équipage;
b) de favoriser la sûreté du réseau de transport maritime;
c) de protéger le milieu marin contre les dommages causés par les activités de navigation et de transport maritime;
d) d'élaborer des outils de réglementation qui favorisent des activités de transport et de commerce maritimes viables, efficaces et économiques;
e) de favoriser l'efficacité du réseau de transport maritime;
f) de faire en sorte que le Canada honore ses obligations internationales découlant d'accords bilatéraux et multilatéraux en matière de navigation et de transport maritime;
g) d'encourager l'harmonisation des pratiques maritimes;
h) d'offrir un régime de responsabilité et d'indemnisation approprié en cas d'incidents mettant en cause des navires;
i) d'établir un programme efficace d'inspection et d'exécution de la loi.
L.R. (1985), ch. S-9 , art. 5; 1998, ch. 16, art. 3.
[73] In keeping with the key objectives of protecting health and promoting safety, Part V of the Act entitled "Safety" provides for the creation of the Steamship Inspection Service including: the appointment of steamship inspectors; the creation of a Board of Steamship Inspection composed of the steamship inspectors and other appointments; the appointment of a Director from the Board; and the provision of certain responsibility and power to the Director relevant to the present action as follows:
Canada Shipping Act
PART V
SAFETY
Loi sur la marine marchande du Canada
PARTIE V
MESURES DE SÉCURITÉ
Duties of Chairman
306. The Chairman shall supervise the steamship inspectors, receive and examine all their reports and accounts and is responsible to the Minister for the administration of the law relating to steamship inspection.
R.S., c. S-9 , s. 371.
Matters in dispute
307. (1) Any matter in dispute arising under this Act between the owner of a ship or any other interested party and a steamship inspector may be referred by either of them to the Chairman, who shall decide on the matter himself, or, if he considers that the circumstances warrant it, shall refer it to the Board for a decision.
...
Appeal to Minister
(3) Where the owner of a ship or any other interested party is dissatisfied with any decision given by the Chairman or by the Board under subsection (1), or where any matter in dispute arises under this Part between the owner of a ship or any other interested party and the Chairman or the Board, the owner or party may refer the matter to the Minister, who shall finally decide the matter.
In writing
(4) Any reference of a matter in dispute and any decision given in respect thereof made under this section shall be in writing.
R.S., 1985, c. S-9 , s. 307; R.S., 1985, c. 6 (3rd Supp.) , s. 33.
Fonctions du président
306. Le président doit diriger les inspecteurs de navires à vapeur, recevoir et examiner tous leurs rapports et comptes, et est responsable envers le ministre de l'application de la loi en ce qui concerne l'inspection des navires à vapeur.
S.R., ch. S-9, art. 371.
Contestations
307. (1) Toute contestation découlant de la présente loi et s'élevant entre le propriétaire d'un navire ou un autre intéressé et un inspecteur de navires à vapeur peut, par l'une ou l'autre partie, être renvoyée au président qui décide lui-même la question ou qui la soumet à la décision du Bureau s'il estime que les circonstances le justifient.
...
Appel au ministre
(3) Lorsque le propriétaire d'un navire ou un autre intéressé n'est pas satisfait de la décision du président ou du Bureau, rendue en vertu du paragraphe (1), ou lorsqu'une contestation découlant de la présente partie s'élève entre un propriétaire de navire ou un autre intéressé et le président ou le Bureau, ce propriétaire ou cet intéressé peut renvoyer la question au ministre qui décide en dernier ressort.
Par écrit
(4) Tout renvoi d'une contestation et toute décision y afférente, rendue en vertu du présent article, doivent être formulés par écrit.
L.R. (1985), ch. S-9 , art. 307; L.R. (1985), ch. 6 (3e suppl.) , art. 33.
[74] Of particular importance to the detention, is the following provision:
Right of inspector to board ships
310. (1) A steamship inspector, in the performance of his duties, may go on board any ship at all reasonable times and inspect the ship, or any of the machinery or equipment thereof, or any certificate of a master, mate or engineer, and if he considers the ship unsafe, or, if a passenger ship, unfit to carry passengers, or the machinery or equipment defective in any way so as to expose persons on board to serious danger, he shall detain that ship.
