A-761-86
CN Marine Inc. (Appellant)(Defendant)
v.
Carling O'Keefe Breweries of Canada Limited and
Norlab Ltd. (Respondents)(Plaintiffs)
and
The Labrador Shipping Co. Ltd., The Vessel
"Newfoundland Coast" and Roger Sirois
(Respondents) (Defendants)
INDEXED AS: CARLING O'KEEFE BREWERIES OF CANADA LTD.
v. CN MARINE INC. (CA.)
Court of Appeal, Iacobucci C.J., Heald and Stone
JJ.A.—Halifax, October 31 and November 1;
Ottawa, December 21, 1989.
Maritime law — Carriage of goods — Loss of cargo in
heavy seas due to improper stowage and inadequate securing
of goods — Exclusion of liability provisions of bill of lading
ineffective to relieve CN from liability as null and void under
Hague Rules — Perils of sea defence not available as sea
conditions not unusual — No error in navigation or manage
ment of ship as such, only error in care of cargo — Liability
not limited to $500 per container as bill of lading indicating
number of packages shipped.
Maritime law — Practice — Interest — Action claiming
damages for loss of cargo at sea — Trial Judge erred in not
allowing pre-judgment interest from date of loss — Nothing
to justify departure from rule of admiralty law interest
awarded as integral part of damages.
This was an appeal from a Trial Division judgment whereby
the respondents-defendants were found liable for damages aris
ing out of the loss at sea of 4,240 cases of beer shipped in three
20-foot containers on board the Newfoundland Coast from
St. John's to Happy Valley/Goose Bay in Labrador under a
received bill of lading issued in October, 1980. The ship had
been time-chartered by the appellant CN Marine (CN). The
respondent Sirois, the master of the ship, and CN decided
together that the containers should be stowed on deck trans
versely, one end of the containers protruding some two feet over
the side of the vessel. They were then secured with wire rope
instead of other far superior fittings then available.
During the crossing, heavy seas — not unusual for that area
at that time of year — hitting the underside of the containers
caused the wire ropes to break and the containers were lost at
sea.
The appellant argued that the Trial Judge erred (1) in
refusing to give effect to clause 18 of the bill of lading
purporting to place the obligations of carrier exclusively upon
the owner of the carrying ship, in this case Labrador Shipping
Co. Ltd.; (2) in rejecting the errors "in the navigation or
management" of the ship, "perils of the sea" and "any other
cause" defences under Article IV, Rules 2(a),(c) and (q) of the
Hague Rules; (3) in basing the "per package" limitation of
liability upon the number of cases of beer carried rather than
upon the number of containers. The shipper, Carling O'Keefe,
cross-appealed the Trial Judge's confinement of pre-judgment
interest to a period of two years from the date the action was
brought rather than allowing it for the whole period from the
date of the loss.
Held, the appeal should be dismissed and the cross-appeal
allowed.
There were no "palpable and overriding errors" affecting any
of the Trial Judge's findings of facts.
With the exception of clause 18, the so-called demise clause,
everything in the relationship between the respondent, Carling
O'Keefe, and the appellant, CN, pointed to a contract of
carriage between them, making CN the "carrier". Also, upon a
proper construction of the bill of lading, in issuing the bill of
lading, CN signed the contract of carriage in its personal
capacity and, as time charterer, thereby became a "carrier" as
defined in the bill of lading as well as under the Hague Rules.
Furthermore, the role played by the time charterer in relation
to the loading and stowage of the cargo on board the vessel was
consistent with the fulfilment of an undertaking assumed by it
as a "carrier" under a contract of carriage that is subject to the
Hague Rules.
The Trial Judge was also correct in finding that clause 18
was null and void and of no effect as beween the shipper and
the time charterer because, contrary to Article III, Rule 8 of
the Hague Rules, it purported to relieve the time charterer of
duties and responsibilities to properly and carefully stow the
goods carried, as required by Article III, Rule 2.
The sea conditions were not such as to justify a "perils of the
sea" defence under Rule 2(c) of Article IV, the Trial Judge
having found that the sea conditions were precisely what would
be anticipated. Nor was there any act, neglect or default in the
management of the ship justifying a Rule 2(a) defence because
in the present case there was want of care of the cargo rather
than want of care of the vessel indirectly affecting the cargo.
Nor was there "any other cause" to justify a Rule 2(q) defence.
There was no error in the Trial Judge's conclusion, based on
what was stated in the shipping documents, things said by the
parties and the course of dealing between them, that the cargo
was composed of 4,240 packages, being the number of cases of
beer carried. Liability therefore could not be limited to $500
per container under Rule 5 of Article IV.
In view of the six-year delay in bringing the matter on for
trial, the Trial Judge, without first requiring an explanation
from Carling O'Keefe, limited the payment of pre-judgment
interest to two years from the date the action was commenced
rather than allowing it for the whole period from the date of the
loss. The Trial Judge erred in this respect. According to the
principles of admiralty law, interest is awarded as an integral
part of the damages suffered. In the present case, there was
nothing which justified a departure from the normal rule for an
award of pre-judgment interest in cases of total loss. Interest
should be allowed from the date the loss occurred.
There was nothing to sustain the master's argument that he
was denied natural justice because no opportunity to make a
defence was afforded him at trial. In fact, the master left the
courtroom of his own accord. The fact that counsel for the
shipper and the time charterer indicated that they did not
expect to recover anything from him, given his financial situa
tion, did not mean that his possible liability for the claim would
not be investigated or, less still, that a judgment would not be
rendered against him.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Carriage of Goods by Water Act, R.S.C. 1970, c. C-15,
Sch., Art. I(a), III(2),(8), IV(2)(a),(c),(q), 5.
The Water Carriage of Goods Act, 1936, S.C.1936, c. 49.
CASES JUDICIALLY CONSIDERED
APPLIED:
Stein et al. v. The Ship "Kathy K" et al., [1976] 2
S.C.R. 802; Samuel, Samuel & Co. v. West Hartlepool
Steam Navigation Company (1906), 11 Corn. Cas. 115
(S.C.); The Ferro, [1893] P. 38 (Div. Ct.); The Gleno-
chil, [1896] P. 10 (Div. Ct.); International Factory Sales
Service Ltd. v. The "Alexandr Serafimovich", [1976] 1
F.C. 35 (T.D.); In re the "Dundee" (1827), 2 Hagg. 137
(Adm.); In re the "Gazelle" (1844), 2 W. Rob. 279
(Adm.); In re the "Hebe" (1847), 2 W. Rob. 530 (Adm.);
Canadian Brine Ltd. v. The Ship Scott Misener and Her
Owners, [1962] Ex.C.R. 441; The Joannis Vatis (No. 2),
[1922] P. 213 P.D.A.; The Northumbria (1869), L.R.A.
& E. 6; The Berwickshire, [1950] P. 204; Canadian
General Electric Company Limited v. Pickford & Black
Limited, [1972] S.C.R. 52; Drew Brown Limited v. The
Ship "Orient Trader" et al., [1974] S.C.R. 1286; Bell
Telephone Co. v. The "Mar-Tirenno", [1974] 1 F.C. 294
(T.D.); Davie Shipbuilding Limited v. The Queen, [1984]
1 F.C. 461 (C.A.).
DISTINGUISHED:
Cormorant Bulk-Carriers Inc. v. Canficorp (Overseas
Projects) Ltd. (1984), 54 N.R. 66 (F.C.A.).
