Decisions

TATC File No. MO-0014-37
MoT File No. O20081211-402-00015

TRANSPORTATION APPEAL TRIBUNAL OF CANADA

BETWEEN:

Mckeil Ships Limited, Applicant

- and -

Minister of Transport, Respondent

LEGISLATION:
Canada Shipping Act, 2001, S.C. 2001, c. 26; paragraph 106(1)(a) and section 87


Review Determination
Barrie LePitre


Decision: July 22, 2010

Citation: McKeil Ships Limited v. Canada (Minister of Transport), 2010 TATCE 18 (review)

Heard at Hamilton, Ontario, on May 11, 2010

Held: I make the following determinations:

  • Violation no. 1 has been proven, but I reduce the penalty from $7 800 to $6 000.
  • Violation no. 2 was not disputed (as to liability or penalty), and I confirm the penalty at $7 800.
  • Violation no. 3 has not been proven, and I dismiss the penalty of $7 800.
  • Liability for violation no. 4 was not disputed, and I confirm the minimum penalty at $1 250.
  • Liability for violation no. 5 was not disputed, and I confirm the minimum penalty at $1 250.

The total amount of $16 300 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.

I. BACKGROUND

[1] The Notice of Violation ("Notice"), which was the subject of the Review Hearing, is dated February 26, 2009 and was issued to McKeil Marine Limited. In the portion of the Notice headed "Vessel particulars", the name of the vessel is specified as the M/V Kathryn Spirit. In the portion of the Notice headed "Authorized representative particulars", the name of the authorized representative is specified as McKeil Marine Limited.

[2] The Notice indicates that, pursuant to section 229 of the Canada Shipping Act, 2001 ("Act"), the Minister of Transport has reasonable grounds to believe that McKeil Marine Limited has committed the violations specified in Schedule A to the Notice. The Notice also indicates that the violations specified in Schedule A have been designated pursuant to the Administrative Monetary Penalties Regulations, SOR/2008‑97 ("AMPRs"), and the procedures in sections 228 to 243 of the Act respecting administrative penalties apply.

[3] In Schedule A to the Notice, the date and details of the violations are specified as follows: (Please note that in the following extract, the asterisk symbol (*) stands for a deleted CDN number.)

No.

No

Violation

Penalty

Sanction

1

On or about October 6, 2008 at Newport News, in the state of Virginia, in the United States of America, McKeil Marine Ltd., authorized representative of the vessel "Kathryn Spirit", failed to ensure that the vessel met the requirements of the regulations made under Part 4 of the Canada Shipping Act, 2001, thereby contravening paragraph 106(1)(a) of that Act:

In particular the vessel did not carry Class I life boats under davits contrary to paragraph 20(1)(a) of the Life Saving Equipment Regulations by reason that a life boat davit was not functioning.

$7,800.00

2

On or about October 6, 2008 at Newport News, in the state of Virginia, in the United States of America, McKeil Marine Ltd., authorized representative of the vessel "Kathryn Spirit", failed to ensure that the vessel met the requirements of the regulations made under Part 4 of the Canada Shipping Act, 2001, namely section 3 of the Safety Management Regulations, thereby contravening paragraph 106(1)(a) of that Act:

In particular, McKeil Marine Limited failed to ensure that the crew were familiar with the operation of the oily water separator contrary to clause 6.3 of the International Safety Management Code which is incorporated by reference in Regulation 3 of Chapter IX of the International Convention for the Safety of Life at Sea, which is incorporated by reference in section 3 of the Safety Management Regulations.

$7,800.00

3

On or about October 22, 2008 at Prescott Wharf, in the province of Ontario, McKeil Marine Ltd., authorized representative of the vessel "Kathryn Spirit" failed to ensure that the vessel met the requirements of the regulations made under Part 4 of the Canada Shipping Act, 2001, namely section 3 of the Safety Management Regulations, thereby contravening paragraph 106(1)(a) of that Act:

In particular, McKeil Marine Limited failed to ensure that the master was fully conversant with McKeil Marine Limited's Safety Management System contrary to clause 6.1.2 of the International Safety Management Code which is incorporated by reference in Regulation 3 of Chapter IX of the International Convention for the Safety of Life at Sea, which is incorporated by reference in section 3 of the Safety Management Regulations.

$7,800.00

4

On or about October 22, 2008, Zhivko Nikolov Popov, *, employed as Able Seaman on board a Canadian vessel, namely the "Kathryn Spirit", in a position in respect of which a certificate is required under Part 3 of the Canada Shipping Act, 2001, did not hold a valid medical certificate as required by subsection 269(3) of the Marine Personnel Regulations, thereby contravening section 87 of that Act.

Pursuant to subsection 238(2) of that Act, McKeil Marine Limited is being proceeded against as the employer of Zhivko Nikolov Popov, *, in respect of this offence and is liable to the penalty provided as punishment for it.

$1,250.00

5

On or about October 22, 2008, Keith Grant Bulgin, *, employed as MA on board a Canadian vessel, namely the "Kathryn Spirit", in a position in respect of which a certificate is required under Part 3 of the Canada Shipping Act, 2001, did not hold a valid medical certificate as required by subsection 269(3) of the Marine Personnel Regulations, thereby contravening section 87 of that Act.

Pursuant to subsection 238(2) of that Act, McKeil Marine Limited is being proceeded against as the employer of Keith Grant Bulgin, * in respect of this offence and is liable to the penalty provided as punishment for it.

$1,250.00

[4] By letter of March 24, 2009, McKeil Marine Limited requested a review of the administrative monetary penalties by the Transportation Appeal Tribunal of Canada ("Tribunal").

[5] There was a motion by the Minister to substitute the name "McKeil Ships Limited" for that of "McKeil Marine Limited", as the Applicant and in the style of cause, on the basis that, after the Notice had been addressed to McKeil Marine Limited as the authorized representative of the vessel, it was discovered that McKeil Ships Limited, a subsidiary of McKeil Marine Limited, is actually the authorized representative of the vessel. The Applicant's representative, Captain Krick, was in agreement with the motion.

[6] At the Review Hearing, the parties also agreed that McKeil Ships Limited is the employer of the individuals named in violation nos. 4 and 5. As a result, it was determined that we would proceed on the basis that:

  • the alleged violations are against McKeil Ships Limited;
  • the Applicant is McKeil Ships Limited; and
  • Captain Krick was representing McKeil Ships Limited at the Review Hearing.

As the Applicant is McKeil Ships Limited, the style of cause is amended accordingly.

II. STATUTES, REGULATIONS AND POLICIES  

[7] Section 2 of the Act provides the following definitions:

"authorized representative" means, in respect of a Canadian vessel, the person referred to in subsection 14(1) and, in respect of a foreign vessel, the master.

"master" means the person in command and charge of a vessel. It does not include a licensed pilot, within the meaning of section 1.1 of the Pilotage Act, while the pilot is performing pilotage duties under that Act.

"vessel" means a boat, ship or craft designed, used or capable of being used solely or partly for navigation in, on, through or immediately above water, without regard to method or lack of propulsion, and includes such a vessel that is under construction. It does not include a floating object of a prescribed class.

