T-2251-74
Atlantic Consolidated Foods Ltd. (Plaintiff)
v.
The Ship Doroty (Defendant)
T-2252-74
Star-Kist Caribe Incorporated (Plaintiff)
v.
The Ship Doroty (Defendant)
Trial Division, Dubé J.—Saint John, April 10;
Ottawa, June 13, 1978.
Maritime law — Contract — Bills of lading — Hague
Rules contractually incorporated into bills of lading — Cargo
damaged — Contractual obligations of carrier to shipper, and
limits of liability — Effect to be given the Hague Rules
incorporated into bills of lading and to actual wording of bills
of lading tending to reduce carrier's obligations — Hague
Rules, Article III, Rules 1, 2, 8, Article IV, Rule 5.
These two actions arise out of alleged damage to two ship
ments of tuna fish, carried by the Doroty from Taboga to St.
Andrews, New Brunswick, and covered by two bills of lading.
Pursuant to clause 1 of each bill of lading, the bill is to be
subject to the Hague Rules. The extent of defendant's contrac
tual obligations for both the safe carriage of the cargo, and the
limits of liability for damage to that cargo are in dispute, and
give rise to the issue of the effect to be given the Hague Rules
incorporated by contractual agreement into the bill of lading.
Held, the action is allowed. This bill of lading was stated to
be "subject to" the Hague Rules but both documents are to be
read together and construed according to their sense and
meaning. Where there is apparent ambiguity, exceptions or
clauses introduced in favour of one party are to be construed
most strictly against him and the whole of both documents
must be appreciated to arrive at a general meaning. It is not
clear when, where or if the carrier may avail himself of the
exceptions favourable to him that he has written into the bill.
The Hague Rules place an absolute duty on the carrier to
perform his tasks "properly and carefully" that are in accord
ance with an efficient system, subject to the exceptions that the
Rules afford the carrier. Once the shipper has established that
the goods were placed on board in good condition, that a clean
bill of lading was issued, and that the goods were delivered in
bad condition, under the Rules, the onus shifts to the carrier to
show that he has properly and carefully performed all his tasks
but that the damage to the cargo is excused under one of the
exceptions. Rather than meeting this onus, defendant argued,
under a clause in the bill of lading, that it was the carrier's
responsibility only to exercise due diligence to provide a sound
refrigeration system. That clause, however, does not displace
the other duties imposed by the Rules—to properly and careful
ly maintain a sound system throughout the voyage. The exact
import of the bill's clause is ambiguous and the maker of the
bill ought not to benefit from any ambiguity of his own
creation. In view of a further ambiguity created by the maker
of the bill concerning limitation of liability, the proper con
struction is to read into the bill the only limitation imposed by
the Rules on units—a liability of £100 per unit. The plaintiff's
claims are well within that limit.
ACTION.
COUNSEL:
Levi E. Clain for plaintiff.
M. Robert Jette for defendant.
SOLICITORS:
McKelvey, Macaulay, Machum &' Fair-
weather, Saint John, for plaintiff.
Clark, Drummie & Company, Saint John, for
defendant.
The following are the reasons for judgment
rendered in English by
DuBE J.: These two actions against the ship
Doroty were heard together on common evidence.
They arise out of alleged damage to two shipments
of tuna fish carried by the Doroty from Taboga, a
Pacific island off Panama, to St. Andrews in the
Province of New Brunswick.
The shipments are covered by two bills of lading
issued on behalf of the vessel.
Bill of lading TG/St. A-1 was issued to plaintiff
Atlantic Consolidated Foods Ltd. (under the name
of Canadian Tuna Fishing Co.) to cover the ship
ment hereinafter called the "Ocean Maid" cargo.
The Ocean Maid cargo includes fish from the
fishing vessels Atlantic Jag and Atlantic Ocean
Maid (which also carried fish from the Atlantic
Paton). The port of discharge is St. Andrews.
Bill of lading TG/MY-2 was issued to plaintiff
Star-Kist Caribe Inc. ("Star-Kist") to cover a
cargo of tuna transhipped from the fishing vessel
Jasna. It shows the port of discharge as
Mayaguez, Puerto Rico. Pursuant to an arrange
ment between Ocean Maid and Star-Kist for an
exchange of cargo, the Star-Kist tuna originally
consigned to Mayaguez was left aboard the Doroty
and carried to St. Andrews. That arrangement is
not disputed by any of the parties to these two
actions.
