Judgments

Decision Information

Rhône (The) v. Peter AB Widener (The) (C.A.)

Collection Judgments
Date 1990-02-06
Report citation [1990] 3 F.C. 185
File numbers A-408-88
Subjects Maritime Law

Decision Content

A-408-88
Great Lakes Towing Company (Appellant) v.
North Central Maritime Corporation (Respond- ent)
A-409-88
Great Lakes Towing Company, The Tug Ohio and the Tug South Carolina (Defendants-Appellants)
v.
The Owners and Operators of the M.V. Rhone, Vinalmar S.A. of Basle, Switzerland, The M.V. Rhone (Plaintiffs-Respondents)
and
The M.V. Peter A.B. Widener, The Owners and Operators of the M.V. Peter A.B. Widener, The Tug Ste. Marie II, The Tug Rival, McAllister Towing & Salvage Ltd., Bury Court Shipping Company Ltd., North Central Maritime Corpora tion, Seaway Dredge & Dock Company Incorpo rated (Now "Seaway Towing Inc.") (Defendants- Respondents)
INDEXED AS: RHONE (THE) V. PETER AB WIDENER (THE) (C.A.)
Court of Appeal, Pratte, Hugessen and Desjardins JJ.A.—Montreal, November 7 and 8, 1989; Ottawa, February 6, 1990.
Maritime law — Torts — Appeal from trial judgment finding two tugs and barge under tow responsible for damages caused by collision between barge and moored vessel — Helper tugs not liable where under control and management of supe rior tug — No obligation to lead disculpatory or any evidence — Res ipsa loquitur not creating presumption of law Limitation of liability under Canada Shipping Act, s. 575 Owners must show no actual fault of physical person who is directing mind and will of company — Inadequate supervision of captain of lead tug not constituting actual fault as not contributing to casualty — Person responsible for fleet main tenance not in actual fault in light of finding inspections numerous and sophisticated — Finding of actual fault making shipowners insurers whenever casualty resulting from equip ment failure, contrary to law — Captain of lead tug directing mind and will of corporate owner because of extended duties
for conduct of whole flotilla — Sufficient to support dismissal of claim to limit liability.
Maritime law — Contracts — Contributory negligence of barge owners in contract action not pleaded, although pleaded in related tort action — Cannot be raised for first time on appeal — Limitation of liability clause in published tariff of rates not binding as no evidence defendant receiving copy of tariff or informed of its existence.
These were appeals from the trial judgment finding two tugs (the Ohio and the South Carolina) and the tow (Peter A.B. Widener) liable for damages sustained by the Rhone. The Rhone was moored at a pier in the Port of Montreal when it was struck by the Widener, a barge which was in tow of four tugs. The Ohio was the lead tug and her master had overall command of the tow. The current caused the Widener to shear to starboard, placing strain on the Ohio's towing machine and causing the fair-lead to break. The shear proved uncontrollable and the collision resulted. The owners of the Rhone brought an action in tort against all five ships in the flotilla and the owners of the Widener brought an action in contract against the tug owners. The Trial Judge found that the collision was caused by faults committed in the navigation of the Ohio, the Widener and the South Carolina. He also found the Widener at fault for failing to maintain proper communication with the master of the Ohio and for not dropping anchor. He held that there was a presumption of fault against the South Carolina which had not been rebutted because her master had not given evidence at trial. He assigned eighty per cent of the responsibility to the owners of the two tugs and the balance to the owners of the Widener. He dismissed the tug owners' claim to limit their liability under Canada Shipping Act, paragraph 575(I)(d) which limits a shipowner's liability where property damage is caused through the act or omission of any person, whether on the ship or not, in the navigation of the ship where the shipowner is not actually at fault. He found that the directing mind and will of the corporate owners of the tugs was repre sented by the captains and that it had not been shown that the collision had occurred without actual fault and privity on their part. In the contract action, he ordered that the owners of the Widener should recover the entire amount of their damage from the owners of the responsible tugs, finding that said owners were in breach of their contractual obligations and that the limitation of liability in the published tariff did not form part of the contract between the parties. In dismissing the action against one of the tugs, the Trial Judge made a Sander- son order by which the costs of the successful defendant were to be borne by the unsuccessful defendants. The issues on appeal concerned findings of liability arising from damage caused to the Rhone, the rights of the tug owners to limit liability under the Canada Shipping Act and liability arising from damage caused to the Widener.
Held, the appeals should be dismissed except the condemna tion against the tug South Carolina should be struck.
Although the Trial Judge's findings of fault against the Ohio were solidly based in the evidence, his finding of fault against the South Carolina was based on what he perceived to be a failure on the part of that ship to lead any evidence as to her actions at the critical time. The Trial Judge approached the matter as if the rule of res ipsa loquitur created a presumption of law, which it does not. It is simply a description of a situation. The Trial Judge also erred in thinking that there was no evidence as to the orders received by the South Carolina, the manner of carrying them out and the decision to get out of the way. Statements of the two captains on board the South Carolina entered into evidence by agreement, and the examina tion for discovery of the captain of the Ohio indicated that the South Carolina carried out the orders received from the tug Ohio up to and including the moment of collision. Helper tugs should not be condemned for a fault not their own, where they are under the control and management of a superior tug. The South Carolina was under no obligation to lead independent evidence to disculpate herself, or indeed to lead any evidence at all. Since there was uncontradicted evidence as to the South Carolina's actions and as it was wholly disculpatory, the Trial Judge erred in finding this tug at fault. As to the liability of the Widener, the Trial Judge found its captain negligent for failing to inform himself as to what was going on on board the Ohio when the towing machine broke, not simply for failing to communicate with the captain of the Ohio. Although the captain testified that he had no reason to suspect that anything was wrong, it was open to the Trial Judge to prefer the expert's evidence (that if the captain had been keeping a proper lookout, he could not have failed to realize that the Ohio had lost control of the tow) to that of the captain. There was no manifest error. Once it is accepted that the captain on the Widener was negligent in not realizing what was happening on board the Ohio, the Trial Judge's further finding that he was at fault for failure to drop anchor was understandable. Dropping anchor was one of the few things the Widener could do in her own navigation. The Trial Judge's acceptance of evidence that a timely dropping of anchors would have prevented the collision justified his finding of fault. Furthermore, the Widener's owners had placed her in command of a captain, who was their servant and for whose actions they were responsible. They cannot escape liability for errors of navigation of their own servant. Failure to drop anchor was a specific error in the navigation of the Widener, not an error in the navigation of the tug. The Trial Judge's apportionment of liability was reason able and would have been the same even in the absence of the
South Carolina. It was within the Trial Judge's discretion to make a Sanderson order.
The owners of a tug can limit their liability based on the tonnage of the tug alone. The burden of establishing that he is without "actual fault" and is therefore entitled to limit liability falls upon the shipowner and is a heavy one. Where a ship is owned by a body corporate, the actual fault which will have the effect of denying the benefit of the statutory limitation of liability to the corporate shipowner must be that of a physical person who is "the directing mind and will" of the company. The Trial Judge found actual fault in the vice-president of the tugs' corporate owner because of his inadequate supervision of the captain of the Ohio. While an owner may be in actual fault through sins of omission, such omissions must be causally related to the casualty. There was no suggestion that a lack of supervision by the owners contributed to the casualty. The captain's specific acts of negligence were within the normal authority and scope of activity of a captain. Secondly, the Trial Judge erred in finding that the man responsible for mainte nance and repairs of the fleet was in actual fault. Although there was a causal relation between the breaking of the towing machine and the damage, the Trial Judge imposed an imposs ibly high standard upon the owners. He described the compa- ny's equipment inspection and maintenance systems as "numer- ous and sophisticated". The consequence of his finding is to turn shipowners into insurers every time a casualty results from an equipment failure. That is not the law. Finally, although the case was at the outer margins of the application of the doctrine of corporate identification there was no error in principle or palpable misunderstanding of the facts when the Trial Judge found that the captain of the tug, Ohio was a directing mind and will of the corporate owner. The question of who is a corporation's alter ego or directing mind and will is essentially one of fact: a corporation may have more than one "directing mind and will" and different persons may constitute the alter ego for specific purposes; and, an individual may by reason of geographical isolation or other circumstances be considered to be the alter ego for certain purposes even though that individu al may not occupy a position at the top of the corporate hierarchy. Kelch had extended duties with respect to the whole fleet. He was the towmaster and vested with authority to give commands to all the captains of the fleet, although his appoint ment to command the flotilla was not made by or with the knowledge of anyone senior to him in the organization. He was described as part of management, as being a salaried employee, as the fleet captain, the "trouble shooter" and the person responsible for breaking in new captains. He also took care of the papers for all 44 of the tugs. The fact that he was also acting as master and that his negligence was committed in that capacity is irrelevant. In light of the heavy burden on the shipowner who invokes the statutory limitation, these circum stances were enough to permit the Trial Judge to find that Captain Kelch was a directing mind and will of the corporate owner, at least for the purposes of this specific tow. The finding
with respect to Ketch is enough to support the dismissal of the claim of the owner to limit liability under the Act.
The Trial Judge did not apportion damages in the contract action for damage to the Widener. Although contributory negligence was pleaded in the tort action, it was not pleaded in the contract action and was not considered. It cannot be raised for the first time on appeal. The plaintiff was not bound by a limitation of liability clause in its published tariff of rates since there was no evidence that the defendant received a copy of the tariff or was even informed of the existence of a tariff contain ing a limitation of liability.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Canada Shipping Act, R.S.C., 1985, c. S-9, s. 575(1). Canada Shipping Act, R.S.C. 1970, c. S-9, s. 647(2).