Right of inspector to detain ship
(2) A steamship inspector may detain any ship in respect of which any of the provisions of this Act have not been complied with, if, in his opinion, detention is warranted in the circumstances.
Droit des inspecteurs de monter à bord
310. (1) Un inspecteur de navires à vapeur peut, dans l'exercice de ses fonctions, monter à bord de tout navire, à des heures convenables, inspecter le navire, ses machines ou son équipement et examiner le certificat ou brevet du capitaine, d'un officier de pont ou d'un officier mécanicien; si le navire lui paraît dangereux, ou dans le cas d'un navire à passagers, inapte au transport de passagers, ou si les machines ou l'équipement lui paraissent défectueux au point d'exposer sérieusement au danger les personnes à bord, il doit détenir ce navire.
Détention du navire
(2) Un inspecteur de navires à vapeur peut détenir un navire à l'égard duquel l'une des dispositions de la présente loi n'a pas été observée, s'il juge que les circonstances le justifient.
2. The Non-Canadian Ship Safety Order, Chapter , C.R.C., c.1452 (1978) ("the Order")
[75] It is agreed that the Order was operative at the time of the detention; however, its references to Part VIII are out of date. These references should be read as Part V. As the Order has a significant impact on the defence to the present action, it is cited here in its entirety.
CHAPTER 1452
CANADA SHIPPING ACT
Non-Canadian Ships Safety Order
ORDER DIRECTING THAT THE APPLICATION OF SECTION 110 AND PART VIII OF THE CANADA SHIPPING ACT BE EXTENDED TO SHIPS REGISTERED ELSEWHERE THAN IN CANADA
Short Title
1. This Order may be cited as the Non-Canadian Ships Safety Order.
Interpretation
2. In this Order,"Act" means the Canada Shipping Act;
"Safety Convention" means the International Convention for the Safety of Life at Sea, 1960.
Application
3. This Order applies to every ship registered elsewhere than in Canada that (a) is engaged in the coasting trade of Canada;
(b) is operating principally from a place within Canada on any voyage other than an international voyage not made solely within the limits of inland waters; or
(c) is being used or operated at a place within Canadian waters.
Inspection and Certification
4. Subject to sections 5 and 6, Part VIII of the Act and the regulations made pursuant thereto apply to every ship described in section 3.
5. A passenger ship, carrying more than 12 passengers, that has on board a valid Passenger Ship Safety Certificate issued in accordance with the Safety Convention shall be regarded as complying with those provisions of Part VIII of the Act and the regulations thereunder dealing with the hull, machinery, life saving and fire extinguishing equipment to the extent that those provisions are requirements of the Safety Convention.
6. A non-passenger ship or a passenger ship that carries not more than 12 passengers shall be regarded as complying with those provisions of Part VIII of the Act and the regulations thereunder dealing with
(a) the hull and machinery, if the ship has on board
(i) a valid Cargo Ship Safety Construction Certificate issued under the Safety Convention, or
(ii) a valid certificate issued by a recognized classification society showing that the ship is in class, and
(b) life saving and fire extinguishing equipment, if the ship has on board a valid Cargo Ship Safety Equipment Certificate issued under the Safety Convention,
to the extent that those provisions are requirements of the Safety Convention or classification society rules, as the case may be.
Certificated Engineers
7. The provisions of section 110 of the Act apply to every ship described in section 3 to the same extent as if that ship were a Canadian ship, except that a ship operating principally from a place within Canada on international voyages solely within the limits of inland waters shall be deemed to have complied with section 110 of the Act if it carries certificated engineers in accordance with the laws of the country of its registry.
CHAPITRE 1452
LOI SUR LA MARINE MARCHANDE DU CANADA
Décret sur la sécurité des navires non canadiens
DÉCRET ÉTENDANT AUX NAVIRES IMMATRICULÉS AILLEURS QU'AU CANADA L'APPLICATION DE L'ARTICLE 110 ET DE LA PARTIE VIII DE LA LOI SUR LA MARINE MARCHANDE DU CANADA
Titre abrégé
1. Le présent décret peut être cité sous le titre: Décret sur la sécurité des navires non canadiens.
Interprétation
2. Dans le présent décret,
« Convention de sécurité » désigne la Convention internationale
pour la sauvegarde de la vie humaine en mer (1960); .Loi. désigne la Loi sur la marine marchande du Canada.
