Decisions

TATC File No. MP-0023-37
MoT File No. P20090819-505-00044

TRANSPORTATION APPEAL TRIBUNAL OF CANADA

BETWEEN:

D & C Management Ltd.,, Applicant

- and -

Minister of Transport, Respondent

LEGISLATION:
Canada Shipping Act, 2001, S.C. 2001, c. 26, para. 106(2)(a)


Review Determination
C. Michael Keefe


Decision: April 6, 2010

Citation: D & C Management Ltd. v. Canada (Minister of Transport), 2010 TATCE 6 (review)

Heard at Nanaimo, British Columbia, on January 26, 2010

Held: D & C Management Ltd. has violated paragraph 106(2)(a) of the Canada Shipping Act, 2001. In the absence of any aggravating factors being put forward by the Minister of Transport, and with my belief that the Applicant does not require anything other than the minimum penalty allowed under the Administrative Monetary Penalties Regulations, SOR/2008‑97, as a deterrent, I reduce the penalty from $6 000 to $1 250. 

The total amount of $1 250 is payable to the Receiver General for Canada and must be received by the Transportation Appeal Tribunal of Canada within thirty-five (35) days of service of this Determination.

File Nos. MP-0023-37 (D & C Management Ltd.)

MP-0024-33 (Joseph Campbell)

I. BACKGROUND

A. File No. MP-0023-37 (D & C Management Ltd.)

[1] On August 19, 2009, the Minister of Transport issued a Notice of Violation ("Notice") to the Applicant, D & C Management Ltd. (D & C Management), for a violation of paragraph 106(2)(a) of the Canada Shipping Act, 2001 ("Act"). It is alleged that on or about August 8, 2009, the M/V Lynnwood proceeded on a voyage and that, as the authorised representative of the vessel, D & C Management failed to ensure that the vessel had been inspected for the purpose of obtaining a vessel Inspection Certificate.

[2] Schedule A of the Notice states the following:

On or about August 8, 2009 at or near Queen Charlotte Sound in the province of British Columbia, D & C Management Ltd., being the authorised representative of the vessel ‘Lynnwood', failed to ensure that the vessel and its machinery and equipment were inspected for the purpose of obtaining all of the Canadian maritime documents required under Part 4 of the Canada Shipping Act, 2001, thereby contravening paragraph 106(2)(a) of that Act.

In particular, the vessel engaged on a voyage without holding a valid Canadian Vessel Inspection Certificate, as required by subsection 10(2) of the Vessel Certificates Regulations.

Penalty $6,000.00

[3] On September 21, 2009, David Campbell, acting on behalf of D & C Management, filed a request for a review with the Transportation Appeal Tribunal of Canada ("Tribunal").

B. File No. MP-0024-33 (Joseph Campbell)

[4] On August 19, 2009, the Minister issued a Notice to the Applicant, Joseph Campbell, for a violation of section 107 of the Act. It is alleged that on or about August 8, 2009, the M/V Lynnwood proceeded on a voyage and that, as the Master of the vessel, Joseph Campbell failed to ensure that the vessel had a valid vessel Inspection Certificate.

[5] Schedule A of the Notice states the following:

On or about August 8, 2009 at or near Queen Charlotte Sound in the province of British Columbia, Joseph Campbell, being the master of the vessel ‘Lynnwood', failed to ensure that a Canadian maritime document required under Part 4 of the Canada Shipping Act, 2001 had been obtained before the vessel embarked on a voyage from a port in Canada, thereby contravening paragraph 107 of that Act.

In particular, the vessel engaged on a voyage without holding a valid Canadian Vessel Inspection Certificate, as required by subsection 10(1) of the Vessel Certificates Regulations.

Penalty $1,250.00

[6] On September 21, 2009, the Applicant, Joseph Campbell, filed a request for a review with the Tribunal.

