Topic Eight

Peril of the Sea and Other Exceptions

(MCC IV, Chap. 18 at
1) Definition: art. 4(2)(c) – Hand, J. and Hough, J. and (www.mcgill.ca/files/maritimelaw/ch18.pdf )
Tetley.
2) Due diligence and peril. 9) Zim Israel Navigation Ltd. v. The Israeli Phoenix Re Gulf and Midlands Barge
3) Burden of proving peril is on carrier. Assurance Compan Ltd. (The Zim-Marseilles) [1999] Line Inc. 509 F. 2d 713 (5
4) Order of Proof ETL 535 (Supr. Ct. of Israel) (C.B. at p. 240) Cir. 1975)
a. Claimant proves its loss. 10) Bache v. Silver Line, Limited (The Silversandal) 1940 The George J. Goulandris 36
b. Carries proves the cause of the loss. AMC 731 (C.B. at p. 248) F. Supp. 827, 1941 AMC
c. Carrier proves due diligence in respect of the 1804 (D. Me. 1941) The
loss. Questions Argo Merchant Limitation
d. A peril is proved by the carrier. Procs. 486 F. Supp. 436,
e. Counter proof by claimant. I. Peril 1980 AMC 1686 (S.D. N.Y.
5) Peril is a question of fact. 1) Define a peril 1980)
6) Strikes and Lockouts. 2) Where does peril fit into the order of proof? Blanchard Lumber v. SS.
7) The “Q” Exception. 3) Is “peril” a valid defence in these modern times? Anthony II 1967 AMC 103,
4) Is peril a valid defence under a) Visby? 259 F. Supp. 857; [1966] 2
References: b) Hamburg? Lloyd’s Rep. 437 (S.D. N.Y.
5) Does the size of the vessel enter into the question of 1966)
1) Tetley, MCC IV, Chap. 18, “Peril of the Sea and peril? How?
Similar Exceptions” at 6) What are your views on:
www.mcgill.ca/files/maritimelaw/ch18.pdf . a) the “one big wave theory”?
2) CNR v. E. & S. Barbour Ltd. [1963] S.C.R. 323 (C.B. b) heading into a storm?
at p. 218) c) Rodière, Traité Général Affrètement et Transports
3) Crelinsten Fruit Co. v. The Mormacsaga [1969] 2 Ex. Vol. II (1968) at p. 403, note 2 and at p. 399 note 3.
C.R. 215, 1969 AMC 1621, [1969] 1 Lloyd’s Rep.
515 (C.B. at p. 220) Additional Reading
4) (The Oak Hill) Eisenerez G.m.b.H. v. Federal
Commerce & Navigation [1970] Ex. C.R. 192, 1970 Definition -The Naples Maru 1939 AMC 1087 (2 Cir 1939)
AMC 227, [1970] 2 Lloyd’s Rep. 332; upheld by the The Rosalia 264 Fed Rep 285, (2 Cir 1920)
Supreme Court of Canada [1975] 1 Lloyd’s Rep. 105
(C.B. at p. 233) Due diligence & Peril – CNR v. E & S Barbour [1963]
5) Mimi Lim Procs. 1979 AMC 1680 (4 Cir. 1979) (C.B. S.C.R. 323; (1963) 40 D.L.R.
at p. 202) (2d) 668 (C.B. at p. 218)
6) Canastrand v. The Lara S. [1993] 2 F.C. 553, (1993)
60 F.T.R. 1 (C.B. at p. 120) Peril is a Question of Fact – Establissements Edouard
7) E.T.S. Gustav Brunet S.A. v. M/V Nedlloyd Rosario Materne v. The SS Leerdam
1997 AMC 803 (C.B. at p. 306) 43 F. Supp 367, 1956 AMC
8) Bunga Seroja [1999] ETL 458 (High Court of 1977 (S.D. N.Y. 1956)
Australia) (C.B. at p. 209)
217
 CANADIAN NATIONAL RAILWAY
COMPANY (Defendant) Appellant and
E. & S. BARBOUR LIMITED (Plaintiff)
Respondent
INDEXED AS: CANADIAN NATIONAL RAILWAY CO.
v. E. & S. BARBOUR LTD.
SUPREME COURT OF CANADA
[1963] S.C.R. 323
June 6, 1963
June 24, 1963
PANEL: Taschereau C.J. and Abbott, Martland, Judson and
Ritchie JJ.
PRIOR-HISTORY: ON APPEAL FROM THE SUPREME
COURT OF NEWFOUNDLAND (ON APPEAL)
CATCHWORDS:
Shipping -- Loss of cargo -- Unseaworthy vessel -- Due
diligence not exercised by owner to make ship seaworthy --
Water Carriage of Goods Act, R.S.C. 1952, c. 291, Sched.,
Article IV, Rules 1, 2(a).
HEADNOTE:
The plaintiff brought an action in respect of certain goods
shipped by it from St. John's, Newfoundland, to Square
Island, Labrador, and being carried by the defendant's motor
vessel Henry Stone when that vessel sank in Goose Bay,
Labrador, on November 19, 1959. The vessel, which at the
time of the voyage in question was unseaworthy for
navigation in ice, encountered ice conditions on her arrival at
the entrance to Goose Bay. After the ship got through this
ice, reports started to come from the engine room that she
was leaking and within approximately one hour she sank.
The judgment at trial allowing the plaintiff's claim was
affirmed on appeal. With leave of the Court of Appeal an
appeal was brought to this Court.
Held: The appeal should be dismissed.
The defendant, whose defence was based primarily on
Article IV, Rule 2(a) of the Schedule to the Water Carriage
of Goods Act, R.S.C. 1952, c. 291, failed to discharge the
burden of proving that the loss of the ship resulted from an
"act, neglect, or default of the master ... in the navigation or
in the management of the ship". In any event, as the loss was
occasioned by the fact that the Henry Stone was unseaworthy
and unfit to encounter the ordinary perils of the voyage at the
particular season in question, the exemption contained in
Article IV, 2(a) could not be invoked to relieve the
shipowner from responsibility. Smith, Hogg & Co. v. Black
Sea and Baltic General Insurance Co., [1940] A.C. 997,
referred to.
The Henry Stone was not dispatched on an "ice free" voyage
but rather on a voyage during which it was expected that she
would be navigated in ice conditions which the master did
not consider "unfavourable". The event proved that the
vessel was unseaworthy for navigation even under such
conditions and as no steps were taken by the defendant
between the date of the steamship inspection and the date of
the loss to fit the Henry Stone "to be navigated in ice" it
could not be said that "the carrier" had discharged "the
burden of proving the exercise of due diligence" to make the
ship seaworthy, so as to claim exemption from liability under
Article IV, Rule 1 of the Schedule to the Act.
INTRODUCTION:
APPEAL from a judgment of the Supreme Court of
Newfoundland (on appeal) n1, affirming a judgment of
Furlong C.J. Appeal dismissed.n1 (1963), 37 D.L.R. (2d) 72.
COUNSEL: P. J. Lewis, Q.C., and J. W. G. MacDougall,
Q.C., for the defendant, appellant
W. G. Burke-Robertson, Q.C., and D. Hunt, for the plaintiff,
respondent
JUDGMENT-1:
The judgment of the Court was delivered by
RITCHIE J.:--This is an appeal brought with leave of the
Supreme Court of Newfoundland (on appeal) from a
judgment of that Court n1 affirming a judgment of Furlong
C.J., and allowing the respondent's claim in respect of certain
goods shipped by it from St. John's, Newfoundland, to
218
Square Island, Labrador, and being carried by the appellant's
motor vessel Henry Stone when that vessel sank in Goose
Bay, Labrador, on November 19, 1959.n1 (1963), 37 D.L.R.
(2d) 72.
The goods in question were delivered to the coastal office of
the appellant at St. John's, Newfoundland on November 6,
1959 and were consigned to B. W. Powell, one of the
respondent's customers at Square Island aforesaid, in
accordance with the provisions of bills of lading which were
subject to the provisions of the Water Carriage of Goods Act.
It had originally been intended that the respondent's goods
would be carried on the S.S. Burgeo but owing to the
lateness of the season and the large quantity of freight
awaiting shipment, the M.V. Henry Stone was pressed into
service and it was thus that the respondent's goods were
shipped by that vessel instead of the Burgeo.
The Henry Stone was a 17-year-old wooden vessel of 264.8
gross tons which had undergone extensive but not permanent
repairs in the spring of 1959, and which was, at the time
when she started on the voyage in question, operating with a
temporary inspection certificate issued by the Department of
Transport, good only until December 1959 and subject to the
following limitations:
"To operate as non-passenger ship on home trade Class 2
voyages; within the limits of the Canadian East Coast
Atlantic Coastal Waters as far north as Chidley, Labrador.
[Italics start]Not to be navigated in ice[Italics end]." (The
italics are mine.)
The appellant's marine superintendent, who appears to have
been responsible for sending the Henry Stone on this voyage,
quite frankly admitted that, due to the lateness of the season
and his knowledge of the conditions at Goose Bay, he
anticipated that ice would be encountered and he describes
the steps which he took to guard against this danger as
follows:
"The Henry Stone was the first available vessel and
contemplating the ice due to the lateness of the season I had
consulted with the Captain of the Burgeo and the Captain of
the Henry Stone and arranged with them that in the event of
meeting any conditions, unfavourable ice conditions at
Goose Bay, that the Henry Stone would come to Cartwright
and make contact with the Burgeo and the Burgeo would
come and take the freight from him, and in no event was the
Burgeo to leave the coast without seeing that the Henry
Stone had completed her work."
The master of the Henry Stone, Captain John Tobin, gives
the following account of these instructions:
"A. Yes, I had instructions from Mr. Healey before we left
St. John's. He was sending us out on this trip and it was up in
November and as usual you would be expecting ice
conditions for that time of the year. So he told me the Burgeo
was enroute to Goose Bay and to keep in contact with the
Burgeo, and if conditions at Goose Bay were unfavourable
for the Henry Stone to go to Goose Bay, for the Henry Stone
to go to Cartwright and the Burgeo would come to
Cartwright and take the freight and deliver it.
Q. And tranship the freight? A. That's right.
Q. That is if ice conditions in Goose Bay were such that--.
Who was making the decision--you? A. Well, I wouldn't--I
guess I was responsible for the Henry Stone. I guess it would
be my decision. If I went in to Cartwright before we got
down there, well, I'd have to--. Whoever I was talking to up
there on ice conditions I would have to go by what they tell
me.
Q. All right. Yes, but I just want to get the facts now. You
did have instructions before you left? A. That's right.
Q. That you were to keep in contact or in communication
with the Master of the Burgeo? A. That's right.
Q. And if ice conditions were such in Goose Bay that you
think you shouldn't enter, then the Burgeo would tranship the
freight for you from Cartwright. Is that the position? A.
That's right."
It is apparent also from Captain Tobin's evidence that he
thought that the direction "not to be navigated in ice" which
was contained in the certificate applied only to heavy arctic
ice and that it did not include such ice as he encountered at
Goose Bay. The appellant's marine superintendent indicated
on direct examination that he shared this opinion and
although he qualified this evidence considerably on cross-
examination, there is no indication that he ever explained to
Captain Tobin the kind of ice that was to be treated as
"unfavourable".
After a rough but not hazardous voyage, which included
calls at one port of loading (Carbonnear) and three ports of
discharge, the vessel, while en route to Goose Bay,
encountered the government icebreaker Ernest Lapointe,
whose master reported on the Goose Bay ice conditions
saying "Ice conditions were not bad; there was three or four
inches of ice there but he did not think we would have any
difficulty getting up through there". In addition to obtaining
this information, Captain Tobin kept in constant touch with
the Burgeo which was then at Goose Bay. On arriving at
Sandy Point, which is at the entrance to Goose Bay, at 3:00
a.m. on November 19, the Henry Stone waited until daylight
and at about 7:45 entered the channel leading to the bay. The
conditions in the channel are described by the master as
follows:
"A. It was level ice, but it wasn't a hard ice; it was a tough
sort of ice, but it was moving out from the Bay. You see it
was--I guess where--wherever the boats came down probably
it was broke off or something like that, because it was
moving out; because we eventually got through the ice you
see--got in clear water. The day before that they broke; the
ice was right in to Goose Bay you see. It was slow going, but
with the ice coming out now, well, that made it so much
slower you see; because we were cutting ice. Well, we
weren't covering the ground, that we were cuting the ice--say
it that way. The ice was moving but it wasn't heavy ice; it
was touch to get through. It was this kind of soft tough ice."
After the vessel got through the ice at about 10:30, reports
started to come from the engine room that she was leaking,
and it soon became apparent that the pumps were unable to
cope with the mounting water. Between 11:30 and 12:00
o'clock, or a little later, the ship sank.
There is some suggestion in the reasons for judgment of the
learned trial judge that the sinking may have been due to a
leak occurring before the vessel entered the ice which
219
resulted in water being penned up in the forward hold, but I
agree with counsel for the appellant that the two and three-
quarter hour run through the ice at Goose Bay was by far the
most likely cause of the sinking which occurred because of
the fact that the vessel was unseaworthy for navigation in
ice.
Before this Court, the appellant based its defence primarily
on Article IV, Rule 2(a) of the Schedule to the Water
Carriage of Goods Act, which reads as follows:
"Neither the carrier nor the ship shall be responsible for loss
or damage arising or resulting from
(a) act, neglect, or default of the master, mariner, pilot or the
servants of the carrier in the navigation or the management
of the ship;"
It was contended on behalf of the appellant that the master
was negligent in entering the approaches to Goose Bay with
the ice conditions as they were on November 19, and that it
was this negligence which caused the loss.
The marine superintendent who was "in complete charge of
the operating and overall supervision of the steamship
operations" for the appellant in Newfoundland deliberately
dispatched the vessel on this voyage to a destination where it
was "usual" for ice to be encountered in the month of
November and in so doing he left the master with the
impression that he was to be guided by information which he
received from persons on the spot and particularly from the
Burgeo in deciding whether or not ice conditions were
unfavourable for the Henry Stone at Goose Bay.
