T-7690-82
Kruger Inc., Hesselbacher Papier —Import and
Export (Gmbh and Co.) (Plaintiffs)
v.
Baltic Shipping Company (Defendant)
INDEXED AS: KRUGER INC. V. BALTIC SHIPPING CO.
Trial Division, Pinard J. —Montréal, January 13,
14, 15, 20, 21, 22, 23, 27, 28, 29, 30 and February
3, 4, 5, 6, 10, 11, 12, 13, 18, 19; Ottawa, May 6,
1987.
Maritime law — Carriage of goods — Cargo lost when ship
sank in severe storm — Liability of shipowner — Whether loss
due to excepted perils in Hague Rules — Burden of proof
Perils of the sea — Foreseeability of severe storms in North
Atlantic in winter — Ventilators breaking off allowing water
in — Unseaworthiness resulting from lack of due diligence in
design and construction of ventilators.
Practice — Interest — Pre-judgment interest in admiralty
cases — Average of monthly prime lending rates of chartered
banks awarded.
This was an action by cargo owners for the loss at sea of a
shipment of newsprint. The defendant's ship had gone down in
a severe storm.
The carrier, in an effort to exculpate itself, tried to establish
that the loss of the cargo was attributable to one of the
excepted perils set out in Article IV of the Hague Rules,
especially "perils of the sea" (Art. IV(2)(c)).
Held, the action should be allowed.
The storm in which the Mekhanik Tarasov sank was
extremely severe. It carried winds of force 12 on the Beaufort
Scale with waves of 10 or 11 metres, and, occasionally, of up to
18 metres. But however severe the storm may have been, it was
by no means unusual for the North Atlantic in the winter. In
fact, it was foreseeable as a probable incident of the voyage.
And, as the ship had access to weather forecasts and warnings
giving accurate and timely information about the storm, it was
actually foreseen. It is clear that the storm could and should
have been guarded against.
There were no "latent defects" in the ventilators within the
meaning of subparagraph IV(2)(p) of the Hague Rules. It was
proven that the ventilators which broke off were not properly
designed, in that no special supports or brackets were fitted to
strengthen them to withstand North Atlantic winter conditions.
The carrier having failed to establish that the loss of the
cargo was attributable to one of the excepted perils of Article
IV of the Hague Rules, to escape liability, it then had to
demonstrate that it had exercised due diligence to make the
ship seaworthy before and at the beginning of the voyage. It
was not sufficient to prove that the Mekhanik Tarasov met the
requirements of the U.S.S.R. Register of Shipping, as evi
denced by the classification certificates it obtained from the
Registry. It passed the various four-year and annual inspections
required by the Registry. There was no evidence that any
person or organization ever checked the ventilators at the
design or construction stages, or later, or exercised due dili
gence in relation to them. There was no evidence that Baltic
exercised any diligence in relation to the construction or design
of the ventilators. Consequently, the defendant has failed to
establish that it had exercised due diligence in making the
Mekhanik Tarasov seaworthy before and at the beginning of
the voyage.
With regard to interest, it is well established that the Court
can, in admiralty cases, award pre-judgment interest at its
discretion as part of the damages. Applying the "Cielo Blanco"
case, interest is awarded according to the average of the
monthly prime lending rate of chartered banks for the relevant
periods.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Carriage of Goods by Water Act, R.S.C. 1970, c. C-15,
Sch., Art. III(1),(2), IV(1),(2)(a),(c),(d),(p),(q).
CASES JUDICIALLY CONSIDERED
APPLIED:
Goodfellow (Charles) Lumber Sales Ltd. v. Verreault et
al., [1971] S.C.R. 522; (1970), 17 D.L.R. (3d) 56;
Federal Commerce and Navigation Co. Ltd. v. Eisenerz,
[1974] S.C.R. 1225; [1975] 1 Lloyd's Rep. 105 (sub
nom. The "Oak Hill"); Dimitrios N. Rallias (Part Cargo
ex) (1922), 13 Ll. L. Rep. 363 (C.A.); Minister of
Materials v. Wold Steamship Company, Ltd., [1952] 1
Lloyd's Rep. 485 (Q.B.); Grain Growers Export Co. v.
Canada Steamship Lines Limited (1917-18), 43 O.L.R.
330 (App. Div.); Union of India v. N.V. Reederij
Amsterdam, [1963] 2 Lloyd's Rep. 223 (H.L.), confirm
ing [1962] 1 Lloyd's Rep. 539 (Q.B.D., Comm. Ct.); W.
Angliss & Co. (Australia) Proprietary, Ld. v. Peninsular
and Oriental Steam Navigation Co., [1927] K.B. 456;
Riverstone Meat Company, Pty., Ltd. v. Lancashire
Shipping Company, Ltd., [1961] 1 Lloyd's Rep. 57
(H.L.); Amjay Cordage Limited v. The Ship "Mar-
garita" (1979), 28 N.R. 265 (F.C.A.); N.V. Bocimar,
S.A. v. Century Insurance Co. of Canada (1984), 53
N.R. 383 (F.C.A.); Canadian Brine Ltd. v. The Ship
"Scott Misener" and Her Owners, [1962] Ex.C.R. 441;
Bell Telephone Co. v. The "Mar- Tirenno", [1974] 1 F.C.
294 (T.D.); [1976] 1 F.C. 539 (C.A.); Algoma Central
Railway v. The "Cielo Bianco", judgment dated Novem-
ber 22, 1984, Federal Court, Trial Division, T-5213-78,
not reported; reversed in part at [1987] 2 F.C. 592
(C.A.); Davie Shipbuilding Limited v. The Queen,
[1984] 1 F.C. 461 (C.A.).
REFERRED TO:
Canada Rice Mills, Ld. v. Union Marine & General
Insurance Co., Ld., [1941] A.C. 55 (P.C.); Wilson, Sons
& Co. v. 'Xantho" (Owners of Cargo of) (1887), 12 App.
Cas. 503 (H.L.); Keystone Transports Limited v. Domin
ion Steel & Coal Corporation, Limited, [1942] S.C.R.
495; [1942] 4 D.L.R. 513; 55 C.R.T.C. 221; The Ship
"Trade Wind" v. David McNair & Co. Ltd., [1956]
Ex.C.R. 228.
AUTHORS CITED
Carver's Carriage by Sea, Vol. 1, 13th ed., R. Colinvaux.
London: Stevens & Sons, 1982.
Tetley, William, Marine Cargo Claims, 2nd ed. Toronto:
Butterworths, 1978.
COUNSEL:
George R. Strathy and Kristine A. Connidis
for plaintiffs.
S. J. Harrington and P. J. Bolger for
defendant.
SOLICITORS:
Campbell, Godfrey & Lewtas, Toronto, for
plaintiffs.
McMaster Meighen, Montréal, for defendant
Baltic Shipping Company.
EDITOR'S NOTE
The Executive Editor has decided to report the
reasons for judgment herein as constituting a
valuable review and exposition of excepted perils
of the sea as an excuse raised by shipowners in
defending actions for cargo loss or damage. The
initial 16 pages of the decision, dealing with the
facts of the case, are omitted from the report.
There follows a brief summary of the unpublished
material.
The plaintiffs' claim is for damages with respect
to the loss at sea of a cargo of newsprint. The
defendant was the owner of a ship—the Mek-
hanik Tarasov—which went down in the North
Atlantic during a severe winter storm. Thirty-two
of the thirty-seven crew members lost their lives.
The plaintiffs say that the vessel was
unseaworthy because: (1) the cargo was improp
erly stowed; (2) the vessel was not equipped to
safely carry the cargo; (3) the design and con
struction of the ship's ventilators were defective
as a result of which they broke off during the
voyage and (4) the pumping and drainage sys
tems were inadequate.
The defendant contends that due diligence had
been exercised to make its ship seaworthy. The
ship encountered a severe storm during which
two ventilators were lost allowing water to get in
and causing the ship to founder in spite of the
heroic efforts made to block off the exposed
areas. The defendant accordingly invokes the
excepted perils as stipulated in paragraph 2 of
section IV of the Rules relating to Bills of Lading
appended to the Carriage of Goods by Water
Act.
The evidence was that there were 22 ventila
tors along the sides of the weather deck and
forecastle deck and that the only closures were
covers on deck. These mushroom covers were
not supported by brackets above the exposed
deck. Two of these were lost during a storm,
allowing water to enter the holds.
