By Brian Dunn

Whenever there’s a maritime accident, shipowners always seem to get the blame, when in fact negligence should often be pinned on the victim or other authorities, according to a seasoned veteran of the shipping industry. “Time and time again we find ourselves being accused and punished for wrongdoing even when clearly another party, be it a crew member, pilot, contractor, or whoever was so blatantly negligent that they should really indemnify us,” Michael Bedford, Director, Risk Management, CSL Group Inc., suggested at the 24th Annual Borden Ladner Gervais Maritime Law Seminar in Montreal on Dec. 7. “The system is unfair and unjust and must be changed.”

The seminar touched on Canada’s Marine Occupational Health and Safety standards (MOSH) which Mr. Bedford strongly supports. In essence, MOSH regulations dictate that every employer must: a) arrange that work in a working area is carried out in a manner that does not endanger the health or safety of any person who is engaged or working in that area or in connection with the work; and b) adopt and carry out appropriate procedures and techniques designed or intended to prevent or reduce the risk of employment injury in the carrying out of the work. “I would hope that there is not a single person in this room that would argue with these statements. I strongly believe that any employer or shipowner who knowingly or deliberately endangers the health and safety of its employees, or endangers the environment, should suffer the consequences of that action,” said Mr. Bedford, who began his career as an apprentice on general cargo ships in 1971.

“But not every accident, injury or incident should necessarily be assumed to be evidence of negligence of the employer. We don’t always have to find someone to blame.” Sometimes “supposedly fit crew members” who have been issued a medical certificate following a prescribed medical examination by an approved health care practitioner, have “underlying debilitating health issues,” suggested Mr. Bedford. He gave the example of an injury claim from a 49-year-old worker who could not return to work due to a knee injury he suffered after standing up from a stooped position, after receiving a Medical Fitness card five months earlier. “His own doctor then wrote several letters to the WSIB (Workplace Safety & Insurance Board) in which he refers to a ‘history of alcohol and drug abuse, ongoing pain in his left ankle injured years ago, the multiplicity and severity of his joint issues combined with obesity,’ and the best comment of all, ‘even if [he] were to lose a hundred or so pounds, this knee (and the pain from his old ankle injury) would preclude his return to work.”

The claim could potentially cost $1 million to $1.5 million, according to Mr. Bedford who then asked the question, “how could this man who is clearly in such a poor state of health be found 100 per cent fit for duty less than five months before this incident? What is wrong with this system?”

A more recent example occurred in the U.S. where Mr. Bedford was in mediation involving an alleged wrongful death when a pilot was boarding a vessel. Everything was going according to plan using the pilot ladder (although the pilot refused to wear the fall protector) when the pilot approached the ladder “closed his eyes, let go and fell backwards, the victim of an apparent heart attack.”

It was discovered the pilot was a “lifelong heavy smoker who was diagnosed as having reported fatigue, difficulty sleeping, wheezing, pains in left arm, heart palpitations, obstructive sleep apnea, hypertension, obesity, type II diabetes, ASHD (Arteriosclerotic Heart Disease), arthritis, peripheral neuropathy, and blurred vision.”

After this description drew incredulous laughter from the audience, Mr. Bedford went on to declare that “despite Federal and State regulations requiring pilots to file a medical report with the Authority annually, there had been no report filed by this pilot for the three years immediately prior to the accident, and in fact he had filed only 6 reports in the 26 years preceding his death.

“The U.S. Coast Guard findings merely report this as ‘not right’ and there were no sanctions against the pilotage authority. As the Owner, we are being sued for US$750,000. The family has not taken action against the pilotage authority.

“So my question is, who is looking out for the Shipowner? Why do the regulations appear to be always applied against the ship? Something is wrong with the system. Individuals have stopped looking after themselves. Regulations are there to save lives, but they are being abused to generate revenue.”

Another topic of concern was ship stowaways and deserters, and what Ottawa is doing to stem that problem as part of its efforts to streamline refugee claims.

“Canada is one of the most generous states for refugee claimants which makes vessels vulnerable to stowaways and deserters, and the responsibility for policing falls upon shipowners. The majority of stowaways come in by container,” said Darren McGuire, partner, Borden Ladner Gervais, Montreal. “When you get walk-ons, there is suspicion the crew are involved.”

If a stowaway is discovered onboard, the captain must notify the Canadian Border Services Agency at the first port-of-call and may be required to file a report. The captain is also responsible for detaining the stowaway. A discharged crew member or deserter must leave Canada within 72 hours and the transporter is financially responsible for all costs related to the departure and removal of stowaways, deserters or other inadmissibles as well as for all medical treatments in Canada.

In 2011, 25,000 new refugee claims were referred to the Immigration Refugee Board with an average processing time of two to three years and an acceptance rate of between 40-45 per cent, although the acceptance rate of 38 per cent in 2011 was the lowest in the Board’s history.

While no data exist for the number of stowaways or deserters that make refugee claims, BLG has been very active in this area. “Virtually all stowaways and deserters eventually file a refugee claim,” said Mr. McGuire.

While the frequency of stowaway incidents in particular have subsided over the course of the past few years due to increased security in and around ports and by the adoption of increased security procedures restricting access to vessels, over the course of the past two years, Mr. McGuire alone had some three new stowaway matters in addition to some 14 new matters involving deserters. He estimated that his firm is also handling some 40 legacy files, some dating back to the late 1980s.

The average removal timeline from the time a claim is made and all recourses exhausted is 4.5 years and as of Nov. 30, 2012, there were over 15,000 failed claimants ready to be removed from Canada. Another 38,000 cannot be found and are subject to an immigration warrant, according to Mr. McGuire. And as of Dec. 1, 2012, there are some 60,000 claims pending, the highest number of claimants per capita of any comparable Western democracy, he added.

To speed up the processing of refugee claims and help deter abuse, the federal government passed the Balanced Refugee Reform Act in June, 2010 and the Protecting Canada’s Immigration System Act in June, 2012, which are expected to save taxpayers $1.6 billion over the next five years through tighter procedures and reduced processing time, according to Mr. McGuire.

The changes will have both positive and negative consequences for shipowners, he noted. On the plus side, the fate of stowaways and deserters will be determined much more quickly and with more certainty as there are no sunset clauses on refugee cases outstanding. And the fate of individuals is more likely to be resolved while a given shipowner or charterer is still a member of a Protection and Indemnity Insurance club. “We generally act for owners or charterers’ P&I Clubs who offer insurance to protect against financial losses involving deserter and stowaway incidents. The advantage for the transporter (owner or charterer or the local agent) in having claims expedited is that if an individual is ordered deported and there are expenses, they can turn to their P&I Club for indemnity. The matter will be closed and not remain on the transporter’s books as a potential liability which is impossible to quantify and estimate how long it will take to resolve.

“From the P&I Clubs’ perspective, for the same reasons, they too would rather be in a position where the matter is resolved quickly, even if they are required to indemnify their member. It is very difficult to estimate potential liabilities and record these open–ended contingencies on their books,” Mr. McGuire explained following the seminar.

On the other hand, while the 40-45 per cent refugee acceptance rate is unlikely to increase (and costs associated with repatriation are therefore expected to remain about the same), the longer processing delays under the old system increased the chances of an asylum seeker being sponsored under the family class category, thus avoiding the cost of sending him or her home at the shipowner’s expense. Shipowners, though, know they cannot have their cake and eat it too, and realize that, on balance, the new rules will produce significant benefits.