As I interpret the evidence, the master carried out these
instructions as best he could and, in my opinion, the
appellant has failed to discharge the burden of proving that
the loss of the ship resulted from an "act, neglect, or default
of the master .... in the navigation or in the management of
the ship".
In any event, as I find that the loss was occasioned by the
fact that the Henry Stone was unseaworthy and unfit to
encounter the ordinary perils of the voyage at the particular
season in question, I am of opinion that the exception
contained in Article IV, 2(a) cannot be invoked to relieve the
shipowner from responsibility. In this regard, I refer to what
was said by Lord Wright in Smith, Hogg & Co. v. Black Sea
and Baltic General Insurance Co. n1 In that case, there was a
clause in the charterparty providing that the shipowner
would not be liable for loss or damage resulting from
unseaworthiness unless caused by want of due diligence on
the part of the shipowner to make the vessel seaworthy; and
also that the shipowner should not be responsible for loss or
damage arising from (amongst other things) act, neglect or
default of the master in the navigation or management of the
ship ... The trial judge held that the accident there in question
took place not by reason of the unseaworthiness of the ship
but by reason of the acts of the master, which he found to
have been wrong in the circumstances, and that the
shipowner was entitled to succeed by reason of the above
exception.n1 [1940] A.C. 997.
In the course of his reasons for judgment, Lord Wright, in
reversing the trial judge, said at p. 1004:
"I think the contract may be expressed to be that the
shipowner will be liable for any loss in which those other
causes covered by exceptions co-operate, if unseaworthiness
is a cause, or if it is preferred, a real, or effective or actual
cause."
Having found that the loss of the Henry Stone was
occasioned by unseaworthiness, it remains to be determined
whether due diligence was exercised by the owner to make
the ship seaworthy. Article IV, Rule 1 of the Schedule to the
Water Carriage of Goods Act, reads as follows:
"Neither the carrier nor the ship shall be liable for loss or
damage arising or resulting from unseaworthiness unless
caused by want of due diligence on the part of the carrier to
make the ship seaworthy, and to secure that the ship is
properly manned, equipped and supplied, and to 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 in accordance with the
provisions of paragraph 1 of Article III.
Whenever loss or damage has resulted from
unseaworthiness, the burden of proving the exercise of due
diligence shall be on the carrier or other person claiming
exemption under this section."
The Henry Stone was not dispatched on an "ice free" voyage
but rather on a voyage during which it was expected that she
would be navigated in ice conditions which the master did
not consider "unfavourable". The event proved that the
vessel was unseaworthy for navigation even under such
conditions and as no steps were taken by the appellant
between the date of the steamship inspection and the date of
the loss to fit the Henry Stone "to be navigated in ice" I do
not think that it can be said that "the carrier" has discharged
"the burden of proving the exercise of due diligence ..."
which rests on it under this rule. For these reasons, I would
dismiss this appeal with costs.
Appeal dismissed with costs.
SOLICITORS: Solicitor for the defendant, appellant: P. J.
Lewis, St. John's
Solicitors for the plaintiff, respondent: Halley, Hickman, &
Hunt, St. John's
220
[The “Mormacsaga”]
CRELINSTEN FRUIT COMPANY
v.
THE "MORMACSAGA"
CANADA EXCHEQUER COURT
[1969] 1 Lloyd's Rep 515
HEARING-DATES: 23 April 1969
23 April 1969
CATCHWORDS:
Carriage by sea - Damage to cargo - Delivery delayed by
strike - Vessel ordered to strike-bound port by owners -
Damage to cargo due to delay when vessel became strike-
bound - Effect of exemption clause in bill of lading -
Whether owners had exercised due care to protect and safely
carry cargo - U.S. Carriage of Goods by Sea Act, 1936.
HEADNOTE:
On June 26, 1965, plaintiff's oranges were loaded at Santos,
Brazil, for delivery at Montreal on defendants' steamship
Mormacsaga (an American vessel) under bills of lading
which provided that defendants should not be liable for loss
or damage arising or resulting from strikes or lock outs. Bills
contained a liberty clause entitling defendants to deviate.
Vessel was scheduled to call at (inter alia) Jacksonville, Fla.
On June 26, 1965, it was common knowledge that
Jacksonville was strike-bound for all American ships.
Mormacsaga arrived at Jacksonville on July 14, 1965, and
was strike-bound until Sept. 2, 1965. On arrival at Montreal
plaintiff's oranges were found to be damaged due to delay
while Mormacsaga was strike-bound. Plaintiff claimed
against defendants contending that defendants did not
exercise due diligence to make vessel seaworthy and fit to
carry oranges. Defendants denied liability, pleading bill of
lading clause and contending that at time vessel entered
Jacksonville there was a strong possibility that strike would
end without delay.
Held, by ARTHUR I. SMITH, J., (1) that test was whether
defendants acted with proper regard for rights of consignees
 as well as with reasonable care for those rights; that
defendants' allegation that there appeared to be a possibility
that strike might end at time vessel entered Jacksonville was
not established by proof; that, accordingly, defendants, by
entering Jacksonville rather than proceeding directly to
Montreal, failed to act with reasonable care and prudence
and with proper regard to preservation of plaintiff's cargo;
and that, therefore, defendants were liable;
(2) that an allowance of 15 per cent. as compensation for loss
of profit would be reasonable and just. Judgment for
plaintiff. - Defendants appealed on grounds (1) that Judge
was wrong in finding that they had failed to establish that
there was any reason to expect an early end to strike; and (2)
that defendants should not be held liable unless plaintiff
showed that decision not to divert was manifestly
unreasonable - considering adventure as a whole and not just
plaintiff's interest. - Held, by Exchequer Court of Canada
(JACKETT, P., NOEL and CATTANACH, JJ.), that, under
U.S. law, a carrier did not establish a defence under
C.O.G.S.A., Sect. 4(2)(j)1 unless of his contributed to the
loss arising from strike situation relied on to bring him
within exception (see p. 524, col. 1; p. 529, col. 1; p. 530,
col. 2; p. 533, col. 2);
that, in considering whether defendants discharged that onus,
regard had to be given to fact that defendants' obligation to
deliver plaintiff's cargo in Montreal was subject to
defendants' responsibility to first deliver all cargo consigned
for U.S. ports (see p. 524, col. 1);
that, accordingly, Mormacsaga was only following normal
and ordinary course of events in going to Jacksonville before
Montreal; and that, therefore, unless carrier had a right to
deviate by reason of strikes, he could not be negligent (see p.
524, cols. 1 and 2);
1
Sect. 4(2) of United States Carriage of Goods by Sea Act, 1936, provides
(in part):
2) Neither the carrier nor the ship shall be responsible for loss or damage
arising or resulting from –
j) Strikes . . . Provided, that nothing herein contained shall be construed to
relieve a carrier from responsibility for the carrier's own acts;
that there was no duty on defendants to divert under liberty
clause but only a duty to act reasonably (see p. 525, col. 1; p.
531, col. 2);
that there was no real reason established by appellants to
expect an early end to strike; and that, therefore, appeal
should be dismissed (see p. 527, col. 1; p. 532, col. 2; p. 533,
col. 2).
Per JACKETT, P. (at p. 525): I am not satisfied that, in all
circumstances of a strike situation, a mere forming of a
general opinion that there is a strong possibility that the
strike might not last long would be a sufficient discharge of
the carrier's duty to consider exercising the liberties clause in
the interest of the cargo-owners . . .
Per NOEL, J. (at p. 530): Where a carrier has the option of
discharging its obligations to the consignees of cargo in
different ways, the propriety of the decision to enter a strike-
bound port, as defendants did, where one of the consigneehs
goods were damaged, becomes a question of reasonableness
which the carrier must establish by satisfactory evidence and
by facts which are peculiarly within its knowledge. I should
think that in such a situation a defendant must establish that
upon all the circumstances shown in the particular case, the
loss arose otherwise than by his negligence and the question
to be determined then really becomes, of course, whether the
loss was due to the strike or to the negligence of the carrier
in entering a strike-bound port.
CASES-REF-TO:
Frenkel v. MacAndrews & Co., Ltd., [1929] A.C. 545; James
Morrison & Co., Ltd. v. Shaw, Savill, and Albion Company,
Ltd., [1916] 2 K.B. 783; Leduc & Co. v. Ward and Others,
(1888) 20 Q.B.D. 475; Lloyd v. General Iron Screw Collier
Co.(Ltd.), (1864) 3 H. & C. 284; London Celluloid
Company, In re, (1888) 39 Ch.D. 190; Margetson v. Glynn,
[1892] 1 Q.B. 337; [1893] A.C. 351; Phelps, James & Co. v.
Hill, [1891] 1 Q.B. 605; Steinman & Co. v. Angier Line,
Ltd., [1891] 1 Q.B. 619
INTRODUCTION:
This was an appeal by the defendants, the steamship
Mormacsaga and her owners, from a decision by Mr. Justice
Arthur I. Smith in the Exchequer Court, Quebec Admiralty
221
District ([1968] 2 Lloyd's Rep. 184), allowing a claim by the
plaintiff, Crelinsten Fruit Company, against the defendants in
respect of damage to a shipment of oranges while carried on
board the Mormacsaga on a voyage from Santos, Brazil, to
Montreal, Canada. The damage was due to delay in delivery
while the vessel was strike-bound at Jacksonville, Florida.
COUNSEL:
William Tetley, Q.C., and Claude A. Sheppard appeared on
behalf of the respondent plaintiff; Charles Alexander
represented the appellant defendants.
PANEL: Before JACKETT, P., NOEL, J., and
CATTANACH, J.
JUDGMENT-1:
JACKETT, P.: This is an appeal from a judgment delivered
on July 19, 1968, by Mr. Justice Arthur I. Smith, [1968] 2
Lloyd's Rep. 184, as District Judge for the Quebec Admiralty
District, whereby he decided that the appellants were liable
to pay to the respondent $53,150.24, together with interest
and costs, in respect of damages sustained by a shipment of
oranges as a result of their being kept on the steamship
Mormacsaga for an excessive period by reason of the ship
having been strike-bound.
The appeal is an appeal against the decision that the
appellants were liable for the damages in question. There is
no appeal against the amount of the judgment.
In March, 1962, the respondent, through its broker, William
H. Kopke, jun., of New York, contracted to purchase a
quantity of Brazilian oranges from Citricula Brasileira Ltda.,
of Sao Paulo, Brazil, to be shipped from Santos, Brazil, by
"Monthly Shipments starting about end May 1965" in
"Refrigerated Stowage", which sale was made subject to the
broker "arranging private steamer" and subject to "shippers'
approval of the date of the steamers and the days the steamer
will remain in port loading". Mr. Kopke "developed the
programme for the shipments" with the appellants, Moore-
McCormack Lines, Inc. (hereinafter referred to as "Moore-
McCormack"), and the shipper (i.e., the vendor of the
oranges) signed a freight contract which obligated it to
deliver and load the merchandise on the ships.
Moore-McCormack operated a liner service called the
American Republic Service served by a number of United
States vessles, the normal route of which was:
Montevideo, Uruguay, Charleston, S.C.
Buenos Aires, Argentina, Norfolk, Virginia
Paranagua, Brazil Baltimore, Md.
Santos, Brazil Philadelphia, Pa.
Rio de Janeiro, Brazil New York, N.Y.
Bahia, Brazil Boston, Mass.
Jacksonville, Florida Montreal, Canada
The Mormacsaga was one of the United States vessels used
to service that route. Mr. Kopke was aware of this route.
Under the arrangement with Moore-McCormack, the first
monthly shipment of the oranges purchased by the
respondent was to be put on board the Mormacsaga in June,
1965.
The Mormacsaga began the voyage in question at
Montevideo on June 7, 1965. While she was at Buenos
Aires, on June 15, 1965, a strike started in the United States
involving unions representing a substantial portion of the
crews and officers on United States ships. As a result of the
strike being called, it was known to all concerned that if the
Mormacsaga put into an eastern United States port while the
strike was in existence, she would be tied up by the strike
until the end of the strike.
Notwithstanding the calling of the strike, the Mormascaga
continued to take on cargo at the various South American
ports on her itinerary and to stow such cargo for delivery at
the North American ports on her itinerary in the order in
which they are set out above - all as had been arranged and
planned before the strike was called.
In particular, when the ship was at Santos, the first monthly
shipment of the oranges that had been sold to the respondent
was delivered to the Mormacsaga on June 26, 1965, bills of
lading were issued for her, and the oranges were stowed for
delivery in Montreal in accordance with the stowage plans
that had been made before the strike started on June 15,
1965. As so stowed, they could not be unloaded without first
unloading some of the cargo consigned to United States
ports.
When she had finished loading in South American ports, the
Mormacsaga had on board cargo destined as follows:
for Jacksonville 880 T.
for Charleston 358 T.
for Norfolk 302 T.
for Baltimore 464 T.
For Philadelphia 447 T.
for New York 1874 T.
for Boston 1019 T.
for Montreal 1274 T.
6618 T.
Of the 1274 tons destined for Montreal, oranges purchased
by the respondent constituted 700 tons. Those oranges
occupied the whole of the vessel's refrigerated space except
for two boxes of cheese. The remainder of the cargo could
not be classified as perishable.
On June 29, 1965, the Mormacsaga left Rio de Janeiro for
Jacsonville (there being, apparently, no reason for calling at
Bahia on that trip) with an estimated time of arrival of July
10. Pursuant to orders from Moore-McCormack, the master
reduced his speed below the ship's normal speed with the
result that when she arrived at Jacksonville on July 13, 1965,
where, the strike still being on, she tied up at a place where
electricity was available for the refrigeration of the oranges,
and the crew, including the master, went on strike.
The Mormacsaga could have been diverted when she was off
Jacksonville on July 12, 1965 (and presumably at any time
after she left Rio de Janeiro), as she had sufficient bunkers
and fresh water on board to have enabled her to sail directly
to Montreal.
The strike finally ended on Aug. 31, 1965. The Mormacsaga
sailed from Jacksonville on Sept. 3, 1965, and arrived at
Montreal on Sept. 22, 1965, at which time the oranges in
question were delivered to the respondent.
