Executive Summary: Key Legal and Evidentiary Issues

• Dispute over unpaid invoices stemming from allegedly defective ship repair work.

• Plaintiff claimed entitlement to payment despite acknowledged deficiencies.

• Defendant counterclaimed for refund based on fundamental breach and unjust enrichment.

• Expert marine surveyor evidence was central in determining the quality and fitness of repairs.

• The Court found the vessel repairs rendered the ship unseaworthy and non-compliant with regulatory standards.

• Summary trial was used to resolve both the claim and counterclaim without proceeding to a full trial.

Facts and outcome of the case

Commodore’s Boats Ltd., a ship repair company based in British Columbia, filed a claim in the Federal Court of Canada against Tyee Pacific Marine Operations Ltd., the owner of the vessel Tyee Shepard. The claim sought $88,303.59 for three unpaid invoices related to repair work performed on the vessel between August and December 2020. The repairs included hull plating, bulkhead work, and modifications to the vessel to make it seaworthy and capable of passing a Canada Steamship Inspection (now Transport Canada Safety inspection).

Tyee paid a total of $233,234.30 for the work but later discovered significant deficiencies after the vessel was returned in December 2020. It claimed that the repairs were defective, used unqualified welders, and rendered the ship unseaworthy. In response to Commodore’s lawsuit, Tyee counterclaimed for the return of the amount already paid, plus damages for overcharges and deficiencies, totaling $233,234.30.

Each party presented expert evidence from marine surveyors. Tyee’s expert, Mr. Braconnier, concluded that the repairs failed to meet Canadian marine standards and that the vessel required extensive rework. Commodore’s expert disagreed, but the Court found Mr. Braconnier’s evidence more credible and comprehensive. The Court accepted that there was a fundamental breach of contract by Commodore and that Tyee did not fail to mitigate its damages by refusing to pay the outstanding invoices or allowing further remediation under disputed terms.

The Honourable Madam Justice Heneghan concluded that Commodore’s work was unfit for its intended purpose. The Court dismissed Commodore’s claim for unpaid invoices and awarded judgment to Tyee for $233,234.30. This amount represents the full sum previously paid by Tyee, effectively granting a legal set-off against the plaintiff's claim. The issue of legal costs was left open for further submissions.