Dixon et al. v. Leggat et al.
Lishman et al. v. Leggat et al. [Indexed as: Dixon v. Leggat]
64 O.R. (3d) 347
[2003] O.J. No. 757
Docket Nos. C36237 and C36236
Court of Appeal for Ontario
Doherty, Laskin and Goudge JJ.A.
March 6, 2003
*Application for leave to appeal to the Supreme Court of Canada dismissed with costs December 11, 2003 (McLachlin C.J.C., Major and Fish JJ.).
Maritime law -- Owner's liability -- Canada Shipping Act not imposing liability on owner of boat for accident caused by operator's navigational error -- Canada Shipping Act, R.S.C. 1985, c. S-9.
Douglas Leggat and his brother Donald Leggat owned cottage property on Penman Island on Lake Rosseau and had spent summers there for more than 40 years. On the evening in question, Douglas allowed Donald to borrow Douglas's 21-foot motorboat to take two passengers across the lake to watch the end of a hockey game. Donald, an experienced sailor, made a navigational error which resulted in his crashing into a small island. One of his passengers was killed and the other was seriously injured. At trial, Donald was found liable as the driver of the boat. The trial judge found that Part IX of the Canada Shipping Act, and particularly s. 566, also imposed liability on Douglas as the owner of the boat. The trial judge found that Douglas was unable to claim the limitation on damages provided by s. 575 of the Act as he failed to show that the loss of life or personal injury took place "without his fault or privity".
Held, the appeal should be allowed.
Section 566(1) of the Act states, "Where loss of life or personal injuries are suffered by any person on board a vessel owing to the fault of that vessel and of any other vessel or vessels, the liability of the owners of the vessels is joint and several." The trial judge erred in finding that s. 566(1) imposed liability on Douglas as owner. The language of the subsection does not impose liability where otherwise there would be none. Rather, it provides that where there are joint tortfeasors who injure an innocent third party, their liability is joint and several. Section 566(2) makes it clear that s. 566 does not create liability that would not otherwise be there because it expressly preserves any defence that would exist without the section. Moreover, s. 566(1) has no application at all to circumstances where, as here, only one tortfeasor is involved. Section 571 of the Act, to which the trial judge also referred, merely ensures that admiralty jurisdiction over damages includes damages for loss of life and personal injury. It says nothing about the liability of an owner for the fault of his vessel.
Rule 2 of the Collision Regulations, C.R.C., c. 1416 provides that nothing in the Rules creates an exemption from liability for an owner. Section 391 of the Act deals only with the terms to be implied in contracts of service and instruments of apprenticeship, binding owners and those employed to work their vessels. That section had no application in the circumstances of this case. Section 575 of the Act does not imply that there is liability on the owner whenever the owner's vessel is at fault. It simply limits the damages that can be obtained from an owner against whom liability has been found. The limitation applies when the owner can demonstrate that the accident causing damage occurred without his actual fault or privity. Provisions such as this were designed historically to promote shipping commerce by protecting ship owners from the full and perhaps ruinous pecuniary liability arising from acts of navigation, over which they had no personal control, by those hired to work their vessels. The Act did not impose a statutory liability on an owner for the fault of his vessel in the circumstances of this case. [page348]
Clearly, liability can be imposed on an owner of a vessel on the basis of the ordinary principles of tort law. The trial judge's disposition of Douglas's attempt to limit his damages pursuant to s. 575 of the Act could not be taken as equivalent to a determination of negligence that would support the conclusion of liability against Douglas. First, the precise conclusion reached by the trial judge was that Douglas had failed to establish that the incident occurred without his actual fault or privity. While the tools used in this analysis mirror those used in a negligence analysis, the trial judge was not required to make an explicit finding that the owner was at fault nor did he do so. Second, as the trial judge acknowledged, the onus in the analysis under s. 575 is a heavy one and it rests on the owner. The owner must establish a complete absence of actual fault on his part. While the trial judge concluded that Douglas had failed to do so, this heavy onus made it more difficult to treat that conclusion as equivalent to a positive finding that the plaintiffs had proven Douglas's negligence. Third, while the trial judge articulated the duties he found to rest on Douglas in these factual circumstances, his description of those circumstances reflected palpable and overriding error in two important respects. The first error was his finding that Douglas expected his brother to drive the boat while seated under the cover unless there was a heavy rainstorm. There was no evidence to support this finding. In addition, the trial judge found that Donald did in fact operate the boat as anticipated by Douglas. However, a crucial aspect of that operation was Donald's attempt to navigate by "dead reckoning". There was no evidence that Douglas anticipated that he would do this; indeed, the evidence was to the contrary. For the trial judge, both these erroneous findings of fact were significant parts of the context from which he derived the duties applicable to Douglas as owner. To that extent, it put those duties under a cloud. Finally, even if those duties could properly be taken as appropriate for an analysis of the negligence of the owner, the trial judge did not deal with other aspects of that analysis, such as foreseeability or remoteness, which might well be matters of debate if the negligence analysis were undertaken directly.
