A-474-78
The ship Doroty (Appellant) (Defendant)
v.
Atlantic Consolidated Foods Limited (Respond-
ent) (Plaintiff)
A-475-78
The ship Doroty (Appellant) (Defendant)
v.
Star-Kist Caribe Incorporated (Respondent)
(Plaintiff)
Court of Appeal, Heald, Urie and Ryan JJ.—
Fredericton, October 17, 1979 and January 23,
1980.
Maritime law — Contracts — Bills of lading — Appeals
from judgments in favour of respondents — Hague Rules
contractually incorporated into bills of lading Cargo
damaged — Limits of liability, and quantum and propriety of
damages — Appeals dismissed — Effect given to Hague Rules
— Hague Rules, Art. 1 par. (e), Art. II, Art. II! par. 2, Art. IV
par. 5, Art. IX.
Appeals from Trial judgments in favour of the respondents
for damages to cargo. The bills of lading, by their terms, were
subject to the Hague Rules. The parties agreed to extend the
application of the Rules to cover damages while the goods were
in the custody of the carrier, except as otherwise provided. The
bills of lading limited the carrier's liability for packaged goods
to an amount per package fixed by the Rules, and its liability
for unpackaged goods to an amount not exceeding the mini
mum agreed value per customary freight unit permitted by the
Rules. If the circumstances of the loss were such that the Rules
did not apply, then the value of the goods was to be an agreed
sum per package or customary freight unit. The appellant
submitted that the bills of lading limited its liability per
"customary freight unit", rather than "per unit" as provided by
the Rules. Thus, it argued that the Rules did not apply to
unpackaged goods. Instead, the limitation per customary
freight unit as provided in the bills of lading would apply. The
question is whether or not the Trial Judge erred in construing
the bills of lading in holding that the Hague Rules were to be
incorporated in toto and consequently any inconsistencies
which arose between the bills of lading and provisions of the
Rules were resolved by the application of the provisions of the
Rules. The second issue is whether or not the Trial Judge erred
concerning quantum and propriety of damages.
Held, the appeal is dismissed. The damage to the goods
occurred in circumstances to which the Hague Rules do, in
their own terms, apply: it occurred after loading and before
discharge. Clause 13 does not apply to the damage to the goods.
Since the Hague Rules apply, it follows that the limitation is
£100 sterling per unit and not £100 sterling per customary
freight unit. Article IX of the Hague Rules provides that "The
monetary units mentioned in this Convention are to be taken to
be gold value", and since the liability is limited to £100 per
fish, it is obvious that on the facts of this case, the limitation
would greatly exceed the amount of the claims regardless of the
basis used for the valuation of £100. The appellant has not
shown error on the part of the Trial Judge in respect of the
claims for damage. There was evidence that at the date when
the damage occurred, the Canadian and U.S. dollars were
treated as if they were at par in the tuna industry. Accordingly
there was no error on the part of the Trial Judge in not
reducing the respondents' claim made in U.S. dollars to the
equivalent of Canadian dollars. Interest is an element of dam
ages and in his discretion, the Trial Judge awarded interest to
the respondent Star-Kist on a portion of its damages which it
had, to the date of trial, not suffered. The Court would not say
that he incorrectly exercised that discretion.
APPEAL.
COUNSEL:
M. R. Jette for appellant (defendant).
L. E. Clain for respondent (plaintiff).
SOLICITORS:
Clark, Drummie & Company, Saint John, for
appellant (defendant).
McKelvey, Macaulay, Machum, Saint John,
for respondent (plaintiff).
The following are the reasons for judgment
rendered in English by
HEALD J.: These appeals are from judgments of
the Trial Division [[1979] 1 F.C. 283] in two
actions for damages to two shipments of tuna fish
carried by the appellant vessel from a Panamanian
island and discharged at St. Andrews, New Bruns-
wick. The actions were tried together on common
evidence and common reasons for judgment were
filed in the Trial Division. The shipments were
covered by two bills of lading issued on behalf of
the vessel, the forms of bills of lading being
identical.
Some of the tuna belonging to each respondent
and located in the lower portion of the lower holds
of the vessel was found to be damaged upon
discharge at St. Andrews and was termed
"suspect".
In order to determine the extent to which the
"suspect" fish was damaged and also to prevent
further damage from occurring, the "suspect"
tuna was processed through the canning plant of
the respondent Atlantic located about one-quarter
mile from the vessel discharge berth near 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.
After processing of the tuna, it was determined
that of the 397 short tons termed "suspect" upon
discharge, some 273 tons were fit for human con
sumption and canned as such by the respondent
Atlantic. The remaining 124 short tons were found
to be suitable only for either pet food or fertilizer.
