A-110-73
J. E. Brynjolfson (Appellant)
v.
Clay's Wharf and Arrawac Charters Ltd.
(Respondent)
Court of Appeal, Jackett C.J., Pratte and Urie
JJ.—Vancouver, February 19 and 20, 1975.
Maritime law—Charterparty—Ship damaged through fault
of charterer—Claim by owner for damages—Effect of insur
ance clause—Federal Court Act, s. 52.
The appellant chartered a ship in 1972 from the respondent
owners, on oral terms, said to reflect the terms of a written
charterparty of a similar vessel, between the parties in 1971.
During the term of the 1972 charterparty, the ship was
damaged through grounding on a rock. In the respondents'
action against the appellant, the Trial Judge found that the
appellant was liable for the damages, as caused by his fault. It
was further found that the appellant derived no assistance from
an "insurance clause" originating in the written charterparty of
1971. In view of this opinion, the Trial Judge made no finding
on the point in controversy that the clause had been stamped
"cancelled" before signature by the parties. The finding of fault
against the appellant was not attacked and the appeal was
concerned only with the "insurance clause".
Held, allowing the appeal, the "insurance clause" was to be
construed as impliedly exonerating the appellant from any
liability to the respondent, in respect of damage to the vessel
during the term of the charterparty, other than the liabilities
set out therein. A finding of fact would have to be made, as to
whether the clause appeared in the 1971 charterparty. The
matter was referred back to the Trial Division for continuance
of the trial on the remaining issues.
Castellain v. Preston (1883) 11 Q.B.D. 380, considered.
APPEAL.
COUNSEL:
W. J. Wallace, Q. C., for appellant.
R. V. Burns for respondent.
SOLICITORS:
Bull, Housser & Tupper, Vancouver, for
appellant.
Macrae, Montgomery, Spring & Cunning-
ham, Vancouver, for respondent.
The following are the reasons for judgment
rendered in English by
JACKETT C.J.: This is an appeal from a judg
ment of the Trial Division awarding the respond
ent damages, with interest and costs for damage to
a vessel chartered by the respondent to the appel
lant and damaged during the period of the charter-
party as a result of the vessel grounding on a rock.
The vessel was chartered orally to the appellant
in 1972 on the terms, except as to daily rental, set
out in a written charter of a similar vessel from the
respondent to the appellant in 1971. 1 That char-
terparty contained a clause reading as follows:
4. INSURANCE: It is understood and agreed that the vessel is
insured by the Owner to full cash value against fire, marine and
collision risks in accordance with Canadian Hulls (Pacific)
Clauses 1953, subject however to payment by the Charterer of
the sum of $250.00 in respect of each separate claim, which
sum, being the deductible portion of the aforesaid insurance,
the Charterer hereby specifically agrees to pay to the Owner
for each separate claim and PROVIDED ALWAYS that the Chart-
erer agrees to be responsible for and to replace or make good
any injury or loss to the vessel, her machinery, appurtenances,
equipment or furnishings caused personally by the Charterer or
any persons aboard the vessel during the terms of this Charter,
if the said injury or loss is not covered by the aforesaid
insurance.
It is however in issue between the parties whether
this clause had been stamped "cancelled" before
the charterparty contract, as prepared from the
respondent's charterparty form and presented by
the respondent to the appellant for signature, had
been signed by the parties. The copy produced by
the respondent as evidence in the action was so
stamped and the appellant was not able to produce
the copy that had been delivered to him at the time
of the 1971 charter. In view of his opinion as to the
effect of the insurance clause, the learned Trial
Judge made no finding on the question as to when
the clause on the respondent's copy was so
stamped, which question depends, in part at least,
on a finding as to the credibility of the various
witnesses who gave evidence touching the question.
It was found by the Trial Division that the
damage complained of was caused by the appel -
While there was no agreement on this at trial, it was
common ground during the argument of the appeal to this
Court.
lant's fault and this finding was not attacked in
this Court.
Leaving aside the "insurance" clause quoted
above, it was common ground in this Court that
the appellant was liable as found by the Trial
Division. This would follow from the ordinary
liability for a failure to deliver up the object of the
bailment at the end of the bailment, which obliga
tion is set out specifically in the 1971 charter
(paragraph 5(d)) in the form of an express obliga
tion on the appellant to surrender the vessel at the
expiration of the charter "in as good condition as
when delivery was made, ordinary wear and tear
accepted [sic]." It would also follow, on the find
ings in this case, I should have thought, on the
alternative claim set out in the statement of claim
based on the tort of negligence.