[8] Paragraphs 6(a) and (b), section 87 and paragraphs 106(1)(a) and (c) of the Act provide as follows:

6. The objectives of this Act are to

(a) protect the health and well-being of individuals, including the crews of vessels, who participate in marine transportation and commerce;

(b) promote safety in marine transportation and recreational boating;

. . .

87. Every person who is employed on board a Canadian vessel in a position in respect of which a certificate is required under this Part shall hold the certificate and comply with its terms and conditions.

106. (1) The authorized representative of a Canadian vessel shall

(a) ensure that the vessel and its machinery and equipment meet the requirements of the regulations made under this Part;

. . .

(c) ensure that the crew and passengers receive safety training.

[9] Section 210 of the Act provides the applicable definition of "relevant provision":

"relevant provision" means a provision of this Act or the regulations that the Minister is responsible for administering . . . .

[10] Subparagraph 229(1)(b)(i), sections 232, 232.1 and 237 and paragraphs 244(f) and (h) of the Act provide as follows:

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,

. . .

232.(1) A person or vessel served with a notice of violation under paragraph 229(1)(b) must

(a) pay the amount of the penalty; or

(b) within thirty days after being served or any further time that the Tribunal on application allows, file with the Tribunal a written request for a review of the facts of the violation or the amount of the penalty.

(2) If a review of the facts of the violation is not requested, the person or vessel is deemed to have committed the violation in respect of which the notice was served.

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.

(2) The member of the Tribunal assigned to conduct the review must provide the Minister and the person or vessel with an opportunity consistent with procedural fairness and natural justice to present evidence and make representations.

(3) The burden is on the Minister to establish that the person or vessel committed the violation referred to in the notice. The person is not required, and must not be compelled, to give any evidence or testimony in the matter.

(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.

237. Every rule and principle of the common law that renders any circumstance a justification or an excuse in relation to a charge for an offence under a relevant provision applies in respect of a violation to the extent that it is not inconsistent with this Act.

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

(f) designating as a violation that may be proceeded with in accordance with sections 229 to 242 the contravention of a relevant provision that is an offence under this Act;

(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;

. . .

[11] Paragraph 20(1)(a) and subparagraph 20(1)(b)(i) of the Life Saving Equipment Regulations, C.R.C., c. 1436 ("LSERs"), which are made under the Act, provide as follows:

20.(1) Subject to subsection (2), a Class IX ship that is not a tanker and is a Safety Convention ship or a ship engaged on a foreign voyage shall carry

(a) Class 1 lifeboats not less than 7.3 metres in length, each under davits, in accordance with paragraph (b) or (c), but where a ship is making home-trade IV or minor waters II voyages, the lifeboats may be of class 2;

(b) subject to paragraph (c),

(i) on each side of the ship, one or more lifeboats of aggregate capacity sufficient to accommodate the complement of which one shall be a motor lifeboat if the ship is of 1,600 tons, gross tonnage, or over, but no motor lifeboat need be carried on a ship that does not go more than 20 miles from land,

. . .

[12] Clauses 1.1.2 and 6.1.2 of the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention ("ISM Code") provide as follows:

1.1.2 "Company" means the Owner of the ship or any other organization or person such as the Manager, or the Bareboat Charterer, who has assumed the responsibility for operation of the ship from the Shipowner and who on assuming such responsibility has agreed to take over all the duties and responsibility imposed by the Code. 

6.1 The Company should ensure that the master is: 

. . .

.2 fully conversant with the Company's safety management system; and

. . .

[13] Subsections 2(1) and 2(2) of the AMPRs which are made under the Act, provide as follows:

2.(1) The contravention of a provision of the Act set out in column 1 of the schedule is designated as a violation that may be proceeded with in accordance with sections 229 to 242 of the Act and by the issuance of a notice of violation.

2.(2) The range of penalties set out in column 2 of the schedule is the range of penalties in respect of a violation set out in column 1.

[14] In item 26 of the schedule to the AMPRs, section 87 of the Act is set out in column 1, and $1 250 to $5 000 is the range of penalties set out in column 2. In item 44 of the schedule to the AMPRs, paragraph 106(1)(a) of the Act is set out in column 1 and $1 250 to $25 000 is the range of penalties set out in column 2.

[15] The section on Penalty ranges in the Regulatory Impact Analysis Statement ("RIAS") that accompanied the AMPRs, but does not form part of them, provides as follows:

Penalty ranges

For each of the designated provisions of the CSA 2001, the Schedule sets out an applicable penalty range. Penalty ranges rather than fixed amounts are being used to ensure that the amount imposed is appropriate to the circumstances of each case and that full consideration can be given to any mitigating or aggravating factors such as the compliance record of the offender and any consequences of the violation.

The penalty ranges were developed first by assessing the seriousness of each violation as low, medium or high, because of the subject matter of the designated provision and the possible consequences of non-compliance with it. Then, within each low, medium and high category, the minimum amount for a first violation, the average amount for a second violation and the maximum amount for a third or subsequent violation was set. This was done both for individuals and vessels/corporations. As a matter of general policy, vessels and corporations will be subject to higher penalties than individuals.

The above analysis is reflected in the following table.

Gravity

1st Violation Individual/Vessel or Corporation

2nd Violation Individual/Vessel or Corporation

Subsequent Violation Individual/Vessel or Corporation

Low

$250 to $1,000

$500 to $2,000

$1,000 to $5,000

Medium

$600 to $3,000

$1,200 to $6,000

$2,400 to $12,000

High

$1,250 to $6,000

$2,500 to $12,000

$5,000 to $25,000

The penalty ranges set the minimum amount that an individual will pay for a first violation and the maximum amount that a vessel/corporation will pay for a third or subsequent violation. For example, in the above table, the range of penalties for a first violation by an individual is from $250 to $1,250.

When there is a contravention, the penalty amount is determined within the range by the Minister using the Department of Transport's policies and guidelines. The maximum penalty permitted by the Act is $25,000 per violation. If the amount is not paid, it becomes a debt due to Her Majesty.

[16] The section on Consultation in the RIAS contains the following paragraph:

The Regulations do not create separate penalty ranges for individuals and corporations/vessels. However, government policies will dictate that higher penalty amounts be imposed on corporations and vessels. This higher amount will provide the appropriate deterrent effect to the AMP.

[17] Transport Canada's Policy on Compliance and Enforcement of the Canada Shipping Act, 2001 sets out compliance and enforcement responsibilities of Transport Canada Marine Safety ("TCMS"). Paragraphs 4.1, 5.8, 5.8.1, 5.8.2 and 5.9 of the Policy provide as follows:.

4.1 Verbal counselling or a warning letter should be used when an offender commits a minor, inadvertent contravention or where the imposition of a more serious sanction is not appropriate.

5.8 An Assurance of Compliance (AC) is a binding agreement that includes the assessed amount of penalty and allows a person or vessel to come into compliance within a specified period of time without incurring any sanction. 