APPEAL by the owner of a vessel from a finding of liability.
Cases referred to ITO - International Terminal Operators Ltd. v. Miida Electronics Inc., [1986] 1 S.C.R. 752, 28 D.L.R. (4th) 641, 68 N.R. 241, 34 B.L.R. 251 (sub nom. Miida Electronics Inc. v. Mitsui O.S.K. Lines Ltd. and ITO International Terminal Operators Ltd.); Rhône (The) v. Peter A.B. Widener (The), [1993] 1 S.C.R. 497, 101 D.L.R. (4th) 188 (sub nom. Great Lakes Towing v. North Central Maritime Corp., Ship (Rhone) v. Ship (Peter A.B. Wideners)); Stein Estate v. Kathy K (The) (1975), [1976] 2 S.C.R. 802, 62 D.L.R. (3d) 1, 6 N.R. 359
Statutes referred to Canada Shipping Act, R.S.C. 1906, c. 113, s. 917 Canada Shipping Act, R.S.C. 1985, c. S-9, ss. 2 "ordinary practice of seamen", 391, 566, 567, 571, 575, 576, 577
Rules and regulations referred to Collision Regulations, C.R.C., c. 1416, rules 2, 5
Patrick J. Monaghan, for appellant. John F. Evans, Q.C., for respondents Dixon and Keesmaat. P. Sweeney and James Scarfone, for respondents Lishman. [page349]
The judgment of the court was delivered by
[1] GOUDGE J.A.: -- It was dark and wet when Donald Leggat set out across Lake Rosseau on the evening of September 14, 1996 in the 21-foot motorboat owned by his brother Douglas. Douglas had given him permission to take their cousin Bertram Leggat and their friend, Robert Lishman, across the lake to Clevelands House to watch the end of the hockey game on television.
[2] Even though he and his brother had summered on Lake Rosseau for more than 40 years, Donald made a terrible navigational error soon after leaving his brother's cottage and the boat smashed headlong into a small rocky island. Bertram Leggat was killed and Robert Lishman was seriously injured.
[3] At trial, Donald Leggat was found liable as driver of the boat. That issue is no longer contested. The primary issue in this appeal is whether the trial judge was correct in finding that the provisions of the Canada Shipping Act, R.S.C. 1985, c. S-9 (the "Act") impose liability on Douglas Leggat as well, because he was the owner of the boat.
[4] For the reasons that follow, I have concluded that the trial judge erred in reaching this conclusion, and I would therefore allow the appeal.
The Facts
[5] In September 1950, when Douglas was 16 and Donald was 21, the Leggat family acquired cottage property on the southern part of Penman Island on Lake Rosseau in central Ontario. Douglas Leggat's cottage is at the easterly end of the south shore of the island. His brother's cottage is about 1,500 feet along the shore to the west. Between them is the cottage owned by Dr. Alex Harvey.
[6] South of this shoreline, across a 400-foot wide channel, is a smaller island known as Monyca Island. Some 650 feet southwest of Monyca Island is a still smaller island, Gabella Island. The stretch of water between it and the south shore of Penman Island is about 1,300 feet wide.