CONSIDERED:
Paterson SS. Ltd. v. Aluminum Co. of Can., [1951]
S.C.R. 852; [1952] 1 D.L.R. 241.
REFERRED TO:
The Berkshire, [1974] 1 Lloyd's Rep. 185 (Q.B.D.); The
Vikfrost, [1980] 1 Lloyd's Rep. 560 (C.A.); Kenya Rail
ways v. Antares Co. Pte. Ltd. (The Antares) (No. 1),
[1986] 2 Lloyd's Rep. 626 (Q.B. Com. Ct.); Ngo Chew
Hong Edible Oil Pte. Ltd. v. Scindia Steam Navigation
Co. Ltd. (The Jalamohan), [1988] 1 Lloyd's Rep. 443
(Q.B. Corn. Ct.); Kaleej International Pty Ltd v Gulf
Shipping Lines Ltd (1986), 6 NSWLR 569 (C.A.); And-
erson's (Pacific) Trading Co Pty Ltd v Karlander New
Guinea Line Ltd, [1980] 2 NSWLR 870 (Corn. Law
Div.); Epstein v. U.S., 86 F. Supp. 740 (D.C.N.Y., 1949);
Blanchard Lumber Co. v. S. S. Anthony II, 259 F. Supp.
857 (D.C.N.Y., 1966); The Iristo, 43 F. Supp. 29
(D.C.N.Y., 1941); affd, 137 F. 2d 619 (2d Cir., 1943);
cert. denied, 320 U.S. 802 (1943); Aris Steamship Co.
Inc. v. Associated Metals & Minerals Corporation,
[1980] 2 S.C.R. 322; (1980), 101 D.L.R. (3d) 1; 31 N.R.
584; Apex (Trinidad) Oilfields, Ltd. v. Lunham & Moore
Shipping, Ltd., [1962] 2 Lloyd's Rep. 203 (Can. Ex. Ct.);
Delano Corp. of America v. Saguenay Terminals Ltd.,
[1965] 2 Ex.C.R. 313; Kennedy & Co., Ltd. v. Canada
Jamaica Line, Canada West Indies Shipping Company,
Ltd., and Aldag, [1967] 1 Lloyd's Rep. 336 (Que. S.C.);
Atlantic Traders Ltd. v. Saguenay Shipping Ltd.
(1979), 38 N.S.R. (2d) 1; 69 A.P.R. 1 (S.C.T.D.);
Weyerhaeuser Co. et al. v. Anglo Canadian Shipping Co.
et al. (1984), 16 F.T.R. 294 (T.D.); Canadian Klockner
Ltd. v. D/S A/S Flint, [1973] F.C. 988 (T.D.); Farr Inc.
v. Tourloti Compania Naviera S.A., T-5847-80, Pinard
J., judgment dated 3/7/85, F.C.T.D., not reported; affd
A-645-85, Marceau J.A., judgment dated 30/5/89,
F.C.A., not yet reported; Q.N.S. Paper Co. v. Chartwell
Shipping Ltd., [1989] 2 S.C.R. 683; Falconbridge Nickel
Mines Ltd. et al. v. Chimo Shipping Ltd. et al., [1969] 2
Ex.C.R. 261; Gosse Millard v. Canadian Government
Merchant Marine, [1928] 1 K.B. 717 (C.A.); affd [1929]
A.C. 223 (H.L.).
AUTHORS CITED
Tetley, William Marine Cargo Claims, 3rd ed., Toronto:
Butterworths, 1988.
COUNSEL:
James D. Youden and E. A. Gores for appel
lant (defendant) CN Marine Inc.
Kristine Arnet Connidis for respondent
(plaintiff) Carling O'Keefe Breweries.
D. Peter Mancini for respondent (defendant)
Roger Sirois.
SOLICITORS:
James D. Youden, Halifax, for appellant
(defendant) CN Marine Inc.
Campbell, Godfrey & Lewtas, Toronto, for
respondent (plaintiff) Carling O'Keefe Brew
eries.
Nova Scotia Legal Aid, Sydney, for respon
dent (defendant) Roger Sirois.
The following are the reasons for judgment
rendered in English by
STONE J.A.: This is an appeal from a judgment
of Martin J. in the Trial Division rendered August
31, 1987 [[1987] 2 F.C. 107] whereby the appel
lant and the respondents (defendants) were found
liable for damages arising out of the loss at sea of
4,240 cases of beer shipped in three 20 foot con
tainers on board the respondent Ship Newfound-
land Coast, from St. John's to Happy Valley/
Goose Bay in Labrador under a received bill of
lading issued at St. John's on October 29, 1980.
For ease of reference I shall hereinafter refer to
the appellant as the "time charterer", to the first
respondent (plaintiff) as the "shipper", to the first
respondent (defendant) as the "shipowners" and to
Captain Sirois as the "master".
In giving judgment in favour of the shipper
against the time charterer, the Trial Judge found
that the latter was a "carrier" of the cargo not
withstanding the presence among the printed
terms and conditions on the bill of lading of a
clause (clause 18) purporting to place the obliga
tions of "carrier" exclusively upon the owner of
the carrying ship. Other defences were also reject
ed. Moreover, the Trial Judge found that the right
of "per package" limitation under the contract of
carriage was to be based upon the number of
individual cases of beer comprising the shipment
rather than upon the number of containers in
which those cases were carried.
The issues
The issues raised on this appeal are that the
Trial Judge erred in refusing to give effect to
clause 18, in rejecting the errors "in the navigation
or management" of the ship, "perils of the sea"
and "any other cause" defences under Article IV,
Rules 2(a),(c) and (q) of the Rules (the "Hague
Rules") scheduled to the Carriage of Goods by
Water Act, R.S.C. 1970, c. C-15' and in basing
the "per package" limitation of liability upon the
number of cases of beer carried rather than upon
the number of containers. The shipper, for its part,
brings a cross-appeal in which it attacks the Trial
Judge's confinement of pre-judgment interest on
the principal amount of, damages to a period of
two years from the date the action was brought,
namely, from October 21, 1981.
Facts surrounding shipment and loss
It is necessary to a determination of the ques
tions in issue to examine the documentation and
other circumstances upon which the Trial Judge
based his conclusions. The language in which the
bill of lading was cast is of especial importance for
much depends on its construction. That document
is in a combination form for use by the time
charterer both for water and for rail carriage. It
bears the heading "CANADIAN NATIONAL RAIL
WAYS", which is followed by an acknowledgment
of the receipt of the cargo on October 29, 1980 "to
be carried upon and subject to all the terms and
conditions on the face and back hereof and to the
usual place of delivery at the destination named".
