T-573-72
Sabb Inc. (Plaintiff)
v.
Shipping Ltd., Lillis Marine Agencies Ltd. and
The Motor Vessels Gwendolen Isle, Ellen Isle,
Christine Isle, Gretchen Isle, Weser Isle, Ida Isle,
owners, and all persons interested therein
(Defendants)
Trial Division, Dubé J.—Montreal, October
27-31; Ottawa, November 18, 1975.
Maritime law—Stevedoring services—Whether stevedoring
and related services rendered by plaintiff were contracted by
defendants "S Ltd." and "L Agencies" on their own behalf so
as to make them liable—Whether these defendants merely
agents for their New York principals and under no liability—
Objective view—Concept of a "mandatary"—Whether action
in rem against "Weser Isle" enforceable—Federal Court Act,
ss. 22(2)(m), 43(2)—Quebec Civil Code, art's. 1028, 1030,
1701, 1715, 1716.
Plaintiff claims for stevedoring and related services against
two shipping agencies. Both defendant companies state that
requests made by them to plaintiff for services were solely for
and on behalf of Commonwealth Carriers Limited and/or its
American agent, Amerind Shipping Corp., for whom they
acted as agents to plaintiff's knowledge. It is alleged that
plaintiff has claimed against the two only because of the
bankruptcy of Commonwealth/Amerind, the vessels'
charterers.
Held, the action is dismissed. (1) It was never the objective
intention of the parties that the Montreal agencies would be
responsible for stevedoring charges. An objective view leads to
the conclusion that plaintiffs' intention was to service the ships
for the New York principals, basically represented by Amerind;
that the intention of the two defendant agents was merely to act
as local shipping agents on behalf of the New York principal—
local agents who never intended, never pretended to assume
personal liability.
(2) As to provisions of the Quebec Civil Code dealing with
mandataries, defendants did not act under their own names so
as to render them liable under article 1716. They acted in the
name of their New York general agents, their mandator under
article 1715. The mandate was- a contract between the New
York mandator and the two firms. As to plaintiff's suggestion
that the mandator had no legal existence, thereby rendering
liable the mandataries, the fact that a foreign company is not
duly licensed to carry on business in Quebec does not mean it
has no legal existence. It was not the agent who first held
himself out, but the principal who first contacted plaintiff; it
was for plaintiff to ascertain the legal status of the principal.
(3) As to the claim against the Weser Isle, one of two ships
arrested by plaintiff, plaintiff claims that the services were
necessaries within the meaning of section 22(2)(m) of the
Federal Court Act, for which the vessel or its owner is liable, by
virtue of reading section 22(2)(m) together with section 43(2).
Proceeding in rem is merely a useful means of protecting a
right in personam; there still must be a debtor personally liable.
There is a rebuttable presumption that necessaries are pre
sumed to have been provided on the ship's credit. Evidence
shows that the supplier of services did not look to the owners
nor to the ship. Plaintiff has not established the liability of the
owners, and cannot enforce his action in rem.
Wolfe Stevedores (1968) Limited v. Joseph Salter's Sons
Limited (1971) 2 N.S.R. (2d) 269, distinguished. Format
International Security Printers Limited v. Mosden [1975]
1 Lloyd's Rep. (Q.B.) 37 and Les Chevaliers de Maison-
neuve v. Société Immobilière Maisonneuve [1951] K.B.
(Que.) 432, agreed with. Westcan Stevedoring Ltd. v. The
Ship "Armar" [1973] F.C. 1232 and The "Heiwa Maru"
v. Bird & Co. (1923) I.L.R. 1 Ran. 78, applied.
ACTION.
COUNSEL:
R. Langlois and G. Vaillancourt for plaintiff.
A. S. Hyndman, Q.C., for defendant M/V
Weser Isle.
T. Bishop for defendants Shipping Ltd. and
Lillis Marine Agencies Ltd:
SOLICITORS:
Langlois, Drouin & Laflamme, Quebec, for
plaintiff.
McMaster, Meighen, Minnion, Patch & Cor-
deau, Montreal, for defendant M/V Weser
Isle.
Brisset, Bishop & Davidson, Montreal, for
defendants Shipping Ltd. and Lillis Marine
Agencies Ltd.
The following are the reasons for judgment
rendered in English by
DUBÉ J.: This is a claim by the plaintiff, a
Quebec City based stevedoring company, against
two Montreal shipping agencies, Shipping Limited
and Lillis Marine Agencies Limited, six vessels
and their owners, for stevedoring and related ser
vices rendered, mostly at the Port of Montreal
from September 1st to the end of December 1971.
The amounts claimed, amended in the pleadings
and at the trial, total $30,828.17 against Lillis
Marine and $115,003.65 against Shipping Lim
ited. The claim against the vessel Weser Isle,
separately represented by counsel, amounts to
$26,378.08, a portion of which ($5,910.14) is
included in the claim against Lillis Marine and the
balance ($20,461.94) is part of the total claimed
against Shipping Limited. Thus the total amount
for which plaintiff has produced invoices or other
supporting exhibits stands at $145,831.82.
The President of Shipping Limited, Fred D.
McCaffrey, admitted very candidly in his evidence
that the books of his company showed debts owing
to Sabb Inc. in the amount of $115,113.92 which
he déscribed as "deficiencies in account with Com
monwealth Carriers". Although a mountain of
exhibits in the form of invoices, vouchers, labour
slips, certificates of unloading, N.H.B. receipts,
cargo manifests, internal memos, bills of lading,
delivery receipts, delivery orders, railway advice
notes, stowage plans, container interchange
reports, piled up during the long and complex
proceedings, it does appear that the crux of the
problem, the first knot to untangle is not what is
owing but by whom.
