Appellants’ act constituted willful misconduct resulting in loss of insurance coverage

Federal appeal | Admiralty


Appellants’ act constituted willful misconduct resulting in loss of insurance coverage

Respondents had laid submarine fibre-optic cables across river. Defendant was lifetime fisherman and sole shareholder and president of company, which owned fishing vessel, of which defendant was master. On two separate occasions, anchors of defendant’s crab fishing cages got hooked on cable. Both times defendant freed anchor by cutting cable with circular electric saw. Judge found that defendant’s personal act was deliberate and done with intent to cause loss resulting from cutting of cable and therefore, that defendant was liable for loss. Since defendant was company’s directing mind and its sole officer, his actions were deemed to be the company’s. Therefore, company was also liable on basis of defendant’s actions. As result, appellants were held liable for damage to cable and respondents’ loss, in amount of $980,433. Judge also found that appellants could not limit their liability pursuant to Article 4 of Convention on Limitation of Liability for Maritime Claims, 1976, reproduced in Schedule I to Marine Liability Act (Can.), nor benefit from protection of marine insurance policy issued to them by Royal. Appeal dismissed. It was open to judge to find that cable was navigational hazard within meaning of Charts and Nautical Publications Regulations, 1995 (Can.), and that defendant ought to have known about presence of cable by virtue of said Regulations and that he had breached this statutory obligation. Defendant owed duty of care to his “neighbours both on and below the water line” and breached that duty by tampering with cable by cutting it in two without further investigating about it. Judge did not err in holding defendant jointly and severally liable with company. Defendant intentionally and deliberately cut cable twice. Defendant did all this while exercising his duties as master and alter ego of company, corporate owner of vessel. Judge did not err in limiting liability. Loss resulted from defendant’s personal act of cutting cable, “committed with intent to cause such loss,” as provided for at Article 4 of 1976 Convention. There was no need for judge to make finding that defendant knew exact value of cable and fact that it was in use before he could reach conclusion he did. Defendant did intend to cut cable into pieces. Respondent claimed cost of putting it back together. Finally, judge had no difficulty finding that defendant’s conduct was “marked departure from the norm,” something more than mere negligence. As result, he found that appellants’ act constituted wilful misconduct resulting in loss of their insurance policy coverage.
Societe Telus Communications v. Peracomo Inc. (June 29, 2012, F.C.A., Letourneau, Gauthier and Trudel JJ.A., File No. A-199-11) Decision at 201 A.C.W.S. (3d) 323 was affirmed. 217 A.C.W.S. (3d) 4 (30 pp.).

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