In Peracomo Inc v Telus Communications Co,1 the Supreme Court of Canada (“SCC”) had the rare opportunity to clarify the strong link between the loss of insurance cover and unlimited liability in maritime law. Unfortunately, the conclusion reached by the honourable judges indicates precisely the opposite. According to their interpretation of relevant provisions, the fault standard required for the loss of insurance cover and the degree of fault required for unlimited liability are similar but not the same.

Peracomo Inc owns the fishing vessel Realice. Her skipper, Mr Vallée, is Peracomo’s president and sole shareholder. Mr Vallée is a self-trained fisherman and engaged in fishing mostly in the St Lawrence River. Between 2002 and 2005, the anchor of the Realice was hooked several times. In 2005 Mr Vallée pulled up the anchor and a submarine cable along with it. He managed to free the anchor. Sometime after this occasion, he visited a museum where he saw a chart of the area where he usually fished. There was a line drawn on the chart across the river with a hand-written notice “abandoned” on it. Mr Vallée believed that it was what the anchor had hooked. In June 2006, when the anchor of the Realice was again hooked on a cable on the river bottom, Mr Vallée, believing that the cable was not in use, pulled it up and cut it with an electric saw. A few days later, when the same thing happened, he cut the cable again. To his misfortune, it was a live fiberoptic cable and the cut resulted in almost $1 million damage. After reading in the local newspaper that the authorities were searching for the person responsible for cutting the cable, Mr Vallée turned himself in. No good deed goes unpunished: the underwriters denied cover and Telus Communications Co, owner of the cable, sued Peracomo and Mr Vallée for damages.

The Federal Court (“FC”)2 and Federal Court of Appeal (“FCA”)3 deprived Mr Vallée of his right to limit and also denied that he was entitled to insurance cover. According to