CASES JUDICIALLY CONSIDERED
APPLIED:
Richardson (James) & Sons, Ltd. v. "Robert J. Paisley", [1930] 2 D.L.R. 257 (P.C.); Stein et al. v. "Kathy K" et al. (The Ship), [1976] 2 S.C.R. 802; (1975), 62 D.L.R. (3d) 1; 6 N.R. 359; Lennard's Carrying Company v. Asiatic Petroleum Company, [1915] A.C. 705 (H.L.); Wishing Star Fishing Co. v. B.C. Baron (The), [1988] 2 F.C. 325; (1987), 45 D.L.R. (4th) 321; 81 N.R. 309 (C.A.); Canadian Dredge & Dock Co. et al. v. The Queen, [1985] 1 S.C.R. 662; (1985), 19 C.C.C. (3d) 1; 45 C.R. (3d) 289; 59 N.R. 241; 9 O.A.C. 321.
DISTINGUISHED:
The Lady Gwendolen, [1965] 1 Lloyd's Rep. 335 (C.A.); Grand Champion Tankers Ltd v Norpipe A/S (The Marion), [1984] 2 All ER 343 (H.L.); Northern Fishing Company (Hull), Ltd. v. Eddom and Others, [1960] 1 Lloyd's Rep. 1 (H.L.).
CONSIDERED:
The Bramley Moore, [1963] 2 Lloyd's Rep. 429 (C.A.); H.L. Bolton (Engineering) Co. Ltd. v. T.J. Graham & Sons Ltd., [1957] 1 Q.B. 159 (C.A.); R. v. St. Lawrence Corp. Ltd. (and nineteen others), [1969] 2 O.R. 305; (1969), 5 D.L.R. (3d) 263; [1969] 3 C.C.C. 263; 59 C.P.R. 97; 7 C.R.N.S. 265 (CA.); R. v. H.J. O'Connell Ltd., [1962] B.R. 666 (Que. C.A.).
REFERRED To:
Sanderson v. Blyth Theatre Company, [1903] 2 K.B. 533 (C.A.); Macdonalds Consolidated Ltd. v. The Viajero, [1977] 1 F.C. 648 (T.D.); Apple Computer, Inc. et al. v. Mackintosh Computers Ltd. et al. (1987), 43 D.L.R.
(4th) 184; 14 C.I.P.R. 315; 12 F.T.R. 287 (F.C.T.D.); McCutcheon v. MacBrayne (David), Ltd., [1964] 1 All E.R. 430 (H.L.).
AUTHORS CITED
Fleming, John G. The Law of Torts, 7th ed. Sydney: The Law Book Company Ltd., 1987.
McGuffie, Kenneth C. British Shipping Laws, vol. 4 "The Law of Collisions at Sea", London: Stevens & Sons Limited, 1961.
Parks, Alex L. The Law of Tug, Tow and Pilotage, 2nd ed. Centreville, Maryland: Cornell Maritime Press, 1982.
Waddams, S. M. The Law of Contracts, 2nd ed. Toronto: Canada Law Book Ltd., 1984.
COUNSEL:
Marc Nadon for Great Lakes Towing Company.
Trevor H. Bishop for McAllister Towing & Salvage Ltd.
Jon H. Scott and Nancy Cleman for Vinal- mar S.A. (Owners of the M.V. "Rhone"). Edouard Baudry for North Central Maritime Corporation.
SOLICITORS:
Martineau, Walker, Montreal for Great Lakes Towing Company.
Brisset, Bishop, Davidson, Montreal, for McAllister Towing & Salvage Ltd.
McMaster Meighen, Montreal, for Vinalmar S.A. (Owners of the M.V. "Rhone").
Lavery, O'Brien, Montreal, for North Central Maritime Corporation.
The following are the reasons for judgment rendered in English by
HUGESSEN J.A.: THE FACTS
These two appeals arise out of a collision which occurred November 7, 1980, in the Port of Mon- treal. The motor vessel Rhone was moored at Pier 34. She was struck on her port side forward by the vessel Peter A.B. Widener, which was at that time in tow of four tugs, the Ohio, the South Carolina, the Ste. Marie II and the Rival.
The Rhone is a wine tanker. She is owned by Vinalmar S.A. of Basle, Switzerland.
The Widener is 605 feet long. She is a dead ship. She had once been a laker but her engines have been removed and her rudder immobilized. She served as a barge, albeit a very large one. She had no power other than that furnished by small auxili ary motors, used to activate running lights, anchor winches and other deck gear. She was in command of Captain Lyons and had a crew of three. She is owned by North Central Maritime Corporation.
The Ohio is a large and powerful across-the- lakes tug. She has 2,000 h.p. and was at all relevant times in command of Captain Kelch.
The South Carolina is a smaller tug, having 1,230 h.p. and was at all relevant times in com mand of Captain Kurdas.
Both the Ohio and South Carolina are owned by Great Lakes Towing Company.
The Ste. Marie II is a little smaller than the South Carolina, having 1,000 h.p., and was in command of Captain Wellington. She is owned by the owners of the Widener, North Central Mari time Corporation.
The Rival is the smallest of the four tugs, with 950 h.p. She was in command of Captain Hetu and is owned by McAllister Towing & Salvage Ltd. and operated by Bury Court Shipping Com pany Ltd.
The five ships comprising the flotilla of which the Widener was the centre were disposed as fol lows at the relevant time:
The Ohio was the lead tug and had a towline going from the towing machine on her after deck back to a bridle made fast to the stem of the Widener. The South Carolina was made fast by a line from her bow to a stanchion on the Widener's deck, on the starboard side at about one-third of the way aft. The Ste. Marie II was attached in a similar fashion at a corresponding position on the Widener's port side. The Rival was made fast to the stern of the Widener by a line leading from her bow.
The entire flotilla was in the overall command of Captain Kelch, in the Ohio, who acted as towmaster.
The Widener carried a load of grain which she had loaded in Saginaw, Michigan. For most of the trip down the Lakes and through the Seaway, only three tugs were used, the Ohio, the South Caroli- na and the Ste. Marie II, with the Ohio always being the lead tug and her master, Kelch, always having overall command of the tow. At the St. Lambert Lock, the Rival was added to the flotilla as a stern tug to aid the manceuvering in the confined waters of the Port of Montreal.
The destination of the Widener was Pier 4, in the inner basin of the harbour. Accordingly, on coming out of the Seaway entrance, just below St. Helen's Island, the flotilla immediately executed a turn to port of almost 180 degrees and proceeded upriver against and across the St. Mary's current. At a point upstream of Pier 34, where the Rhone lay, the current caught the Widener's port bow so as to cause her to shear to starboard. The shear proved difficult to control and, to add to the difficulty, the very great strain on the Ohio's towing machine caused the fairlead to break, resulting in several hundred feet of towline being paid out before the effect could be temporarily remedied and the full towing power of the Ohio again brought to bear on the Widener's bow. Not withstanding the efforts of all four tugs, the Wid- ener's shear proved uncontrollable and her star board side forward came into contact with the Rhone's port side forward.
Immediately after the collision, the South Carolina disengaged and backed out so as to avoid being caught between the Widener and the Rhone. Thereafter the Widener dropped an anchor, which had the effect not only of stopping her drift but also of causing her to lie with her head straight to the current. In due course, the four tugs resumed their efforts and the Widener was navigated with out further incident to her destination at Pier 4.
Both vessels sustained damage in the collision. The damages to the Rhone were agreed at the sum
of $88,357.89 and those to the Widener at $49,200.
THE PROCEEDINGS
Two actions were brought in the Trial Division. In the first, T-5225-80, the owners of the Rhone sought recovery from all five of the ships of the flotilla, all of which denied liability. In addition, Great Lakes Towing, as owners of the Ohio and the South Carolina, by counterclaim sought to limit their liability pursuant to the provisions of section 575 of the Canada Shipping Act.'
In action T-1066-81, the owners of the Widener sought to recover their damages from Great Lakes Towing for breach of the contract of towage. The defendant, besides denying liability, also pleaded a contractual limitation of liability based upon its published tariff.
THE TRIAL JUDGMENT
The Trial Judge, Denault J., [Ship "Rhone" v. Ship "Peter A.B. Widener" et al. (1988), 18 F.T.R. 81 (F.C.T.D.)] found that the collision was caused by faults committed in the navigation of three of the five members of the flotilla, namely, the Ohio, the Widener and the South Carolina. He found that the Ste. Marie II and the Rival had successfully rebutted any presumption of fault arising against them by reason of having been involved in the collision and accordingly absolved their owners from liability.
The Trial Judge was most severe in his finding of fault against Captain Kelch, the master of the Ohio, who, it will be recalled, had overall com mand of the entire flotilla. In particular, he found Captain Kelch at fault:
1. In turning at the Seaway entrance buoy, thereby obliging the flotilla to cross the St. Mary's current, rather than going further downstream to turn at Vickers and then breasting the current directly all the way upriver to its destination.
I R.S.C., 1985, c. S-9.
2. In proceeding at full speed once the turn had been effected, thereby denying to himself and to the flotilla as a whole any reserve power to deal with an emergency.
3. In failing to maintain adequate communica tion between himself and the other tugs and with Captain Lyons on board the tow.
As regards the Widener, the Trial Judge found her to be at fault for having failed to maintain proper communication with Captain Kelch aboard the tug Ohio; for having failed to suggest to Cap tain Kelch that the Widener should drop her anchor before the collision occurred and for having failed, in default of having received orders to drop an anchor, to take such action independently.
In so far as the South Carolina was concerned, the Trial Judge held that there was a presumption of fault against her and that this had not been rebutted because her master had failed to give evidence at the trial.
As between the defendants whom he found to be liable, the Trial Judge assigned eighty per cent of the responsibility to Great Lakes Towing, as owners of the Ohio and South Carolina, and the balance of twenty per cent to North Central Mari time, as the owners of the Widener.