Application
3. Le présent décret s'applique a tout navire immatricule ailleurs qu'au Canada qui
a) fait du cabotage au Canada;
b) effectue principalement d'un lieu situe au Canada tout voyage autre qu'un voyage international qui n'est pas accompli uniquement dans les limites des eaux intérieures; ou
c) est utilise ou exploité en un lieu dans les limites des eaux canadiennes.
Inspection et délivrance de certificat
4. Sous réserve des articles 5 et 6, la Partie VIII de la Loi et les règlements édictés en exécution de ladite Partie VIII s'appliquent a tout navire décrit a l'article 3.
5. Un navire a passagers, transportant plus de 12 passagers et ayant a son bord un certificat valide de sécurité pour navire a passagers délivré selon la Convention de sécurité, est censé avoir observé les dispositions de la Partie VIII de la Loi et des règlements établis en exécution de cette partie quant a la coque, aux machines, a l'équipement de sauvetage et au matériel d'extinction d'incendie, dans la mesure où ces dispositions sont prévues dans la Convention de sécurité.
6. Un navire non a passagers ou un navire a passagers transportant 12 passagers au plus est censé avoir observe les dispositions de la Partie VIII de la Loi et des règlements établis en exécution de cette partie
a) quant a la coque et aux machines, si le navire a à son bord
(i) un certificat valide de sécurité de construction pour navire de charge délivré selon la Convention de sécurité, ou
(ii) un certificat valable délivré par une société de classification reconnue constatant que le navire est cote, et
b) quant 3 1'équipement de sauvetage et au matériel d'extinction d'incendie, si le navire a à son bord un certificat valide de sécurité du matériel d'armement pour navire de charge délivré selon la Convention de sécurité,
dans la mesure où ces dispositions sont prévues dans la Convention de sécurité ou les règles de la société de classification, selon le cas.
Mécaniciens brevetés
7. Les dispositions de ]'article 110 de la Loi s'appliquent a tout navire décrit a I'article 3 dans la même mesure que si ce navire était un navire canadien, sauf qu'un navire qui effectue principalement d'un lieu du Canada des voyages internationaux dans les limites des eaux intérieures est censé avoir observé les dispositions de L'article 110 de la Loi s'il a à son bord des mécaniciens brevetés conformément aux lois du pays où il est immatriculé.
3. The Coasting Trade Act, 1992, Chap. 31, 1992, as amended
[76] By its preamble, the Coasting Trade Act is "an Act respecting the use of foreign ships and non-duty paid ships in the coasting trade", and, by its provisions, is administered by the Canadian Transportation Agency. Two definitions of "coasting trade" found in s.2 are relevant to the present action:
Coasting Trade Act
"coasting trade" means
(a) the carriage of goods by ship, or by ship and any other mode of transport, from one place in Canada or above the continental shelf of Canada to any other place in Canada or above the continental shelf of Canada, either directly or by way of a place outside Canada, but, with respect to waters above the continental shelf of Canada, includes the carriage of goods only in relation to the exploration, exploitation or transportation of the mineral or non-living natural resources of the continental shelf of Canada,
...
(f) the engaging, by ship, in any other marine activity of a commercial nature in Canadian waters and, with respect to waters above the continental shelf of Canada, in such other marine activities of a commercial nature that are in relation to the exploration, exploitation or transportation of the mineral or non-living natural resources of the continental shelf of Canada.
Loi sur le cabotage
« _cabotage_ »
a) Le transport de marchandises par navire, ou par navire et par un autre moyen de transport, entre deux lieux situés au Canada ou au-dessus du plateau continental du Canada, directement ou en passant par un lieu situé à l'extérieur du Canada; toutefois, dans les eaux situées au-dessus du plateau continental du Canada, seul le transport de marchandises lié à la recherche, à l'exploitation ou au transport des ressources minérales ou des autres ressources non biologiques du plateau constitue du cabotage;
...
f) toute autre activité maritime de nature commerciale effectuée par navire dans les eaux canadiennes ou les eaux situées au-dessus du plateau continental du Canada, l'activité devant toutefois, dans ce dernier cas, être liée à la recherche, à l'exploitation ou au transport des ressources minérales ou des autres ressources non biologiques du plateau.
