The transfer of title on a ship sale is not dependent on registration of the sale in the Canadian Ship Registry, at least in the specific context of Ship-Source Oil Pollution Fund (SOPF) pollution liability claims.  On the flip side, status as the registered owner does not necessarily mean liability as owner, depending on the statutory definition of owner applicable in the circumstances.

These were the Federal Court of Canada’s conclusions, per a January 11, 2019, judgment in The Administrator of the Ship-Source Oil Pollution Fund (ed: SOPF) v. Dr. Jim Halverson Medical Services Ltd. (ed: JHMS) et al.

The SOPF was claiming recovery via subrogation of pollution mitigation costs, alleging that JHMS was the liable party as “owner” at the time of a barge sinking in 2014.

The Court concluded that JHMS had sold the barge in 2012 to a third party, and transferred title via the contract, but the change was not registered in the Canadian Register of Vessels, which continued to show JHMS as the registered owner.

The Court noted that the relevant liability provisions of the Marine Liability Act (MLA) pinned liability on the “owner”, which was a defined term meaning “the person who has for the time being either by law or by contract, the rights of the owner of the ship with respect to its possession and use”.  In short, that definition contained nothing which tied ownership to the registration of title in the Canadian Register in accordance with the Canada Shipping Act, 2001 (CSA2001).  In turn, the ship registration provisions in CSA2001 were clear that the change of ownership should have been registered, but did not prescribe formalities that had to be complied with before title could pass to a new owner (and unlike earlier versions founded on the U.K. Merchant Shipping Act of 1894.

The result was that JHMS was not liable since it was not the owner in the MLA sense at the time of the sinking.

There is an interesting tie-in here with the Wartsila case (scope of Canadian maritime law; see our 09/20/18 post referring to the case), which is headed for hearing in the Supreme Court of Canada on January 24, 2019.  The Court decided as a matter of common law that the transfer of title depended on the intention of the parties and that the contract, its circumstances and post-contract conduct all evidenced an intention to transfer title.  JHMS also argued that the B.C. Sale of Goods Act applied to the effect that the property in goods passes at the time that the parties intend it to pass.  The Court noted that incidental application of provincial law to a federal (maritime) matter was supported by caselaw, but that it is also argued in Wartsila that as regards the sale of goods it may actually be the U.K. Sale of Goods Act of 1893 that applies as incorporated into Canadian maritime law.  But since there was no difference between the two Acts, or any difference compared with the common law position, the point did not need to be decided.

It remains to be seen to what degree the eventual Supreme Court judgment in Wartsila will clarify these issues, and whether the Supreme Court will venture beyond the narrow sale of goods issue to clarify the broader application (of federal law versus provincial law in maritime matters) issues.

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