The Ocean Maid cargo was of 880, and the
Star-Kist cargo of 191 short tons of tuna fish.
The tuna were caught in Pacific Ocean waters
b several fishing vessels and transhipped to the
Doroty at Taboga Island in early April 1974. The
Doroty sailed through the Panama Canal and
anchored at Mayaguez where a portion of the
cargo, not in issue here, was taken off. It was
found there that the Star-Kist shipment consigned
to Mayaguez was stowed in a bottom hold under
Ocean Maid fish. So it was decided to carry the
whole load of tuna to St. Andrews, New Bruns-
wick, where the vessel arrived on May 2, 1974.
The evidence shows that the tuna unloaded at
St. Andrews from the upper holds during the first
four days was in good condition. However, on May
6, as the unloading crew neared the bottom of
lower hold no. 1, water was found. The Chief Mate
of the Doroty was asked if the water could be
pumped out and he answered that it could not be
done. But very shortly thereafter, water was seen
being rejected into the sea as the water gradually
disappeared from the hold.
In the afternoon it was discovered that water
was running into lower hold no. 4 from a broken
pipe. The flow was stopped by turning off a valve
on deck. The next morning as the men approached
the bottom of that hold, they were again faced
with water. The Chief Mate was asked to pump it
out. There was no reply but not long after the
water receded from the hold.
Water was not found at the bottom of the other
two lower holds (no. 2 and no. 3) but there, as in
the case of lower holds no. 1 and no. 4, the fish was
soft, gooey and messy, and a waterline mark was
observed on the walls of those two lower holds.
It was then decided to attempt to salvage the
damaged fish at the local Ocean Maid fish plant at
St. Andrews. Normally, frozen tuna arriving at the
plant is placed in cold storage and processed later
on in due course. The damaged fish, however,
could not wait and the whole capability of the
plant was diverted at once to the salvage
operations.
The owners of both shipments of tuna are claim
ing against the Doroty for damage calculated on
the basis of market value of total suspect
(damaged) fish lost, plus salvage costs and freight.
For Ocean Maid, the claims total $88,279.27 and
for Star-Kist, $34,481.
The plaintiffs have clearly established at the
trial that the cargo was delivered in a damaged
condition at St. Andrews. The preponderance of
evidence would also indicate that the tuna was
loaded in good condition on board the Doroty at
Taboga.
The bill of lading for the Ocean Maid cargo
describes the "frozen tuna" as having been
"received on board under refrigeration April 6,
1974". The Star-Kist bill of lading describes the
"frozen tuna" as having been received "under
refrigeration at average pulp temperatures be
tween —5°C. to —8°C."
Roberto Carillo, who supervised loading on
behalf of Star-Kist at Taboga, testified that the
information was incorrect. He took the tempera
ture from the backbones of the arriving fish and
was definite at the trial that he found the body
temperature to be steady around 13°F.
(-10.5°C.) to 14°F. (-10°C.). This he con
firmed in a report to his supervisor made on the
day loading was completed and filed as an exhibit.
Bruce Chatwin, who supervised the loading of
the Ocean Maid fish, also observed the fish to be
in good condition and confirmed it to his supervi
sors. His evidence is supported by two certificates
signed by the Master of the Doroty on April 4,
1974 certifying the temperature of the fish to be
between 10.4°F. (-12°C.) and 6.8°F. (-14°C.).
At Mayaguez, two other witnesses found the
tuna to be frozen and at good temperatures.
That evidence is only contradicted by Nunzio
Libro, the Chief Engineer of the Doroty, who
examined some of the fish while the Master and
the Mate were doing some sport fishing on their
own, off the deck at Mayaguez. The responsibility
for receiving the tuna was that of the Master, not
of the Chief Engineer. And there is evidence that
the Doroty thermometer was not accurate and not
appropriate for taking temperature from frozen
fish, being made of glass and not metal, thus too
fragile and breakable.
The weight of the evidence is that the fish was
accepted on board in good condition and arrived at
St. Andrews mostly in good condition, except for
the fish found at the bottom of the lower holds.
