Grace Plastics Ltd. (Plaintiff)
v .
The Bernd Wesch II and her owners Jonny
Wesch of Hamburg, Germany and her charterers
Hy Car Line S/A of Geneva, Switzerland
(Defendants)
Trial Division, Jackett C.J.—Montreal, May 17
to 21; August 9 to 13, 17 to 19, 1971.
Shipping—Hague Rules—Bill of lading—Damage to cargo
in heavy weather—Contract of carriage between time-chart-
erer and forwarder for undisclosed principal—Deck cargo—
Under deck cargo—Some under deck cargo carried on deck
with forwarder's acquiescence—Respective liabilities of
owner and charterer Deck cargo not adequately secured for
foreseeable weather—Whether damage caused by unseawor-
thiness or perils of sea—Limitation of liability—Hague
Rules (Carriage of Goods by Water Act, R.S.C. 1970, c.
C-15, Art. I, III(1)(c), IV(2)(c), IV(5)).
Judgments—Judgment for damage to cargo—Interest on—
From when payable.
Practice—Evidence—Admission of exhibits at trial—
Exhibits in extra-judicial proceedings, procedure for
admitting.
Plaintiff purchased two heavy reactors and certain equip
ment and chemicals in Germany and arranged with a for
warder to ship them to Canada. The forwarder contracted
with a shipping company for the shipment to Montreal. The
contract between the forwarder and the shipping company
provided that the latter's bill of lading would be used and
that it would be executed on behalf of the master of the ship
selected to carry the cargo. The shipping company selected
defendant ship, which it time-chartered from her owner.
The contract specified that the reactors would be carried on
deck and the rest of the shipment under deck but in fact
four parcels were, with the forwarder's acquiescence,
loaded on deck together with the two reactors. The ship
encountered heavy weather in the north Atlantic, the reac
tors broke loose, one went overboard and the other was
damaged. As a result of the reactors breaking loose, a hatch
covering was pierced and three of the parcels on deck as
well as the under deck cargo were damaged. Plaintiff, as
assignee of the bill of lading, which was issued when the
ship was at sea, claimed damages of some $264,000 in
respect of the reactors, some $128,000 in respect of under
deck cargo, some $7,600 in respect of the three damaged
parcels loaded on deck and miscellaneous damage of some
$13,000, plus interest at 5% per annum from the date the
shipment should have been delivered, viz September 1,
1968. The bill of lading contained a clause relieving the
carrier of liability for loss or damage to deck cargo resulting
from negligence of the carrier, its servants or agents. The
Court found on the evidence that the conditions encoun-
tered by the ship were foreseeable, that there was no
neglect or default in the navigation of the ship, but that the
reactors were not properly secured to hold them against the
reasonably foreseeable dangers of the crossing.
Held, the shipowner was liable for the damage to the
under deck cargo and the three parcels carried on deck but
not for the damage to the reactors.
1. While the governing contract of carriage was the
agreement made between the forwarder and the charterer
before the goods were placed on board, the agreement was
a "contract of carriage covered by a bill of lading" and so
within the Hague Rules. Anticosti Shipping Co. v. Viateur
St -Amand [1959] S.C.R. 372, applied.
2. The contract of carriage was when executed a contract
on behalf of an unknown principal, viz the owner of the
vessel that was subsequently to be chosen and it was not a
contract by the charterer as principal. Accordingly, the
shipowner and not the forwarder was liable on the contract
of carriage. Paterson Steamships Ltd. v. Aluminum Co. of
Canada [1951] S.C.R. 852, applied.
3. The reactors were "cargo which ... the contract of
carriage ... stated as being carried on deck" (Art. I of the
Hague Rules), and hence were not subject to the Hague
Rules, but the three damaged parcels, although carried on
deck with the forwarder's acquiescence, were not within the
quoted words and, together with the cargo carried under
deck, were therefore subject to the Hague Rules. Plaintiff
having entrusted the forwarder with the making of the
contract of carriage was bound by the term that the two
reactors be carried on deck. Svenska Traktor Aktiebolagent
v. Maritime Agencies (Southampton) Ltd. [1953] 2 All E.R.
570, applied.
4. As the damage to the under deck cargo and the three
parcels on deck was caused by inadequate securing of the
reactors against reasonably foreseeable dangers of the pro
posed crossing the ship was therefore not seaworthy in the
sense of Art. III(1)(c) of the Hague Rules, i.e. the damaged
cargo was not stowed in a part of the ship "fit and safe for
its preservation", and the shipowner was therefore liable for
the damage sustained by the under deck cargo and the three
parcels carried on deck. The damage was not from perils of
the sea so as to afford the shipowner a defence under Art.
IV(2)(c) of the Hague Rules.