5.8.1 ACs will be used where the person or vessel responsible for the deficiency accepts the terms of the agreement and is able to make the appropriate rectifications within the specified time period.

5.8.2 ACs will not be used if the person or vessel has a recent history of non-compliance, particularly a default under an AC, or if it would be unsafe for the vessel to get underway before the deficiency is rectified.

5.9 TCMS will assess an Administrative Monetary Penalty (AMP) by issuing a Notice of Violation (NOV) in cases where:

  • an AC is inappropriate in the circumstances; or
  • the issuance of an NOV is the appropriate enforcement response (e.g. serious circumstances, repeat violation, etc.)

III. EVIDENCE

[18] At the Review Hearing, the parties agreed that, regarding violation no. 1, the facts were not in dispute, but a liability issue remained for me to determine as to whether having a lifeboat under a non‑functioning davit meets the regulatory requirement to have a lifeboat under davits. If it does not, then there is also the issue of whether the Applicant has established a defence of due diligence. The Applicant indicated that it did not dispute violation no. 2. The facts were in dispute regarding violation no. 3, as described below. The facts were not in dispute with regard to violation nos. 4 and 5.

A. Minister of Transport

(1) Scott Atkinson

[19] Scott Atkinson is a Marine Safety Inspector with Transport Canada, in Kingston, Ontario.

[20] Inspector Atkinson testified that the M/V Kathryn Spirit had been detained in Virginia. The vessel is under the Lloyd's Register for classification purposes. Due to the detention and a number of deficiencies, a Lloyd's surveyor had requested a verification audit of the vessel upon its return to Canada. The verification audit was conducted by a Lloyd's surveyor at the Prescott Wharf, Ontario, on or about October 22, 2008. Inspector Atkinson attended the verification audit as an observer. One of the questions that he asked the vessel's captain (Captain Randolph Lefrense) during the verification audit was whether the captain had received any ISM Code training. The captain answered in the negative. The question was repeated by the Lloyd's surveyor, or trainer, and again the answer was negative.

[21] Inspector Atkinson testified that part of a verification audit consists of documentation review. Under the ISM Code, there is a Safety Management System for the vessel, whereby what is done on the vessel has to be recorded. An internal audit had been done three months previously, and three non-conformities had been raised. For someone with ISM Code training, part of the process is to formally close out such non-conformities. Inspector Atkinson indicated that had not been done. If the captain had had the ISM Code training, then he would have known to close out the non-conformities.

[22] Inspector Atkinson testified that, as the verification audit went further, there was no evidence of a lot of the procedures normally expected of a ship with a Safety Management System. There were no work procedures for contractors to come on board. There were no records of compliance-based entry training. There was no evidence of the crew having any ISM Code training.

B. Applicant

[23] The Applicant introduced a binder of materials (Exhibit A-1), the cover page of which bears the following information:

McKeil Marine Limited

Kathryn Spirit – October, 2008

Request for Review – TATC file # MO-0014-37

The binder contains some opening pages followed by six tabbed items. The introductory pages contain McKeil's rationale for a review of the five violations. The six tabs contain the following documents:

Tab 1 Record of Boat and Fire Drills

Tab 2 Memorandum of September 2, 2008, from John Gruszewski, addressed to the captain of the M/V Kathryn Spirit, and a reply to it

Tab 3 ISM Internal Auditor Training Course Certificate of March 18, 2002

Tab 4 Various Lloyd's Register ISM Code Certification documents

Tab 5 Provisional Marine Medical Certificate of October 24, 2008, in respect of the individual named in violation no. 4

Tab 6 Provisional Marine Medical Certificate of October 24, 2008, in respect of the individual named in violation no. 5.

Some of the materials in the binder were introduced through a witness, while others can only be regarded as submissions.

(1) John Gruszewski

[24] John Gruszenski is the Manager of Safety, Security and Environment at McKeil Marine Limited.

[25] Captain Gruszewski testified that he was present for the latter half of the verification audit in Prescott. With regard to the master's knowledge of the company's Safety Management System, he indicated that the master (Captain Lefrense) was involved from the start when the vessel was placed under the ISM Code. The master had been present for all internal and external audits. Captain Gruszewski further testified that the master had ISM Code training. On the day of the verification audit, the master became flustered under a lot of pressure. Previously, the master of the M/V Kathryn Spirit had been the master of another vessel, a product tanker carrying jet fuel, which was also under an ISM Code safety management certificate. The master was put on the M/V Kathryn Spirit because he had vast knowledge and was trained.

[26] Captain Gruszewski was referred to a certificate, dated March 18, 2002, in respect of a PRI (Performance & Results International, LLC) ISM Internal Auditor Training Course, which he described as showing that Captain Lefrense had successfully completed the course on February 27, 2002 (Exhibit A-1, Tab 3).

[27] Captain Gruszewski was also referred to two documents (Exhibit A-1, Tab 2). One is a memorandum of September 2, 2008, from Captain Gruszewski to the Captain of the M/V Kathryn Spirit. Captain Gruszewski described this memorandum as the latest update to the ship's ISM Code Manual that had been sent to the ship prior to the violation in Virginia. The memorandum contains 10 of the 44 amendments that had been made to the ship's Manual between June 2007 and September 2008. The other document is a letter of September 10, 2008, addressed to Captain Gruszewski from the relief captain of the vessel at that time. Captain Gruszewski described it as showing that the amendments to the Manual were received and the crew and officers had been made aware of the changes.

[28] Captain Gruszewski was then referred to the first page of a Lloyd's Register, ISM Code Certification, Audit Log (Exhibit A-1, Tab 4). He indicated that the purpose of the audit of February 12, 2008, was to receive a Safety Management Certificate for the vessel. Captain Lefrense had signed in the client box, at the bottom of the first page of the Audit Log. He was then referred to the second page, which is a Ship Audit Plan relating to the audit. It indicates that one of the persons audited was the master, and that he was audited in respect of document control, Safety Management System, statutory certificates, crew certification, internal audits, emergency preparedness drills, document of compliance, masters review and designated person ashore. Finally, he was referred to the last page, which he described as the last page of the Audit Log. He read the fourth paragraph of the last page, which provides as follows:

Master and crew were familiar with the safety management system, training program and use of safety and pollution equipment, of which the crew received instructions for their use prior to sailing. Class and statutory surveys were found up to date. A crew list was supplied for the audit.

[29] On cross-examination, the witness indicated that there had been outstanding items from an internal audit which had been closed but that, at the time in question, the captain had been unable to find the closed documents. There were items from an external audit which, at the time in question, had not been closed and were about a week overdue. Captain Gruszewski was referred to a document, which he identified as one that he had produced on board the M/V Kathryn Spirit, regarding training he conducted with senior officers on board. The document is styled "ISM Training on board the M/V Kathryn Spirit" and is dated October 24, 2008 (Exhibit M-1). The vessel was detained in Prescott until, as a condition, the ISM Code training was given. Captain Gruszewski indicated that this training, or retraining, was ISM Code training that flowed from the audit in Virginia and the verification audit in Prescott.

