Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 12 - Evidence

OTTAWA, Wednesday, May 3, 2000

The Standing Senate Committee on Transport and Communications met on this date at 5:32 p.m. to consider Bill S-17, respecting Marine Liability, and to validate certain bylaws and regulations.

Senator Lise Bacon (Chairman) in the Chair.


The Chairman: Today, we are studying Bill S-17. Our witnesses this evening are from the Canadian Board of Marine Underwriters. We already have the briefs that you presented to us. Please proceed.

Mr. Arthur Payne, President, Canadian Board of Marine Underwriters: On behalf of the Canadian Board of Marine Underwriters, I would thank you, Madam chair and members of the committee, for giving us the opportunity to make this submission to you today.

The Canadian Board of Marine Underwriters, or CBMU, was founded in 1917. Together with our sister organization in Vancouver, the Association of Marine Underwriters of British Columbia, AMUBC, we represent the interests of Canada's marine insurance industry.

Our corporate members include all the major Canadian marine insurers, including many that write both commercial and pleasure craft insurance. CBMU also maintains close contact with its counterparts in London, the United States and around the world through the International Union of Marine Insurance, or IUMI.

The three key functions of CBMU are: to procure and disseminate information of interest to marine underwriters and to others; to facilitate the exchange of views and ideas to improve the marine insurance industry; and to promote and protect the interests of the Canadian underwriting community.

Marine insurance in Canada is an international business. However, it is estimated that over 50 per cent of the business is written in our domestic market. The balance is written in overseas markets and in the United States. The principal world market for liability insurance for large vessels, protection and indemnity insurance, is a series of mutual associations, known as protection and indemnity associations, or "P&I" clubs.

The largest P&I clubs are grouped in an umbrella association known as the International Group of Protection and Indemnity Associations. By pooling their capacity, which derives in part from the assets of the ship-owning members, and jointly purchasing reinsurance, the P&I clubs can provide an estimated $4 billion of capacity for an individual claim. The P&I clubs are the obvious choice for large vessel owners, particularly the tanker owners.

There are, in addition, several other non-mutual P&I insurers overseas with capacities exceeding $250 million for any one loss. The Canadian marine insurance market provides coverage for the smaller craft, generally operating within Canadian waters.

The CBMU comments mainly will be directed at Part 4 of Bill S-17, which implements the international regime for carriers of passengers, the Athens Convention, although we do have some other comments regarding the bill.

In 1996, Parliament simultaneously introduced two related bills. Bill C-58, to enact the 1976 Convention on Limitation for Maritime Claims and its 1996 protocol; and Bill C-59, to enact the Athens Convention, dealing with liabilities arising from carriage of passengers. The 1976 convention provided for a global limitation of liability for ships, while the Athens Convention provided important per-passenger limits. The two conventions go hand in hand.

Both bills had widespread industry support. However, Bill C-258 and Bill C-59 were not enacted due to elections being called. While the 1976 Convention on Limitation for Maritime Claims and its 1996 protocol were reduced and enacted as Bill S-4, the Athens Convention will now become law with Bill S-17, completing the task.

In addition, a temporary measure in Bill S-4, clause 577(3), restricting the global liability with respect to passengers can be removed, greatly increasing the limitation amount available to meet passenger claims. This is possible now that the Athens Convention will introduce the per-passenger limits.

In our view, the two conventions are inseparable, and the enactment of Bill S-17 will reunite them in Canadian law.

CBMU strongly supports the international harmonization of maritime law which tends to reduce costs and maintain a competitive position for the Canadian shipping industry. The adoption of the Athens Convention is another step in that direction.

As mentioned, I will speak to the marine insurance implications of the bill. The P&I clubs offer very high capacities to shipowners with exposures to large claims. Currently, virtually all large passenger vessel owners are members of P&I clubs, and have complete liability coverage at reasonable cost.