222
While, otherwise, all steps were taken by the ship properly
and carefully to keep and care for the oranges, by reason of
the strike the oranges were on the ship over 50 days more
than the time that they would ordinarily have been there.
This extra delay in delivery resulted in the oranges
deteriorating and being worth, when delivered, $53,150.24
less they would have been worth if they had been delivered
after a trip of normal duration.
This action was instituted by way of a writ issued out of the
District Registry at Montreal. By the statement of claim, the
respondent not only sets up its prima facie claim under the
bills of lading by alleging that the oranges had been received
by the ship in good order and were delivered to the
respondent in a deteriorated condition, but also alleges, as
follows:
5. THAT Defendants and other ocean carriers diverted other
ships from East Coast American ports to avoid the strike but
Defendants did not divert the MORMACSAGA.
6. THAT at Toronto, Defendants' local agent admitted to
William D. Branson that Defendants took a calculated risk in
ordering the MORMACASAGA into Jacksonville and did so
for their own benefit because they hoped the strike would
terminate soon.
7. THAT the proceeding of the MORMACSAGA to
Jacksonville, Florida, by Defendants was an intentional act,
breaching and nullifying the contract and Defendants have
no rights under the law, the contract or otherwise and
Defendants are thus in the position, place and stead of
insurers of the contract to carry.
.
20. THAT Defendants, prior to or upon the departure of the
S.S. MORMACSAGA from Santos, did not exercise due
diligence to make said vessel in all respects seaworthy and
fit to carry the said oranges and the ship was at the time of
her departure and at various stages of the voyage
unseaworthy and as a result Defendants are entitled to none
of the rights or immunities of which they might otherwise
benefit under the provisions of the law, the bill of lading or
any contract.
The portion of the statement of defence which indicates the
position taken by the appellants reads as follows:
22) THAT the voyage in question commenced in
Montevideo, Uruguay, on or about June 7th, 1965;
23) THAT from Montevideo the MORMACSAGA
proceeded to her other scheduled ports of loading in the
following order, namely, Buenos Aires in Argentina and
Paranagua, Santos, Angras Dos Ries and Rio de Janeiro in
Brazil, the whole as advertised and in accordance with the
usual and customary route taken by the vessel;
24) THAT the vessel loaded general cargo in all the said
ports for discharge at the following scheduled ports in the
following order, namely, Jacksonville in Florida, Charleston
in South Carolina, Norfolk in Virginia, Baltimore in
Maryland, Phildelphia in Pennsylvania, New York in New
York, Boston in Massachusetts (all on the East Coast of the
United States of America) and Montreal, P.Q., Canada, the
whole in accordance with the usual and customary route
taken by the vessel;
25) THAT whilst the vessel was loading cargo in Buenos
Aires, which she reached on or about June 12th, 1965, and
left on or about June 19th, 1965, the strike referred to in
Plaintiffs' Statement of Claim broke out at midnight on June
15th, 1965, affecting all the vessel's scheduled ports of call
of the East Coast of the United States of America;
26) THAT at the time the said strike broke out Defendants
had no way of knowing how long it might last;
27) THAT after the vessel had completed loading at Rio de
Janeiro on or about June 29th, 1965, she departed for
Jacksonville with a total general cargo of approximately
6758 tons of which approximately 1,276 tons were destined
for Montreal;
28) THAT of the tonnage destined for Montreal
approximately 700 tons consisted of the cases of cranges
referred to in paragraph 1 of Plaintiffs' Statement of Claim
and the remaining tonnage consisted of other general cargo;
29) THAT when the vessel sailed from Rio de Janeiro the
cargo was stowed in such a manner that the cargo destined
for Montreal (being the last scheduled port of discharge)
could not have been discharged without first removing cargo
destined for the intermediate ports on the East Coast of the
United States of America;
30) THAT as the vessel approached Jacksonville the
Defendants cabled her Master on at least two occasions
instructing him to reduce speed;
31) THAT the last such cable was sent on July 9th, 1965 and
read as follows: FURTHER REDUCE SPEED MAKE
ARRIVAL JACKSONVILLE 0600 HOURS TUESDAY
13TH. ACKNOWLEDGE.
32) THAT Defendants instructed the Master to reduce speed
in the hopes that the strike would be over by the time the
vessel reached Jacksonville;
33) THAT after the vessel became strikebound in
Jacksonville the Defendants had no way of knowing how
long the strike might last;
34) THAT all twelve bills of lading produced together as
Plaintiffs' Exhibit P-1 provide that the carrier shall be exempt
from liability for loss or damage arising or resulting from
strikes or lockouts or stoppage or restraint of labour from
whatever cause, whether partial or general;
35) THAT even if the Defendants might have been justified
in ordering the MORMACSAGA to proceed directly to
Montreal, by passing the scheduled intermediate ports of call
on the East Coast of the United States of America, which is
not admitted but on the contrary expressly denied, they were
not bound to do so;
36) THAT in arriving at the decision not to divert the
MORMACSAGA the Defendants were bound to consider
and did in fact consider the adventure as a whole and the
interests of and their responsibilities to all shippers and/or
consignees of the cargo on board as well as the interests of
and their responsibilities to the shippers and/or consignees of
the cargo here in question;
223
(37) THAT at the time the vessel reached Jacksonville the
strike had been in progress for almost one month;
38) THAT at the time the vessel entered Jacksonville there
appeared to be a strong possibility that the strike might end
without further undue delay;
At the trial it was common ground that the Mormacsaga
never departed from her original schedule and had
deliberately gone to Jacksonville notwithstanding that it was
known that, when she did so, she would be tied up by the
strike as long as the strike lasted.2 It was also clear that the
responsibility for no decision having been taken to avoid that
situation arising was that of the senior officers of Moore-
McCormack and was not a matter that had been left to the
master of the vessel. Evidence was given by the senior
officers concerned with reference to why no such decision
was taken.
The first of the senior officers of Moore-McCormack who
have evidence was Harrison R. Glennon, jun., whose title
was executive vice-president, operations. On direct
examination, he testified that, at the time the strike began,
they "felt" that they were make substantial progress in their
negotiations and that the strike "would be of a very short
duration". He said that negotiations were in progress on July
9, 10, 11 and 12, 1965, and that, on July 12, they thought that
"within a short period of time we would have a contract". At
that time, in the back of their minds was the fact "that unless
we could conclude a contract, because of the importance of
our vessels, that the Federal Government would enter the
picture and hopefully that . . . they would force an early
settlement". On July 12, in his opinion, "The prospects were
reasonably good for an early settlement". In his view,
"During strike negotiations it is just the feeling that you
have, are you close to a settlement or are you not?" On cross-
2
I see no necessary inconsistency between evidence that the vessel was
instructed to lay off the crew on account of the strike upon her arrival at
Jacksonville and that the vessel proceeded to a berth where she could not
unload and the contention that it was expected that the strike would end
"without further undue delay". Clearly, when the vessel entered Jacksonville
the strike was still on and she was going to be tied up by the strike. The
crew would therefore go on strike and the vessel had to tie up where
electricity was avaialble for refrigeration. The appellants' position is that
this was a situation which, they expected, would not last long.
examination, Mr. Glennon said that it was probably on his
advice concerning the prospects of the strike that the
company acted in going into Jacksonville. When referred to
newspaper accounts of the strike regotiations being bogged
down before the middle of July, he stuck to his statement
that they were "at all times . . . hopeful of even that evening
getting a settlement".
The second senior officer of Moore-McCormack to give
evidence was Sebastien J. Mueller, vice-president in charge
of American Republic Line Service for that company. On
direct examination he said that, when the Mormacsaga left
Rio de Janeiro, the officers of Moore-McCormack "thought
that the settlement of the strike was imminent" and that they
were receiving reports from their operations people - Mr.
Glennon and those associated with him - who attended the
"union meetings". He said that it was not logical for the
Mormacsaga to have been ordered to proceed directly to
Montreal by-passing the ports from Jacksonville to Boston
because they thought that the end of the strike and imminent
and that there would not be an undue delay and because the
vessel was not stowed "that way".In addition, he said: "Had
the strike been over and we had diverted the vessel we had to
give consideration to other cargoes which were some 5500
tons for American ports as well". He also said that, at that
time, there was no indication that they could be assured that
the stevedores in Montreal would handle the discharge of
American cargo "while we were on strike in the United
States ports". On cross-examination Mr. Mueller, on being
questioned about the way the oranges were stowed in
relation to other cargo, said that, at that time the
Mormacsaga loaded, "it was still our opinion that the strike
would be of short duration", and that the strike "would be
over" when the vessel arrived in a strikebound port. He
admitted that, if they had known, when they loaded the
oranges on June 26, that the strike would not be over when
they were due in Jacksonville, they would have stowed the
oranges and other cargo so that the oranges could be
unloaded first in Montreal as they did the two subsequent
shipments on other vessels.
Some of Mr. Mueller's evidence was relied on as tending to
show that an agreement was made on behalf of the
respondent that the strike need not be allowed to interfere
with the normal trip of the Mormacsaga. I have not referred
to such evidence, as in my view, no such agreement was
established.
Evidence was adduced by the respondent at the trial to show
that the estimated extra cost of moving the cargo for United
States ports in order to make the Montreal cargo
"acceptable" would have been $9564. I accept this evidence
as establishing that the extra cost of unloading the oranges
and other Montreal cargo before the United States cargo
would have been approximately that amount.
Par. 16 of each of the bills of lading covering the shipment of
oranges in question contains a clause reading: Ths bill of
lading shall be construed and the rights of the parties
thereunder determined according to the law of the United
States.
Each bill of lading also contains a provision reading:
This bill of lading shall have effect subject to the provisions
of the Carriage of Goods by Sea Act of the United States . . .
The latter Act, which has been put in evidence by the
respondent, reads, in part, as follows:
CARRIER'S DUTIES AND RIGHTS RISKS
SEC. 2. Subject to the provisions of section 6, under every
contract of carriage of goods by sea, the carrier in relation to
the loading, handling, stowage, carriage, custody, care, and
discharge of such goods, shall be subject to the
responsibilities and liabilities and entitled to the rights and
immunities hereinafter set forth.
DUE DILIGENCE TO MAKE SEAWORTHY BEFORE
SAILING RESPONSIBILITIES AND LIABILITIES
SEC. 3. (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;
224
(c) Make the holds, refrigerating and cooling chambers, and
all other parts of the ship in which goods are carried, fit and
safe for their reception, carriage, and preservation.
CARRIER'S DUTY TO CARGO
(2) The carrier shall properly and carefully load, handle,
stow, carry, keep, care for, and discharge the goods carried.
IMMUNITIES - EXCEPTIONS SEC. 4. (1) . . .
(2) Neither the carier nor the ship shall be responsible for
loss or damage arising or resulting from –
(j) Strikes or lockouts or stoppage or restraint of labor from
whatever cause, whether partial or general: Provided, that
nothing herein contained shall be construed to relieve a
carrier from responsibility for the carrier's own acts;
While the bill of lading expressly provides that the rights of
the parties thereunder are to be determined according to the
law of the United States, this is a type of situation where, I
should have thought, the Court is to assume that the foreign
law is the same as Canadian law except to the extent that
some party has pleaded and proved, by the evidence of
experts, the state of the foreign law.3 In this case, neither
party has pleaded what it says the law of the United States is
on any relevant aspect of the matter. The parties have,
however, by mutual arrangement, each put before the Court
below the evidence of a qualified United States lawyer on
certain aspects of the matter. Where there is no such
evidence, the quesumption, to which I have referred, in my
view applies. Where there is such evidence, the Court must
find as a fact (the parties having, with the acquiescence of
the Court below, impliedly waived pleading the foreign law
that they intended to prove) the state of the foreign law on
the areas covered by such evidence.
3
Canadian Fire Insurance Company v. Robinson, (1901) 31 S.C.R. 488, at
p. 493; Canadian National Steamships Company, Ltd. v. Watson, (1939)
S.C.R. 11, at p. 14; and Transocean Machine Company, Inc. v. Oranje Line
et al., (1958) Ex.C.R. 227, at p. 229. The rule does not apply, however, to
special provisions of particular statutes altering the common law. See Gray
v. Kerslake, (1958) S.C.R. 3, at p. 10.
Mr. J. H. Simonson, an attorney-at-law from New York,
gave evidence on behalf of the respondent. He expressed the
opinion that the effect of American law is "that a carrier
cannot accept goods for a non-strike-bound port and take
those goods into a port that is known to be strike-bound . . .
and hold them there and eventually make delivery resulting
in loss to the owner of the goods bound for the non-strike-
bound port". He also pointed out an "important" difference
between the United States Carriage of Goods by Sea Act
(usually referred to as "C.O.G.S.A.") and the Hague Rules as
originally adopted, which consists of the fact that
C.O.G.S.A. does not make the carrier's duty to "cargo" as
contained in Sect. 3(2) subject to the "Immunities -
Exceptions" contained in Sect. 4 while the corresponding
duties in the Hague Rules are expressed to be subject to the
corresponding exceptions. (In support of his opinion that
"carrier cannot go into a strike-bound port with cargo for a
non-strike-bound port", Mr. Simonson referred to numerous
authorities.) Mr. Simonson then quoted Clause 4 from the
bills of lading in tis case, which is usually referred to as the
"liberties clause", and which reads in part as follows:
4. In any situation whether existing or anticipated before
commencement of the voyage, which in the carrier's
judgment may give rise to risk of damage, delay or
disadvantage to the ship, he cargo or person aboard, or make
it imprudent to begin or continue the voyage or to enter or
discharge at the port of discharge, or give rise to delay or
difficulty in arriving, discharging at or leaving the port of
discharge or the usual place of discharge there, the carrier
may discharge the goods into depot, lazaretto, craft, or other
place; or may proceed or return, directly or indirectly, to
such other port or place as the carrier may select and
discharge the goods or any part thereof there; may retain the
goods on board until the return trip or such time as the
carrier thinks advisable; or may forward the goods by any
means, but always at the risk and expense of the goods. and
expressed the opinion: "This says that the carrier can decline
to export the goods. He has given himself full leeway in
refusing to take it or discharge the goods if he has put them
on board already, or discharge some other place, always for
the purpose of avoiding delay and to damage the goods". (He
also referred to authorities on this point.) In an apparent
application of this principle to the facts of the present case,
he said:
The contract of carriage is to carry safely to destination and
to deliver the goods in the same apparent good order as when
they were received by the ship. If the vessel cannot do this, it
has breached the contract of carriage. Now, to stow cargo on
a vessel which is going - a vessel which is going to a
strikebound port, and particularly when this cargo is
perishable, and is bound for a non-strikebound port, I believe
in this case there is a violation under the contract of carriage.