5. The bill of lading relieved the shipowner of liability
both in contract and tort for damage to the reactors result
ing from the negligence of the carrier, its servants or agents.
Even if application of that clause was excluded where the
damage was caused by unseaworthiness of the ship (which
it was not necessary to decide), the damage to the reactors,
unlike the damage to the other cargo, was not the result of
unseaworthiness of the ship. Falconbridge Nickel Mines
Ltd. v. Chimo Shipping Ltd. [1969] 2 Ex.C.R. 261,
distinguished.
6. Under Art. IV(5) of the Hague Rules, the damage to
the three parcels on deck was limited to the amount of
actual loss or $500 for each parcel and in calculating actual
loss, there will have to be added a portion of the general
items referred to.
7. Plaintiff was entitled to interest on the award of dam
ages from September 1, 1968, until judgment is signed (and
thereafter on the amount of the judgment under s. 40 of the
Federal Court Act).
Held also, the admission and marking of exhibits in this
Court is a function of the Court, and only those documents
accepted by the Court during trial (including exhibits to
evidence taken before a Commission abroad or before a
foreign court or upon examination for discovery) become a
part of the evidence upon which the case will be decided.
ACTION for damages.
David Angus for plaintiff.
Trevor Bishop for defendants.
JACKETT C.J. (orally)—While according to
the style of cause on the writ, this is an action
against a ship, I understand from counsel that it
is, as a practical matter, an action in personam
against the persons mentioned in the style of
cause.
This is an action for damages for failure to
deliver in good order in Montreal goods belong
ing to the plaintiff that were, while in European
ports, put on board a vessel that belonged to
one defendant, hereinafter referred to as "the
owner" or "Donny Wesch", and that was under
time charter to the other defendant, hereinafter
referred to as "the charterer" or "Hy Car".
The plaintiff, since 1965, has manufactured
at Cornwall, Ontario, a chemical used in the
manufacture of plasticizers and resins employ-
ing for the purpose plant or equipment and a
chemical substance that is referred to as a
"catalyst", all of which is manufactured in Ger-
many. In 1968, arrangements were made with a
German supplier to acquire a second "stage" of
such plant or equipment and catalyst so as to
expand the plaintiff's manufacturing activities.
The arrangement was that the plant and catalyst
acquired in 1968 was to be delivered f.o.b. at
certain North Atlantic ports in Europe.
Having entered into that arrangement with
the German supplier, the plaintiff made an
arrangement, which would seem to have been
of a somewhat unusual character, with a
Canadian company in the business known as
that of a "forwarder" (hereinafter referred to as
"the forwarder" or "Schenker of Canada") pur
suant to which the forwarder, for a lump sum
payment, undertook the transportation of the
plant or equipment and the catalyst from the
European ports to Cornwall.
The forwarder, thereupon entered into an
arrangement, by means of a document called a
"shipping note", with the defendant Hy Car
who had a time charter in respect of the vessel
Bernd Wesch II from her owner, the defendant
Jonny Wesch, for the carriage of the plant or
equipment and the chemicals in question from
the European ports to Montreal. It is common
ground that the arrangement between the for
warder and Hy Car was that two items of plant
or equipment known as "reactors", each of
which weighed 70 tons, were to be carried "on
deck" and that the rest of the shipment was to
be carried "under deck".
The plant and equipment was loaded on the
Bernd Wesch II in accordance with such
arrangement except that, in addition to the two
reactors, four parcels that were supposed to
have been carried under deck were loaded on
deck. The forwarder, however, before the
vessel sailed, acquiesced in these parcels
remaining on deck, but there was no agreement
to amend the contract of carriage constituted by
the shipping note.
The Bernd Wesch II sailed from Rotterdam
for Montreal on August 17, 1968.
Four to five days after the vessel left Rotter-
dam, on August 23, 1968, while the vessel was
encountering very heavy weather, one of the
reactors broke loose and went overboard, and
the other broke loose but stayed on board and
was resecured. As a result of the reactors
breaking loose, holes were made in a hatch
covering, with the result that water got into the
place where the catalyst was stored, and
damage was caused to some of the plaintiff's
other cargo that was on deck.
In the result, the plaintiff claims
(a) for the loss of the reactor that went over
board in the sum of $133,218.32,
(b) for damage to the reactor that did not go
overboard, on the basis of value less salvage
for scrap, in the sum of $130,992.89,
(c) for damage to all the catalyst, being 662
drums, on the basis of a total loss,
(d) for damage to parcel No. 671, which was
carried on deck, in the sum of $185.38,
(e) for damage to parcel No. 667, which was
carried on deck, in the sum of $7,260.23,
(D for damage to parcel No. 665, which was
carried on deck, in the sum of $158.04,
(g) miscellaneous expenses for surveyors,
experts, travelling, etc., involved in determin
ing what damage was done and in endeavour
ing to minimize the loss:
the expert Engelhardt $1,073.06
the expert Wanka 942.21
Mr. Bellis 779.74
testing and nitrogen 880.00
equipment handling charges 5,809.21
Mr. Danker 172.90
Mr. Zapd 150.00
Mr. Bojawski 69.89
a contractor 163.00
Briere & Gosling 2.00
Marine surveyor 3,061.32
(h) interest at 5 per cent. per annum from the
date when the shipment should have been
delivered, namely, September 1, 1968.