[77] The following provision explains the process whereby foreign ships are allowed to engage in coasting trade:
Prohibition
3. (1) Subject to subsections (2) to (5), no foreign ship or non-duty paid ship shall, except under and in accordance with a licence, engage in the coasting trade.
United States Wreckers Act
(4) Subsection (1) does not apply in respect of operations permitted by the United States Wreckers Act.
Interdiction
3. (1) Sauf en conformité avec une licence, un navire étranger ou un navire non dédouané ne peut, sous réserve des paragraphes (2) à (5), se livrer au cabotage.
Loi sur les bateaux sauveteurs des États-Unis
(4) Le paragraphe (1) ne s'applique pas aux opérations de sauvetage autorisées par la Loi sur les bateaux sauveteurs des États-Unis.
C. Conclusions
1. On the law
[78] A point of contention is the degree to which Part V of the Act applies to a non-Canadian ship, such as the Lantau Peak, carrying on trade in Canadian waters. The Defendants argue that such ships are subject to the enforcement process of s.310 of the Act. However, the Plaintiffs argue that when the Act is read together with the Order and the Coasting Trade Act, Parliament intended that this should not be the case.
[79] In particular, the Defendants argue that s.3(c) of the Order does not apply to the Lantau Peak because, at the time of the detention, the Vessel was not "being used or operated at a place within Canadian waters"; that is, it travels between countries loading and delivering coal and iron ore, and in April 1997 it was travelling between Japan and Canada and not "being used or operated at a place within Canadian waters". The Defendants urge an interpretation that, on the plain meaning of the words in s.3(c), before the Order can be said to apply to a particular ship, that ship must have some certain geographic connection with Canada. In support of this argument, the Defendants point to the French version of s.3(c). It is agreed that the English translation of the French version of s.3(c) is as follows:
3. This order applies to every ship registered elsewhere than in Canada that
...
c) is used or operated in a place within the limits of Canadian waters.
I do not find that the French version adds anything to the Defendants' argument. In addition, on the basis of the analysis which follows, I do not agree with the Defendants' interpretation of the provision.
[80] In the course of oral reply, Mr. Swanson, on behalf to the Plaintiffs, made a compelling argument with respect to the correct interpretation of the Order, and the relationship between the Act and the Order.
[81] Three important features underpin the argument, with which I agree. First, the Act and the Order should be read in a way so as to find harmony, not conflict. This feature is well expressed in the following quote from Driedger on the Construction of Statutes (3rd ed.) at p. 176:
It is presumed that the provisions of legislation are meant to work together, both logically and teleologically, as parts of a functioning whole. The parts are presumed to fit together logically to form a rational, internally consistent framework; and because the framework has a purpose the parts are also presumed to work together dynamically, each contributing something toward accomplishing the intended goal.
[82] Second, the Act and the Order should be read with SOLAS so as to find harmony, not conflict. In making this point, Mr. Swanson referred to Driedger, supra.; the following is the entire passage at p.330:
Although international law is not binding on Canadian legislatures, it is presumed that legislation is meant to comply with international law and with Canada's international law obligations. The presumption applies to both federal and provincial legislation. The presumption was stated broadly in Bloxom v. Favre. Every statute is to be so interpreted and applied as far, as its language admits, as not to be inconsistent with the comity of nations or with the established rules of international law. In Solomon v. Customs and Excise Commissioners, Lord Diplock wrote:
...there is a prima facie presumption that Parliament does not intend to act in breach of international law, including therein specific treaty obligations, and if one of the meanings which can reasonably be ascribed to the legislation is consonant with the treaty obligations and another or others are not, the meaning which is consonant is to be preferred.