He also expressed the opinion that Sect. 3(1) of C.O.G.S.A.
is applicable in circumstances set out in a question put to him
that reads as follows:
Mr. Simonson, in your opinion again in respect to a crew, an
American crew, on an American flag ship bound for an
American port which will be strikebound, and also the same
crew is on a ship which has contracted to proceed to a port
which will not be strikebound, do you consider that in the
second contract that the crew is complete or the ship is
seaworthy?
Finally, he expressed the opinion that the onus is on the
carrier to show that the immediate cause of the damage is an
"excepted cause" and referred to authorities to support that
opinion.
Mr. Tellman Bissell, another attorney-at-law from New
York, gave evidence on behalf of the appellants. He
expressed the opinion that Sect. 4(2)(j) of C.O.G.S.A., which
relates to strikes, will give a carrier exemption fromliability
"provided that he can show that no negligence of his or on
the sea . . . contributed to the loss".Referring to the liberties
clause, he said: " . . . the ship must act reasonably under the
circumstances. I do not believe there is a duty to divert, but
merely a duty to act reasonably". Upon being referred to a
passage in a judgment in one of the United States cases
referred to by Mr. Simonson, reading as follows:
If the vessel had proceeded to Los Angeles to wait out the
strike, she would unquestionably become liable for damages
to all other consignees of cargo for delays in delivery that
could have been avoided.
He said: "I agree because in that case the Judge had decided
it was not unreasonable to divert the vessel."
225
The reasoning by which the learned trial Judge came to the
conclusion that the appellants were liable for the damage to
the oranges is contained in the following portion of his
reasons for judgment ([1968] 2 Lloyd's Rep. 184, at p. 190):
The bills of lading provide that they will be subject to the
provisions of the Water Carriage of Goods Act of the United
States of America,
Sect. 4(2)(j) of that statute provides that:
Strikes or lockouts or stoppage or restraint of labor from
whatever cause, whether partial or general: Provided, that
nothing herein contained shall be construed to relieve a
carrier from responsibility for the carrier's own acts;
It is noteworthy that this section is identical with the
corresponding section of the Canadian Water Carriage of
Goods Act except that the last clause thereof is not included
in the Canadian Act.
Included also in the said bills of lading is the usual liberty
clause and it appears to be common ground that the
defendants would, in virtue of this clause, have been entitled
to deviate to proceed direct to Montreal instead of entering
the port of Jacksonville.
Expert evidence as to the law of the United States was
presented on behalf of both parties with jurisprudence in
support thereof.
The following is an excerpt from the testimony of Mr.
Bissell, a New York attorney, heard on behalf of the
defendants (at p. 212) and referring to the exception relating
to strikes:
Well, this exception is treated by the Courts as other similar
exceptions in this section of the Act. That it will give the
carrier, if he can bring himself within the exception,
exemption from liability; provided that he can show that no
negligence or fault of his contributed to the loss.
The witness referred particularly to the case of Budewar v.
Colorado Fuel, [1955] A.M.C. 2139.

After considering the testimony of the experts and examining
the cases cited the Court is of the opinion that the test of
whether the entry of the Mormacsaga into the port of
Jacksonville on July 13, 1965, amounted to failure on the
part of the defendants to carry out their contract and exercise
due care to protect and safely carry the plaintiff's shipment in
accordance with its obligations under the contract of carriage
is whether in so doing, rather than proceeding direct to
Montreal, those in charge of the said vessel acted with proper
regard for the rights of the consignees as well as with
reasonable care for those rights.
Having regard to the fact that, to the knowledge of the defendants
and their representatives, a strike was in progress at Jacksonville and
that when the plaintiff's shipment was loaded at Santos and at all
times thereafter, right up until the vessel entered the port at
Jacksonville, the defendants or their presentatives knew or ought to
have known that the strike was still in effect, did they not fail to act
reasonably by entering the port of Jacksonville rather than deviating
to and proceeding directly to Montreal, which they were entitled to
do in virtue of the liberty clause above quoted?
As noted above, the statement of defence contains inter alia the
following paragraph:
38) THAT at the time the vessel entered Jacksonville there appeared
to be a strong possibility that the strike might end without further
undue delay;
This is an allegation which, if proven (and the burden of proof rested
upon the defendants), might have constituted a valid defence to the
plaintiff's action.
However in the opinion of the Court it was not established by the
proof. The only evidence offered in support of the allegation that the
defendants had reason to believe that the strike would be over
"without further undue delay" was the testimony of Mr. Glennon
who stated that it was so expected. His testimony in this respect
however was not corroborated or supported by any other evidence.
Moreover from the newspaper clippings produced it would appear
that there was no real basis for the expectation, or even the hope,
that an early settlement of the strike would ensue.
In the Court's view the defendants failed to establish that there was
any real reason to expect an early end to the strike which at the time
the vessel entered Jacksonville had been in progress for almost a
month and as things turned out, persisted until Aug. 31, 1965. In the
circumstances the Court finds that the defendants and their
representatives, by entering Jacksonville rather than proceeding
directly to Montreal failed to act with reasonable care and prudence
and with proper regard to the preservation of the plaintiff's shipment
of oranges.
There is moreover no evidence that had the vessel continued on to
Montreal, instead of entering Jacksonville, the plaintiff's shipment
would not have been saved undamaged nor is there proof to justify
the conclusion that this could not have been done with due regard to
the interests of the owners of other cargo.
In the circumstances the Court considers that the plaintiff has
established his right to recover the damages sustained by it as the
consequence of the failure of the defendants and its representatives
to carry out their obligations under the said contract of carriage.
The appellants attacked this judgment on two principal grounds,
viz.,
(a) that the learned trial Judge erred in his finding that Moore-
McCormack "failed to establish that there was any real reason to
expect an early end to the strike", and
(b) that Moore-McCormack should not be held liable unless the
respondent can show that the decision not to divert was manifestly
unreasonable bearing in mind that, as a carrier, Moore-McCormack
had a responsibility to all shippers and consignees and had to
consider the adventure as a whole and not just the respondent's
interest.
While the respondent put forward submissions concerning various
aspects of the matter, its formal position is that "the real issues in
this case" are "whether the carrier or the ship acted reasonably in
accepting the cargo, and particularly in sailing straight into a strike-
bound port".
It is common ground that the shipment of oranges in question was
delivered to the carrier in good order and was delivered by the
carrier to the consignee in a deteriorated concition. The respondent
was therefore entitled to judgment for damages unless the appellants
226
brought themselves within one of the exceeptions in Sect. 4 of
C.O.G.S.A.
The only such exception upon which the appellants relied was Sect.
4(2)(j) of the United States statute. The ambit of this exception was
the subject of expert evidence led by both parties. The expert for the
appellants hexpressed the opinion, in effect, that Sect. 4(2)(j) will
only provide a defence to a carrier in respect of a loss arising out of
a strike "provided that he [ - that is, the carrier - ] can show that no
negligence of his . . . contributed to the loss". The respondents
expert, as I understand his evidence, took an even narrowed view as
to the ambit of Sect. 4(2)(j). I find as a fact on this evidence, that,
according to the United States law, a carrier does not establish a
defence under Sec. 4(2)(j) unless he, at least, shows that no
negligence of his contributed to the loss4 arising from the strike
situation relied on to bring him within the exception.
The background against which it must be considered whether the
appellants have discharged this onus of showing that the carrier's
negligence has not contributed to the deterioration in the
respondent's oranges caused by their being held in the strike-bound
port is that Moore-McCormack was operating a vessel that was held
out to the public as being available to take goods from various
specified ports in South America to various specified ports in the
United States and to Montreal. When, therefore, by each contract of
carriage evidenced by the bills of lading it issued for the various
shipments it accepted in the South American ports, it undertook to
deliver such goods to a specified port, that obligation must be
considered in the light of the obligations similarly undertaken, in the
ordinary course of its business, by all the other contracts of carriage
so evidenced. In the ordinary course, therefore, the obligation to
deliver the oranges in Montreal was subject to the carrier's
responsibility to deliver first all the cargo consigned for United
States ports. It follows that it was because it was following the
4
The witnesses do not make it clear by their testimony how they reached
their conclusion. The result may have been reached by referring to a failure
properly and carefully to "care for" the cargo as required by Sect. 3(2) of
C.O.G.S.A. as "negligence" excluded from the ambit of the exception by the
proviso to Sect. 4(2)(j). (It is arguable that such reasoning would not be
acceptable if the Canadian statute were applicable.) Alternatively, the
reasoning may be quite simply that a carrier does not establish that damage
was caused by a strike unless he excludes the possibility that it wa caused
by his wrongfully or improperly taking the ship into a strike-bound port
contrary to the primary obligation in the contract of carriage. Compare
Steinman & Co. v. Angier Line, Ltd., [1891] 1 Q.B. 619.
normal and ordinary course of events that the vessel went to
Jacksonville before it went to Montreal. Indeed, it would seem to be
clear that a consignee in Jacksonville had an expectation that his
cargo would be delivered on or about the time scheduled for the
Mormacsaga's call at that port and would probably have had a legal
recourse for any loss arising from an undue delay in delivery, if, for
no justifiable reason, the ship had gone to Montreal before going to
Jacksonville.Indeed, each of the other consignees of cargo destined
for a United States port similarly had a business expectation, if not a
legal right, to delivery in accordance with the established schedule,
before the vessel went to Montreal.5 Unless, therefore, the carrier
had a right to change the normal route of the vessel by reason of the
strike situation, there is no ground for suggesting that the carrier was
negligent in allowing the vessel to go into the strike-bound port.
It is, as I appreciate the situation, because the legitimate interests of
the consignees of other cargo would have required that the vessel go
to Jacksonville and the other United States ports before going to
Montreal that both parties paid considerable attention to the so-
called liberties clause to be found in all of Moore-McCormack's bills
of lading. That clause reads, in part, as follows:
4. In any situation . . . which in the carrier's judgment may give rise
to risk of damage, delay or disadvantage to the ship, her cargo or
persons aboard . . . the carrier . . . may proceed . . . directly or
indirectly, to such other port . . . as the carrier may select and
discharge the goods . . . may retain the goods on boared until the
return trip . . . or may forward the goods by any means, but always
at the risk and expense of the goods.
The respondent's position is, in effect, as I understand it, that, once
the strike situation arose, Moore-McCormack should have invoked
the authority given to it by this clause in the bills of lading for goods
consigned to United States ports so as to pout it in a position,
without being in breach of the contracts evidenced by those bills, to
take the Montreal cargo to Montreal directly and so avoid having it
tied up in a strike-bound port.
5
Compare Leduc & Co. v. Ward and Others, (1888) 20 Q.B.D. 475, at pp.
480 et seq.; Margetson v. Glynn, [1892] 1 Q.B. 337; [1893] A.C. 351;
James Morrison & Co., Ltd. v. Shaw, Savill, and Albion Company, Ltd.,
[1916] 2 L.B. 783, at p. 792 et seq.; and Frenkel v. MacAndrews & Co.,
Ltd., [1929] A.C. 545.
With reference to the duty of the carrier to the consignee of the
oranges destined for Montreal to exercise the liberties clause in the
bills of lading for the remainder of the cargo so as to take the
oranges directly to Montreal, I accept the evidence of Mr. Bissell
that there was no "duty to divert" but only a "duty to act
reasonably".
I have no doubt that the strike in question was a "situation" in
relation to which Moore-McCormack would have been justified in
considering exercising the power conferred on it by the liberties
clause in the other bills of lading, and, indeed, as Mr. Bissell has
indicated, it cast on the carrier a "duty to act reasonably", that is, as I
understand it, to address itself to the question as to what special
action, if any, was required by the strike situation having regard to
the interests of all concerned in the adventure and to reach a
reasonable decision as to whether, having due regard to the interests
of all, the liberties clause should be invoked for the purpose of
changing the order in which the ports on its schedule should be
visited.
I find no support in the evidence as to the United States law for the
contention by the appellants that the burden was on the consignee to
show that the decision not to "divert" was manifestly unreasonable.
As already indicated, I have accepted the evidence of the appellants'
expert, Mr. Bissell, that it was for the carrier to show that his
negligence had not contributed to the loss.
On the other hand, I am of the view that the carrier would have
discharged the obligation on it (under United States law as I have
found it to be on the evidence) to show that its "negligence" did not
contribute to the loss, in circumstances such as exist here, if it had
shown that, at the various points of time when the circumstances
required it to consider the matter, it had addressed itself to the
problem and did so in a reasonable manner. The question is whether
it acted reasonably in the circumstances as a carrier faced with a
special situation and owing a duty to all having an interest in the
adventure, and not merely whether it acted reasonably having regard
to the safe-keeping of the oranges. Assuming it did so act
reasonably, the Court should not substitute its judgment ex post
facto for the decision made by the carrier in the somewhat critical
situation facing it at that time.6
6
Compare Phelps, James & Co. v. Hill, [1891] 1 Q.B. 605, at pp. 612 and
613.
227
I do not find that the approach that I have expressed so laboriously
differs in effect from that indicated in a much more concise manner
by the learned trial Judge. His reasoning, as I understand it, was as
follows:
(a) he accepted Mr. Bissell's opinion that a carrier should not avail
itself of Sect. 4(2)(j) unless it showed that no negligence on its part
contributed to the loss;
(b) he said (sup., at p. 190):
. . . the test of whether the entry of the Mormacsaga into . . .
Jacksonville . . . amounted to failure on the part of the defendants to
carry out their contract and exercise due care to protect and safely
carry the plaintiff's shipment in accordance with its obligations
under the contract of carriage is whether in so doing, rather than
proceeding direct to Montreal, those in charge of the said vessel
acted with proper regard for the rights of the consignees as well as
with reasonable care for those rights.