After the Bernd Wesch II sailed from Rotter-
dam, a bill of lading was issued showing the
forwarder's Hamburg agent as "Shipper" and
showing that the goods were consigned "to the
order of" the forwarder. It is, however, clear
that the governing contract of carriage is the
agreement made before the goods were placed
on board between the forwarder (through its
Hamburg agent) and the defendant Hy Car.
(See S.S. Ardennes (Cargo Owners) v. S.S.
Ardennes (Owners) [1951] 1 K.B. 55, at pp. 59
and 60, per Lord Goddard, C. J., applied by this
Court in Sheerwood y. The Lake Eyre [1970]
Ex.C.R. 672.) The agreement would, however,
seem clearly to be a contract of carriage "cov-
ered by a bill of lading" so as to be a "contract
of carriage" within the Hague Rules as adopted
by the Water Carriage of Goods Act, R.S.C.
1952, c. 291; R.S.C. 1970, c. C-15. See
Anticosti Shipping Co. v. Viateur St -Amand
[1959] S.C.R. 372. 1
The plaintiff asserts a claim against the
defendant Jonny Wesch as owner of the Bernd
Wesch II and also asserts a claim against the
defendant Hy Car as the charterer. Against both
defendants it asserts its claim in tort, and, alter
natively, on the contract of carriage. I propose
to consider, in the first instance, the claim on
the contract of carriage.
The Bernd Wesch II was owned and operated
by Jonny Wesch. It was under a time charter,
not a demise charter, to Hy Car. According to
the terms of the contract for carriage, which
provided for use of "Hy Car Line Bills of
Lading", it was an agreement for carriage of
goods under a formal contract (the Bill of
Lading to be issued) which would be executed
on behalf of the "Master" of the vessel selected
to carry the goods. This was a contract that
was, when it was executed, a contract on behalf
of an unknown principal, namely, the owner
and operator of the vessel that was subsequent
ly to be chosen; and it was not a contract by the
charterer as principal. See Paterson Steamships
Ltd. v. Aluminum Co. of Canada [1951] S.C.R.
852. I am therefore of the view that the claim
on the contract of carriage, if there is one, is
against Jonny Wesch; and that there can be no
such claim against Hy Car, who contracted on
behalf of an unknown principal who has now
been identified by proof of the charterparty in
this action.
In so far as the claim based on the contract of
carriage is concerned, the plaintiff, who is
assignee of the Bill of Lading, is prima facie
entitled to the damages flowing from the failure
to deliver in good order in Montreal the goods
that were received by the ship in good order in
Europe.
The principles to be applied in determining
whether the defendant Jonny Wesch avoids
such prima facie liability vary depending on
whether the Hague Rules as enacted by the
Water Carriage of Goods Act apply or not. In
this case, such Rules would seem clearly to
apply in so far as the goods carried under deck
are concerned. Those Rules do not, however,
apply to "cargo which by the contract of car
riage is stated as being carried on deck and is so
carried" (see the definition of "goods" in Arti
cle I). In this case, the contract of carriage is
the booking note signed by the defendant Hy
Car and the forwarder's Hamburg agent, and it
is common ground that it did not contemplate
the carriage on deck of the three parcels Nos.
665, 667 and 671. It would not seem, therefore,
that those three parcels fell within the exception
from the definition of "goods" in the Hague
Rules even though the forwarder's Hamburg
agent did subsequently verbally acquiesce in
their being so carried. On the other hand, it is
common ground that the contract of carriage
provided for the carriage of the two 70 ton
reactors "on deck" and that they were so car
ried. In so far as it relates to those two reactors,
therefore, my conclusion is that the contract of
carriage is not governed by the Hague Rules.
I have not overlooked the plaintiff's submis
sion that it is not bound by the agreement made
by the forwarder through its Hamburg agent
that the two 70 ton reactors be carried on deck.
I am, however, of the view that, having entrust
ed to the forwarder the making of the' contract
of carriage, the plaintiff must as between it and
the carrier accept the contract as so made even
if it had specifically instructed the forwarder
that all the goods be carried under deck, a
question concerning which I make no finding.
The only cargo carried under deck in respect
of which there is a claim is some 662 drums of
the catalyst to which I have already referred.