I am also of the view that the presence of water
at the bottom of the lower holds was due to the
faulty method used for defrosting the coiling
system. It would appear that the proper and most
efficient way of defrosting coils is by passing warm
gases through the pipes to melt the ice accumulat
ed on the coils. Those on board the Doroty, how
ever, did not follow that procedure. They employed
the more rudimentary method of watering the coils
with a hose. The ordinary, garden type hose, was
connected to a fire pipe on deck, passed through a
doorway, and taken down below to the coils. The
hose water would run off the coils into a pan
underneath. When the drain holes at the bottom of
the pan were plugged (either by ice or deliberately
by hand), the water would spill over the sides of
the pan and flow downwards through the grills
onto the cargo below.
Water going down the open drain holes at the
bottom of the pan would make its way to a scupper
pipe and when the pipe was unplugged, as clearly
evidenced in St. Andrews with reference to lower
hold no. 4, the water would shoot directly on the
cargo.
There is evidence that while at sea the pan drain
holes had been plugged and the water removed
manually from the pan with a bucket. The Chief
Engineer, or a seaman would go down to the coils
and the bucket of pan water was hoisted up by
another hand on deck through an open door. That,
obviously, is a crude system at the best of times
and a very risky operation on rough sea waters.
The log book and the evidence indicate that during
the-passage from Panama to Mayaguez the Doroty
encountered heavy weather with very accentuated
rolling and pitching of the vessel. At one point,
most of the crew were seasick. Again, during the
passage from Mayaguez to St. Andrews, the
Doroty met with heavy winds, and she had to ride
a violent storm as she approached St. Andrews.
It would also appear that those on board the
Doroty did not use the vessel's bilge pumps until
they were asked to do so at St. Andrews. It is not
clear if the pumps were not operative during the
voyage, or if the crew were not familiar with their
usage, or otherwise reluctant to operate them. The
fact that the pumps effectively dried up at least
two, and possibly all four, of the lower holds at St.
Andrews would indicate that earlier use would
have at least mitigated, if not totally prevented,
the damage.
The defendant called two expert witnesses to
advance separate theoretical explanations as to
possible causes for the damage to the fish.
Captain Paul Hansell, a marine surveyor, sug
gested that the movements of the vessel would
cause the smaller fish to move gradually down the
pile toward the bottom of the holds, thus impeding
the normal flow of cooling air. No factual evi
dence, however, was adduced to support that
theory. In fact, the tuna at the bottom of the upper
holds was not damaged, and there was no indica
tion that more small fish were to be found at the
bottom than at the top of any of the holds.
Dr. David G. Doust, a naval architect and
marine engineer, testified that the San Diego
method of fishing tuna, the method employed by
the fishing vessels supplying the Doroty, is not
satisfactory. In his opinion, those clippers catch
their tuna at depths of more than one hundred
fathoms, with the result that the rapid surfacing
ruptures the stomach of the fish. He described
their landing on deck as an ugly spectacle of agony
and blood. According to Dr. Doust, the fish are
improperly refrigerated on board the fishing ves
sels and thus cannot be properly transported to
their destination. The witness is a forceful propo
nent of a new freezing method, the Confreeze
system, which he would want to see adopted by the
tuna fish industry.
This Court is not, of course, the proper forum
for the advancement of arguments on the value of
different tuna fishing systems, however competent
and dedicated the proponent be. The role of this
tribunal is merely to determine, as best it can, the
liability for the damage to the tuna cargo on board
the Doroty.
In my view, on the facts before me, the damage
to the tuna on board the Doroty was caused by the
presence of water in the lower holds and the water
was placed there because of the inept method
employed by those on board to defrost the coiling
system and their failure to make proper use of the
bilge pumps.
And now, to return to the bills of lading.
The two forms used are identical, face and back,
but the particulars typed on the face are different.
In the case of the Ocean Maid, the description
reads:
One Lot Frozen tuna ex
"Atlantic Jag" 80 S/tons
One Lot Frozen tuna ex
"Atlantic Ocean Maid" 800 S/Tons
880 S/Tons
Received on board under refrigeration April 6, 1974.
And in the case of the Star-Kist:
One Lot Frozen tuna ex:
"Jasna" 191.210 S/Tons
Received on board under refrigeration April 6, 1974
at average pulp temperatures between —5 to —8
degrees celsius.
