Engine and Leasing Co. v. Atlantic Towing Ltd.
A-167-92
Décary J.A.
21/7/93
36 pp.
Appeal from trial judgment, ([1992] 1 F.C. D-45), finding in favour of respondents in action for damages resulting from sinking of barge -- Appellants agreeing to tow barge to Florida -- Towing contract containing standard towing conditions including exculpatory clauses -- Prior to tow, discovering water in hold no. 1 -- Appellant undertaking to arrange for necessary repairs -- Inspection after repairs satisfying appellant's shore engineer and tug captain barge fit to tow -- Barge capsizing without warning in moderate sea and moderate breeze -- Trial Judge concluding (1) faulty repairs undertaken by appellant most probable cause of loss; (2) repair contract distinct from towage contract; (3) exculpatory clauses in towage contract not applying to repair contract -- Appeal dismissed re: liability; granted re: quantum -- (1) Trial Judge should make finding on balance of probabilities how loss most likely happened when enough known, either directly or indirectly, about circumstances -- No clear, palpable overriding error as to cause of loss -- (2) Whether one or two contracts, exculpatory clauses not applying to repair work done by appellant -- Incorporated in towage contract at time when parties only contemplating service of towage and not aware repairs might be needed -- By nature, purpose, terms, such clauses not generally applying to events unrelated to actual towage -- Absent words to contrary, exculpatory clauses forming part of standard towing conditions not applying to services rendered before actual towage service commences -- Towage service generally commences when tug begins operations, including hook-up, leading to actual towing -- Distinguish work to have tow ready to be towed and operations, purpose of which to have tow towed -- Former condition precedent to towage taking place; latter condition precedent to actual towage -- Whatever language used in exculpatory clauses incorporated in towage contracts, and absent specific provision to contrary, such clauses not applicable to state of fact caused by negligence of tower and existing before or not associated with beginning of manoeuvres leading to commencement of towage -- (3) Doctrine of equitable fraud based on respondents' failure to share material knowledge of barge's recent past and present situation not applicable on facts and in light of Trial Judge's findings -- Respondents not giving any information as none requested, and as under impression from appellant's representatives water entering through leak which appellants could easily fix -- No evidence appellant would have acted differently had it been fully apprised of facts allegedly misstated or withheld -- Absent evidence misrepresentation material to conclusion of contract, doctrine not applying -- (4) Contract of carriage providing cargo owner would insure cargo with waiver of subrogation against carrier -- Appellant arguing should be identified with other respondents for purposes of immunity from suit because it became "carrier" when its tug replaced theirs -- S.C.C. holding rule of privity of contract, according to which no one but parties to contract can be bound by or entitled under contract only departed from in cases of trust or agency -- Evidence not supporting inference in entering contract other respondents acting as agents or as trustees for appellant -- Appellant cannot invoke waiver of subrogation clause in its favour -- (5) Subject to duty of mitigation, respondents entitled to claim value of replacement barge plus costs of adaptation and costs of transportation of replacement vessel to place of accident under principle of restitutio in integrum -- Trial Judge erred in calculation of damages -- Awarded value of barge on basis of price asked, but never received, for its sale and total expenses allegedly incurred to prepare for ocean service and preparation costs -- Asking price cannot be sole criterion used to assess value of object -- Preparation costs accepted by Trial Judge included costs incurred with respect to tug, costs related to hiring of captain who went on board tug neither of which related to preparation costs of barge -- Expert's valuation of replacement costs including transportation costs -- Trial Judge erred in awarding transportation costs again -- Value of actual loss, including replacement costs, preparation costs, transportation costs set at $446,550.