The respondents claimed from the appellant the
market value of that respective portion of their
cargo which could not be used for human con
sumption plus salvage costs and freight. The
learned Trial Judge accepted these claims and
gave judgment for the respondent Atlantic for
$88,279.27 and for the respondent Star-Kist for
$34,481 plus interest in each case at the rate of 8%
per annum from May 6, 1974 to the date of
judgment (June 13, 1978) together with costs to
the respondent in each case.
In both cases, the appellant does not appeal
from the finding of the Trial Judge that the vessel
was liable for the physical damage to the tuna fish.
In both cases, the appellant appeals two general
issues:
(i) the right of the appellant to monetary limita
tion of liability; and
(ii) the quantum and propriety of damages
awarded each respondent.
The appellant raises eight objections to the judg
ments of the Trial Division, all of which apply
equally to both cases with the exception of objec
tion no. 8 which applies only to the respondent
Star-Kist. I will deal with these objections in the
order dealt with in the appellant's memorandum:
Objection No. 1—It is the submission of the
appellant that the learned Trial Judge erred in
construing the bills of lading in holding that
under clause 1 thereof the Hague Rules were to
be incorporated in toto into the said bills of
lading and consequently any inconsistencies
which arose between clauses in the bills of
lading and provisions of the Rules were resolved
by the application of the provisions of the Rules.
Clause 1 of both bills of lading 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, 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 sur
render by the Carrier of any of its rights or immunities or an
increase of any of 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.
Clause 1 of the bills of lading, in relevant aspect,
makes the bills of lading subject to "Hague Rules
Legislation", defined by the clause, for relevant
purposes, as "The International Convention for the
Unification of Certain Rules relating to Bills of
Lading at Brussels of August 25, 1924", that is to
say the Rules as adopted by the Convention.
The Rules are applicable to a contract of car
riage, covered by a bill of lading, from the time the
goods shipped are loaded on the ship until they are
discharged from it'. Clause 1 of the bills of lading
does, however, extend the application of the provi
sions of the Rules so that they are to govern loss or
damage "... before the goods are loaded on and
' Article I, paragraph (e) of the Convention, and see Article
II and Article III, paragraph 2.
after they are discharged from the ship and
throughout the entire time the goods are in the
custody of the Carrier." Thus, by virtue of agree
ment of the parties, the Rules are given a broader
reach than, by their own terms, they would have
had. Because of the agreed extended coverage, the
provisions of the Rules are to cover loss or damage
suffered by goods at any time while the goods are
in the custody of the carrier, not merely during the
periods specified in the Rules themselves. But this
coverage of the Rules—the coverage that would
have been provided by the very terms of the Rules
themselves and the extended coverage—is made
subject to an exception expressed in these words:
"... except as may be otherwise specifically pro
vided herein".
It was submitted by the appellant that there is
an exception provided in clause 13 of the bills of
lading, an exception having the effect of limiting
the liability of the carrier to £100 sterling per
"customary freight unit" rather than "per unit" as
provided in Article IV, paragraph 5 of the Hague
Rules 2 . The alleged exception is expressed in this
way:
(sentence 1) ... The Carrier shall not be liable for any
loss of or damage to or in connection with,
goods in any amount exceeding the minimum
agreed value permitted by the pertinent
Hague Rules Legislation per package, or, in
2 Article IV, paragraph 5 of the Hague Rules reads as
follows:
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 pack
age 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.
This declaration if embodied in the bill of lading shall be
prima facie evidence, but shall not be binding or conclusive
on the carrier.
By agreement between the carrier, master or agent of the
carrier and the shipper another maximum amount than that
mentioned in this paragraph may be fixed, provided that
such maximum shall not be less than the figure above named.
Neither the carrier nor the ship shall be responsible in any
event for loss or damage to or in connection with goods if the
nature or value thereof has been knowingly misstated by the
shipper in the bill of lading.
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 applicable tariffs or
rate schedules to obtain the benefit of such
higher valuation. 3
(sentence 2) Partial losses shall be adjusted pro rata on the
basis of the valuation agreed to herein.
(sentence 3) If the circumstances of the loss or damage are
such that no Hague Rules Legislation is perti
nent, then the value of the goods shall be
deemed to be £100 sterling per package or
customary freight unit.
I have numbered the sentences in the above
extract for convenience of reference.
