This Week At The SCC (25/04/2014)

The Supreme Court of Canada released three judgments this week of interest to Canadian businesses and professions.

The first, Peracomo Inc. v. TELUS Communications Co., 2014 SCC 29, involved an action against a crab fisherman and his company brought after he deliberately cut a cable lying on a river bottom which, unbeknownst to him, was a live fiber-optic cable co-owned or used by several of the plaintiffs. The defendant relied on s. 29 of the federal Marine Liability Act, which limits liability for property damage caused by the operation of ships of the defendant's class to $500,000. In response, the plaintiffs relied on Article 4 of the Convention on limitation of liability for maritime claims given force by the same statute, which creates an exception to this limitation of liability provision where "the loss resulted from [the defendant's] personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result". Cromwell J. for the majority of the Court held that this exception was inapplicable, since although the defendant intended to cut the cable, he did not intend to cause the loss incurred by the plaintiffs nor act recklessly and with knowledge that this loss would probably occur.

At the same time, Cromwell J. held that the defendant was barred from recovering under his insurance policy because his conduct engaged the statutory exclusion from marine liability insurance in s. 53(2) of the federal Marine Insurance Act, which applies where a loss is "attributable to the wilful misconduct of the insured". According to Cromwell J., the test for wilful misconduct under this provision is less stringent than that applicable to the Marine Liability Act exclusion, and "does not require either intention to cause the loss or subjective knowledge that the loss will probably occur", but "simply misconduct with reckless indifference to the known risk despite a duty to know". (para. 67) Given the many statutory and contractual contexts in which the expression "wilful misconduct" appears, the Peracomo decision could have broad implications when construing such language in the future.

The second decision is Ontario (Community Safety and Correctional Services) v. Ontario...