The appellant, Wire Rope, appealed a Federal Court of Appeal decision finding it liable for the loss of a log barge owned by B.C. Marine and chartered to Straits.
The barge was lost when a towline socket failed during a storm.
Yorke, the tug owner, had claimed indemnity against Wire Rope for allegedly negligent resocketing of the cable.
The Supreme Court of Canada first held that the Federal Court had jurisdiction over the third-party claim as it fell within Canadian maritime law.
On the merits, the Court found that Wire Rope's resocketing did not cause the socket's failure, which was instead due to a latent manufacturing defect.
Consequently, Wire Rope was not liable.
Furthermore, Yorke was not liable to B.C. Marine and Straits because the latent defect could not have been discovered through the exercise of due diligence, thus satisfying Yorke's contractual obligation to provide a seaworthy tug.