[30] On re-examination, Captain Gruszewski confirmed that the training on October 24, 2008, was conducted at the request of Lloyd's and Transport Canada and as a condition for release of the vessel to sail from Prescott.

IV. ARGUMENTS

A. Minister of Transport

[31] With regard to violation no. 1, the Minister concedes that there were lifeboats of the required type on the vessel, but submits that, as one of them was under a non-functioning davit on or about October 6, 2008, it was not a lifeboat under davits within the meaning of paragraph 20(1)(a) of the LSERs. With regard to the penalty for violation no. 1, the Minister submits that the $7 800 amount is an elevated one because the Minister regards it as a serious matter when a lifeboat cannot be launched because of a non-functioning davit.

[32] With regard to violation no. 3, the Minister submits that, no matter what type of training Captain Lefrense had in the past, two experts (a marine safety inspector and a Lloyd's representative) were satisfied that the captain did not demonstrate the requisite knowledge of someone trained in the ISM Code Safety Management System. Indeed, the level of concern was such that the vessel was detained with a condition imposed that the crew, including the captain, be trained to ensure that they were familiar with an ISM Code Safety Management System. With regard to the penalty for violation no. 3, the Minister submits that the $7 800 penalty is an elevated amount because, when a Safety Management System on board a ship is not functioning properly, the ship and crew are put at risk.

[33] With regard to violation nos. 4 and 5, the Minister submits that the $1 250 penalty is the minimum penalty available, under the AMPRs, in respect of a violation of section 87 of the Act. The policy of Transport Canada as to whether to use an assurance of compliance or a warning (rather than a Notice) is completely within enforcement discretion.

[34] To establish the defence of due diligence, the Applicant has to show that it did everything possible to ensure the offence did not occur. Because the Applicant did not establish that it ensured the lifeboats were swung out in September 2008, the defence of due diligence is not established regarding violation no. 1. The Minister relies on the admission of liability in respect of violation no. 2, as showing that the Applicant did not establish due diligence in respect of violation no. 3.

B. Applicant

[35] With regard to violation no. 1, the Applicant relied upon the Record of Boat and Fire Drills, including drills from February 2008 until October 2008, when the davit did not lower the port lifeboat during the inspection in Virginia (Exhibit A-1, Tab 1). The Minister agrees that the document is an accurate reflection of the log book with regard to the drills aboard the vessel. The Record indicates that, on February 1, 2008, the starboard lifeboat was lowered to the water and manoeuvred, and the port lifeboat was lowered to deck level. The Record also indicates that the port lifeboat was lowered into the water and tested on February 11, 2008. The Applicant conceded that it was because there had been an inability to get it into the water on February 1, 2008. The Record also shows that, on March 10, 2008, a boat and fire drill was conducted in the presence of the United States of America (USA) Coast Guard. The Applicant submits that, while the Record does not state that the lifeboats were swung out, they would have been swung out for a USA Coast Guard inspection and, therefore, it can be presumed that the davit was functioning on March 10, 2008. The Record shows that, on May 29, 2008, the port lifeboat was lowered and manoeuvred all around, and that, on June 28, 2008, the port lifeboat was lowered and manoeuvred in the water. The Record shows that there was a boat and fire drill on September 8, 2008, but the Applicant conceded that there is no evidence that the lifeboats were swung out during the drill.

[36] The Applicant submits that the duty of the authorized representative of the vessel was to make sure that a lifeboat was on board, and that the crew carried out the lifeboat drills to ensure that the equipment continued to function during the voyage. The authorized representative did everything it could to ensure that the crew members had the life saving equipment to which they were entitled, and that the crew members did their jobs, until September 2008, to ensure that the davits were functioning. The crew should have swung out the lifeboats in September 2008, but there was nothing that the authorized representative could do about that. Had the lifeboats not been swung out for a year and the authorized representative not monitored what was going on, then there would be an argument that the authorized representative is liable. The Applicant does not dispute that the lifeboat did not function. It is alleged that the vessel was not equipped properly. The Applicant contends that it was. With regard to the penalty for violation no. 1, the Applicant does not see how the authorized representative should receive a penalty of $7 800, when the crew members were doing almost everything that they should and it is not a case of the authorized representative not providing a lifeboat.

[37] With regard to violation no. 2, the Applicant admits the violation and does dispute the penalty. Not disputing violation no. 2 is not evidence that the Applicant agrees it had a non‑functioning Safety Management System.

[38] With regard to violation no. 3, the Applicant submits that the master had been tested for adequate knowledge of the Safety Management System, that the authorized representative had provided training six years previously but the captain had forgotten about it, and that the authorized representative had sent documents to update the Safety Management System. The captain may have had a bad day in Prescott but the authorized representative did what it felt was necessary to ensure the Safety Management System was working on board the vessel.

[39] With regard to violation nos. 4 and 5, the Applicant concedes that the medical certificates for the two crew members had expired, but submits that the two crew members were medically fit and that the medical certificates (Exhibit A-1, Tabs 5 and 6) were obtained on October 24, 2008, which was before the vessel sailed again. However, from the Applicant's perspective, a verbal counselling, a warning letter or an Assurance of Compliance should have been used instead of a penalty as these contraventions were minor. There should be no penalty for these two violations.

V. EVIDENCE, LEGISLATION AND POLICY ANALYSIS

A. Violation No. 1

[40] At the Review Hearing, the parties agreed that the facts were not in dispute with regard to violation no. 1. On or about October 6, 2008, the port lifeboat could not be lowered into the water because a davit (crane) required to lower it would not function. However, the parties disagreed as to whether having a lifeboat under a non-functioning davit, on the day in question, met the regulatory requirement to have a lifeboat under davits. The parties did not refer me to any case law on this issue.

[41] Paragraph 20(1)(a) of the LSERs requires lifeboats under davits. The davits lower the lifeboats. Included amongst the objectives of the Act are the protection of the health and well‑being of crews of vessels and the promotion of safety in marine transportation. Having regard to such objectives, I determine that the interpretation which would best achieve the object of the Act and the LSERs made thereunder is that paragraph 20(1)(a) of the LSERs requires lifeboats under functioning davits.

[42] As I have determined that having a lifeboat under a non-functioning davit on or about October 6, 2008, did not meet the regulatory requirement, there is also the issue of whether the Applicant has established a defence of due diligence. In that regard, did the authorized representative take all reasonable steps to ensure that there was a functioning davit on the day in question? The Record of Boat and Fire Drills (Exhibit A-1, Tab 1) does not show that the port lifeboat was lowered during the drill in September 2008. The Applicant did not introduce any evidence of the port lifeboat being lowered between June 28, 2008 and the day in October 2008 when the davit did not function to lower the port lifeboat. As a result, I am not satisfied that the authorized representative, directly or through its vessel's crew, took all reasonable steps to ensure that there was a functioning davit on the day in question. The Applicant has not established the defence of due diligence with regard to violation no. 1.