Spaces are then provided for inserting the consig-
nee's name, the destination of the goods and the
name of the carrying vessel. Immediately thereaf
ter are provided spaces for inserting particulars of
the goods (to be furnished by the shipper), which
are followed by a set of printed provisions:
The provisions of Part A shall be included in the terms and
conditions governing the carriage of the goods at all times while
in the custody of the Company or connecting carriers as carrier
by water; the provisions of Part B shall be included in the terms
and conditions governing the carriage of the goods at all times
while in the custody of the Company or connecting carriers as
carriers by rail; provided that if goods are to be transported by
rail following carriage by water, the provisions of Part A shall
apply from the time goods are unloaded from cars.
' Formerly The Water Carriage of Goods Act, 1936, S.C.
1936, c. 49.
If the goods in whole or in part are from any cause not
forwarded on the ship or ships for which intended, or be
overcarried or landed at an intermediate port, the carrier shall
be at liberty to forward or return them under the terms of this
bill of lading on the next available ship of the carrier, or at
carrier's option, of any other line.
It is agreed that the custody and carriage of the goods are
subject to all the terms of this bill of lading on the front and
back hereof, which shall govern the relations, whatsoever they
may be, between the shipper, consignee, and the carriers,
master and ship in every contingency, wheresoever and whenso-
ever occurring, and also in the event of deviation, or of
unseaworthiness of the ship at the time of loading or inception
of the voyage or subsequently, and none of the terms of this bill
of lading shall be deemed to have been waived by the carriers
unless by express waivers in writing signed by a duly authorized
agent of the carriers.
Any alterations, additions or erasures in this bill of lading
whether on the front or back hereof shall be signed or initialled
in the margin by an agent of the carrier issuing the same and if
not so signed or initialled shall be without effect and this bill of
lading shall be enforceable according to its original tenor.
IN WITNESS WHEREOF, the Agent has signed this bill of lading
on behalf of the Canadian National Railway Company and its
connecting railway and steamship lines, severally and not
jointly.
Immediately below appears the following:
D.M. Mercer
Terminal Super
Agent on behalf of the
carriers severally and not
jointly.
Carling O'Keefe Shipper
Per: F. Walsh
That portion of the bill of lading is followed by two
parts, the first titled "BILL OF LADING CONDI
TIONS Part A — With Respect to Water Car
riage" and, the second, "Part B — With Respect
to Rail Carriage". Only Part A is applicable to the
case at bar, and I shall recite only those conditions
relied upon in argument:
1. (a) This bill of lading shall have effect subject to the
provisions of the Water Carriage of Goods Act, 1936, enacted
by the Parliament of Canada, or, where the laws of the United
States apply, to the provisions of the Carriage of Goods by Sea
Act of the United States, which shall be deemed to be incorpo
rated herein, and the Carrier and the ship shall be entitled to
the benefit of all privileges, rights and immunities conferred by
the said Acts.
(b) Nothing herein contained shall be deemed a surrender
by the Carrier of any of the rights or immunities or an increase
of any of its responsibilities or liabilities under such Act, rules
or ordinance as may be applicable, or to deprive the Carrier of
the right to claim before the Courts of any country any
limitation of, or to limit any protection or exemption from,
liability conferred by law upon the Carrier or the ship. If any
term of this bill of lading be repugnant to whichever of said
Acts is, or is hereby made, applicable, to any extent, such term
shall be void to that extent but no further.
(c) The rights and immunities set forth in Article IV of the
Rules comprising the Schedule to said Water Carriage of
Goods Act, 1936, shall govern before the goods are loaded on
and after they are discharged from the ship and throughout the
entire time the goods are in the custody of the Carrier, but in
the event of loss or damage the burden of proof shall be on the
person claiming such loss or damage to show that same was due
to the actual fault or privity of the Carrier or the fault or
neglect of the agents or servants of the Carrier. The Carrier
shall not be liable in any capacity whatsoever for any delay,
non-delivery or misdelivery, or loss of or damage to the goods,
howsoever any of the foregoing may be caused, occurring while
the goods are not in the actual custody of the Carrier.
2. In this Bill of Lading, the word "ship" shall include any
substituted vessel, and any craft, lighter or other means of
conveyance owned, chartered or operated by the Carrier; the
word "Carrier" shall include the ship, her owner, operator,
demise charterer, time charterer, master and any substituted
carrier, whether the owner, operator, charterer, or master shall
be acting as Carrier or bailee; the word "shipper" shall include
the person named as such in this bill of lading and the person
for whose account the goods are shipped; the word "consignee"
shall include the holder of the bill of lading, properly endorsed,
and the receiver and the owner of the goods; the word
"charges" shall include freight and all expenses and money
obligations incurred and payable by the goods, shipper, con-
signee, or any of them.
18. If the ship is not owned by or chartered by demise to the
ocean carrier by which the goods are intended to be carried
hereunder (as may be the case notwithstanding anything that
appears to the contrary), this bill of lading shall take effect only
as a contract with the owner or demise charterer, as the case
may be, as principal, made through the agency of Canadian
National Railways or the said ocean carrier which in either
case acts as agent only and which shall be under no personal
liability whatsoever in respect thereof.
The time charterer owned a fleet of vessels, and
chartered others. Because the Newfoundland
Coast was time chartered and the bill of lading
contained clause 18, the time charterer vigorously
attacks the conclusion of the Trial Judge that it
was a "carrier" of the cargo. If the stow was
improperly performed, it says, that was due to the
negligence of the shipowners as sole "carrier" and
not in anywise the responsibility of the time chart-
erer. Certain terms of a "Time Charter Party"
dated May 23, 1980 made between the time chart-
erer and the shipowners in respect of the New-
foundland Coast are also relied upon. Clause 1,
for example, places the obligation of loading and
discharging the vessel upon the "vessel's crew".
Clauses 8 and 9 deserve to be recited in their
entirety:
8. The Charterers may place a Purser on board the vessel at
their expense, and the owner will provide meals and accommo
dation for the said Purser. The Purser shall receive, sign and
handle all shipping documents and collect freight monies and
advise as to cargo to be picked up or discharged at various ports
of call. For this purpose, the Purser shall be deemed to be the
agent of the Master but in no way shall the Master's authority
as to the management, care and control of the vessel be
curtailed. In the absence of a Purser, the Master shall fulfill the
Purser's functions.
All freight charges for cargo handled between ports of call shall
be prepaid in accordance with the Charterer's practice. Bills of
Lading shall be signed by the Master or the Purser of the
vessel. All monies collected for freight, together with copies of
all Bills of Lading, to be turned over by the Master or the
Purser to the Charterers' agents at terminal ports.
9. The Master and/or Owners to be responsible for the careful
handling of cargoes and in the event of loss, damage or short
delivery of the said cargoes, the vessel to be held responsible,
where it is found and proved that such loss or damage was due
to negligence of the Master and/or Owners.
