T-3830-76
Romulo C. Manalaysay, Luisito M. Villaflor,
Manuel M. Tumbokon, Felipe G. Gensaya Jr.,
Leopoldo M. Gawaran, Alejandro S. Galanga,
Danilo De La Cruz, Luis P. Pena, Juanito L.
Lucero, Crus C. Sablon, Gladio N. Ruiz, Rodolfo
C. Gonzales, Arturo B. Adolfo, Sigfredo L. Torres,
Joselito M. Pajarillo, Felizardo T. Rozul, Vin-
cente L. Losbanes, Antonia F. Magbanua, Domin-
go G. Corcochea, Agapito A. Mallorca, Antonio P.
Panaquiton, Rodolphe D. Celorico (Plaintiffs)
v.
The Vessel Oriental Victory (Defendant)
Trial Division, Walsh J.—Montreal, June 28;
Ottawa, July 8, 1977.
Maritime law — Labour contracts — Individual contracts
signed by crew members in the Philippines — Collective
agreement between union and ship owners subsequently signed
— Crew members not party to collective agreement and union
ized only after agreement signed — Whether or not the crew
can claim the unpaid difference in pay between the lower wage
rate of the individual contracts and the more favourable rate
of the collective agreement — Quebec Civil Code, art. 1029.
The crew members of the Oriental Victory signed individual
employment contracts in the Philippines with the vessel's
owners. Before the expiry of these contracts, the owners signed
an agreement with the International Transport Workers' Fed
eration, undertaking to apply all sections of the ITF collective
agreement to all seafarers on board the vessel. The defendant
paid the crew a higher wage rate as per the ITF contract, but
only in ports where the union possessed affiliated unions, and
paid a lower rate as per the individual contracts the rest of the
time. The plaintiffs claim the difference in pay not received
between the rates provided in each individual contract and the
collective agreement.
Held, the action is allowed. The defendant voluntarily (even
though perhaps under -considerable pressure) entered into an
agreement to man the vessel with an ITF crew, knowing full
well that this would result in higher rates of pay than those
called for in the individual agreements with the members of the
crew. Once the vessel was at sea it then failed to fulfil the terms
of the agreement which, although made with the ITF by
defendant, was for the benefit of the individual crew members.
While the individual crew members were bound by the terms of
the individual contracts which they had signed, matters were in
effect taken out of their hands by the contract signed by the
owners with ITF and must be considered as replacing the
individual agreements. The plaintiffs are entitled to the higher
rates of pay.
ACTION.
COUNSEL:
J. Nuss, Q.C., and G. Waxman for plaintiffs.
E. Baudry for defendant.
SOLICITORS:
Ahern, Nuss & Drymer, Montreal, for
plaintiffs.
Chauvin, Marler & Baudry, Montreal, for
defendant.
The following are the reasons for judgment
rendered in English by
WALSH J.: This action was heard at the same
time as an action bearing Court No. T-4791-76
between the same parties in which the issues are
the same. Plaintiffs are all seamen who were
engaged by individual contracts of employment
entered into in Manila in the Philippines with
Okada Kaiun Company Limited of Osaka, Japan,
managers of the vessel M/V Oriental Victory of
Panamanian registry and operating under the flag
of that country to serve as crew commencing
February 2, 1976. The agreements of employment
were to be of twelve months' duration and called
for the wage scale and other benefits set out
therein and were filed with the National Seamen's
Board in Manila. They were flown to Ghent in
Belgium where the ship was located at the time to
replace the former crew who were leaving the
vessel there. The former crew had become mem
bers of the International Transport Workers' Fed
eration (hereinafter referred to as the ITF).
While in Belgium the captain of the vessel, on
behalf of Okada Kaiun Company Limited who had
sent a representative there to enter into negotia
tions signed an agreement on March 5, 1976, with
the ITF whereby it was undertaken to apply all
sections of the ITF collective agreement dated
September 1, 1975, to all seafarers on board the
vessel and to incorporate the terms of the ITF
collective agreement into the articles of agreement
of each seafarer. It appears that no articles of
agreement had been signed by the crew at that
time, each being engaged only by the terms of the
individual shipboard employment contracts signed
in Manila. I do not consider this to be of critical
significance, however, since paragraph 1 of the
collective agreement dated September 1, 1975,
incorporated by reference into the special agree
ment made on behalf of the defendant with the
ITF provides that it shall apply to seafarers serv
ing in the vessel referred to in the special agree
ment and article 2 states:
A seafarer to whom this Collective Agreement is applicable, in
accordance with paragraph 1 above, shall be covered by the
agreement with effect from the date on which he is engaged,
whether he has signed articles or not, until the date on which he
signs off and/or the date until which, in accordance with this
agreement, the company is liable for the payment of wages.