The damage sustained by the catalyst resulted
from water entering through hatch covers as a
result of holes made in the hatch covers by the
two 70 ton reactors when they broke loose from
the positions to which they had been secured on
the hatch covers.
The defendant relied at trial on two defences,
under Article IV(2) of the Hague Rules, to
escape its prima facie liability in respect of the
under deck cargo. Those defences are "neglect,
or default ... in the navigation ... of the ship,"
and "perils ... of the sea". As I indicated
during argument, I found no evidence of neglect
or default in navigation of the ship. In my view,
the other defence depends on the situation
created by the securing of the 70 ton reactors.
As I appreciate the problem in this case, in
relation to the catalyst, on one view of the facts
the loss resulted from a peril of the sea and on
the alternative view of the facts the loss result
ed from an unseaworthy ship. I shall now con
sider that problem.
As I understand the legal position in respect
of the under deck cargo, under the Hague
Rules, as applied to the facts of this case in
respect of the perils of the sea defence,
(a) if the 70 ton reactors were not, before the
ship left Rotterdam, secured sufficiently to
hold the reactors against any reasonably fore
seeable danger arising from a North Atlantic
crossing such as the ship was to make, the
ship was not seaworthy in respect of the
under deck cargo at that time and the break
ing loose of the reactors and the resultant
entry of water into the holds was a direct
result of that unseaworthy condition, 2 and,
alternatively,
(b) if the 70 ton reactors were, before the
ship left Rotterdam, secured sufficiently to
hold the reactors against any reasonably fore
seeable danger arising from such a North
Atlantic crossing, and the reactors broke
loose as a result of the ship having encoun
tered conditions that were not reasonably
foreseeable, the entry of water into the holds
as a result of their breaking loose was the
result of a peril of the sea for which the
carrier is not responsible by virtue of para
graph 2(c) of Article IV of the Hague Rules
as enacted by the Water Carriage of Goods
Act.
My conclusion on the evidence is that the 70
ton reactors were not, before the ship left Rot-
terdam, sufficiently secured to hold the reactors
against the reasonably foreseeable dangers aris
ing from the proposed crossing and that the ship
did not encounter any conditions that were not
reasonably foreseeable. My holding is, there
fore, that the defendant Jonny Wesch is liable
under the contract of carriage for the damages
sustained by the catalyst.
So far as the conditions encountered by the
ship are concerned, I have been able to find no
evidence that the conditions encountered were
not such as were to be anticipated. Indeed, the
ship's Master's evidence makes it clear that,
while he endeavoured to navigate so as to avoid
getting into the weather and sea situation that,
in his view, gave rise to his difficulties, the
possibility that he would not be able to avoid
getting into such a situation was one that was
foreseeable. I accept that evidence.
So far as the securing of the two 70 ton
reactors on deck is concerned, even if one
assumes the adequateness of the ship's Master's
method for securing the reactors, it is clear that
that method was absolutely dependent on lash-
ings that would hold the reactors from leaving
their "beds" as a result of the ship's rolling and
pitching and, in my view, those lashings were
not such that, properly appraised, they could
have been regarded as sufficient for that pur
pose. Those lashings were attached to the reac
tors by passing them through relatively small
"eye pads" welded on to the reactors for a
different purpose although there were available
for the purpose very substantial "hooks" which
had, in fact, been used to move the reactors on
to the ship. I am satisfied, on the evidence, that
the Master did not consider sufficiently, if at
all, whether the "eye pads" were strong enough
for the purpose. The fact that they were possi
bly the most obvious means for attaching cables
to the reactors and that there were no signs
warning that they were not to be used for
securing the reactors did not, in my view,
relieve the Master of his very heavy responsi
bility of seriously considering their adequacy
for the purpose of securing these formidable
objects against the forces of the elements to be
anticipated on the North Atlantic. I am satisfied
on the evidence that the Master did not suffi
ciently direct his mind to this vital aspect of his
securing operation and that the result was that,
when foreseeable conditions were met, the "eye
pads" gave way and the resultant movement of
the reactors was inevitable.
For the above reasons, as already indicated,
my conclusion is that the defendant Jonny
Wesch is liable for the damage to the catalyst.
I turn now to the cargo that was carried "on
deck" other than the two 70 ton reactors. As I
have already indicated these parcels were,
under the contract of carriage, to be carried
under deck. They were placed on deck contrary
to the contract of carriage and, before the ship
left Rotterdam, the forwarder's agent
acquiesced in their remaining there.