I shall review only briefly the other circum
stances of the case that surrounded the shipment
and carriage of the cargo from St. John's to
Labrador. The containers were picked up by the
shipper from the time charterer's premises and
taken to the shipper's warehouse where they were
stuffed by the shipper with the subject goods. In
the office of the warehouse supervisor was kept a
pad of the time charterer's blank forms of bill of
lading. The evidence was to the effect that it was
this supervisor who completed one of the forms by
inserting "St. John's" as the place where the goods
were received, the date of their receipt, the name
of the shipper, the name of the consignee (Norlab
Ltd.), the destination and the particulars of the
goods. Under a column headed "No. Packages"
and the two columns immediately to the right
thereof headed "Description of Articles and Spe
cial Marks" and "Weight (Subject to Correction)"
respectively, he inserted the number of cases, the
brands of beer and their weight. In the lower
portion of the space set aside for "particulars" of
the goods (astride the first two columns) he insert
ed the identifying numbers of the three containers
which were lost. The containers were delivered to
the time charterer on October 29, 1980 when a
secretary acting with the authority of its terminal
superintendent signed the form of bill of lading in
the space provided on its face and thereby caused
it to be issued.
At no time was the name of the carrying vessel
inserted in the space provided on the face of the
bill of lading. Quite some days passed before a
vessel was selected by the time charterer when the
goods would be actually loaded on board and the
ship could depart on her voyage.
Of obvious significance to the Trial Judge was
the state of the shipper's knowledge concerning the
identity of the vessel which would carry the goods
to destination. Evidence contained in the time
charterer's waybills, prepared on October 29, 1980
but received by the shipper subsequent to the
ship's departure, further disclosed that, apparent
ly, at first it had been decided to ship the goods on
board the Sir R Bond, one of the time charterer's
own vessels. It was argued in any event from the
course of dealings which had existed between the
parties and from shipping practices at St. John's,
that the shipper knew or ought to have known that
the Newfoundland Coast would be utilized. The
Trial Judge, at pages 110-111 F.C., made these
very precise findings as to the state of the shipper's
knowledge:
Walsh was not told what vessel would take the cargo nor did
he enquire. Captain William Embleton, CN's coastal service
operations manager, said it was not CN's practice to give
shippers the name of the vessel taking the cargo unless there
was a specific request for the information. He also said that
CN did not inform the plaintiff and does not inform shippers
generally that their cargo will be going on chartered as opposed
to CN vessels.
In my view, it would not be proper for this Court
to interfere with these findings for which, even the
time charterer acknowledges, some supporting evi
dence existed. Nor should we attempt to re-weigh
the evidence on which it is based when no valid
ground for so doing has been shown. Put shortly,
no "palpable and overriding error" affecting the
Trial Judge's assessment of the facts such as would
entitle us to disregard these findings, has been
demonstrated. (See Stein et al. v. The Ship
"Kathy K" et al., [1976] 2 S.C.R. 802).
Not long after the ship departed St. John's on
November 15, 1980, the master decided to make
for shelter in a small coastal port after receiving
over the ship's radio a gale warning put out by the
Canadian Coast Guard. In point of fact, this warn
ing was for the west coast of Newfoundland; the
vessel was still in northeastern coastal waters. At
all events, the containers were lost at sea on the
same day near Cape Bonavista when, according to
the master, "heavy swell and tide rips" resulted in
"confused seas" hitting "the containers ... and
breaking the lashings" and in "3 containers slip
ping over the side and floating away". The Trial
Judge did not accept that these sea conditions
exonerated the "carrier" from liability for he con
sidered that they were "precisely what would be
anticipated". He found that the loss was caused by
improper stowage of the cargo, saying, at pages
114 and 115 of his reasons:
The master attributed the loss to the heavy seas hitting the
underside of the containers and, he speculated, to the possibility
that, in combination with the heavy seas causing the containers
to lift up, there might have been a cutting edge on one of the
containers which cut the wire rope.
Given the wind speed and consequent speed of the waves
combined with the rolling of the vessel and the protruding
containers I have no hesitation in finding that the loss was
brought about by the fact that the containers were stowed so
that their ends protruded over the side of the vessel. By being
stowed in that way they formed a trap against which the full
force of onrushing waves, of even moderate height, would rush
up the sides of the vessel and exert enormous upward pressure
on the bottoms of the containers. That at any given time the
force of the waves could be increased significantly as a result of
breaking waves and by the downward rolling motion of the ship
only serves to reinforce my view that the loss was the direct
result of the improper stowage of the containers.
The Trial Judge also found that the wire rope
lashings supplied by the time charterer pursuant to
its obligation under the Time Charter Party were
inadequate for the purpose of lashing the contain
ers, stowed as they were athwartships on the
weather deck. With regard to the loading and
stowage of the cargo he found, at page 111:
Although the master has the last word on where the cargo
will be placed on his vessel and how much he will take, in
practice, Captain Sirois worked in conjunction with CN staff in
planning the amount and placement of the cargo on his vessel.
CN would, for example, designate which of several containers
it might want stowed below deck. CN would determine how
much freight the vessel would take and Sirois would supervise
its loading by stevedores under contract with CN. Between
Sirois and CN it was decided that the 20-foot containers should
be stowed athwartships or transversely rather than longitudi
nally or fore and aft. In fact, as CN was determined, towards
the end of the shipping season, to use every inch of space
available on the defendant ship, the master had no alternative
but to stow it that way.
I shall now take up the questions raised on this
appeal, the first being whether the Trial Judge
erred in finding that the time charterer acted as
"carrier" of the cargo at the time of the loss.
The demise clause defence
The time charterer puts its position that it had
not acted as a "carrier" in simple terms: it was not
a party to the contract of carriage evidenced by
the bill of lading and, accordingly, could not be
considered the "carrier" of the cargo; the contract
of carriage was made between the shipowners and
the shipper; in signing the bill of lading it acted in
the capacity as agent only for the shipowners and
not on its own behalf; the so-called demise clause
(clause 18) in the bill of lading clearly demon
strates an intention that only the shipowners would
be bound as "carrier"; the shipper must look to the
shipowners and only to the shipowners for its loss.
In concluding on the evidence that the time
charterer was a "carrier" of the cargo, the Trial
Judge relied upon this Court's decision in Cormo
rant Bulk-Carriers Inc. v. Canficorp (Overseas
Projects) Ltd. (1984), 54 N.R. 66 (F.C.A.). I
accept, as both counsel submit, that the facts of
that case were such as to render it distinguishable
from the case at bar. Counsel for the shipper
insists, however, that the case laid down a principle
applicable here, namely, that a clause purporting
to identify shipowners, rather than a time charter-
er, as "carrier" does not insulate a time charterer
from liability as "carrier" if the facts show him to
have actually assumed that role under the contract
of carriage with the shipper.
The validity of this type of clause has been
upheld in England, 2 and in Australia,' but appears
to have been looked upon with some disfavour in
the United States. 4 It is not necessary here to deal
with the question at large except perhaps to note
that, speaking generally, the current of judicial
authorities thus far decided in this country appears
to favour validity: Paterson SS Ltd. v. Aluminum
Co. of Can., [1951] S.C.R. 852; [1952] 1 D.L.R.
241; Aris Steamship Co. Inc. v. Associated Metals
& Minerals Corporation, [1980] 2 S.C.R. 322;
2 See e.g. The Berkshire, [1974] 1 Lloyd's Rep. 185
(Q.B.D.); The Vikfrost, [1980] 1 Lloyd's Rep. 560 (C.A.);
Kenya Railways v. Antares Co. Pte. Ltd. (The Antares) (No.