[7] On the weekend of the accident, Douglas Leggat was hosting a number of his friends and business associates at his cottage. On the Saturday night, September 14, 1996, he had cooked a steak dinner for them. His brother had brought over a small portable television set from his own cottage to watch the hockey game, but the picture was so poor that, after the second period, Donald asked whether anyone wanted to go across the lake to Clevelands House, where there was proper television reception, to see the third period. Bertram Leggat and Robert Lishman wanted to go, so Donald asked his brother if they could use his boat. Douglas agreed. [page350]
[8] The boat, which Douglas had purchased some six weeks earlier, was a 21-foot SeaRay fitted with a 5.7 litre mercury inboard/outboard motor. The driver's position was immediately behind the windshield. The dashboard housing the steering wheel and the boat's gauges was illuminated by panel lights. There was a 360 white pole light inserted at the stern of the boat. A canvas canopy stretched back from the top of the windshield to cover the seating area. The canopy had a square immediately over the driver's position that could be unzipped to permit the driver to stand up and look over the windshield for better visibility.
[9] Douglas Leggat gave no instructions to his brother that night about how to operate the boat. He did not tell Donald that both the lights on the dashboard and the stern light created a glare on the windshield in front of the driver, nor that he kept a towel on board to put over the dash to cut down on that glare.
[10] Douglas did not put his mind to the proposed trip when he gave his permission because he and his brother had spent most weekends as well as extended periods of time at Penman Island each summer since 1951, and he was well aware of his brother's boating skills. He had observed Donald operating a variety of powerboats in a variety of conditions, both by day and by night. He knew how familiar Donald was with the lake and particularly with the location of Monyca and Gabella Islands. Donald's evidence was that he went past them by boat 100 to 200 times each season. Douglas had lent boats to his brother on many other occasions and knew that Donald's own boat at that time was also a SeaRay. He knew that Donald was an able and experienced boat operator and he assumed that Donald would operate the boat that night in the same way that he or any other experienced operator would have done.
[11] Douglas Leggat's evidence about the route he would have followed to get to Clevelands House was clear. From his own cottage, he would have driven parallel to the south shore of Penman Island past the lights of the Harvey cottage, until he could see the flashing buoy at Bell's Rock. He would then have turned south, safe in the knowledge that, because he could see the flashing light, he was beyond Gabella Island. Once he had reached Bell's Rock, he would then have headed southwest into open water and over to Clevelands House.
[12] When Donald Leggat and his companions set out that night, it was very dark and a misty rain was falling. Donald backed the boat out of his brother's boathouse. As he turned it around, the glare from the 360 light, which one of his passengers had inserted in the socket at the stern, caused him to momentarily lose his bearings. However he was travelling slowly, and on [page351] sighting Monyca Island, he was able to return to what he believed to be the right course. He then accelerated the boat to planing speed, and once the bow had levelled out, he eased off on the throttle to 20 to 25 miles per hour. His intention was to proceed westerly, parallel to the south shore of Penman Island, and once east of Gabella Island, to turn south towards Bell's Rock, where there was a navigational light. From there he would head southwest to Clevelands House, some five miles from his brother's cottage.
[13] Donald Leggat drove the boat west about twice as far as he thought he needed to go to get beyond Gabella Island and then turned south. He turned without having first seen the light at Bell's Rock, and without having seen the lights of the Harvey cottage or his own cottage along the south shore of Penman Island and, therefore, without using them as navigational aids. As the trial judge put it, he attempted to navigate by "dead reckoning". Moreover, he remained under the canopy without ever unzipping the canvas over the driver's position to stand up and look out over the windshield. Almost immediately on turning south, the boat smashed into Gabella Island, with tragic results.
The Trial Judgment
[14] The action on behalf of the widow and children of Bertram Leggat and the action on behalf of Robert Lishman and his dependants were heard together. By agreement, the trial judge determined the issue of liability and adjourned the assessment of damages to a later date.