In Daniels v. White and The Queen, Pigeon J. wrote:
This is a case for the application of the rule of construction that Parliament is not presumed to legislate in breach of a treaty or in any manner inconsistent with the comity of nations and the established rules of international law.
These authorities make it clear that there are two aspects to the presumption. First, the legislature is presumed to comply with the obligations owed by Canada as a signatory of international instruments, and more generally as a member of the international community. In choosing among possible interpretations therefore, the courts avoid interpretations that would put Canada in breach of any of its international obligations. Second, the legislature is presumed to respect the values and principles enshrined in international law, both customary and conventional. These constitute a part of the legal context in which legislation is enacted and read. Insofar as possible therefore, interpretations that reflect these values and principles are preferred.
In addition, as support for this statement, Mr. Swanson referred to the majority decision in Baker v. Canada 1999 CanLII 699 (S.C.C.), [1999] 2 S.C.R. 817, where, while speaking of an immigration issue, Justice L'Heureux-Dubé said this about the application of international conventions at paras. 69-71:
69 Another indicator of the importance of considering the interests of children when making a compassionate and humanitarian decision is the ratification by Canada of the Convention on the Rights of the Child, and the recognition of the importance of children's rights and the best interests of children in other international instruments ratified by Canada. International treaties and conventions are not part of Canadian law unless they have been implemented by statute: Francis v. The Queen, [1956] S.C.R. 618, at p. 621; Capital Cities Communications Inc. v. Canadian Radio-Television Commission, [1978] 2 S.C.R. 141, at pp. 172-73. I agree with the respondent and the Court of Appeal that the Convention has not been implemented by Parliament. Its provisions therefore have no direct application within Canadian law.
70 Nevertheless, the values reflected in international human rights law may help inform the contextual approach to statutory interpretation and judicial review. As stated in R. Sullivan, Driedger on the Construction of Statutes (3rd ed. 1994), at p. 330:
[T]he legislature is presumed to respect the values and principles enshrined in international law, both customary and conventional. These constitute a part of the legal context in which legislation is enacted and read. In so far as possible, therefore, interpretations that reflect these values and principles are preferred. [Emphasis added.]
The important role of international human rights law as an aid in interpreting domestic law has also been emphasized in other common law countries: see, for example, Tavita v. Minister of Immigration, [1994] 2 N.Z.L.R. 257 (C.A.), at p. 266; Vishaka v. Rajasthan, [1997] 3 L.R.C. 361 (S.C. India), at p. 367. It is also a critical influence on the interpretation of the scope of the rights included in the Charter: Slaight Communications, supra; R. v. Keegstra, 1990 CanLII 24 (S.C.C.), [1990] 3 S.C.R. 697.
71 The values and principles of the Convention recognize the importance of being attentive to the rights and best interests of children when decisions are made that relate to and affect their future. In addition, the preamble, recalling the Universal Declaration of Human Rights, recognizes that "childhood is entitled to special care and assistance". A similar emphasis on the importance of placing considerable value on the protection of children and their needs and interests is also contained in other international instruments. The United Nations Declaration of the Rights of the Child (1959), in its preamble, states that the child "needs special safeguards and care". The principles of the Convention and other international instruments place special importance on protections for children and childhood, and on particular consideration of their interests, needs, and rights. They help show the values that are central in determining whether this decision was a reasonable exercise of the H & C power.
[83] Third, the Act and the Order should be read with an understanding of the reality of international marine trading so as to find harmony, not conflict.
[84] As Mr. Swanson's argument is all-encompassing, and deals well with Counsel for the Defendants' submissions on the issue of the authority for and enforcement of the detention, I quote it here with some editing for clarity because, in my opinion, it provides the correct interpretation of the relationship between the Act and the Order (Transcript, January 21, 2004, pp.59-76):
MR. SWANSON: That's in large part what the Canada Shipping Act does, but it's specific to Canadian flag vessels. I think as I said yesterday, it would be absurd to read the Canada Shipping Act as somehow regulating non-Canadian flag vessels from a construction, safety and manning perspective, because what that would do then is that would impose Canadian safety, construction, manning and safety standards on ships all around the world flying different flags.