The Trial Judge dismissed the claim for limita tion of liability. For the purposes of the action, he found that the directing mind and will of the corporate owners of the tugs Ohio and South Carolina was represented by three persons, Cap tains Lloyd, White and Kelch, and that it had not been shown that the collision had occurred without actual fault and privity on their part.
In dismissing the RhOne's action against the tug Rival, the Trial Judge made a Sanderson order 2 by which the costs of the successful defendant were to be borne by the unsuccessful defendants. In addition, the Trial Judge ordered that the plain tiffs should recover additional counsel fees for junior counsel from the unsuccessful defendants.
2 See Sanderson v. Blyth Theatre Company, [1903] 2 K.B. 533 (C.A.).
In case No. T-1066-81, the Trial Judge found that Great Lakes Towing was in breach of its contractual obligations to North Central Mari time, the owners of the Widener. He found that the limitation of liability contained in the Great Lakes Towing published tariff did not form part of the contract between the parties and refused to give effect to it. He ordered that the owners of the Widener should recover the entire amount of their damage from Great Lakes Towing.
THE APPEALS
In appeal No. A-409-88, the owners of the Ohio and the South Carolina attack the findings and conclusions against those ships in action No. T-5225-80; a cross-appeal by the owners of the Widener puts in issue the Trial Judge's finding of fault against that ship.
In Appeal No. A-408-88, Great Lakes Towing attacks the judgment in action No. T-1066-81.
THE ISSUES
The following issues fall to be determined on the present appeal:
A. Liability arising from damage caused to the Rhone.
1. The Ohio.
2. The South Carolina.
3. The Widener.
4. Others.
5. Apportionment.
6. Costs.
B. The right of the owners of the Ohio and South Carolina to limit liability pursuant to
section 575 of the Canada Shipping Act.
C. Liability arising from damage caused to the Widener.
1. Contributory negligence.
2. Limitation of liability.
A. Liability arising from damage caused to the Rhone
1. The Ohio
There was ample evidence to support the Trial Judge's findings of fault against Captain Kelch, the master of the Ohio. Much of the evidence came from Captain Kelch himself who, although the Trial Judge did not have the benefit of seeing him, appears clearly from the transcripts of his examination for discovery (which was filed as part of the evidence at trial) and his commission evi dence, as an arrogant and opinionated personage believing himself capable of dealing with any sit uation even in strange waters with a difficult tow. There was evidence,, which the Trial Judge clearly accepted, to show that Captain Kelch had received advice to take the flotilla downstream as far as Vickers before undertaking his turn, but that he decided to reject it because he was in a hurry to bring the trip to an end. There was also evidence that he was warned by the master of the Rival that the speed of the flotilla up the St. Mary's current was too high, but that he ignored such warning. Finally, there was evidence that he failed to com municate his plans of action to the other ships of the flotilla and to keep their masters advised of developments as they occurred, even when such developments were of such major importance as the failure of the towing machine and the resultant paying out of the cable. Not only has it not been shown that the Trial Judge committed any mani fest error in his appreciation of Captain Ketch's conduct, but, on the contrary, it is quite apparent that his findings of fault were solidly based in the evidence and that any other finding would be perverse.
The principal argument advanced by Great Lakes Towing, the owners of the Ohio, on this aspect of the matter is that the whole of the responsibility for the collision is due to the negli gent operation of the stern tug, the Rival. That proposition finds little support in the evidence. It was, after careful consideration, rejected by the Trial Judge and I see no grounds on which we should interfere.
2. The South Carolina
The Trial Judge's finding of fault against the South Carolina appears to have been based entire ly on what he perceived to be a failure on the part of that ship to lead any evidence as to her actions at the critical time. He said [at page 103]:
Little is known about the "South Carolina". Capt. Kurdas was at the tiller but he did not testify. All that is known about this tug is that Capt. Kelch directed it to work to starboard of the "Widener" because of its greater strength and power. However, we have no information on the conversations or communications between Capts. Kelch and Kurdas, and in particular whether the latter carried out the orders received or even whether he alerted the tug master to the impending collision. Similarly, we do not know the exact moment and on whose order or suggestion the decision was taken by the "South Carolina" to get out of the way so as to avoid being crushed between the "Rhone" and the "Widener". In short, the owners of this tug and its master did not discharge, so far as the "Rhone" is concerned, the burden of establishing that they had committed no fault or negligence.
I must say at the outset that, as a matter of law, I have great doubt that there was any burden upon the South Carolina to show that she was not at fault once there was evidence, as there was here, of causal fault committed by other actors, notably the tug Ohio, which was in overall charge of the tow. The Trial Judge appears to have approached the matter as if the so-called rule of res ipsa loquitur created a presumption of law. It does not:
In some circumstances, the mere fact that an accident has occurred raises an inference of negligence against the defend ant. A plaintiff is never obliged to prove his case by direct evidence. Circumstantial evidence is just as probative, if from proof of certain facts other facts may reasonably be inferred. Res ipsa loquitur is no more than a convenient label to describe situations where, notwithstanding the plaintiffs inability to establish the exact cause of the accident, the fact of the accident by itself is sufficient in the absence of an explanation to justify the conclusion that most probably the defendant was negligent and that his negligence caused the injury. The maxim contains nothing new; it is based on common sense, since it is a matter of ordinary observation and experience in life that sometimes a thing tells its own story. Unfortunately, the use of a Latin phrase to describe this simple notion has become a source of confusion by giving the impression that it represents a special rule of substantive law instead of being only an aid in the evaluation of evidence, an application merely of "the gener al method of inferring one or more facts in issue from circum stances proved in evidence".
It is impossible to catalogue res ipsa loquitur cases: every accident is in some respects singular and proof of facts by facts incapable of reduction to a formula. Nonetheless, it is feasible to indicate in general terms the conditions which must subsist to call the maxim into operation. Clearly, the occurrence must bespeak negligence and that negligence be the defendant's; it must be such as to raise two inferences: (1) that the accident was caused by a breach by somebody of a duty of care to the plaintiff, and (2) that the defendant was that somebody.;
No less important a requirement is that the res must not only bespeak negligence, but pin it on the defendant. Negligence in the air will never do. It is not enough that the accident spell negligence on the part of someone or other without linking it specifically to the person charged. Thus, if several contractors were engaged in the construction of a building, its collapse does not without more evidence point to the negligence of any particular one of them. 4
Be that as it may, however, it appears that the Trial Judge was in error in thinking that there was no evidence as to the orders received by the South Carolina, the manner of carrying them out and the decision to get out of the way. At the opening of the trial, the parties had filed a large number of documents which were to be, by agreement, accepted as evidence. Amongst these, the Trial Judge appears to have overlooked written state ments by each of the two captains on board the South Carolina made very shortly after the inci dent. Captain Kurdas, who was the senior of the two and in command, states as follows:
I put out a salty-line on the starboard side of Widener. I worked on orders given by tug Ohio to push ahead, back off, push into, hold bow up or down when needed to the best of my ability, and worked tug as strong as possible to execute each order given.
When Widener started to sheer to the starboard, I worked the tug wide open on a left wheel to hold the bow up. Widener's bow kept sheering to the starboard. Orders were given to back off, I backed wide open until Widener's bow hit tanker Rhone. I let go of the line, and backed out to keep from being squeezed between Widener and the dock. Widener dropped the anchor to stop from drifting. After Widener stopped, I hooked up on starboard side of Widener, Then we proceeded to wharf # 4.
Fleming, John G., The Law of Torts, 7th ed. The Law Book
Company Ltd., 1987, at p. 291.
4 Idem, at p. 293.
(Appeal Book, Common appendix, volume 1, at page 106.)
The second captain, Captain McCarty says as follows:
While making left turn with Ohio on bow Ste Marie II on port bow, South Caroline [sic] on stbd bow and tug Rival on stern up into current vessel being towed Peter A B Widener current being on portside, vessels kept setting down instead of turning up into current. Proceeded across (sic) river and into vessel "Rhone" at dock. Peter A B Widener hit vessel "Rhone" on port bow bull warks (or flared bow) with stbd bow of Peter A B Widener. Then shearing off back out into river at which time tug S. Carolina backed out from between vessels Rhone & Widener went around on portside at which time Widener dropped anchor.
(Appeal Book, Common appendix, volume 1, at page 36.)
While both these statements may have relatively little weight, as being self-serving, they were entered into evidence by agreement. They were not contradicted in any way. They indicate clearly that the South Carolina carried out the orders received from the tug Ohio up to and including the moment of the collision between the Widener and the RhOne. They do not indicate any negligence on the part of those responsible for her navigation.
In addition, the examination for discovery of Captain Kelch was also entered into evidence in its entirety, by agreement. Two short passages indi cate clearly that in the latter's view, the South Carolina carried out her orders.
A. Right. The only one that let go, when he seen he had no choice, was the South Carolina. He had to get the hell out of there because ...
Q. So as not to get caught between the ... A. So as not to get squashed in there.
(Appeal Book, Common appendix, volume 3, at page 505.)
Q. When the cable began to pay out, what commands did you give to the other tugs?
A. Jesus Christ!, I don't know. I'll tell you what I was concerned about: it was the South Caroline [sic] inside there and I thought: "my God, he's got to get out of there", you know; that's all I was thinking about. I'm sure I said something, but what I said, I don't know.
(Appeal Book, Common appendix, volume 3, at page 516.)
The law as to the liability of subsidiary or "helper" tugs is well summarized by Parks, as follows:
The decisions with respect to the liability of "helper" tugs apparently turn on the admiralty doctrine of the "dominant mind" as applied between tugs operating a joint venture. The majority of the cases hold that helper tugs should not be condemned for a fault not their own, where they are under the control and management of a superior tug. As Justice Learned Hand commented in Oil Transfer Corp. v. Westchester Ferry Corp., 1959 A.M.C. 485, 173 F.Supp. 637 (SDNY):
. where responsibility for the joint navigation of two vessels has been taken over by one of them, the other is not liable in rem if her owner is not responsible in personam . . . 5
The South Carolina was under no obligation to lead independent evidence to disculpate herself. As I have indicated, it was doubtful that she was obliged to lead any evidence at all. Since there is uncontradicted evidence in the record as to the South Carolina's actions and as it is wholly discul- patory, the Trial Judge was in error to find this tug at fault.