[15] The trial judge began his discussion of liability by recognizing the application of Canadian maritime law to pleasure craft and to inland navigable waterways.
[16] In particular, however, the Act was central to his reasoning. He found that, for the purposes of the Act, Douglas Leggat was the owner, his boat was a ship or vessel, Donald Leggat was the master, and the boat met the equipment requirements of the Act and the regulations passed pursuant to it.
[17] The trial judge went on to find that Donald Leggat was liable because he failed to meet the standard set out in s. 2 of the Act, namely the "ordinary practice of skilful and careful persons engaged in navigation in like cases". Further, he found that Donald, as the master, was entitled by s. 577 of the Act to limit his liability to the amount set out in s. 575(1)(e). Neither of these findings is contested in this appeal.
[18] Turning to Douglas Leggat, the finding of liability against him was based on the conclusion of the trial judge that Part IX of the Act, and particularly s. 566, clearly makes the owner liable [page352] for the fault of his vessel. At para. 29 of his reasons for judgment the trial judge said this:
On my interpretation, Part IX of the Canada Shipping Act clearly states the intention of Parliament to make the owner or owners of a vessel or vessels liable for the fault of their vessels (ss. 566 and 567 C.S.A.; Collision Regulations Rule 2) also s. 571 C.S.A. which authorizes an action to be brought against a vessel.
[19] The trial judge went on to say that the liability of the owner was originally established under s. 917 of the Canada Shipping Act, R.S.C. 1906, c. 113 and that the 1985 iteration of the Act contained provisions similar to those in that original Act.
[20] He spelled out his statutory interpretation in para. 43 of his reasons for judgment in these words:
Pursuant to section 566(1), R.S.C. 1985, owners are held jointly and severally liable for loss of life or personal injuries that are suffered "by a person on a vessel owing to the fault of that vessel and of other vessel or vessels". The owner is allowed to limit his liability if the event occurred without his actual fault or privity under section 575. Consequently, the liability of the ship owner is one that is imposed by statute rather than common law, in other words, it is a statutory liability upon the words originally enacted in Canada in 1906, "shall be deemed to be in fault."
[21] Given this reading of the Act, and his assessment of the way Donald Leggat had driven the boat, his finding of liability against Douglas Leggat followed. At para. 52 of his reasons, the trial judge said:
I have found Donald Leggat liable to the defendants. I find that the vessel being the subject 21-foot Sea Ray was in fault for the collision between it and Garabella Island. I find that its owner, Douglas Leggat, is liable for the fault of the vessel pursuant to the Canada Shipping Act, by necessary inclusion with [sic] ss. 566(1).
[22] Having found Douglas Leggat liable on this basis, the trial judge spent the balance of his judgment considering whether Douglas Leggat could limit the damages pursuant to ss. 575 and 576 of the Act, which require the owner to show that the loss of life or personal injury took place "without his actual fault or privity".
[23] The trial judge concluded that Douglas Leggat failed to satisfy this requirement, and therefore he was unable to claim the limitation on damages provided by s. 575.
[24] In reaching this conclusion, the trial judge acknowledged that the onus under s. 575 is on the owner and that the case law makes clear that this onus is a heavy one. He went on to indicate that he proposed to apply the civil standard of proof and to address the question of actual fault on the principles of the law of negligence. He drew on the judgment of Iacobucci J. in Rhône (The) v. Peter A.B. Widener (The), [1993] 1 S.C.R. 497 to articulate the legal standard applicable to his task as that of "the ordinary reasonable ship owner in the management and control of its shipping operation." Iacobucci J. developed this standard in the following passage at p. 521 S.C.R.:
Negligence on the part of a master of a ship in the performance of his or navigational duties does not amount to actual fault or privity on the part of a corporate shipowner. Courts have viewed masters as the "hands" of a shipping company. Obviously, if it were otherwise a corporate shipowner's right to limit its liability would be virtually nonexistent. However, having said that, the courts have moved away from allowing shipowners to wash their hands completely of all responsibility for matters of navigation by leaving everything to the discretion of their masters. Whereas in the past it may have been sufficient for a shipowner to discharge its responsibility by merely showing that it appointed a competent master, a number of decisions now make it clear that there exists an overall duty on a shipowner to supervise properly the navigation of its vessels: see, for example, Grand Champion Tankers, supra, and Continental Bank of Canada v. Riedel International Inc. (1991), 78 D.L.R. (4th) 232 (F.C.A.).