Vessel not responsible for physical condition of cargo,
nor for external damage to fish during loading and
discharging.
Clause 1 appearing on the back of both docu
ments reads as follows:
1. If the goods are shipped to or from a port in the United
States, this Bill of Lading is and shall be effective subject to the
provisions of the Carriage of Goods by Sea Act, 46 U.S.C.
#1300 et seq., which is incorporated herein. If not, this Bill of
Lading is subject to "The International Convention For the
Unification of Certain Rules Relating to Bills of Lading at
Brussels of August 25, 1924," as adopted by the locality from
which the goods are shipped, or if not adopted by said locality,
as adopted by the Convention (hereinafter referred to as Hague
Rules Legislation). Nothing herein contained shall be deemed a
surrender by the Carrier of any of its rights or immunities or an
increase of any Cif its responsibilities or liabilities under any of
the acts, statutes, or ordinances which are, or are hereby made,
applicable and the provisions stated therein shall (except as
may be otherwise specifically provided herein) govern before
the goods are loaded on and after they are discharged from the
ship and throughout the entire time the goods are in the
custody of the Carrier. The Carrier shall not be liable in any
capacity whatsoever for any delay, nondelivery or misdelivery,
or loss of or damage to the goods occurring while the goods are
not in the actual custody of the Carrier.
Since the goods were not shipped to or from a
port in the United States and it is common ground
that Panama has not adopted the International
Convention of 1924, therefore, pursuant to clause
1, as reported above, the bill of lading is subject to
the Hague Rules'.
Plaintiffs allege that where parties to a bill of
lading specifically agree that certain laws are to
apply to a shipment or that the Hague Rules as
adopted by a specific country are applicable, full
effect must be given to this provision. Reference is
made to Vita Food Products Inc. v. Unus Shipping
Co., Ltd. 2 and to Adamastos Shipping Co., Ltd. v.
Anglo-Saxon Petroleum Co., Ltd.'
In the latter case, Viscount Simonds said with
reference to such a provision at page 729:
The contract must, therefore, be read as if the provisions of the
Act were written out therein and thereby gained such contrac
tual force as a proper construction of the document admits.
Rules 1 and 2 of Article III of the Hague Rules
prescribe the obligations of the carrier:
' The Brussels Convention-1924.
2 [1939] 1 All E.R. 513.
3 [1958] 1 All E.R. 725.
Article III
1. The carrier shall be bound, before and at the beginning of
the voyage, to exercise due diligence to,
(a) make the ship seaworthy;
(b) properly man, equip, and supply the ship;
(c) make the holds, refrigerating and cool chambers, and all
other parts of the ship in which goods are carried, fit and safe
for their reception, carriage and preservation.
2. Subject to the provisions of Article IV, the carrier shall
properly and carefully load, handle, stow, carry, keep, care for,
and discharge the goods carried.
Learned counsel for plaintiffs points out that the
obligation of the carrier therefore under Article
III, Rule 2, is to "properly and carefully" carry,
keep and care for the goods. Thus the carrier must
not only be careful, he must also carry the goods
"properly". He cites the case of G. . H. Renton &
Co., Ltd. v. Palmyra Trading Corporation of
Panama 4 as authority for the proposition that
" properly" means in accordance with a sound and
efficient system, having regard to the nature of the
cargo.
Thus, a cargo of frozen fish would not be carried
"properly" if the refrigeration system is not
"sound and efficient". That obligation would be
absolute, it is alleged, unless the carrier can show
that the loss was caused by one of the exceptions
provided for under Article IV, Rule 2.
Counsel for plaintiffs argues therefore that the
shipper need only prove that the cargo was shipped
in good order and condition and was delivered in a
damaged condition in order to establish a prima
facie breach by the carrier of its obligation under
Article III, Rule 2, of the Hague Rules. Then the
onus would shift to the carrier to bring the cause
of the damage within the exceptions provided by
Article IV, Rule 2 5 .
Counsel adds that the Hague Rules do not
permit a carrier to expand its protection from
liability beyond the protection afforded by the
Rules. Article III, Rule 8, provides that such
4 [1956] 3 All E.R. 957.