3. The Widener
The essence of the Trial Judge's findings against the Widener appears from the following two pas sages of his reasons for judgment [at pages 98 and 103]:
The expert witness Espley concluded in his report that the owners of the "Widener" were liable for failing to drop anchor at the proper time. This decision could have been taken by the tug master, Capt. Kelch, or if not by him by Capt. Lyons on board the barge. Immediately after the mechanical breakdown Capt. Kelch, who had taken the tiller of the "Ohio", was too concerned to save his own tug and confident of correcting the swerve to think of giving the "Widener" the order to drop anchor. By his own admission, he did not even consider this solution. According to the expert witnesses, it is certainly not easy for the pilot of a barge to take the place of the tug master and make the decision to drop anchor: he should only do so if he is certain that no other course is possible. However, the masters must also communicate with each other and keep each other informed of any developments which could require action by them. In the case at bar it would seem that communications
5 Parks, Alex L. The Law of Tug, Tow and Pilotage, 2nd ed. Centreville, Maryland: Cornell Maritime Press, 1982, at p. 205.
were very deficient, which leads us to consider the final and perhaps most important allegation, a lack of communication.
. . .
The "Widener" is liable due to the fault of Capt. Lyons to obtain or provide information on the emergency situation which arose. As he was undoubtedly in the best position to size up the situation and was in direct contact with Capt. Ketch, there is no explanation for his silence or his failure to suggest that they drop anchor, or even to take the decision to do so if Capt. Kelch failed to act.
Counsel for the Widener takes issue with these findings by pointing out that the transcript shows that Captain Lyons was, in fact, in constant com munication with Captain Kelch throughout the critical period of the passage of the St. Mary's current, and there is no doubt that this is the case. The argument, however, misapprehends the nature of the Trial Judge's criticism of Captain Lyons, which is not that the latter merely failed to trans mit information to Captain Kelch but, much more seriously, that he failed to inform himself as to what was going on on board the Ohio at the time of and in the period immediately after the failure of the towing machine. From his testimony it does not appear that Captain Lyons was aware at any time before the collision that the towing machine had broken or that anything was amiss aboard the Ohio. This should be compared with the evidence, notably from the expert witness Espley mentioned by the Trial Judge, 6 to the effect that Captain Lyons, from the bridge of the Widener, if he had been keeping a proper lookout, could not fail to have realized that the Ohio was in trouble and had lost control of the tow. Clearly, the Trial Judge accepted Espley's evidence in preference to Cap tain Lyons' assertion that he had no reason to think that anything was wrong and that he did not realize that the cable was paying out uncontroll ably. That was a choice which was open to the Trial Judge and I have not been persuaded that he committed any manifest error in choosing as he did.
6 See Appeal Book, Common appendix, vol. 1, p. 4; Appendix 1, vol. 1, pp. 94 and 95; Appendix 1, vol. 2, pp. 230 to 240.
Indeed given that Captain Lyons, on the bridge of the Widener, was the only person to have a full view of the whole operation, and given the catas trophic nature of what took place on board the Ohio (at one point, her stern was so far under water that a witness on the after deck was sub merged up to his waist) and the fact that some seven hundred feet of cable paid out when the towing machine broke, his evidence is astonishing:
Q. Now, when the Widener began shearing to starboard, you said you were able to see the Ohio pulling hard, pulling her little heart out, as you said. That's where you would have expected her to be at that particular time?
A. Correct.
Q. And, in fact, she was fairly stable in the water. A. Oh, Yes.
(Commission evidence, at page 62.)
Once it is accepted that Captain Lyons, on board the Widener, was negligent in not realizing what was happening on board the Ohio, the Trial Judge's further finding that Captain Lyons was at fault for failure to suggest the dropping of the anchor and even, as the situation worsened, to take such action independently becomes understand able. While the Widener was a "dumb" barge with very little independence of action, she did have a qualified master on board and a crew and one of the very few things that she could do in her own navigation was to drop anchor. The fact that she was temporarily under the command of Captain Kelch in the Ohio does not excuse her owners from the negligence committed by their employees in the navigation of their ship.
The matter may be tested as follows. If one supposes that the towing machine had not been repaired or even that the towline had parted altogether so that the Ohio could no longer exer cise any effective pull on the Widener, could it be seriously argued that the latter could plead lack of orders from the Ohio as an excuse for failure to drop her anchors and prevent her drift into the Rhone? Surely not. Again there was evidence, albeit contradictory, that a timely dropping of the anchors would have prevented the collision and the Trial Judge's acceptance of such evidence provides
the justification for his finding of fault against the Widener.
The matter can also be looked at in another way. The Widener's owners had placed her in command of a master, Captain Lyons, who was their servant and for whose actions they were responsible. Clearly it was part of Captain Lyons' duty to his employers to follow the orders received from Captain Kelch as towmaster. While no doubt the relationship between Captain Kelch and the owners of the Widener is that of independent contractor rather than that of master and servant, it is difficult to see how the owners of the Widener can escape liability for errors of navigation com mitted by their own servants in obedience to orders issued to them by independent contractors acting on behalf of the owners.' We are dealing here not with errors in the navigation of the Ohio, in the execution of which the Widener was a mere pas sive instrument, but rather with a specific error (the failure to drop anchor) in the navigation of the Widener itself at a time when such error presented an imminent danger to innocent third parties. 8
The situation is analogous to that mentioned by McGuffie, Kenneth C., in British Shipping Laws, vol. 4, "The Law of Collisions at Sea", London: Stevens & Sons Limited, 1961, at p. 174, Para 231.
If the collision is caused by the fault of those in charge of the tow in wrongly directing the course of the tug, both tug and tow may be liable jointly and severally to the third ship for the whole damage. The tug-owners would be liable as employers of the helmsman of the tug if he were negligent and not the less because their servant is bound by the towage contract to obey those on board the tow. The tow-owners are liable because it was the wrong order given by their servant that caused the collision.
Compare the situation described by Lord Denning M.R. in The Bramley Moore, [1963] 2 Lloyd's Rep. 429 (C.A.), [at p. 436] where the tow which collided with another ship had no navigational capacity whatever:
... in a case where those on the tug are negligent, and those on the barge are not, the cause of the damage is in truth the improper navigation of the tug, not the improper navigation of the barge. It is the tug which is the cause of all the trouble.
Reference may also be had in this connection to the decision of the Privy Council in The Paisley. 9 That case likewise concerned a dead ship, the Paisley, which, while being moved by a tug, came into collision with a moored vessel, the Saskatche- wan. Extensive damage was caused to the Sas- katchewan by reason of the Paisley's anchor being carried hanging in the water with the stock partly submerged and the crown two and a half feet under water. As a consequence, what might other wise have been a minor collision resulted in damage to the Saskatchewan below the waterline, causing her to founder and her cargo of grain to be saturated. The Privy Council held the owners of the Paisley to be responsible by reason of the contributory role played by her shipkeeper, in the following words [at page 262]:
At the hearing before their Lordship's Board it was not disputed—as, indeed, it could not be—that Penrice was in charge of the "Paisley" and her tackle and equipment, includ ing the anchor. The anchor having been at the commencement of the material time temporarily unshipped, one of Penrice's duties, in making ready for the move to the elevator, was to get the anchor restored to its place at the hawse-hole. With help from the tug he set about his task. Before it was completed he agreed with the tugmaster, "We will leave it." But for this the anchor would have been safely stowed. As things went, by reason of Penrice's decision, the anchor crown was damaged and the "Saskatchewan's" side was penetrated by the fluke. Had the tugmaster Waugh kept or left the anchor dangerously exposed against Penrice's will, that piece of perversity on Waugh's part would have wholly altered the relevant facts. Both the incidents of damage could have been attributed solely to him. On the contrary, though, the shipkeeper instigated and actively shared in the misplacement of the anchor so that it became a cause of damage.
I conclude, on this aspect of the matter, that the Trial Judge's finding of fault against the Widener should not be disturbed.
4. Others
I have already, when dealing with the liability of the Ohio, mentioned the Trial Judge's findings with respect to the Rival. Those findings were specific and exculpate those on board the Rival from any responsibility for the collision. The find ings are founded in the evidence and no manifest error has been demonstrated.
With respect to the final member of the flotilla, the tug Ste. Marie II, it has not been suggested by
9 -Richardson (James) & Sons, Ltd. v. "Robert J. Paisley", [1930] 2 D.L.R. 257 (P.C.).
any of the parties to this appeal that the Trial Judge was in error to find that she was not at fault.
5. Apportionment
On the question of apportionment, the Trial Judge had this to say [at pages 103-104]:
However, the greatest part of the liability must of necessity rest with the lead tug, the "Ohio", its master and owners. The lack of preparation which was apparent in the organization and conduct of this voyage, the haste shown by Capt. Ketch to get into the Port of Montreal, the flagrant lack of communication between the masters both before the turn at the Ile Ste-Helene buoy and while they were proceeding back up the river, the decision to turn at that location, their return speed, are all factors which helped to make the accident inevitable. Further more, the mechanical breakdown on the tug, which had been the subject of extreme tension, cannot serve to exonerate the owners of the "Ohio" in respect of the "Rhone".