Certain of the facts were established by seven
emergency radio messages from the ship's cap
tain to the defendant at Leningrad and to the
Ministry of Merchant Marine in Moscow. The Court
treated these communications as admissions
against interest. They were unqualified, accurate
descriptions of the events on the part of the
person most likely to be fully aware of the state of
affairs.
A search and rescue plane from Greenwood,
Nova Scotia had flown to the stricken ship and the
pilot offered help. The Mekhanik Tarasov replied
that no assistance was required. Photographs
taken from the rescue plane depicted the violence
of the sea and the ship's significant list to star
board. She sank the following day.
The following are the reasons for judgment
rendered in English by
PINARD J.:
Turning now to the applicable law, I first refer
to the relevant provisions of Articles III and IV of
the Schedule to the Carriage of Goods by Water
Act, R.S.C. 1970, c. C-15, namely the Rules relat
ing to Bills of Lading (the Hague Rules) which
are:
Article III
Responsibilities and Liabilities
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.
2. Subject to the provisions of Article IV, the carrier shall
properly and carefully load, handle, stow, carry, keep, care for
and discharge the goods carried.
Article IV
Rights and Immunities
1. Neither the carrier nor the ship shall be liable for loss or
damage arising or resulting from unseaworthiness unless caused
by want of due diligence on part of the carrier to make the ship
seaworthy, and to secure that the ship is properly manned,
equipped and supplied, and to 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 preserva
tion in accordance with the provisions of paragraph 1 of Article
III.
Whenever loss or damage has resulted from unseaworthiness,
the burden of proving the exercise of due diligence shall be on
the carrier or other person claiming exemption under this
section.
2. Neither the carrier nor the ship shall be responsible for
loss or damage arising or resulting from,
(a) act, neglect, or default of the master, mariner, pilot or
servants of the carrier in the navigation or in the manage
ment of the ship;
(c) perils, danger, and accidents of the sea or other navigable
waters;
(d) act of God;
(p) latent defects not discoverable by due diligence;
(q) any other cause arising without the actual fault and
privity of the carrier, or without the fault or neglect of the
agents or servants of the carrier, but the burden of proof
shall be on the person claiming the benefit of this exception
to show that neither the actual fault or privity of the carrier
nor the fault or neglect of the agents or servants of the
carrier contributed to the loss or damage.
It is also essential, at this stage, to look at the
question of burden of proof. In cases like the
present one, where the contract of carriage is one
to which the Carriage of Goods by Water Act is
applicable, I consider the following test to be
appropriate:
1) Initially, the cargo owners need only establish
their interest in the cargo, the fact that it was
not delivered in the same apparent good order
and condition as received on board and the
value of cargo lost or damaged. If the carrier
offers no defence, the plaintiffs will obtain
judgment.
2) The carrier can then shift the burden of proof
back to the plaintiffs by establishing that the
loss or damage is attributable to one of the
excepted perils set out in Article IV of the
Hague Rules.
3) Thereafter the cargo owners must establish the
carrier's negligence or both that the ship was
unseaworthy and that the loss was caused by
that unseaworthiness.
4) If these points, in the context of unseaworthi-
ness, are established, the carrier can only
escape liability by establishing that due dili
gence was exercised to make the ship
seaworthy.
Those principles in my view are in total accord
ance with the above relevant Hague Rules and
with the analysis of the burden of proof as made
by the Supreme Court of Canada in two cases of
this nature:
First, in Goodfellow (Charles) Lumber Sales
Ltd. v. Verreault et al., [1971] S.C.R. 522; (1970),
17 D.L.R. (3d) 56, the Court said at pages 524
S.C.R.; 57 and 58 D.L.R.:
The contract of carriage was one to which the Water Car
riage of Goods Act, R.S.C. 1952, c. 291, was applicable and the
respondent quite properly admits that the burden upon the
appellant under that contract is limited to proving: (1) the
ownership of the cargo at the time of the loss; (2) the amount
and value of the cargo shipped; and (3) the failure to deliver a
quantity of that cargo and the value of the cargo so lost. This
having been proved, the carrier may escape liability if it can be
proved that the loss occurred as a result of one of the excepted
perils enumerated in art. IV of the Schedule to the Water
Carriage of Goods Act and upon proof that the â–ºoss was
occasioned by one of those perils, the cargo owner cannot
recover unless it can be established that the loss was caused by
the carrier's negligence or by want of due diligence to make the
ship seaworthy.
Second, in Federal Commerce and Navigation
Co. Ltd. v. Eisenerz, [1974] S.C.R. 1225 [The
"Oak Hill", [1975] 1 Lloyd's Rep. 105], the
Supreme Court of Canada said at pages 1230
S.C.R.; 108 Lloyd's Rep.:
I find it convenient to deal first with the allegation of
unseaworthiness and in this regard I adopt the test described in
Carver's Carriage by Sea, 12th ed. at p. 90 (para. 103) where it
said:
The shipowner is responsible for loss or damage to goods,
however caused, if the ship was not in a seaworthy condition
when she commenced her voyage, and if the loss would not
have arisen but for that unseaworthiness. The goods owner
must, in order to make the shipowner liable, establish both
these facts, and cannot recover for the loss or damage merely
on the ground that the ship was unseaworthy, unless it is also
shown that the loss or damage was caused by that
unseaworthiness.
Those principles are also consistent with the
comments made on the same subject in Carver's
Carriage by Sea, Vol. 1, 13th Edition, page 154,
where it is said:
Onus of proof. Ordinarily, the burden of proving that a loss
which has occurred has been due to an excepted cause, falls
upon the shipowner who seeks to excuse himself. Thus, if there
be a doubt whether damage to a cargo has arisen from bad
stowage, or from excepted perils of the sea, the shipowner
relying on the exception must prove that the perils of the sea
caused it. And where it appears that two causes have contribut
ed to the loss, one of which only is excepted, the shipowner
must distinguish between the damage which was and was not
due to that.
But if a â–ºoss apparently falls within an exception, the burden
of showing that the shipowner is not entitled to the benefit of
the exception, on the ground of negligence, is upon the person
so contending.
Having outlined the relevant principles with
regard to the burden of proof, I will now apply the
appropriate test to the present case.
First, it is clear as, I understand, it is now
recognized by the defendant, that the plaintiffs
have established their relevant interest in the cargo
of newsprint, that the cargo was totally lost before
delivery, while on board the defendant's vessel, and
finally that the value of the cargo has been suf
ficiently proven.
Indeed the contract of sale of the newsprint
between Kruger and Hesselbacher is evidenced by
three commercial invoices dated February 11,
1982. The total sale price was D.M. 2,594,300.80.
As the terms of sale were "C.I.F. Hamburg",
Kruger was responsible for making the arrange
ments for ocean carriage and for paying the ocean
freight, which was included in the sale price. Hes-
selbacher paid the sale price of the paper, in
Deutsche Marks, notwithstanding that the Mek-
hanik Tarasov sank en route from Trois-Rivières
to Hamburg, resulting in the total loss of the
cargo. Hesselbacher was reimbursed by the plain
tiffs' cargo insurer, which brings this action pursu
ant to its right of subrogation. Finally, as we have
seen, the contract of carriage of the cargo is
evidenced by the Liner Booking Note dated at
Montréal December 28, 1981 and by the Bill of
Lading dated at Montréal February 4, 1982. I will
deal with the quantum of damages in more detail
later.
Thus, the plaintiffs having successfully met the
initial onus which is imposed on them, it was then
incumbent upon the defendant to establish that the
loss or damage was attributable to one of the
excepted perils set out in Article IV of the Hague
Rules.
I will therefore consider each of the excepted
perils invoked by the defendant in its statement of
defence, namely the perils under subparagraphs
IV ( 2 )(a),(c),(d),(P),(9)•
ARTICLE IV (2)(a)
At trial, the defendant did not attempt to prove
this excepted peril. On the contrary, much empha
sis was put on the training of Soviet officers and
crews, as shown especially by the evidence of
Captain Yakovlev, a Master employed by Baltic,
and of Mr. Sergeev, formerly First Assistant Head
of Operations of Baltic and responsible for cargo
claims. There is nothing in the evidence to suggest
that the defendant, in the circumstances, could
seriously and realistically rely on that excepted
peril.