1), [1986] 2 Lloyd's Rep. 626 (Q.B. Corn. Ct.); Ngo Chew
Hong Edible Oil Pte. Ltd. v. Scindia Steam Navigation Co.
Ltd. (The Jalamohan), [1988] 1 Lloyd's Rep. 443 (Q.B. Corn.
Ct.).
3 See e.g. Kaleej International Pty Ltd v Gulf Shipping Lines
Ltd (1986), 6 NSWLR 569 (C.A.). Compare Anderson's
(Pacific) Trading Co Pty Ltd v Karlander New Guinea Line
Ltd, [1980] 2 NSWLR 870 (Com. Law Div.).
See e.g. Epstein v. U.S., 86 F. Supp. 740 (D.C.N.Y., 1949);
Blanchard Lumber Co. v. S. S. Anthony II, 259 F. Supp. 857
(D.C.N.Y., 1966). Compare The Iristo, 43 F. Supp. 29
(D.C.N.Y., 1941), affd, 137 F. 2d 619 (2d Cir. 1943); cert.
denied, 320 U.S. 802 (1943).
(1980), 101 D.L.R. (3d) 1; 31 N.R. 584. 5 In
Paterson, for example, the terms of the charter-
party placed the vessel's master under the orders
and direction of the charterers as regards employ
ment and agency, and required the charterers to
load, stow and trim the cargo at their expense and
under the supervision of the master who was to
sign bills of lading for cargo as presented in con
formity with notes or tally clerk's receipts. The
vessel was to remain in possession of its owners
who were obliged to pay for all provisions and
wages of the master and crew and to maintain the
vessel in class. Rand J., speaking for himself and
two of the other judges, said at page 854:
Under such a charter, and in the absence of an undertaking
on the part of the charterer, the owner remains the carrier for
the shipper, and in issuing bills of lading the captain acts as his
agent. In this case, the bill of lading was signed for the captain
by the agents appointed by the charterers certainly for them
selves and probably for the vessel also and that fact raises the
first of the only two points deserving consideration.
Locke J. added the following, speaking for himself
and two of his colleagues, at pages 860-861:
While the charterer was thus empowered to decide on the
manner of the employment of the ship and to appoint agents for
the ship at points of call, possession of the vessel remained in
the appellant through the Captain. The rule applicable is stated
by Channell J. in Wehner v. Dene Steam Shipping Company
([1905] 2 K.B. 92 at 98), as being that in ordinary cases, where
the charterparty does not amount to a demise of the ship and
possession remains with the owner, the contract is made not
with the charterer but with the owner.
5 See also Apex (Trinidad) Oilfields, Ltd. v. Lunham &
Moore Shipping, Ltd., [1962] 2 Lloyd's Rep. 203 (Can. Ex.
Ct.); Delano Corp. of America v. Saguenay Terminals Ltd.
[1965] 2 Ex.C.R. 313; Kennedy & Co., Ltd. v. Canada Jamai-
ca Line, Canada West Indies Shipping Company, Ltd., and
Aldag, [1967] 1 Lloyd's Rep. 336 (Que. S.C.); Atlantic Trad
ers Ltd. v. Saguenay Shipping Ltd. (1979), 38 N.S.R. (2d) 1;
69 A.P.R. 1 (S.C.T.D.); Weyerhaeuser Co. et al. v. Anglo
Canadian Shipping Co. et al. (1984), 16 F.T.R. 294 (T.D.).
Compare Canadian Klockner Ltd. v. DIS AIS Flint, [1973]
F.C. 988 (T.D.); and Farr Inc. v. Tourloti Compania Naviera
S.A. (T-5847-80, Pinard J., judgment dated 3/7/85, F.C.T.D.,
not reported; affd. A-645-85, Marceau J.A., judgment dated
30/5/89, F.C.A., not yet reported).
It was clear that the contract of carriage therein
was made with the shipowners who thereby agreed
to be bound as "carrier" of the cargo. The time
charterer was not a party to the action.
While these decisions of the Supreme Court of
Canada show that in cases where a clause of this
kind is contained in a contract of carriage that
contract will ordinarily be between the shipper and
the shipowners, it would seem unwise (as has been
observed) to "lay down a hard and fast rule" of
general application because the "circumstances
and terms of the documentation may differ in
different cases". 6 That much seems clearly to have
been accepted by the Supreme Court itself in
Paterson where Rand J. reached his conclusion "in
the absence of an undertaking on the part of the
charterer" and where Locke J. spoke only of the
rule applicable in "ordinary cases". Thus Cormo
rant was not seen by this Court as an ordinary case
because the totality of the evidence showed that
the charterers, by their words and actions, actually
undertook to act as "carrier" of the cargo and
thereby bound themselves as principal under the
contract of carriage with the shipper.
Is this an ordinary case or, put another way,
does the evidence show that the time charterer
undertook to act as "carrier"? To answer this
question it is necessary once again to consider the
documentation and the circumstances. As for the
latter, we have important findings of fact by the
Trial Judge. Although the terms of the Time
Charter Party placed the obligation of signing the
bills of lading on the master or the purser (the
time charterer's representative on board the ship),
the bill of lading was in fact signed by or on behalf
of the time charterer's terminal superintendent.
This led the Trial Judge to conclude, at page 117 of
his reasons for judgment:
6 Per Walton J. in Samuel, Samuel & Co. v. West Hart-
lepool Steam Navigation Company (1906), 11 Com. Cas. 115
(S.C.).
4. The bill of lading was a CN bill of lading filled out and
signed precisely in the same manner as if the cargo were
going to be taken on a CN-owned ship. No where was it
indicated on the bill of lading that the CN employee who
signed it signed it on behalf of the master or the owners of
the ship but only on behalf of CN. Under the place for
signature the following is printed:
Agent on behalf of the carriers severally and not jointly.
Immediately above the place for signature the following is
printed:
IN WITNESS WHEREOF, the Agent has signed this bill of
lading on behalf of the Canadian National Railway Com
pany and its connecting railway and steamship lines, several
ly and not jointly.
It seems to me that a fair reading of that portion of the bill of
lading alone would lead a shipper to conclude that CN was
holding itself out to be the carrier and that the contract of
carriage was intended to be between the shipper and CN.
Furthermore clause 2 of part A of the bill of lading conditions
dealing with water carriage specifically provides that the word
"carrier" in the bill of lading includes the time charterer.'
This is followed, at page 118, by a finding as to the
role played by the time charterer in loading and
stowing the cargo on board the ship:
6. CN acted in part as carrier in the loading and stowing of the
cargo. It supplied the lashings for the containers. It decided
how much freight the vessel would take. The master merely
acquiesced. It was CN's decision to use every inch of avail
able space on the ship including its deck space. It was CN's
decision to have the vessel take the number of containers
which it did. The inevitable consequence of that decision was
that they would have to be stowed athwartships, with their
ends protruding over the side of the vessel. It was CN's
decision that the containers, so stowed, be secured by wire
rope instead of by "proper fittings."