The P&I clubs have already endorsed the Athens Convention, so the adoption by Canada of that convention will have no impact on large vessel owners. Currently, many of the small Canadian passenger vessels, usually in the nature of small excursion vessels, small ferries, fishing charter boats, et cetera, are insured in the Canadian market. While the Canadian insurers are capable of providing P&I limits up to $50 million or more, the cost of such coverage is not competitive with the P&I clubs. Our market is competitive at lower levels of coverage, perhaps up to $10 million. Under the Athens Convention, the exposure of small vessels <#0107> "small" being up to 300 gross registered tonnes -- to liability claims reached $10 million with 24 passengers on board. That is based on a $1.5 million global limitation, plus approximately $350,000 per passenger. It is expected, then, that vessels with more than 24 passengers will likely purchase P&I coverage from the P&I clubs, while the smaller ones may remain insured in the Canadian market.

In our opinion, a large majority of shipowners will willingly purchase insurance with limits sufficient to meet the obligations imposed by Bill S-17. That willingness underscores the need for the adoption of the proposed legislation.

We would like to assure the committee that our organization will take steps to widely disseminate the information regarding the changes in the legislative regime for operators, as we did following the passage of Bill S-4. The required limits are available at reasonable cost, and we are confident that the insurers and brokers will emphasize the requirements for higher limits as part of their professional responsibilities. Our experience with Bill S-4 leads us to conclude that the voluntary compliance by the operators will obviate the need for compulsory insurance.

While we expect no premium increases as a result of the bill, the increase in exposure to passenger claims will require the small operators to carry higher limits of liability. The only appreciable impact may be on small operators with short operating seasons where annual revenues are not substantial. However, the changes will affect those operators uniformly, and there is no reason to suspect that they will not be able to pass on increased costs to passengers. We also expect that the impact to the Canadian insurance market will be minor, since marine liability insurance represents a very small fraction of the total liability insurance premium underwritten in the Canadian market.

Mr. Doug McRae will now speak to several tables we have attached to our submission today. Those tables address insurance costs relative to passenger vessel size.

Mr. Doug McRae, Chairman, Canadian Board of Marine Underwriters Legislative Committee: Honourable senators, the first table on page 4 is intended to illustrate the current costs of small passenger vessel owners in Canada. We have concentrated in this table on the vessels under 300 tonnes. As we mentioned, the larger vessels tend to be insured in the P&I clubs and not here.

To give you an illustration, the first table shows the current Canada Shipping Act limits which include the passenger liabilities. In all these categories of vessels with 12, 20, 50 or 100 passengers, the overall global limit including the passenger liability is only $1.5 million. Some vessel owners purchase $1 million of coverage. In the global limit of $1.5 million, the $1 million is allocated to bodily injury claims, including passenger claims, and $500,000 is allocated to property damage changes. Some of the vessel owners elect sufficient to meet the passenger liability requirements of $1 million.

For a small vessel operating with, perhaps, 12 passengers, we estimate $1 million of coverage would cost $500 to $1,000. Some of these vessel owners, even though their liability may be limited to $1.5 million, elect voluntarily to insure to higher limits because these limits can, in certain circumstances, be broken.

Similarly, for a vessel carrying 12 passengers, if the vessel owners elect to purchase $5 million of liability insurance, their costs would be $1,500 to $2,500. The same coverage with a $10 million limit would perhaps cost about $2,500 to $5,000. Although it rarely happens in that market, occasionally someone purchases $25 million of liability insurance, and the cost is currently $7,500 to $9,500.

In the extreme right-hand column, we have indicated the costs for similar coverage by these P&I clubs. They operate in a rather odd fashion. They do not put a passenger limit on their coverage, they cover unlimited liability for bodily injury claims, and they have a capacity of about $4 billion to meet that, so they do not have to include any individual limits. Their minimum premiums for vessels like this are only $3,500.