In the statements of defence of both Lillis
Marine and Shipping Limited, the defendants
state that whatever requests were made by them to
Sabb Inc. for stevedoring services were made
solely for and on behalf of Commonwealth Carri
ers Limited for whom they acted as agents to
plaintiff's knowledge. In paragraph 14 of its
defence, Lillis Marine states that "plaintiff has
filed a claim against Lillis Marine Agencies Ltd.
and Shipping Ltd. only because the vessel's chart-
erers, Commonwealth Carriers Ltd. and/or its
American agent, Amerind Shipping Corp., went
into bankruptcy." In his eloquent conclusion coun
sel for plaintiff referred to the unfortunate event as
an international bankruptcy which made innocent
victims of the three major parties in this action.
Most of the material facts are not in dispute
although different interpretations have been
placed upon them by the various witnesses and, of
course, by the plaintiff and the defendants.
It appears that in July 1971, Harry N. Moore, a
New York steamship executive, was retained by
Amerind Shipping Corporation to carry out cer
tain duties in the container shipping business
including the location of a proper terminal in
Quebec City or Montreal. Amerind was general
agent for Caribbean Container Line which became
Commonwealth Carriers Limited in the summer of
1971 as some container services were dropped and
others were extended to Europe. Amerind had
experienced some berthing problems in Halifax,
and looked for better priority in Quebec City or
Montreal.
After some inquiries Moore heard of Sabb Inc.
and arranged for a meeting with the plaintiff and a
visit of its terminal facilities.
On August 11, 1971, he came to Montreal
accompanied by Vern Unger, Vice-President of
Operations for Amerind, where they met with K.
J. Monks, Secretary-Treasurer of Sabb Inc.,
Edward Patrick Brennan, Manager of Lillis
Marine and others. The interpretation of the con
versations at the meeting at the offices of Lillis
Marine and during the visit of plaintiff's terminal
installations vary according to the recollections of
the participants but it was obviously decided there
that Sabb Inc. would provide the stevedoring ser
vices to handle container ships in Montreal at the
request of Mr. Moore of Amerind.
Mr. Monks knew they were Commonwealth
ships. In his examination for discovery, he said (at
page 2) "as soon as he (Moore) mentioned the
names of the ships to me, I said: `Those I believe
are the Commonwealth container ships now ter
minating in Halifax' ".
Four letters from K. J. Monks to Harry Moore
(tabled as exhibits Monks 1, 2, 3 and 5) shed some
light on the matter. The first two were written
before the August 11 meeting and the other two
shortly after.
The first one dated June 8, 1971 is addressed to
"Harry Moore, Isbrandtsen Line". It should be
noted here at the risk of compounding the confu
sion that Isbrandtsen Line was a predecessor of
Commonwealth Carriers Limited. The letter
accompanied "two folders containing information
in respect of our container terminal in the Port of
Quebec" and notices "in connection with our ter
minal at section 73 in Montreal".
The second letter of August 3rd starts with
these words: "Further to telephone discussion of
this date concerning your Company's decision to
operate a container service from Quebec or Mon-
treal ... we wish to confirm our quotation as fol
lows ...". It goes on to quote the rates for han
dling containers.
It should be mentioned at this stage that Moore
had passed his calling card at the Montreal meet
ing. The card has him as Vice-President of "C&M
Transportation Consultants, Inc." The name of
that firm was crossed out and the name "Amerind
Shipping" was written in.
The third letter dated August 17th, addressed to
"Mr. H. Moore, Amerind Shipping Corp." refers
to the August 11th meeting, enclosing a Head-
Donaldson schedule and states that "no doubt you
will arrange to schedule your ships so as to avoid
any conflict of dates". It concludes with these
words: "We shall arrange to send you a schedule
of wages payable to all classes of labour within the
next day or two".
The fourth letter dated August 20th covers a
"Schedule of Composite rates for all classes of
personnel on our Terminal in Montreal for 1971".
That letter was also addressed to "H. Moore,
Amerind Shipping Corp."
During the relevant period the Montreal agent
of Isbrandtsen or Commonwealth was Lillis
Marine up to October 15, 1971, then Shipping
Limited from that date. Three agency agreements
filed at the trial should be referred to at this
juncture.
The first one dated March 25, 1970 is between
"Cargo Carriers Ltd." of Hamilton, Bermuda and
Lillis Marine Agencies Limited. It appears that
Cargo Carriers is another corporate name of the
Isbrandtsen Line as witness the signature "H. C.
Isbrandtsen" as President of Cargo Carriers Ltd.
Albert M. Lillis signed on behalf of his agency.
The document states that the principal appoints
Lillis Marine to be agent for Canada. The agent is
to have no authority to pledge the principal's
credit or in any way to engage the responsibility of
the principal unless authorized. Funds collected by
the agent as freight must be remitted promptly.
After each vessel leaves his territory, the agent
shall send to the principal a detailed disbursement
account.
The second agreement, dated October 15, 1971,
is between Commonwealth Carriers Limited and
Shipping Limited. It establishes that Common
wealth owns, operates and charters vessels and is
desirous of having an agent. It appoints Shipping
Limited as agent for its vessels in Canadian Great
Lakes Ports and Canadian East Coast Ports. The
agent will perform services normally incidental to
such agency, including arranging for repairs,
stevedoring and other cargo handling, "the steve
dore contractors having been appointed by the
Agent and/or the Company by mutual consent".