I have heretofore indicated that, in my view, the Trial Judge was in error to find the South Caroli- na at fault and that such finding was based on his erroneous belief that there was a presumption against her and that there was no evidence as to the actions taken by her in the minutes leading up to the collision. In effect, he held the South Carolina responsible for faults committed by the Ohio. In the passage just quoted, the Trial Judge, in apportioning liability, speaks only of the Ohio and Captain Kelch. In my opinion, and notwith standing that the South Carolina is no longer in the picture, the Trial Judge's apportionment of liability of eighty per cent to the owners of the Ohio and twenty per cent to the owners of the Widener was reasonable and would have been the same even in the absence of the South Carolina. It should not be disturbed.
6. Costs
The making of a Sanderson order in favour of the successful defendants, the owners and opera tors of the tug Rival, against the unsuccessful defendants was a matter within the Trial Judge's discretion I° and I have not been persuaded that he
'° See Macdonalds Consolidated Ltd. v. The Viajero, [1977] 1 F.C. 648 (T.D.); Apple Computer, Inc. et al. v. Mackintosh Computers Ltd. et al. (1987), 43 D.L.R. (4th) 184 (F.C.T.D.).
committed any reviewable error. By the same token, his order allowing a junior counsel's fee to plaintiff was not a matter in which this Court should intervene.
B. The right of the owners of the Ohio and South Carolina to limit liability pursuant to section 575 of the Canada Shipping Act
The relevant statutory provision was formerly subsection 647(2) of the Canada Shipping Act [R.S.C. 1970, c. S-9] and is now subsection 575(1). It reads as follows:
575. (1) The owner of a ship, whether registered in Canada or not, is not, where any of the following events occur without his actual fault or privity, namely,
(a) where any loss of life or personal injury is caused to any person on board that ship,
(b) where any damage or loss is caused to any goods, merchandise or other things whatever on board that ship,
(c) where any loss of life or personal injury is caused to any person not on board that ship through
(i) the act or omission of any person, whether on board the ship or not, in the navigation or management of the ship, in the loading, carriage or discharge of its cargo or in the embarkation, carriage or disembarkation of its passen gers, or
(ii) any other act or omission of any person on board that ship, or
(d) where any loss or damage is caused to any property, other than property described in paragraph (b), or any rights are infringed through
(i) the act or omission of any person, whether on board that ship or not, in the navigation or management of the ship, in the loading, carriage or discharge of its cargo or in the embarkation, carriage or disembarkation of its passen gers, or
(ii) any other act or omission of any person on board that ship,
liable for damages beyond the following amounts:
(e) in respect of any loss of life or personal injury, either alone or together with any loss or damage to property or any infringement of any rights mentioned in paragraph (d), an aggregate amount equivalent to three thousand one hundred gold francs for each ton of that ship's tonnage, and
(J) in respect of any loss or damage to property or any infringement of any rights mentioned in paragraph (d), an aggregate amount equivalent to one thousand gold francs for each ton of that ship's tonnage.
Since there was no loss of life, personal injury or damage to cargo, the provisions of paragraph (d) are in play.
It is now well established that, in matters of tug and tow (at least where the tug is owned separate ly from the tow), the owners of the tug are entitled to limit their liability based on the tug's tonnage alone. This is so notwithstanding that the damage may have been caused by the tug's negligence in navigating the tow and that the tow may be very much the larger of the two vessels. The leading case is the decision of Lord Denning M.R., in The Bramley Moore, supra. There, after citing the relevant statutory provision, he said [at page 437]:
Let me apply this to a tug and tow case such as we have been considering. If those on board the tug are negligent and those on board the tow are not, and the tow comes into collision with another vessel, then clearly the damage is caused through an "act or omission of any person on board the tug". If you insert the appropriate words into the section as now amended, it reads in this way: "The owners of a tug shall not, where damage is caused through any act or omission of any person on board the tug, be liable in damages" beyond an amount calculated on the tonnage of the tug. So read, it seems clearly to cover the case when those on the tug are negligent and those on the tow are not. It shows that the owners of the tug can limit their liability according to the tonnage of the tug.
• • •
The principle underlying limitation of liability is that the wrongdoer should be liable according to the value of his ship and no more. A small tug has comparatively small value and it should have a correspondingly low measure of liability, even though it is towing a great liner and does great damage. I agree that there is not much room for justice in this rule; but limitation of liability is not a matter of justice. It is a rule of public policy which has its origin in history and its justification in convenience.
It is also well established that the burden of establishing that he is without "actual fault or privity" and therefore entitled to limit liability falls upon the shipowner and is a heavy one.
The burden resting on the shipowners is a heavy one and is not discharged by their showing that their acts were not "the sole or next or chief cause" of the mishap. As Viscount
Haldane states in Standard Oil Co. of New York v. Clan Lines Steamers, Ltd., at page 113
... they must show that they were themselves in no way in fault or privy to what occurred."
Finally, by way of introduction to this aspect of the matter, the law is now clear that, where a ship is owned by a body corporate, the actual fault or privity which will have the effect of denying the benefit of the statutory limitation of liability to the corporate shipowner must be that of a physical person who is "the directing mind and will" of the company. The quotation comes from the judgment of Viscount Haldane L.C. in Lennard's Carrying Company v. Asiatic Petroleum Company: 12
Now, my Lords, did what happened take place without the actual fault or privity of the owners of the ship who were the appellants? My Lords, a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation.
The Trial Judge dealt with the issue of limita tion of liability as follows [at pages 107-110]:
Let us see what the evidence presented by G.L.T. in the case at bar does to limit its liability.
Capt. Paul A Lloyd, G.L.T.'s vice-president, operations, testified at length. He is responsible as such for administration, the hiring of staff and the setting of rates, and he also has responsibility for the proper operation of the many tugs owned by the company: he is in fact the person responsible "to make sure that they operated properly". However, as regards the tug "Ohio" inter alia, for anything relating to navigation, the provision of maritime maps and everything that should be on board the tug, he relied on Capt. Kelch. By his own admission, Kelch was part of the company's management and had to make many decisions regarding, inter alia the provision of maritime maps. Additionally, all decisions regarding this voyage to a port on the St Lawrence, except for the preliminary measures, were made by Capt. Kelch, though this did not prevent him from discussing matters frequently with his superior. Thus when the time came to obtain a fourth tug to get out of the St Lawrence Seaway, Kelch referred to Lloyd for authority, but this was more of a formality to cover the financial aspect of the matter, for as Lloyd said the number of tugs required to make a manoeuvre was a navigational matter which was specifically Kelch's responsibility. Indeed, according to the testimony of Capt. Kelch himself, his many duties with the company made him a representative of it. He admitted spontaneously that he
" Stein et al. v. "Kathy K" et al. (The Ship), [1976] 2
S.C.R. 802, at p. 819.
12 [1915] A.C. 705 (H.L.), at p. 713.
had acted as tug master for this voyage, a fact which his immediate superior Capt. Lloyd did not know until the trial. The latter stated that the company did not even make a practice of checking who was in charge of manoeuvres in tows involving more than one tug.
A tug-owner seeking to limit his liability cannot display such a complete lack of interest in who, how and under the ultimate responsibility of which captain such a long voyage is to be undertaken, without even checking that he has all the instru ments necessary for navigation on board.
The defendant also called Joseph White, who is responsible for maintenance and repairs on the fleet. He provided a long explanation of the features of the tugs "Ohio" and "South Carolina" and the documents and spare parts to be found on board. He also dwelt at length on the various annual or sporadic inspection programs applicable to their tugs, and in particular the towing equipment on board the "Ohio". In this connection, after explaining the braking systems in this equip ment, the witness noted that the pin which broke in the accident that occurred in Montreal in 1980 was a replacement one which had been installed in the company's own workshops at an unknown date but before 1975, the date on which he commenced his duties. To his knowledge it had not been replaced since.
There is no question that the mechanical breakdown which occurred in the towing equipment is attributable to negligence by the company in maintaining its equipment, and it provided no plausible explanation except for the high tension applied to the equipment. It was mentioned that the original pin, made of copper, had broken too often in the past and for this reason it was decided to replace it with another made of stainless steel that had never broken ... until November 7, 1980. This fact in no way excuses the company: for it to avoid liability, it must do more than establish that the pin broke and that it had been replaced more than five years earlier. In this connection the equipment inspection and maintenance systems referred to in evidence, however numerous and sophisticated they may have been, cannot serve to exonerate the company.
The defendant also called Thomas Meakin, who in fact held the position of chief mechanic with the defendant and worked under the immediate orders of Jos White. On the day of the accident, though this was not his usual function, he was in the stern of the "Ohio" when the mechanical breakdown occurred. This witness, whose testimony was very precise, provided a lengthy explanation of the operation of the equipment, its braking systems and the maintenance programs covering it. In particular he described the danger the "Ohio" was in before the mechanical breakdown, when the stern was completely sub merged, and though he is quite tall the water was up to his waist, and the actions he had to take at the last minute to stop the paying out of the cable. His presence of mind and extraor-
dinary courage probably prevented the tug being swamped, and clearly he cannot be in any way faulted personally.
That leaves Capt. Kelch, who as we saw earlier was also part of the company's management and had many duties. The Court has already discussed earlier the faults committed by him. It does not much matter whether he acted wrongfully in his capacity as a manager of the company, as port master, or whether his faults are attributable to navigational errors as tug master: that cannot be a means of excluding his liability to the plaintiff. If the same person who commits a navigational mis take is also one whose acts identify him with acts of the company, and in that capacity is also at fault, his employers cannot benefit from the limitation of liability contained in 647.