5 Gosse Millerd, Ltd. v. Canadian Government Merchant
Marine, Ltd. The "Canadian Highlander" [1928] All E.R. 97.
attempts are null and void and of no effect 6 . It
reads:
8. Any clause, covenant or agreement in a contract of car
riage relieving the carrier or the ship from liability for loss or
damage to or in connection with goods arising from negligence,
fault or failure in the duties and obligations provided in this
Article or lessening such liability otherwise than as provided in
this Convention, shall be null and void and of no effect. A
benefit of insurance clause in favour of the carrier or similar
clause shall be deemed to be a clause relieving the carrier from
liability.
Counsel for defendant, agrees that where the
Hague Rules are ex proprio vigore, by virtue of
statute, compulsory, then the Rules take prece
dence over all contractual terms of the bill, but
alleges that where the Hague Rules are adopted
by contract they do not have the force of law and
are to be construed, and given effect to, only in
situations not specifically provided for in the bill.
Learned counsel recalls the quotation by plain
tiffs of Viscount Simonds in the Adamastos Ship
ping case (supra) and reads from it that Viscount
Simonds does not say that provisions of an Act (in
that case the United States Carriage of Goods by
Sea Act, 1936 adopted by reference into a charter-
party) contractually incorporated, achieve the
force of statute, but that the Viscount says that the
adoption of an Act gives it such "contractual force
as a proper construction of the document admits".
Counsel points out that rules of law are appli
cable in spite of contractual intention while rules
of construction are applied to give effect to con
tractual intention. He refers to Carver in Carriage
by Sea 7 who deals briefly with incorporated docu
ments and the Adamastos case (supra) at para
graph 532:
Incorporated documents. Sometimes the terms of one docu
ment are incorporated in toto into another. The principle of
construction then applicable is that only the provisions of the
former applicable to the latter are to be taken as incorporated
therein and the other provisions of the former are to be
disregarded.
6 The "Lady Drake". Bayliss v. Canadian National Steam
ships 1935 A.M.C. 427.
Twelfth Edition, Volume 1.
The practical difficulty, as appeared in Adamastos v. Anglo-
Saxon, is how, having struck out the provisions inapplicable, to
construe what remains of the incorporated documents. Delvin J.
and the majority of the Lords in that case reached their
respective decisions by construing what remained in isolation
and not (as did the minority of the Lords) by construing what
was left as qualified by the inapplicable clauses.
Defendant alleges that only those provisions in
the Hague Rules which are not in conflict with the
provisions of the bill of lading are to be incorpo
rated in the bill of lading. Reference is made to
W.R. Varnish & Co., Ltd. v. "Kheti" (Owners) 8
and to Club Coffee Company Limited v. Moore-
McCormack Lines, Inc. 9
Consequently, defendant argues that on the
proper construction of the documents the Hague
Rules can only be incorporated to the extent that
the bill of lading clauses are silent on the particu
lar subject and the Rules do not become para
mount merely by their contractual adoption.
Plaintiffs reply that their position is not that the
principles of construction to be applied in the case
at bar are the same as if the Hague Rules were
made applicable by statute. They state that the
basic rule, where one document is incorporated by
reference into another, is that the two must be
read together and construed as if they were one
document, neither document taking precedence
over the other. When there are provisions in the
incorporatéd document which makes the incorpo
ration "insensible" or "inapplicable" they must be
disregarded. 10
It is quite clear that where a bill of lading is
subjected by legislation to the Hague Rules, the
Rules will prevail and any clause in the bill repug
nant to any clause of the Rules is of no effect. But
where the Rules are contractually incorporated in
a bill, then such construction must be placed on
both documents as will best effectuate the inten
tion of the parties. While clauses of the Rules
which are inapplicable to the situation must be
disregarded, it is not to be inferred that clauses of
the Rules which are inconsistent with clauses in
the bill must be ignored. It must always be borne
8 (1949) 82 Ll. L.R. 525.
9 [1968] 2 Ex.C.R. 365.
10 Hamilton & Co. v. Mackie & Sons (1889) 5 T.L.R. 677;
Adamastos Shipping Co., Ltd. v. Anglo-Saxon Petroleum Co.,
Ltd. [1958] 1 All E.R. 725.
in mind that any inconsistencies were put there by
the maker of the bill. The latter may rightfully
attempt to draft a bill of lading which will at the
same time afford the full immunities provided by
the Rules and then some, yet bring relief from all,
or as much responsibility as possible. The attempt,
however, is not without peril.