[Emphasis mine.]
Pursuant to the special agreement the company
paid the entrance fee of $12.00 U.S. and member
ship fee of $24.00 U.S. per annum on behalf of
each seafarer as well as the yearly contribution to
the welfare fund. The individual crew members
were not asked to sign any membership application
form in order to join the union and were allegedly
not even aware that they were members until some
time in June, 1976, when, in Brisbane, Australia,
as a result of pressure brought by the ITF, they
received pay for forty-two days according to the
ITF scale of pay which was considerably higher
than the rate at which they had individually con
tracted to work in Manila. In due course the union
sent individual membership cards for each member
to the company, and the company forwarded these
to the Master of the Oriental Victory in Brisbane
to distribute to the members of the crew.
Defendant pleads that to avoid delaying the
vessel and prevent further disputes, although it
was in no way obligated to do so under the plain
tiffs' existing contracts of employment, it paid
them additional amounts corresponding to the dif
ference, for a total of 42 days spent by the vessel in
ports where the International Transport Workers'
Federation possessed affiliated unions, between
their contractual scale and the ITF scale. During
the rest of the period, however, between March 5,
1976, and October 31, 1976, they were paid
according to the scale called for by their original
individual contracts of employment made in
Manila, which was significantly lower. By a
re-amended statement of claim filed at the trial by
the parties by consent it is stated that the total
amount of wages owing to plaintiffs collectively as
of October 31, 1976, was $142,773.48. Their con
tracts of employment were terminated on January
23, 1977, unilaterally by the owners of the vessel
and plaintiffs were repatriated to the Philippines
and claim leave pay totalling $12,963.60. The
re-amended statement of claim goes on to state
that the total claim is therefore $166,039.39.' The
rate of exchange on the American dollar at 5.5% is
then calculated on this total as amounting to
$9,132.16, making a total claim of $175,171.55.
The other action bearing Court No. T-4791-76
is for wages for the month of November only and
for this according to the amended statement of
claim the additional wages and benefits owing
total $19,279.24 to which $1,060.30 is added as
the result of calculating the exchange on the
American dollar at 5.5% resulting in a total claim
of $20,339.60 collectively, again to be divided
amongst the plaintiffs in accordance with details to
be furnished to the Court. 2
While dealing with the figures it may be said
that counsel for the parties was asked by the Court
to make the individual calculations and did so
after a brief adjournment. The totals included the
claim for the month of November, and hence the
amount due in the two actions in the event of
judgment in favour of the plaintiffs, and also
including such items as extra weekends, statutory
holidays, refunds of sums paid to the captain in
some cases under pressure after the ship left Aus-
tralia and paid leaves, the whole converted to U.S.
funds. The amounts can be tabulated as follows:
Romulo C. Manalaysay $ 6,947.53
Luisito M. Villaflor $12,751.12
Manuel M. Tumbokon $11,281.95
Felipe G. Gensaya Jr. $11,139.71
Leopoldo M. Gawaran $ 3,859.60
Alejandro S. Galanga $ 6,705.50
Danilo De La Cruz $ 6,705.50
' This obviously does not balance. Furthermore, the name
Agapito A. Mallorca is omitted as a plaintiff in the re-amended
statement of claim although included in the initial claim and
amounts due him are calculated as part of the total claimed.
2 Again the name Agapito A. Mallorca is omitted though
included in the original claim and the amount due him for
November is included in the total claim.
Luis P. Pena $ 3,735.11
Juanito L. Lucero $18,683.68
Crus C. Sablon $11,250.30
Gladio N. Ruiz $ 8,314.89
Rodolfo C. Gonzales $ 7,094.79
Arturo B. Adolfo $10,768.69
Sigfredo L. Torres $ 7,044.97
Joselito M. Pajarillo $ 3,735.11
Felizardo T. Rozul $ 5,723.42
Vincente L. Losbanes $ 4,823.74
Antonia F. Magbanua $11,435.36
Domingo G. Corcochea $ 7,300.28
Agapito A. Mallorca $12,750.93
Antonio P. Panaquiton $ 7,298.17
Rodolphe D. Celorico $ 5,683.39
These amounts total $185,033.74 which, while
greater than the total shown in the re-amended
statement of claim in action T-3830-76 (even
before deducting the arithmetical error therein) is
not greater than the total amounts claimed in the
two actions covering the entire period. While
strictly speaking, separate judgments should be
rendered in each action for the amounts claimed
therein this would involve a recalculation of the
figures of each individual claimant so as to delete
the amounts claimed for the month of November
in each case from the claim in case T-3830-76,
after calculating the exchange thereon, and trans
fer these amounts to the claim in T-4791-76 lim
ited to that month, so as a matter of con
venience judgment will be rendered for the total of
the amounts claimed in case T-3830-76, even
though that total may exceed the amount sought in
that action and the judgment in case T-4791-76
will merely show that the amounts claimed and
allowed in that action have been awarded in
T-3830-76.