II. STATUTES, REGULATIONS AND POLICIES

[7] Subsection 106(2), section 107, paragraph 229(1)(b), subsections 232.1(1) and (4), paragraph 244(h) and subsection 254(1) of the Act provide as follows:

106(2) The authorized representative of a Canadian vessel shall ensure that

(a) the vessel and its machinery and equipment are inspected for the purpose of obtaining all of the Canadian maritime documents that are required under this Part; and

(b) every term or condition attached to a Canadian maritime document issued in respect of the vessel or its machinery or equipment is met.

107 The master of a Canadian vessel shall, before the vessel embarks on a voyage from a port in Canada, ensure that all of the Canadian maritime documents required under this Part have been obtained.

229(1) If the Minister has reasonable grounds to believe that a person or vessel has committed a violation, the Minister may

. . .

(b) issue, and cause to be served on the person or vessel, a notice of violation that names the person or vessel, identifies the violation and sets out

(i) the penalty, fixed by or within the range fixed by the regulations made under this Part, for the violation that the person or vessel is liable to pay,

(ii) the period, being thirty days after the notice is served, within which the penalty must be paid or a review of the notice requested, and

(iii) particulars of the manner in which, and the address at which, the penalty must be paid or a review requested.

232.1(1) On receipt of a request filed under paragraph 232(1)(b), the Tribunal must appoint a time and place for the review and must notify the Minister and the person who, or vessel that, filed the request of the time and place in writing.

. . .

(4) The member may confirm the Minister's decision or, subject to any regulations made under paragraph 244(h), substitute his or her own determination.

244 The Governor in Council may, on the recommendation of the Minister, make regulations for carrying out the purposes and provisions of this Part, including regulations

. . .

(h) designating violations that may be proceeded with by issuing notices of violation and fixing a penalty or a range of penalties in respect of each such violation, up to a maximum of $25,000 but in any event not greater than the maximum fine if the violation were proceeded with by way of summary conviction

. . .

254(1) No person may be found guilty of an offence under this Act if the person establishes that they exercised due diligence to prevent its commission.

[8] Paragraph 9(1)(b) and section 10 of the Vessel Certificates Regulations, SOR/2007-31, state the following:

9(1) Sections 10 and 11 apply in respect of the following Canadian vessels if they are not Safety Convention vessels:

. . .

(b) vessels of more than 15 gross tonnage;

. . .

10(1) No vessel shall engage on a voyage unless it holds a certificate issued under subsection (2).

(2) On application by the authorized representative of a vessel, the Minister shall issue an inspection certificate to the vessel if the requirements under the Act that apply in respect of the vessel when engaged in its intended service are met.

[9] In the Regulatory Impact Analysis Statement ("RIAS") associated with the Administrative Monetary Penalties Regulations, ("AMPRs"), but not forming part of those Regulations, the section entitled Penalty ranges states, in part:

. . . As a matter of general policy, vessels and corporations will be subject to higher penalties than individuals.

III. ELEMENTS TO BE PROVEN

[10] Based on the Notices, I identified the following elements to be proven by the Minister to satisfy his cases.