As I have already indicated, in my view, this
part of the cargo does not fall within the exclu-
sionary portion of the definition of "goods" in
Article I of the Hague Rules, which excepts
from that definition cargo which "by the con
tract of carriage" is "stated" as being carried on
deck. It is my view that the contract of carriage
must be found in the preliminary document that
had been signed on behalf of the parties before
the goods were put on the ship and cannot be
taken to have been changed by additional
clauses added to the Bill of Lading that was
issued after the ship sailed. The liberty to carry
on deck given verbally in this case cannot have
any greater effect, as far as the definition of
"goods" in the Hague Rules is concerned, than
the liberty clause in Svenska Traktor Aktiebola-
gent v. Maritime Agencies (Southampton) Ltd.
[1953] 2 All E.R. 570, where Pilcher, J. said at
page 572:
A mere general liberty to carry goods on deck is not, in
my view, a statement in the contract of carriage that the
goods are, in fact, being carried on deck. To hold otherwise
would, in my view, do violence to the ordinary meaning of
the words of art. I(c). I, accordingly, hold that the plaintiffs'
tractors were being carried by the defendants subject to the
obligations imposed on them by art. III, r. 2, of the Act.
My conclusion is, therefore, that the Hague
Rules apply to the cargo that was in fact carried
on deck other than the two 70 ton reactors.
Applying the Hague Rules to the cargo so
carried on deck, I reach the same result as I
have already reached with reference to the cata
lyst. The damage it sustained was the direct
physical consequence of the unseaworthy state
of the vessel arising from the fact that the
reactors were not adequately secured when the
vessel left Rotterdam. To be more specific, the
place on deck where this cargo was stored was
not "fit and safe" for its preservation because
these two 70 ton reactors were also on deck so
secured that it was foreseeable that they might
break loose and damage anything that was in
their way. The defendant Jonny Wesch is there-
fore responsible under the contract of carriage
for the damage to the cargo carried on deck
other than the two 70 ton reactors.
I turn now to the claim against Jonny Wesch
under the contract of carriage for the loss of
one of the two 70 ton reactors and for the
damage to the other as the result of their break
ing away from their positions on deck.
As the 70 ton reactors were not "goods"
within the definition of that word in Article I of
the Hague Rules because they were cargo
which by the contract of carriage was stated "as
being carried on deck" and were so carried, the
Hague Rules do not apply in respectof the
claim based on the failure to deliver them in
good order and that claim must therefore be
dealt with in accordance with the contract of
carriage as interpreted in accordance with the
principles that are applicable when those Rules
do not apply.
The fact that the Hague Rules do not apply
enables the defendant Jonny Wesch to assert a
defence based on paragraph 9 of the conditions
in the Hy Car Bill of Lading form, which were
incorporated in the contract of carriage by ref
erence, which defence is not available when the
Hague Rules apply. Paragraph 9 of those condi
tions reads in part as follows:
9. Live animals, plants and deck cargo. Cargo carried on
deck and stated on the face hereof as being so carried and
live stocks ... are received, handled, stowed, carried, kept
and discharged at Shipper's and/or Consignor's risk and the
carrier shall not be liable for any loss thereof, or damage
thereto, howsoever caused even though resulting from the
negligence of the Carrier, its servants or Agents or in the
case of deviation of the ship.
Giving the words their ordinary meaning, this
clause would seem to be an agreement that the
"Cargo carried on deck ... " was "stowed" and
"carried" at the shipper's and consignor's risk
and that the carrier is not liable for "any loss
thereof, or damage thereto, howsoever caused
even though resulting from the negligence of
the Carrier, its servants or Agents". It is
impossible to escape the conclusion in my view
that such words encompass the plaintiff's claim
in this case in respect of the reactors.
What is contended on behalf of the plaintiff,
however, is
(a) that the loss and damage was caused by
gross negligence or "faute lourde" and that by
the law of the Province of Quebec, which
must be taken to be applicable, it is contrary
to public policy to contract out of responsibil
ity for gross negligence or "faute lourde", and
(b) that the loss and damage was caused by
unseaworthiness of the vessel and that a
clause contracting out of responsibility for
cargo will not be taken to extend to loss or
damage caused by unseaworthiness unless
there is an "express" reference therein to
unseaworthiness.
Having regard to my appraisal of the circum
stances of this case, I do not find it necessary to
reach a conclusion as to the soundness of the
various legal principles asserted on behalf of
the plaintiff as the bases for these two
contentions.