ARTICLE IV (2)(c)
Learned counsel for the defendant relied mostly
on perils of the sea as having constituted the real
cause of the loss of or damage to the cargo.
The leading case on this issue, in this country, is
Goodfellow (Charles) Lumber Sales Ltd. v. Ver-
reault et al., [1971] S.C.R. 522; (1970), 17
D.L.R. (3d) 56. In that case, Ritchie J. of the
Supreme Court of Canada reviewed some of the
main authorities, including authorities referred to
by the defendant in this case, in which the issue
was raised and various different shades of meaning
have been attached to "perils of the sea". These
authorities involved an action on a marine insur
ance policy insuring against the risk of loss by
"perils of the sea", namely Canada Rice Mills, Ld.
v. Union Marine & General Insurance Co., Ld.,
[1941] A.C. 55 (P.C.); they also involved actions
for breach of contract contained in bills of lading,
for example Wilson, Sons & Co. v. `Xantho"
(Owners of Cargo of) (1887), 12 App. Cas. 503
(H.L.).
Ritchie J. made a clear distinction between in
surance and bills of lading cases when he expressed
the following, at pages 529 and 530 S.C.R.; 61 and
62 D.L.R.:
This statement, together with other observations made by Lord
Wright in the same case, (The Canada Rice Mills Ltd. case,
supra) have sometimes been relied on as authority for the
proposition that there need not necessarily be anything extraor
dinary or unexpected about the weather in order to constitute a
peril of the sea, but I do not think that Lord Wright's judgment
affects the proposition that, in a bill of lading case, the damage
done to the cargo must be shown to have occurred as a result of
some peril "which could not have been foreseen or guarded
against as one of the probable incidents of the voyage" before
the defence of "perils of the sea" can be said to have been made
out. [Emphasis added.]
When referring to Lord Herschell's reasons for
judgment in the `Xantho" (Owners of Cargo of)
case (supra), Ritchie J. also said, at pages 528
S.C.R.; 60 D.L.R.:
That part of Lord Herschell's reasons for jugement in which
he had said that in order to constitute a peril of the sea "There
must be some casualty, something which could not be foreseen
as one of the necessary incidents of the adventure" was, in my
opinion, the statement which influenced Sir Lyman Duff, when
he gave the judgment of this Court in Canadian Nat'l Steam
ships v. Bayliss ([1937] S.C.R. 261, at page 263; [1937] 1
D.L.R. 545 at pages 546-547), a bill of lading case where he
said of the defence of perils of the sea:
The issue raised by this defence was, of course, an issue of
fact and it was incumbent upon the appellants to acquit
themselves of the onus of showing that the weather encoun
tered was the cause of the damage and that it was of such a
nature that the danger of damage to the cargo arising from
it could not have been foreseen or guarded against as one of
the probable incidents of the voyage.
Then, Ritchie J. commented on the Keystone
Transports case also referred to by the defendant
in this case, and said at pages 530 and 531
S.C.R.; 62 and 63 D.L.R.:
In Keystone Transports Limited v. Dominion Steel & Coal
Corporation, Limited, ([1942] S.C.R. 495; [1942] 4 D.L.R.
513; 55 C.R.T.C. 221), which was a bill of lading case, Mr.
Justice Taschereau quoted at length from the Canada Rice
Mills case and concluded (at p. 522) "that to constitute a peril
of the sea the accident need not be of an extraordinary nature
or arise from irresistible force. It is sufficient that it be the
cause of damage to goods at sea by the violent action of the
wind and waves, when such damage cannot be attributed to
someone's negligence."
Less than a year later, however, in the case of Parrish &
Heimbecker Limited et al. v. Burke Towing & Salvage Com
pany Limited, ([1943] S.C.R. 179; [1943] 2 D.L.R. 193; 55
C.R.T.C. 388) (another bill of lading case), Mr. Justice
Kerwin, speaking on behalf of the same members of this Court
who had agreed with Mr. Justice Taschereau in the Keystone
Transports case, founded his judgment in part upon Lord
Herschell's statement that there must be "something which
could not be foreseen as one of the necessary incidents of the
adventure," in order to constitute a peril of the sea and
proceeded to adopt the test which had been laid down by Sir
Lyman Duff in the Bayliss case.
I do not think that Lord Wright's judgment in the Canada
Rice Mills case is to be read as being in conflict with the law
stated by Lord Herschell in the The 'Xantho" case, at page
509 where he said:
It must be a peril "of" the sea. Again, it is well settled that it
is not every loss or damage of which the sea is the immediate
cause that is covered by these words. They do not protect, for
example, against that natural and inevitable action of the
winds and waves, which results in what may be described as
wear and tear.
Ritchie J. stressed the importance of the proper
test to be adopted with regard to subparagraph IV
(2)(c) of the Hague Rules when he referred to an
additional case and said, at pages 531 S.C.R.; 63
D.L.R.:
The test adopted by Sir Lyman Duff, in the Bayliss case was
again applied in this Court in N. M. Paterson & Sons Limited
v. Mannix Limited, ([1966] S.C.R. 180, at p. 188; 55 D.L.R.
(2d) 119, at p. 126), where it was said of a vessel that had been
transporting goods which were lost overboard:
In my opinion the evidence discloses that the weather which
was encountered by the Wellandoc on the 9th of December,
although it was rough, was of a kind which an experienced
master should have foreseen as a probable incident of such a
voyage at the time of year. [Emphasis added.]
Finally, Ritchie J. summarized his view as fol
lows, at pages 535 S.C.R.; 66 D.L.R.:
As I have indicated, I am of opinion that by invoking art.
4(2)(c) of the Schedule to the Water Carriage of Goods Act
and raising the defence of perils of the sea, the respondents
assumed the onus of showing that the weather encountered was
the cause of the damage and that it was of such a nature that
the danger of damage to the cargo arising from it could not
have been foreseen or guarded against as one of the probable
incidents of the voyage. I think that the damage to the cargo in
this case arose from the fact that the hull was not sufficiently
strong to withstand the weather encountered at 1900 hours on
the 10th of June. The incursion of water at that time increased
steadily as the weather worsened, but I am not satisfied that
the evidence called by the respondents, and particularly that of
its master, discharges the onus of proving that the loss was
occasioned by "perils of the sea".
Read in the context of the whole decision, I
understand these last comments of Ritchie J. to
simply mean that the perils of the sea in subpara-
graph IV (2)(c) of the Hague Rules, in relation to
damage to goods carried on a vessel, must be perils
which could not be foreseen or guarded against as
probable incidents of the intended voyage.
Turning now to the evidence in the present case,
the four survivors who testified for the defendant
all described what they saw and what they felt
about the very severe storm the Mekhanik Tara-
sov encountered between early evening of Febru-
ary 14, 1982 and 05:30 hours ship's time on Febru-
ary 16, 1982.
The Fourth Engineer reported that during his
watch that began at 20:00 hours ship's time on
February 14 and ended four hours later, he first
noticed a very strong and symmetrical roll which,
at times, forced the needle on the inclinometer to
go off at each extremity of the scale which stops at
55 degrees. He explained that he had an opportu
nity to look outside, shortly after 07:00 hours
ship's time on February 15, and that he saw a
terrifying sea with waves almost constantly engulf
ing the vessel; he said that he noticed the ship had
a list of 30 degrees to 40 degrees to starboard and
he described a roll that had become asymmetrical
and somewhat smoother. He said that after 12:00
hours ship's time on February 15, there was a
smoother roll and that the needle on the inclinome-
ter went off the scale to starboard only, because of
the list of the vessel. He summarized the period of
roll as follows: at first, the roll was quicker, then
slower, and finally the ship did not pass the
upward position towards port because of a list to
starboard.
The Third Engineer said that during his watch
from 00:00 to 04:00 hours ship's time on February
15, the ship was rolling severely from 45 degrees to
55 degrees and that the roll was then symmetrical.
He indicated that at the outset he thought the
rolling was a little more to port but that by the end
of his watch a list had developed to starboard. He
then referred to his following watch, from 12:00 to
16:00 hours ship's time on February 15, and
described a severe roll to starboard of up to some
45 degrees and occasionally even beyond the incli-
nometer scale; he stated that the roll would not
come back across the vertical to port. He went on
to say that later that day, at 23:00 hours ship's
time, the list had increased even more, the rolling
was still heavy and that the ship would remain on
her starboard side to slowly come back to vertical
and roll again to starboard.