A. File No. MP-0023-37 (D & C Management Ltd.)

1. The M/V Lynnwood proceeded on a voyage on or about August 8, 2009.

2. The M/V Lynnwood was a Canadian vessel.

3. The authorised representative of the M/V Lynnwood was D & C Management.

4. The M/V Lynnwood had not been inspected for the purposes of obtaining all Canadian maritime documents.

B. File No. MP-0024-33 (Joseph Campbell)

1. The M/V Lynnwood proceeded on a voyage on or about August 8, 2009.

2. The M/V Lynnwood was a Canadian vessel.

3. The Master of the M/V Lynnwood was the Applicant, Joseph Campbell.

4. The M/V Lynnwood was required to, but did not, have a valid vessel Inspection Certificate.

IV. EVIDENCE

A. Minister of Transport

(1) Cheryl Caldwell

[11] At the time of the alleged violation, Cheryl Caldwell was employed as a Second Mate on board the Canadian Coast Guard Ship (CCGS) Gordon Reid. She testified that, on August 9, 2009, her ship received a mayday call and was tasked to go to the M/V Lynnwood. During Ms. Caldwell's testimony, three photographs that she had taken were introduced as evidence (Exhibits M-1-1, M-1-2 and M-1-3). They show a small fishing vessel laying on its starboard side, partially submerged. She explained that she had identified the partially submerged vessel to be the M/V Lynnwood, as its crew had been transferred to her vessel the night before, and that she had signed the M/V Lynnwood's crew on to her "ship's book".

[12] During cross-examination, Ms. Caldwell was asked who had altered the photographs to remove identifying numbers from the vessel. She replied that the photographs had not been altered and that there were no numbers on the side of the vessel when the photographs were taken.

(2) Patrick Lwyn

[13] Patrick Lwyn works as a Senior Marine Inspector with Marine Safety, at the Nanaimo Office of Transport Canada.

[14] A printout of the registration particulars of the M/V Lynnwood, which was filed in evidence, indicates that D & C Management is the owner and the authorised representative of the M/V Lynnwood (Exhibit M-2).

[15] An Inspection Certificate, issued by Transport Canada in respect of the M/V Lynnwood shows an expiry date of April 21, 2009 (Exhibit M-3). Inspector Lwyn testified that this was the last Inspection Certificate issued to the M/V Lynnwood.

[16] Following the sinking of the M/V Lynnwood, Inspector Lwyn contacted Joseph Campbell and requested that he submit a report on the sinking of the vessel. Inspector Lwyn testified that he received a Report of a Marine Occurrence that consisted of a five-page form and three handwritten pages from Joseph Campbell (Exhibit M-4). The handwritten pages describe a sequence of events leading up to the foundering of the vessel. Inspector Lwyn testified that Joseph Campbell had hand-delivered the document to him at the Nanaimo Office and told him that he was the author of the handwritten pages.

[17] During cross-examination, Inspector Lwyn stated that he was sure it was the M/V Lynnwood that had sunk because he was advised by Joseph Campbell and had received a report from the Coast Guard to that effect. When asked who within Transport Canada is responsible for sending out inspection certificate renewal notices, Inspector Lwyn replied that it was the owner's responsibility. He stated that there are no regulations that require Transport Canada to give owners renewal notices.

[18] During cross-examination, Inspector Lwyn testified about four pages of email messages that had been included in the disclosure package provided to the Applicants (Exhibit A-1). He confirmed that only two Notices were issued with respect to the cases at hand and that there was not a third one that named David Campbell as the Master of the M/V Lynnwood.

B. Applicant

(1) David Campbell

[19] David Campbell identified the M/V Lynnwood on three photographs (Exhibits A-2-1, A‑2-2 and A-2-3). The first photograph (Exhibit A‑2-1) is a black and white reproduction of one of the three photographs identified by Ms. Caldwell (Exhibit M-1-1). The two other photographs (Exhibits A-2-2 and A-2-3) show the M/V Lynnwood, at some time in the past, with identifying numbers on the side of the wheelhouse. David Campbell testified that he had no knowledge of anyone having removed the identifying numbers from the side of the vessel. He stated that he knew he was required to have an inspection certificate, that he thought he had a valid one and that he had always had valid certificates. In the past, he had been advised of the requirement to have his ship inspected by Transport Canada or by steamship inspectors whom he knew.

[20] David Campbell said that he had dry docked his vessel in the spring of 2009, in order to have an inspection by Pacific Coast Fishermen's Mutual Marine Insurance Company, the insurer of his vessel. The insurance company inspected his vessel, found it to be seaworthy and renewed his policy. He indicated that he did not arrange for an inspection by Transport Canada while the vessel was dry docked, as he did not realize the inspection was due. He believed it to be due the following year.