In such instances, the focus of inquiry is on whether a shipowner acted as an ordinary reasonable shipowner in the management and control of its shipping operation.
[25] Against this legal backdrop, the trial judge found that Douglas Leggat anticipated that his brother would operate the boat as he himself would have done. He found that Douglas expected that after his brother had backed the boat out of the boathouse and turned it to the west, he would immediately accelerate to planing speed and thereafter travel at 25 to 40 miles per hour which, in these circumstances, the trial judge found would contravene the obligation to maintain a proper lookout imposed by Rule 5 of the Collision Regulations, C.R.C., c. 1416 under the Act. The trial judge further found that Douglas Leggat expected his brother to be seated under the canvas cover unless there was a heavy rainstorm. Finally, given these expectations, the trial judge held that Douglas Leggat in fact accepted and approved of the very practice that Donald actually employed in operating the boat that night.
[26] In the context of these legal principles and these findings of fact, the trial judge set out the duties that he found to rest on Douglas Leggat. He found that, as owner, Douglas had a duty either to forbid his brother to use the boat on that night for that voyage or alternatively, to obtain an undertaking from him to operate the boat while standing up outside of the canopy and at less than planing speed until Gabella Island was rounded and the navigation light at Bell's Rock was sighted and thereafter at perhaps higher speeds, but with the operator looking above the windshield. From there, the trial judge moved directly to his conclusion that Douglas Leggat had failed to establish that the incident had occurred without his actual fault or privity. He therefore denied Douglas Leggat the limitation on damages provided by s. 575 of the Act.
Analysis
[27] The principal issue in this appeal is whether the trial judge erred in finding that the Act imposes liability on Douglas Leggat because he was the owner of the boat.
[28] The trial judge began his analysis by reaching back to s. 917 of the Canada Shipping Act of 1906, finding that it deemed an owner liable for the damage caused by the fault of his vessel, and then concluding that this concept has been carried forward by provisions to similar effect in the 1985 Act. That section reads as follows:
If any damage to person or property arises from the non-observance by any vessel or raft of any of the said regulations, such damage shall be deemed to have been occasioned by the wilful default of the person in charge of such raft, or of the deck of such vessel at the time, unless the contrary is proved, or it is shown to the satisfaction of the court that the circumstances of the case rendered a departure from the said regulations necessary.
The owner of the vessel or raft, in all civil proceedings, and the master or person in charge as aforesaid, or the owner, if it appears that he was in fault, in all proceedings, civil or criminal, shall be subject to the legal consequences of such default.
[29] With respect, I think there are two flaws in this reasoning, and indeed the respondent concedes as much. First, s. 917 of the 1906 Act did not impose statutory liability on an owner for the fault of his vessel. Rather, its focus was to deem the conduct prescribed by the regulations under that Act to be duties at civil law. Second, and more important, s. 917 was repealed in 1934 and not reenacted. It had long since ceased to be in force at the time of this litigation.
[30] However, the trial judge did not anchor his finding of liability in this history. Rather, he looked to sections in Part IX of the 1985 Act, which is entitled "Navigation -- Collisions -- Operation -- Limitations of Liability". He relied primarily on s. 566, but also referred to s. 567, s. 571, and Rule 2 of the Collision Regulations. To sustain the trial judge's conclusion, the respondents also point to s. 391 and s. 575 of the Act.1 [page355]
[31] Section 566 reads as follows:
566(1) Where loss of life or personal injuries are suffered by any person on board a vessel owing to the fault of that vessel and of any other vessel or vessels, the liability of the owners of the vessels is joint and several.