[43] With regard to penalty, where a Notice is issued pursuant to subsection 229(1) of the Act, the penalty is to be fixed by the regulations or within the range fixed by the regulations made under Part 11 of the Act. Pursuant to paragraph 244(h) of the Act (which is in Part 11), the range of penalties that has been set out in item 44 of the Schedule to the AMPRs, for a violation regarding paragraph 106(1)(a) of the Act, is $1 250 to $25 000.

[44] The RIAS that accompanied the AMPRs, but does not form part of them, provides some insight as to the rationale for the penalty regime under the AMPRs. In that regard, the $1 250 to $25 000 range of penalties regarding paragraph 106(1)(a) of the Act (it being a paragraph that could apply to individuals or corporations) signals that the violation is regarded as one of high gravity. The RIAS also gives some indication that higher penalty amounts for corporations than for individuals provide an appropriate deterrent effect and that a penalty of $6 000 was envisaged for a first high-gravity violation by a corporation and a penalty of $12 000 was envisaged for a second high-gravity violation by a corporation.

[45] With regard to a review of penalty, my authority is provided under subsection 232.1(4) of the Act, which reads as follows:

232.1(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.

Taking into account the penalty regime under the AMPRs, I am satisfied that, in the circumstances of this case, a penalty of $6 000 (the penalty contemplated under the RIAS for a first high-gravity violation by a corporation) is appropriate.

B. Violation No. 2

[46] At the Review Hearing, the Applicant indicated that it was admitting violation no. 2 and was not disputing it (as to liability or penalty).

C. Violation No. 3

[47] Paragraph 106(1)(a) of the Act requires an authorized representative to ensure that the vessel (and its machinery and equipment) meet the requirements of the regulations. The introductory portion of the alleged violation is consistent with paragraph 106(1)(a) of the Act, in alleging that the authorized representative failed to ensure that the vessel met requirements of the regulations. However, the particulars of the alleged violation are not consistent with paragraph 106(1)(a) of the Act, in alleging that the authorized representative failed to ensure that the master was conversant with the Safety Management System contrary to clause 6.1.2 of the ISM Code. While the ISM Code does require the ship owner to ensure that the master is fully conversant with the ship owner's Safety Management System, paragraph 106(1)(a) of the Act does not require the authorized representative to ensure that the master meets regulatory requirements. That there is a distinction between the vessel and the crew in subsection 106(1) of the Act is clear, because paragraph 106(1)(a) imposes, on the authorized representative, a requirement in respect of the vessel (and its machinery and equipment), while paragraph 106(1)(c) imposes, on the authorized representative, a requirement in respect of the crew (and passengers). As a result, the Minister has not proven the violation.

D. Violation Nos. 4 and 5

[48] As the enforcement response with regard to violation nos. 4 and 5, the Minister chose the assessment of an administrative monetary penalty. At the Review Hearing, the Applicant indicated that it was not disputing the violations, as to liability, but submitted that there should be no penalty. Pursuant to paragraph 244(h) of the Act (which is in Part 11), the range of penalties that has been set out in item 26 of the Schedule to the AMPRs, for a violation regarding section 87 of the Act, is $1 250 to $5 000. Because these two violations have not been disputed as to liability, and because the range of penalties for both violations has been set out in the AMPRs pursuant to paragraph 244(h) of the Act, my authority is limited by the range. The penalty imposed by the Minister for both of the violations was the minimum in the range.

VI DETERMINATION

[49] I make the following determinations:

  • Violation no. 1 has been proven, but I reduce the penalty from $7 800 to $6 000.
  • Violation no. 2 was not disputed (as to liability or penalty), and I confirm the penalty at $7 800.
  • Violation no. 3 has not been proven, and I dismiss the penalty of $7 800.
  • Liability for violation no. 4 was not disputed, and I confirm the minimum penalty at $1 250.
  • Liability for violation no. 5 was not disputed, and I confirm the minimum penalty at $1 250.

[50] Therefore, the total penalty payable by McKeil Ships Limited in this case is $16 300.

July 22, 2010

Barrie LePitre

Member


Appeal decision
J. Richard W. Hall, C. Michael Keefe, David G. Henley


Decision: May 17, 2011

Citation: Canada (Minister of Transport) v. McKeil Ships Limited, 2011 TATCE 11 (Appeal)

Heard at Toronto, Ontario, on November 24, 2010

Held: The Appeal is dismissed and the Determination by the Review Member that Violation no. 3 was not proven is upheld.

I. BACKGROUND

[1] On February 26, 2009, the Minister of Transport ("Minister") issued a Notice of Violation to McKeil Marine Limited for five violations of sections 87 and 106(1)(a) of the Canada Shipping Act, 2001 ("Act"). The Notice of Violation indicated that administrative penalties were assessed for violations pursuant to the Administrative Monetary Penalties Regulations, SOR/2008-97 ("AMPRs"). The details of the violations and penalties assessed were specified in Schedule A to the Notice of Violation.

[2] The present Appeal is limited to Violation no. 3 in the Notice of Violation which states:

On or about October 22, 2008, at Prescott Wharf, in the province of Ontario, McKeil Marine Ltd., authorized representative of the vessel "Kathryn Spirit" failed to ensure that the vessel met the requirements of the regulations made under Part 4 of the Canada Shipping Act, 2001, namely section 3 of the Safety Management Regulations, thereby contravening paragraph 106(1)(a) of that Act

In particular, McKeil Marine Limited failed to ensure that the master was fully conversant with McKeil Marine Limited's Safety Management System contrary to clause 6.1.2 of the International Safety Management Code which is incorporated by reference in Regulation 3 of Chapter IX of the International Convention for the Safety of Life at Sea, which is incorporated by reference in section 3 of the Safety Management Regulations.

[3] In Schedule A to the Notice of Violation, a penalty of $7 800 was assessed by the Minister for Violation no. 3.

[4] On March 24, 2009, McKeil Marine Limited requested a review of the administrative monetary penalties by the Transportation Appeal Tribunal of Canada ("Tribunal"). As a result of a Motion by the Minister at the Review Hearing, consented to by the Respondent, "McKeil Ships Limited" was substituted for "McKeil Marine Limited" in the style of cause for this proceeding.

[5] The Review Hearing was heard before Barrie LePitre on May 11, 2010 ("Review Member") and he made the following determination:

  • Violation no. 1 has been proven, but I reduce the penalty from $7 800 to $6 000.
  • Violation no. 2 was not disputed (as to liability or penalty), and I confirm the penalty at $7 800.
  • Violation no. 3 has not been proven, and I dismiss the penalty of $7 800.
  • Liability for violation no. 4 was not disputed, and I confirm the minimum penalty at $1 250.
  • Liability for violation no. 5 was not disputed, and I confirm the minimum penalty at $1 250.

[6] On August 11, 2010, the Minister filed a Notice of Appeal.

II. GROUNDS FOR APPEAL

[7] The grounds for appeal in the Notice of Appeal are as follows:

1. The Member erred in law in interpreting section 3 of the Safety Management Regulations as it incorporates Regulation 3 of Chapter IX of the International Convention for the Safety of Life at Sea, 1974 as it incorporates clause 6.1.2 of the International Safety Management Code (ISM Code).

