Québec Superior Court Re-Ignites Debate On The Scope Of Maritime Law In Canada

Transport Desgagnés Inc. v. Wärtsilä Canada Inc., 2015 QCCS 5514

In brief

In a case that raises interesting constitutional questions, the Québec Superior Court recently held that the sale of a bedplate and crankshaft for the use aboard a vessel falls outside of the scope of Canadian Maritime Law. As a result, the professional seller is not entitled to benefit from the limitation of liability clause under the contract of sale. Rather, the prohibition against limitation or exclusion of liability clauses for hidden defect under the Québec Civil Code applied. The Québec Court of Appeal is currently seized of the matter.

Case summary

(i) Facts

Transport Desgagnés Inc. ("Desgagnés") operates a fleet of vessels in Canadian and international waters. In 2006, the company bought a new bedplate and reconditioned crankshaft for one of its vessels from the Wärtsilä group ("Wärtsilä"). In October 2009, after more than 13,000 running hours, the new crankshaft suffered a total breakdown while the vessel was operating near Les Escoumins (Québec), causing damages agreed by the parties to be approximately $5.6 million.

(ii) Arguments

The fact that the failure was caused by the insufficient tightening of one of the connecting rods was not disputed, nor an issue at trial. Desgagnés alleged that the crankshaft was defective and badly installed when it was delivered. Wärtsilä for its part argued that it was Desgagnés who was responsible for the improper tightening of the connecting rods after routine maintenance. It further argued that, under the terms of the sales contract between the parties, Desgagnés had agreed to a limitation of liability clause. Desgagnés answered that the contract was covered by the Civil Code of Québec ("CCQ") and that as a consequence, the limitation of liability clause was invalid in the circumstances.

(iii) Decision

The two main issues at play were (A) what law governs the transaction: Canadian Maritime Law or the Québec civil law?; and (B) based on the governing law, is Wärtsilä entitled to limit its liability by means of the contractual limitation of liability clause?

With respect to the applicable law, the Superior Court was of the view that the conflict between the parties stems from a simple contract of sale. As such, the transaction between the parties is not integrally connected with the Federal Parliament's jurisdiction over navigation and shipping.1 The Superior Court also found that differences in provincial rules concerning...