That would be] problematic because that would result in essentially foreign flag vessels boycotting Canada, and that would mean Canada would end up in a situation where unless it had sufficient foreign flag vessels to carry products to and from Canada, we would be in a terrible state economically.
So [the Act] has to be thought of in that context. I know my friend wants you to view the Canada Shipping Act as simply a public safety and health document or legislation. It's not. As the objects clearly state in 1998, an economic transportation system is important to Canada. An ability to get goods to and from Canada is important to Canada.
So we could not and we do not create this regulatory framework where foreign flag vessels coming to Canada have to comply with unique Canadian safety standards. And that's recognized, yet Parliament obviously at some point [said]: Well, we need to have some way of judging the suitability of these foreign flag vessels when they're in our waters. When they're in our waters we certainly have territorial jurisdiction over them. When they're in our waters, we certainly need a mechanism to make sure that they're not flouting the most basic of safety standards.
Well, what is the mechanism? The mechanism is you go to the international framework -- SOLAS, Safety of Life at Sea Convention that Canada is a party to, and you go: Okay, well, basically every country requires vessels coming into their jurisdiction to comply with SOLAS. So what do you look for? Step 1 is you look to see whether or not the vessel has valid statutory certificates, i.e. certificates under SOLAS.
The other way of judging safety or gauging safety is ...the classification societies.... We know that these ships are monitored by classification societies. We know that flag states will pay heed to classification society requirements. We know that these statutory certificates will not generally be issued unless it can be shown that the vessel is meeting minimum standards like class.
And the point is, under the Coasting Trade Act , non-Canadian flag vessels cannot coast unless they bring the ship in and register it here, or unless they, for notional purposes, import the ship and pay duty. And I think as Mr. Bernard said, this legislation is legislation that virtually every country in the world has, and it's protective legislation to protect local ship owners to make sure that foreign flag ship owners don't come in and take the work of locals. It really is very much protectionist legislation. But it's protectionist legislation that virtually every country has.
...
[By provision (b) of the definition of "coasting trade" which deals with the carriage of passengers] it's a little more complicated in the context of passengers, but in essence it's the same thing. Foreign flag vessels can't come into Canadian waters and carry passengers to and from Canadian ports. That's the preserve of Canadian flag vessels, unless you as a foreign flag owner come and apply under the Coasting Trade Act, either get exempted -- or you have to get exempted in which case you have to pay duty as if you import the vessel and there's a formula to do that and it costs quite a bit of money. So it's legislation that prohibits foreign flag vessels from doing those things.
Importantly, if you flip the page, you'll see that there's another provision under the definition of Coasting Act and that's (f) and (f) is:
The engaging by ship in any other marine activity of a commercial nature in Canadian waters¼"
So the oil rig, I would suggest, the floating hotel I would suggest.
"¼and with respect to waters above the continental shelf of Canada, and such other marine activities of a commercial nature that are in the relation to the exploration, exploitation or transportation of mineral or non-living natural resources of the continental shelf of Canada."
So coasting is not only moving cargo and moving people back and forth, but it's also coming in a stationary sense and doing work, commercial work, commercial exercises in a stationary sense in Canadian waters. So that rig that comes in, it's a foreign flag vessel, a foreign flag rig, it can't just come in to Canadian waters and start drilling. It can't do it. You have to get an exemption under the Coasting Trade Act, duty pay your vessel and come in and do it.
Similarly I would submit the floating hotel. No different. A foreign flag passenger ship operator could not bring a ship into Vancouver harbour, position it in the harbour and say, "We're just a floating hotel." If they do that, they are coasting.
So when you look at that broad definition of coasting and you go back to the Order, you have to read that broad definition of coasting into s.3(a) because it's the exact same language, it's the exact same wording. And I expect my friend will agree that in comparable legislation if you use the same words -- and there's actually a definition in comparable legislation you go to that definition and you apply that definition.
So "coasting trade" as used there means coasting as defined in the Coasting Trade Act which means that a ship that is a foreign flag vessel which, when you bring into this Section 3 [of the Order] it means a foreign flag vessel that is either carrying cargo from one place in Canada to another place in Canada, it's coasting. A foreign passenger ship carrying people from one place in Canada to another place in Canada, it's coasting. A foreign flag vessel that is stationary such as a drilling rig or a floating hotel, it is coasting. So that (a) captures all of those activities.