During the course of the hearing plaintiffs'
counsel pointed out that on December 9, 1976, at
Trois-Rivières, Quebec, the crew signed articles of
agreement for an overseas voyage to last until
March 4, 1977, when the agreement with ITF
would terminate. Actually they were discharged on
January 23 in Africa and replaced by a crew from
Taiwan who are not members of the ITF, and will
have additional claims resulting from this dis
charge. It was further indicated that they had been
paid in full according to the ITF rates for January,
but received only 30% of the amount due from
December 9 to the end of the month and from
December 1 to December 9 had been paid accord
ing to the Philippine rate of pay. Since the present
actions bring the claim only up to the end of
November, plaintiffs' counsel suggested that a fur
ther amendment be permitted so as to include
these additional items of claim. Defendant's coun
sel opposed this saying that this would bring in
new facts and different figures based on the new
articles of agreement signed in Trois-Rivières. It
appears that he is correct in contending that this
claim should become the subject of a new action if
desired and should not be made as an incidental
demand added to the previous action by amend
ments to the proceedings at trial, especially as this
would involve production of the new articles of
agreement entered into at Trois-Rivières and con
sideration of whatever effect they would have on
plaintiffs' claims following that date, which is
really a new cause of action though some of the
issues involved are similar. Accordingly the
amendment was refused.
Defendant's counsel was handicapped in his
defence by the fact that he indicated he had been
unable to receive any further communications or
instructions from his clients with respect to wit
nesses and accordingly could not produce any.
Accordingly, there was no witness as to Philippine
law nor did the representative of Okada Kaiun
who had been involved in the negotiation of the
special agreement with ITF in Ghent prior to
March 5, 1976, come to testify. The only witness
called by defendant was Felipe Gensaya, the Third
Marine Officer of the Oriental Victory, one of the
plaintiffs, all of whom had given pre-trial evidence
on October 6, 1976, in Montreal by virtue of an
order of Dubé J. dated August 4, 1976. The
Captain of the vessel, Eudiquio R. Nalcoraz, had
been examined for discovery in Montreal by plain
tiffs and his examination was taken as read into
the record in toto at the trial.
In cross-examination at trial of the witness
Brian Laughton, the administrative secretary of
the ITF, it was brought out that the Federation
has 330 Transport Workers' unions affiliated with
it in 87 countries in the Free World, mainly in
North Europe but also in developing countries in
Africa and the Far East. In Belgium the Transport
Workers' Union, Road Transport Workers' Union,
Civil Service Union, are affiliated and in Ghent
some of the local stevedores are members of
Transport Workers' unions so affiliated, as are
some of the harbour workers. Boycotts have taken
place in Ghent of vessels with crews which are not
members of the ITF. The witness did not believe
that this took place with respect to the Oriental
Victory, however. The vessel had been arrested in
Ghent for wages according to the ITF scale, as
well as benefits under the individual Philippine
agreements, due to the former crew. This claim
was settled by agreement between the shipowners
and the ITF. He stated that there is no fixed policy
in Ghent to boycott vessels whose crews are not
affiliated with the ITF but that with respect to
vessels flying flags of convenience such as the
Oriental Victory pressure is brought to raise the
crew's wages to acceptable ITF standards.
While there may be grounds for suspecting that
the vessel might not have been allowed to sail from
Ghent if her managers had not authorized the
captain to sign an agreement with the ITF, and
hence that this agreement was entered into under
duress, there is no direct evidence from defendant
justifying such a finding, and in any event I believe
that it must be said that accepted principles for
setting aside contracts made under duress cannot
be strictly applied in connection with agreements
made by an employer with a union. All such
contracts are entered into under considerable pres
sure, often accompanied by strikes, threats of
strikes or boycotts, or as a result of lockouts by the
employer, and when a contract is signed after such
industrial conflicts as a result of protracted
negotiations it should not be set aside on grounds
that it was entered into by one party or the other
as the result of duress. This defence therefore must
fail.
At an early stage in these proceedings defendant
obtained leave to file a conditional appearance to
contest the jurisdiction of the Court based on the
individual agreements made by plaintiffs, all citi
zens of the Philippines. The affidavit had annexed
to it extracts from the Labour Code of the Philip-
pines which inter alia make it unlawful to substi
tute or alter employment contracts approved by
the -Department of Labour without its approval
and also giving the National Seamen's Board of
that country original and exclusive jurisdiction to
decide cases arising out of the employment of
Filipino seamen on board vessels engaged in over
seas trade, such decision to be final and unappeal-
able. The authorization for the conditional appear
ance was given by judgment of Marceau J. dated
November 9, 1976, and gave defendant 15 days to
raise these objections before the Court. However,
in due course by letter dated November 25, 1976,
the Court was advised that defendant could not
raise these objections within the delay fixed and a
statement of defence was filed which reiterated
these contentions.