The sole attack in this Court on the judgment
appealed from was based on the "insurance"
clause. As I have already indicated, the learned
Trial Judge held that this clause did not aid the
appellant. He dealt with it as follows:
On the proper construction of this clause, there is no insur
ance for the charterer, but only a liability. The first part of the
clause provides for the owner's insurance exclusively; that is,
for the owner's insurance against certain risks, for which the
owner will recover owner's loss subject to a deduction of $250,
in respect of each separate claim, which deduction the charterer
expressly agreed with the owner to pay. Every insurer has a
right of subrogation to an action by the owner against the
charterer for fault (Castellain vs. Preston (1883) 11 Q.B.D.
380). There is no clause to exclude the insurer's right of
subrogation; therefore, that right of subrogation would remain.
Hence, the first portion of Clause 4 provides no coverage of
insurance for the charterer, but on the contrary, provides for
the liability of $250 irrespective of fault and provides impliedly
for the liability of the charterer by subrogation for fault.
The latter part of Clause 4 expressly refers to "the aforesaid
insurance", which must mean the insurance of the owner, and
is conditioned "if the said injury or loss is not covered by the
aforesaid insurance", then the charterer would become liable
for any injury or loss caused "personally by the Charterer or
any persons aboard the vessel". That again imposes a liability
on the charterer, irrespective of fault, but there is no provision
for insurance wherein the charterer is the insured. Therefore,
the defendant, by properly reading the clause, could not have
considered himself insured at all.
I agree with the learned Trial Judge that the
"insurance" clause C (if it was part of the contract
between the parties) does not provide for insurance
for the appellant as charterer. I agree also, that, as
between the respondent as owner and the appellant
as charterer, all that the clause does expressly is
spell out
(a) an obligation of the appellant to pay to the
respondent the "deductible portion" of $250 in
certain circumstances, and
(b) an obligation of the appellant to make good
injury or loss to the vessel, etc. when "caused
personally by the Charterer or any persons
aboard... during the term of the charter" and
when "not covered by the aforesaid insurance".
It is to be noted, however, that in spelling out
specifically the obligation of the charterer to pay
to the owner the "deductible portion" of damage
to the vessel, the charterparty is requiring the
charterer expressly to pay a part of the damage
that he would, quite apart from the "insurance"
clause, be required to pay in full, and that, in
spelling out expressly the obligation of the charter-
er to "make good any injury or loss to the vessel"
if caused personally or by any person on board
(which seems to imply fault) and if not covered by
the insurance that it is "understood and agreed"
that the owner has on the vessel, the charterparty
is requiring the charterer expressly to pay, subject
to certain conditions, amounts that he would, quite
apart from the "insurance" clause, be required to
pay, whether or not such conditions were fulfilled.
It is further to be noted that the charterparty is in
a form prepared by the owner for entering into
contracts with his customers, who would ordinarily
be laymen, and that it is so worded as to be
calculated to lead a customer reading it hurriedly
to believe that, subject to the express obligations
imposed on him by the clause, he would be pro
tected from obligation in respect of any loss of, or
damage to, the vessel because any such loss or
damage would be covered by insurance provided
by the owner. In these circumstances, with some
doubt, I have concluded that the "insurance"
clause is to be construed as impliedly exonerating
the appellant from any liability to the respondent
in respect of loss of, or damage to, the vessel
during the time of the charterparty other than the
liabilities expressly set out therein.
On that view of the effect of the "insurance"
clause, it becomes necessary to decide whether
that clause was in the 1971 charterparty. Whether
it was or not requires a finding of fact depending,
in part at least, upon the credibility of witnesses
not seen by this Court.
I am, therefore, of opinion that the appeal
should be allowed with costs, that the judgment of
the Trial Division should be set aside, that, pursu
ant to section 52(b)(ii) of the Federal Court Act,
it should be declared that the "insurance" clause
in the 1971 charterparty by reference to which the
charterparty in the action in suit was made had the
effect of impliedly exonerating the appellant from
any liability to the respondent in respect of loss of,
or damage to, the chartered vessel during the
charterparty period other than the liabilities
expressly set out therein and that, otherwise, the
conclusions of the Trial Division were correct, and
that, pursuant to the same provision, the matter
should be referred back to the Trial Division for a
continuance of the trial on the issues that remain
to be determined in the light of such declarations.
* * *
PRATTE J.: I agree.
* * *
URIE J.: I agree.
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.