Haida Tourism Limited Partnership (West Coast Resorts) v. Canada (Ship-Source Oil Pollution Fund)

Haida Tourism Limited Partnership (West Coast Resorts) v. Canada (Ship-Source Oil Pollution Fund)
Court (s) Database
Federal Court Decisions
Date
2022-08-31
Neutral citation
2022 FC 1249
File numbers
T-1375-21
Notes
Reported Decision
Decision Content
Date: 20220831
Docket: T-1375-21
Citation: 2022 FC 1249
Ottawa, Ontario, August 31, 2022
PRESENT: The Honourable Madam Justice Strickland
BETWEEN:
HAIDA TOURISM LIMITED PARTNERSHIP DBA WEST COAST RESORTS
Appellant
and
THE ADMINISTRATOR OF THE SHIP-SOURCE OIL POLLUTION FUND
Respondent
JUDGMENT AND REASONS
[1] This is a statutory appeal of a decision of the Administrator [Administrator] of the Ship-Source Oil Pollution Fund [SOPF] brought pursuant to subsection 106(2) of the Marine Liability Act, SC 2001 c 6 [MLA]. The Administrator disallowed a claim filed pursuant to subsection 103(1) of the MLA by Haida Tourism Limited Partnership [Haida] with respect to its costs and expenses incurred to prevent, repair, remedy or minimize ship-source oil pollution damage.
Overview [2] Haida was, at all material times, the owner and operator of an accommodation barge, the “Tasu I” (West Island 395, O.N. 323291) [Vessel], used as a sports fishing lodge. According to the claim submitted by Haida to the Administrator, on September 8, 2018, the Vessel came loose from its mooring buoy in Alliford Bay, Haidi Gwaii, and drifted to a grounding point in Bearskin Bay on Lina Island, British Columbia, where it released a mixture of gasoline and/or diesel [Incident]. The Vessel was the only ship involved in the Incident. Haida contacted the Canadian Coast Guard [CCG] to inform it of the Incident and, on or about September 9, 2018, made efforts to prevent, repair, remedy or minimize potential oil pollution damage resulting from the grounding.
[3] On December 27, 2018 counsel for Haida submitted a claim to the SOPF pursuant to paragraph 101(1)(b) of the MLA (subsequently reframed as a claim made under subsection 103(1) of the MLA) for the costs and expenses incurred by Haida to mitigate oil pollution damage. Haida claimed that the evidence pointed to an intentional and willful tampering of the Vessel’s mooring lines by a third party with the intent to cause damage. It further claimed that this factual circumstance provided Haida, as the shipowner, with a defence under paragraph 77(3)(b) of the MLA. Accordingly, Haida claimed that it was entitled to be compensated by the SOPF for Haida’s claimed expenses incurred to mitigate oil pollution damage from its own ship.
[4] By a Letter of Disallowance dated August 4, 2021, the Administrator denied Haida’s claim.
[5] This appeal of the Administrator’s decision is concerned only with a question of law. Specifically, it concerns the interpretation by the Administrator of section 103 of the MLA and whether that provision creates a right for a shipowner to recover costs and expenses incurred to prevent, repair, remedy or minimize potential oil pollution damage resulting from an incident caused solely by its own ship.
[6] The Administrator did not assess the issue of whether Haida has a valid defence to the otherwise strict liability of a shipowner for oil pollution damage and the costs and expenses incurred to prevent or mitigate same. However the parties agree that this issue, and other factual matters, are not relevant to the question of law that arise in this appeal.
Legislative Regime
[7] To provide some context to the Administrator’s decision which is the subject of this appeal, as well as the parties’ positions on appeal and my reasons that follow, it is helpful to first provide a summary overview of the MLA legislative regime. At the time of the Incident, the version of the MLA which came into effect on June 8, 2015 and remained in effect to December 12, 2018 was in force and applies to this appeal. That is the version referred to in these reasons unless otherwise noted.
[8] The MLA comprehensively addresses matters of maritime claims and liability. For example, Part 1 deals with personal injuries and fatalities, Part 2 with apportionment of liability, Part 3 with limitation of liability for maritime claims, Part 4 with liability for carriage of passengers by water and Part 5 deals with liability for carriage of goods by water.