With reference to the "gross negligence"
point, I hold that the evidence in this case does
not establish gross negligence in the securing of
the two 70 ton reactors. In The King v. Canada
Steamship Lines [1950]S.C.R. 532, (reversed by
the Privy Council on another point, see
[1952]A.C. 192) Rinfret C.J.C. adopts the defi
nition of "faute lourde" as given by Pothier,
which is: " ... le soin que les personnes les
moins soigneuses et les plus stupides ne man-
quent pas d'apporter à leurs affaires". Upon the
evidence in this case, I cannot conclude that the
securing operation of the Master in this case
was so ineffective that not even "les personnes
les moins soigneuses et les plus stupides"—i.e.,
the most careless and the stupidest of people—
would have been guilty of going to sea relying
on it. On the contrary, I accept the evidence of
the ship's Master that, throughout his career, he
had carried many comparable "heavy lifts" and
had used the same methods without previously
having suffered a loss. I can see the force of
some of the criticisms made of the methods that
were employed in this case and that there are
elements of risk that are not present in the
methods outlined by the plaintiff's experts. It
must not, however, be overlooked that some
degree of risk is involved in all of man's activi
ties and that we are continually being confront
ed with cases where methods of operation have
been used over long periods before their
inadequacies are revealed by tragic experiences.
Very intelligent people who are not exactly
reckless continue to use methods that have
worked well in the past rather than increase
costs by adding expensive safety features. I
cannot say that I think that such a course is
always that of a reasonably prudent man. I am
not prepared, however, to hold that such con
duct is gross negligence even on a definition of
that term that is not nearly as stringent as the
one quoted from Pothier.
I turn now to the plaintiff's contention that he
avoids the effect of the exclusion clause (para-
graph 9 of the Bill of Lading) because, as it is
urged, the loss and damage here was caused by
unseaworthiness and the exclusion clause does
not apply to such a loss or damage.
I reject that contention because, on the evi
dence, I hold that the loss of one reactor and
the damage to the other - was not caused by
unseaworthines s.
Having already held that the damage to the
under deck cargo and the other "on deck" cargo
was caused by unseaworthiness, my holding
that the loss of the reactors, which flows from
the same physical facts, was not caused by
unseaworthiness calls for some explanation.
As I understand the cases, the term "un-
seaworthiness" was used before the Hague
Rules to refer to at least three quite different
states of a vessel which are reflected more or
less precisely in paragraphs (a), (b) and (c) of
Article HI(1) of the Hague Rules, which reads:
1. The carrier shall be bound, before and at the beginning
of the voyage, to exercise due diligence to,
(a) make the ship seaworthy;
(b) properly man, equip, and supply the ship;
(c) make the holds, refrigerating and cool chambers, and
all other parts of the ship in which goods are carried, fit
and safe for their reception, carriage and preservation.
Furthermore, it should be emphasized that a
claim based on unseaworthiness depends on
two requirements, viz:
(a) there must have been a state of affairs on
or affecting the ship that falls within one or
other of the categories compendiously
referred to as unseaworthiness, and
(b) the damage or loss must have been
caused by that state of affairs.
Applying those principles here, the inade
quately secured reactors created a potential for
holes in the hatch covers so that the hold was
not "fit and safe" for "preservation" of the
under deck cargo; that potential was realized
and the under deck cargo was damaged. The
same reasoning applies to the on deck cargo
other than the reactors. It may also have been
that the inadequately secured reactors created a
potential for such an injury to the ship or her
stability as to cause her to founder or roll over.
However, that potential, if it existed, was not
realized and there was, therefore, no loss or
damage caused by it.
Turning now to the reactors, I cannot find
any state of the vessel that falls within any of
the categories of unseaworthiness that caused
the loss of the one and the damage to the other.
On the facts as I appreciate them the places
where they were carried were, when the ship
left Rotterdam, "fit and safe" for their "recep-
tion, carriage and preservation". The main
potential for their loss or damage lay in the fact
that they were inadequately secured and it was
because that potential was realized that they
were lost or damaged.
I have no doubt that there was also a state of
unseaworthiness when the ship left Rotterdam
that might have resulted in the loss of the
reactors. Being badly secured, they might, as I
have already suggested, have so damaged the
ship that she would founder or roll over with a
resulting loss of all cargo. If that had happened,
you would have a potential state of unseawor-
thiness becoming a reality that causes the loss
of cargo. That was what was found in Falcon-
bridge Nickel Mines Ltd. v. Chimo Shipping
Ltd. [1969] 2 Ex.C.R. 261, where Kerr J. said
at page 283:
But I think that the barge was rendered unseaworthy by
the inadequately secured tractor and generating set. When
the tractor slid towards the edge of the deck it thereby made
the barge unstable. Its instability in the circumstances
amounted to unseaworthiness. The loss of the tractor and
generating set resulted immediately from that unseaworthi-
ness.
In this case, there is no evidence to suggest that
the loss of one reactor or damage to the other
followed or was caused by any effect that the
freed reactors had on the state of the ship.
My conclusion is, therefore, that the defend
ant Jonny Wesch is not liable under the contract
of carriage for the loss of the one reactor and
the damage to the other.
The tort claims may be disposed of shortly.