Tetley on Marine Cargo Claims, 1965, at page
46 says that specific rules of interpretation of bills
of lading have evolved. His first rule:
1. In the case of doubt, a contract is interpreted against the
interest of the author of the contract. Therefore, a bill of lading
printed by the carrier (which is the usual case) would be
interpreted against the carrier. When the shipper prepares his
own form of bill of lading, then the interpretation is against the
shipper.
Both documents are to be read together and
construed according to their sense and meaning.
When there is apparent ambiguity, exceptions or
clauses introduced in favour of one party are to be
construed most strictly against him and the whole
of both documents must be appreciated to arrive at
a general meaning.
The paramount clause of this bill (clause 1
reported supra) is to the effect that it be "subject
to" the Hague Rules. It is immediately followed
by what would first appear to be an exception in
favour of the carrier "except as may be otherwise
specifically provided herein" (in the bill). But, the
exception is ambiguous. It may mean that the
provisions of the Rules shall apply generally,
except where the bill says otherwise. Or it may
signify that the Rules shall govern before loading,
during the voyage, and after discharge (thus an
extension of the time in which the Rules normally
operate), except as provided otherwise in the bill.
A third interpretation could be that the exception
to the Hague Rules would only apply before load
ing, after discharge, or during such period before
and after when the goods are in the custody of the
carrier. The next sentence could support any of the
last two constructions: "The Carrier shall not be
liable .. . while the goods are not in the actual
custody of the Carrier". Thus the Rules would
govern when the goods are in his actual custody, as
they are at loading, during the voyage and at
discharge.
In other words, it is apparent that the bill is
"subject to" the Hague Rules, but it is far from
clear as to when, or where, or if, the carrier may
avail himself of the exceptions favourable to him
that he has written into the bill.
Exceptions provided in the bill come into con
flict with the Rules in two distinct areas: the
responsibility of the carrier in the carriage of
goods, and possible monetary limitations to his
liability.
Article III, Rule 2, places an absolute duty on
the carrier to perform his tasks "properly and
carefully" that is in accordance with a sound
system, thus with efficiency. This he must do from
the moment loading commences. His duties are to
carry, keep and care, and to do so in the manner
appropriate to the particular consignment, which
in the instant case means in properly and carefully
refrigerated holds. If the carrier cannot provide
that special type of service, he must refuse to carry
that particular type of shipment.
The duty prescribed in Article III, Rule 2, is
subject to Article IV which spells out the excep
tions, or the rights and immunities afforded to the
carrier. Those provisions do not lessen the degree
of skill expected of the carrier, or in any way
excuse him from performing his tasks properly and
carefully. Once the shipper has established that
the goods were placed on board in good condition,
that a clean bill of lading was issued, and that the
goods were delivered in bad condition, then, under
the Rules, the onus shifts to the carrier to show
that he has properly and carefully performed all
his tasks but that the damage to the cargo is
excused under one of the exceptions.
Defendant has not tried to prove that the
damage to the tuna has arisen from any of the
causes listed under Article IV. An attempt was
made to seek refuge behind paragraph 3 of clause
20 of the bill of lading which reads:
It is also agreed that if the shipowners shall have exercised
due diligence to make the vessel in all respects seaworthy and
properly manned, equipped and supplied, said vessel, her
owners, agents or officers shall in no case be responsible for any
loss or damage to any cargo shipped in refrigeration chambers
whether such loss or damage arise from defect or insufficiency
either before or after the shipment, in the hull of the said vessel
or her refrigeration machinery, chambers, spaces or apparatus
or any part thereof, or in any material used in the process of
refrigeration and whether such loss or damage, however arising,
be caused by the negligence, fault, error in judgment of the
pilot, Master, officers, engineers, mariners, refrigeration engi
neers or any other servants of the shipowners or persons for
whom they are responsible, or by unseaworthiness. It is express
ly agreed any negligence, fault or error in the operation of said
refrigerating apparatus shall be deemed to be and is hereby
expressly agreed to be a fault or error in the management of the
vessel, within the meaning of this Bill of Lading/Charter Party,
and shall not be considered to be a fault or failure in the
custody, care or stowage of merchandise shipped in refrigera
tion space.
