Madame Justice Strickland of the Federal Court has rendered a lengthy decision in a limitation of liability action in J. D. Irving Ltd. v. Siemens Canada Ltd. et al, 2016 FC 69 that was widely anticipated to be an interesting read following the 2014 Supreme Court of Canada decision on limitation in Peracomo v. Telus Communications. The important decision of the Supreme Court in Peracomo was reviewed in these pages in the June 2014 article by Joanna Dawson. The Peracomo case dealt with intent to cause loss under Article 4 of the Limitation Convention, rather than recklessness. There, Mr. Vallee was a sole shareholder and alter ego of Peracomo Inc. While fishing, he snagged a cable which he cut, believing it to be abandoned. The cable was, contrary to his belief, a working cable used for communication purposes and owned by Telus. Justice Strickland, in the J. D. Irving decision observed that the Supreme Court found that Article 4 establishes a very high level of fault based on the Limitation Convention’s purpose to establish “a virtually unbreakable limit on liability.”
In the recent Federal Court case before Justice Strickland, Siemens Canada, the party that lost its low pressure modules off a barge owned by J. D. Irving, did not assert in the limitation action that any party intended to cause the loss. Rather Siemens argued that J.D. Irving and its naval architect acted recklessly and with knowledge that loss of the modules would probably result, within the meaning Article 4 of the Limitation Convention.
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