The facts as found established to the Trial Judge's
satisfaction that, with the exception of clause 18
[at page 118], "everything in the relationship be
tween the plaintiff and CN points to a contract of
carriage between the plaintiff and CN".
As for the documentation, counsel for the time
charterer points to what he claims is a fatal flaw in
the Trial Judge's treatment of the bill of lading
language. He says that, in effect, the Judge
' Compare the English decisions in The Birkshire and The
Vikfrost, footnote 2 supra, to the effect that if the terms of a
charterparty the master is bound to sign a given bill of lading if
ordered by the charterer, a signature by the charterer has the
same effect as a signature by the master, the signing being but
a mere "ministerial act".
ignored the true import of the words "Agent on
behalf of the carriers severally and not jointly"
printed under the signature line on the face of the
bill of lading and especially so when they are read
along with language appearing in clause 18 — viz,
that the bill of lading "shall take effect only as a
contract with the owner or demise charterer, as the
case may be, as principal, made through the
agency of Canadian National Railways or the said
ocean carrier which in either case acts as agent
only", stress being placed on these last three
words. This language, he submits, shows that the
time charterer acted solely as the shipowners'
agent and not as principal.
While I agree that the task facing us is essen
tially one of construing the language of the bill of
lading, that task cannot be properly carried out by
focusing on a portion of clause 18 to the exclusion
of the balance. To my mind, the opening words of
that clause are paramount, for it is only in a
narrow circumstance that the clause as a whole
was intended to operate: where "the ship is not
owned by or chartered by demise to the ocean
carrier by which the goods are intended to be
carried hereunder". I have no doubt that the words
"the ship" in this clause as elsewhere in the rele
vant bill of lading provisions refer to the "Vessel"
to be identified by name in the blank space pro
vided on its face, the intention being that the time
charterer in signing the completed document
would do so "as agent only" of the "owner" of
"the ship" so identified. This failure to name the
carrying vessel is particularly critical given the
Trial Judge's finding that the shipper was not
otherwise informed that the goods would be car
ried on the chartered ship rather than on one
owned by the time charterer. Had "the ship" been
named in the bill of lading it might well have been
arguable that the time charterer would then have
acted "as agent only" for her owners. 8 That is not
the case here. The words "agent", "agency" and
"as agent only" in the vacuum that was thus
created can have no legal effect when, at the time
the bill of lading was issued, the only principal
existing within its contemplation was the time
charterer itself. 9 I must therefore agree that in
issuing the bill of lading the time charterer signed
the contract of carriage in its personal capacity
and, as time charterer, thereby became a "carrier"
thereunder as defined in clause 2 of part A of the
document as well as in Article 1 of the Hague
Rules. 10 Furthermore, the role played by the time
charterer in relation to the loading and stowage of
the cargo on board the vessel was consistent with
the fulfilment of an undertaking assumed by it as a
"carrier" under a contract of carriage that is
subject to the Hague Rules.
Article III, Rule 8; shipowners as "carrier"
Having concluded that the time charterer
accepted to act as "carrier", the Trial Judge decid
ed that clause 18 was null and void and of no
effect as between the shipper and the time charter-
er because, contrary to Article III, Rule 8 of
Hague Rules," it purported to relieve the time
charterer of duties and responsibilities to "properly
'See Q.N.S. Paper Co. v. Chartwell Shipping Ltd., [1989] 2
S.C.R. 683.
9 The definition of "ship" in clause 2 of Part A which
includes a "substituted vessel" could surely not embrace the
vessel initially chosen but, rather, one substituted therefor.
10 The term "carrier" is defined to include "the owner or the
charterer who enters into a contract of carriage with a
shipper".
" Article III, Rule 8 reads:
Article III ...
8. Any clause, covenant or agreement in a contract of car
riage relieving the carrier or the ship from liability for loss or
damage to or in connection with goods arising from negli
gence, fault or failure in the duties and obligations provided
in this Article or lessening such liability otherwise than as
provided in these Rules, shall be null and void and of no
effect.
A benefit of insurance or similar clause shall be deemed to be
a clause relieving the carrier from liability.
and carefully . .. stow ... the goods carried"
required by Article III, Rule 2. 12 I entirely agree.
Secondly, his finding that the ship and her
owners "are also carriers within the meaning of
the Rules" was fastened upon by the time charter-
er in support of a submission that it could not also
be a "carrier". It is urged that to be so considered
is patently erroneous because the scheme of the
Hague Rules admits of only one carrier acting as
such at any one time pursuant to a given contract
of carriage. As I have already decided that the
time charterer contracted for the carriage of the
goods in its personal capacity rather than as agent
for the shipowners, I do not see how the latter
could be viewed under that contract as a "carrier",
for it is plain from Article 1(a) of the Hague
Rules that the owner or charterer of a ship can be
a "carrier" only if he "enters into a contract of
carriage with a shipper"." If so then their liability
as a carrier would have to rest on some other
footing. It is unnecessary and, perhaps, even
undesirable to say anything more on the point for
purposes of this appeal. The shipowners are not
represented before us so that the question of their
liability as such is not raised. Moreover, they are,
for practical purposes, judgment proof and the
ship has been lost at sea.
12 Article III, Rule 2 reads:
Article III ...
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.
13 It has been suggested, however, that both a charterer and a
shipowner may become carriers if, in effect, they are joint
venturers in relation to the carriage of the cargo. See e.g.
Tetley, Marine Cargo Claims, 3rd ed. (1988), at p. 535.
Article IV, Rule 2 defences
The time charterer sought in its pleading to
invoke the provisions of the Hague Rules, and
contends that Article IV, Rules 2(a),(c) and (q)
exonerates it from liability for any loss which may
be found to devolve upon it as "carrier". These
read:
Article IV ...
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
the 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;
(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.
In my opinion, the Trial Judge dealt adequately
with the Rule 2(c) defence when he found on the
evidence that the sea conditions encountered on
the voyage were "precisely what would be
anticipated". As for the Rule 2(q) defence, noth
ing in the record would bring the case within it.
I am also satisfied that the Rule 2(a) defence
must fail. Reliance here is placed upon the words
"act, neglect, or default ... in the management of
the ship", the argument being that the negligence
in stowing the cargo was an error of that kind. The
decided cases elaborate the distinction to be drawn
between an error in "navigation" and an error in
"management". 14 I am not satisfied that the time
charterer has made out the defence. That it is not
available in a case of improper stowage is apparent
from The Ferro, [1893] P. 38 (Div. Ct.), a case
decided under the U.S. Harter Act of 1893 con
14 The distinction is explained in Falconbridge Nickel Mines
Ltd. et al. v. Chimo Shipping Ltd. et al., [1969] 2 Ex.C.R. 261
where, at p. 285 et seq. Kerr J. refers to cases on the point
decided both in Canada and in England.
taining somewhat similar language, and which
case was referred to by the President, Sir Francis
Jeune, as well as by Gorrell Barnes J. in The
Glenochil, [1896] P. 10 (Div. Ct.). At page 18,
Gorrell Barnes J. summarized the holding in that
case:
That was a case in which it was sought to exonerate the
shipowner from improper stowage by the stevedore under the
words "navigation or management of the ship"; and we held in
this Court that negligent stowage by the stevedore was not
within those words ...