At somewhere between $5 and $10 million of coverage, the Canadian market becomes uncompetitive with these P&I clubs. A passenger vessel owner carrying 100 passengers <#0107> and it would really be stretching the capacity of a 300-tonne vessel to put 100 passengers on board -- would pay slightly more than that. You will see that in the bottom row, first column. Coverage of $1 million would cost $1,000 to $3,000; $5 million would cost $1,500 to $4,000; $10 million would cost $2,500 to $6,000; and $25 million would, again, cost in the range of $7,500 to $9,500. The P&I clubs would ignore the fact that they were carrying more passengers. They would charge a minimum premium of $3,500. It is not expensive coverage.

I would refer to the second part of that table on page 4 respecting insurance costs. Given the introduction of Bill S-17 with the Athens Convention limits of approximately $350,000 per Canadian passenger, we estimate, in the first example with 12 passengers, that there would now be exposure to claims of $5.7 million.

You can see that I have marked the $1 million and $5 million columns as being not applicable because, presumably, these people will have to buy $10 million of coverage to be fully insured. We are estimating the cost to be identical to that under the current CSA limits. The only difference would be that the operators will presumably buy the higher limits. However, the cost of those limits will not be any higher than it was under the current regime.

The view of the insurance market is that the trade-off of the higher limits is balanced by the per-passenger limits. One balances out the other, and the cost should not change. Again, the P&I clubs, already having endorsed Athens, will not change their price structures as a result of Bill S-17 being enacted. As the number of passengers increases, as shown in the example with 20 passengers, the vessel exposure is $8.5 million; and at 50 passengers, it rises to $19 million.

Earlier, as Mr. Payne mentioned, the vessel owners with $19 or $36 million of exposure <#0107> those with 50 or 100 passengers -- will likely seek to provide coverage in the P&I clubs, although the domestic market can provide for them if they choose to ensure with us. However, pricing in our Canadian market is not competitive.

Based on our experience over the years, we recognize that we may be in a position to cover them, assuming the claims do not materially increase over a period of time because of the introduction of any particular regime.

In the second table, on page 5, we have endeavoured to show the impact of Bill S-17 on a passenger ticket cost. We have made several assumptions. The object of this exercise is to take the worst case, that is, the vessel owner who will be impacted most severely by the implication of having to buy higher limits. In Canada, we have some widely varying situations. A tour boat operator in Vancouver might operate 10 or 12 months of the year, whereas an operator on the north shore of the Gulf of St. Lawrence might operate for a 20-week season. The worst-case scenario assumes 80 per cent of passenger capacity being carried on a daily basis, during a short, 20-week season, and a fairly low ticket price of $30.

In the first column we outline an operator with a small boat with capacity for 12 passengers. Under the assumptions laid out, he would only be able to carry approximately 200 passengers over his season, and his total, annual passenger revenue would be only $5,600. If he buys $1 million of coverage under the current CSA limitation provisions, his average premium might be $750. We have, therefore, estimated the premium allocation for the insurance would be about $4 of his $30 ticket.

The same operator, with the passage of Bill S-17 and the Athens Convention, will have to buy coverage of $5 million to fully insure the passenger liabilities, and his average premium will be in the neighbourhood of $2,000. This would cause an average impact of premium per ticket of $10.50. The operator's additional cost per ticket would be $6.50.

We submit that the $6.50 additional cost is probably not high compared to the additional coverage that his passengers will enjoy coming under the Athens Convention.

The second case, illustrated on the next line, is the 20-passenger situation. The number of passengers per season rises to 320, and annual revenues increase to $9,600. Currently under the CSA, with this $1 million limit per passenger, the operator might purchase that insurance for $1,250 or, again, about $4 a ticket. With the Athens limits, he would be required to carry $8.5 million of coverage which we estimate will cost $3,500. The impact of the insurance cost on ticket price would be about $11 per ticket, or an increase of about $7. If you consider the greatly increased coverage of passengers to $8.5 million, a $7 increase in ticket price is not extreme.

We also mentioned that all the operators of similar boats in the region will have to carry the same limit, so no one would have a competitive advantage and, presumably, they would be able to increase their ticket costs, if necessary, to balance out the increased insurance they will be providing.