(c) having regard to all the circumstances, he re-stated tht test as
being (sup., at p. 191):
. . . did they not fail to act reasonably by entering . . . Jacksonville
rather than deviating to . . . Montreal, which they were entitled to do
in virtue of the liberty clause . . . and
(d) from this, he concluded that the allegation in the defence that, at
the time that the vessel entered Jacksonville, there appeared to be a
strong possibility that the strike might end without further delay
might have constituted a defence if the defendants had proved it.7
7
My own view is that it would have been more to the point if Moore-
McCormack had established the allegation in par. 36 of the statement of
defence "THAT in arriving at the decision not to divert the
MORMACSAGA the Defendants . . . did in fact consider the adventure as a
whole and the interests of and their responsibilities to all shippers and/or
consignees of the cargo on board as well as the interests of and their
responsibilities to the shippers and/or consignees of the cargo here in
question". However, I do not find evidence establishing that such
consideration was given at the relevant times. The learned trial Judge does
not consider the matter as though it had been submitted to him that this fact
had been proved and the appellants do not attack the judgment because no
finding of fact was made to that effect.
While I am not satisfied that, in all circumstances of a strike
situation, a mere forming of a general opinion that there is a strong
possibility that the strike might not last long would be a sufficient
discharge of the carrier's duty to consider exercising the liberties
clause in the interest of the cargo-owners, I am satisfied that, if the
appellants were not able to establish that there was a "strong
possibility" of the strike ending without further delay at the time that
the ship entered Jacksonville, the learned trial Judge was right in
holding that it had failed to establish the defence under Sect. 4(2)(j)
in teh manner in which it had undertaken to establish it.
I might try to re-state my position on this crucial point in the appeal.
Accepting, as I do, the position that United States law requires a
carrier to act reasonably in deciding whether or not to invoke the
liberties clause in some bills of lading to change a vessel's route, in
my view, whenever a situation arises that would make it impossible,
if the situation continues, for the vessel to operate normally in a port
that she is scheduled to visit - whether it be a strike, a state of war, a
revolution or any other abnormal state of affairs - the carrier must
consider whether the probabilities of the situation call for any
change in the plans that were made when such situation was normal;
and it must do so as a reasonably knowledgeable, capable and
responsible business man carrying on this type of business.
Applying that to the situation facing Moore-McCormack just before
it accepted the oranges on board at Santos, it might have considered
refusing a shipment of perishable goods by reason of the
uncertainties created by the strike. (I should say that I am not
satisfied on the evidence that this would not have been a breach of
the freight contract that had been entered into by the vendor of the
oranges with the carrier.) If it had done so and the strike had been
settled the day after the vessel left Santos, it might well have then
assemed that, having regard to the probabilities of an imminent
settlement, its decision had paid too little regard to the business
interest of the respondent in having the oranges in Montreal at the
scheduled time. Another possibility is that, when it did accept the
oranges at Santos, it might have considered so stowing the rest of
the goods in the vessel that, in the event that the strike could,
without undue expense, be discharged at Montreal before the United
States consignments were discharged. This would have made
subsequent diversion a more acceptable decision. Similarly, when
the vessel was leaving Rio de Janeiro, and again when it was off
Jacksonville, I should have thought that the carrier should have
examined the current situation by weighing the adverse effect on the
owners of the oranges and other Montreal cargo of going to
Jacksonville if the strike should then become protracted against the
adverse effect on the consignees of United States cargoes (and the
extra costs involved if the ship were diverted to Montreal) if the
strike should then come to an end as soon as the vessel were
committed to the divergent course.
Obviously, in deciding whether or not to make any change in the
normal operation of the vessel in any such situation, the probable
duration of the emergency situation would be a very important
factor. If, for example, a handful of employees have called a one-day
strike at a port that a vessel does not expect to reach for a month, it
might well be an irresponsibly timid interference with normal
commerce to depart from an announced schedule. If, on the other
hand, a strike has been announced by both sides as one that is to be
fought to the end, if both sides are apparently in shape for a
protracted struggle, and if the government concerned has announced
that the long run public interests require that the parties be allowed
to fight it out, a carrier serving the public might be regarded as
irresponsible if it does not take steps to enable it to protect the
interests of consignees against the possibility that the strike will last
a long time.
In this case, the carrier has, by its evidence, rested its case on a
single proposition. It has justified not changing its plans in any way
by reason of the strike on the ground that "there appeared to be a
strong possibility that the strike might end without further undue
delay". That has been put forward as a sufficient indication of a
discharge of its duty to act reasonably. If it has failed to prove that
contention, it has failed to discharge the onus of showing that its
negligence did not contribute to the loss because the attempt to
prove that allegation in its pleading is the only attempt that it made,
by its evidence, to show that it was not at fault in not changing its
schedule so as not to take the Montreal bound cargo, including the
oranges, into a strike-bound port.8
have already reviewed the evidence of the two senior officers of the
appellants that were involved in making the critical decision and,
after giving it the most sympathetic consideration that I can, I have
come to the same conclusion as the trial Judge, namely, that the
8
Even if the appellants had proven that there was a strong possibility that
the strike might end without further undue delay, I am not satisfied that that
would have been sufficient to discharge the onus of showing that it had
acted reasonably. In view of my conclusion that it did not establish that
strong possibility, I am relieved from considering whether the onus did not
go to showing that it had given, at the relevant times, a more precise
consideration to the various factors involved.
228
appellants have not established the correctness of the allegation in
par. 38 of the statement of defence. Taken as pleaded, that paragraph
is an assertion
THAT . . . there appeared to be a strong possibility that the strike
might end without further undue delay;
That pleading, to me, is a pleading that such "strong possibility"
appeared generally to those interested in the situation. The evidence
really stops short of indicating anything except that it so "appeared"
to Mr. Glennon who was able to point to no single factor that led
him to that conclusion, and to his associates two accepted his
appraisal of the matter. To have any relevance for the purpose of
discharging the onus of showing that their negligence did not
contribute to the loss, it would have had to be shown that there was
some real basis in fact that led the appellants' officers to believe that
the strike would probably end without
undue delay.I adopt the finding of the learned trial Judge that
there was no "real reason" established by the appellants to
expect an early end of the strike.
I find, therefore, that the appellants have failed to bring
themselves within the "strike" exception contained in the
United States Carriage of Goods by Sea Act.
In my view, therefore, the appeal should be dismissed with
costs.
JUDGMENT-2:
NOEL, J.: This is an appeal from the decision of Mr. Justice
Arthur I. Smith, [1968] 2 Lloyd's Rep. 184, District Judge in
Admiralty of the Quebec Admiralty District, maintaining
plaintiff's action and condemning the defendants, the ship
Mormacsaga and her owners, to pay the plaintiff the sum of
$53,150.24 with interest from the date of the institution of
the action and costs for damage suffered by plaintiff as
consignees of a cargo of oranges carried on board the
Mormacsaga from Santos, Brazil, to Montreal, P.O., under
12 clean bills of lading.
The quantum of damages is not contested and the appeal is
therefore brought against the finding of liability only.
The learned trial Judge found that the damage to the oranges
had been caused by the defendants (the carrier and its
owners) in that they failed (sup., at p. 190)
. . . to carry out their contract and exercise due care to protect
and safely carry the plaintiff's shipment in accordance with
its obligations under the contract of carriage . . .
when on July 13, 1965, the vessel Mormacsaga entered the
strike-bound port of Jacksonville in the U.S.A., where she
remained stranded for 49 days before completing her
scheduled trip and eventually reaching Montreal where
plaintiff's oranges were unloaded and found to be in a
deteriorated condition.
He indeed held that the defendants failed (sup., at p. 191)
. . . to act reasonably by entering the port of Jacksonville
rather than deviating to and proceeding directly to Montreal,
which they were entitled to do in virtue of the liberty clause [
- contained in the bills of lading - ].
The learned trial Judge in this connection referred to par. 38
of the statement of defence which reads as follows (sup., at
p. 189):
38) THAT at the time the vessel entered Jacksonville there
appeared to be a strong possibility that the strike might end
without further undue delay; and then stated (sup., at p. 191):
This is an allegation which, if proven (and the burden of
proof rested upon the defendants) might have constituted a
valid defence to the plaintiff's action.
However in the opinion of the Court it was not established
by the proof. The only evidence offered in support of the
allegation that the defendants had reason to believe that the
strike would be over "without further undue delay" was the
testimony of Mr. Glennon who stated that it was so expected.
His testimony in this respect however was not corroborated
or supported by any other evidence. Moreover from the
newspaper clippings produced it would appear that there was
no real basis for the expectation, or even the hope, that an
early settlement of the strike would ensue.
In the Court's view the defendants failed to establish that
there was any real reason to expect an early end to the strike
which at the time the vessel entered Jacksonville had been in
progress for almost a month and as things turned out,
persisted until Aug. 31, 1965.
The learned trial Judge then concluded as follows (sup., at p.
191):
In the circumstances the Court finds that the defendants and
their representatives, by entering Jacksonville rather than
proceeding directly to Montreal failed to act with reasonable
care and prudence and with proper regard to the preservation
of the plaintiff's shipment of oranges.
He then finally added (ibid.):
There is moreover no evidence that had the vessel continued
on to Montreal, shipment would not have been saved
undamaged nor is there proof to justify the conclusion that
this could not have been done with due regard to the interests
of the owners of other cargo.
Before dealing with a number of facts necessary in my view
to properly understand the issues involved in this appeal, it is
helpful, I believe, to point out three rather important facts
admitted by the parties in that
(1) . . . the deterioration in the condition and state of the
oranges, carried under twelve (12) bills of lading . . . was due
solely to the extra passage of time during which the
Mormacsaga (with the said oranges on board) lay strike-
bound in Jacksonville from July 13th, 1965 to August 31st,
1965. (i.e., a period of 49 days) and therefore the damage
was caused only by the extended delay due to the laying up
to the ship at Jacksonville because of the strike9 which
involved four United States unions, namely those of the
masters, mates and pilots, the machine engineers, the radio
operators and pursers.
9
This is confirmed by the report of the surveyor from Hayes, Stuart & Co.,
Ltd., acting for the respondents which indicates that the oranges were
properly cared for from the time they were loaded in Santos to the time they
wee discharged in Montreal.
229
(2) . . . the contract of carriage is subject to the Carriage of
Goods by Sea Act of the United States of America (known as
"C.O.G.S.A.").
Two American attorneys, Mr. James H. Simonson, on behalf
of the respondent, and Mr. Tellman Bissell, on behalf of the
appellants, were heard as experts on United States law. Both
of these gentlemen in their evidence referred to a number of
American and Canadian decisions to establish the law
applicable to the solution in this case, but were unable to
refer to any case that was directly in point. They did,
however, point out a number of differences between the
Canadian law under the Water Carriage of Goods Act, 1952,
and the American legislation, and it may be of some interest
to indicate them here.
Sect. 4(2)(j) of C.O.G.S.A. (the U.S.A. statute), which
creates an exemption in the case of (inter alia) strikes, reads
as follows: Sect. 4
(2) Neither the carrier nor the ship shall be reasonable for
loss or damage arising or resulting from –
(j) Strikes or lockouts or stoppage or restraint of labor from
whatever cause, whether partial or general: Provided, that
nothing herein contained shall be construed to relieve a
carrier from responsibility for the carrier's own acts;
The section in italics is not found in the Hague Rules or the
Canadian Water Carriage of Goods Act, and Sect. 3(2) of
C.O.G.S.A. which deals with the obligation of the carrier to
"properly and carefully load, handle, stow, carry, keep, care
for and discharge the goods carried" does not contain the
opening words "Subject to the provisions of article 4" (which
deals with a number of immunities of the carrier including
strikes) which are found in the Hague Rules and in the
Canadian Water Carriage of Goods Act, R.S.C. 1952, cap.
291.
There is, as I see it, however, no difference between the
Canadian law and the American law in so far at least as the
immunity for strikes is concerned because the evidence of
the expert witness was that the proviso in Sect. 4(2)(j) would
have no effect different than the corresponding section under
the Canadian Act as it merely affirms the general principle
 that no man can take advantage of his own wrong.10 With
regard to the obligations and rights of the carrier, under the
American Act, concerning the immunity given by strikes, I
am content to accept as the law of the United States the
expert evidence of T. Bissell, for the defendants (p. 217 of
the case), when, to the following question, he gave the
following answer:
Q.: And would you please tell the Court what in your
opinion is the law of the United States on the exception of
strikes and in particular the proviso. A.: Well, this exception
is treated by the Courts as other similar exceptions in this
Section of the Act that it will give the carrier, if he can bring
himself within the exception, exemption from liability,
provided he can show that no negligence of his or on the sea
was perhaps no fault of his - contributed to the loss. . .
3. Captain Dale E. Haakinson, the master of the
Mormacsaga, admitted that if the owners of the vessel had
instructed him to come to Montreal directly instead of going
to an American port, he could have done so as the vessel had
enough water and fuel to do so.
The respondent submitted that the real issues in the appeal
are:
(a) whether the carrier was negligent in accepting as it did,
on June 24 to 27, 1965, the cargo of perishables (oranges) in
Santos, when it knew that a strike had been declared on June
15, 1965, and was in progress on the east coast of the United
States and that its ship would become strikebound as soon as
she reached Jacksonville, the first American port on her
scheduled voyage northward, and
(b) whether the carrier was negligent thereafter in not
diverting the ship from Jacksonville to a port which would
not be strike-bound or to Montreal as it had a right to do
under Clause 4 of the bills of lading (Exhibit P-1) which
reads as follows:
10
Ct. Ocean Bills of Lading, by Knauth (1953) ed., at p. 223. The maxim
that "no man can take advantage of his own wrong" means that a man
cannot enforce against another a right arising from his own breach of
contract or breach of duty (In re London Celluloid Company, (1888) 39
Ch.D. 190, at p. 206).
