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On the hook for damages...by Joanna R. Dawson, Bernard LLP - Subscriber Access Only

By BCShippingNews 15 June 2014

Of importance to maritime insurers and fishermen alike is a recent decision from the Supreme Court of Canada where a crab fisherman was found personally liable, and uninsured, for damages he caused to property. This is significant because it is the first Canadian case where it was considered whether Article 4 of the Convention on the Limitation of Liability for Maritime Claims, 1976 could bar a liable party to the limitation of liability under section 29 of the Marine Liability Act, S.C. 2001, c. 6.

The Convention has a high standard of fault and has historically been an unbreakable limit on liability. However, in Société Telus Communications v. Peracomo Inc., 2011 FC 494, the Federal Court decided for the first time that it could be broken. The Supreme Court of Canada subsequently disagreed in Peracomo Inc. v. TELUS Communications Co., 2014 SCC 29. The SCC held that while the appellant’s conduct did not meet the very high level of fault so that he loses the benefit of the Convention’s limit on liability, it did constitute willful misconduct for insurance purposes, thus excluding the loss from insurance coverage pursuant to the Marine Insurance Act, S.C. 1993, c. 22. A summary of this case is as follows.