[9] This appeal engages Part 6 – Liability and Compensation for Pollution and Part 7 - Ship-source Oil Pollution Fund of the MLA.
i. MLA Part 6 Part 6 – Division 1 [10] Division 1 of Part 6, Liability and Compensation for Pollution, is concerned with international conventions. Division 1 gives force of law to certain international conventions to which Canada is a contracting state, three of which are relevant to this matter:
a) Bunkers Convention [11] The International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001, concluded at London on March 23, 2001 [Bunkers Convention]. Articles 1 to 10 of the Bunkers Convention are set out in Schedule 8 of the MLA and have the force of law in Canada (MLA s 47(1), s 69). The Bunkers Convention applies to any seagoing vessel and concerns “pollution damage” caused by “bunker oil” which is defined as “any hydrocarbon mineral oil, including lubricating oil, used or intended to be used for the operation or propulsion of the ship, and any residues of such oil”. That is, the Bunkers Convention applies not just to tankers and not just to persistent oil (Bunkers Convention, Article 1, ss 5, 9).
[12] Pursuant to subsection 71(a) of the MLA, the liability of the owner of a ship in relation to preventative measures , for the purposes of the Bunkers Convention, includes the costs and expenses incurred by the Minister of Fisheries and Oceans, a response organization within the meaning of section 165 of the Canada Shipping Act, 2001, SC 2001, c 26 [CSA] and any other person in Canada or any person in a state, other than Canada, that is a party to that Convention, in respect of measures taken to prevent, repair, remedy or minimize pollution damage from the ship, including measures taken in anticipation of a discharge of bunker oil from it, to the extent that the measures taken and the costs and expenses are reasonable, and for any loss or damage caused by those measures.
b) Civil Liability Convention [13] The International Convention on Civil Liability for Oil Pollution Damage, 1992, concluded at London on November 27, 1992, Article V of which was amended by the Resolution adopted by the Legal Committee of the International Maritime Organization on October 18, 2000 [Civil Liability Convention]. Articles I to XI, XII bis and 15 of the Civil Liability Convention are set out in Schedule 5 of the MLA and have the force of law in Canada (MLA s 47(1), ss 48). The Civil Liability Convention applies to sea going vessels constructed or adapted for the carriage of oil in bulk as cargo (primarily tankers) with respect to “pollution damage” cause by “oil” which is defined “as any persistent hydrocarbon mineral oil such as crude oil, fuel oil, heavy diesel oil and lubricating oil, whether carried on board a ship as cargo or in the bunkers of such a ship” (Article 1(1), 1(5),1(6)).
[14] Pursuant to section 51 of the MLA, the liability of the owner of a ship in relation to preventative measures for the purposes of the Civil Liability Convention includes the costs and expenses incurred by the Minister of Fisheries and Oceans, a response organization within the meaning of section 165 of the CSA, any other person in Canada or any person in a state, other than Canada, that is a party to that Convention, in respect of measures taken to prevent, repair, remedy or minimize pollution damage from the ship, including measures taken in anticipation of a discharge of oil from it, to the extent that the measures taken and the costs and expenses are reasonable, and for any loss or damage caused by those measures.
c) Fund Convention [15] The International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992, concluded at London on November 27, 1992, Article 4 of which was amended by the Resolution adopted by the Legal Committee of the International Maritime Organization on October 18, 2000 [Fund Convention]. Articles 1 to 4, 6 to 10, 12 to 15, 36 ter, 29, 33 and 37 of the Fund Convention are set out in Schedule 6 of the MLA and have the force of law in Canada (MLA s 47(1), ss 57). The Supplementary Fund Protocol means the Protocol of 2003 to the Fund Convention, concluded at London on May 16, 2003 (s 47(1)). Articles 1 to 15, 18, 20, 24, 25 and 29 of the Supplementary Fund Protocol are set out in Schedule 7 of the MLA and have the force of law in Canada (s 63). The International Oil Pollution Compensation Supplementary Fund, 2003, [Supplementary Fund] is established by Article 2 of the Supplementary Fund Protocol.