In so far as the tort claim against Jonny
Wesch is concerned, he is protected by clause 9
of the Bill of Lading form. A shipper cannot
avoid his contractual obligations on which his
shipping charges are based by putting the con
tract aside and suing in tort for what he is
entitled under the contract. In this case at least
the exclusion clause in paragraph 9 of the Bill
of Lading clearly covers such a claim.
In so far as the tort claim against Hy Car is
concerned, I dismiss it on the facts. It is based
on the contention that Hy Car's officer, Mr.
Burger, somehow made Hy Car vicariously
liable in tort by his conduct in connection with
the securing of the 70 ton reactors. In my view,
it is clear on the evidence that the officer in
question left the responsibility for the securing
with the Master where it belonged. I found his
evidence and the evidence of the Master consis
tent on that point. All the decisions with refer
ence to how the reactors were secured were
made by the Master either personally or
through members of his crew.
I turn now to the question of quantum of
damages.
The main problem in connection with dam
ages should be mentioned first. If the goods
were goods that could be replaced readily on
the Canadian market, it would be one matter,
but that is not this case. In this case the plaintiff
had, for reasons that it found sound, committed
itself to a process of manufacture of its product
that called for obtaining all the goods in ques
tion from specific German sources. Having
regard to the nature of the process, and to have
the benefit of contractual guarantees that would
have attached to the damaged and lost goods if
they had not been damaged and lost, such
goods, with minor exceptions, had to be
replaced or repaired by the German suppliers. I
am satisfied that as a matter of sound business
the plaintiff had no alternative to following the
advice received from the German experts with
reference to what had to be replaced and what
had to be sent back to Germany for repairs. In
particular, I am satisfied that a reasonably pru
dent business man, anxious to minimize the loss
as much as possible, would have had to accept
the advice that all the catalyst had to be
replaced. It would have been, in my view, rash
and imprudent for the plaintiff to have tried to
determine what part of the catalyst had
managed to survive the water in the hold with
out any material change in its character by
reason of moisture when the German expert
advised that that was unsafe and when, by so
doing, it would lose the benefit of guarantees
that were part of the economic facts on which it
based its planning.
There is, however, a minor problem in con
nection with the catalyst. The amount of $128,-
842.60 is computed by deducting salvage from
replacement cost and, in computing salvage, I
am under the impression that freight was
charged for returning to Germany all the cata
lyst including a substantial amount of almost
valueless quartz. Counsel should have been able
to show me during argument precisely what the
evidence revealed in this respect. The plaintiff
may take judgment in respect of the catalyst for
$128,000 or it may have a judgment for a
reference in relation thereto on terms that may
be spoken to.
With reference to the "on deck" cargo other
than the reactors, I am satisfied that the
amounts established are
No. 665 $ 158.04
No. 667 7,260.23
No. 671 185.23
However, the defendant relies, with reference
to these items, on paragraph 1 of Article IV(5)
of the Hague Rules, which reads as follows:
Neither the carrier nor the ship shall in any event be or
become liable for any loss or damage to or in connection
with goods in an amount exceeding 100 pounds sterling per
package or unit, or the equivalent of that sum in other
currency, unless the nature and value of such goods have
been declared by the shipper before shipment and inserted
in the bill of lading.
On the question whether this limitation provi
sion applies where the damage was caused by a
failure to comply with Article III(1), I follow
my brother Kerr in Falconbridge Nickel Mines
Ltd. v. Chimo Shipping Ltd. [1969] 2 Ex.C.R.
261, where he said, at pages 284-85:
The situation, then, if the Rules applied to the tractor and
generating set until they were lost, appears to me to be this:
If the loss resulted from unseaworthiness of the barge
caused by want off due diligence on the part of the carrier to
make the barge seaworthy, the exceptions from immunity in
Article IV, Rule 2, are of no avail to the carrier, but the
limitation of liability in Rule 5, where the words "in any
event" are used, applies;
The result is that the plaintiff may take judg
ment in respect of each of these items for the
amount of actual loss or $500 and, in calculat
ing actual loss, there will have to be added to
the above amounts a proportion of the general
items to which I have yet to refer.
With reference to the reactors, although there
• will be no judgment, I should say that I accept
the figures of $133,218.32 and $130,992.89, to
which I have already referred. These figures are
necessary for the calculations that have to be
made as hereinafter indicated. I express no
opinion as to the application of the valuation
clause in paragraph 18 of the conditions in the
Bill of Lading as there will be no judgment for
the reactors and as I do not think I am in a
position to make such a finding. There is an
additional question as to whether that point is
open to the defendant on the pleadings.