The Chief Engineer for his part indicated that
the severe roll began abruptly sometime between
20:00 and 24:00 hours ship's time on February 14.
He added that sometime before 04:00 hours ship's
time on February 15, one could sense a list to
starboard; he confirmed that at about 07:00 hours
ship's time the vessel had a significant list to
starboard and that the roll was such that she
would not pass the vertical to go to port; as for
pitch, he indicated he had the impression it was
not significant. He noticed in the last moments,
just before leaving the ship, when the sea was still
very agitated, that the severe list to starboard
began to correct itself while the vessel's bow was
gradually going underwater.
The last crew member who testified, the Second
Mate, said that when he began his third watch, on
February 15 at 00:00 hour, the weather was bad.
He described that the vessel was in line with the
wind and the waves which were coming astern. He
described a heavy symmetrical roll of forty-five
degrees and explained that the vessel deliberately
followed a course to allow the waves and the wind
to come directly on the stern. He then said that
during the first half of his watch, the roll was a
little greater to port side by some five degrees, that
by the end of his watch, at 04:00 hours ship's time
on February 15, the roll had increased and that
while the inclinometer went off the scale to star
board, the roll to port was about fifty degrees. He
stated that the ship had begun to roll more to
starboard during the middle of his watch at about
02:00 hours. When he began his fourth watch, at
12:00 hours ship's time on February 15, he
described winds and waves coming on the star
board bow, at some thirty degrees; he said there
were very high waves of some fifteen metres with
winds of eleven to twelve on the Beaufort scale. He
stated that the direction of the vessel was then
south-west. Finally, he said that in the afternoon
of February 15, the vessel was lying on its star
board side, with a permanent list of some twenty-
five degrees; he described a roll that then went
beyond the scale to starboard, indicating that the
vessel would not pass the vertical to go to port.
Commander Maurice R. Morgan, a consultant
meteorologist, testified as an expert in marine
meteorology and applied oceanography. His
qualifications within that sphere are most impres
sive. He was called by the defendant and his
testimony constitutes the only expert evidence on
the subject of weather.
Having made generally the proper assumptions
as to the ship's movements between her departure
from the Port of Trois-Rivières and the time of her
sinking on February 16, 1982, and relying also on
appropriate meteorological and oceanographic
data and data products, relative to the same period
of time, Commander Morgan came to the follow
ing conclusion: the extremely severe storm that
then passed in the vicinity of the Mekhanik Tara-
sov occasioned at times winds of 50-70 knots
(Beaufort force 12) with the associated seas
including significant waves of 10 or 11 metres and
occasional maximum high waves of up to 18
metres. This appears to be consistent with the
various descriptions given above by the crew survi
vors and, indeed with the Captain's radiograms.
Now, with regard to the frequency of similar
storms in the area, Commander Morgan expressed
the opinion that such storms would occur some
three times every ten years. He relied upon the
Concord Scientific Corporation Study filed as
exhibit D-34 which focused on 125 severe storms
defined as storms of Beaufort force 10 or greater
that occurred off the East Coast of Canada from
1957 to 1983. I have perused that document and
noticed that in fact Appendix A to that study
indicates that during the 37—year period from
1946-1983 there were well over 1000 such storm
periods. The author distinguished "storm periods"
from individual storms by explaining that a storm
period may be due to more than one storm if one
storm followed "close on the heels" of another, and
two or more consecutive storm periods may poss
ibly be caused by a single storm; he also explained
that for many of the 125 individual storms
described in his study, the maximum wind report
ed was obtained from the Mariners Weather Log
while the storm periods were considered from the
MAST exceedance wind listing. Considering all
that, I have found that while winds in the Beaufort
12 range (64-71 knots) were less common than
Beaufort 11 (56-63) and Beaufort 10 (48-55),
there were by no means unusual and in fact storms
of even greater severity occurred with some fre
quency, in that area, during the study period.
I have also reviewed one of Commander Mor-
gan's sources of data, a study by William G.
Richards, prepared for the Ocean Ranger Inquiry
and entitled "Weather Conditions Experienced by
the Ocean Ranger, November 1980-February 15,
1982"; it is interesting to note that this study filed
as Exhibit P-72 concluded, at page 12:
The storm of February 14-15, 1982 over the Grand Banks was
a severe one. However the storm track information (figure 10),
the extreme wind data in Tables 4 and 5, and the discussion of
section 1.2 of this report suggest that this storm was typical of
severe winter storms over the grand Banks. The evidence shows
that storms of comparable severity have occurred in the past
and probably can be expected in the future. [Emphasis added.]
During his cross-examination, Commander
Morgan confirmed that the North Atlantic is well
renowned for its fierce storms, especially in the
winter-time, and that mariners are very familiar
with their frequency in that area. He indicated
that thirty-six hours before the storm, the Mek-
hanik Tarasov, if well equipped as are the seago
ing ships nowadays, ought to have known about
the forecast of that weather.
Other witnesses familiar with the weather condi
tions usually associated with the North Atlantic in
winter have also been heard on that subject.
The Second Mate testified that immediately
prior to her last voyage, the Mekhanik Tarasov,
on her westbound voyage from Europe to North
America, had also encountered a severe storm with
winds of up to Beaufort force 12 and seas of more
than nine metres. As a matter of fact, Captain
Bylkin then filed a statement of sea protest dated
January 27, 1982 where he wrote:
During the voyage through the Atlantic Ocean from January
18(th) to January 26(th), the ship encountered strong winds,
boisterous weather & heavy seas, even heavy storm up to 12 per
Beaufort scale on January 23(rd), causing the ship to labour,
strain, pitch & roll heavily.
Captain Walker, an experienced ship's Captain
for C.P. Ships before he became Port Warden, in
Montréal, testified that the North Atlantic route is
well-known for its very severe weather, particular
ly in the winter months, from September to April,
January and February being the worst months. He
consequently agreed that ships must be prepared
to encounter very bad weather at that time of the
year and that a competent Master must see that
cargo is well-secured to meet these "extremes".
Captain Yakovlev said that he was familiar with
the North Atlantic route and agreed that very
heavy weather in winter-time was to be expected.
Dr. Doust, a naval architect who gave expert
evidence on behalf of the plaintiffs, said that he
had personally experienced Beaufort force 12
weather on the North Atlantic which he described
as a notoriously bad run.
Finally, Mr. Henshaw, a Master Mariner and
Marine Surveyor who also gave expert evidence on
behalf of the plaintiffs, referred to his personal
experience in the North Atlantic while in the navy.
He testified that the weather encountered by the
Mekhanik Tarasov was not unusual for the North
Atlantic in winter-time and that the extremes of
weather that one could expect to encounter in that
area would include winds of Beaufort force 12 and
seas of 60 feet.
From all those testimonies, studies and docu
ments, it appears that the weather encountered by
the Mekhanik Tarasov was not unusual in the
North Atlantic, in winter. In fact, I am satisfied
that the evidence clearly shows that the storm was
foreseeable as a probable incident of the voyage.
Furthermore, as the track and the intensity of this
particular storm were forecast with considerable
accuracy and in a timely fashion, and as that
information was also available to the Mekhanik
Tarasov, I find that the storm was actually
foreseen.
Indeed, Commander Morgan in his statement
confirmed that two weather warning advisory ser
vices are routinely available to shipping in transit
between the Gulf of St. Lawrence, through New-
foundland coastal waters to European destinations.
He stated that these are the U.S. National Weath
er Service broadcast provided by Washington
(KWBC) which issues the Western Atlantic Gale
and Storm Warning Service, and the Marine
Weather Warnings and Forecast Service issued by
the Canadian Atmospheric Environment Service
Newfoundland Weather Centre, at Gander, for
Newfoundland coastal waters.
With regard to this particular storm, Command
er Morgan then made a track verification, a speed
verification and an intensity verification. It
appears that the storm was first identified as a
potential threat to shipping off the Canadian East
Coast by 2200Z (3 hours later than ship's time) on
February 12, 1982 and that thereafter, particular
ly from 12:00Z on February 13, the track, speed
and intensity of the storm, including winds in the
50-70 knot range (as actually developed), were
forecast with considerable accuracy. It also
appears that those weather forecasts were broad
cast to the merchant shipping before the Mek-
hanik Tarasov passed and left the vicinity of Cape
Race, on the south east coast of Newfoundland,
where Captain Bylkin could have taken shelter if
he had felt that was necessary.