Part 6 – Division 2
[16] Division 2, of Part 6 of the MLA is concerned with liability not covered by Division 1. That is, liability not addressed by the international conventions referenced in Division 1 of Part 6.
[17] Section 76 states that Division 2 applies in respect of actual or anticipated pollution damage, except for pollution damage covered by Division 1, irrespective of the location of the actual or anticipated discharge of the pollutant and irrespective of the location where any preventive measures are taken on Canada’s territory or in Canadian waters; or, in Canada’s exclusive economic zone.
[18] Section 77 of the MLA imposes strict liability on a shipowner for oil pollution damage from their ship as well as for the costs and expenses incurred by the Minister of Fisheries and Oceans, a response organization within the meaning of section 165 of the CSA or, any other person in Canada in respect of measures taken to prevent, repair, remedy or minimize oil pollution damage from the ship, including measures taken in anticipation of a discharge of oil from it, to the extent that the measures taken and the costs and expenses are reasonable, and for any loss or damage caused by those measures (s 77(1)). Owners are also strictly liable for environmental damage (s 77(2)).
[19] This strict liability of a shipowner under section 77 of the MLA is subject to certain limited exceptions:
(3) The owner’s liability under subsections (1) and (2) does not depend on proof of fault or negligence, but the owner is not liable under those subsections if they establish that the occurrence
(a) resulted from an act of war, hostilities, civil war or insurrection or from a natural phenomenon of an exceptional, inevitable and irresistible character;
(b) was wholly caused by an act or omission of a third party with intent to cause damage; or
(c) was wholly caused by the negligence or other wrongful act of any government or other authority that is responsible for the maintenance of lights or other navigational aids, in the exercise of that function.
[20] Similar shipowner liability provisions are found in both the Civil Liability Convention and the Bunkers Convention:
The Civil Liability Convention, Article III, states:
1 Except as provided in paragraphs 2 and 3 of this Article, the owner of a ship at the time of an incident, or, where the incident consists of a series of occurrences, at the time of the first such occurrence, shall be liable for any pollution damage caused by the ship as a result of the incident.
2 No liability for pollution damage shall attach to the owner if he proves that the damage:
(a) resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character, or
(b) was wholly caused by an act or omission done with intent to cause damage by a third party, or
(c) was wholly caused by the negligence or other wrongful act of any Government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function.
3 If the owner proves that the pollution damage resulted wholly or partially either from an act or omission done with intent to cause damage by the person who suffered the damage or from the negligence of that person, the owner may be exonerated wholly or partially from his liability to such person.
……..
[21] Article 3 of the Bunkers Convention states:
Liability of the Shipowner
1 Except as provided in paragraphs 3 and 4, the shipowner at the time of an incident shall be liable for pollution damage caused by any bunker oil on board or originating from the ship, provided that, if an incident consists of a series of occurrences having the same origin, the liability shall attach to the shipowner at the time of the first of such occurrences.
2 Where more than one person is liable in accordance with paragraph 1, their liability shall be joint and several.
3 No liability for pollution damage shall attach to the shipowner if the shipowner proves that:
(a) the damage resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character; or
(b) the damage was wholly caused by an act or omission done with the intent to cause damage by a third party; or
(c) the damage was wholly caused by the negligence or other wrongful act of any Government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function.
4 If the shipowner proves that the pollution damage resulted wholly or partially either from an act or omission done with intent to cause damage by the person who suffered the damage or from the negligence of that person, the shipowner may be exonerated wholly or partially from liability to such person.
…….
[22] I note in passing here that a shipowner also has the right to limit its liability, based on the tonnage of the ship (MLA, Part 3, referring to the Convention on Limitation of Liability for Maritime Claims, 1976, concluded at London on November 19, 1976, as amended by the Protocol, Articles 1 to 15 of which Convention are set out in Part 1 of MLA Schedule 1 and Article 18 of which is set out in Part 2 of Schedule 1 of the MLA).
ii. MLA Part 7 [23] Part 7 of the MLA continues the SOPF and provides for the appointment, by the Governor in Council, of its Administrator and Deputy Administrator. Part 7 applies to oil pollution damage, defined as “in relation to a ship, means loss or damage outside the ship caused by contamination resulting from the discharge of oil from the ship”. “Oil” is defined as “any kind or in any form and includes petroleum, fuel oil, sludge, oil refuse and oil mixed with wastes but does not include dredged spoil” (s 91(1)).