And see also Gosse Millard v. Canadian Govern
ment Merchant Marine, [1928] 1 K.B. 717 (C.A.),
per Greer L.J., at page 744; affd, [1929] A.C. 223
(H.L.). In any case, even if it could somehow be
shown that the manner of stowage constituted an
error in management, I do not think that this could
avail the time charterer because, in the present
case, there was at very least, to adopt the words of
Sir Francis Jeune in The Glenochil, at page 16, a
"want of care of cargo" rather than a "want of
care of vessel indirectly affecting the cargo."
Per package limitation
The time charterer says that it is not liable
beyond the sum of $1500 for the lost goods
because the three containers and not the cases of
beer are to be regarded as the "packages" to which
Article IV, Rule 5 of the Hague Rules applies:
Article IV ...
5. Neither the carrier nor the ship shall in any event be or
become liable for any loss or damage to or in connection with
goods in an amount exceeding five hundred dollars per package
or unit, or the equivalent of that sum in other currency, unless
the nature and value of such goods have been declared by the
shipper before shipment and inserted in the bill of lading.
The Trial Judge rejected this argument as well,
finding that the calculation is to be based on the
number of cases of beer stowed in the three con
tainers, each case to be counted as a "package",
rather than on the number of containers involved.
He took his guidance from a decision of the Trial
Division in International Factory Sales Service
Ltd. v. The "Alexandr Serafimovich", [1976] 1
F.C. 35, at page 49, that the question must be
answered by gleaning the intention of the parties
from "what is stated in the shipping documents,
things said by the parties and the course of dealing
between them".
I can find no error in the Trial Judge's conclu
sion which appears at pages 120-121 of his reasons
for judgment:
The shipping documents in this matter are the bill of lading
and the waybills for each container. The bill of lading, in the
column indicating the number of packages, specifically sets out
that there are a total of four thousand two hundred and forty
(4,240) packages.
The waybills for each container refer to the container
number and then that notation on each waybill is followed by
the following notation:
Containing 1,413 c/s beer
or
Cont. 1,413 c/s beer.
Under rule 3(b) of Article III of the Rules, if a bill of lading
is issued by the carrier it shall show either the number of
packages or pieces or the quantity or weight as the case may be
as furnished by the shipper.
Here both the bill of lading and the waybill showed the
number of cases of beer or packages accepted by CN. In
addition to this evidence there was also the evidence of the
course of dealings between the parties. The plaintiff had previ
ously placed many such shipments with CN. It is common
knowledge that beer is shipped in cases. There is no doubt in
my mind that CN was fully aware, notwithstanding the fact
that the containers were delivered to it in a sealed condition,
that it had received approximately 4,000 cases of beer for
shipment to Goose Bay.
Pre-judgment interest
I come now to the cross-appeal in which it is
asserted that the Trial Judge erred in limiting the
payment of pre-judgment interest to two years
from the date the action was commenced rather
than allowing it for the whole period from the date
of the loss. It is a small though important point.
Counsel for the time charterer had submitted at
trial that no pre-judgment interest should be
allowed because of the length of time taken to
bring the matter on for trial. Counsel for the
shipper had contended that the time which
elapsed, though lengthy, was nevertheless required.
In disposing of the point, the Trial Judge had this
to say at page 121 of his reasons:
I agree with CN's submission that there was a delay in
bringing the matter on for trial but do not intend to assess
blame on one side or the other for that delay. If counsel for the
plaintiff was determined to have an early trial I would expect
that two years should be an adequate period of time to bring
the matter on.
As the awarding of pre-judgment interest
involves the exercise of a discretion, it would not
normally be proper to interfere on appeal. The
shipper contends, however, that we ought to do so
because by "simply assuming that there had been
delays in reaching trial and declining to consider
reasons or fault for the delay", the Trial Judge
failed to exercise his discretion properly. There
was, says counsel, no suggestion that the shipper
was responsible for any delay. Moreover, she sub
mits that delay by itself cannot justify relieving a
defendant from the payment of interest on dam
ages withheld from a successful plaintiff.
Underlying this last submission is what counsel
for the shipper contends is an aspect of damages
assessment in maritime claims that has been
unique to admiralty law for many years. The
Court under its admiralty jurisdiction has the
power to award pre-judgment interest as an inte
gral part of the damages suffered in respect of
rights either ex contractu or ex delicto. The rule is
rooted in civil law. It evolved in England where it
has been applied from very early times (see e.g. In
re the `Dundee" (1827), 2 Hagg. 137 (Adm.); In
re the "Gazelle" (1844), 2 W. Rob. 279 (Adm.);
In re the "Hebe" (1847), 2 W. Rob. 530 (Adm.)),
and has been carried into Canada. It was
explained in Canadian Brine Ltd. v. The Ship
Scott Misener and her Owners, [ 1962] Ex.C.R.
441 where Wells D.J.A., after referring to English
decisions, 15 said at page 452:
15 In three of these decisions the basis for the rule was
articulated as follows:
per Sir Henry Duke P. in The Joannis Vatis (No. 2), [1922]
p. 213 (P.D.A.), at p. 223:
Here two special matters are to be considered. In this
jurisdiction a rule exists with regard to interest upon
damages which is well established and proper to be taken
into account. The registrar and merchants include in their
(Continued on next page)
It would seem under the authorities of these cases to be clearly
established that there is a discretion in a Court of Admiralty to
award interest whether the rights being dealt with arose ex
contractu or ex delicto. It is interesting to note that it was Sir
Robert Phillimore's judgment in The Northumbria case which
was relied on by Martin L.J.A. in delivering judgment at trial
in the Winslow Marine Railway and Ship Building Company
v. The Ship Pacifico ([1924] Ex.C.R. 90) case, the judgment of
which in appeal I have already quoted. The trial judgment was,
of course, expressly approved by MacLean J. on appeal. Now in
the case at bar it is quite true that no special claim for interest
was expressed in the statement of claim but as I understand the
equitable jurisdiction vested in the Court of Admiralty it is
quite clear interest is not granted as something apart from the
damages but as an integral part of them.
The principle has since been approved by the
Supreme Court of Canada: Canadian General
Electric Company Limited v. Pickford & Black
(Continued from previous page)
computation of damage by collision interest upon the items
of claim from the time of accrual of the damage until the
date of the assessment. The practice was discussed and
confirmed in The Kong Magnus ([1891] p. 223), and is in
conformity with what was said long since by Lord Stowell
in The Dundee ((1827) 2 Hagg. Adm. 137, p. 143). The
sum so calculated is given not as interest on a debt but as
part of the damages.
per Robert Phillimore in The Northumbria (1869), L.R.A.