Captain Yakovlev confirmed that the Mekhanik
Tarasov was equipped with modern weather infor
mation systems, allowing access to weather fore
casts from U.S.S.R., the United States of America
and Canada. He added that all that information
was at the Master's disposal. At trial, the Second
Mate also confirmed that Captain Bylkin was
aware of the storm to be encountered by the ship
in the evening of February 14, 1982.
In my view, it is well established by the evidence
that the weather encountered by the Mekhanik
Tarasov, while unquestionably severe, which is
well recognized by the plaintiffs, was in fact fore
seen as a probable incident of the voyage and
could even have been guarded against. At the very
least, it is abundantly clear that the weather could
and should have been foreseen and that it could
have been guarded against.
Therefore, it is not so much the severity of the
storm that must be considered here as the fact that
it could have been foreseen or guarded against as
probable incident of the intended voyage in the
North Atlantic, at that time of the year. Further
more, it may well be in fact that the loss of the
cargo arose from the fact that the ventilators were
not sufficiently strong to withstand the weather
encountered between the early evening of Febru-
ary 14 and 08:20 hours ship's time on February 15,
1982. In an effort to find out whether indeed the
ventilators were strong enough to withstand the
weather encountered at that time, I could now go
further and make a thorough analysis of the evi
dence with regard to the litigious question of the
design and construction of the ventilators. But I do
not think that this is necessary at this stage. It is
sufficient that I am not satisfied, as I am not, that
the evidence called by the defendant, in this par
ticular case, discharges the onus of proving that
the weather encountered was the cause of the loss
of the cargo and that, in the circumstances, such
weather could not have been foreseen or guarded
against as a probable incident of the voyage.
ARTICLE IV (2)(d)
In Carver's Carriage by Sea, volume 1, 13th
Edition, it is said, about "act of God", at page 11:
... it must have been an event which the shipowner could not
have avoided, or guarded against, by any means which he could
reasonably be expected to use.
In the same volume of Carver's Carriage by
Sea, it is also said, at page 163:
The exception perils of the sea covers partly the same ground
as is covered by acts of God; but it is, on the one hand, confined
to only a limited class of natural causes; and, on the other hand,
as we shall see, it sometimes includes losses which have been in
part brought about by acts or neglects of man. In this latter
respect, therefore, it is more comprehensive than the exception
acts of God.
Here again, there is nothing in the evidence to
suggest that the defendant could seriously and
realistically rely on that excepted peril otherwise
than by assimilating it into "perils of the sea". At
trial, the defendant did not attempt to prove any
other irresistible force than the force it attributed
to the storm encountered by the Mekhanik Tara-
sov. As I have just concluded that the evidence
establishes that the storm was not only foreseeable,
which would have been sufficient, but that it was
actually foreseen and could have been guarded
against, it is obvious then that it could not consti
tute an irresistible force or an act of God.
ARTICLE IV (2)(p)
When it invoked "latent defects not discoverable
by due diligence", the defendant, through its coun
sel, stressed the distinction to be made between
defect in design and defect in actual construction
of the vessel's ventilators. The defendant then
insisted again that the ventilators were well
designed and that if there were any defects, they
would have to be associated with their actual
construction.
Indeed, as said in Carver's Carriage by Sea,
volume 1, 13th Edition, at page 382, the phrase
"latent defect" does not cover a weakness of
design.
In William Tetley's Marine Cargo Claims,
Second Edition, at page 239, one of the most
famous definitions of a latent defect is said to be
the following:
... "a defect which could not be discovered by a person of
competent skill and using ordinary care".
This definition was also set out in Carver's
Carriage by Sea, volume 1, 13th Edition, at page
540 and was cited in Dimitrios N. Rallias (Part
Cargo ex) (1922), 13 L1. L. Rep. 363 (C.A.), at
page 366, and in Minister of Materials v. Wold
Steamship Company, Ltd., [ 1952] 1 Lloyd's Rep.
485 (Q.B.), at page 501.
Tetley's Marine Cargo Claims (supra) also
defines "latent defect", at page 239:
... a defect which a competent examination, made according to
modern standards of the trade, would not reasonably be expect
ed to disclose.
With regard to the burden of proof, it is my
view that when invoking this excepted peril the
carrier must prove: a) that the defect existed; b)
that it caused the loss and c) that it could not be
discerned by reasonable diligence that was in fact
exercised.
Turning to the evidence in this case, the ship
Mekhanik Tarasov was designed and built by
Hollming Oy in Finland, as part of a series of five
sisterships, including the Mekhanik Yevgrafov,
also owned by Baltic. Construction of the former
was completed in 1976, and that of the latter, in
1977.
As explained by Mr. Sergeev, the contract for
the purchase of the Mekhanik Tarasov was made
between Sudoimport, a Soviet state-owned corpo
ration created to purchase vessels abroad, and
Hollming Oy. Sudoimport never actually operated
the ship which had been assigned to Baltic by the
Soviet Ministry of Merchant Marine who made
the decision to have the ship built. When construc
tion was completed, in 1976, the ship was immedi
ately turned over to Baltic.
A number of ship's drawings were produced by
the defendant, indicating the design and construc
tion of the ventilation system for the cargo holds
and in particular of ventilators 2 and 4 which were
lost.
The expert evidence on the subject of the design
and construction of the ventilators was that of Dr.
David Doust, called by the plaintiffs, and that of
Mr. Daymond Daoust, called by the defendant.
Dr. David Doust, an experienced and high quali
fied naval architect, expressed the opinion that the
ventilators which broke off during the voyage were
not properly designed and constructed, in that no
special supports or brackets were fitted to
strengthen them to withstand the wind and wave
forces which can be anticipated on such voyages
under winter North Atlantic conditions. Dr. Doust
also expressed the view that there was an inherent
weakness in the design of the ventilators at some
230 millimetres above the exposed deck, where the
10 millimetre thick filler ring was welded to the
main body of the ventilator trunk; he added that at
that height there was a marked reduction in wall
thickness giving rise to discontinuities of stress. In
his opinion, "this structure spelled disaster".
As well summarized by the plaintiffs in their
written submissions, Dr. Doust testified that
brackets, or similar means of support above the
deck such as a collar and stays, were necessary to
properly support the ventilator coamings above the
deck and resist the forces which would be
experienced by the ventilators on voyages such as
the last voyage, across the North Atlantic in mid
winter. According to his calculations, ventilator
no. 2 was in jeopardy in Beaufort force 10 and
beyond, and ventilator no. 4 was in jeopardy at
slightly less than Beaufort force 11. Dr. Doust
stressed that the "reinforcement ring" and any
brackets or securements underneath the deck,
would constitute very good attachments or secure-
ments of the ventilator to the deck, but would do
nothing to support the ventilator coaming above
the deck and, in particular, at and above the line of
welding. He testified that, in his opinion, it was the
lack of such supports which caused the loss of the
ventilators. He also testified that, in his opinion,
while the ventilators were in jeopardy beyond
Beaufort 10 with the ship in an upright position,
they were twenty times more likely to break off if
the ship was listed to starboard. The basic
inadequacy in their strength would be exaggerated
by such a prior list, and in his opinion that was the
probable sequence of events. He finally empha
sized that the ventilator coamings were more vul
nerable because they were located in the region of
the forward end of the open deck, which is recog
nized as a point of high stress.
For his part, Mr. Raymond Daoust, also a naval
architect, gave his opinion on the adequacy of the
design and construction of the ventilators and
stated that "the ventilators' bases were properly
attached to the deck as being integrated in the
deck reinforcement ring, which is required by the
regulation". At trial, he explained that the rein
forcement ring increased the strength of the deck
at the place where it was cut out for the insertion
of the ventilator coaming, and that in combination
with under-deck supports it became a part of the
deck structure of the ship itself and thereby ade
quately secured the ventilators.