In particular, the member erred in determining that the authorized representative was not liable for the fact that the vessel did not comply with the ISM Code by reason that the master was not trained and fully conversant with the company's management system as required by clause 6.1.2 of the ISM Code.

2. Such further and other grounds in fact and in law that the transcript of the proceeding may disclose.

[8] With respect to ground no. 2, no further grounds were identified by the Minister during or before the Appeal Hearing.

III. STATUTES AND REGULATIONS

[9] Subsection 106(1) of the Act provides as follows:

106. (1) The authorized representative of a Canadian vessel shall

(a) ensure that the vessel and its machinery and equipment meet the requirements of the regulations made under this Part;

(b) develop procedures for the safe operation of the vessel and for dealing with emergencies; and

(c) ensure that the crew and passengers receive safety training.

[10] Subsections 1(1) and 1(2) and sections 2 and 3 of the Safety Management Regulations, SOR/98-348 ("SMRs"), provide as follows:

1. (1) The following definitions apply in these Regulations.

"SOLAS" means the International Convention for the Safety of Life at Sea, 1974, and the Protocol of 1988 relating to the Convention, as amended from time to time. (SOLAS)

(2) In these Regulations, the expression "company" has the same meaning as in Regulation 1 of Chapter IX of SOLAS.

2. These Regulations apply in respect of Canadian vessels to which Chapter IX of SOLAS applies.

3. Every company shall comply with, and ensure that its vessels comply with, Regulations 3, 4.2 and 5 of Chapter IX of SOLAS.

[11] Regulation 3 of Chapter IX of the International Convention for the Safety of Life at Sea, 1974 ("SOLAS") provides as follows:

Safety management requirements

1 The company and the ship shall comply with the requirements of the International Safety Management Code. For the purpose of this regulation, the requirements of the Code shall be treated as mandatory.

[12] Regulation 1 of Chapter IX of SOLAS defines "Company" as follows:

Company means the owner of the ship or any other organization or person such as the manager, or the bareboat charterer, who has assumed the responsibility for operation of the ship from the owner of the ship and who on assuming such responsibility has agreed to take over all the duties and responsibilities imposed by the International Safety Management Code.

[13] Clauses 6.1 and 6.5 of the International Safety Management Code ("ISM Code") provides as follows:

6.1 The Company should ensure that the master is:

.2 fully conversant with the Company's safety management system; and

…          

6.5 The Company should establish and maintain procedures for identifying any training which may be required in support of the safety management system and ensure that such training is provided for all personnel concerned.

IV. ARGUMENTS

A. Minister of Transport

[14] The Appellant referred specifically to paragraph [47] of the Determination of the Review Member for its basis of appeal. The Appellant submitted that the Master of the Kathryn Spirit was not conversant with the Safety Management System ("SMS"), as he was required to be under clause 6.1 of the ISM Code.

[15] The Appellant stated that it is well understood in the marine world that the SMS is an extension of the requirements for the vessel. The Appellant submitted that the vessel must fulfill the requirement that the SMS is functioning correctly and that one of these requirements is that the master and crew be conversant with it.

[16] The Appellant submitted that under the Act, a vessel is treated as a person and having the liabilities of a person, it also has the responsibilities of a person to ensure that the SMS is functioning properly.

[17] The Appellant acknowledged the distinction in the Regulations that the provisions of section 3 of the SMRs require the "Company" to comply with the Regulations of SOLAS and that there is no reference to requiring the vessel to comply.

[18] The Appellant submitted that the question of whether the vessel must also comply relates to its treatment as a person under the Act. In support of this submission, the Appellant noted that the treatment of a vessel as a person arises from in rem actions, drawing the Appeal Panel's attention to a number of sections of the Act in which liability exists for a vessel. The Appellant directed the Appeal Panel to subsection 238(2) of the Act:

238. (2) A person or vessel is liable for a violation that is committed by an employee or agent of the person or vessel acting in the course of the employee's employment or within the scope of the agent's authority, whether or not the employee or agent who actually committed the violation is identified or proceeded against in accordance with this Act.

[19] The Appellant submitted that the provision that a vessel can be held vicariously liable for criminal matters suggests that a vessel is to be treated as a person. The Appellant directed the Appeal Panel to subsections 252(1) and (2) and 254(2) of the Act as examples of situations where a vessel may be held responsible as an entity though acting through agents. The Appellant also directed the Appeal Panel to subsection 126(4) of the Act as an example of a responsibility being placed upon a vessel. In this subsection, the Appellant argued, a vessel appears to be treated the same as a company. The crux of the Appellant's argument seemed to be that if a vessel has the liabilities of a person, it also has the responsibilities of a person, such that the individual's responsibilities relating to the SMS would be included in the overall obligation with respect to the vessel in paragraph 106(1)(a) of the Act.

[20] The Appellant was particularly concerned to ensure that there is clarity with respect to the nature of a vessel as a person under the Act. The Appellant asserted that the Act treats the vessel as a fully responsible legal person and to determine otherwise would create difficulties for enforcement. The Appellant acknowledged that there is no case law or precedent on this point of law, but submitted that the Appeal Panel should hold that the vessel is a person.

[21] In addressing the distinction made by the Review Member in paragraph [47] of his determination with respect to paragraphs 106(1)(a) and (c) of the Act, the Appellant indicated that he was of the view that the requirement to be conversant with the SMS was different than the training requirement under paragraph 106(1)(c) of the Act. The Appellant stated that he considered the requirement to have and maintain a proper SMS fell within paragraph 106(1)(a) of the Act, which would include having a Master who is conversant with the system. The SMS, in the Appellant's view, is considered part of the vessel, like its machinery and equipment. The Appellant argued that a component of a properly functioning SMS is that the Master is conversant with it.

[22] The Appellant indicated that the matter of the Master not being conversant with the SMS was not pursued under paragraph 121(1)(s) of the Act as that section has not been designated as a violation that may be proceeded with under the  AMPRs.

B. McKeil Ships Limited

[23] The Respondent asserted that there was a deficiency in the Notice of Appeal in that the Review Member did not interpret section 3 of the  SMRs or rule on liability thereunder. Rather, the Review Member ruled that the Minister used the wrong section of the Act for Violation no. 3 in the Notice of Violation.

[24] The Respondent submitted that the distinction as to whether a vessel is a person under the Act is not relevant to the finding with respect to Violation no. 3 in the Notice of Violation.

[25] The Respondent referred to section 252 of the Act as an example of how a vessel is treated as distinct from a person under the Act. Section 252 of the Act provides as follows:

252. (1) In a prosecution of a vessel for an offence under this Act, it is sufficient proof that the vessel has committed the offence to establish that the act or omission that constitutes the offence was committed by the master or any person on board, other than a person carrying out an inspection under this Act, a pollution prevention officer or a pollution response officer, whether or not the person on board has been identified.

(2) For the purpose of prosecuting a vessel for contravening a direction given under this Act, a direction given to the master, a crew member or any person on board who is, or appears to be, in charge of the vessel, is deemed to have been given to the vessel.