& E. 6, at p. 10:
But it appears to me quite a sufficient answer to these
authorities to say, that the Admiralty, in the exercise of an
equitable jurisdiction, has proceeded upon another and a
different principle from that on which the common law
authorities appear to be founded. The principle adopted by
the Admiralty Court has been that of the civil law, that
interest was always due to the obligee when payment was
not made, ex mora of the obligor; and that, whether the
obligation arose ex contractu or ex delicto.
per Lord Merriman P. in The Berwickshire, [1950] P. 204,
at p. 208:
As I have already indicated, there can be no doubt that the
principle of including in the damages for a collision, at the
discretion of the judge, interest on the amount recovered,
at a rate, for a period, and whether in respect of the whole
or part of the amount recovered, all of which matters are
also respectively at the discretion of the judge, was firmly
embodied in the Admiralty jurisdiction at a time when the
right to award interest by way of damages at common law
depended, speaking generally, on the Statute 3 & 4, Wm.
IV, c. 42, ss. 28 and 29, or on the express terms of a
contract, or on those imported into mercantile contracts by
the custom of merchants, as, for example, on bills of
exchange or promissory notes: see the notes to the common
indebitatus count for interest, in Bullen and Leake's Prece
dents of Pleadings (3rd ed.), pp. 51-52.
Limited, [1972] S.C.R. 52; Drew Brown Limited
v. The Ship "Orient Trader" et al., [1974] S.C.R.
1286. It was again explained and applied by Addy
J. in Bell Telephone Co. v. The `Mar-Tirenno",
[1974] 1 F.C. 294 (T.D.), which was in turn
followed by this Court in Davie Shipbuilding Lim
ited v. The Queen, [1984] 1 F.C. 461 (C.A.).
While in Canadian Brine the discretion was
exercised in relation to the quality of the defen
dant's negligent act, it is now apparent that the
conduct of a plaintiff in the litigation is also
embraced. At page 312 of Bell Telephone, Addy J.
expressed the view that a wider discretion exists,
and gave as a general guide the following:
... I am satisfied that the interest should be awarded unless
there should be some reason flowing from the plaintfiffls
conduct or some other reason to reduce or eliminate the claim
for payment of interest ...
No case has been cited for including the conduct
of counsel for a plaintiff, but I think the authori
ties contemplate that possibility as well. At the
same time, given that pre-judgment interest is
viewed as an element or as part of the damages
suffered, care in exercising the discretion is
required lest a successful plaintiff be deprived of
full compensation for his injury.
In the present case, as the Trial Judge expressly
refrained from assigning blame to "one side or the
other" for the time taken, the decision to limit
recovery of pre-judgment interest was not attribut
ed to conduct on the part of the shipper or its
counsel. He appears, rather, to have founded that
decision on the view that a period of two years was
adequate for bringing the action to trial if [at page
121] "counsel for the plaintiff was determined to
have an early trial", implying thereby that counsel
had not acted with diligence. I have no doubt that
the Judge was quite entitled to have regard to the
length of time taken as compared with some
reasonable norm but it would be wrong to do so
from that consideration alone without first having
regard to any explanation that might be forthcom
ing. Some actions by their very nature do, after all,
require more time than others to get ready for
trial.
The trial transcript contains a verbatim account
of submissions by counsel on the point, but I
cannot be satisfied that these left the Trial Judge
with the necessary assistance. 16 The time charterer
argued against any award of pre-judgment interest
and, at any rate, for a reduced award. The shipper
asked for a full measure of interest, and submitted
(at page 244) that no "unnecessary delays" had
been created. In these circumstances, I think it
was incumbent on the Judge to require an explana
tion by looking at factors that might justify the
delay. I am thinking, for example, of the number
of parties to the action and their places of resi
dences in different parts of the country as possibly
requiring more time for exchange of pleadings,
discovery of documents and pre-trial discovery
proceedings; the places of residence of counsel; the
willingness and ability of all counsel to co-operate
with one another in advancing the litigation
towards trial; and any other relevant factor. In this
way the Trial Judge would have been better able, I
think, to exercise his discretion one way or the
other. Taking the record as it stands I can find
nothing therein which would justify a departure
from the normal rule for an award of pre-judg
ment interest in cases of total loss and, according
ly, would allow the shipper interest from the date
the loss occurred. To do less would not amount, as
should ordinarily be the case, to restitutio in inte-
grum under the applicable principle.
Natural justice argument
Before disposing of these proceedings I should
deal with a submission made against the judgment
on behalf of the master to the effect that in the
circumstances described below he was denied
16 Counsel for the time charterer drew attention to his sub
missions before the Trial Judge (see Transcript, Vol. 6, at p.
202-204), but I can see nothing in those submissions or in the
response of counsel for the shipper (p. 244-245) as positively
demonstrates any material delay in bringing the action on for
trial was attributable to the shipper or its counsel.
natural justice because no opportunity to make a
defence was afforded him at trial. The record
shows that he appeared at the commencement of
the trial on his own behalf. It soon became evident
to him that his financial position would not enable
him to meet any judgment in respect of the loss
claimed. Counsel, for the shipper then indicated
that no attempt would be made to recover upon a
judgment that might be rendered against the
master in favour of her client. After that, counsel
for the time charterer spoke to his client's cross-
claim against the master by indicating that, in the
circumstances, it would not be pursued and,
accordingly, that he could see no reason for the
master to participate in the trial on that account.
It was following these interventions that the
master withdrew from the courtroom, and the trial
proceeded in his absence. In his reasons for judg
ment of November 17, 1986, the Trial Judge
allowed a period of time for granting leave to
make written representations on the question of
the master's liability. The last of these representa
tions were filed by the master's counsel in the
spring of 1987. In an addendum to those reasons,
the Trial Judge concluded that the master was
indeed liable and granted the shipper leave to enter
a judgment against him as well.
I can find no merit in the objection for it seems
abundantly clear that the master left the trial
courtroom quite on his own accord; he could have
remained and participated in the proceeding had
he desired to do so. I can find nothing in what
transpired during his presence in the courtroom
that might be taken to mean that his possible
liability for the claim would not be investigated or,
less still, that a judgment would not be rendered
against him. I must therefore reject this objection.
Disposition
In the result I would dismiss the appeal with
costs to the respondent (plaintiff) shipper, and
would allow the cross-appeal also with costs to that
party. I would vary the judgment below rendered
August 31, 1987 by deleting from paragraph 1
thereof the words and numbers "for a period of.
two years, for a total judgment in the sum of
THIRTY SEVEN THOUSAND NINE HUNDRED AND
EIGHTY SEVEN DOLLARS AND SEVENTY ONE
CENTS ($37,987.71)," and by substituting therefor
from November 15, 1980 to the date hereof.
so that paragraph 1 as varied shall read:
I. The Plaintiffs, Carling O'Keefe Breweries of Canada Lim
ited and Norlab Ltd., recover from the Defendants CN Marine
Inc., The Labrador Shipping Co. Ltd., The Ship NEWFOUND-
LAND COAST and Roger Sirois, the principal amount of
THIRTY ONE THOUSAND THREE HUNDRED AND NINETY FOUR
DOLLARS AND EIGHTY CENTS (31,394.80) together with pre
judgment interest at ten percent (10%) from November 15,
1980 to the date hereof.
In all other respects I would confirm the said
judgment.
IACOBucCi C.J.: I agree.
HEALD J.A.: I concur.
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.