On the other hand, Mr. Daoust recognized that
this practice was "not always standard in Canada
where reinforcement is sometimes made in the
form of brackets welded to the deck"; he then went
further and even agreed that it is a commonly
accepted practice to have brackets to support such
ventilators. He indicated that the brackets he had
seen were usually between fifteen percent and
twenty-five percent of the height of the ventilator
coaming. These brackets are substantially lower
than the brackets suggested at trial by Dr. Doust,
the plaintiffs' expert, and which, according to Mr.
Daoust, because of their size and shape, exposed
the ventilator coamings to even more strain from
the forces of the winds and of the seas. Neverthe
less, it is significant that the shorter brackets
referred to by Mr. Daoust would have extended at
least above the welding point on the Mekhanik
Tarasov's ventilators. This is even more significant
when one considers Mr. Daoust's statement that if
there was any defect in the ventilators, it would
most likely have been related to their actual con
struction and be located at the welding point or to
the point where there were attachments, such as
the flange and bolt attachments just above the
welding point. Finally, Mr. Daoust agreed that the
ventilators would be more likely to break off if the
ship was listed to starboard than if it was rolling
about an upright position.
In my view, the defendant's evidence is far from
being conclusive as to the existence of any specific
inherent defect in the ventilators and indeed as to
any such defect having caused their loss and that
of the cargo. As a matter of fact, the defendant
rather attempted to establish that the Mekhanik
Tarasov was "seaworthy in all respects", as
alleged in its statement of defence, and that there
was no defect in the ventilators. I cannot see any
compelling reasons why I should prefer the defen
dant's evidence to that of the plaintiff's, particu
larly when the former's expert witness, even
though qualified, was in fact and also appeared to
be much less experienced than that of the latter.
Furthermore, Dr. Doust's opinion on required sup
port above the deck, in the circumstances, is in my
view more consistent with the best known and
relevant rules and regulations for the construction
and classification of sea-going ships and steel ves
sels, including those of the U.S.S.R. Register:
1) Lloyd's Register of Shipping (1984 edition of
the Rules, Part 3) has a relevant general rule
and, in addition, specific requirements (Chap-
ter 12, Section 2):
2.1 General
2.1.1 Special care is to be taken in the design and positioning
of ventilator openings and coamings, particularly in the region
of the forward end of superstructures and other points of high
stress. The deck plating in way of the coamings is to be
efficiently stiffened.
The specific provisions are in Table 12.2.1 and
one of them requires that ventilator coamings
exceeding 900 millimetres in height be "spe-
cially supported."
In its 1967 edition of the Rules (Chapter D),
the same Register required in art. 2405 that
the deck plating in way of ventilator coamings
be efficiently stiffened between the beams or
longitudinals; moreover, art. 2402 required
that ventilator coamings of a greater height
than thirty-six inches be "specially supported
and secured."
2) American Bureau of Shipping (1972 edition of
the Rules, Section D) has a rule which
stipulates:
20.9.1 Construction of Coamings
Coamings are to be effectively and properly secured to properly
stiffened deck plating of sufficient thickness. Coamings which
are more than 900 mm (35.5 in.) high and which are not
supported by adjacent structures are to have additional
strength and attachment. Ventilators passing through super
structures other than enclosed superstructures are to have
substantially constructed coamings of steel at the freeboard
deck.
3) Bureau Veritas (1975 edition of the Rules)
requires, at article 24 (page 328):
24—Ventilator coamings are to be solidly secured on the deck.
Coamings the height of which exceeds 900 millimetres are to be
supported by brackets or suitably stiffened.
4) Det Norske Veritas (1977 edition of the Rules)
stipulated in Section G, article 203, that the
deck plating in way of deck openings for ven
tilator coamings be of sufficient thickness, and
efficiently stiffened between ordinary beams or
longitudinals; moreover, in article 202, coam-
ings with heights exceeding 900 millimetres
were required to be "additionally supported".
5) U.S.S.R. Register of Shipping (1974 edition of
the Rules, vol. I, Part II) has the following
rules:
2.7.10.2 Where the thickness of the deck plating is less than 10
mm, an insert plate shall be welded in way of the coaming with
a thickness equal to at least 10 mm and length and breadth not
less than twice the diameter or twice the length of the greater
of the coaming sides; otherwise a 10 mm doubling plate having
the same linear size as above should be fitted.
2.7.10.3 Where the ventilator coaming exceeds 0,9 m in height
and is not supported by adjacent hull structures, brackets are to
be fitted attaching the coaming to the deck.
Indeed, I consider that the preponderance of
evidence rather establishes that a defect in design,
which did not provide for brackets or special sup
port of the ventilator coamings above the exposed
deck of the ship, made the ventilators unduly
vulnerable to the kind of weather encountered by
the Mekhanik Tarasov.
Besides, the only evidence called by the defen
dant that could be related to latent defects came
from Mr. Daoust when he had to more or less
assume their existence. Indeed, that was when, as
indicated earlier, he referred to the actual con
struction of the ventilators and to the welding
point or to the point where there were attachments
just above the welding point on the ventilator
coamings.
I do not think the defendant ever really attempt
ed to prove the existence of any specific latent
defect. I had the impression that the defendant
rather intended to simply rely on the possibility
that some latent defect could be inferred from the
evidence if unseaworthiness were to be established.
In any case, it is clear that the defendant has
failed to discharge the onus of proving the exist
ence of any defect that could have constituted a
latent defect within the meaning of subparagraph
IV (2)(p) of the Hague Rules. Consequently, it
will not be necessary, at this stage, to consider any
other aspect related to this excepted peril in order
to conclude that the defendant has failed to prove
it.
ARTICLE IV (2)(q)
As the evidence stands, it is clear to me that the
defendant did not succeed in discharging the
burden of proof resting upon it in this provision.
Suffice it to refer to my analysis of the facts in
these reasons to conclude that the defendant has
clearly failed to establish "any other cause arising
without the actual fault or privity of the carrier, or
without the fault or neglect of the agents or ser
vants of the carrier". It therefore cannot success
fully rely on this exception.
As the defendant has not been able to establish
that the loss of the cargo is attributable to one of
the excepted perils set out in Article IV of the
Hague Rules, I will now consider whether the
defendant had exercised due diligence to make the
Mekhanik Tarasov seaworthy "before and at the
beginning of the voyage".
Mr. Pankrantiev, a vice-chief inspector of the
U.S.S.R. Register of Shipping for the Baltic ship
ping area, in Leningrad, is one of the three wit
nesses who gave evidence on that subject. He
testified that the Mekhanik Tarasov possessed the
relevant classification certificates issued by the
Register, which he filed, and that the ship was
built according to the Register Rules and under its
supervision. He expressed the view that the ven
tilators met the requirements of the Registry
because, although not attached by brackets, they
were "supported by adjacent hull structures",
namely the plating under the deck of the ship. He
largely based this opinion on his inspection of
ventilator 4 on the sistership Mekhanik Yevgrafov,
before coming to Canada for trial. In fact, he
never inspected the under-deck construction of any
of the ventilators on the Mekhanik Tarasov. The
evidence also shows that the ventilators on the
Mekhanik Yevgrafov were reinforced, after the
sinking of the Mekhanik Tarasov, by the addition
to the flanges of C or D shaped metallic brackets,
"for greater safety".
Mr. Pankrantiev explained that in order to
remain in class with the U.S.S.R. Register, a
vessel had to be thoroughly inspected once every
four years; he added that a vessel was also
required to be subjected to an external inspection
once a year and to "special inspections" according
to circumstances. With regard to the Mekhanik
Tarasov, Mr. Pankrantiev filed relevant inspection
certificates and confirmed that she was subjected
to the four-year inspection in January 1980 as well
as the annual inspections, the last of which was in
February, 1981. This was the only inspection with
which the witness was personally involved. The
only inspection of the ventilators which the witness
could speak of from personal knowledge was an
external visual inspection, on the occasion of that
annual inspection of February 1981, at which time
no damage was noted.
With regard to this testimony, I agree with the
plaintiffs' submissions 1) that Mr. Pankrantiev
had little evidence to give on the issue of due
diligence other than to say that the vessel had
always been in class with the Register and to give
his personal interpretation of the Register Rules;
2) that he did not (and could not) give evidence
concerning the nature and extent of any examina
tions, tests or inspections of the ship by officials of
the Register during and upon completion of
construction.