The defendant states that under that clause, the
carrier's responsibility in the case of refrigerated
cargo was to exercise due diligence to provide a
sound system. The evidence of the Chief Engineer
of the Doroty is to the effect that, prior to loading
the tuna, he personally checked the cargo com
partments and the refrigeration equipment and
found everything to be in proper working order.
Lloyds and R.I.N.A. certificates were filed show
ing that a survey was carried out in February 1974
attesting that the Doroty was properly equipped
and in cargo worthy condition.
The defendant submits that there is therefore
sufficient evidence that the owners exercised due
diligence under clause 20 of the bill. That may be
so, but clause 20 does not displace the other duties
imposed by the Rules not only to provide, but also
to properly and carefully maintain, a sound system
throughout the voyage.
Defendant also claims that with reference to the
Star-Kist cargo the typed clause on the face of the
bill relieves the vessel from all liability for the
condition of the fish. It will be recalled that the
typed clause provides that "the vessel is not
responsible for physical condition of cargo nor for
external damage to fish during loading and
discharging".
The exact import, or net result, of that clause is
less than obvious. Firstly, there is no evidence that
the tuna was damaged during "loading and dis
charging". Then, it is not clear from the typed
words whether the excused responsibility of the
vessel for the "physical condition" of the tuna
relates only to the loading and discharging, or to
the fish carried on board. In any event, the evi
dence is to the effect that the damaged tuna was
not delivered in the same "physical condition" in
which it was received. If the typed clause purports
to relieve the vessel from all liability for the car
riage of the tuna, then it conflicts with clause 20 of
the bill, and, of course, with the Rules. Again, the
maker of the bill ought not to benefit from any
ambiguity of his own creation.
I am of the view therefore that a proper con
struction of the bill read with the Rules does not
relieve the defendant from his liability for the
damage to the tuna. There now remains to deter
mine whether defendant's liability is limited to any
specific amounts under the bill or the Rules.
The Hague Rules provide a £100 limitation per
package or unit. Article IV, Rule 5 reads:
5. Neither the carrier nor the ship shall in any event be or
become liable for any loss or damage to or in connection with
goods in an amount exceeding 100 pounds sterling per package
or unit, or the equivalent of that sum in other currency, unless
the nature and value of such goods have been declared by the
shipper before shipment and inserted in the bill of lading. [The
underlining is mine.]
Clause 13 of the bill refers to the Rules and to a
"customary freight unit". It reads as follows:
13. All claims for which the Carrier may be liable shall be
adjusted and settled on the basis of the Shipper's net invoice
cost plus freight and insurance premiums, if paid, and in no
event shall the Carrier be liable for more than the damage
actually sustained or for any loss of possible profit or any
consequential loss. The Carrier shall not be liable for any loss
of or damage to or in connection with, goods in an amount
exceeding the minimum agreed value permitted by the perti
nent Hague Rules Legislation per package, or, in the case of
goods not shipped in packages, per customary freight unit,
unless the nature and value of such goods is declared in writing
by the shipper before shipment and inserted in the Bill of
Lading and extra freight is paid thereon as required by appli
cable tariffs or rate schedules to obtain the benefit of such
higher valuation. Partial losses shall be adjusted pro rata on the
basis of the valuation agreed to herein. If the circumstances of
the loss or damage are such that no Hague Rules Legislation is
pertinent, then the value of the goods shall be deemed to be
£100 sterling per package or customary freight unit. [The
underlining is mine.]
The defendant argues that it is entitled to limit
its liability to £100 "per customary freight unit".
Plaintiffs claim that the defendant is entitled only
to a limitation of £100 "per unit", the unit being
one fish; and also that the monetary value referred
to in the Rules is the gold value of £100, which in
1974 was considerably in excess of £400 in bank
notes.
The distinction between "unit" and "freight
unit" was discussed by the Supreme Court of
Canada in Falconbridge Nickel Mines Ltd. v.
Chimo Shipping Limited" and Ritchie J. referred
to the Anticosti case 12 from which he reproduced
at page 945 the following reasoning of the learned
Trial Judge:
The word "unit" would, I think, normally apply only to a
shipping unit, that is, a unit of goods; the word "package" and
the context generally seem so to limit it.