[24] With respect to the liability of the SOPF, the MLA states as follows:
Liability of Ship-source Oil Pollution Fund
101 (1) Subject to the other provisions of this Part, the Ship-source Oil Pollution Fund is liable for the matters referred to in sections 51, 71 and 77 in relation to oil, Article III of the Civil Liability Convention and Article 3 of the Bunkers Convention if
(a) all reasonable steps have been taken to recover payment of compensation from the owner of the ship or, in the case of a ship within the meaning of Article I of the Civil Liability Convention, from the International Fund and the Supplementary Fund, and those steps have been unsuccessful;
(b) the owner of a ship is not liable by reason of any of the defences described in subsection 77(3), Article III of the Civil Liability Convention or Article 3 of the Bunkers Convention and neither the International Fund nor the Supplementary Fund are liable;
(c) the claim exceeds
(i) in the case of a ship within the meaning of Article I of the Civil Liability Convention, the owner’s maximum liability under that Convention to the extent that the excess is not recoverable from the International Fund or the Supplementary Fund, and
(ii) in the case of any other ship, the owner’s maximum liability under Part 3;
(d) the owner is financially incapable of meeting their obligations under section 51 and Article III of the Civil Liability Convention, to the extent that the obligation is not recoverable from the International Fund or the Supplementary Fund;
(e) the owner is financially incapable of meeting their obligations under section 71 and Article 3 of the Bunkers Convention;
(f) the owner is financially incapable of meeting their obligations under section 77;
(g) the cause of the oil pollution damage is unknown and the Administrator has been unable to establish that the occurrence that gave rise to the damage was not caused by a ship; or
(h) the Administrator is a party to a settlement under section 109.
…..
Action by Administrator
102 (1) If there is an occurrence that gives rise to the liability of an owner of a ship under section 51, 71 or 77, Article III of the Civil Liability Convention or Article 3 of the Bunkers Convention,
(a) the Administrator may, either before or after receiving a claim under section 103, commence an action in rem against the ship that is the subject of the claim, or against any proceeds of sale of the ship that have been paid into court; and
(b) subject to subsection (3), the Administrator is entitled in any such action to claim security in an amount not less than the owner’s maximum aggregate liability determined in accordance with section 71 or 77, or Article V of the Civil Liability Convention.
Subrogation
(2) The Administrator may continue the action only if he or she has become subrogated to the rights of the claimant under paragraph 106(3)(c).
…..
Claims filed with Administrator
103 (1) In addition to any right against the Ship-source Oil Pollution Fund under section 101, a person who has suffered loss or damage or incurred costs or expenses referred to in section 51, 71 or 77, Article III of the Civil Liability Convention or Article 3 of the Bunkers Convention in respect of actual or anticipated oil pollution damage may file a claim with the Administrator for the loss, damage, costs or expenses.
……
Administrator’s duties
105 (1) On receipt of a claim under section 103, the Administrator shall
(a) investigate and assess it; and
(b) make an offer of compensation to the claimant for whatever portion of it that the Administrator finds to be established.
Administrator’s powers
(2) For the purpose of investigating and assessing a claim, the Administrator has the powers of a commissioner under Part I of the Inquiries Act.
Factors to be considered
(3) When investigating and assessing a claim, the Administrator may consider only
(a) whether it is for loss, damage, costs or expenses referred to in subsection 103(1); and
(b) whether it resulted wholly or partially from
(i) an act done or omitted to be done by the claimant with intent to cause damage, or
(ii) the claimant’s negligence.
Cause of occurrence
(4) A claimant is not required to satisfy the Administrator that the occurrence was caused by a ship, but the Administrator shall dismiss a claim if he or she is satisfied on the evidence that the occurrence was not caused by a ship.
When claimant at fault
(5) The Administrator shall reduce or nullify any amount that he or she would have otherwise assessed in proportion to the degree to which he or she is satisfied that the claim resulted from
(a) an act done or omitted to be done by the claimant with intent to cause damage; or
(b) the claimant’s negligence.
