Lloyd's Maritime and Commercial Law Quarterly
PRIVITY A LA CANADIENNE
Fraser River Pile & Dredge Ltd
v. Can-Dive Services Ltd
The decision of the Supreme Court of Canada in Fraser River
v. Can-Dive Services Ltd
1
provides a timely opportunity to analyse the approach of another common law jurisdiction to the question of third party rights and to reflect upon the possible application of our own fledgling Contracts (Rights of Third Parties) Act 1999.
In 1990, Can-Dive chartered one of Fraser River’s barges to carry out work on a gas pipeline under construction between Vancouver Island and the mainland of British Columbia. Under the charter, Can-Dive was fully responsible for towing the barge to and from the work site and for maintaining its safety and condition. While at the site, the barge sank. Fraser River recovered the loss of the vessel and equipment under its hull policy, which contained notably “Additional Insureds” and “Waiver of Subrogation” clauses. Fraser River and its insurers subsequently agreed to claim against Can-Dive in negligence for the sinking of the vessel. It was accepted by the court that this action, albeit brought by Fraser River, was in reality a subrogated action for the benefit of the insurers (the latter having already paid out to Fraser River). Can-Dive raised two lines of defence to the action. First, it argued that the insurers were precluded from pursuing Can-Dive because it was an “additional insured”, as defined in cl. 1 of the insurance policy.2
Alternatively, Can-Dive sought to rely on the terms of the “Waiver of Subrogation” clause.3
At first instance, Warren, J., rejected all of Can-Dive’s contentions, notably that based on the “Waiver of Subrogation” clause. To permit a third party to rely on the waiver as a defence to the subrogated action would, according to the judge, involve going beyond
1. [2000] 1 Lloyd’s Rep. 199 (hereafter “Fraser River”
).
2. “1. Additional Insureds Clause
…Notwithstanding anything contained in the Additional Insureds Clause…, it is hereby understood and agreed that permission is hereby granted for these vessels to be chartered and the charterer to be considered an Additional Insured hereunder….
Trustee Clause
It is understood and agreed that the Named Insured who obtained this Policy did so on his own behalf and as agent for the others insured hereby including those referred to by general description.”
3. “17. Subrogation and Waiver of Subrogation Clause
In the event of any payment under this Policy, the Insurers shall be subrogated to all of the Insured’s rights of recovery therefor…but it is agreed that the Insurers waive any right of subrogation against…(b) any charterer(s) and/or operator(s)…”.
CASE AND COMMENT
323