It is common ground that the "customary
freight unit" would be the short ton as specified
under "Gross Weight" on the face of the two bills
of lading.
Looking firstly at the last proviso of clause 13 of
the bill, it is obvious that it does not apply in the
instant case since the circumstances of the loss, as
described earlier, are not such that no Hague
Rules legislation is pertinent. The circumstances
" [1974] S.C.R. 933, at page 945.
12 [1959] S.C.R. 372.
surrounding the damage to the tuna on board the
Doroty are the very type of situations which the
Rules are meant to govern.
The first part of clause 13 sets out that the
carrier is not liable for any amount exceeding the
minimum agreed value permitted by the Rules
"per package, or ... per customary freight unit".
But we are not concerned here with "packages"
and the Rules deal only with "unit", not "custom-
ary freight unit". So, in view of the ambiguity
created by the maker of the bill, the proper con
struction to be placed on the bill "subject to the
Rules" is to read into the bill the only limitation
imposed by the Rules on units, that is a liability on
the carrier of "£100 per unit".
There are no provisions in the bill regarding the
monetary value of £100 but it is provided in
Article IX of the Rules that "The monetary units
mentioned in this convention are to be taken to be
gold value". In 1965, the gold value of £100 was
held in Fiat Company v. American Export Lines,
Inc. 13 to be $824 U.S. Plaintiffs explain that Eng-
land was on the gold standard when the Conven
tion was adopted in 1924, but went off it in 1925.
Thus; plaintiffs' claims are well within the limita
tions under the Rules which are the only limita
tions that may, under proper construction, apply to
the instant case.
I now turn to the quantum of damage. Defend
ant concedes that, since the actual fish loss could
not be assessed until plaintiffs took steps to miti
gate the loss, the proper expenses in mitigation of
the loss are claimable. However, it is alleged that
certain amounts claimed under salvage costs are
not proper heads of damage, namely loss of contri
bution, mark up, cost of claim preparation,
unloading costs and market value.
I do not propose to go over again plaintiffs'
calculations of damage. I am satisfied that Mr.
Gregory Deering, the vice-president in charge of
production at the St. Andrews plant, has followed
well accepted accounting principles and is not
attempting to recover more than the losses sus
tained. He has proved to be a knowledgeable and
13 1965 A.M.C. 384.
trustworthy witness. He held up extremely well
under exhaustive examination and severe cross-
examination. I am left with the distinct impression
that his efficient handling of the salvage opera
tions resulted in substantial savings, as it turns out
to the benefit of defendant. An easier way out
would have been to reject the damaged tuna and to
claim the full value thereof.
Defendant did not produce at the trial evidence
which would contradict either the accuracy or the
propriety of the various claims, which were all
properly detailed and described to the Court by
plaintiffs. I therefore accept those claims in toto as
proved and owing by defendant.
It is common ground that interest is allowable in
Admiralty cases as a part of damage. Following
upon the Mar-Tirenno decision 14 , I have, in 1976,
awarded 7% as being a fair rate of interest from
the date of damage to date of judgment 15 .
In the Dumurra case, as well as in the instant
case, plaintiff did not claim in its statement of
claim the actual commercial rate, nor the prime
bank lending rate. It merely claimed "interest". In
the present case, plaintiffs only claimed "interest"
but filed in exhibit the Toronto-Dominion Bank
rates over the period, ranging from a low of 8'/4%
to a high of 11 1 / 2 %.
An awarding of interest is discretionary and I
am of the view that the rate of 8% would be fair
and just under the circumstances and the period of
years involved.
Judgment therefore in favour of plaintiff Atlan-
tic Consolidated Foods Ltd. for $88,279.27, and
plaintiff Star-Kist Caribe Inc. for $34,481, plus
interest in each case at the rate of 8% per annum
from May 6, 1974, to the date of judgment. Costs
to the plaintiff in each case.
14 [1974] 1 F.C. 294—Addy J. allowed 6% interest.
15 Maritime Telegraph and Telephone Company, Limited v.
The "Dumurra", Court No. T-3315-74 rendered September 1,
1976, confirmed by the Federal Court of Appeal [1977] 2 F.C.
679 and motion for leave to appeal to Supreme Court of
Canada dismissed July 20, 1977.
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.