All expenses incurred in connection with loading
and discharge of cargo and related expenses on
behalf of the company will be borne by the com
pany. The agent at direction of the company will
deposit all receivables to the company's account at
the Bank of Montreal, the agent to provide to the
Bank pro forma disbursement account on a per
voyage basis and draw down up to 80% of said pro
forma. Upon presentation of vouchered/actual dis
bursement account the residual balance may be
drawn from the Bank. Supplemental disburse
ments shall be accounted in the general account
ing. The agent will exercise its best efforts and due
diligence to collect all freight.
The third agreement also dated October 15,
1971, is between the two defendants Shipping
Limited and Lillis Marine. It is a sub-agency
contract in respect to cargo destined to Bermuda,
Nassau and the Caribbeans. The plaintiff was
neither a party to, nor aware of, these three
documents.
At the time of the change of agency, Shipping
Limited caused advertisements to appear in The
Montreal Gazette identifying Shipping Limited as
general agents for Commonwealth Carriers Lim
ited. The October 18, 1971, issue of the Montreal
Gazette filed as an exhibit carried this
advertisement:
COMMONWEALTH
CARRIERS
ARE PLEASED TO ANNOUNCE
THE APPOINTMENT OF
SHIPPING LIMITED
AS GENERAL AGENTS IN CANADA
FOR THEIR INDEPENDENT FULLY
CONTAINERIZED SERVICES
CANADA-UK/CONTINENT
CANADA/CARIBBEAN
EFFECTIVE OCTOBER 15th 1971
The October 20, 1971 issue of The Gazette
carried an advertisement from Shipping Limited
with the title "Shipping Limited, Agents for"
heading a list of clients, including "Common-
wealth Carriers, independent fully containerized
service". Several other issues of The Gazette for
the relevant period carrying these advertisements
were filed as exhibits.
In his examination for discovery, Mr. Monks
was asked (at page 56) if he was "informed that
the general agency for Commonwealth had
changed from Lillis Marine to Shipping Limited".
He answered: "Not formally, I believe I read it in
The Montreal Gazette". Mr. Monks also made a
congratulatory telephone call to President McCaf-
frey upon the appointment of Shipping Limited as
agent for Commonwealth Carriers Limited.
Shortly after the Montreal meeting, or on Sep-
tember 1st, the Weser Isle called at the Port of
Montreal and docked at plaintiff's terminal. There
is no dispute that from that date to the end of
December 1971 stevedoring and related services
were performed by the plaintiff on six different
Isle ships and that Lillis Marine and, after Octo-
ber 15, Shipping Limited were involved.
A certain modus operandi or channels of opera
tions were followed. Day to day details of the
terminal operations had been discussed between
Sabb Inc. and Lillis Marine who would inform
Sabb Inc. when ships were to come in and what
containers were to be moved. The invoices were
sent by Sabb Inc. to the Montreal agents who
would forward them on to New York, and later
Bermuda, for approval. The rates charged were on
the basis of those quoted by Mr. Monks of Sabb
Inc. to Mr. Moore of Amerind.
The exact procedure to be followed on handling
cargo was defined at a November meeting and set
out in a document titled "Container Cargo Han
dling Procedure, S.A.A.B. Terminal Montreal"
filed as exhibit P-37. The undated document is
under the letterhead of Shipping Limited and
unsigned. It deals with three different procedures
for export containers, import containers and stor
age containers. Basically it establishes that Ship
ping Limited is to provide Sabb Inc. with cargo
lists, rail car lists. Sabb Inc. is to issue receipts,
tally sheets, interchange forms, numerical lists of
all containers in the terminal and to inspect all
containers for cleanliness before delivery to ship
per for loading. Nothing is mentioned with refer
ence to the procedure of paying stevedoring or any
bills.
A discernable pattern emerges from the mass of
documents, a flow from Sabb Inc. as stevedores to
either Lillis Marine or Shipping Limited as Mon-
treal agents, then on to Commonwealth Carriers
Limited, c/o Amerind Shipping Corp. in New
York. Unfortunately for the stevedoring firm the
cash flow was not equal to the paper output.
Because of the dock strike in New York, cargo
traffic was heavy in the Port of Montreal in the
fall of 1971. Unpaid bills were piling up. When
Jean-Louis Lachance became President of Sabb
Inc. on January 1st, 1972, he became quite con
cerned over the credit situation of the company. As
soon as the 1971 financial statements of Sabb Inc.
became available he took steps to collect the
accounts receivable. In his evidence, Mr. Lachance
said that he contacted Mr. Moore who informed
him "to go after" the Montreal agents who were
authorized to pay off disbursements from freight
collected.
It should be noted at this point that on the
opening day of the trial plaintiff sought and
obtained leave to table a second amended state
ment of claim which included a new paragraph 20
as follows:
Whereas on or about January 24th, 1972 defendant SHIPPING
LTD. promised to pay in the course of a telephone conversation
not only plaintiff's then outstanding invoices addressed to it
totalling then $137,655.85 plus other invoices to come for about
$20,000.00 but also the invoices addressed to co-defendant
LILLIS MARINE AGENCIES LTD. for $30,828.17 and that such
amounts were to be paid by a first payment of at least
$75,000.00 which it did pay, the balance of approximately
$150,000.00 to be paid at the rate of twenty thousand dollars
per week before April 1st, 1972 which was not paid.
