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Newsletters > April 2009

In this issue:
1. Punitive and aggravated damages in a wrongful death claim
2. When will courts assume jurisdiction
3. Constitutional validity of provincial workers compensation legislation in a maritime context

1. Punitive and aggravated damages in a wrongful death claim

In McDonald v. Queen of the North (Ship), 2008 BCSC 1777 the court was asked in an application to determine whether, as a matter of law, the claimants in a wrongful death action brought under the Marine Liability Act, S.C. 2001, c. 6 are precluded from seeking punitive and aggravated damages on behalf of dependants of the deceased.

Two passengers who were on board the ferry "Queen of the North" when she ran aground on Gil Island in Wright Sound about 135 kilometres south of Prince Rupert B.C. and sank were not saved and their bodies were never found. Mr. Foisy and Ms. Rosette were presumed to be dead pursuant to the Survivorship and Presumption of Death Act, R.S.B.C. 1996, c. 444.

The dependants of the passengers commenced an action against the owner of the vessel, British Columbia Ferry Services Inc. and the captain and fourth officer who was on the bridge at the time she ran aground.

The defendant British Columbia Ferry Services Inc. admitted liability but claimed the benefit of the limitation provisions of the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974. The application to strike the claim for punitive, exemplary and aggravated damages was made before the scheduled trial.

The court examined the Marine Liability Act, the Athens Convention, the existing case law and made the following findings:

a) Punitive or exemplary damages are not compensatory in nature. Their purpose is to punish wrongdoers and deter others from acting in the same manner.

b) The wording of the legislation in this case, as in the case of the Warsaw Convention [with respect to the carriage of passengers by air], clearly indicates that damages to be awarded under the Marine Liability Act and Athens Convention are to be compensatory in nature. "I am of the opinion, therefore that where the claim falls under the MLA and Athens Convention, as these claims do, the provisions of the legislation do not permit the recovery of punitive or exemplary damages, which are not in the nature of compensation." In coming to this conclusion the court looked at the three Canadian decisions dealing with similar issues under the Warsaw Convention.

c) Aggravated damages are compensatory in nature and are awarded in circumstances where the defendant's conduct has been particularly high-handed or oppressive thereby increasing the plaintiff's mental distress.

d) The Marine Liability Act (and the Athens Convention therein) does not permit the recovery of aggravated damages.

e) Punitive and aggravated damages do not form part of Canadian maritime common law (that would fill the statutory gap for these damages left by the Marine Liability Act and the Athens Convention.)

f) The court was not persuaded that it should reform Canadian maritime common law to provide for punitive and aggravated damages. In refusing to do so Justice Joyce noted that the claimants had not put forward a cogent reason why the court should do so when Parliament had chosen not to do it. Justice Joyce stated:

When the MLA was enacted Parliament incorporated the reform made by the Supreme Court of Canada in Ordon. It provided in s. 6(3) for the inclusion in damages recoverable by dependants of "an amount to compensate for the loss of guidance, care and companionship that the dependant could reasonably have expected to receive from the injured or deceased person if the injury or death had not occurred". It could have further expanded the scope of damages but did not do so.
Secondly, as Ordon made clear, the uniformity of maritime law is particularly pressing in actions for tortious liability. In undertaking judicial reform in an area of law that is the product of international treaties, courts must consider the effects of the change on the state of international maritime law. With those considerations in mind, I have not been presented with a sufficient basis upon which to reform Canadian maritime law in the manner put forward by the plaintiffs.
Thirdly, introducing into Canadian maritime law the ability for dependants to claim punitive or aggravated damages, or both, would place them in a different and potentially superior position as compared to dependants of persons killed in, for example, a bus crash on the highway, whose claim would fall under the Family Compensation Act. I can see no basis for creating that difference.

The application to strike the punitive, exemplary and aggravated damages from the claim was granted.