Offer of compensation
106 (1) If the Administrator makes an offer of compensation to a claimant under paragraph 105(1)(b), the claimant shall, within 60 days after receiving the offer, notify the Administrator whether they accept or refuse it and, if no notification is received by the Administrator at the end of that period, the claimant is deemed to have refused the offer.
Appeal to Admiralty Court
(2) A claimant may, within 60 days after receiving an offer of compensation or a notification that the Administrator has disallowed the claim, appeal the adequacy of the offer or the disallowance of the claim to the Admiralty Court, but in an appeal from the disallowance of a claim, that Court may consider only the matters described in paragraphs 105(3)(a) and (b).
Acceptance of offer by claimant
(3) If a claimant accepts the offer of compensation from the Administrator,
(a) the Administrator shall without delay direct payment to be made to the claimant of the amount of the offer out of the Ship-source Oil Pollution Fund;
(b) the claimant is then precluded from pursuing any rights that they may have had against any person in respect of matters referred to in sections 51, 71 and 77, Article III of the Civil Liability Convention and Article 3 of the Bunkers Convention in relation to the occurrence to which the offer of compensation relates;
(c) the Administrator is, to the extent of the payment to the claimant, subrogated to any rights of the claimant referred to in paragraph (b); and
(d) the Administrator shall take all reasonable measures to recover the amount of the payment from the owner of the ship, the International Fund, the Supplementary Fund or any other person liable and, for that purpose, the Administrator may commence an action in the Administrator’s or the claimant’s name, including a claim against the fund of the owner of a ship established under the Civil Liability Convention and may enforce any security provided to or enforceable by the claimant.
…..
Proceedings Against the Owner of a Ship
Proceedings against owner of ship
109 (1) If a claimant commences proceedings against the owner of a ship or the owner’s guarantor in respect of a matter referred to in section 51, 71 or 77, Article III of the Civil Liability Convention or Article 3 of the Bunkers Convention, except in the case of proceedings based on paragraph 77(1)(c) commenced by the Minister of Fisheries and Oceans in respect of a pollutant other than oil,
(a) the document commencing the proceedings shall be served on the Administrator by delivering a copy of it personally to him or her, or by leaving a copy at his or her last known address, and the Administrator is then a party to the proceedings; and
(b) the Administrator shall appear and take any action, including being a party to a settlement either before or after judgment, that he or she considers appropriate for the proper administration of the Ship-source Oil Pollution Fund.
If Administrator party to settlement
(2) If the Administrator is a party to a settlement under paragraph (1)(b), he or she shall direct payment to be made to the claimant of the amount that the Administrator has agreed to pay under the settlement.
[25] It is worth noting here, for future ease of reference, that matters referred to in sections 51, 71 or 77 of the MLA, Article III of the Civil Liability Convention, and Article 3 of the Bunkers Convention are frequently referenced together in Part 7 of the MLA. Each of these provisions concern shipowner liability for costs and expenses incurred in respect of measures taken to prevent repair, remedy or minimize pollution damage from the ship [also referred to collectively in these reasons as the Liability and Damages Provisions]:
- MLA section 51: the liability of the shipowner in relation to preventative measures, for the purposes of the Civil Liability Convention, includes costs and expenses incurred (by the Minister of Fisheries and Oceans; a response organization; or, any other person as set out) in respect of measures taken to prevent repair, remedy or minimize pollution damage from the ship, including anticipatory measures (s 51(a));
- MLA section 71: the liability of the owner of a ship in relation to preventative measures, for the purpose of the Bunkers Convention, also includes costs and expenses incurred (by the Minister of Fisheries and Oceans; a response organization; or, any other person as set out) in respect of measures taken to prevent repair, remedy or minimize pollution damage from the ship, including anticipatory measures; costs and expenses in respect of preventive or response measures (s 71(a));
- MLA s 77: the owner of a ship is liable for oil pollution damage from the ship and for costs and expenses in respect of measures taken to prevent, repair, remedy or minimize oil pollution damage from the ship, including measures taken in anticipation of a discharge of oil from it (s 77(1)(a)-(b));
- Article III(1) of the Civil Liability Convention: except as provided in Article III(2) and (3), the owner of a ship shall be liable for any pollution damage caused by the ship as a result of the incident, and:
- Article 3(1) of the Bunkers Convention: except as provided in Article 3(3) and (4), the owner of a ship shall liable for pollution damage caused by any bunker oil on board or originating from the ship.