The two other witnesses who testified on the
issue of whether due diligence was exercised by
Baltic to make the Mekhanik Tarasov seaworthy,
were Captain Iakovlev and Mr. Sergeev whose
evidence, as I have indicated earlier, dealt largely
with officer and crew training and supervision. Mr.
Sergeev also testified that Baltic employed no
naval architects and did not contract with any
naval architects to carry out any inspection of the
ship during or after construction.
Finally, on that subject, it was well established
that Hollming Oy is a Finnish shipyard which is
known to be reputable.
The burden of proving the exercise of due dili
gence, under the provisions of paragraph IV (1) of
the Hague Rules, is on the carrier Baltic. This
expression "due diligence" has been well defined in
a number of cases.
In Grain Growers Export Co. v. Canada Steam
ship Lines Limited (1917-18), 43 O.L.R. 330
(App. Div.), "due diligence" was explained as
follows [at pages 344-345]:
To my idea, the words "exercises due diligence" must be taken
in a reasonable sense, and mean something substantial. The
ship-owner warrants the seaworthiness, and the seaworthiness is
a necessary condition of the carriage. Its absence, as has
already been pointed out, increases the danger from the perils
mentioned in sec. 6, and I read "exercises due diligence to make
the ship in all respects seaworthy" as meaning not merely a
praiseworthy or sincere, though unsuccessful, effort, but such
an intelligent and efficient attempt as shall make it so, as far as
diligence can secure it.
In Union of India v. N.V. Reederij Amsterdam
("The Amstelslot"), [1963] 2 Lloyd's Rep. 223 [at
page 226], the House of Lords confirmed the
Queen's Bench Division (Commercial Court) deci
sion [[1962] 1 Lloyd's Rep. 539] where it had
been held by McNair J. "(1) that the breakdown
was due to a fatigue crack; that the cause of the
fatigue crack was unknown; and that the crack
was not detectable by visual inspection in 1956;
(2) that when the vessel was taken over by the
defendants there was nothing in her history to
suggest that any special inspection of her reduction
gear should be carried out; (3) that the inspection
carried out in 1956 was carefully and competently
performed; (4) that the defendants had exercised
due diligence to make the Amstelslot seaworthy
because they employed skilled and competent per
sons to carry out necessary inspections and those
persons carried out those inspections carefully and
competently; and that, therefore, the defendants
were entitled to the protection of the Act".
[Emphasis added.] In the House of Lords' deci
sion, Lord Reid said, at pages 230 and 231:
It is not enough to say that if those steps had been taken
there would have been a better chance of discovering the crack.
In a great many accidents it is clear after the event that if the
defendant had taken certain extra precautions the accident
would or might have been avoided. The question always is
whether a reasonable man in the shoes of the defendant, with
the skill and knowledge which the defendant had or ought to
have had, would have taken those extra precautions.
There must be some compromise or balance in deciding what
steps to take in any particular case, keeping in mind both the
serious consequences which may flow from failure to detect a
defect and the remoteness of the chance that such a defect may
exist; for it would plainly be impracticable to make elaborate
scientific tests for every defect which could possibly be present
in any part of the machinery surveyed. In my judgment, the
appellants have proved that in conducting the survey in the way
he did, Mr. Van Lare exercised due diligence. I agree entirely
with the judgment of Mr. Justice McNair, and I would,
therefore, allow this appeal.
More recently, the Supreme Court of Canada,
in the Charles Goodfellow case (supra) considered
"due diligence" as well as the insufficient proba-
tive value of certificates of seaworthiness and the
inability of the mere use of servants and agents to
discharge the shipowner's obligation to exercise
such diligence. At pages 540 and 541 S.C.R.; 69
and 70 D.L.R., Ritchie J. wrote:
Where the ship is found to have been unseaworthy the
shipowner is seized with the burden of proving that he exercised
due diligence to make her so, if he is to escape liability. When
the Maxine Footwear case was heard in this Court ([1957]
S.C.R. 801; 10 D.L.R. (2d) 513; 76 C.R.T.C. 120), a dissenting
judgment was delivered by Mr. Justice Cartwright, (as he then
was). The dissenting reasons for judgment were affirmed in the
Privy Council and in the course of them Mr. Justice Cartwright
adopted [at pages 808 S.C.R.; 519-520 D.L.R.] the following
definition [Carver's Carriage of Goods by Sea, 10th ed., at
pages 181-182] of the due diligence required by art. III, Rule 1:
'Due diligence' seems to be equivalent to reasonable dili
gence, having regard to the circumstances known, or fairly to
be expected, and to the nature of the voyage, and the cargo
to be carried. It will suffice to satisfy the condition if such
diligence has been exercised down to the sailing from the
loading port. But the fitness of the ship at that time must be
considered with reference to the cargo, and to the intended
course of the voyage; and the burden is upon the shipowner
to establish that there has been diligence to make her fit.
It is not enough to satisfy the condition that the shipowner
has been personally diligent, as by employing competent men
to do the work. The condition requires that diligence to make
her fit shall, in fact, have been exercised, by the shipowner
himself, or by those whom he employs for the purpose. The
shipowner 'is responsible for any shortcoming of his agents or
subordinates in making the steamer seaworthy at commence
ment of the voyage for the transportation of the particular
cargo.' ....
'The obligation to make a ship seaworthy is personal to the
owners, whether or not they entrust the performance of that
obligation to experts, servants or agents.' ... If such experts,
servants or agents fail to exercise due diligence to make her
seaworthy the owners are liable under Art. III, r. 1 of the
Rules.
The burden of proving the exercise of due diligence which is
placed upon the carrier under the provisions of art. IV(1) can
only be discharged by affirmative proof that due diligence was
exercised to make the ship seaworthy. In the present case the
only such evidence adduced by the respondents in discharge of
this burden was the production of a certificate of seaworthiness
signed by a steamship inspector appointed by the Department
of Transport. This is not, in my opinion, sufficient to discharge
the statutory onus and any reliance placed upon it must be
further weakened by the fact that it appears to have been
known to the inspector who issued the certificate that the vessel
suffered from an inherent weakness. The preponderance of
evidence is that it was this weakness which caused the loss.
And more specifically, with regard to due dili
gence and design, the two following cases support
the proposition that the shipowner's duty to exer
cise due diligence is not discharged simply by the
employment of reputable and experienced ship
builders.
Indeed, in W. Angliss & Co. (Australia) Pro
prietary, Ld. v. Peninsular and Oriental Steam
Navigation Co., [1927] K.B. 456, Wright J. said,
at pages 461-462:
If he has a new vessel built he will be liable if he fails to engage
builders or repute and to adopt all reasonable precautions
... for instance, requiring the builders to satisfy one of the well
known classification societies, such as Lloyd's Register, and
engaging skilled naval architects to advise him and skilled
inspectors to supervise the work. In the same way, if he buys a
ship he may be required to show that he has taken appropriate
steps to satisfy himself by appropriate surveys and inspections
that the ship is fit for the service he puts her in. But I do not
think that in any case that the carrier can be held guilty of
want of due diligence simply because the builders' employees
have put in some bad work which in fact, though concealed,
renders the vessel unfit. In the present case the defendants
employed an inspector to supervise the work. I have held that
that inspector used due diligence. It may well be that if he had
negligently passed bad work which he saw, or even perhaps
which he ought to have seen, the carrier would be liable for
want of due diligence on the part of one to whom he had
delegated the task of inspecting the work. Similarly, he might
be held liable if the naval architect whom he employed to
supervise the design failed to detect a definite error in design,
though I do not think he would be so liable for an error on the
part of one of the classification societies, such as Lloyd's
Register, which occupy a public and quasi-judicial position. He
might also be liable if, either personally or by his scientific
advisers, he chose a special form of construction which involved
a risk ... [Emphasis added.]
In Riverstone Meat Company, Pty., Ltd. v. Lan-
cashire Shipping Company, Ltd. (the "Muncaster
Castle"), [1961] 1 Lloyd's Rep. 57, a decision by
the House of Lords, the Angliss case (supra) was
approved as follows per Viscount Simonds, at page
70:
It is important to note what was the point of decision. It was
whether, when the carrier has contracted for the building of a
ship, he is liable for lack of due diligence on the part of the
shipbuilders or their workmen if he has engaged builders of
repute and has adopted all reasonable precautions such as
requiring the builders to satisfy one of the recognized classifica
tion societies and engaged skilled naval architects who advise
him and skilled inspectors who supervise the work with due
diligence. The learned Judge, Mr. Justice Wright (as he then
was) held that, in such circumstances, the carrier was not
liable: I see no reason to question the correctness of this
decision, and need say no more about it, for it does not in the
present appeal fall to be reviewed. (Emphasis added.]
and per Lord Keith, at pages 86 and 87:
No distinction can, in general, be made between this case and
the case of a ship bought from a previous owner. Liability will
attach to the owner, as in the other cases, from failure to
discover defects making for unseaworthiness which he ought to
have discovered by the exercise of due diligence on or after the
transfer of possession.