[21] A letter from Pacific Coast Fishermen's Mutual Marine Insurance Company, dated January 25, 2010, and addressed to D & C Management, states that the insurance company had surveyed the M/V Lynnwood on October 21, 2008, and had received confirmation that the bottom of the vessel was inspected in May 2009 (Exhibit A-3). Included with this letter is a handwritten requirements report dated October 21, 2008, from the insurance company, that states in part as follows, ". . . nails due for inspection in 2010".

[22] During cross-examination, David Campbell testified that D & C Management had no other shareholders, that he was the sole owner of the Company and that D & C Management owned the M/V Lynnwood. He agreed that the inspection that was carried out in the spring of 2009 was for insurance purposes and that it was not for the purpose of obtaining an inspection certificate.

(2) Joseph Campbell

[23] Joseph Campbell identified the M/V Lynnwood as the vessel shown on one photograph filed in evidence (Exhibit A-2-1). He testified that there were numbers on the side of the vessel and that he had no knowledge of anyone taking them off. He could not think of any reason why someone would take the numbers off the vessel. He stated that the last time the vessel was taken out of the water was in May 2009, for painting and an inspection by the insurance company. It was his opinion that all necessary inspections had been completed. It was his belief that an inspection was due for certificate renewal in 2010.

[24] During cross-examination, when asked if he had been the Captain of the M/V Lynnwood in August 2009, Joseph Campbell replied in the affirmative. He testified that he was the Captain when the M/V Lynnwood went down and that the information in the Report of a Marine Occurrence (Exhibit M-4) is an accurate representation of what happened that day.

V. ARGUMENTS

A. Minister of Transport

[25] The Minister's representative states that the master of the vessel is responsible for ensuring that a valid inspection certificate is on board and that the authorised representative is responsible for ensuring that the required inspections are carried out. The responsibility for certificate renewal is on the owner of the vessel. There is no onus on Transport Canada to advise when an inspection certificate is soon to expire.

[26] The Minister's representative submits that with regards to markings on the side of the vessel and whether the photographs (Exhibits M-1-1, M-1-2, M-1-3 and A‑2‑1, A-2-2, A 2-3) were somehow altered, it has no bearing as the issue is whether or not the M/V Lynnwood was working the day it sank.

[27] The Minister's representative comments on what he understands to be the authority of the Tribunal Member to award a penalty in an amount that the Member considers fit even if it is below the minimum stated in the Administrative Monetary Penalties Regulations ("AMPRs"). The gist of the submission, being that the options afforded by the Tribunal Member under subsection 232.1(4) of the Canada Shipping Act, 2001 ("Act") disappear if the penalty amount in the AMPRs  made pursuant to paragraph 244(h) of the Act, is fixed, as opposed to being within a range.

[28] The Minister's representative states that, for D & C Management, the penalty was set at $6 000 because it is Transport Canada's policy to do so.

B. Applicant

[29] The Applicants' representative submits that David Campbell truly did believe that the inspection was due in 2010. Over the years, he had relied on others, including Transport Canada Inspectors to advise him that the Inspection Certificate was up for renewal. She indicated that David Campbell was sure that in the past he was sent renewal notices.

[30] With respect to Joseph Campbell, it was put forward that there were extenuating circumstances, in as much that it was from his father, David Campbell, that he had the understanding that all of the necessary inspections had been carried out and the vessel had a valid certificate. It was suggested that Transport Canada issue certificate renewal notices.

VI. EVIDENCE, LAW AND POLICY ANALYSIS

[31] The statements in the descriptions of the violations at Schedule A of both Notices were not disputed by either Applicant.