Decision Under Review
[26] The Administrator’s decision is 28 pages long, much of which is devoted to describing the procedural history of Haida’s claim, the operation of Part 6 of the MLA and related international conventions, Part 7 of the MLA and, the Administrator’s understanding of the operation of the liability regime as a whole.
[27] The Administrator noted that Haida had initially framed its claim under section 101 but later asserted that this was based on its view that claimants under subsection 103(1) had to establish that they met the criteria set out in section 101. The Administrator permitted Haida to re-categorize its claim as a claim under subsection 103(1), but found that Haida’s view that a claimant under subsection 103(1) is held to any of the section 101 criteria is incorrect. The Administrator pointed out that subsection 103(1) of the MLA expressly provides claimants with a route to accessing compensation that stands “in addition to any rights against the [SOPF] under section 101”. For this, and other reasons, the Administrator found that subsection 103(1) constitutes an independent and separate mechanism for claims. Further, Haida’s interpretation would mean that a claimant was required to establish one of the criteria under section 101(1) in order to make a claim under subsection 103(1). This would greatly reduce the circumstances in which the subsection 103(1) scheme is available to those affected by oil pollution, thereby reducing access to justice by imposing an additional burden on claimants. The Administrator rejected Haida’s interpretation of the interplay between section 101(1) and subsection 103(1) based on the text of those provisions and the purpose and functions of Parts 6 and 7 of the MLA as a whole.
[28] The Administrator stated that subsection 103(1) permits claims where persons affected by a spill have suffered loss, damage, costs or expenses as described in certain provisions of Part 6 of the MLA (apparently referring to sections 51, 71 and 77 of the MLA, the Civil Liability Convention, or the Bunkers Convention). The Administrator stated that, “in all cases, the provisions referenced by subsection 103(1) are focused on the liability of a shipowner. This makes it conceptually challenging to understand how a shipowner might be entitled to make a subsection 103(1) claim”.
[29] The Administrator noted Haida’s apparent answer to this, being the submission made by its counsel that “one must not confuse liability of the shipowner under s 77 with reference to ‘costs and expenses’ under s 77. They are 2 separate things”. The Administrator found this proposed interpretation to be problematic.
[30] The Administrator found that, to the extent that the Bunkers Convention had application, Article 3, which states that “the shipowner at the time of the incident shall be liable for pollution damage”, could not be read to divorce shipowner liability from pollution damage. The Administrator did not accept that by referencing Article 3 of the Bunkers Convention in subsection 103(1) of the MLA, Parliament intended that loss, damage, costs and expenses to be severable from a shipowner’s liability. That is, for the purposes of claims brought under subsection 103(1) of the MLA, the loss, damage, costs or expenses “as referred to” in Article 3 of the Bunkers Convention could not be separated from the shipowner’s liability. Moreover, because a shipowner cannot be liable to itself, it cannot incur “costs and expenses as referred to in Article 3 of the Bunkers Convention”. Therefore, Article 3 does not provide a shipowner with a pathway to make a claim to the Administrator under subsection 103(1).
[31] The Administrator similarly found that the explicit references to “costs and expenses” in section 77 of the MLA , when read in their entire context, and taking into account all of the characteristics of those costs and expenses, do not provide a mechanism for shipowners to make a claim under subsection 103(1), as this would require an arbitrarily selective reading of section 77 to sever all references to a shipowner’s liability. While a shipowner could suffer oil pollution damage and incur response-related costs and expenses stemming from an incident caused by its own vessel, an owner cannot suffer the “loss, damage, costs and expenses referred to in paragraphs 77(1)(a) through (c) because those are damages for which an owner would presumptively be liable, and no entity can be liable to itself”.