[26] The Respondent submitted that section 252 of the Act is provided for situations, such as pollution, where the individuals committing an offence cannot easily be identified. In such a case, the Respondent argued, it makes sense to charge the vessel. In this section, the Respondent submitted, the vessel is treated other than a person. The Respondent submitted that in subsection 106(1) of the Act, the responsibility is specifically assigned to the authorized representative, not the vessel.

[27] The Respondent emphasized that subsection 106(1) of the Act has three different paragraphs which are intended to address different circumstances. The Respondent submitted that there is no dispute that the vessel had a valid SMS and, in that regard, the vessel complied with paragraph 106(1)(a) of the Act. The requirement to be conversant with the system, in the Respondent's submission, is found in the training requirement under paragraph 106(1)(c) of the Act. The Respondent submitted that the relevant issue is whether the Minister laid the charge under the correct subsection of the Act.

V. ANALYSIS

A. Issue 1 – The Notice of Appeal

[28] Dealing first with the argument made by the Respondent that the Notice of Appeal was deficient, the Appeal Panel finds that the Notice of Appeal did not clearly frame the issue on appeal. While the first ground for appeal in the Notice of Appeal could perhaps be considered to describe the alleged error in the broadest sense, it captured neither the essence of what the Appellant described as the issue during the Review Hearing nor the finding of the Review Member on this issue. In this sense, the Notice of Appeal lacked the clarity that would assist the Respondent in preparing for the appeal.

[29] However, despite the Minister's failure to clearly frame the issue on appeal, that alone is not sufficient to render the Notice of Appeal deficient. In Luigi Stornelli Ltd. and Centre City Capital Ltd. [1985] O.J. No. 2495, one of the parties failed to provide grounds for the appeal. The party later filed an amending notice, but it was not received by the Court in time. In finding the notice to be valid, Justice Osler, writing for a panel of three justices of the Ontario High Court of Justice endorsed the statement of Lord Denning in Howard v. Secretary of State for the Environment, [1974] 1 All ER 644:

… It is not to be supposed that an appeal should fail altogether simply because the grounds are not indicated, or the facts stated. Even if it is wanting in not giving them, it is not fatal. The defects can be remedied later, either before or at the hearing of the appeal, so long as an opportunity is afforded of dealing with them.

[30] It was apparent during the Appeal Hearing that the Respondent understood the issues under appeal. The Respondent provided clear and cogent argument in response to those of the Appellant. The Appeal Panel finds that the Notice of Appeal sufficiently identified the issues argued by the Minister such as to provide adequate notice to the Respondent who appeared to have suffered no prejudice by the lack of clarity in the Notice of Appeal. While the Notice of Appeal may not have accurately characterized the basis for the Review Member's determination on the particular violation, it did provide adequate notice to the Respondent of the argument being advanced by the Appellant.

B. Issue 2 – Subsection 106(1) of the Act

[31] This case hinges upon the interpretation of various sections of the Act. In Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54 at paragraph 10, Chief Justice McLachlin stated:

… When the words of a provision are precise and unequivocal, the ordinary meaning of the words play a dominant role in the interpretive process. On the other hand, where the words can support more than one reasonable meaning, the ordinary meaning of the words plays a lesser role. The relative effects of ordinary meaning, context and purpose on the interpretive process may vary, but in all cases the court must seek to read the provisions of an Act as a harmonious whole.

[32] The present case is not about a situation where the words in question can support more than one reasonable meaning. Given their ordinary meaning, the relevant words in the Act are precise and unequivocal. The question is whether they achieve what the Appellant wishes them to do.

[33] For ease of reference, paragraph 106(1)(a) is repeated:

The authorized representative of a Canadian vessel shall

(a) ensure that the vessel and its machinery and equipment meet the requirements of the regulations made under this Part;

[34] The Appellant's argument focused extensively on whether a vessel is considered a person under the Act. The Appellant seemed to be asserting that requirements imposed upon the vessel include those imposed upon "persons" pursuant to the Regulations made under the Act. In this regard, the Appellant argued that the obligation to ensure that the Master is conversant with the SMS under the ISM Code, and therefore under the SMRs, is included within the obligation that the vessel meet the requirements of the Regulations made under Part 4 of the Act as provided in paragraph 106(1)(a) of the Act. Essentially, such an interpretation would require that the vessel be considered to constitute more than the physical aspects of the ship but also the persons on board, being the master, crew and passengers. The Appeal Panel notes that the Review Member did not make a finding as to whether or not the Master was conversant with the SMS.

[35] Whether a vessel is a person under the Act is not determinative of the issue. It is clear that the Act makes a distinction between a vessel and a person as different entities in the various provisions where certain requirements are attributed to each or, where applicable to both, refers to them collectively as "person or vessel". The Act is replete with specific obligations or restrictions upon the authorized representative, the Master, crew and passengers. As well, there are separate requirements imposed upon the vessel. See, for example, sections 187 and 188 of the Act, where Parliament has distinguished between the restrictions or obligations attributable to a "person or vessel" and to a "vessel" solely:

187. No person or vessel shall discharge a prescribed pollutant, except in accordance with the regulations made under this Part or a permit granted under Division 3 of Part 7 of the Canadian Environmental Protection Act, 1999.

188. If a vessel is required by the regulations to have a shipboard oil pollution emergency plan, the vessel shall take reasonable measures to implement the plan in respect of an oil pollution incident.

[36] It is also significant that Parliament has chosen to separately refer to vessels or persons on board. For example, see subsection 138(3) of the Act:

138. (3) No vessel or person on board a vessel may be convicted of contravening subsection 126(1) (entering, leaving or proceeding within a VTS Zone) or a provision of the regulations made under paragraph 136(1)(b) if they had reasonable grounds to believe that compliance with that provision would have imperilled life, the vessel, another vessel or any property.

[37] In the Appeal Panel's view, the Act evidences clear intention to treat a vessel as distinct from a person. While in many cases the obligations or restrictions align, in such cases both person and vessel are consistently referenced, rather than one term subsuming the other. Nevertheless, the true question is not whether the vessel has the obligations and responsibilities of a person under the Act but is in fact much narrower. In the view of the Appeal Panel, the success of the Appellant's argument turns on whether the requirement under paragraph 106(1)(a) that the vessel comply with the requirements of the Regulations made under the Act includes obligations personal to the authorized representative, specifically to ensure that the Master be conversant with the SMS. If a failure to ensure that the Master is conversant with the SMS is also a failure to ensure that the vessel met the requirements of the Regulations (as referred to in paragraph 106(1)(a)), then the Appellant succeeds.

[38] For the Appellant's approach to succeed, the vessel, as it is referred to in paragraph 106(1)(a), must include more than its bare parts. It must refer to everything on the vessel required for it to function, including the Master and crew. The definition of "vessel" in the Act provides no indication that it is intended to include the persons on board the vessel. The definition of "vessel" reads as follows:

"vessel" means a boat, ship or craft designed, used or capable of being used solely or partly for navigation in, on, through or immediately above water, without regard to method or lack of propulsion, and includes such a vessel that is under construction. It does not include a floating object of a prescribed class.