At 50-passenger capacity, the revenues for 800 passengers rises to $24,000. Under the current CSA regime, the owner might pay $1,750, or only $2 a ticket. Obviously it becomes insignificant at this level. Although he would have to provide $19 million of coverage to provide limitation for the 50 passengers, we are assuming in this scenario that he would probably move over to a P&I club and pay the $3,500 premium, which is an increase of about $4 in the ticket price. The impact on his operation might be an additional $2 per ticket for the additional coverage, but that moves him from $1 million to $19 million in coverage for his passengers, again, a very reasonable trade-off.

At the 100-passenger level, we estimate that 1,600 passengers might be carried in a short season with annual revenues of $48,000. The owner's $1 million limit under the current CSA regime would only cost $2,000. With Athens, he would presumably be looking at a $36.5 million limit to cover his 100 passengers. Again, we assume he would go with a P&I club with those extreme limits, and his premium cost per ticket drops to an insignificant $2. The additional cost of implementing his additional insurance with the Athens Convention will be under $1, an insignificant amount.

The impact, to the extent that it will be noticed, will be on small vessel owners with very limited seasons who do not earn a great deal of revenue. We presume that, the regime being equal for all, they will be able to increase prices, if necessary, to cover the additional cost.

As explained, under the current CSA regime, the limitation amounts are $1 million for bodily injuries, and $500,000 for property damage. We selected a $1 million limit as being the cheapest insurance that anyone would be buying in the current market. If we look at the worst-case scenario to assess what the maximum impact might be, we suggest that in most cases the additional cost of implementing Athens for the average tour boat operator will be insignificant.

As I also stated, in the last two categories of 50 and 100 passengers, we assume that these owners will move to the P&I clubs which will provide these high limits at a very reasonable cost.

Those are our comments on the implications of the Athens Convention.

Article 39 provides the means for compulsory insurance to be introduced, if required. As stated earlier, we do not believe such measures are necessary at this time. However, in the event that it becomes required, we submit that the problem of enforcement would have to be dealt with. In addition, there is no formal certification of small vessels carrying 12 passengers or less, and the insurance industry could not guarantee that all owners would be able to obtain coverage.

We regard clause 40, the changes in the limitation provision, to be quite positive. We are of the opinion that the method by which the passenger limits of liability may be updated; that is, by Order in Council, will greatly simplify the process of harmonizing the Canadian regime with the international conventions as those conventions are updated. We are aware of current initiatives at the international level to revise the Athens Convention limits, as these limits were established 10 years ago. The mechanism provided for in the legislation will make the task of revising the limits in Canada very efficient.

A similar provision, clause 31, is present in Part 3, allowing for rapid response to changes in the global limits of liability in the 1976 Convention on Limitation for Maritime Claims. As stated before, it is our position that Canada should maintain harmony with these international conventions.

With respect to clause 37(2)(b), the passenger definition, it has come to our attention that the wording of this clause could be interpreted as bringing pleasure vessels carrying non-commercial passengers within the scope of the Athens Convention. Clearly, in our mind, Athens was not intended to include non-commercial vessels. We submit that this passenger definition should be reworked to clearly exclude passengers on pleasure vessels.

With regard to the concept of the Marine Liability Act, we are of the view that the grouping of the principal acts focusing on civil liability for maritime claims into a single statute will simplify the task of our members and their clients in understanding and interpreting the various conventions which have been adopted by Canada. It will also be a natural repository for future conventions involving civil liability. Finally, it allows for simplification of the Canada Shipping Act which is taking form as CSA 2000.

Clause 46 deals with the carriage of goods portion of this bill. The CBMU strongly supports the affirmation of the jurisdiction of the Federal Court in matters involving cargoes being transported to and from Canada, and with respect to contracts of carriage made in Canada. It is our view that this will make the process of recovering claims for cargo damage from carriers a more efficient process, and should result in lower cargo insurance costs for Canadian importers and exporters.

In case it is not clear, I have left the scheme of the Athens Convention and am commenting on clauses of the bill unrelated to Athens.