[32] With respect to the interaction of subsection 77(5) and subsection 103(1) of the MLA, the Administrator noted that subsection 77(5) allows a shipowner who has established a limitation fund to set off some of its own response costs against its maximum liability to others. By itself, subsection 77(5) does nothing to give an owner a right to recover from other parties. However, the Administrator found that there was some ambiguity in the interaction between subsections 77(5) and 103(1) of the MLA. The Administrator therefore proceeded to interpret those provisions, citing the approach set out in Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 SCR 27 at para 21 [Rizzo & Rizzo].
[33] The Administrator reasoned that if Haida was correct that shipowners were allowed to claim under subsection 103(1), then this would not be limited to “innocent” shipowners because subsection 105(3) limits what the Administrator may consider in investigating and assessing claims to whether the claim is for loss, damage, costs or expenses referred to in subsection 103(1) and whether it resulted wholly or partially from an act done or omitted to be done by the claimant with the intent to cause damage or, the claimant’s negligence. Thus, under the MLA, the Administrator has no authority to consider whether the shipowner may be entitled to a defence to liability, that is, whether it is “innocent”. Accordingly, even “non-innocent” shipowners would be eligible to claim under this avenue.
[34] The Administrator pointed out that Haida’s interpretation would impair the operation of other parts of the statutory scheme, both within and outside of the MLA. For example, shipowners of larger vessels are required by section 167 of the CSA to have a standing oil pollution response arrangement with a response organization certified by Transport Canada. The owners of such vessel are very likely to incur response costs following an incident, which costs are typically insured (the Administrator noted that liability insurance is mandatory for vessels larger than 1000 gross tonnage, and many smaller vessels voluntarily carry such coverage). It would not make sense to allow shipowners to make claims to the Administrator for costs which are required to be insured against. Further, if Haida’s interpretation was correct, any shipowner who was forced to pay a response organization’s expenses could claim reimbursement for those expenses under subsection 103(1), whereas the response organization itself could not because response organizations are prohibited from making section 103 claims, by subsection 103(3). The Administrator concluded that preferring the interests of polluting shipowners (even innocent ones) over response organizations was at odds with the purpose and objectives of the MLA.
[35] The Administrator found that Haida’s interpretation of subsection 103 would also eclipse the operation of subsection 77(5), which allows shipowners to claim against their own security in equal ranking with other claims against that security. If Haida’s interpretation were correct, shipowners would not need to claim against their security at all, and could instead seek compensation for the full amount from the Administrator. The Administrator found that this cannot have been Parliament’s intention in enacting subsection 77(5), which “appears to be the only possible point of entry for shipowners under subsection 103(1)”. The Administrator also noted that an even more incongruous result arising from Haida’s interpretation would be where a shipowner responds to an oil pollution incident and fully indemnifies the affected parties, as there would be nothing to stop that shipowner, or its insurer, from agreeing to pay the claims, taking an assignment of the rights of the indemnified parties, then presenting a claim to the Administrator under subsection 103(1) for the entirety of its own response as well as for the claims it was responsible for under Part 6 of the MLA. Accordingly, the Administrator concludes that, “[t]o the extent that Parts 3 and 6 of the MLA are designed to make shipowners pay to the limit of their liability, irrespective of their negligence, that objective would fail in cases of non-negligence”.
[36] The Administrator then conducted a comparison between the SOPF and the International Oil Pollution Compensation Funds, which it described as instructive but inherently limited. Essentially, the Administrator found that it lacks the power to consider whether a shipowner my be entitled to a defence when assessing and investigating a subsection 103(1) claim, regardless of the liability scheme upon which such a claim is founded. In contrast, the international funds have a clear mandate to consider shipowner “innocence” under Article 4(1)(a) of the Fund Convention 1992. The mechanical structure needed to address claims by innocent shipowners is not present in Part 7 of the MLA.
[37] Finally, the Administrator discussed the potential for disparate outcomes depending on the kind of ship involved in a subsection 103(1) claim. The Administrator did not accept that this was Parliament’s intent and found that it was more probable that no shipowners are intended to be eligible to make claims to the Administrator for expenses incurred in responding to an incident solely involving their own ship.
Issue and standard of review [38] The issue in this appeal is a discrete one which, in my view, can be framed as whether the Administrator erred in interpreting subsection 103(1) of the MLA as not allowing a shipowner to make a claim for compensation for its costs and expenses incurred to prevent, repair, remedy or minimize ship-source oil pollution damages, resulting from an incident that was caused solely by its own ship.