4. In any situation whether existing or anticipated before
commencement of the voyage, which in the carrier's
judgment may give rise to risk of damage, delay or
disadvantage to the ship, her cargo or persons aboard, or
make it imprudent to begin or continue the voyage or to enter
or discharge at the port of discharge, or give rise to delay or
difficulty in arriving, discharging at or leaving the port of
discharge or the usual place of discharge there, the carrier
may discharge the goods into depot, lazaretto, craft, or other
place; or may proceed or return, directly or indirectly, to
such other port or place as the carrier may select and
discharge the goods or any part thereof there; may retain the
goods on board until the return trip or such time as the
carrier thinks advisable; or may forward the goods by any
means, but always at the risk and expense of the goods. In
order to properly understand the situation the owners of the
vessel were faced with in deciding as they did to enter a
strike-bound port, it is useful to go into some of the facts
covering the voyage of the Mormacsaga prior to entering
Jacksonville.
The north-bound voyage of the Mormacsaga started in
Montevideo on June 7, 1965, and then proceeded to her other
scheduled ports of loading in the following order: Buenos
Aires, Paranagua, Santos (where plaintiff's oranges were
loaded), Angras Dos Ries and Rio de Janeiro, where she
loaded general cargo for discharge at the following ports in
the following order: Jacksonville in Florida, Charleston in
South Carolina, Norfolk in Virginia, Baltimore in Maryland,
Philadelphia in Pennsylvania, New York, Boston in
Massachusetts and, finally, Montreal, P.Q., in accordance
with the usual and customary route taken by vessels in the
ownership of the Mormacsaga's American Republics Line
Service.
The Mormacsaga, after completing loading at Rio de Janeiro
on June 29, 1965, sailed for Jacksonville, Florida, with a
total general cargo of approximately 6756 tons (although
from the evidence of the master at pp. 50 and 51, the total
appears to be 6618 tons) of which 880 tons were to be
discharged in Jacksonville, 358 tons at Charleston, 302 tons
at Norfolk, 464 tons at Baltimore, 447 tons at Philadelphia,
1874 tons at New York, 1019 tons at Boston and, finally,
1274 tons at Montreal of which 700 tons consisted of
230
plaintiff's oranges and the remaining tonnage consisted of
other general cargo. The only perishables on board were
plaintiff's oranges and a small cargo of cheese.
The stowage plans, Exhibits P-14 and P-15, indicate how the
cargo was stowed and the evidence of one Parfett, a witness
produced by the plaintiff, shows that the cargo for Montreal
could not have been discharged without first removing some
cargo destined for the other ports at a cost which was
estimated at $9564.
There is no question that the vessel could have been diverted
to Montreal at some point after she left Rio de Janeiro or
even later when she arrived close to Jacksonville. Had the
vessel gone directly to Montreal from Rio de Janeiro, instead
of proceeding to Jacksonville, as the did, she would have
travelled only 637 miles farther than Jacksonville since the
distance to Jacksonville is 4707 miles and to Montreal 5354
miles. The time involved at the admitted optimum speed of
16 1/2 knots would have been, according ot Mr. C. Parfett
(plaintiff's witness) 11 days and 22 hours to Jacksonville and
approximately 14 days to Montreal (cf. factum, p. 171, line
23). The extra time required would, therefore, have been a
little more than three days.
I have gone into the facts covering the loading of the cargo,
the manner in which the cargo was loaded and the possible
routes the vessel could have taken to deliver plaintiff's cargo
in Montreal, because the decision to enter into a strike-bound
port as defendants did, must be considered in the light of all
the surrounding circumstances including the possibility or
feasibility of diverting the cargo to Montreal, which enters
into some of the considerations a carrier is faced with when a
decision has to be taken as to what course its vessel should
adopt having regard to the interest of all the cargo-owners.
I do not consider that there is any substance in respondent's
submission that the carrier was negligent in accepting the
load of oranges in Santos when it knew that a strike was in
progress on the east coast of the United States and that its
ship would become strike-bound as soon as she reached
Jacksonville, her first American port, although I would have
thought that some consideration would have been given at
that time to loading the cargo so that the oranges could, if
necessary, be unloaded first. A strike is something which
may end at any time and the carrier was, in my view, entitled
to continue to pick up cargo along her scheduled route in the
hope and expectation that the strike would be over prior to or
even when she reached the strike-bound port. I am not
impressed either by S. J. Mueller's (vice-president of the
appellants) suggestion that William Kopke, the New York
broker who arranged for the sale and purchase of the
oranges, was aware of the possibility of the vessel becoming
strike-bound but had agreed to load the cargo because of the
possibility that the strike would probably be settled shortly.
Appellants' submission that Kopke, on behalf of the plaintiff,
had agreed to accept the risk of placing the cargo on board
the vessel and to have the cargo put into a strike-bound port,
is not supported by the weight of the evidence. Mueller's
evidence is at its highest a suggestion only and Kopke denies
that he ever agreed to such a proposal. It also appears that
this so-called agreement was not even alleged in the plea. At
any rate, I cannot see how from such evidence, it can even be
inferred that the plaintiff had agreed that the carrier would
safely transport and deliver its cargo only if the existing
strike was settled, which is really what the respondent is
saying and which is what it would have to mean to have any
effect on the rights of the parties herein.
I am not particularly impressed either by the appellants'
submission that they made two subsequent shipments for the
respondent in July, 1965, on the ships Mormacmail and
Mormacgulf where an agreement to divert was stipulated and
that no such agreement was made in the case of the
Mormacsaga. It in my view merely shows that when Kopke,
or the plaintiff, realized that their cargo would be stranded in
Jacksonville by the entry of the carrier into that port, steps
were taken to make sure that no other cargo would be tied up
in this manner.
The issue here, really comes down to whether the owners of
the Mormacsaga should have diverted her around the United
States ports and ordered her to proceed directly to Montreal
or were justified in bringing her into Jacksonville, as they
did, on June 13, 1965, where she remained tied up for 49
days.
Counsel for the appellants submitted that once a carrier
establishes that damages have been caused by a strike, the
claimant has the burden of establishing that the exception or
immunity is inapplicable because the decision of the carrier
to become strikebound was unreasonable. The evidence
admittedly established that the damage to the oranges had
been caused by the long delay in Jacksonville and that this
delay had been caused by the strike, but it also disclosed that
the carrier had knowingly gone into a strike-bound port. I do
not think that in such circumstances it can be said that a
prima facie case of loss by strike has been made or that the
carrier has brought itself within the exception or immunity as
it must do. In order to do so, it must, in my view, clearly
establish that the cause of the damage was not its negligence
in entering a strike-bound port. Where a carrier has the
option of discharging its obligations to the consignees of
cargo in different ways, the propriety of the decision to enter
a strike-bound port, as defendants did, where one of the
consignee's goods were damaged, becomes a question of
reasonableness which the carrier must establish by
satisfactory evidence and by facts which are peculiarly
within its knowledge. I should think that in such a situation a
defendant must establish that upon all the circumstances
shown in the particular case, the loss arose otherwise than by
his negligence and the question to be determined then really
becomes, of course, whether the loss was due to the strike or
to the negligence of the carrier in entering a strikebound port.
In Lloyd v. General Iron Screw Collier Co.(Ltd.), (1864) 3
H. & C. 284, Pollock, C.B., states at p. 291:
It appears to me clear, upon the authorities, that Mr. Brett's
proposition is correct, and that in cases of this kind, we must
look, not at the causa proxima, but the causa causans, or real
cause of the loss. Therefore, if the negligence of the master
or mariners was the cause of the loss, the plaintiff is entitled
to recover, notwithstanding the exceptions in the bill of
lading.
There are, on the other hand, to my knowledge, no
authorities to the effect that a ship with cargo cannot go into
a strike-bound port. Under the Carriage of Goods by Sea
Act, a strike does not indeed have to be unforeseeable or an
absolute obstacle to the execution of an obligation as
required to constitute "cas fortuit" or "force majeure" in
order to free a carrier from liability. Once a carrier does go
into a strike-bound port, however, it must be in a position to
establish and must establish that the decision to go in was a
231
reasonable one which in the discharge of its contract with the
various owners of cargo carried on the vessel is consonant
with the exercise of due diligence or due care, having regard
to the fact that a line carrier must only discharge its
obligations by ordinary means and does not necessarily have
to incur exceptional expenses in order to ensure the delivery
in good condition of the goods of one particular cargo-
owner. A carrier, of course, must attempt to remedy the
effects of a strike if it can do so by ordinary means as part of
its obligation to take reasonable diligence or due care of the
cargo it is carrying. There is, however, no obligation to take
all means at any cost. It is sufficient, in discharging its
obligations under its contract of carriage, that a carrier
establishes that in proceeding to a strike-bound port, it has
proceeded with due care having regard, however, to the fact
that the obligation it has assumed under a contract such as
we have here towards all the owners of the cargo on its
vessel who (because of the nature of the cargo for instance)
may be differently affected by whatever course of action is
adopted by a carrier in placing itself in a situation covered by
an immunity under the Act.
The carrier, in the present case, could have used under the
"liberty clause" the ordinary and apparently not too
expensive or inconvenient means and right it had of diverting
its vessel and in my view, had an obligation to divert if, in
the circumstances, that was the only reasonable thing to do in
order to discharge with due care its obligations under the
contract. A carrier may, indeed, in some cases be in a
situation where it has good reason to believe that a strike will
not be of long duration and that the entry of the vessel into a
strike-bound port in accordance with her scheduled line
service, would be in the best interest of the cargo in general.
The carrier, in such a case, could not, in my view, be faulted
if after a due and proper consideration of convincing reasons
for thinking that the strike will soon come to an end, it
reaches a business decision that the thing to do in the interest
of the joint venture is to go into a strike-bound port even if it
turned out later that its expectations did not materialize. A
decision arrived at in such circumstances may be considered
as reasonable and consonant with the exercise of due care
even if it did not succeed and I would, in such a case, be
reluctant to substitute a Judge's business judgment to that of
a businessman in the industry.
In the present instance, however, it does not appear to me
that the carrier has established, by satisfactory and
convincing evidence, that the decision taken on July 13,
1965, to enter the strike-bound port of Jacksonville was the
exercise of sound business judgment.
I cannot, indeed, on the basis of the evidence adduced in this
case, come to the conclusion that the carrier here by merely
proceeding on its scheduled stops as it did has properly and
carefully cared for the plaintiff's perishable goods under the
carriage contract or that it has successfully established that it
is entitled to the immunity provided by Sect. 4(2)(j) of
C.O.G.S.A.
I say this because the evidence as to whether the problem of
determining whether the ship should be diverted to Montreal
or go into Jacksonville when the ship departed from Rio de
Janeiro, and even some days later prior to taking a course
towards Jacksonville, was considered by the carrier (as it
should have been) is non-existent. The only indication in the
evidence that the effect or consequences of entering into a
strike-bound port seem to have been considered was when a
couple of days before the ship reached Jacksonville, wires
were forwarded to the master requiring him to reduce the
speed of his vessel.
The only evidence regarding the progress of the strike
negotiations was given by Mr. Glennon, a vice-president of
Moore-McCormack, the owners of the vessel, who was their
representative at the negotiations with officials of the
striking unions. He stated that the prospects for an early
settlement of the strike were reasonably good on July 12,
1965, the day prior to the entry of the vessel into
Jacksonville. The strike had been in progress for
approximately 30 days by then and Mr. Glennon said that
this "is a little bit more than normal for strikes of this nature"
although he admitted later that some previous strikes had
lasted two to three months. He then added "during strike
negotiations, it is just the feeling that you have, are you close
to a settlement or are you not. Is there any issue that remains
open? If it cannot be resolved at all or are the issues so
narrowed that within hours or days you might iron them out
and have a contract?"
He then later stated that he advised Mr. Moore, the president
of his company, of the progress of the negotiations." I
advised him on that date that there was a possibility, or even
a probability of an early solution of the contract
negotiations."
I must say that it is quite impossible for me at least, to see
how Mr. Glennon could, on July 12, advise Mr. Moore that
there was a probability of an early solution of the strike
negotiations.
A strike, of course, may end at any time but upon a due
consideration of all the facts prior to the decision to enter
Jacksonville and even after, it appeared clearly on July 13,
1965, that no progress had been made in the negotiations
which would even suggest to the most optimistic labour
negotiator that a settlement was possible let alone probable.
As a matter of fact the evidence discloses that there was very
little to go on to support Mr. Glennon's statement that the
strike would probably be settled shortly.
The only conclusion I can reach is that the appellants have
not established that the entering of their vessel into a strike-
bound port was in the circumstances a reasonable decision to
take and that they did not have in the diversion of their
vessel to Montreal an ordinary and, under the circumstances,
a not too expensive or inconvenient means of ensuring that
respondent's perishable cargo would be properly cared for
and delivered to destination in good condition. It then
follows that by choosing as they did not to divert their vessel
to Montreal, they acted wrongly without due care and in
disregard to respondent's perishable cargo and thereby
breached their obligations under their contract to carry and
deliver respondent's cargo to destination. I should add that
there is not even any cogent evidence that in proceeding as
they did, the appellants were discharging their
responsibilities to all shippers and consignees of cargo on the
basis that they had to consider the adventure as a whole and
not just the interest of plaintiff. I can indeed find nothing in
the evidence which would indicate that they were even
motivated by such a consideration. In my opinion, the appeal
should be dismissed with costs.
232
JUDGMENT-3:
CATTANACH, J.: the issue in this appeal from the District
Judge in Admiralty of the Quebec Admiralty District dated
July 19, 1968 ([1968] 2 Lloyd's Rep. 184), whereby the
appellants were held liable for the damage sustained by the
respondent with respect to its cargo of oranges carried by the
appellants, the quantum of which is not in dispute, as I see it,
resolves itself into the question of whether the appellants, in
deciding to put into the strike-bound United States port of
Jacksonville, acted as reasonable and prudent carriers. The
obligation of the appellants, at the critical time, which I
conceive to be when the ship was off Jacksonville, was to
consider whether to divert the vessel to the port of Montreal,
the last port of call on her itinerary and to which the
respondent's perishable cargo of oranges was destined, or not
to so divert the vessel.
