Berhad v. Canada

Berhad v. Canada
Court (s) Database
Federal Court Decisions
Date
2004-04-05
Neutral citation
2004 FC 501
File numbers
T-609-99
Notes
Digest
Decision Content
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 betwe