Rui Fernandes

2. When will courts assume jurisdiction: Case comment on Teck Cominco Metals Ltd. v Lloyd's Underwriters

The courts have long struggled with the question of how to determine when it is appropriate to take jurisdiction over a matter. Courts cannot help but want to add some clarity to this area and have continually created and modified applicable tests in the hopes of achieving this goal. That being said, the Supreme Court of Canada is not prepared to provide an absolute rule, even if by not doing so an undesirable consequence is created.

In Teck Cominco Metals Ltd. v. Lloyd's Underwriters* the Supreme Court of Canada was asked to determine whether a proceeding should be stayed on the basis that a court in a foreign jurisdiction already heard a motion for jurisdiction and determined that the foreign jurisdiction was the appropriate forum. It found on the basis of numerous policy considerations, including the desire to avoid a situation where parties race to the court to obtain jurisdiction in their preferred forum in order to thwart opposing parties from obtaining jurisdiction in perhaps a less favourable or desirable forum. In the end, the Court agreed with the conclusions of the lower courts and found that British Columbia was the appropriate forum. This ruling resulted in parallel proceeding in two jurisdictions with respect to insurance coverage issues.

The proceedings arose as a result of Teck Cominco Metals Ltd. ("Teck") being sued for environmental damages that allegedly occurred downstream from its plants in Trail, Port McNeill, Pinchi Lake and Vancouver, British Columbia and in the United States. Teck sought coverage from Lombard General Insurance Company of Canada, Lloyd's Underwriters and Seaton Insurance Co. (collectively referred to as the "Insurers"), but was denied.

Following the denial of insurance coverage by the Insurers, Teck commenced an action in Washington State Superior Court seeking a declaratory judgment for insurance coverage. At about the same time, the Insurers commenced parallel proceedings in the Supreme Court of British Columbia seeking declaratory orders regarding their obligations with respect to providing insurance coverage.

The parties then proceeded to bring motions in both courts seeking orders to have the coverage issues heard in their preferred jurisdiction. Upon the Insurers' motion, the Washington State Superior Court transferred the matter to the U.S. District Court. The U.S. District Court denied the Insurers' motion to dismiss Teck's claims in Washington on the basis that Washington was the convenient and appropriate forum.

At the same time, Teck brought a motion in British Columbia to dismiss the Insurers' proceedings. In determining jurisdiction, the British Columbia, court applied the Forum non conveniens test, as codified in the Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28, s. 11. The Court found that British Columbia was the appropriate forum. This decision was based on the findings that, amongst other things, the source of the alleged damages in the U.S. originated in British Columbia and the parties with respect to the insurance coverage issue were in Canada, therefore, the law of British Columbia applied to the application of the insurance policy.

The Supreme Court of British Columbia did consider that the U.S. District Court had already found that the United States was the appropriate forum. However, in the end it considered comity an influential consideration, but not a sufficient justification to stay the action in British Columbia. The appellate courts upheld this decision.

The courts rendered this decision despite the challenges that could result. Such challenges include, but are not limited to, the increased expense of defending and prosecuting two actions and the possibility of obtaining contradictory judgments. In addition, it could lead to problems with respect to enforcement of court Orders.

The Supreme Court of Canada noted those above concerns, but concluded that fairness outweighed these concerns when it stated:

A holistic approach, in which the avoidance of a multiplicity of proceedings is one factor among others to be considered, better serves the purpose of fair resolution of the forum non conveniens issue with due comity to foreign courts.**

As such, while parallel proceedings should be avoided, the mere possibility or actuality of parallel proceedings will not be sufficient to oust Canadian jurisdiction. The Supreme Court of Canada noted numerous policy considerations as the basis for its decision. For instance, the Court noted that the holistic approach would prevent law being determined by a race to the courts. An additional factor against the absolute rule was that jurisdiction could end up being determined by the speed of a judge in rendering his or her decision rather than being based on the most appropriate and/or convenient forum.