[32] Regarding the three photographs of a vessel, taken by Ms. Caldwell (Exhibits M-1-1, M‑1-2 and M-1-3), I accept that they show the M/V Lynnwood according to the testimonies of Ms. Caldwell, David Campbell and Joseph Campbell, and I find these three witnesses to be credible. Ms. Caldwell testified that she took the photographs while serving as Second Mate on board the CCGS Gordon Reid. Based on this, I conclude that the M/V Lynnwood was on a voyage, and therefore, the first element of the alleged violation against both D & C Management and Joseph Campbell is proven on a balance of probabilities.

[33] Inspector Lwyn has testified with respect to a partial printout of registration particulars of the M/V Lynnwood (Exhibit M-2). This document has a date of 8/10/2009, appearing on the bottom right hand corner. I take this to be October 8, 2009. The document shows that the authorised representative and the owner at that time was D & C Management. The Applicant did not contest this document but if he had done so, the Minister's case would have been better served to have presented the information as received directly from one of Transport Canada's Ship Registrars, attested as being an accurate reflection of the database at the time of the alleged violation. The printout shows the port of registry as being Nanaimo. Therefore, I conclude that the M/V Lynnwood was a Canadian vessel and that the second element of the alleged violation against both D & C Management and Joseph Campbell is proven on a balance of probabilities. From the same testimony and Exhibit, I also conclude that the third element of the alleged violation against D & C Management, that the Company was the authorised representative of the M/V Lynnwood, is proven on the balance of probabilities.

[34] During the testimony of Inspector Lwyn, a Report of a Marine Occurrence was filed in evidence (Exhibit M-4). He testified that this Report had been completed by Joseph Campbell and hand-delivered to him at his Nanaimo Office. The last three pages are handwritten and signed by Joseph Campbell with the word "Captain" printed next to his name. During cross‑examination, Joseph Campbell testified that he was the Captain of the vessel when it sank and that the contents of the Report were an accurate representation of what happened that day. Based on this, I conclude that Joseph Campbell was the Master of the M/V Lynnwood while it was on a voyage and that, on a balance of probabilities, the third element of the alleged violation against him, that he was the ship's Master, is proven.

[35] Sections 9 and 10 of the Vessel Certificates Regulations require vessels of more than 15 gross tons to hold a vessel Inspection Certificate. The partial printout of registration particulars (Exhibit M-2) shows that the M/V Lynnwood was of 17.07 gross tons. David Campbell has testified that he is the sole owner of D & C Management as well as the owner and the authorized representative of the M/V Lynnwood. He stated that he did not arrange for an inspection of the vessel, as he thought the Inspection Certificate was valid until 2010 and that an inspection was therefore not required prior to the sinking of the vessel. Inspector Lwyn has indicated that the last Inspection Certificate issued to the M/V Lynnwood expired on April 21, 2009 (Exhibit M-3). Based on this, I conclude that the vessel had not been inspected for the issuance of a valid inspection certificate and, at the time of its sinking, on or about August 8, 2009, it was sailing without a valid certificate. On a balance of probabilities, the fourth and final elements of the alleged violations against both D & C Management and Joseph Campbell are proven.

[36] I find David Campbell to be a credible witness, and I am convinced that he believed the Inspection Certificate was valid until sometime in 2010, and that his ship was sailing with a valid certificate at the time of the alleged offence.

[37] The Applicants' representative has indicated that David Campbell did not intend to break the law. David Campbell has stated that, had he known his certificate was expired, he would not have sailed without first arranging for a new certificate. His testimony indicates that, in the past, he had been informed by others, including Transport Canada Inspectors, when his certificate was soon to expire and he would then arrange for inspection.

[38] The Applicants' representative has indicated that Joseph Campbell honestly relied on the mistaken belief of his father, David Campbell, that the vessel had a valid Inspection Certificate. With both Applicants, I believe this to be true. Their testimonies and the submissions by their representative speak towards the defence of due diligence, as allowed by section 254 of the Act.

[39] A person who seeks the benefit of the defence provided by section 254 of the Act must prove, on a balance of probabilities, that all due diligence had been exercised to prevent the violation.