Mr. Lachance testified that after having spoken
to Mr. Moore he contacted Donald S. Gough,
Comptroller and Chief Administrator of Financial
Operations for Shipping Limited. According to
notes taken by Mr. Lachance during his telephone
conversation on January 24, 1972, Mr. Gough
agreed to pay some $75,000 cash and the balance
of all outstanding bills, including those owing by
Lillis Marine, at the rate of $20,000 a week. The
Lachance telephone memo lists a series of invoices
and the amount $76,417.25 "cash"; also "balance
$150,000 to be paid before April 1, 1972, $20,000
per week". A certified cheque in the amount of
$76,417.25 was in fact made and signed by Mr.
Gough and quickly picked up by a Sabb employee.
Mr. Gough testified that he did in fact receive a
call from Mr. Lachance. He stated that he told
Lachance he would have to review the accounts
receivable on behalf of Commonwealth to verify
the excess funds. He said that he informed
Lachance that Shipping Limited was authorized to
pay stevedoring bills from freight collected when
surplus moneys were left after having paid
expenses. During the conversation with Lachance
he confirmed with the latter that he had some
$75,000 in excess that could be used to pay off
against the outstanding stevedoring charges. He
added that Lachance did make a proposal that the
balance be paid off in the manner outlined but that
he did not promise or guarantee any specific
amounts as he was limited to the excess money on
hand on behalf of Commonwealth.
Fred McCaffrey, President of Shipping Limited
had no criticism of his Comptroller for the cheque
he issued as he himself favoured paying off
Canadian suppliers from freight moneys available
rather than forwarding the excess cash to a "bot-
tomless pit" in New York or Bermuda.
He asserted however that Gough had no author
ity to commit Shipping Limited to pay stevedoring
charges other than from excess money. The con
tract between Commonwealth and Shipping Lim
ited auhorized the latter to pay up to 80% of
freight moneys to disbursements and Gough had
informed him that he had assured Lachance he
would do his best to cover outstanding bills out of
future freight moneys.
I must conclude that Mr. Lachance tried desper
ately to extract as much cash and commitment as
he possibly could from the Montreal agency and
that, although he was successful in securing a
substantial cheque, there just was not sufficient
money at that late stage to cover all the outstand
ing invoices. Although Mr. Gough must have
sounded accommodating, encouraging and sooth
ing to the eager listener, I cannot find that Mr.
Gough would have gone so far as to personally
engage his company's own financial resources
without first having obtained the authority to do
so. Moreover, neither the word "promise" nor any
equivalent term, appear on Mr. Lachance's tele
phone notes. And there is no evidence that the new
President of Sabb attempted to secure a quick
written confirmation of the alleged promise to pay
as he surely would have if a firm oral promise had
been secured by him on the telephone.
The Gwendolen Isle and the Weser Isle were
both arrested in the Port of Saint John on
February 25 and 29, 1972, respectively and served
with the statement of claim in this cause. The
Gwendolen Isle did not file a defence. The Weser
Isle did and was represented by counsel at the
trial. In January 1972, Commonwealth Carriers
Limited had become Commonwealth Carriers
(1972) Limited and had shifted its winter opera
tions to Saint John, New Brunswick. Amerind
Shipping filed bankruptcy. On February 7, 1972,
President McCaffrey of Shipping Limited received
a very interesting telex from Midsea Containership
Inc. The first paragraph reads as follows:
FURTHER TO OUR TELEPHON (SIC) CONVERSATION, PLEASE BE
ADVISED THAT MIDSEA CAUSED COMMONWEALTH CARRIERS
1972 LTD. TO BE FORMED FOR "PURPOSES OF CONTINUITY OF
VESSEL EMPLOYMENT. YOU MUST UNDERSTAND THERE NEVER
HAS BEEN ANY FINANCIAL RELATIONSHIP DIRECTLY OR IN
DIRECTLY BETWEEN MIDSEA AND OLD COMMONWEALTH BUT IN
VIEW OF TAKING HOLD OF AN ABANDONED SITUATION LITERAL
LY IN MID-OCEAN SOME PROCEDURE MUST BE INSTIGATED TO
CLARIFY STATUS OF AFFAIRS ACCORDINGLY. FOR PURPOSES OF
THIS ACCOUNTING COMMONWEALTH CARRIERS 1972 WILL PICK
UP THE VOYAGES KNOWN AS ELLEN ISLE EB 16, WESER ISLE EB
15, GWENDOLEN ISLE SB 76, CHRISTINE ISLE SB 11.
The main issue in this case is whether the
stevedoring and related services rendered by the
plaintiff were contracted by the defendants Ship
ping Limited and Lillis Marine on their own
behalf so as to make them liable or whether these
defendants were merely agents for their New York
principals and thus under no liability. The answer
must be found in the objective intention of the
parties.
Plaintiff's counsel referred to the case of Wolfe
Stevedores (1968) Limited v. Joseph Salter's Sons
Limited', a 1970 decision of the Appeal Division
of the Court of Nova Scotia which reviews some of
the basic criteria in these actions for stevedoring
services against shipping agents. A Halifax ship
ping agent acting for Quebec City shipowners
agreed to pay Wolfe Stevedores for its services out
of freight charges. The Appeal Court held that the
agent extended his personal liability to the steve-
' (1971) 2 N.S.R. (2d) 269 at page 275.
doring firm and breached its agreement with the
stevedoring company by expending freight charges
for other expenses.