(2) Nothing in this section shall be construed as depriving any person of any right of defence on which, independently of this section, he might have relied in an action brought against him by the person injured or by any person or persons entitled to sue in respect of any loss of life, or to affect the right of any person to limit his liability, in cases to which this section relates, in the manner provided by law.
[32] The central provision for the trial judge was s. 566(1). In my view he was wrong to find that it imposes liability on Douglas Leggat as owner. The language of the subsection does not impose liability where otherwise there would be none. Rather it provides that where there are joint tortfeasors who injure an innocent third party, their liability is joint and several.
[33] Section 566(2) makes clear that s. 566 does not create liability that would not otherwise be there, because it expressly preserves any defence that would exist without that section. Moreover, s. 566(1) has no application at all to circumstances where, as in this case, only one tortfeasor is involved. That is made clear in Stein Estate v. Kathy K (The) (1975), [1976] 2 S.C.R. 802 where the harm was inflicted on the innocent party by the fault of only one vessel. In that case, the Supreme Court of Canada said this at p. 822 S.C.R.:
The present case is not one in which an innocent ship or person was damaged through the joint negligence of two others although in my view this is the situation contemplated by s. 639(1) [s. 566(1) in the 1985 Act] of the Canada Shipping Act. . . .
Like the case of Devonshire, s. 639 is directed to the liability of joint tortfeasors whose combined negligence has injured an innocent third party and it recognizes the joint and several liability of such tortfeasors just as does the judgment in that case, but, as I have said, the parties to this action are not joint tortfeasors in that sense and I do not think that s. 639 has any application to the circumstances here at issue any more than has the Devonshire or the cases following it to which Chief Justice Jackett referred.
[34] Section 567 reads:
567(1) Where loss of life or personal injuries are suffered by any person on board a vessel owing to the fault of that vessel and any other vessel or vessels, and a proportion of the damages is recovered against the owners of one of the vessels that exceeds the proportion in which the vessel was at fault, those owners may recover by way of contribution the amount of the excess from the owners of the other vessel or vessels to the extent to which those vessels were respectively at fault, but no amount shall be so recovered that could not, by reason of any statutory or contractual limitation of, or exemption from, liability, or could not for any other reason have [page356] been recovered in the first instance as damages by the persons entitled to sue therefor.
(2) In addition to any other remedy provided by law, the person entitled to any contribution under subsection (1) has, for the purpose of recovering it, subject to this Act, the same rights and powers as the persons entitled to sue for damages in the first instance.
[35] As with s. 566, this section does not impose liability on the owner for the fault of his vessel in circumstances such as these. It too applies only where the damage to the innocent party is due to the joint negligence of two owners. In that circumstance, it simply provides for contribution and indemnity to be claimed by the owner of the vessel who has already been found liable.
[36] Section 571 reads:
- Any enactment that confers Admiralty jurisdiction on any court in respect of damage has effect as though references to the damage included references to damages for loss of life or personal injury, and accordingly proceedings in respect of those damages may be brought in rem or in personam.
[37] While the trial judge also made reference to this section, it merely ensures that admiralty jurisdiction over damages includes damages for loss of life and personal injury. It says nothing about the liability of an owner for the fault of his vessel.
[38] Rule 2 of the Collision Regulations is as follows:
RULE 2
Responsibility
(a) Nothing in these Rules shall exonerate any vessel, or the owner, master or crew thereof, from the consequences of any neglect to comply with these Rules or of the neglect of any precaution which may be required by the ordinary practice of seamen, or by the special circumstances of the case.
(b) In construing and complying with these Rules due regard shall be had to all dangers of navigation and collision and to any special circumstances, including the limitations of the vessels involved, which may make a departure from these Rules necessary to avoid immediate danger.
[39] This Rule merely ensures that nothing in the Rules creates an exemption from liability for an owner. It does not purport to impose a liability on the owner that would not exist without the Rule.