[40] The Inspection Certificate contains a note that the certificate is required to "be posted in a conspicuous place accessible to all persons on board the vessel" (Exhibit M-3). In the section entitled "Limitations on Use of Certificate" an expiry date of April 21, 2009, is clearly indicated. Therefore, the fact that the certificate would expire on April 21, 2009, was not something that could easily be missed. It is my belief that a prudent and responsible ship owner would know the status (valid or expired) of his ship's Inspection Certificate. Oral evidence indicates that David Campbell is an experienced mariner, as is Joseph Campbell, the ship's Master. The belief that they were operating with a valid certificate does not satisfy the onus of taking all reasonable care to avoid committing the offence, as required for a due diligence defence.

[41] The Minister's representative has suggested that the Tribunal has the authority to award a penalty that is less than the lower end of the range for this offence, as set out in the AMPRs. His reasoning, as described above in his closing submission, does not convince me that this is the case. Subsection 232.1(4) of the Act allows the Tribunal Member to confirm the Minister's decision or, subject to regulations made under paragraph 244(h) of the Act, substitute his or her own determination. The Minister's representative used the example of a fixed penalty, taking away the power of the Tribunal Member to substitute his or her own determination. A fixed penalty takes away the Tribunal Member's power to vary the amount of penalty but it certainly does not take away the Tribunal Member's ability to substitute his or her own determination, as to whether there was a violation or not. I see nothing in the wording of paragraph 231.1(4) of the Act, that would permit the awarding of a penalty of less than the minimum stated in the AMPRs. Additionally, the wording of paragraph 244(h) of the Act is not such that the choice for all penalties in the AMPRs are either fixed or subject to a range, but rather that some can be fixed amounts and that others can be within a range.

[42] The Minister's representative indicated that the penalty in the Notice issued to D & C Management was set at $6 000, in accordance with Transport Canada's policy, for the minimum amount that could be awarded to a vessel or corporation. I note that the AMPRs set the minimum amount at $1 250. I also note that the Regulatory Impact Analysis Statement ("RIAS") accompanying the AMPRs, but not forming part of them, speaks to an intended general policy of awarding vessels and corporate offenders greater penalties than individual offenders for the same offence. The RIAS gives no rationale for such a policy, and the AMPRs themselves do not give any direction to carry out such a practice. It is my view that justice is not served when one bases the amount of a penalty on departmental policy with the class or status of an offender being the determining factor. In this case, D & C Management was awarded a penalty of $6 000, over four times the minimum amount, and there was no explanation of any aggravating factors that were considered when arriving at that figure. The reason for the figure appears to be only "departmental policy".

[43] D & C Management is the authorised representative as well as the owner of the M/V Lynnwood (Exhibit M-2). During David Campbell's testimony, it was revealed that he is the owner and sole shareholder of D & C Management and that he owned only one vessel, the M/V Lynnwood. In the words of the Applicants' representative, he is "a one man show". I do not believe that unexplained reasons for awarding higher penalties for vessels and corporations than for individuals can possibly apply in this case. Indeed, it is my view that there must always be reasons given for setting the amount of the penalty, even when setting it at the minimum. To state only that it is "departmental policy" is insufficient.

VII. DETERMINATION

A. File No. MP-0023-37 (D & C Management Ltd.)

[44] D & C Management has violated paragraph 106(2)(a) of the Act. In the absence of any aggravating factors being put forward by the Minister, and with my belief that the Applicant does not require anything other than the minimum penalty allowed under the Administrative Monetary Penalties Regulations as a deterrent, I reduce the penalty from $6 000 to $1 250.

B. File No. MP-0024-33 (Joseph Campbell)

[45] Joseph Campbell has violated section 107 of the Act. Consequently, I confirm the penalty of $1 250, imposed by the Minister.

April 6, 2010

C. Michael Keefe

Member