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.