[39] There is nothing in this definition that suggests a vessel is to be treated as anything other than an object. Furthermore, neither party directed the Appeal Panel to any jurisprudence which would bear on this issue.

[40] As was asserted by the Respondent, paragraph 106(1)(c) is significant. This subsection is a further obligation upon the authorized representative to ensure that the crew and passengers receive safety training. The fact that Parliament found it necessary to separately refer to the obligation to ensure the crew receives safety training suggests that the crew was not intended to be part of the vessel under the Act. To find otherwise would mean that paragraph 106(1)(c) is redundant.

[41] The obligation of the company to ensure safety training is provided in respect of the crew is found in Article 6.5 of the ISM Code, as provided to the Appeal Panel by the Appellant:

6.5 The Company should establish and maintain procedures for identifying any training which may be required in support of the safety management system and ensure that such training is provided for all personnel concerned [emphasis added].

[42] If the obligations with respect to the crew were considered to fall under the obligations with respect to the vessel, the requirement to ensure training would be caught by the requirement in paragraph 106(1)(a) to ensure that the vessel meets the requirements of the Regulations under the Act, which would include the safety training requirement in Article 6.5 of the ISM Code. The Appeal Panel is of the view that this cannot be the intended result as it would render paragraph 106(1)(c) unnecessary. If the reference to the vessel in paragraph 106(1)(a) does not include the crew, the Appeal Panel sees no reason why it should include the Master.

[43] As the question for this appeal is whether the Review Member appropriately dismissed the charge under paragraph 106(1)(a), it is unnecessary to determine whether the charge for the Master failing to be conversant with the SMS would more appropriately have been brought under paragraph 106(1)(c). However, as this issue was raised by both parties, the Appeal Panel feels compelled to comment upon it, particularly because it may indicate a potential gap in the legislative scheme.

[44] The various parts of the Act treat the Master as distinct from the crew. In Part 4 – Safety, for example, the provisions specific to the Master are in sections 107 to 112 while the provisions specific to the crew are in sections 113 and 114, clearly separating their responsibilities. Other parts of the Act are arranged similarly.

[45] While "crew" is not defined under the Act, there are many references which indicate that the Master and crew are separate. See for example, subsection 86(1):

86. (1) The master, and each crew member [emphasis added], of a Canadian vessel has a maritime lien against the vessel for claims that arise in respect of their employment on the vessel, including in respect of wages and costs of repatriation that are payable to the master or crew member under any law or custom.

[46] See also the definition of "complement" in the Marine Personnel Regulations, SOR/2007-115, where the Master and crew are clearly separate:

"complement" means the master and the persons who constitute the crew of a vessel.

[47] If the Master is not part of the crew, under what section does the failure to ensure that the Master is conversant with the SMS become an offence? Based upon the reasoning above, it is not paragraph 106(1)(a). If the Master is not considered part of the crew, it cannot be paragraph 106(1)(c). Paragraph 106(1)(b) and subsection 106(2) are clearly inapplicable.

[48] It may be that the more appropriate provision is paragraph 121(1)(s), which provides:

121. (1) Every person who, or vessel that, contravenes any of the following commits an offence:

(s) a provision of the regulations made under this Part.

[49] The chain of provisions from the ISM Code to the SMRs can extend back to paragraph 121(1)(s).

[50] Section 3 of the SMRs incorporates the obligation to comply with the specific SOLAS provisions:

3. Every company shall comply with, and ensure that its vessels comply with, Regulations 3, 4.2 and 5 of Chapter IX of SOLAS

[51] Subsection 1(2) of the SMRs provides that "company" has the same meaning as in Regulation 1 of Chapter IX of SOLAS. For ease of reference, the definition of "company" in Regulation 1 of SOLAS is repeated:

Company means the owner of the ship or any other organization or person such as the manager, or the bareboat charterer, who has assumed the responsibility for operation of the ship from the owner of the ship and who on assuming such responsibility has agreed to take over all the duties and responsibilities imposed by the International Safety Management Code.

[52] This definition clearly captures both the owner and authorized representative of a ship.

[53] Regulation 3 of Chapter IX of SOLAS incorporates the ISM Code provisions:

Safety management requirements

1 The company and the ship shall comply with the requirements of the International Safety Management Code. For the purpose of this regulation, the requirements of the Code shall be treated as mandatory.

[54] Article 6.1 of the ISM Code is the source of the ultimate requirement that the authorized representative ensure the Master is conversant with the SMS:

6.1 The Company should ensure that the master is:

.2 fully conversant with the Company's safety management system; and

[55] The chain of these provisions establishes that the obligation of the company to ensure that the Master is fully conversant with the SMS is a requirement of the Regulations made under Part 4 of the Act, namely the SMRs. For that reason, a contravention of such Regulations would have allowed the Minister to lay a charge under paragraph 121(1)(s) against the owner or the authorized representative of the vessel.

[56] The Appellant addressed this issue briefly in response to a question from the Appeal Panel stating that it would not have been possible to proceed under the AMPRs had the charge been laid under paragraph 121(1)(s). In that regard, the Appellant is quite correct. The Schedule to the AMPRs does not include paragraph 121(1)(s). Accordingly, the Appellant could not use this paragraph if it wished to proceed under the AMPRs. However, as the Appeal Panel has noted, it does not seem apparent that the provisions of Part 4 of the Act which are currently included in the Schedule to the AMPRs include one which would address the obligation of the company, or in this case the authorized representative, to ensure that the Master was fully conversant with the SMS. The Appeal Panel can only conclude that by excluding the broad paragraph 121(1)(s) from the Schedule to the AMPRs, Parliament intended that the AMPRs would apply only to select offences under the Act.

[57] In the Appeal Panel's view, the obligations of the authorized representative under section 106 of the Act do not include an obligation of the company, or in this case the authorized representative, to ensure that the Master was fully conversant with the SMS. In order to be able to lay a charge for a contravention of this nature under the AMPRs, changes would be necessary to the Schedule to the AMPRs or the sections of the Act referenced in the Schedule to the AMPRs. This could be achieved in two ways. Additional sections, such as paragraph 121(1)(s) of the Act or more specific provisions within the Regulations made under the Act, could be added to the Schedule to the AMPRs. Alternatively, the sections of the Act currently referenced in the Schedule to the AMPRs could be amended to include obligations upon the authorized representative with respect to ensuring that the Master is fully conversant with the SMS.

[58] To conclude, the Appeal Panel agrees with the Review Member that the particulars of the alleged violation, specifically that the Respondent failed to ensure that the Master was fully conversant with the SMS, do not fall within the provisions of paragraph 106(1)(a) of the Act. In addition, the Appeal Panel is of the view that such a contravention does not fall within the provisions of the remaining subsections of section 106 of the Act.

VI. DECISION

[59] The Appeal is dismissed and the Determination by the Review Member that Violation number 3 was not proven is upheld.

May 17, 2011

Reasons for Appeal Decision: David G. Henley

Concurred by: J. Richard W. Hall

C. Michael Keefe