After reviewing the facts, Cooper J.A., sets out
the issue and refers to Bowstead on Agency and
Fridman, The Law of Agency:
The principal issue before us as it was at the trial of the
action is whether the contracts for loading the vessels were
made by the appellant on its own behalf so as to make the
appellant liable for payment of the services or whether the
contracts were made by the appellant solely as agent for the
owner. The law applicable is set out in Bowstead on Agency,
13th ed., pp. 374, 5 as follows:
The question whether an agent who has made a contract on
behalf of his principal is to be deemed to have contracted
personally, and, if so, the extent of his liability on the
contract depends on the intention of the parties to be
deduced from the nature and terms of the particular contract
and the surrounding circumstances, including any binding
custom.
Article 123 of Bowstead (supra) p. 390, reads:
"Where an agent makes a contract which is not reduced to
writing, the question whether he contracted personally or
solely in his capacity as an agent is a question of fact."
Fridman, The Law of Agency, 2nd ed., at p. 164 is as follows:
"Where the contract is oral.—If the agent has contracted
orally, the question whether or not the agent is personally
liable is a question of fact, dependant on the circumstances."
Cooper J.A., also refers at page 276 to two
Lloyd's cases as follows:
In Maritime Stores, Ltd. v. H. P. Marshall & Co., Ltd.,
[1963] 1 Lloyd's Rep. 602, the plaintiff, ships' stores mer
chants, sought recovery for supplying tackle to two vessels.
Roskill, J. said at p. 608:
"It is perfectly true that the defendants were ships' agents. It
is perfectly true that the plaintiffs knew that they were ships'
agents. But the fact that the plaintiffs knew that the defend
ants were ships' agents is, in my judgment, in no way
determinative of the issue."
The learned Judge then concludes at page 282:
I must now return to the central issue in this case. What did
the parties intend when the agreement was made for loading
the vessels? I think it was contemplated and agreed that the
appellant itself would be responsible for payment of the
accounts to Wolfe Stevedores. The surrounding circumstances
were (1) the appellant found the cargoes for the ships; (2) Mr.
Evans said he was collecting the freight and that the bills would
be paid out of the freight; (3) the bills were to be sent to
Salter's Sons; (4) on three previous occasions (one relating to
the "Cap St. Laurent", a vessel not owned by Bouchard) the
bills were so sent and were paid; (5) nothing was said to the
respondent that it should look for payment to the owner.
There are important distinctions however be
tween the Wolfe case and the facts of the present
case: (1) contact with Sabb Inc. was made directly
by the principal through Mr. Moore, not by the
agents; (2) apart from two minor bills paid by
Lillis Marine and the $76,000 cheque made by
Shipping Limited stevedoring bills were not paid
by the agents as a matter of course; (3) the two
shipping agents did not inform Sabb Inc. they
would pay them out of freight collected, until
January when Mr. Gough spoke to Mr. Lachance;
(4) Wolfe Stevedores had no dealings with the
principal Bouchard or with anybody else except
the agent, whereas plaintiff Sabb Inc., mostly
through their Mr. Monks, dealt directly with Mr.
Moore of Amerind to establish the services and to
set the stevedoring rates.
The "objective intention" test is again referred
to and applied in a very recent case Format Inter
national Security Printers Limited v. Mosden 2 .
The question before the Court was whether in
ordering from the plaintiffs the printing of stamps
the defendant was acting solely as agent for the
government or contracting in such manner as to
incur personal liability. Mr. Justice Stabb referred
to some authorities, including Bowstead and The
Swan case and said at page 38:
Later in the text, under the heading, "Comment", the author
has this to say:
The question whether an agent who has made a contract
on behalf of his principal is to be deemed to have contracted
personally, and, if so, the extent of his liability on the
contract depends on the intention of the parties to be
deduced from the nature and terms of the particular contract
and the surrounding circumstances, including any binding
custom. The operation of the rules is strictest in relation to
written contracts where the use of an inappropriate form of
words may make an agent personally liable though it is in
fact doubtful whether he intended to assume such personal
liability.
2 [1975] 1 Lloyd's Rep. (Q.B.) 37.
The contract with which I am concerned was undoubtedly an
oral one, although the order was subsequently confirmed by the
defendant in writing. I can therefore only conclude what were
the terms of that contract by a consideration of the evidence
given by two directors of the plaintiff company, Mr. McAllen
and Mr. Rodgers, on the one hand, and the defendant on the
other, deriving such further assistance as I can from all the
surrounding circumstances, including the correspondence
subsequently passing between the parties, the terms of which
may give some indication of the parties' view as to what was the
liability which had been incurred. This I regard as a factor to
which some weight can properly be given as part of the
surrounding circumstances, although the intention of the par
ties should still be judged objectively.
Stabb J. thus concluded at page 44:
Accordingly, I have come to the conclusion on the evidence
and on an objective view of the whole transaction that the
intention always was that the defendant should be the person
responsible for the printing costs of the stamps which he was
authorized to have printed for the Philippine government and
accordingly, in my view, the - plaintiffs have established their
claim.
The objective view of the whole transaction in
the present case leads me to a different conclusion.
Undoubtedly stevedoring and related services were
rendered and the plaintiff has a valid claim against
someone. He would most likely have pressed it
against the principals Amerind and Common
wealth were they still solvent. But was it ever the
objective intention of the parties that the Montreal
agents would be responsible for stevedoring
charges? I find that it was not.
The initial contact was made by Messrs. Moore
and Unger of Amerind and Commonwealth who
went to Montreal and inspected plaintiff's termi
nal. Mr. Monks of Sabb Inc. knew them both
personally and identified them with the Isbrandt-
sen Line and with the Commonwealth vessels.