As I understood appellant's submission, it was
that sentence 1 fixed a maximum limit on the
carrier's liability for loss of or damage to packaged
goods shipped under the bills of lading at the
amount of £100 sterling per package, which is the
amount fixed by Article IV, paragraph 5 of the
Hague Rules. In this respect, it was submitted, the
Hague Rules would be pertinent to damage to
packaged goods. But, in respect of unpackaged
goods (the goods shipped in the present case were
unpackaged), liability was limited by sentence 1 to
an unstated sum per customary freight unit. In this
respect, the Hague Rules were not, it was said,
pertinent: Article IV, paragraph 5 refers to an
amount, £100, "per package or unit", not "per
package or customary freight unit". The failure to
state a sum per customary freight unit was remed
ied, it was argued, by sentence 3: in the absence of
"pertinent Hague Rules Legislation" respecting
"customary freight units", the maximum liability
was set at £100 per customary freight unit 4 . This
provision, rather than the "per unit" limitation,
was thus the applicable limit on the appellant's
3 The words in sentence 1 beginning with "... unless the
nature ..." do not apply in this case because the nature and
value of the goods were not declared and inserted in the bills
nor was extra freight paid, all of which would be required for
the proviso to operate.
4 I take it that a "customary freight unit" for present pur
poses is a short ton.
liability. It was the limitation expressly provided
by the bills of lading themselves, and was other
than the limit provided by Article IV, paragraph 5
of the Hague Rules, so that, it was submitted, to
that extent the bills of lading had not become
subject to the Rules; recovery for the goods
damaged was, it was said, limited by sentence 3 to
£100 per customary freight unit.
I am not, however, persuaded. If appellant's
counsel were right in his submission, the provision
of a deemed value for packaged goods in sentence
3 would, I am afraid, puzzle me.
A better reading of sentence 3 is, as I see it, that
the deemed value of packaged and unpackaged
goods, stipulated in the sentence, is intended to
apply where damage occurs to shipped goods in
circumstances to which ".Hague Rules Legisla
tion" (as defined in clause 1), pertinent as legisla
tion or made pertinent by agreement (as in this
case), does not in its own terms apply. And I am of
opinion that the limitation of liability provided in
sentence 3 is restricted at least to that extent. The
damage to the goods in this case occurred in
circumstances to which the Hague Rules do, in
their own terms, apply: it occurred after loading
and before discharge. Sentence 3 of clause 13 does
not apply to it: Article IV, paragraph 5 of the
Hague Rules does: it is the pertinent provision.
For the foregoing reasons, I would reject appel
lant's objection no. 1.
Objection No. 2—The Trial Division erred in
not allowing the appellant to limit its liability to
£100 sterling per customary freight unit as set
out in clause 13 of the bills of lading.
The appellant submits that no Hague Rules legis
lation is pertinent to the circumstances of the loss
and damage in this case and that, therefore, pursu
ant to the last sentence in clause 13 supra, the
appellant is entitled to limit its liability to £100
sterling per customary freight unit. Since I have
already held under objection no. 1 supra that the
last sentence of clause 13 does not apply to the
damage to the goods in this case and that Article
IV, paragraph 5 of the Hague Rules supra does
apply and is the pertinent provision, it necessarily
follows that the limitation is £100 sterling per unit
and not £100 sterling per customary freight unit as
submitted by the appellant.
For these reasons, I do not accept appellant's
objection no. 2.
Objection No. 3—The Trial Division erred in
holding that the monetary value of the £100
sterling was to be "gold value" and further erred
in taking judicial notice of such gold value.
Since I have already held that the limitation
imposed by the last sentence of clause 13 of the
bills of lading cannot apply to the circumstances of
this case, I do not accept the appellant's contention
that the monetary unit to be used here is £100
sterling per customary freight unit. However, since
the Hague Rules apply and since Article IX of
those Rules provides that: "The monetary units
mentioned in this Convention are to be taken to be
gold value", and since those Rules limit liability to
£100 per fish, it is obvious that on the facts of this
case, the limitation would greatly exceed the
amount of the claim of both respondents regardless
of the basis used for valuation of £100. The
learned Trial Judge relied on a 1965 decision in
which it was held that the gold value of £100 was
about $825 U.S. Tetley in his textbook Marine
Cargo Claims, written in 1965, places the gold
value of £100 at about $825 U.S. 5 Scrutton on
Charterparties 6 places the 1974 value at consider
ably in excess of £400 in bank notes. At page 240
of his textbook, Tetley states that the jurispru
dence is not settled as to whether a Court, when
applying the Hague Rules should interpret the
limitation as being £100 in bank notes or £100 in
gold. In this case, since the parties have agreed
that the value of the pound is $2.40 Canadian,
whether the valuation is made in bank notes or in
gold makes no difference since, in either case, the
respondents' claims would be well within the limi
tation contained in the Hague Rules. For these
reasons, I reject appellant's objection no. 3.