[40] The respondents also seek to support the finding of liability by referring to s. 391 and s. 575(1). They read:
391(1) In every contract of service, express or implied, between the owner of a ship and the master or any seaman thereof, and in every instrument of apprenticeship whereby any person is bound to serve as an apprentice on board any ship, there shall be implied, notwithstanding any agreement to the contrary, an obligation on the owner of the ship, that the owner, the master and every agent charged with the loading of the ship, the preparing of the ship for sea or the [page357] sending of the ship to sea shall use all reasonable means to ensure the seaworthiness of the ship for the voyage at the time when the voyage commences and to keep the ship in a seaworthy condition during the voyage.
(2) Nothing in this section subjects the owner of a ship to any liability by reason of the ship being sent to sea in an unseaworthy state where, owing to special circumstances, the sending of the ship to sea in that state was reasonable and justifiable.
575(1) The owner of a ship, whether registered in Canada or not, is not, where any of the following events occur without his actual fault or privity, namely,
(a) where any loss of life or personal injury is caused to any person on board that ship,
liable for damages beyond the following amounts:
(e) in respect of any loss of life or personal injury, either alone or together with any loss or damage to property or any infringement of any rights mentioned in paragraph (d), an aggregate amount equivalent to three thousand one hundred gold francs for each ton of that ship's tonnage, and . . .
[41] Section 391 deals only with the terms to be implied in contracts of service and instruments of apprenticeship, binding owners and those employed to work their vessels. That section simply has no application in the circumstances of this case.
[42] Section 575 is argued by the respondents to imply that there is liability on the owner whenever the owner's vessel is at fault. I do not agree with this submission. In my view, s. 575 simply limits the damages that can be obtained from an owner against whom liability has been found. The limitation applies when the owner can demonstrate that the incident causing damage occurred without his actual fault or privity. Provisions such as this were designed historically to promote shipping commerce by protecting ship owners from the full and perhaps ruinous pecuniary liability arising from acts of navigation, over which they had no personal control, by those hired to work their vessels. See Iacobucci J. in Rhône (The), supra, at p. 531 S.C.R. He explained this further with these words at pp. 516-17 S.C.R. of that case:
The leading Anglo-Canadian case setting out the meaning of the words "actual fault or privity" and its application to a corporate shipowner is Lennard's Carrying Co. v. Asiatic Petroleum Co., [1915] A.C. 705 (H.L.), aff'g [1914] 1 K.B. 419 (C.A.). The words "actual fault or privity" were found to denote something personal and blameworthy to a shipowner as opposed to a constructive fault arising under the doctrine of respondeat superior. In the oft-quoted words of Viscount Haldane L.C. at pp. 713-14: [page358]
It must be upon the true construction of that section in such a case as the present one that the fault or privity is the fault or privity of somebody who is not merely a servant or agent for whom the company is liable upon the footing respondeat superior, but somebody for whom the company is liable because his action is the very action of the company itself. It is not enough that the fault should be the fault of a servant in order to exonerate the owner, the fault must also be one which is not the fault of the owner, or a fault to which the owner is privy; and I take the view that when anybody sets up that section to excuse himself from the normal consequences of the maxim respondeat superior the burden lies upon him to do so.
[43] In summary, therefore, an analysis of the particular sections of the Act does not support the conclusion that, individually or collectively, they impose a statutory liability on an owner for the fault of his vessel in the circumstances of this case. Thus I think the trial judge erred in finding Douglas Leggat liable on this basis.
[44] Having said that, it is clear that Canadian maritime law permits the imposition of liability on an owner of a vessel on other bases. Historically, the principle of respondeat superior rendered ship owners responsible for the acts of those they employed to navigate their ships on the high seas. That principle obviously has no application to this case.
[45] However, it is also clear that liability can be imposed on an owner of a vessel on the basis of the ordinary principles of tort law. As MacIntyre J. said in ITO-International Terminal Operators Ltd. v. Miida Electronics Inc., [1986] 1 S.C.R. 752, 28 D.L.R. (4th) 641 at para. 28:
It is my view, as set out above, that Canadian maritime law is a body of federal law encompassing the common law principles of tort, contract and bailment.