"Isbrandtsen" and "Commonwealth" were impres
sive names in the world of container ships. Such a
generous line of credit as was allowed by the
plaintiff would never have been extended to a mere
local agent. The fact that Sabb Inc. did not pro
test, but extended congratulations, when Lillis
Marine was replaced as agent by the principals is a
fair indication of the little importance which Sabb
Inc. attached to the credit of the small Montreal
shipping agency. If the "objective intention" of the
parties had been to base a contract on the personal
liability of Lillis Marine, Sabb would never have
allowed Lillis Marine to withdraw without insur
ing that it had paid the stevedoring bills outstand
ing at the time.
Written and telephone discussions with refer
ence to stevedoring rates took place between
Messrs. Monks and Moore; the local agents were
not even involved. The person to whom the new
President of Sabb turned in January to get the
bills paid was Mr. Moore of Amerind. He was the
one who informed Mr. Lachance "to go after" the
Montreal agents who were authorized to pay steve-
doring bills from freight collected. Apart from the
Lachance telephone conversation, nowhere is to be
found, any indication that the Montreal agents
would have committed themselves to pay stevedor-
ing bills out of their own money. One fails to see
what their motives would be in doing so; after all
they did not own the ships and were deriving no
freight revenues from them.
To be sure, there is confusion as to the identity
of the principals. Perhaps nowhere but in the
mysterious world of container ships can such
incredible fiction parade as businesslike, matter of
course, reality. One would think that the plaintiff
would have taken steps from the start to better
identify the principals and to insist on a written
contract. One must conclude that Mr. Monks of
Sabb Inc. knew Messrs. Moore and Unger so well
that he felt no need for better financial security or
greater contractual certainty. The names in the
background of these two New York men kept
shifting from Isbrandtsen Line, to Cargo Contain
ers Ltd., to Caribbean Containers Ltd., to•Com-
monwealth Carriers and Commonwealth Carriers
(1972) Ltd., with Amerind Shipping as a focal
point, until its bankruptcy.
An objective view of the situation leads me to
conclude that the intention of the plaintiff was to
service the container ships for the New York
principals, basically represented by Amerind; that
the intention of the two defendant Montreal agents
was merely to act as such, namely local shipping
agents on behalf of the New York principals, local
agents who never intended and never pretended to
assume personal liability for the stevedoring
services.
Under article 1715 of the Quebec Civil Code the
mandatary acting in the name of the mandator
and within the bounds of the mandate is not
personally liable to third persons with whom he
contracts, but under article 1716 a mandatary who
acts in his own name is liable to the third party.
Mandate is defined in article 1701 as "a con
tract by which a person called the mandator,
commits a lawful business to the management of
another, called the mandatary, who by his accept
ance obliges himself to perform it".
The plaintiff firstly alleged there was no man
date between Amerind and/or Commonwealth and
the defendant shipping agents, but in the alterna
tive that if there was a mandate, unless it were a
mandate as defined under article 1701, then the
mandatary could not benefit from the immunity
provided by article 1715. Under that alternative
the mandatary would be liable under articles 1028
and 1030 of the Code.
Under article 1028 a person cannot, by a con
tract in his own name, bind any one but himself,
but he may contract that another shall perform an
obligation and in this case he is liable in damages
if such obligation be not performed by the person
indicated. A person is deemed by article 1030 to
have stipulated for himself unless the contrary is
expressed or results from the nature of the
contract.
I have no difficulty in reconciling these provi
sions of the Quebec Civil Code with the applica
tion of the common law principles of agency to the
facts of this case.
I have found that the two defendant shipping
agents, Lillis Marine and Shipping Limited, did
not act under their own names so as to render
them liable to the plaintiff stevedoring firm under
article 1716. They acted in the name of the New
York general agents, their mandator under article
1715. The mandate was a contract partly written
and partly oral between the New York mandator
and the two firms. It is true that the plaintiff firm
was not aware of the written contracts but they
knew the mandator was dealing with them through
their Montreal agents.
It was argued that the shipping agents did not
act "within the bounds of the mandate" because
they did not call in ordinary disbursement funds
from the mandator to pay off the stevedoring bills.
My understanding of the arrangement between the
Montreal agents and the New York principals was
that the agents were to pay ordinary disbursements
but to forward stevedoring invoices to the princi
pals for approval, which they did. Except that in
the later stage Shipping Limited was authorized to
use so called excess money to pay off stevedoring
charges, which they did on one occasion with the
$76,000 cheque. It is possible that Shipping Lim
ited could have commenced paying plaintiff from
excess money before January, but that is hardly
acting outside the bounds of the mandate. In any
event, the plaintiff was not privy to, nor indeed
even aware of these, arrangements between the
principal and his agent.
A more ingenious argument was advanced to the
effect that the mandate does not exist because the
mandator has no legal existence. In Traité de
Droit Civil du Québec 3 , it is stated at page 68:
[TRANSLATION] The mandatary shall also be personally liable
if the mandator has no legal existence.
In Les Chevaliers de Maisonneuve v. Société
Immobilière Maisonneuve 4 , it was held that a
person who holds himself as a mandatary guaran
tees the existence of a mandator and is personally
liable if a mandator does not exist. In that case,
the Knights of Maisonneuve, the alleged manda-
tor, were not incorporated.
Under section 3, Extra-Provincial Companies
Acts, no extra-provincial corporation shall carry
on business in the Province of Quebec unless - a
licence under this Act has been granted to it and
unless such licence is in force.