5 Marine Cargo Claims by W. Tetley—at p. 240.
6 18th ed., at p. 441.
Objection No. 4—The Trial Division erred in
allowing the claims for damage under "salvage
costs" being:
1. Production loss;
2. Loss of contribution;
3. Mark-up;
and
Objection No. 5—The Trial Division erred in
accepting the evidence produced by the respond
ents as sufficient proof of the damages claimed.
In my view, the appellant has not shown error on
the part of the learned Trial Judge in respect of
these matters. An Appellate Court, in deciding
whether it is justified in disturbing a Trial Court's
finding as to quantum of damages must be guided
by the principle that it is not justified in substitut
ing a figure of its own for that awarded by the
Trial Court simply because it would have awarded
a different figure had it tried the case. Before an
Appellate Court can properly intervene, it must be
satisfied that either the Trial Judge applied a
wrong principle of law in assessing the damages or,
short of this, that the amount awarded is so inordi
nately low or so inordinately high that it must be a
wholly erroneous estimate of the damage'. On the
evidence here, I am unable to say that the learned
Trial Judge applied a wrong legal principle or that
the amount awarded by him is inordinately high.
In this case, the evidence on damages was pro
vided by Mr. Gregory L. Deering, the Vice-Presi
dent in charge of the St. Andrews cannery where
the salvage operation was conducted. Exhibits
P-35 and P-36 were extensive and detailed calcula
tions of the damages. The learned Trial Judge
accepted this evidence. The appellant adduced no
evidence to contradict it. In my view, it was quite
open to the learned Trial Judge to accept Mr.
Deering's evidence and to award damages on the
basis of that evidence.
' See: Nance v. British Columbia Electric Railway Company
Ld. [19511 A.C. 601 at p. 613.
For the above reasons, I reject appellant's objec
tion no. 4 and objection no. 5.
Objection No. 6—The Trial Division erred in
holding that the respondents had no duty to
mitigate and any steps in mitigation were for the
benefit of the appellant.
This alleged error in law by the learned Trial
Judge becomes academic because it is clear from
the evidence that the respondents did mitigate the
loss through their efficient handling of the salvage
operations.
Objection No. 7—The Trial Division erred in
not reducing the claim of the respondents made
in U.S. dollars to the equivalent of Canadian
dollars.
The learned Trial Judge said at page 250 of the
Appeal Book (Vol. II):
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 sustained ....
There was also evidence to the effect that at the
date when the damage occurred, the Canadian and
U.S. dollars were treated as if they were at par in
the tuna industry, even though, in fact, there was a
premium on the Canadian dollar of approximately
3.5 cents 8 .
Accordingly, I have the view that there was no
error on the part of the learned Trial Judge in
respect of this matter.
Objection No. 8—The Trial Division erred in
awarding interest to the respondent Star-Kist on
that portion of its claimed damages which it
had, to the date of trial not suffered.
It was the appellant's submission that since, at the
date of trial, the respondent Star-Kist had not yet
paid the sum of $14,019.35 to the respondent
Atlantic, it would be unjust for it to receive inter
est on this amount. On the other hand, the appel -
8 See Exhibits P-27—P-30 inclusive (Vol. 1, A.B. pp. 71-78
inclusive). See also: Transcript of verbal testimony for Decem-
ber 16, 1977, pp. 64-67 inclusive.
lant has had this amount available for investment
for the past five years and it might well be said
that to allow it to escape interest for this period on
this amount would result in unjust enrichment to
the appellant. In any event, interest is an element
of damages and in his discretion, the learned Trial
Judge awarded this item. I am not prepared to say
that he incorrectly exercised that discretion. For
these reasons, I reject appellant's objection no. 8.
Since I have concluded that none of the appel
lant's objections to the judgment of the learned
Trial Judge can prevail, it follows that in my view,
the appeal should be dismissed with costs to the
respondent in each case.
The only remaining matter to be decided is the
respondents' motion pursuant to section 40 of the
Federal Court Act, R.S.C. 1970 (2nd Supp.), c.
10, to increase the interest running on the judg
ment of the Trial Division from 5% to 8% effective
June 13, 1978 (the date of judgment in the Trial
Division) until final settlement. On the circum
stances present in this case and in the exercise of
my discretion, I would decline to increase the
interest rate running on the Trial Division
judgment.
* * *
URIE J.: I agree.
* * *
RYAN J.: I concur.
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