In short, even assuming that the defendant G.L.T. was able to prove the identity of persons whose acts identified them with acts of the company, it is far from establishing that those persons were not guilty of fault or privity in the sense that must be given to these words, as explained in the "Kathy K". On the contrary, the evidence established that Capt. Lloyd was the person whose acts identified him most with the acts of the company so far as administration and general supervision are concerned, and it was abundantly clear from his testimony that he knew practically nothing of what was happening on board his tugs during this voyage, cared very little about it and gave his masters all possible latitude. The person responsible for maintenance, Jos White, gave no plausible explanation of the mechanical breakdown on board the "Ohio". Finally, Capt. Kelch, who was responsible on the company's behalf not only for providing the tugs with the documentation necessary for such a voyage, but, inter alia for hiring a fourth tug to bring the barge to its destination, failed lamentably in his duties by exercising his functions as a company manager negligently in respect of the "Rival".
In short, the defendant G.L.T. did not establish that it is entitled to the limitation of liability.
Several aspects of this finding cause me difficulty.
In the first place, as I understand the Trial Judge, he finds actual fault or privity in Captain Lloyd because of the latter's inadequate supervi sion of Captain Kelch or, as the Trial Judge put it, a "lack of interest". While there can be no doubt that an owner may be in actual fault or privity through sins of omission, it remains that such omissions must in some way be causally related to the casualty. Examples from the leading cases make this clear.
Thus, in The Lady Gwendolen, 13 where a ship travelling at speed in dense fog collided with a vessel at anchor, it was held that the owners' failure to see that the master was properly instructed in the use of radar and to impress upon him the dangers of navigating at speed in fog, even with radar, constituted actual fault or privity on their part. The following passage from the judg ment of Winn L.J., at page 348, is particularly instructive on the issue of causation:
Having been greatly assisted by thorough analyses by learned Counsel, to whom I express my indebtedness, of all the authori ties in which in a number of different sets of circumstances and situations Courts have determined the presence or absence of such actual fault or privity, it appears to me that two guiding principles are plain:
First: an owner who seeks to limit his liability must establish that, although for the immediate cause of the occurrence he is responsible on the basis of respondeat superior, in no respect which might possibly have causatively contributed was he himself at fault. An established causative link is an essential element of any actionable breach of duty: therefore, "actual fault" in this context does not invariably connote actionable breach of duty.
Second: an owner is not himself without actual fault if he owed any duty to the party damaged or injured which (a) was not discharged; (b) to secure the proper discharge of which he should himself have done but failed to do something which in the given circumstances lay within his personal sphere of performance.
Similarly, in The Marion, 14 where the master, using an out-of-date chart, anchored over an underwater pipeline which broke and caused immense damage, the owners were held in actual fault or privity for having failed to ensure that the ship was equipped only with up-to-date charts and that obsolete charts were destroyed. Once again, the lack of supervision bore a clear causal relation to the damage, as is indicated by the following passage from Lord Brandon's speech, at page 352:
There remains only the question of causation, which presents little difficulty, especially having regard to the incidence of the burden of proof. The appellants could not, and did not, prove that, if FMSL had had a proper system of supervision in relation to charts, Captain Potenza would still in March 1977 have been navigating with a hopelessly obsolete chart, even
13 [1965] 1 Lloyd's Rep. 335 (C.A.).
14 Grand Champion Tankers Ltd v Norpipe A/S (The Marion), [1984] 2 All ER 343 (H.L.).
though a modern one showing the pipeline was on board and available to him. Equally the appellants could not, and did not, prove that, if Mr. Downard had been informed promptly about the Liberian report and its contents, the same events would still have taken place. The likelihood is, in either case, that Captain Potenza would either have been persuaded by FMSL to aban don his propensity for navigating with obsolete charts or, if he proved to be incapable of reform in that respect, have been relieved of his command. In these circumstances it is impossible for the appellants to establish that the two actual faults of the appellants which I have held were committed did not contribute to the damage to the pipeline.
Finally, on this question reference may be had to the decision of the House of Lords in The Norman," where failure to send a wireless mes sage to the master warning him of newly received information regarding suspected hazards in a poorly charted area already known to be hazard ous was found to constitute actual fault and privity on the part of the owners. On the issue of causa tion, Lord Radcliffe put the question as follows [at page 12]:
Did the owners then succeed in establishing that, even though it would have been the reasonable course to send on the information, yet its receipt would have made no contribution to averting the actual disaster? For this purpose, I think that we must look to the owners as plaintiffs to satisfy the Court that, taking one consideration with another, there was no reasonable likelihood that the message, if received, would have affected the actions or decisions of the skipper of the Norman in any material direction.
The comparison between these cases and the facts as found by the learned Trial Judge in the case at bar is striking. There is no suggestion that a lack of supervision by the owners contributed in some way, however remote, to the casualty. The specific acts of negligence found against Captain Kelch are without exception ordinary questions of navigation lying within the normal authority and scope of activity of the master. There is no shred of evidence to suggest that a prudent shipowner would have so concerned himself with the details of navigation as to specifically instruct Kelch where to turn the flotilla or at what speed to tackle the St. Mary's current or in what manner to communicate with the other captains. In short and to paraphrase the words of Lord Radcliffe in The Norman, supra, taking one consideration with another, there was no reasonable likelihood that any closer degree of supervision and reporting
15 Northern Fishing Company (Hull), Ltd. v. Eddom and Others, [1960] 1 Lloyd's Rep. 1 (H.L.).
imposed by the owners at the company's Head Office in Cleveland would have materially affected the actions or decisions of Captain Kelch when he was navigating his flotilla in the Port of Montreal.
In the second place, it is my view that the Trial Judge has erred in finding that Captain White, another directing mind and will, was in actual fault and privity in the casualty. Here the difficul ty lies not with the issue of causation, for there is no question that there was a causal relation be tween the breaking of the towing machine and the damage. Rather it is my opinion that the Trial Judge has imposed an impossibly high standard upon the owners. He himself describes the compa- ny's equipment inspection and maintenance sys tems as "numerous and sophisticated". He fails to make any finding that they were inadequate or defective. What more, one may ask, can an owner do than institute a proper and prudent programme of inspection and maintenance? The consequence of the Trial Judge's finding, if left undisturbed, is to turn shipowners into insurers every time a casu alty results from an equipment failure. In my opinion, that is not the law.
There remains, on this aspect of the matter, the Trial Judge's finding that Captain Kelch was him self a directing mind and will of the corporate shipowner. Here there is no difficulty on the ques tion of personal fault or the causal relationship between such fault and the damage. It is now well settled, that, if Kelch was truly a directing mind and will of the company, the fact that he was also acting as master and that his negligence was com mitted in that capacity is nothing to the point. The following words of Stone J.A., in Wishing Star Fishing Co. v. B.C. Baron (The),' 6 are conclusive [at page 3391:
As I see it, the distinction between an act of a particular individual in his capacity of master and an act in his capacity as owner for purposes of section 649, has no application in determining whether the act was done "without the actual fault or privity" of a corporation for purposes of section 647. In the
16 [1988] 2 F.C. 325 (C.A.).
latter case, as the authorities demonstrate, what is important is whether the doer of the act occupied such a position in the corporation that at the time it was done it may be said to have been the very act of the corporation itself. I have concluded that Mr. Krause's acts and omissions were of this kind and, accordingly, the corporation cannot limit its liability. The losses did not occur without its "actual fault or privity".
The real question with regard to Captain Kelch is whether the Trial Judge was justified in finding that he was a directing mind and will of Great Lakes Towing Company. Certainly at first blush this seems surprising. Kelch, after all, although master of a vessel, is an employee and the very purpose of section 575 is surely to relieve shipown- ers from liability for negligent acts of their employees where they have not themselves par ticipated in the negligence. Surely it cannot be that, by the device of corporate identification, a liability is imposed which it was the very purpose of the legislation to avoid.
On the other hand, it must also be borne in mind that Kelch was more than an ordinary master or simple employee and, acting on behalf of his employers, had extended duties and responsibilities for the conduct of the whole flotilla.
The test established in Lennard's Carrying, supra, for the identification of the corporate ego has not stood still. In particular, it has not been restricted to the rather arcane purposes of limiting the owners' liability for marine casualties. In H.L. Bolton (Engineering) Co. Ltd. v. T.J. Graham & Sons Ltd.," the English Court of Appeal used it to determine whether a corporate landlord had the necessary intention to occupy property under the Landlord and Tenant Act. In an oft quoted pas sage, Denning L.J. (as he then was) said [at page 172]:
So the judge has found that this company, through its managers, intend to occupy the premises for their own pur poses. Mr. Albery contests this finding, and he has referred us to cases decided in the last century; but I must say that the law on this matter and the approach to it have developed very considerably since then. A company may in many ways be
17 [1957] 1 Q.B. 159 (C.A.).
likened to a human body. It has a brain and nerve centre which controls what it does. It also has hands which hold the tools and act in accordance with directions from the centre. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such. So you will find that in cases where the law requires personal fault as a condition of liability in tort, the fault of the manager will be the personal fault of the company. That is made clear in Lord Haldane's speech in Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd. So also in the criminal law, in cases where the law requires a guilty mind as a condition of a criminal offence, the guilty mind of the directors or the manag ers will render the company itself guilty.