3 Série Trudel, Tome 13.
4 [1951] K.B. (Que.) 432.
R.S.Q. 1964, c. 282.
Counsel for plaintiff suggested that, since it was
not alleged by the defendants that their mandator
was duly licensed under the said Act, these extra-
provincial corporations had no legal capacity in
Quebec. The mandator having no legal existence,
the mandatary would then become liable to the
plaintiff.
I cannot accept that argument. The fact that a
foreign company is not duly licensed to carry on
business in the Province of Quebec does not mean
it has no legal existence. If it were so, legal and
commercial chaos would prevail in the Port of
Montreal. In fact, the penalty under section 11 for
not complying with the requirements of the Extra-
Provincial Companies Act is not imposed on the
extra-provincial corporation itself but on any
person doing business for it. Furthermore, it was
not the agent who held himself out, but it was the
principal who first contacted the plaintiff; it was
for the plaintiff to ascertain the legal status of the
principal.
For the foregoing reasons, plaintiff's action
against Lillis Marine Agencies Limited and Ship
ping Limited is dismissed with costs.
I must now turn to plaintiff's claim against the
vessel Weser Isle, one of two ships arrested at
Saint John, New Brunswick, in February 1972, by
the plaintiff in this action. The services rendered to
the Weser Isle are described in paragraph 6 of
plaintiff's statement of claim as stevedoring ser
vices at the request of masters and/or defendant
Lillis Marine Agencies on September 1 and Octo-
ber 12 ($5,910.14) and in paragraph 12 at the
request of the masters and/or Shipping Limited on
October 12, November 5-8, November 9 (at
Quebec), ($20,462.94).
In the statement of defence the owners of the
vessel, namely Partenreederei M/S Weser Isle
deny that the master of the said vessel ever
requested the services and deny knowledge of any
arrangements with reference to alleged services.
They allege that the Weser Isle is owned by a
partnership of five German businessmen. They
also allege that the vessel was under charter of
Midsea Containership of Hamilton, Bermuda, by
virtue of a time-charter of 1968 which provided
this vessel would be delivered after construction to
Midsea for a period of "7-10 consecutive years".
They allege that the said charterparty provided
that the master was to be under the orders of the
charterers and that charterers would arrange and
pay for loading, trimming, etc. They pray for
cancellation of the said $35,000 bail bond filed to
obtain the release of the vessel and dismissal of the
action.
At the trial Heinrich Wurthmann, representing
the owners of the Weser Isle duly established the
ownership of the vessel and the charterparty. He
confirmed that the owners had no communication
whatsoever with Sabb Inc., nor with Lillis Marine
or Shipping Limited during the relevant period.
In Westcan Stevedoring Ltd. v. The Ship
"Armor" 6 , a stevedoring firm brought an action in
rem for services requested by the charterers on
their sub-agents in connection with the loading of
cargo on board the defendant ship Armar. The
plaintiff claimed that the services were necessaries
within the meaning of paragraph 22(2)(m) of the
Federal Court Act' for which the vessel or owner
is liable by virtue of reading paragraph 22(2)(m)
together with subsection 43(2) of the Act. The
sections read as follows:
22. (2) Without limiting the generality of subsection (1), it
is hereby declared for greater certainty that the Trial Division
has jurisdiction with respect to any claim or question arising
out of one or more of the following:
(m) any claim in respect of goods, materials or services
wherever supplied to a ship for her operation or maintenance
including, without restricting the generality of the foregoing,
claims in respect of stevedoring and lighterage;
43. (2) Subject to subsection (3), the jurisdiction conferred
on the Court by section 22 may be exercised in rem against the
ship, aircraft or other property that is the subject of the action,
or against any proceeds of sale thereof that have been paid into
court.
6 [1973] F.C. 1232.
7 R.S.C. 1970, (2nd Supp.) c. 10 as amended by 1973-74, c.
17, s. 8; 1974-75, c. 18.
My brother Collier dismissed the claim and held
that personal liability of the vessel or the owner
had not been proved. He stated that the Federal
Court Act enabled a claimant to enforce his rights
in rem but that was dependent on his establishing
a liability on the owners, apart from statute. He
said at page 1234:
Mr. Lutz candidly admitted he never at any time dealt with
the owners of the vessel or the master of the vessel in respect of
the supplying of these stevedoring services. He said his com
pany was not looking to the credit of the vessel or her owners,
but was supplying the services on the credit of the charterers or
their sub-agents. The defendant (in this case, the owner of the
vessel) has raised several issues in defence, but I propose to deal
primarily with the main contention, which is this: Assuming
these services to be in the nature of necessaries, the liability, on
the facts here, is that of the charterer or its agents, and not a
liability of the vessel or its owners; therefore this action in rem
cannot be maintained.
And then at pages 1236-7:
I think it too wide a proposition, that suppliers such as the
plaintiff invariably look to or ought to have the credit of the
vessel. There may be sound business reasons for looking to the
credit of others. In this case, Mr. Lutz testified that his
company, as a matter of practice, did not usually look to the
credit of the vessel (where there were charterers). He said his
company did not normally wish to become involved with owners
or other third parties in respect of payment for services
arranged for by, with, or on behalf of, charterers.
I therefore rule against the plaintiff's first argument.