In the absence of any proof of Philippine law at
trial this issue cannot be raised and was not seri
ously argued. The only facts before the Court on
this issue is that the individual seamen's contracts
were signed in the Philippines and bear the stamp
of the National Seamen's Board of that country.
Even if its approval were required, which has not
been established, it is reasonable to assume that
this could readily have been obtained for contracts
providing substantially higher wages for the
seamen in question. Whether such approval would
have a retroactive effect or not is not a question
which should be gone into here since it is academic
in any event.
Defendant's principal defence is based on the
fact that the individual crew members were not
consulted about joining the ITF and that in the
absence of this consent no contract existed be
tween them and the ITF, the only agreement being
between the ITF and the managers of the defend
ant vessel. It was therefore a contract made for the
benefit of third parties and some attempt was
made to invoke article 1029 of the Quebec Civil
Code which provides that a party to a contract
may stipulate for the benefit of a third person and
cannot then revoke it if the third person has signi
fied his assent to it. It was contended that the
evidence of receipt by the members of the crew in
Australia of their individual membership cards in
the union was not equivalent to acceptance of the
contract by them, nor was the receipt of pay at the
ITF scale by them while in Australia. Aside from
the fact that it is difficult to conceive that they
would not have consented to the contract which
was to their great advantage, certainly the receipt
of pay at the higher rate without protest would be
equivalent to consent to the terms of the agree
ment, and it would likely have retroactive effect to
the date of the agreement. This issue is not impor
tant however since I am not of the view that article
1029 of the Quebec Civil Code can be applied
merely because the proceedings are brought in
Quebec. This is not a procedural matter but a
question of substantive law. As Cartwright J., as
he then was, said in his dissenting reasons in
National Gypsum Company Inc. v. Northern
Sales Limited' at page 153:
The substantive law applied by the Exchequer Court on its
Admiralty side is, of course, the same throughout Canada and
does not vary according to the Admiralty District in which the
cause of action arises ....
It would appear that the defendant voluntarily
(even though perhaps under s considerable pressure)
entered into an agreement in Ghent to man the
vessel with an ITF crew, knowing full well that
this would result in higher rates of pay than those
called for in the individual agreements with the
members of the crew who had been flown from the
Philippines to Ghent to man the vessel there. Once
the vessel was at sea it then failed to fulfil the
terms of this agreement which, although made
with the ITF by defendant was for the benefit of
the individual crew members. While the individual
crew members were bound by the terms of the
individual contracts which they had signed in
accordance with Philippine rates of pay and would
no doubt have been prepared to abide by these
conditions, matters were in effect taken out of
3 [1964] S.C.R. 144.
their hands by the contract signed by the owners of
the defendant vessel with the ITF and I find that
this must be considered as replacing the individual
agreements, and that plaintiffs are entitled to the
higher rates of pay. Had the agreement by the
vessel with the ITF called for lower rates of pay or
less favourable working conditions, then I believe
that plaintiffs might have had the right to repudi
ate it, not having been consulted at the time it was
entered into. The effects of a contract made for the
benefit of third parties who are not parties to it are
quite different from the effects of such a contract
made to their disadvantage.
The actions are therefore maintained with costs
and the following sums are awarded to the follow
ing plaintiffs:
Romulo C. Manalaysay $ 6,947.53
Luisito M. Villaflor $ 12,751.12
Manuel M. Tumbokon $ 11,281.95
Felipe G. Gensaya Jr. $ 11,139.71
Leopoldo M. Gawaran $ 3,859.60
Alejandro S. Galanga $ 6,705.50
Danilo De La Cruz $ 6,705.50
Luis P. Pena $ 3,735.11
Juanito L. L,ucero $ 18,683.68
Crus C. Sablon $ 11,250.30
Gladio N. Ruiz $ 8,314.89
Rodolfo C. Gonzales $ 7,094.79
Arturo B. Adolfo $ 10,768.69
Sigfredo L. Torres $ 7,044.97
Joselito M. Pajarillo $ 3,735.11
Felizardo T. Rozul $ 5,723.42
Vincente L. Losbanes $ 4,823.74
Antonia F. Magbanua $ 11,435.36
Domingo G. Corcochea $ 7,300.28
Agapito A. Mallorca $ 12,750.93
Antonio P. Panaquiton $ 7,298.17
Rodolphe D. Celorico $ 5,683.39
TOTAL $185,033.74
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