There is, however, one qualification, or rather, reservation, I
would make in such a case. The prospective owner may have
taken some part in the project of the building of the ship, either
in the matter of design, or by supervision in the course of
building, or otherwise, and in such case it may well be that he is
responsible for unseaworthiness of which he is the cause, or
which he should have detected in the course of the building.
[Emphasis added.]
Therefore, in the present case, in the context of
unseaworthiness resulting from defect in design, I
fully agree with the plaintiffs' submissions:
a) that there is no evidence that any person or
organization, including Baltic, ever turned his
or its attention to the construction or design of
the two ships' ventilators, in the region of the
forward end of the exposed deck, inspected
them, tested them, considered their strength or
stability or exercised "due diligence" in relation
to them;
b) that there is no evidence that Baltic exercised
any diligence in relation to the construction
and design of the ventilators except, apparent
ly, to assume that any deficiencies would be
detected by the Register;
c) that in the present circumstances, because of
the way in which the Soviet Ministry of Mer
chant Marine, Sudoimport and Baltic were all
involved in the purchase of the Mekhanik
Tarasov from Hollming Oy, it was incumbent
upon Baltic to show what, if anything, was done
by the relevant parties, and to show that due
diligence was exercised by them.
Furthermore, if the Mekhanik Tarasov was
intended for numerous voyages on the North
Atlantic Ocean, particularly in winter time, as it
now appears she was, I think that the defendant
ought to have shown that it had taken even more
precautions with regard to the appropriate design
and construction of any structure projecting above
the exposed deck of the ship, including the ventila
tors, particularly in the region of the forward end
of that deck, which is recognized as a point of high
stress.
Consequently, in light of the applicable law and
of the evidence, I am not satisfied that the defen
dant has discharged the burden of proving the
required exercise of due diligence to make the
Mekhanik Tarasov seaworthy "before and at the
beginning of the voyage".
QUANTUM OF DAMAGES
1. IN PRINCIPAL
As shown by invoices Nos. 5008, 5009 and 5010,
dated February 11, 1982, and as explained by
Mr. Egon Rulfs, the export manager of Kruger,
the C.I.F. price (cost, insurance and freight) of
the cargo of newsprint was D.M. 2,594,300.86
and was payable in Deutsche Marks. I agree
with the defendant's proposition that absent
proof of a sound market value, as in the present
case, the C.I.F. value should apply.
In Amjay Cordage Limited v. The Ship "Mar-
garita" (1979), 28 N.R. 265 (F.C.A.), Ryan J.,
said at pages 270-271:
I am of opinion that the true measure of damages in the
circumstances of this case is the market value of sound twine at
the port of delivery less the amount which was recovered or
might reasonably have been recovered on resale of the damaged
cargo. There was no actual proof of such value at Duluth, so it
is not necessary to consider what the position would have been
had there been such proof. I would apply the provision of clause
17 of the bill of lading by which in the present circumstances
the market value is deemed to be the invoice value plus freight.
(See also The Ship "Trade Wind" v. David
McNair & Co. Ltd., [1956] Ex.C.R. 228.)
2. FOREIGN CURRENCY AND CANADIAN DOLLARS
As the law now stands in Canada, the claim
must be converted into Canadian dollars "as of
the date of the breach". (See N.V. Bocimar,
S.A. v. Century Insurance Co. of Canada
(1984), 53 N.R. 383 (F.C.A.), on appeal to the
Supreme Court of Canada.) In the present case,
the plaintiffs filed an affidavit showing an
exchange rate for conversion of German Deut-
sche Marks as of March 11, 1982, which must
be approximately the date the goods should have
been delivered to Hesselbacher; one German
Deutsche Mark equalled .5112 Canadian dol
lars, giving a Canadian dollar value of
$1,326,206.50 to the plaintiffs' claim.
Given that value and the number of 3,523 rolls
of newsprint, the $500 per package limitation
will not apply.
3. INTEREST
With regard to interest, I have previously taken
into account, in other cases, that it is well
established that in admiralty law, the Court can
award interest at its discretion whether the
claim arose extra contractu or ex delicto as an
integral part of the damage from the time that
the expenditure giving rise to the damage award
occurred (see Canadian Brine Ltd. v. The Ship
"Scott Misener" and Her Owners, [ 1962]
Ex.C.R. 441; Bell Telephone Co. v. The `Mar-
Tirenno", [1974] 1 F.C. 294 (T.D.) and [1976]
1 F.C. 539 (C.A.); Algoma Central Railway v.
The "Cielo Bianco", Federal Court, Trial Divi
sion, T-5213-78 (November 22, 1984); Davie
Shipbuilding Limited v. The Queen, [1984] 1
F.C. 461 (C.A.)).
Recently, the Federal Court of Appeal ([1987]
2 F.C. 592) allowed the appeal in part in the
"Cielo Bianco" case above mentioned; neverthe
less, the Court of Appeal affirmed the conclu
sion of the Trial Judge on the question of pre
judgment interest. At page 623, the Appeal
Court said:
The appellants' submission was that instead of basing his
conclusion on the average prime rate, the learned Trial Judge
should have fixed a rate equivalent to the rate of interest paid
each month on monies deposited in Court. In support of this
position counsel relied on the decision of this Court in Davie
Shipbuilding Limited v. The Queen where, in the absence of
other material on which to found a conclusion, the Court
adopted a rate of interest based on that paid on monies in
Court.
The learned Trial Judge, after reviewing the principle on
which pre-judgment interest is included in the damages award
ed in admiralty cases, cited four respects in which the case
before him differed from that in the Davie Shipbuilding case
and reached the conclusion that, on the evidence before him
and the circumstances of the case, the average of the prime
bank rates would be the fairest measure to apply.
That the rate of interest to be included is a matter for the
exercise of discretion by the trial judge is well settled and I see
no reason to think that the Trial Judge erred in any respect in
fixing the rate at 14% from the times as agreed by the parties
to the date of his judgment, November 22, 1984. Accordingly, I
would affirm that conclusion.
Considering that the average of the monthly
prime lending rate for chartered banks, as estab
lished and published in The Bank of Canada
Review, for the period March 1982 to December
1986, is approximately 12%; considering also that
such prime lending rate is now at some 9%, I shall
award interest before judgment, from March 11,
1982, at a rate of 12% per annum and after
judgment at a rate of 9% per annum.
The circumstances of the present case warrant
that the plaintiffs be entitled to costs to which will
be added the reasonable costs for the services
performed by the expert witnesses F. G. Henshaw
and Dr. D. J. Doust in preparing themselves to
give evidence and in advising counsel for the plain
tiffs during the trial.
Futhermore, I agree with the unanimous sugges
tion that an additional fee at trial be granted to
counsel for the successful party. In view of my
conclusions on liability and considering that the
plaintiffs were represented by two counsel who
both attended and actively participated in the trial;
considering also the nature and the length of the
trial (22 days) which required various types of
expert evidence and a significant share of interpre
tation of Russian testimony and documents; coun
sel for the plaintiffs will therefore be entitled to an
additional fee at trial of $4,000.
Consequently, judgment will be rendered in
favor of plaintiffs jointly and severally against the
defendant in the sum of $1,326,206.50 with inter
est on that sum at 12% per annum from March 11,
1982 until judgment and at the rate of 9% from
the date of judgment.
The plaintiffs shall recover from the defendant,
after taxation, their costs of this action according
to the following directions:
a) The reasonable costs for the services performed
by the expert witnesses F. G. Henshaw and Dr.
D. J. Doust in preparing themselves to give
evidence and in advising counsel for the plain
tiffs during the trial shall be added to and
included in these costs;
b) Counsel for the plaintiffs shall be entitled to an
additional fee at trial of $4,000.
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.