[46] This then raises the question of whether the trial judge's disposition of the owner's attempt to limit his damages pursuant to s. 575 of the Act can be taken as equivalent to a determination of negligence that will support the conclusion of liability against Douglas Leggat.
[47] In my view, the answer to this question is no. There is no doubt that in assessing Douglas Leggat's assertion that the accident took place without his actual fault, the trial judge applied the concept of "the ordinary reasonable ship owner" and went on to articulate the duties he found to rest on Douglas Leggat in the circumstances of this case. Nonetheless, for a number of reasons, I do not think that his disposition of this issue can serve as a finding of negligence so as to support his conclusion of liability against Douglas Leggat. [page359]
[48] First, the precise conclusion reached by the trial judge was that Douglas Leggat had failed to establish that the incident occurred without his actual fault or privity. While the tools used in this analysis, as elaborated by Iacobucci J. in Rhône (The), supra, mirror those used in a negligence analysis, the trial judge was not required to make an explicit finding that the owner was at fault, nor did he do so.
[49] Second, as the trial judge said, the onus in the analysis under s. 575 is a heavy one and it rests on the owner. The owner must establish a complete absence of actual fault on his part. While the trial judge concluded that Douglas Leggat had failed to do so, this heavy onus makes it more difficult to treat that conclusion as equivalent to a positive finding that the respondents have proven the owner's negligence.
[50] Third, while the trial judge articulated the duties he found to rest on Douglas Leggat in these factual circumstances, his description of those circumstances reflects palpable and overriding error in two important respects.
[51] The first error is his finding that Douglas Leggat expected his brother to drive the boat while seated under the cover unless there was a heavy rainstorm. There is no evidence to support this finding. Douglas Leggat's evidence was clear that if he had been operating the boat, he would have got outside the canopy had he needed to do so to see and he anticipated that Donald would do the same without being told to do so.
[52] In addition, the trial judge found that Donald did in fact operate the boat as anticipated by Douglas. However, a crucial aspect of that operation was Donald's attempt to navigate by "dead reckoning". Again there is no evidence that Douglas anticipated that he would do this. Rather, Douglas testified that, following his own boating practice, he would have driven the boat parallel to the south shore of Penman Island, past the Harvey cottage until he could see the flashing light at Bell's Rock, and then he would have turned left. He expected Donald to do the same.
[53] It is clear that, for the trial judge, both these erroneous findings of fact were significant parts of the context from which he derived the duties applicable to Douglas Leggat as owner. To that extent, it puts those duties under a cloud.
[54] Finally, even if those duties could properly be taken as appropriate for an analysis of the negligence of the owner, the trial judge did not deal with other aspects of that analysis, such as foreseeability or remoteness, which might well be matters of debate if the negligence analysis were undertaken directly.
[55] In conclusion, since it cannot be said that the Canada Shipping Act imposes liability for this incident on Douglas Leggat as [page360] owner, and since the trial judge's other findings cannot serve as a surrogate for the conclusion that Douglas Leggat was himself negligent and therefore liable, the trial judge's finding of liability against him cannot stand.
[56] The appeal must therefore be allowed and, regrettably, the issue of Douglas Leggat's liability returned for a new trial.
[57] As to costs, I think that the costs of the first trial should be left to the judge hearing the new trial. However, there is no reason why costs of this appeal should not follow the event on a partial indemnity basis. The appellant submitted a draft bill of costs on a partial indemnity basis in the amount of $48,470.66 inclusive of disbursements and GST. He has suggested that an amount of $32,500 plus disbursements would be appropriate for the respondents were they to be successful. The respondents submitted their draft bill of costs on a partial indemnity basis in the amount of $82,557.24 inclusive of disbursements and GST.
[58] While I agree that the issues in this appeal required significant preparation, given the means of the respondents and our general concern with the steep costs of litigation produced by a mechanical application of the costs grid, I think that the appellant's costs should be fixed on a partial indemnity basis at $25,000 inclusive of disbursements and GST.
Appeal allowed.