Indeed the doctrine of corporate identification now serves principally in the field of criminal law. The most recent and definitive Canadian state ment on the subject is the decision of the Supreme Court of Canada in Canadian Dredge & Dock Co. et al. v. The Queen [at pages 684-685]:' 8
The principle of attribution of criminal actions of agents to the employing corporate principal in order to find criminal liability in the corporation only operates where the directing mind is acting within the scope of his authority (Beamish, supra, at pp. 890 and 892, and St. Lawrence, supra, at p. 320), in the sense of acting in the course of the corporations' business (Halsbury's (4th ed.), vol. 14, p. 30, paragraph 34, supra). Scattered throughout the submissions on behalf of the four appellants, was a translation of the directing mind rule to a requirement that for its application the directing mind must, at all times, be acting in the scope of his employment. Conversely, the argument went, if the directing mind was acting totally outside the 'scope of that employment', the attribution of the acts of the directing mind to the corporate employer would not occur. The terminological problems arise from the fact that the concept of vicarious liability in the law of torts has been traditionally fenced in by the concept of the employee acting within 'the scope of his employment' and not, in the classic words, "on a frolic of his own". The identification theory, however, is not concerned with the scope of employment in the tortious sense. "Scope of employment" in the St. Lawrence judgment, supra, and the other discussions of that term in Canadian law have reference to the field of operations delegat ed to the directing mind. The charge by His Lordship to the jury makes this abundantly clear, as does the Court of Appeal in its analysis of this defence. The Court in St. Lawrence, supra, in describing the elements of the delegation theory, concluded by adding that attribution to the corporation occurred only so long as the directing will "was acting in the
' 8 [1985] 1 S.C.R. 662, per Estey J.
scope of his employment." The expression comes from the law of tort and agency and from master and servant law. It is not apt in relation to the identification theory. It smacks of vicari ous liability and it invites the defence that criminal actions must prima facie be beyond the scope of an employee's duty and authority. The learned trial judge, in directing the jury, expressed it more accurately: "... so long as he was acting within the scope of the area of the work assigned to him." In Tesco, supra, at p. 171, Lord Reid employed the phrase acting "within the scope of delegation" of the corporation's business. The essence of the test is that the identity of the directing mind and the company coincide so long as the actions of the former are performed by the manager within the sector of corporation operation assigned to him by the corporation. The sector may be functional, or geographic, or may embrace the entire under taking of the corporation. The requirement is better stated when it is said that the act in question must be done by the directing force of the company when carrying out his assigned function in the corporation. It is no defense to the application of this doctrine that a criminal act by a corporate employee cannot be within the scope of his authority unless expressly ordered to do the act in question. Such a condition would reduce the rule to virtually nothing. Acts of the ego of a corporation taken within the assigned managerial area may give rise to corporate criminal responsibility, whether or not there be formal delegation; whether or not there be awareness of the activity in the board of directors or the officers of the company; and, as discussed below, whether or not there be express prohibition. [Underlining added.]
[at page 675]:
... the criminal conduct, including the state of mind, of employees and agents of the corporation is attributed to the corporation so as to render the corporation criminally liable so long as the employee or agent in question is of such a position in the organization and activity of the corporation that he or she represents its de facto directing mind, will, centre, brain area or ego so that the corporation is identified with the act of that individual.
[at pages 681-682]:
The transition from virtual corporate immunity from crimi nal liability to virtual equality with humans in like circum stances under the criminal law is traced in greater detail by Jessup J., as he then was, in R. v. J.J. Beamish Constructions Co., supra. Three years later Schroeder J.A., of the Court of Appeal of Ontario, in R. v. St. Lawrence Corp., supra, at pp. 315-21, again reviewed this transition. In the end Schroeder J.A., at p. 320, adopted the same statement of the governing
principle as Jessup J. had in Beamish, supra, although the earlier case is not cited:
While in cases other than criminal libel, criminal contempt of Court, public nuisance and statutory offences of strict liability criminal liability is not attached to a corporation for the criminal acts of its servants or agents upon the doctrine of respondant superior, nevertheless, if the agent falls within a category which entitles the Court to hold that he is a vital organ of the body corporate and virtually its directing mind and will in the sphere of duty and responsibility assigned to him so that his action and intent are the very action and intent of the company itself, then his conduct is sufficient to render the company indictable by reason thereof. It should be added that both on principle and authority this proposition is subject to the proviso that in performing the acts in question the agent was acting within the scope of his authority either express or implied. [Underlining added.]
[at page 693]:
The identity doctrine merges the board of directors, the manag ing director, the superintendent, the manager or anyone else delegated by the board of directors to whom is delegated the governing executive authority of the corporation, and the con duct of any of the merged entities is thereby attributed to the corporation. In St. Lawrence, supra, and other authorities, a corporation may, by this means, have more than one directing mind. This must be particularly so in a country such as Canada where corporate operations are frequently geographically wide spread. The transportation companies, for example, must of necessity operate by the delegation and sub-delegation of au thority from the corporate centre; by the division and subdivi sion of the corporate brain; and by decentralizing by delegation the guiding forces in the corporate undertaking.
Two earlier cases, also from the criminal law, are cited with approval by Estey J. in Canadian Dredge & Dock Co. and are of interest. The first is R. v. St. Lawrence Corp. Ltd. (and nineteen oth ers), 19 where Schroeder J.A., speaking for the Ontario Court of Appeal, in a passage immediate ly following that quoted by Estey J., at page 682, supra, said [at pages 320-321]:
The history of the treatment accorded to corporations in the sphere of both civil and criminal law points to a rejection of the earlier narrow conception in favour of a very broad conception of a much wider field of potential corporate responsibility. This trend has a valid basis to support it since corporations are at once more powerful and more materially endowed and equipped than are individuals and, if allowed to roam unchecked in the field of industry and commerce, they are
19 [1969] 2 O.R. 305 (C.A.).
potentially more dangerous and can inflict greater harm upon the public than can their weaker competitors.
I am entirely in agreement with the learned Judge's conclu sion as above-quoted in the light of the law of corporate responsibility for crime as more recently developed. It follows from the cases which I have discussed that a company can have more than one directing mind or alter ego. A company with branch offices in territories widely separated from its head office can have directing minds in those several territories. Mr. Pim, acting in the sphere of his assignment as vice-president in charge of sales of both appellant companies, was just as much their directing mind in his particular sphere as was Mr. Cooper in a wider sphere. He may have been but a satellite to a major planet, but his position in the galaxy was not an inferior one and the learned Judge was entitled to attach criminal liability to the company by reason of his acts and those of other agents of the company acting under Mr. Pim's direction and control. [Underlining added.]
The second is the even earlier decision of the Quebec Court of Appeal in R. v. H.J. O'Connell Ltd. 20 The case is only reported in summary form, the relevant portion of which reads as follows [at pages 666-667]:
On June 20, 1960, respondent entered into a contract with the Minister of Highways for the Province of Quebec for the paving of certain highways in the district of Labelle. The contract provided for payment on the basis of certain unit prices, the estimated total cost being $311,567. When the contract was signed, the work was actually under way, having been started in the middle of May, 1960. It was carried under the direction of the co-accused, one Barthe, who was the foreman in charge of the work. The trial judge found that Barthe conspired with another co-accused, one Gouin, a subordinate employee, and others to establish a system which resulted in the Crown making payment for loads of asphalt that were in fact never delivered. This was done by means of fictitious delivery receipts which were inserted into batches of the genuine receipts properly forming the basis of payments made from time to time to respondent. The trial judge found that Barthe had conspired with Gouin and also with other employees of respondent and of the Highway Department. He nevertheless acquitted respondent on the ground that it was not criminally responsible for the acts of the guilty employees. His view of the law relating to the criminal responsibility of a corporation is summarized by him in the following terms:
[TRANSLATION] It is evident that the court must be con vinced that the senior executives, i.e. the president, vice- president, etc. and especially the board of directors, with out having committed the offence personally, must have been aware of the actions of their servants and agents.
To summarize the case law, a company has the mens rea required to be found guilty of a criminal offence if it was
20 [1962] B.R. 666 (Que. C.A.).
committed by one of its officers or the board of directors, i.e. those who are responsible Jor the control of the company's operations, but it cannot be held liable for the actions of a subordinate employee who was only a local agent. In other words, a concurrence of wills in the minds of the officers must be clearly established between them and their agent in charge for the company to be found as guilty as the agent would be.
The Crown's principal ground of appeal is that the trial judge misdirected himself on this question of the criminal liability of a corporation for the acts of its agents. Respondent made a motion for the dismissal of the appeal. It argued that the Crown's appeal was not one on a question of law. The Court of Appeal is of opinion that the judgment is based upon the trial judge's appreciation of the law as above set forth. If this is incorrect, the judgment is wrong in law, and the Court may intervene. Respondent's motion is therefore dismissed.
While the Criminal Code makes it clear that corporations may be guilty of crimes, there is nothing in it that sheds any light on the specific problem now before the Court. A corporation may at least under certain circumstances be liable for the acts of agents other than its president, vice-president or general manager. In this instance, there is evidence to the effect that Barthe had complete control over the operations of respondent in so far as they related to that particular contract and to other operations in the same district. He could refer problems to respondent's head office but was apparently not expected to do so. His responsibility extended to the point that he had discretion to carry out minor contracts which could conveniently be executed in conjunc tion with the main contract and was not held to any precise accounting for monies received by him under these contracts. Under the circumstances, the Court of Appeal declares that it does not know what the trial judge's decision would have been had he not considered, in the Court's opinion incorrect ly, that respondent could not be criminally liable for the acts of an agent who was not a senior executive unless such acts were known to its directors. [Underlining added; footnote omitted.]
From this jurisprudence it seems to me that we can derive principles which are of importance to the solution of the present problem:
1. The question of who is a corporation's alter ego or directing mind and will is essentially one of fact, depending on the circumstances of each par ticular case and the way in which the corporation in question, in fact, manages its affairs.
2. A corporation may have more than one "directing mind and will" and different persons may constitute the alter ego of the corporation for
specific purposes and within specific fields of activity.
3. An individual may, by reason of geographical isolation or other circumstances, be considered to be the corporation's alter ego for certain purposes even though that individual may not, in formal terms and by title, occupy a position at the top of the corporate hierarchy.
Bearing these principles in mind, let us look again at the position of Captain Kelch.
There is no doubt that Kelch was, in fact, the towmaster of the flotilla and vested with authority to give commands to all the captains of the fleet, of which he was de facto commodore.
A. Captain Kelch was the tow master, designated by the owners of the tug and the barge which puts him in command of the whole tow no matter how many tugs we would add or subtract. Captain Kelch was the tow master.