So why then do you have (c) to simply reiterate what (a) says? The Defendants would have you interpret "use or operate at a place within Canadian waters", to simply be a restatement of coasting. Well, that's contrary to all general principles of statutory interpretation.
There's another way of looking at it, and that is the principle that legislation should not be construed to promote an absurd result. Well, if you take what the Defendants are saying here, they are saying that a vessel that is a non-Canadian flag vessel that comes into Canada, pays duty, seeks an exemption under the Coasting Trade Act -- it's still coasting but it has authority to do it now -- comes into Canada, carrying passengers to and from one port in Canada to another or is carrying cargo from one port to and from in Canada, that ship, interestingly enough, that's here on a frequent or on a more regular basis, that ship only has to meet the SOLAS and have a valid class certificate [under s.6(a)(i) of the Order. That's what he's saying. That ship, under this regulation, that's all they have to have.
But [the Defendants say] you must interpret this legislation so that the one-off ship, the foreign flag ship that comes here in ballast to come to the Port of Vancouver to load cargo and leave and go to Japan, that ship interestingly enough, is governed by all of Canada's safety laws. That ship must comply with all of the provisions of the Canada Shipping Act. That's what his argument is suggesting.
It makes no sense. It makes no sense at all. The foreign flag vessel that is here frequently is here performing a regular kind of operation here in Canada, they only have to meet a minimum standard of SOLAS and class [by s.6(a)(i) or (ii) of the Order], but a ship that's here on and-off, it's got this higher stricter regime it has to comply with. It's just nonsensical. Not only that, and I appreciate that the titles of legislation do not govern, obviously and they do not take precedence over the wording of the legislation itself, but it's pretty hard to ignore the title of this order: "An Order Directing that the Application of Section 110 and Part 8¼" which has been agreed is Part 5, "¼of the Canada Shipping Act be extended to ships registered elsewhere than in Canada."
What my friend wants you to accept is that when Parliament enacted this regulation, Parliament was intending to apply the provisions of the Canada Shipping Act to all ships that ever come into Canada, except they won't for those that are coasting. It just doesn't make any sense.
And there's another way of dealing with this, My Lord, and that is that interpretation that my friend wants to place on it, I submit, is inconsistent with SOLAS itself. It's inconsistent with the MOU to the extent that that is an important document in trying to interpret something like this. You have to look, I submit, at "used or operated" [in s.3(c) of the Order] not only in the context of the Canada Shipping Act but again -- and there can be no doubt that this particular document is a document that has an international law flavor. The "Safety Convention" [referred to in s.2 of the definition section of the Order] is in fact defined as the International Convention for the Safety of Life at Sea, 1960. When this regulation was implemented, they were aware of SOLAS, 1960 and they were legislating specifically in respect of SOLAS, 1960.
So you have to go to SOLAS and [ask], "Okay, well, how does this fit?" And you have to ask how does the defendant's interpretation of this fit with the international legal framework in existence. It doesn't fit.
And I'd like to refer you to [a provision of SOLAS] where I say their interpretation results in an inconsistency--I'm at Volume 13, tab 47, page 29, Regulation 19A:
"Every ship when in a port of another party is subject to control by officers duly authorized by such government insofar as this control is directed towards verifying that the certificates issued under Regulation 12 or Regulation 13 of this Chapter are valid."
That's exactly what the Non-Canadian Ship Safety Order says if you ascribe to the interpretation that we're advancing. It's completely at odds with the interpretation that the defendant is advancing.
So just reverting back to Baker, you've got two possible interpretations to "used or operate" [in s.3(c) of the Order]. My friend's which I think is a restrictive, narrow interpretation that creates more uncertainty and absurdity than it creates clarity or harmony. And that interpretation is clearly contrary to what the obligations, the international treaty obligations Canada has agreed to.
Our interpretation is, a foreign flag vessel like the LANTAU PEAK is being "used or operated" when it is here in Vancouver for the purpose of loading cargo. That's what it came here for, it came here to be used. It didn't just come here for -- to h