Judgments

Decision Information

Decision Content

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.
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