Because of the liberty clause in the bills of lading for the
respondent and other cargo-owners the option to so divert the
vessel was open to her owners without being in breach of
their contracts of carriage. The circumstances which
prompted the decision of the ship's owners to order her to put
in at Jacksonville which were relied upon by the appellants
as justifying that decision at that time were: (1) that the cargo
was so stowed so that the ship was committed to her
predetermined route and ports of call so as to discharge her
cargo economically and (2) that it was expected that the
strike would be of short duration.
Like the learned District Judge, I do not think that there was
convincing evidence, which it was the appellants' obligation
to adduce, which would justify the conclusion that the strike
would be of short duration.
There was no other evidence as to the circumstances which
prompted the appellants' decision to act as they did. In the
absence thereof I am forced to the conclusion that the carrier
has failed to discharge the onus that it was not negligent in
acting as it did.
I have had the opportunity of reading the judgment of the
President in which he out-lines, with detailed logic, the
reasons for which he arrives at a conclusion identical to the
conclusion which I have reached. I am in complete
concurrence with his conclusion and his reasons therefor.
 [The “Oak Hill”]
Accordingly I agree with the trial Judge's conclusion that the FEDERAL COMMERCE AND NAVIGATION
appellants are liable for the damage so incurred and I too
would dismiss the appeal. CO. LTD. AND OTHERS v. EISENERZ
G.m.b.H.
CANADA SUPREME COURT
[1975] 1 Lloyd’s Rep 105
HEARING-DATES: 18 October 1972
18 October 1972
CATCHWORDS:
Canada - Carriage by sea - Damage to cargo - Mixing of pig-iron
following grounding of vessel - Voyage charter-party and bills of
lading - Carrier's obligation to keep cargo separate and provide a
seaworthy ship - Whether overloading of vessel or negligence of
pilot caused grounding - Effect of exception clause in charter-party -
Liability of carrier and cargo-owner for acts of surveyor during
general average operations - Whether loss due to general average
operations part of general average loss - York-Antwerp Rules, 1950,
rr. XII and D.
Canada - General average - Mixing of pig-iron - Whether surveyor
appointed under general average act becomes agent of carrier and/or
cargo-owners - Whether carrier absolved from responsibility for
cargo during general average operations.
HEADNOTE:
The plaintiff chartered the steamship Oak Hill under a voyage
charter for the carriage of pig-iron from Sorel, Quebec, to Genoa,
Italy. The charter provided that pig-iron of different qualities was to
be kept separate and exempted the carrier from responsibility for
damage caused by
[Clause 20] any act, neglect, default or error in judgment whatsoever
of the Pilot, Master, Crew or other Servants of the Shipowners in the
management and/or the navigation of the Steamer.
On Aug. 24, 1962, two types of pig-iron were loaded at Sorel, the
different qualities being separated by holds. Two clean bills of
lading, signed by the master, were issued to the plaintiff.
233
After sailing from Sorel, the vessel went aground at Quebec city just
after taking on a pilot. She refloated on a rising tide and, having
discharged the greater part of the cargo of pig-iron at Levis, Quebec,
under the direction of a general average surveyor, was repaired at a
local dry dock. The cargo was then reloaded and the vessel
proceeded to Genoa. On discharge at Genoa it was found that the
different types of pig-iron loaded at Sorel were intermixed and also
that hematite for another consignee loaded prior to the loading at
Sorel was mixed with the plaintiffs' pig-iron.
The plaintiff claimed damages of $180,000 in the Exchequer Court
of Canada, alleging that the defendants, the owners and time
charterers of the vessel, were in breach of their obligation to keep
the types of pig-iron separate; and, further, that the vessel was
unseaworthy at the time of her departure from Sorel because of
being beneath her marks, which directly contributed to the loss.
The defendants contended (inter alia) that if the loss was caused by
the stranding, that was due to the act, neglect or default of the pilot,
master or servants of the carrier in the navigation of the vessel, for
which they were not responsible under the exemption clause of the
charter-party (or the Canadian Water Carriage of Goods Act, 1936,
or the United States Carriage of Goods by Sea Act, 1936, whichever
might be applicable); further, that any loss was caused in the acts of
handling, discharging, storing, reloading and stowing the pig-iron
subsequent to the stranding, which acts were not carried out by the
defendants, but by or on the instructions of the general average
adjusters and/or its agents, appointed on behalf of the shipowner,
cargo and all other interests, and for those acts the defendants were
not responsible. (The charter-party provided for general average to
be settled under the York-Antwerp Rules, 1950, and the defendants
relied on rr. XII and D thereof.)
The plaintiff denied that the defendants could plead general average
in the action. - Held, by NOEL, J., ([1970] 2 Lloyd's Rep. 332), (1)
(i) that the mixture, excess breakage and shortage occurred during
the enforced discharge, the storing and the reloading in Quebec;
(ii) that under the charter-party the defendants had warranted to
provide a seaworthy ship; but that even if they were in breach of that
warranty, they would not be liable for damage to cargo without any
causal relation between the defect and the casualty;
(iii) that the vessel was not unduly overloaded and thereby
unseaworthy; nor did any overloading have anything to do with the
grounding; that the grounding was caused by a serious error in
navigation of the pilot who, at the time, was in charge of the vessel;
and that, therefore, the carrier had established that it fell within the
exemption clause in the charter-party;
(2) that the objects of r. D of the York-Antwerp Rules, 1950, were to
keep all questions of alleged fault outside the average adjustment
procedure, but reserving unaffected the legal position at the stage of
enforcement; that there was serious neglect in the reloading of the
cargo in Quebec city which caused the mixture and breakage and
which resulted in the damage claimed in the action;
that when general average expenditure was involved the owner or
master conducted or supervised operations and that, although the
master or the adjuster was, in this case, the appointed agent of the
shipowner it did not follow that he became the agent of all parties;
that the obligation to properly carry, take care of and deliver the
cargo during the voyage did not cease once the general average
procedure was initiated and conducted;
that the loss was not a direct consequence of the general average act,
but it resulted from the joint fault and negligent actions or omissions
of both the surveyors and the master of the Oak Hill, for which fault
and neglect the defendants, as carriers, held no immunity either
under the York-Antwerp Rules or under the charter-party;
and those acts of neglect, even if committed during the general
average procedure, could not be held as those of the plaintiff so as to
prevent it from successfully recovering the damages to its cargo.
On appeal by the defendants: - Held, by the Supreme Court of
Canada (ABBOTT, RITCHIE, HALL, PIGEON and LASKIN, JJ.),
(1) The unseaworthiness point: The trial Judge was correct in
finding that the stranding was solely caused by a serious error in
navigation on the part of the vessel's pilot and no causal connection
had been shown between any unseaworthiness and the stranding (see
p. 108, col. 1); - Statement in Carver's Carriage by Sea, 12th ed.
(1971), vol. 1, p. 90, par. 103, adopted.
that the facts of the case established a prima facie breach of the
fundamental obligation evidenced by the bills of lading and charter-
party to deliver the shipment in the like good order and condition in
which it was when loaded (see p. 109, col. 1);
(2) The general average point: The stranding was the event which
made it necessary for the Oak Hill to unload her cargo and go into
dry dock; that decision, made by the master, was not unreasonable
and was made for the benefit of the ship and cargo alike and could
be properly described as a "general average act" which was
occasioned through negligent navigation of the vessel, for which the
owners were exempted from liability under the charter-party (see p.
110, col. 1);
but although, in carrying out that general average act, the master was
acting in the interest and in so doing, his overriding duty to care for
the cargo was still paramount and loss or damage sustained by the
cargo through a breach of that duty was not a "general average loss"
to which the rules applied (see p. 110, col. 1);
Under r. D, general average was to be settled without reference to
the question of whose fault gave rise to the general average act; but
the remedies against the party responsible for the fault were none the
less to be preserved; but r. D did not have the effect of preserving
remedies which might be open against one of the parties for "any
fault . . . which might have caused damage" (see p. 111, col. 1); -
Goulandris Brothers Ltd. v. B. Goldman & Sons Ltd., [1958] 1 Q.B.
74, at p. 92; [1957] 2 Lloyd's Rep. 207 at p. 214 (dicta of Pearson,
J.), considered.
In carrying out the general average procedure, the fact that the
master entrusted the discharging and reloading of the cargo to
general average surveyors did not relieve the master of the ultimate
responsibility for carrying out the procedure properly; and a master
was not to be relieved of responsibility for his own negligence by
contending that it was "reasonably foreseeable" (see p. 112, cols. 1
and 2); - Judgment of Lord Denning, M.R., in Australian Coastal
Shipping Commission v. Green and Others, [1971] 1 Lloyd's Rep.
16, considered.
that on the evidence, neither the master nor the surveyors and
adjusters employed by the carriers took any steps to protect the pig-
iron from being intermingled (see p. 112, col. 2);
that the expenses incurred in handling the cargo were a direct
consequence of the general average act but the combined negligence
of the master and of the surveyors and stevedores, who were acting
as his servants, which occasioned the damage, was not attributable
to the general average act and were not "the direct consequence" of
that Act (see p. 114, col. 1).
234
Appeal dismissed.
INTRODUCTION:
This was an appeal by shipowners and time charterers, Federal
Commerce & Navigation Co.Ltd., and Halifax Overseas Freighters
Ltd., respectively, from a decision by Mr. Justice Noel ([1970] 2
Lloyd's Rep. 332) holding that the plaintiff cargo-owner, Eisenerz
G.m.b.H., was entitled to recover $107,621.26 with interest, jointly
and severally, from the appellants in respect of damage sustained to
cargoes of pig-iron carried on board the steamship Oak Hill,
following a stranding in the St. Lawrence River.
The further facts are stated in the judgment of Mr. Justice Ritchie.
COUNSEL:
L.S. Reycraft, Q.C. for the appellants; P. R. D. MacKell, Q.C., and
B. Cleven, for the respondents.
PANEL: Before Mr. Justice ABBOTT, Mr. Justice RITCHIE, Mr.
Justice HALL, Mr. Justice PIGEON and Mr. Justice LASKIN
JUDGMENT-1:
Mr. Justice RITCHIE: This is an appeal from a judgment of Mr.
Justice Noel, sitting as Judge in Admiralty in the Quebec Admiralty
District, whereby he held the respondent cargoowner entitled to
recover a sum of $107,621.26 with interest, jointly and severally,
from the appellants, in respect of damage sustained to cargoes of
pig-iron owned by the respondent and carried on boad the steamship
Oak Hill when that vessel stranded near Lauzon drydock in the St.
Lawrence River. As a result of the stranding it became necessary to
discharge the cargo pending repairs to the vessel and it was in the
course of reloading the respondent's cargoes of pig-iron at Levis,
P.Q., that the two cargoes became intermingled and to a limited
extent lost and destroyed.
The circumstances giving rise to this action are fully and, in my
view, accurately described in the reasons for judgment of Mr.
Justice Noel, which are now reported in [1970] Ex.C.R. 192; [1970]
2 Lloyd's Rep. 332. (The page references hereinafter made to that
judgment refer to those reports.) This relieves me of the necessity of
restating the facts except in so far as I consider it necessary to do so
in order to provide a setting for discussion of the questions of law to
which they give rise.
The Oak Hill was owned by the appellant, Halifax Overseas
Freighters Ltd., and had been time chartered to the appellant,
Federal Commerce and Navigation Co.Ltd. (hereinafter referred to
as "Federal") who, in turn chartered to the respondent under a
voyage charter. Federal issued two bills of lading covering the
respondent's pig-iron cargoes which incorporated the terms of the
voyage charter-party and by both of which the owners are bound by
virtue of the master's signature thereon.
The separate cargoes of the respondent's pig-iron which were then in
apparent good order and condition had been received and loaded on
the Oak Hill at Sorel, P.Q., in separate holds on Aug. 24, 1962, and
it should be mentioned that a further and different shipment of
hematite belonging to other owners had been taken on board and
separately stowed prior to the Sorel loading.
The various types of iron ore were all uniform in size, length, shape
and weight, differing only in quality and in the purpose for which
they were to be used. It was obviously important that these cargoes
should be kept separate at all times and provision was made in this
regard by pars. 24 and 49 of the charter-party, to which reference is
made in the reasons for judgment of the learned trial Judge, who
also points out at pp. 196 and 334 that:
It is common ground between the parties that it was understood,
well known and agreed, that the pig-iron of different qualities must
be kept separate . . .
After the stranding, the vessel proceeded to Wolfe's Cove on the
Quebec side of the St. Lawrence River, where certain cargo other
than pig-iron was discharged, and then went across the river to
Levis, P.Q., where the greater part of the pig-iron was unloaded. The
vessel was repaired at a local dry dock and the cargo having been
reloaded at Levis, proceeded to Genoa, where it was discovered that
the respondent's cargoes had been mixed in the various holds of the
vessel and that the hematite previously loaded was also mixed with
the respondent's pig-iron. It was apparently conceded on behalf of
the appellants that any loss, damage or intermixture of the pig-iron
must have occurred during the handing of the cargo at Levis.
In this regard the learned trial Judge observed:
Counsel for the defendant even took the position (and this, in my
view is fully supported by the evidence) that the mixture, excess
breakage and shortage occurred during the enforced discharge, the
storing and reloading in Quebec . . .
The respondent's action was initially based on the appellants' breach
of the obligation evidenced by the bills of lading to carry, care for
and deliver the cargoes to Genoa in the same apparent good order
and condition in which they had been loaded at Sorel, and more
particularly that while in the care of the appellants, the cargo was
broken, carelessly handled, lost and mixed with other cargoes and
then improperly reloaded.It was also pleaded that the Oak Hill was
unseaworthy on departure from Sorel by reason of overloading, that
this unseaworthiness directly contributed to the loss and that the
appellants failed to exercise due diligence to make the vessel
seaworthy.
I find it convenient to deal first with the allegation of
unseaworthiness and in this regard I adopt the test described in
Carver's Carriage by Sea, 12th ed. (1971), vol. 1, p. 90, par. 103,
where it is said:
The shipowner is responsible for loss or damage to the goods,
however caused, if the ship was not in a seaworthy condition when
she commenced her voyage, and if the loss would not have arisen
but for that unseaworthiness. The goods owner must, in order to
make the shipowner liable, establish both these facts, and cannot
recover for the loss or damage merely on the ground that the ship
was unseaworthy, unless it is also shown that the loss or damage
was caused by that unseaworthiness.