In conclusion, we would again like to thank the committee for providing us with this opportunity to present the marine industry view on this important bill. We would also like to acknowledge the work of the people in Transport Canada who consulted with our organization, and undoubtedly many others, during the entire process leading up to the introduction of the bill.

Senator Callbeck: With regard to the insurance costs with which you have supplied us, are those yearly figures? Can vessels that operate for only part of the year get a reduced rate?

Mr. McRae: The figures I have given are annual costs. The insurance industry has certain minimum rates for issuing policies and opening client files. These premiums are probably minimums. They would not change much if the vessel were operated for 20 weeks instead of 40 weeks.

Senator Callbeck: Do you think that these would be the lowest rates, even if a vessel were only operating for two months?

Mr. McRae: Based on my experience, it would be difficult to get insurance much more cheaply than that. There may be isolated cases where it is somewhat less. We used the figure of $500 to $1,000 to include the whole range of possibilities. It may be as low as $500 in some cases, or $1,000, depending on the area in which the vessel is operated.

Senator Callbeck: I do not understand the $350,000. Is $350,000 the maximum coverage a passenger can get?

Mr. McRae: That is right.

Senator Callbeck: Is there no possibility of suing the vessel owner for more than that?

Mr. McRae: There is a provision in the Athens Convention which allows for the limitation to be broken if the vessel is operated recklessly. In a situation of gross negligence, I would submit that the vessel owner may not be able to limit his liability.

Senator Callbeck: On page 6 of your brief we see the words, "Passenger definition." Am I correct that non-paying passengers are covered under clause 3 of the bill, but that an employee on the vessel would not be covered?

Mr. McRae: My understanding is that an employee, a crew member, on a vessel would be covered by Workers' Compensation regime and would not fall under the Athens Convention which deals with non-employee passengers.

Senator Callbeck: If this were changed from "persons" to "passengers" would that not exclude employees or anyone who might be on that vessel who is not a passenger?

Mr. McRae: No. The point we made is that the Athens Convention was clearly intended to cover fare-paying passengers; that is ships being operated for commercial reasons. This definition leads to a possibility that someone might interpret it as bringing in passengers on pleasure vessels. We simply suggest that Transport Canada look at amending that definition to make it absolutely clear that the "passenger" definition for Athens applies to commercial vessels and passengers being carried on commercial vessels, not someone who is out for an afternoon's cruise on a pleasure boat.

Senator Callbeck: I thought it was put in here to cover people who might not be covered on a pleasure boat. For example, people who do not pay are covered under clause 3. Let us consider the employee who is operating the boat.

Mr. McRae: All the employees in the maritime sector would be covered under Workers' Compensation. That is the body who would provide their compensation.

Senator Forrestall: I am not sure whether I should direct this question to the chairman or to senior officials in government. We would benefit from having a parliamentary secretary here. I believe we might all agree that an amendment is necessary to rectify this situation. Could I ask whether or not such an amendment will be forthcoming from government, or should we take the initiative?

The Chairman: If I understand correctly, people in the department are working on an amendment which will be tabled at the next meeting. It is not ready yet.

Senator Forrestall: Will that come to us at the clause-by-clause stage?

The Chairman: Yes.

Senator Forrestall: Will that cover the passenger definition?

The Chairman: Yes, clause 37(2)(b).

Senator Forrestall: I have some concern that, in years to come, for example, there will be more people in ocean kayaks floating around in the waters off Vancouver than there will be on board passenger ferries. The numbers are increasing dramatically. You mentioned 12 passengers; but a kayak carries only one or two, but the number of kayaks is increasing. They will soon outnumber charter boats for the purposes of crab fishing or salmon fishing, and so on. I am thinking not in the extreme but, rather, in the practical sense, given the increasing numbers of ocean-going kayaks and the difficulty that they may present to ocean traffic movement.

There have already been some serious incidents and fatalities. We may have a situation where someone may divert a ship into the path of another vessel and cause a serious accident. The legal process will eventually lead to the determination of the cause of the accident, that is, the identification of the owner of an ocean kayak that, for example, was not equipped with a radar reflector.

