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Leave to Appeal Granted in Societe Telus case

The Supreme Court granted the request for leave to appeal the decision of the Federal Court of Appeal in the case of Societe Telus Communications v Peracomo Inc., the ‘cable-cutting’ case.  The case arose when, on two separate occasions, the operator of the vessel REALICE, owned by the defendant, encountered and cut an underwater cable while crab-fishing, wrongly believing the line to be out of service. The cuttings resulted in millions in losses for the plaintiff telecom.

The key issue is likely to continue to be the application of the $500,000 limitation contained at s.29 of the Marine Liability Act. The trial judge found that the Master of the REALICE was also the owner and the directing mind of Peracomo inc, and that while he honestly believed the cable to be worthless his acts were intentional and accordingly the limitation did not apply. The Court of Appeal upheld this decision.

Similarly, the Court found, and the Court of Appeal agreed, that the insured’s wilful misconduct entitled insurers to deny coverage. As a result, both the quantum of loss and the party liable to pay it will be live issues when the case is argued at the highest court in the land.

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