Canadian registration

Roger Rizzo of Bernard & Partners explains the ship registration process in Canada

THE registration of vessels in Canada is based on the provisions of the British Merchant Shipping Act 1894, which were incorporated into the Canada Shipping Act in 1934 and are now contained in Part I of the Canada Shipping Act 1985 (the ‘Act’), as amended. The registration system is administered by Transport Canada with its headquarters in Ottawa, Ontario.

Vessels registered in Canada may be searched online by official number or ship name at through Transport Canada’s Vessel Registration Query System at www.tc.gc.ca/ShipRegistry/advanced.asp?lang=e. The online search engine is not real-time however, and a transcript of registry should be requested from Transport Canada in order to determine the existence and registration date and time of any mortgages on title.
In general terms, pleasure and commercial vessels over 15 gross tons must be registered in Canada. There is no restriction on age, purpose, or whether the vessel is foreign-built or not, provided that the vessel comes within the definition of a ‘ship’ in the Act, which includes every description of vessel used in navigation not propelled by oars. Vessels, including small commercial vessels, under 15 gross tons and equipped permanently or temporarily with a motor greater than 7.5 kW (9.9 horsepower) are classified as ‘small vessels’ under the Act and owners have the option of registering such vessels in the Transport Canada ship’s registry (the ‘registry’) or obtaining a Small Vessel License pursuant to section 108 of the Act.

A feature unique to the Canadian registry is the ability to ‘record’ vessels under construction. Recording a vessel falls short of registration, but is useful as it permits registration of a builder’s mortgage on a vessel under construction until such time as the vessel may be registered in a Canadian or other registry. This process provides security to the intended owner of a vessel for advances, as well as offering protection to Canadian shipbuilders, and should be considered within any contract for construction of a new vessel.

In order to register a vessel in Canada, the registering party must be a ‘qualified person’ within the meaning of section 2(1) of the Immigration and Refugee Protection Act, which includes a Canadian citizen or a permanent resident of Canada, or a corporation incorporated under a federal or provincial law. In the latter case, owners must be cautious as provincial laws vary with respect to the residency of directors. For example, British Columbia has recently amended its corporate legislation to eliminate residency requirements for directors.

The Act requires registration for any vessel in Canada that:

  • exceeds 15 gross tons;
  • is owned by Canadian citizens, residents or companies in Canada; and
  • is not registered in a foreign country.

Unless registered in a foreign country, owners may, not must, register:

  • vessels equal to or less than 15 gross tons which are owned by qualified persons;
  • vessels owned by a foreign corporation with a subsidiary incorporated in Canada, or the vessel is managed by a Canadian vessel management company; or
  • a vessel that a qualified person is using under a financing agreement (lease to own) provided that such person will own the vessel at the end of the agreement.

The advantages of registration in Canada include the following:

  • Registration gives title to a vessel and proves legal ownership (including registered ‘small vessels’);
  • A registered vessel may be used as security for a loan;
  • A registered mortgage becomes a marine mortgage;
  • Registration ensures a unique name for the vessel in Canada; and registration allows the vessel to fly the Canadian flag.

To complete the registration of a vessel in Canada, the owner must establish legal title. The owner must send the following documents to the registrar at the desired port of registry:

  • Application for registry.
  • Declaration of ownership – a separate form for each owner (Canadian-registered vessels are defined as being comprised of a total of 64 shares which may be apportioned among up to five qualified persons).
  • Appointment of an authorised representative – this form must be completed by the owners and is required where there is more than one owner or the owner is a corporation. It is not required for pleasure vessels.
  • Notice of name for a ship.
  • A certificate of survey by an approved surveyor after the vessel has been measured for tonnage certifying that the vessel’s name has been marked on its bow, its name and port of registry marked on its stern and that its official number and register tonnage have been carved on its main beam. As well, commercial vessels may be required to provide a Load Line Certificate in favour of Transport Canada.
  • The appropriate fee.

For a vessel built in Canada, the owner will also need a builder’s certificate (issued by the builder and made out to the owner) and, in the event the owner is not named on the certificate, all bills of sale showing the sequence of title from the builder to the applicant.

For foreign-built vessels, the owner will need to provide the original bill of sale (or a notarised true copy having an original stamp) selling the vessel from the last foreign owner to the applicant duly authenticated by a Canadian or acceptable consular office. If the applicant is not the first Canadian owner, all bills of sale showing the sequence of title up to the applicant must be provided. If the bill of sale has the seal of either a Canadian or foreign notary, consular authentication is not required. In addition, a certificate of deletion is required from the former registry, a certificate from the foreign registry port attesting to the consent of its authorities to transfer to the registry of another country, and a certificate of no liens or encumbrances are required.

Additional Requirements

Authorised Representative

Canadian registered vessels, other than pleasure vessels, must appoint an authorised representative (which may be a corporation) responsible for acting in all matters relating to the vessel. Where the vessel is owned by more than one person, the owners must appoint one of themselves as the authorised representative. The authorised representative of a vessel owned by a foreign-owned subsidiary corporation must be:

  • a subsidiary of the corporation that is incorporated under the laws of Canada or a province;
  • an employee or director of any branch of the corporation that is carrying on business in Canada; or
  • a ship management company incorporated under the laws of Canada or a province.

It is important to note that Transport Canada, the federal agency regulating marine matters in Canada, may hold the authorised representative legally responsible for any problem with the vessel.

Mortgages

The treatment of mortgages under Canadian legislation is beyond the scope of this article, however, in general terms, all registered vessels may be mortgaged to secure a principal sum or to secure a current account. Canada is not a party to the International Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages of 1967, or the International Convention on Maritime Liens and Mortgages, nor has Canada incorporated the rules of such conventions into its national law. For additional information regarding the registration, enforceability and priority of maritime mortgages, readers are advised to contact a lawyer practicing maritime law in Canada.

Maritime Liens

Maritime liens, including claims for collision damage, salvage, crew’s wages and master’s disbursements have priority over a mortgage. The master’s disbursements extend to all expenses properly incurred by the master on behalf of the vessel. This topic is raised simply to highlight that the registry does not record maritime liens, which may have a significant effect on the value of the vessel and enforceability of mortgages.

This publication is intended to provide information on recent developments in provincial, national and international law. Information provided in this article shall not be considered legal opinion and readers should not act on the basis of this article without first consulting a lawyer who will provide analysis and advice on a specific matter. Bernard & Partners, Barristers and Solicitors, is a partnership of law corporations under the laws of British Columbia.