[39] The parties agree that the only substantive issue before the Court is a question of law, and that a standard of correctness applies to that issue.
[40] In Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 [Vavilov], the Supreme Court of Canada held that a statutory appeal mechanism signals the legislature’s intent that appellate standards apply when a court hears an appeal from an administrative tribunal (Vavilov at para 17). “This means that the applicable standard is to be determined with reference to the nature of the question and to…jurisprudence on appellate standards of review” (Vavilov at paras 37, 49). The correctness standard applies in answering pure questions of law, including questions of statutory interpretation (Housen v Nikolaisen, 2002 SCC 33 at paras 8-9).
[41] Accordingly, given that this matter is brought pursuant to an appeal mechanism set out in subsection 106(2) of the MLA, I agree with the parties that the standard of correctness applies.
Analysis Haida’s position [42] Haida’s position is premised on its submission that there is an interplay between section 101 and subsection 103(1) of the MLA.
[43] Haida submits that on a plain reading of subsection 103(1) of the MLA there is nothing to preclude a shipowner that has a defence to liability from making a claim under that provision. Section 101 sets out the SOPF’s liabilities, which include matters referred to in Article 3 of the Bunkers Convention and sections 71 and 77 of the MLA, if the shipowner is not liable by reason of any of the defences described in section 77(3). That is, the owner is not liable if they establish that the occurrence was wholly caused by an act or omission of a third party with intent to cause damage (s 77(3)(b)) and, under Article 3(3)(b) of the Bunkers Convention, a shipowner will not be liable for pollution damage if the shipowner proves that the damage was wholly caused by an act or omission done with the intent to cause damage by a third party.
[44] Haida submits that the Administrator erred in finding, regardless of which liability regime applies, that it is inconsistent with the principles of statutory interpretation to read subsection 103(1) in isolation from references to shipowner liability. Haida submits that the liability of a shipowner under the Bunkers Convention and the liability of the SOPF are separate matters, except with respect to section 102 of the MLA. Haida further submits that its claim against the SOPF is not under the Bunkers Convention or section 77 of the MLA, which Haida asserts only apply to the SOPF’s ability to recover under section 102.
[45] Haida submits that the Administrator’s interpretation of subsection 105(3) of the MLA is wrong because it fails to incorporate the effect of section 102 of the MLA and because a consideration under paragraph 105(3)(a) of whether a claim is for loss, damage, costs or expenses referred to in subsection 103(1) includes a determination of whether those costs are referred to in section 71 (Bunkers Convention) or section 77 – both of which permit for a determination of the shipowner’s liability. Therefore, according to Haida, the factors to be considered under subsection 105(3)(a) and subsection 106(2) include a consideration of the factors giving rise to the liability of the SOPF under section 101. Section 102 permits the SOPF to bring a subrogated claim against a shipowner with no defence while a shipowner with a defence is not subject to a subrogated claim. According to Haida, section 102 “closes the loop” for shipowners without a defence under section 71 or 77.
[46] Haida asserts that the Administrator’s interpretation of the “matters referred to” in sections 71 and 77 of the MLA and Article 3 of the Bunkers Convention, as found in subsection 101(1) of the MLA, as pertaining to the liability of the shipowner in respect of such matters, is nonsensical. The proper interpretation would be that where a shipowner is not liable, the SOPF is liable for the matters referred to, being the reasonable costs and expenses of responding to a pollution or potential pollution event.
[47] Haida submits that the Administrator’s interpretation, which precludes an innocent shipowner from claiming compensation from the SOPF, defeats the purpose and objectives of the MLA. Haida submits that the overall purpose of Parts 6 and 7 of the MLA is to protect the marine environment, and to ensure that those who suffer loss or damage or voluntarily expend resources to prevent or cleanup oil pollution damage are compensated. Shipowners are usually first on the scene of a pollution event but are not obliged to contract with others and incur expenses, and therefore, shipowners and their insurers who are precluded from compensation are unlikely to incur those expenses. Additionally, a shipowner who has a defence under the MLA is “not technically a polluter” so compensating the innocent shipowner does not impair the “polluter pays” principle. Haida further r