With reference to the general expenses,
already enumerated, I allow the amounts that I
have earlier specified except that they must be
allocated or distributed among the various
heads of loss or damage as follows:
(a) Mr. Wanka's expenses in the sum of
$942.21, and, of the equipment handling
charges in the sum of $5,809.21, $3,983.70
must be allocated to the reactors;
(b) Mr. Engelhardt's expenses in the sum of
$1,073.06 must be distributed between the
deck cargo (other than the reactors) and the
catalyst;
(c) the claim for testing and nitrogen in the
sum of $880, the contractor's expense in the
sum of $163, and, of the equipment handling
charges in the sum of $5,809.21, $1,825.51
must be allocated to the deck cargo other
than the reactors;
(d) all the remainder of such items must be
distributed pro rata on the basis of the
amounts otherwise determined and any
amounts allocated to the cargo that was on
deck must be distributed among the various
items in the same way to the extent that it is
relevant to do so.
There will also be judgment for interest on
the amount so determined from September 1,
1968, until judgment is signed after a motion
has been made as hereinafter contemplated.
Interest will automatically run on the amount of
the judgment from that time. See section 40 of
the Federal Court Act.
A motion may be made for judgment under
subparagraph (b) of paragraph (2) of Rule 337
of the Federal Court Rules. If the parties cannot
agree on the amounts that should be in the
judgment having regard to the above indica
tions, there will have to be a provision in the
judgment for a reference, the terms of which
may be spoken to. I will also hear the parties on
the question of costs on the application for
judgment.
Before leaving this case, I should say some
thing about the confusion that has arisen during
the trial concerning the numbering and record
ing of the exhibits, an aspect of a trial which I
have heretofore found that I could leave to the
Court Registrar and counsel.
In addition to the normal exhibits that were
tendered by one or other or both of the parties
and accepted by the Court at the trial, there are
documents in this case
(a) that were tendered and accepted during
the taking of evidence abroad by agreement
as though it was taken on a commission that
issued out of the Court,
(b) that were tendered and accepted during
the taking of "depositions" in United States
litigation, which "depositions" were, by con
sent, filed as exhibits at the trial of this
action, and
(c) that were marked as exhibits in the course
of examinations for discovery and that were
put in by one or other of the parties as part of
its case at the trial of this action.
An attempt has been made to have all such
exhibits marked as though they had been ten
dered and accepted as exhibits at the trial of
this action. The result is, I am afraid, that the
record is not accurate. For this, I must take my
share of the responsibility for not recognizing
that counsel were assuming to themselves a
control of the admission of exhibits in evidence,
and of marking the exhibits, which, in this
Court at least, is a function of the Court.
In this Court cases are decided on the proof
made at trial. Documents that get on the Court
file in some way other than by being accepted
by the Court during trial cannot be considered.
It is, therefore, most important that the record
kept by the Court Registrar accurately reflect
the proof made or accepted at the trial and this
is accomplished, as far as documents tendered
at trial are concerned, once the Court has
assigned an exhibit number to each such docu
ment, or group of documents, after it has been
accepted, by the Court Registrar who
(a) affixes an exhibit stamp to the document
showing that the document has been accepted
as an exhibit at the trial under such exhibit
number, and
(b) duly enters in the records of the trial the
acceptance of such exhibit under the exhibit
number.
Where, however, an exhibit is tendered and
accepted during the taking of evidence on com
mission, the commissioner is required by the
"Instructions and Directions" to assign his own
exhibit number to such exhibit, and when he
has finished taking such evidence, he is
required to return the evidence so taken "toge-
ther ... with ... exhibits produced" under his
seal to the Court and the party who caused such
evidence to be taken should, at an appropriate
time during the trial, move the Court to make
that evidence a part of his case at the trial,
which fact would then be duly recorded in the
record of the trial. Any such exhibit would then
be known as "Exhibit to the evidence
taken on commission at ..." etc. Once an
exhibit is tendered as evidence to a commis
sioner in such a case, the custody of the docu
ment must remain in the commissioner until he
makes a return of the evidence together with
the exhibits under his seal to the Court. In this
case, an attempt has been made to have the
commissioner assign exhibit numbers on behalf
of the Court as though the exhibits were put in
at trial and the commissioner has not retained
the exhibits, with unfortunate results.
As far as the exhibits to the United States
depositions and the documents marked on the
examinations for discovery are concerned, they
did not, of course, become part of the evidence
in this case until they were tendered and accept
ed at trial and were then assigned exhibit num
bers by the Court in the ordinary way.
It is common ground that, no foreign law having been
proved, the applicable law is to be taken to be the same as
the Canadian law. Compare The Glengoil Steamship Com
pany v. Pilkington, (1897) 28 S.C.R. 146, per Taschereau J.,
delivering the judgment of the Supreme Court of Canada, at
page 160.
2 I use the phrase "not seaworthy" here, in the sense
spelled out in Article III(1)(c) of the Hague Rules, as
meaning that the part of the ship where the catalyst was
stowed was not "fit and safe" for the preservation off the
catalyst.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.