(Captain R. B. Lyons, Commission evidence, at page 14).
Q. Alright ... Can you describe to us, generally speaking, what the duties are of a Tow Master such as yourself ... obviously, you are the man in charge, like you take all the decisions?
A. Oh, yes.
Q. Do you tell each tug where to position itself?
A. Yes, I do.
Q. Do you give specific engine orders to each tug? A. Yes, I do.
Q. You tell them to go ahead half power, full power and
that?
A. Yes, I do.
Q. To pull or push in a certain direction? A. Yes, I do.
(Paul A. Kelch, Examination for discovery, Common appendix, volume 3, at page 465).
Q. Were you in a position to give orders to the captains of
the other tugs?
A. Oh, yes, absolutely.
(Paul A. Kelch, Commission evidence, Appeal Book, appendix I, volume 3, at page 419).
Even more significant, although rather surpris ing, is the fact, which appears abundantly from the evidence, that Kelch's appointment to command the flotilla (as opposed to his command of the tug Ohio) was not made by or with the knowledge of anyone senior to him in the organization of Great Lakes Towing Company:
Q. ... did you have any communications with Captain Kelch before the beginning of that tow?
A. I just sent him to do the job, that was his job. He did all the outside towing for our company, at that time—on the "Ohio". He was strictly on the "Ohio".
(Paul A. Lloyd, Evidence, hearing September 15, 1987, transcript at page 44.)
Q. Let me ask you this, on the Lakes, when a tow is undertaken with more than one tug, you have a lead tug—which I understand is usually the largest size, and you have smaller tugs. Who onboard these tugs acts, normally, as the towmaster?
A. They work together.
Q. Is there not, necessarily, one towmaster?
A. No, not as far as we're concerned. They work together.
(Paul A. Lloyd, Evidence, hearing September 15, 1987, transcript at page 45.)
Q. It is your evidence, then, that in situations where tows are undertaken by Great Lakes Towing, using more than one tug, the company doesn't insure that there is one person in charge of the operation?
A. That's absolutely right, it does not.
(Paul A. Lloyd, Evidence, hearing September 15, 1987, transcript at pages 45 and 46.)
Q. Do I understand you correctly then, Captain Lloyd, that until the time of the accident, if you will, in Montreal, that the management of Great Lakes Towing did not know who was in charge of that operation?
A. That is absolutely right.
(Paul A. Lloyd, Evidence, hearing September 15, 1987, transcript at page 47.)
In other parts of the evidence, Kelch is described as being part of management, as being a salaried (as opposed to hourly-paid) employee, as the fleet captain, the "trouble shooter" and the person responsible for breaking in new captains.
Kelch himself describes another part of his responsibilities in the following terms:
Another job is taking care of the ship's papers, making sure everything is taken care of, telephone licenses, all the documents on all the tugs. I tried to have them all dated the same date at the same time.
Q. For all the tugs in the fleet? A. Yes, for all of them.
At one time I had my name on every one of the ship's papers in the fleet.
(Paul A. Kelch, Commission evidence, Appeal Book, appendix I, volume 3, at pages 438 and 439.)
Since Great Lakes Towing Company's fleet of tugs consisted of a total of forty-four ships in 1980, the extent of his responsibilities was considerable indeed.
Bearing in mind the heavy burden which lies on a shipowner who invokes the statutory limitation, it is my view that these circumstances taken to gether were enough to permit the Trial Judge to find as a fact that Captain Kelch constituted a directing mind and will of Great Lakes Towing Company, at least for the purposes of carrying out the company's obligations in relation to towing the Widener to the Port of Montreal. As a Court of Appeal, we should only interfere with such a find ing if we are satisfied that the Trial Judge misap prehended the law or made a manifest error in his factual determinations. While the case is, in my view, at the outer margins of the application of the doctrine of corporate identification, I have not been persuaded that there has been any error of principle or palpable misunderstanding of the facts. Accordingly and notwithstanding that I have earlier indicated that, in my opinion, the Trial Judge erred in law in his findings with respect to Captains Lloyd and White, his finding with respect to Captain Kelch is enough to support his dismissal of the claim by Great Lakes Towing Company to limit liability pursuant to section 575 of the Canada Shipping Act.
C. Liability arising from damage caused to the Widener
1. Contributory negligence
It will be recalled that, in the action brought by the owners of the Rhone (Court file No. T-5225- 80, Appeal No. A-409-88), the Trial Judge appor tioned liability as between the owners of the Ohio and the owners of the Widener eighty per cent— twenty per cent. In the action brought by the owners of the Widener (Court file No. T-1066-81, Appeal No. A-408-88), the Trial Judge, however, allowed the claim for the entire amount of the agreed damages. The appellants argue that this is inconsistent. Their entire submission on the point is contained in the following paragraph of their factum:
Firstly, we wish to submit that the trial judge was manifestly wrong in condemning G.L.T. to pay 100% of North Central's damages. In effect, Denault J. in dealing with G.L.T.'s liability vis-a-vis the Rhone, decided that G.L.T. was 80% at fault for the collision. On the other hand, the trial judge also decided that North Central was 20% at fault for the collision (page 28 of the judgment, A.B., Vol 4, 751). Bearing this in mind, how can the trial judge then condemn G.L.T. to pay 100% of North Central's damages. We submit that the trial judge, in order to be logical, should have condemned G.L.T. to pay 80% of the damages claimed by North Central. We see no purpose in discussing this point further as it seems to us that it is quite obvious that the trial judge is wrong.
This is not helpful.
Appellants' counsel appears to be unaware of, or at the very least to overlook, the entire vexed question of the role of contributory negligence in contractual claims 21 and the state of Canadian maritime law (which, of course, is not touched by provincial negligence statutes) on this subject.
Furthermore, the appellants' suggestion that the Trial Judge has not been "logical" is far from being as self-evident as counsel seems to think. That two tortfeasors should have breached in dif ferent degrees their duty of care towards an inno cent third party does not necessarily and inevitably exclude the possibility of a contract between them
21 Conveniently and concisely summarized in Waddams, S. M., The Law of Contracts, 2nd ed. Toronto: Canada Law Book Ltd., 1984, at pp. 581-583.
resulting in one of them being required wholly to indemnify the other. 22
While the foregoing observations are not, of course, in themselves enough to justify the dismis sal of appellants' argument on the point, they serve to show that such argument is, in fact, an after thought asserted for the first time on appeal. A reference to the pleadings in the Trial Division makes this abundantly clear: in the amended state ment of defence and counterclaim in action file No. T-1066-81, the sum total of what appellants had to say on the question of negligence is con tained in the following paragraphs:
10. The collision which occurred between the M.V. "RHONE" and the "PETER A.B. WIDENER" was due to the negligence, imprudence, fault and want of skill on the part of those in charge of the tugs "RIVAL" and "SAULT STE. MARIE II";
11. The said collision did not result in any way from the negligence, imprudence, fault and want of skill on the part of those in charge of the tugs "OHIO" and "SOUTH CAROLINA";
12. All the manoeuvers carried out by the tugs "OHIO" and "SOUTH CAROLINA" prior to the collision were reasonable and prudent under the circumstances existing at such time.
(Appeal Book, at page 8.)
There is no assertion whatever of any alleged negligence on the part of the Widener.
The claim of the owners of the Widener in action no. T-1066-81 sounded in contract and was maintained by the Trial Judge on that basis. Con tributory negligence was not pleaded in defence and accordingly was not considered. Contributory negligence as a defence to claims in contract not only raises difficult questions of law but also requires specific and detailed findings of fact, not ably on the question of causation. Those questions were not before the Trial Judge and were not considered by him in action no. T-1066-81. The fact that the negligence of the Widener was plead ed in the tort action brought by the Rhone against all the members of the flotilla (Court file No. T-5225-80) does not allow Great Lakes Towing
22 Insurance is an obvious example, but there are others such as the provision found in many collective agreements where the employer agrees to indemnify employees against third party claims for which the employer may itself be independently liable.
Company to import those pleadings into the con tract claim. It would be wrong and unjust to give effect to appellants' attempt to raise these issues now, for the first time, in appeal.
2. Limitation of liability
Great Lakes Towing's principal defence to the contract claim asserted by the Widener was that a limitation of liability clause contained in its pub lished tariff of rates formed part of the contract between the parties and should therefore be given effect to. Since the hiring of Great Lakes Towing was effected orally by telephone, the question as to what was or was not included in the agreement became one of fact. Likewise, since it was Great Lakes Towing that contended for a term of such contract limiting its liability for breach, the burden of proving such term fell upon it. 23
The Trial Judge dealt with the question concise ly and clearly [at page 114]:
For the plaintiff to be bound by this tariff, and in particular by the clause limiting its liability, the defendant must show that it received a copy of the tariff. Not only was there no such evidence, the evidence actually tended to show that in the telephone agreement a daily tariff was agreed on and that the plaintiff was not informed of any provision of this tariff, still less of the clause limiting liability.
In my view, this passage correctly states the law and makes a finding of fact which was clearly available on the evidence. We should not interfere.
CONCLUSIONS AND DISPOSITION
For all the foregoing reasons:
In Court file no. A-408-88 (T-1066-81) I would dismiss the appeal with costs;
In Court file no. A-409-88 (T-5225-80), I would allow the appeal solely for the purpose of striking from the trial judgment the condemnation against the tug South Carolina. In all other respects, I would dismiss the appeal. Since the appellants' success is limited to one very minor aspect of the
23 See McCutcheon v. MacBrayne (David), Ltd., [1964] I All E.R. 430 (H.L.).
case, which is in the circumstances wholly without practical consequence, I would give the respond ents their costs of the appeal. I would dismiss the cross-appeal by the owners of the Widener with costs in favour of those respondents only who were plaintiffs in the Court below.
PRATTE J.A.: I agree.
DESJARDINS 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.