That being said, the holistic approach is not perfect and on occasion it can lead to parallel proceedings and to the possibility of inconsistent decisions. The court, while paraphrasing an article by V. Black and J. Swan, noted a couple of possible solutions to this undesirable consequence of having inconsistent decisions including:

a race where the first judgment handed down prevails;
an absolute preference for local proceedings; or
a middle ground that adopts a general first to judgment rule but affords additional defences to enforcement that may be engaged in some circumstances.***

However, in the end, beyond the list of possible solutions, the Court has left this enforcement question for future courts to decide and, in essence, the court may have only delayed the result, but has not necessarily averted the race to the courts.

ENDNOTES:
*2009 S.C.C. 11
** Ibid. Paragraph 30
*** Ibid. Paragraph 39 which paraphrases V. Black and J. Swan, "Concurrent Judicial Jurisdiction: A Race to the Court House or to Judgment?" (2008), 46 C.B.L.J. 292

Matt Mulholland

3. Constitutional validity of provincial workers compensation legislation in a maritime context

In Jim Pattison Enterprises v. Workers' Compensation Board, 2009 BCSC 88 the court had to consider the constitutional validity of British Columbia's occupational health and safety legislation relating to commercial fishing vessels. The provincial legislation under challenge was the Workers Compensation Act, R.S.B.C. 1996, c. 492 and in particular Part 24 of the Occupational Health and Safety Regulation, B.C. Reg. 296/97, enacted pursuant to the Act.

The challenge was brought by commercial fishing companies and not the by the Government of Canada. The federal and provincial governments reached an accord pursuant to which British Columbia took on responsibility for regulating and monitoring workplace safety on commercial fishing vessels.

The challenge involved two different actions: The Osprey Marine action involved the vessels called the "Osprey No. 1" and "Point Made". The Jim Pattison Enterprises action involved two of its vessels.

In both actions the vessels had been inspected by a Canadian Steamship Inspector on behalf of Transport Canada to ensure that they conformed to with the provisions of the Canada Shipping Act, R.S.C. 1985 and its regulations. The vessels were approved for fishing and annually inspected. Captains and crew were duly certified. The vessels were operated in accordance with the Canada Shipping Act, the Canada Labour Code, R.S.C. 1985, c. L-2 and their regulations.

In early 2007 a crew member on the Osprey No. 1 was struck and killed by a trawl door. A WCB inspection officer boarded and inspected the vessel and issued an inspection report requiring the establishment of a health and safety program including having stability books on board the vessels. Osprey took the position that the provincial legislation and regulation did not apply because they are ultra vires the Province of British Columbia or, alternatively, because such provisions or the regulations are inoperative by reason of incompatibility with the laws and regulations of the Parliament of Canada. It also sought an injunction or stay of proceedings prohibiting the WCB from initiating or taking any further enforcement proceedings.

In the Pattison action, the court noted that the crew of the vessels were British Columbia residents and covered by, and had made claims, under the compensation scheme created by the B.C. WCA. The vessels had stability books approved by Transport Canada for seine fishing but not for trawling operations. The stability books were being updated to cover trawl fishing. The B.C. WCB made certain orders including compliance with regarding stability documentation. The Pattison action petitioners' position was that the provincial legislature lacked constitutional jurisdiction to regulate safety on board fishing vessels operating from British Columbia.

The court reviewed the history of the federal-provincial agreements for the fishing industry. The federal government did not appear or make submissions in the proceedings before the court. The Attorney General of British Columbia represented the province. The WCB was represented at the hearing. The court reviewed the legislation including section 114 of the Workers Compensation Act which provides that the Board has power to co-operate and enter into arrangements with governments and other agencies on matters relating to its responsibilities (for safety) under the Act.