I am not sure you have given any thought to this. What insurance obligations apply to someone who rents out 500 kayaks? How can we deal with that? Kayaking is the fastest growing recreational marine sport on the West Coast, and the virus has already hit the East Coast. I would point out that it started in Senator Adams' jurisdiction.

Mr. McRae: I do not see the problem being so much an insurance problem as, perhaps, a regulation problem. The insurance industry can provide insurance for virtually any sort of safe operation in which people choose to participate whether it is renting out kayaks or running tour boats. The insurance coverage is there for people who require insurance. You may have concerns about the regulation or issues that we are not familiar with, but the insurance industry is able to provide coverage for all these sorts of operations to whatever limits of coverage people choose to buy.

Mr. Payne: Is it not in some way analogous to the personal water craft that are on most of the inland waterways and lakes today?

Senator Forrestall: Except that they are motor powered and they fall into a different regulatory class.

Senator Spivak: We will eliminate them.

Senator Forrestall: The senator does have a point.

Yes, there is a difference. The kayak has a low profile in the water and it is very difficult to install anything other than the most rudimentary radar reflector because of the balance considerations. The question of liability arises, however, when someone carelessly causes a larger vessel, for example, a ferry, to suddenly swerve to avoid running into one or two of these people who are paddling around with their earphones plugged in and listening to music. They might run into a ferry carrying 200 people and a number of cars. How can the operator be protected? How do you arrive at an insurance rate that will protect the directly interested parties in such an accident?

It is not a hypothetical question. Ten years ago we had 1,000 kayaks; today we have 10,000. Within 10 years you will have 40,000, 50,000 people going out in the evenings and long weekends, taking extended camping vacations. People have already crossed the Arctic waters in ocean kayaks. It is becoming a problem. Kayaks are environmentally friendly so it is good to have them, but how can kayakers protect themselves?

Mr. McRae: I will go back to the point you made when you talked about the ferry that runs aground with passengers on board. The good news is that all those passengers will be protected by the Athens Convention. It may not be good news for the kayak that put the ferry ashore, but having been in a yacht off the shore of Vancouver area, I do not believe those ferries divert for pleasure craft, whatever the circumstance.

Senator Forrestall: No; they do not care.

Your industry should become informed about what is happening. I am sure your people are too busy to tell you about the increasing numbers, and those in Statistics Canada are running two years behind in their statistics. This is an unleashed problem but, in some sense it is a delight to see all of these kayakers on the water.

Senator Spivak: I am happy to see the increase in that sport. In fact, I hope the use of kayaks increases.

Senator Forrestall: I would ask Mr. Brennan if he is satisfied with that. Are you monitoring the amendment?

Mr. Martin Brennan, Researcher, Library of Parliament: I have had some informal discussions with people from the department about it. They appreciate the problem, and they are working on the wording of the amendment.

The Chairman: We will have it for our next meeting on Tuesday.

Senator Forrestall: Will you move it?

The Chairman: Yes.

Senator Furey: I have two brief questions. First, is there an industry norm with respect to cost of insurance as a percentage of revenues?

Mr. Payne: The quick answer is no.

Senator Furey: There are some wide fluctuations in the numbers that you gave us.

Mr. Payne: It is a competitive market and, as we said in our introduction, it is an international business. The majority of the large vessels are placed with associations of P&I clubs in the London market.

Senator Furey: My second question pertains to clause 39. You made the comment that there is no guarantee that the insurance industry would insure all owners. Is that because there is no system in place for a high-risk pool, or does it suggest that there are vessels out there that the insurance industry would perceive as being uninsurable?

Mr. McRae: There is no pool for high risks. The high risks are written by individual companies. We are free to reject one that looks too risky. I do not foresee it as a big problem. In the vein of compulsory insurance, one of the problems it raises is: What do you do with the people who cannot obtain insurance because either the operation they are undertaking is hazardous or they are operating in a region where inspecting the boat would be extremely expensive? It is not quite as simple as it seems to make people insure themselves.

