Canada: BC Supreme Court Clarifies Application Of Maritime Limitation Periods

The BC Supreme Court recently determined that the two-year limitation period found Article 16 of the Athens Convention (the "Convention"), incorporated into Canadian law through the Marine Liability Act, S.C. 2001, c. 6 ("MLA"), applies only to carriers. The Court further clarified that the three-year limitation period found in the MLA incorporates the common law "discoverability" principle articulated in Peixeiro v. Haberman, [1997] 3 S.C.R. 549. In doing so, the Court avoided addressing a complex constitutional issue regarding the provincial superior courts' ability to apply provincial limitations statutes and their rules of court to federal maritime law.

In Sperling v. Queen of Nanaimo (Ship), 2014 BCSC 326, the plaintiff applied to add several parties to the plaintiff's personal injury action. The plaintiff was injured while aboard the Queen of Nanaimo ferry when the ferry had a hard landing that caused the plaintiff to be thrown from her chair and strike her head. BC Ferries' investigation into the incident revealed that the hard landing was, at least in part, caused by the installation of incorrect tapered dowels in the ferry's port oil distribution box.

The plaintiff's action was started two years less a day after the incident against the Queen of Nanaimo, BC Ferries and a number of unnamed defendants. Shortly thereafter, the plaintiff learned from BC Ferries that Kamewa Canada Inc. and Rolls-Royce Canada Limited were involved in the installation and maintenance of the oil distribution box, including the incorrectly installed tapered dowels. The plaintiff filed an application three years less a day from the date of the accident to add or substitute those two companies as well as three other related companies. The addition of these companies was integral to  the plaintiff's ability to fully recover for the damages she suffered, given that BC Ferries' liability to her was limited to a fraction of her potential claim due to the operation of the Convention.

The proposed defendants raised a number of defences to oppose their addition to the action, including a constitutional challenge to the applicability of provincial limitations acts and rules of court to federal maritime law. In their submission, based on Ordon Estate v. Grail, [1998] 3 S.C.R. 437 ("Ordon"), maritime law was in the exclusive domain of Parliament. As a result, it was constitutionally impermissible for a provincial limitations statute to apply to liability in maritime law or for a provincial superior court to apply its rules of court to extend the limitation period found in MLA. The plaintiff disagreed, arguing that under the recent Supreme Court of Canada decision in Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44, both provincial and federal statutes were constitutionally applicable, and that, in any event, Ordon did not go so far as to proscribe the application of provincial rules of court that run up against federal maritime law.

A determination of this point was not necessary, however, because the Court found it possible to resolve the dispute on two grounds: limitation periods and discoverability. Ultimately the Court accepted the plaintiff's argument that the proposed defendants be added because it was just and convenient to do so under Rule 6-2(7)(c) of the Supreme Court Civil Rules.

The proposed defendants had argued that the two-year limitation period found in Article 16 of the Convention applied to them and acted as a time-bar to their addition. The Court disagreed. It accepted the plaintiff's argument that the limitation period found in Article 16 only applied as a time-bar to actions against the carriers under the Convention. While Article 16 did not make express reference to carriers, unlike most other articles within the Convention, the Court found that it was clear that the purpose of the Convention was to address to the liability of carriers. As a result, the logical interpretation was that Article 16 was similarly restricted.

The second issue was whether section 140 of the MLA, establishing a three-year limitation period for "any matter coming within the class of navigation and shipping", acted as a time-bar to the plaintiff's application. The plaintiff argued that even if section 140 applied to the plaintiff's application, the common law principle of discoverability meant that the three-year limitation period had not yet expired. Discoverability postpones the running of time for a limitation period "until the material facts underlying the cause of action" are known (Peixeiro). In this case, the plaintiff argued that the material facts underlying the cause of action were not known until BC Ferries had provided its investigation report to the plaintiff.

The Court agreed, finding that the language of section 140 permitted the application of the discoverability principle. Accordingly, time for the three-year time-bar found in section 140 did not begin running against the proposed defendant at least until the plaintiff learned of the contribution of the incorrectly installed tapered dowels to the incident. As a result, the three-year limitation period had not yet expired.

Once the absence of a limitation defence was established, the Court found that it was clearly just and convenient to add the two proposed defendants identified in BC Ferries' investigation report.

This case clarifies two points of law that had not previously been decided in Canada. First, the limitation period found in Article 16 of the Convention applies only to carriers of passengers. Second, the discoverability principle applies to the three-year limitation period found in section 140 of the MLA. However, the case leaves open constitutional questions as to the scope of the ability of provincial statutes to operate in perceived conflict within the sphere of federal maritime law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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