Counsel for the applicants argued that the pith and substance of the provincial legislation is ship safety, a term which includes safety of the vessel, crew and passengers (if any). Ship safety is a matter within the exclusive legislative competence of Parliament under s. 91(10) (Navigation and Shipping) or s. 91(12) (Sea Coast and Inland Fisheries) of the Constitution Act, 1867. Counsel also argued that Parliament enacted a comprehensive and complete code for marine operations and safety in the CSA, CSA, 2001 and some 74 different sets of regulations governing all aspects of ship operations. They point to the importance of a uniform body of maritime law. Their position was that the intrusion of the WCB into this area is relatively new, and threatens to undermine the uniformity of maritime law. They stated that vessel safety and crew safety are essentially the same thing, and that both are extensively regulated in the federal regime. Arguing that attempts by provincial legislatures to regulate crew safety will only create confusion and doubt on board ships, they stated that uniformity in the training of crew, building and equipping of vessels is essential, as is uniformity as between provinces with respect to maritime matters.

The position of the WCB was that the provincial and federal regulatory regimes exist without conflict and prevent a potential gap in the regulatory scheme (relating to stability tests on small fishing vessels). Counsel for the WCB submitted that federal-provincial cooperation in this area was not unconstitutional and, indeed, was essential. Counsel argued that the pith and substance of the legislation is the regulation of occupational health and safety with respect to vessels engaged in the "business of fishing", a matter within provincial jurisdiction. The WCB's position is that the business of fishing is not a federal undertaking when conducted by fishing vessels based in the Port of Vancouver which do not travel inter-provincially or internationally between ports.

In looking at the constitutional issue the court acknowledged that the effects of legislation may extend beyond the jurisdiction of the government enacting it without rendering the legislation unconstitutional. This is because "it is in practice impossible for a legislature to exercise its jurisdiction over a matter effectively without incidentally affecting matters within the jurisdiction of another level of government" , and because some matters may have both provincial and federal aspects -- the double aspect doctrine.

The court also looked at the decision of the Nova Scotia Court of Appeal which had delivered its decision in overturning Mersey Seafoods in 2007 N.S.S.C. 155. Mersey carried on a fishing business in Nova Scotia using vessels from the port of Liverpool Nova Scotia. It was charged by the Province of Nova Scotia with infractions under the Occupational Health and Safety Act, S.N.S. 1996, c. 7. The provincial court quashed the charges on the basis that the provincial Act was inapplicable. The Court of Appeal of Nova Scotia eventually upheld the provincial legislation. The Court held that the "matter" to which the legislation essentially related (examining both its purpose and effect) was a matter within provincial jurisdiction. Matters of working conditions, labour relations and the management of undertakings fall within property and civil rights in the province.

In its analysis the court noted:

"The compensation scheme in the WCA embodies a historic trade-off. A statutory bar prevents suits against employers where their negligence causes injury to workers, but employers in return are required to contribute to the compensation scheme which provides limited benefits to injured workers. It was common ground among the parties that the compensation scheme (with its statutory bar) applies to the employees of the petitioners and the plaintiff. It has been held in this Court that the statutory bar to an action by a worker does not intrude on the federal power over navigation and shipping: Laboucane v. Brooks, 2003 BCSC 1247, 229 D.L.R. (4th) 747, per Burnyeat J. However, the occupational health and safety aspects of the WCA are distinct from the injured-worker compensation aspects. Indeed, in some provinces they are found in different statutes… the occupational health and safety provisions are not part of an indivisible whole with the compensation provisions, and can be severed."

The court then proceeded to look at the exact provisions in issue. The court recognized that there were specific provisions in the provincial legislation that are matters that are the subject of maritime law, such as seaworthiness, vessel stability, and the duties of a master. These matters touch on areas that are exclusively federal. "However, they do so in the context of an attempt to impose, on commercial fishing employers, requirements designed to enhance the safety of workers on board fishing vessels. Having regard to both the purpose and the legal effect of the impugned provisions, I find that their pith and substance is the prevention of risks to the health and safety of British Columbia workers on fishing boats, and the promotion of sound occupational health and safety practices in that sector…some provisions of Part 24 incidentally affect matters beyond provincial jurisdiction, but at this stage it is their dominant purpose that is determinative, and I find that to be occupational health and safety."

The court concluded that the legislation is valid provincial legislation.

Rui Fernandes

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