| Case-Name: | Peracomo Inc v TELUS Communications Co |
| Full-Case-Name: | Peracomo Inc, Réal Vallée, the owners and all other persons having an interest in the fishing vessel “Realice” and the fishing vessel "Realice" v TELUS Communications Company, Hydro-Québec, Bell Canada and Royal & Sun Alliance Insurance Company of Canada |
| Heard-Date: | 15 November 2013 |
| Decided-Date: | 23 April 2014 |
| Citations: | 2014 SCC 29 |
| Docket: | 34991 |
| History: | APPEAL from Peracomo Inc. v. Société Telus Communications. 2012. fca. 199. 2012-06-29., affirming Société Telus Communications v. Peracomo Inc.. 2011. fc. 494. 2011-04-27. |
| Ruling: | Appeal allowed in part, Wagner J dissenting in part |
| Ratio: | While liability in the present case was capped by the Convention (as the damage was not caused by intentional or reckless conduct), insurance coverage was void because the applicable standard of "wilful misconduct" was met. |
| Scc: | 2013-2014 |
| Majority: | Cromwell J |
| Joinmajority: | McLachlin CJ and Rothstein and Karakatsanis JJ |
| Concurrence/Dissent: | Wagner J |
| Notparticipating: | LeBel, Abella and Moldaver JJ |
| Lawsapplied: |
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Peracomo Inc v TELUS Communications Co. 2014. scc. 29. is a decision of the Supreme Court of Canada concerning the law of marine insurance, which also has international impact.
In 1999, QuébecTel (subsequently acquired by Telus), in conjunction with Hydro-Québec, laid two fibre-optic cables across the Saint Lawrence River:[1]
In June 2006, Réal Vallée, a local fisherman engaged in snow crab and whelk fishing aboard the catamaran Realice, had strung a series of cages on the river bottom, secured at both ends by small anchors attached to buoys. One of these anchors got snagged onto the cable. The anchor with the cable attached was hauled out of the water, and Vallée freed it by cutting the cable with an electric saw. Several days later, the same thing happened and he cut the cable again. He had done so, believing that the cable had been abandoned (according to a handwritten note on a map he had seen at a local museum). Remote monitoring controls operated by Telus indicated that the Sunoque I parted about 8.9km (05.5miles) off Baie-Comeau.
Telus, Hydro-Québec, and Bell Canada (which had a right of use of the cable), shared the cost of repair in accordance with a pre-existing contract among them. When Vallée learned of the repairs that were being undertaken, he consulted a lawyer, notified his underwriters (who promptly denied coverage), and made a voluntary statement to the police. He was later charged with committing mischief by wilfully damaging property exceeding $5,000 in value, and was subsequently acquitted.[2]
Telus and Hydro-Québec commenced an action in the Federal Court of Canada:
The defendants also instituted third party proceedings against their underwriters, Royal and Sun Alliance Insurance Company of Canada in order to regain their insurance cover.
Harrington J, in his ruling, found that:
The Federal Court of Appeal affirmed the ruling. In his ruling, Létourneau JA also held that, under existing precedent, employees, officers and directors will be held personally liable for tortious conduct causing property damage even when their actions are pursuant to their duties to the corporation. In addition, the Convention contemplates such scenarios.[10]
Vallée appealed to the Supreme Court of Canada,[11] and leave to appeal was granted in January 2013.[12]
In a 4-1 ruling, the appeal was allowed in part. In relation to the appellants’ limitation of liability, the appeal was allowed with costs but including only one-half of their costs of the leave application. The appellants’ joint and several liability is limited by the Convention. In relation to the claim against the insurer, the appeal was dismissed with costs including its costs of the leave application.[13] In his ruling, Cromwell J held that:
While agreeing with Cromwell J that the Convention applied so as to limit liability, Wagner J believed that the relevant provision of the Marine Insurance Act must be read harmoniously with the Conventions provisions, and would have therefore allowed the appeal in its entirety, with costs. Both the provisions at issue require proof of the same fact: that the insured had knowledge of the harmful consequences of his or her act, and intended or was reckless with regard to those consequences.[19] The fact that a reasonable person ought to have known or that a person had a duty to know, does not suffice to characterize the misconduct as willful. It is also necessary to establish that the person intended to cause a loss, or to prove gross negligence or misconduct in which there is a very marked departure from the conduct of a reasonable person.[20]
As Peracomo was concerned with the interpretation of the Convention, and could therefore have a wide-reaching impact on commercial maritime law around the world, the case attracted international attention.[21] [22] It is of interest to insurers in the areas of marine insurance and protection and indemnity insurance.
The Court looked to previous cases concerning the Convention, as well as examining the Warsaw Convention (which had inspired art. 4).[23] It effectively pointed out that art. 4 focuses on an intention to cause the loss, while the right to limit under the Convention relates more generally to the claim.[23] It also affirmed that the limitation of liability regime under the Convention is "virtually unbreakable",[24] which was already the view of many legal observers.[25]
As Wagner J pointed out, formalizing a legal difference between "reckless conduct" and "wilful misconduct" is likely to have commercial implications, and possibly increase litigation between marine insurers and their insureds.[26]