Senator Furey: You raise another point with respect to policing compulsory insurance as well.

Mr. McRae: It is difficult. We expect compliance. Insurance costs are not extremely high for most of the tour boat operators, so I do not think there will be any problem for them to purchase the limits they need to have.

Senator Adams: You have said that the crew is covered by Workers' Compensation and the passengers are covered under the owner's insurance. Does Workers' Compensation pay crew members the same amount of money as passengers would receive if, say, the operator were killed in an accident?

Mr. McRae: The Athens regime applies only to the passengers. The crew or the employees of the ship are covered by Workers' Compensation. Their benefits would be paid by that body. I am not familiar with the running costs of Workers' Compensation. It is a provincially run scheme. They set the rules and regulations on how it works and the premiums they charge.

Senator Adams: If there are 100 passengers on board a ship, then there may be 5 or 10 crew members. However, with 12 passengers, there may only be one crew member. Are there any regulations in place to cover the ratio of passengers to crew members?

Mr. McRae: There are regulations in place regarding the safety considerations that must be taken on passenger ships, particularly those that are certified, which is all passenger-carrying vessels over 12 passengers. For those that carry over 12 passengers, there is a regulatory regime in place for safety inspections which limits the number of passengers they can carry, the safety equipment, and so on.

Senator Adams: We now have ferries and hovercraft that travel at a higher rate of speed than cruise ships. Is the insurance coverage for those vessels different?

Mr. McRae: Until recently, Vancouver operated fast ferries, hydrofoils. They operated at very high speed but the insurance industry took that operation in its stride and they had no particular problems getting insured. Hovercraft are an entirely different mode of operation. I do not think we have any hovercraft ferries in Canada, although some operate internationally. I do not think this regime applies to hovercraft.

Senator Adams: Is that not called a passenger ship?

Mr. McRae: It is a question of the definition of "ship."

Senator Adams: We talked about pleasure craft, but I would point out that passengers on those ferries have a purpose other than pleasure -- they want to cross to the mainland. There is a difference, is there not?

Mr. McRae: If I understand it, you are asking me if this regime applies to hovercraft passengers.

Senator Adams: Yes.

Mr. McRae: I believe it does not, but I will have to check with the people from Transport Canada and defer to them. I think the definition of "ship" is such that it would not include a hovercraft. In Canada, that is not a problem because we do not have commercial hovercraft ferrying people around.

Senator Adams: Do you know how many people cross between Vancouver and Victoria on a daily basis? Is it 500 or 1,000 people a day?

Mr. Payne: It is much more than that. However, the B.C. ferry entity buys its liability protection through the P&I club and is well within the cost and ticket structure.

Senator Adams: The P&I club has nothing to do with Bill S-17, though, does it? Is it a separate insurance?

Mr. Payne: No, the P&I club is a form of insurance solution to protect the vessel operator who is operating within Bill S-17. It is another form of insurance in a mutual association of vessel owners.

Senator Spivak: In this act, the definition of "ship" does not include hovercraft. Is the definition of "ship" contained in the bill, or is it in some act?

Senator Forrestall: It is contained in the Canada Shipping Act.

Mr. McRae: That is correct.

Senator Spivak: I can look it up.

The Chairman: If there are no other questions, I would thank Mr. Payne and Mr. McRae for their presentation and the answers to our questions. If you think of anything that you forgot to tell us, feel free to send us further information.

We have a motion that the Subcommittee on Communications be authorized to revise the budget application for the special study on communications policy for submission to the committee on Internal Economy, Budgets and Administration.

Senator Spivak: I so move.

Senator Callbeck: I second the motion.

The Chairman: Is it agreed?

Hon. Senators: Agreed.

The Chairman: Carried.

Senator Furey: Have we concluded this hearing on Bill S-17?

The Chairman: Yes. We will meet again on Tuesday morning in room 256. We will then proceed with clause-by-clause study of the bill and with the amendment we discussed.

The committee adjourned.

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