I turn now to the plaintiff's contention that subsection 43(2)
and par. 22(2)(m) when read together impose, on the facts
here, a liability in rem on the vessel or her owners. I understand
the submission to be as follows: Prior to the passing of the
Federal Court Act, liability in this case was (for the purposes of
this argument) on the charterer alone. The intent of the
provisions of the Act referred to is to create a liability in rem on
the vessel or her owners, regardless of what the liability in
personam might be.
In my view, Parliament did not intend to enlarge the liability
of a vessel or her owners in the factual situation which exists
here, or to create a liability on the vessel or her owners which
did not in law exist prior to the passing of the Federal Court
Act.
Analogous arguments have been advanced in some earlier
English decisions, in which similar provisions of admiralty Acts
in England were considered. I cite as examples of those situa
tions: "The Tolla" [1921] P. 22; "The Sara" (1889) 14 App.
Cas. 209; "The Mogileff' [1921] P. 236. See also Coastal
Equipment Agencies Ltd. v. The "Corner" [1970] Ex.C.R. 13.
In those cases, the history of admiralty jurisdiction in respect of
necessaries and master's disbursements was, to varying degrees,
reviewed. It was held that the statutory provisions providing
that a suit for necessaries or master's disbursements could be
enforced by an action in rem did not per se impose a liability on
the vessel or her owners. There first must be a personal liability
at law which by virtue of the legislation became enforceable in
rem.
To my mind, the same reasoning applies in this case. Prior to
the coming into force of the Federal Court Act, the Exchequer
Court on its admiralty side by statute had jurisdiction in
respect of claims for necessaries. Legislation enabled the claim
ant to enforce his rights in rem but was dependent on his
establishing a liability on owners, apart from statute. In my
view, the so-called admiralty jurisdiction sections of the Feder
al Court Act did not alter the previous position.
I am deliberately quoting at some length the
judgment of Collier J., because it provides a very
useful overview of the modern jurisprudence on
actions in rem and the liability of vessels and their
owners for necessaries.
Proceeding in rem is merely a useful machinery
to protect a right in personam, there still must be a
debtor personally liable. It has been held in The
"Heiwa Maru" v. Bird & Co. 8 that there is a
rebuttable presumption that necessaries are pre
sumed to have been provided on the credit of the
ship:
It would seem therefore that though necessaries supplied to a
ship are prima facie presumed to have been supplied on the
credit of the ship, this prima facie presumption may be rebut
ted by evidence of facts going to show that the person who has
supplied or paid for the necessaries looked for payment to the
person at whose instance he furnished the supplies or advance
monies, and not to the owner of the ship.
The evidence in the case at bar is to the effect
that the supplier of services did not look to the
owners (he did not know who they were), nor to
the ship (the first request against the ship was
made when she was arrested), but firstly to Mr.
Moore of Amerind and then to Mr. Gough of
Shipping Limited. Mr. Moore was the person at
whose initial request the stevedoring services were
rendered, and Mr. Gough the person whom Mr.
Moore suggested the plaintiff should "go after" to
get paid from freight collected.
8 (1923) I.L.R. 1 Ran. 78 at page 100.
I must conclude therefore that the plaintiff has
not established the liability of the owners and
therefore cannot enforce his action in rem.
The action against the Weser Isle is dismissed
with costs and I hereby order the bail bond (No.
3-3818) of the Fireman's Fund Insurance Com
pany cancelled..
There remains plaintiff's claim against the
Gwendolen Isle which was also arrested in the Port
of Saint John, New Brunswick, on February 25,
1972 and served a statement of claim in this
action. The exact claim made against the Gwen-
dolen Isle in the second amended statement of
claim is $8,568.51. It is alleged in the affidavit to
lead warrant that the vessel is of Liberian registry,
being registered in the Port of Monrovia and is
owned by Midsea Containership Inc.
The record shows that a motion for leave to
intervene and file conditional appearance dated
March 6, 1972 was filed. It alleges that the vessel
was at all material times owned by Midsea Con-
tainership Inc., Hamilton, Bermuda ("Midsea").
Also of the same date a motion to release from
arrest the M/V Weser Isle and M/V Gwendolen
Isle, alleging that both vessels on or about August
20, 1971, were chartered by Midsea to Common
wealth Carriers Limited for a period of one year
on the terms and conditions of a time charter and
that Midsea never entered into nor authorized any
contract with the plaintiff.
Dated March 9, 1972, there appears on record a
notice of motion to call witnesses re the above two
motions in the arrest of both vessels. On that same
date, an order was made allowing Midsea Contain-
ership Inc. to participate in the proceedings as
owner of the M/V Gwendolen Isle as well as
charterers of the M/V Weser Isle. The motion to
release from arrest the two vessels was dismissed
_ as premature.
Unlike the owners of the Weser Isle, the owners
of the Gwendolen Isle, for reasons better known to
themselves, have not filed a defence and have
taken no other step to defend themselves.
There appears on the record, an order granting
leave to the firm of solicitors representing the
defendants Midsea Containership Inc. and the
vessel Gwendolen Isle to cease representing them;
also a renewed joint application for time and place
for trial signed by solicitors for the plaintiff, the
defendant Weser Isle and the defendants Shipping
Limited and Lillis Marine Agencies; the applica
tion is not signed by any solicitor for the Gwendol-
en Isle. The order setting dates for the trial was
also forwarded to the above three solicitors, but
not to the Gwendolen Isle.
Under the circumstances, the Gwendolen Isle
and her owner cannot be bound by any order
which I would make against them so I am not
making any.
Action against Lillis Marine Agencies Limited
and Shipping Limited and the Weser Isle is dis
missed with costs.
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.