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NAVIGATION AND MARINE DAMAGE - Pollution - Legislation - Marine Liability Act

Monday, July 31, 2017 @ 3:21 PM  


Application by the Administrator of the Ship-source Oil Pollution Fund for a reference to determine whether a claimant is required to execute a Release and Subrogation Agreement as a condition precedent to payment of a claim. This was a test case involving a claim by the Canadian Coast Guard for costs and expenses incurred in the course of responding to an oil spill caused by the sinking of a fishing vessel. The Coast Guard claimed $94,689 from the Fund for the costs related to its services. The Administrator investigated and assessed the claim, finding $86,228 was established. The Administrator offered $86,228 as a full and final settlement pursuant to the Marine Liability Act and enclosed a Release and Subrogation Agreement for execution by the Coast Guard. The Coast Guard accepted the settlement offer, but refused to sign the Agreement. The Administrator took the position that the Coast Guard was required to sign the Agreement in order to receive the settlement funds. The Coast Guard submitted the Administrator did not have the authority to require execution of the Agreement as a condition precedent to payment of a valid claim.

HELD: Application determined in Coast Guard's favor. Under s. 106 of the Marine Liability Act, once a claimant under the Fund accepted an offer of compensation, the Administrator was required to direct payment without delay. The rights of the Administrator under s. 105(1) of the Act were limited to investigation and assessment of a claim, and to offer compensation for the allowed portion of any claim. The fact that the Administrator might be required to execute a final release settling a subrogated action against a vessel owner did not permit the Administrator to require execution of a similar release by claimants. The degree to which s. 106 of the Act limited a claimant to one claim arising from the event that gave rise to the pollution was not a question that arose on the facts or that should be answered in the reference.

Administrator of the Ship-source Oil Pollution Fund v. Canada (Minister of Fisheries and Oceans), [2017] F.C.J. No. 666, Federal Court, R.W. Zinn J., May 30, 2017. TLD-July312017001