I do not find it necessary to consider the provisions of the Water
Carriage of Goods Act, R.S.C. 1952, c. 291 (now the Carriage of
Goods by Water Act, R.S.C. 1970, c. 15) or of the Quebec Civil
Code in relation to the duty of the master to provide a seaworthy
ship and to exercise due diligence to make it so because cl. 2 of the
charter-party contains a warranty that the ship was "tight, staunch,
strong and in every way fit for the voyage" and that the loading at
Sorel would not exceed what she could "reasonably stow and carry"
and I think that this includes an undertaking to exercise due
diligence to make the vessel seaworthy.
If it had been shown that the stranding was caused by the
unseaworthiness of the vessel through overloading or otherwise, the
shipowners would then have been responsible for any damage
caused as a direct consequence of such unseaworthiness, but in the
present case there is an express finding by the learned trial Judge,
235
with which I agree, that the stranding was solely caused by serious
error in navigation on the part of the pilot who was in charge of the
vessel at the time, and no causal connection has been shown
between any unseaworthiness and stranding. Furthermore, the
respondent's contention is that the damage was not a direct
consequence of the stranding but rather that it was caused by an
independent act of negligence in handling the cargo. It follows, in
my view, that even if it were accepted that the vessel had been
overloaded, no responsibility would attach to the owner for the
breach of the guarantee and warranty above referred to. Mr. Justice
Noel's finding as to the cause of the stranding is to be found at pp.
210 and 341 of the reports where he said:
One must, I believe, from this, infer that whoever was on the bridge
directing the vessel had committed a very serious error of navigation
to have, on a clear night, so misdirected this ship as to ground her on
the wrong side of the buoy and outside of the channel. This accident
can, under these circumstances, be explained only by a serious error
of navigation of the pilot who, at the time, was in charge of the
vessel. It strikes me also that the captain was somewhat remiss in
not remaining on the bridge for some time after the new pilot had
taken over . . .
Under the terms of cl. 20 of the charter-party, the shipowner is
exempted from liability for "the neglect . . . of the pilot in the
navigation of the Steamer" in the following terms:
20. . . . damage . . . from any act, neglect, default or error in
judgment whatsoever of the Pilot, Master, Crew or other servants of
the Shipowners in the management and/or the navigation of the
Steamer, and all and every other Dangers and Accidents of the Seas,
Rivers and Canals of whatever nature and kind whatsoever, before
and during the said voyage always excepted.
The claim of the respondent is not, however, based on the
negligence which caused the stranding, but rather upon the
allegation that the damage was sustained by the cargo through
negligent handling whilst in the custody and care of the appellants
during the unloading, handling and reloading at Levis.
The appellants' defence to this latter claim is that the discharge of
the cargo at Levis was a general average act done for the benefit of
ship and cargo alike and that any damage sustained while at the port
of refuge occurred in the course of carrying out the general average
procedure and should therefore be contributed to proportionately by
all interests concerned.
As the defence is somewhat technical in nature and involves an
interpretation of the York/Antwerp Rules, 1950, I think it desirable
to refer to the pleadings. Having referred to the contract evidenced
by the bills of lading and the charter-party, the respondent went on
to plead:
4 - That in particular it was understood, well known and agreed that
the pig iron of different qualities must be kept separate and the
Charter Party is particularly to this effect especially at paragraphs 28
and 49.
5 - That in breach of contract on or about August 25, 1962, at 10:30
P.M. near Quebec City, the S.S. OAK HILL stranded on the south
bank of the St. Lawrence River, P.Q., Canada, said cargo was
discharged from the vessel and said cargo was broken, carelessly
handled, lost and mixed with other cargo and then reloaded in part
and improperly, the whole to the prejudice of the Plaintiff.
6 - That upon arrival of the said vessel at Genoa on or about
December 5, 1962, the said shipment was found to be short and
damaged and mixed with other cargo, defendants noted, inspected
and surveyed the loss and damage and notice was duly given to
them.
8 - That the defendants have thus breached their obligation under the
contract and law to keep the said cargoes of pig iron separate and in
separate holds and undamaged from receipt at Sorel to delivery at
Genoa.
The various admissions made by the parties make it clear that the
following matters are not seriously disputed:
(1) That the cargo was properly loaded in apparent good order and
condition at Sorel.
(2) That it was understood and agreed that the pig iron of different
qualities must be kept separately.
(3) That at the time of discharge at Genoa there was a shortage,
missing and breaking of cargo and that in this regard the loss and/or
damage suffered by the respondent to its cargo under Sorel-Genoa
bills of lading numbers 1 and 2 as determined at Genoa was
$107,621.26.
(4) That the damage to the cargo occurred during the enforced
discharge, storing and reloading in Levis. In my opinion, these
circumstances establish a prima facie case of a breach of the
fundamental obligation evidenced by the bills of lading and the
charter-party to deliver the shipment at Genoa in the like good order
and condition in which it was when loaded at Sorel, and were it not
for the allegations contained in par. 8 of the appellants' statement of
defence, I think that the respondent would be entitled to succeed in
this action on that ground. There remains, however, the question
raised by par. 8 of the appellants' defence which reads as follows:
8. That if the said pig iron suffered any loss or damage or
intermixture whilst in the care and custody of the Defendants, which
is denied, said loss and damage and intermixture was caused in
whole or in part in the acts of handling, discharging, storing,
reloading and stowing said pig iron subsequent to the
aforementioned stranding, which acts were not carried out by the
Defendants but by or on the instructions of the General Average
Adjuster and/or its agents, appointed on behalf of the Shipowner and
Cargo and all other interests, and for whose acts the Defendants are
not responsible, and the Defendants plead paragraph 13 of the
aforementioned charterparty dated at Hamburg on July 17, 1962,
which provides for General Average to be settled according to
York/Antwerp Rules 1950 and particularly Rule XII of said Rules.
Paragraph 13 of the charter-party reads:
13. Any averages occurring under this Charter to be settled
according to York/Antwerp Rules.
In answer to this defence, the respondent pleads in part as follows:
7.That paragraph eight is denied and in particular Plaintiff denies
that the Defendants can plead general average in the present action.
The inclusion of par. 13 of the charter-party introduced a term into
the contract of carriage whereby in the event of general average loss
or damage occurring the "York/Antwerp Rules" were incorporated
as a part of that contract for the purpose of settling "the average".
By par. 7 of the respondent's answer tot he defence, the question of
whether or not the loss or damage complained of as having been
236
caused by "breach of contract, negligence or delict" was in fact a
general average loss to be borne by shipowners and cargo alike, was
placed directly in issue.
"General average" is a term used to describe a procedure to be
followed when by reason of some maritime misfortune both the ship
and her whole cargo are in danger. In such cases, if the master
deliberately and reasonably takes action for the benefit of all
concerned which has a direct consequence of damaging the ship or
cargo, the loss becomes a "general average loss", and is adjusted
between all the parties to the marine adventure.
The most obvious and perhaps the earliest recorded example of this
is a case where tempestuous seas make it necessary to lighten ship
and part of the cargo is jettisoned to save the ship and the remaining
cargo. General average may, however, apply to any sacrifice or
expense intentionally and reasonably incurred for the benefit of all
in the face of an emergency. Lowndes and Rudolf, General Average,
9th ed., British Shipping Laws (1964), vol. 7, which has long been
regarded as a standard work, adopts the early definition of general
average contained in the judgment of Mr. Justice Lawrence in
Birkley v. Presgrave, (1801), 1 East. 220; 102 E.R. 86, as having
been so widely followed in the Courts of England that it has become
sort of a maxim. Mr. Justice Lawrence there says [at pp. 228-91]:
All loss which arises in consequence of extraordinary sacrifice made
or expences incurred for the preservation of the ship and cargo come
within general average, and must be borne proportionably by all
who are interested.
In the present case the stranding at Lauzon was the event which
made it necessary for the Oak Hill to unload her cargo and go into
drydock. This decision was made by the master and there is no
suggestion that it was an unreasonable one. The decision was made
for the benefit of the ship and cargo alike and can therefore be
properly described as a "general average act" which was occasioned
through negligent navigation of the vessel for which the owners are
exempted from liability under the charter-party. Although the
decision to unload was a general average act, it does not necessarily
follow that the loss and damage to the respondent's cargo was a
"general average loss" coming within the ambit of the
York/Antwerp Rules.
It would, in my opinion, be wrong to assume that, in carrying out the
general average procedure, the York/Antwerp Rules are to be treated
as a code governing the rights of the parties concerned to the
exclusion of other rights and obligations created by the contract of
carriage. In my opinion, the effect of par. 13 of the charter-party is
simply to include the rules as a part of the contract and although in
carrying out the general average act the master is acting in the
interest of all concerned, he is representing the owner and in so
doing, his overriding duty to care for the cargo is still paramount and
loss or damage sustained by the cargo through a breach of this duty
is, in my view, not "a general average loss" to which the rules apply.
There is, in my opinion, nothing in the York/Antwerp Rules to
relieve the master of his responsibility to see that cargo is properly
handled and cared for during the carrying out of the general average
procedure. In this regard, Carver's Carriage by Sea contains the
following statement concerning the role of the master when acting
on behalf of cargo-owners in cases of necessity, at p. 647, par. 752:
But although such acts are done by the master on behalf of the
owner of the goods, and with his implied authority, so as to bind
him, they are still done by the master as servant of, and as
representing, the shipowner. And the shipowner is responsible if he
exercises that power improperly.
One of the authorities cited by Carver in support of this proposition
is the old case of Notara v. Henderson, (1872) L.R. 7 Q.B. 225,
which was an action against shipowners by the shippers of a cargo
of beans, claiming that the shipowners were liable for the alleged
negligence of the master in failing to take reasonable care of the
beans by drying them at the port of Liverpool, into which the vessel
was driven for repairs by an accident of the sea as the result of a
collision at sea "for the necessary and immediate consequences of
which" the shipowner was exempted from liability under the bill of
lading. The judgment in this case is a comparatively long one but the
effect of it appears to me to be accurately summarized in the first
paragraph of the headnote which reads:
There is a duty on the master of a ship as representing the
shipowner, to take reasonable care of the goods entrusted to him, not
merely in doing what is necessary to preserve them on board the
ship during the ordinary incidents of the voyage, but also in taking
active measures, where reasonably practicable under all the
circumstances, to check and arrest the loss or deterioration resulting
from accidents, for the necessary and immediate consequences for
which the shipowner is not liable by reason of exceptions in the bill
of lading. And for neglect of this duty by the master the shipowner
is responsible to the shipper.
Before considering whether the appellants can successfully invoke
the York/Antwerp Rules in the present case, it seems to me to be
desirable to consider the format in which the rules are arranged. The
rules are lettered A to G and numbered I to XII and they are
preceded by a rule of interpretation which reads as follows:
In the adjustment of general average, the following lettered and
numbered Rules shall apply to the exclusion of any Law and
Practice inconsistent therewith.
Except as provided by the numbered Rules, general average shall be
adjusted according to the lettered Rules.
n commenting on this Rule, Lowndes and Rudolf, sup., observe at p.
289, par. 546:
The first sentence of the Rule ensures that the Rules shall not be
construed as a mere codification of any national law or any practice,
national or international. They thus take effect as a contract between
the parties and fall to be construed in the same manner as any other
contract. They do not, however, constitute a complete or self-
contained code and need to be supplemented by bringing into the
gaps provisions of the general law which are applicable to the
contract.
Paragraph 8 of the defence specifically pleads r. XII which reads as
follows:
Rule XII.
Damage to or loss of cargo, fuel or stores caused in the act of
handling, discharging, storing, reloading and stowing shall be made
good as general average, when and only when the cost of those
measures respectively is admitted as general average.
It is contended on behalf of the appellants that the provisions of r.
XII are to be construed as meaning that any damage to or loss of
cargo occurring in the course of the general average procedure is to
be made good as general average.
In this regard, the learned trial Judge invoked the provisions of r. D
of the rules which reads:
237
Rule D
Rights to contribution in general average shall not be affected,
though the event which gave rise to the sacrifice or expenditure may
have been due to the fault of one of the parties to the adventure; but
this shall not prejudice any remedies which may be open against that
party for such fault. [Italics added.]
Mr. Justice Noel, construed this as meaning that [at pp. 218 and
343]:
. . . general average procedure has nothing to do with, nor does it
affect, the rights of any party to any remedy he may have against
one of the parties . . . for any fault committed and which has caused
him damage. [Italics added.]
And the learned trial Judge continues:
Such, indeed, would be the situation of the plaintiff here if it can
establish that it is entitled to a recourse against the defendants for
the damage sustained to its cargo during the reloading procedure
conducted in Quebec City after the grounding of the vessel, whether
or not there is or may be a general average enforcement against all
the parties to this common adventure.
In my view, the effect of r. D is to provide that general average is to
be settled without reference to the question of whose fault gave rise
to the general average act but that the remedies against the party
responsible for that fault are none the less to be preserved. With the
greatest respect for the views of the learned trial Judge, I am unable
to find that the last portion of r. D has the effect of preserving
remedies which may be open against one of the parties for "any fault
. . . which may have caused the damage" and I do not think it is to be
read as qualifying the language of r. XII in so far as that rule
provides that damage to or loss of the cargo . . . caused in the act of
handling . . . shall be made good as general average when and only
when the cost of those measures respectively is admitted as general
average.
In finding that r. D had the effect of preserving the rights of any
party to any remedy which he may have against one of the parties to
a general average for any fault which has caused the damage, Mr.
Justice Noel relied on a judgment of Mr. Justice Pearson in
Goulandris Bros.Ltd. v. B. Goldman & Sons Ltd., [1958] 1 Q.B.D.
74; [1957] 2 Lloyd's Rep. 207, at pp. 92 and 214, in the course of
which he said:
I understand that the task of compiling an average adjustment in a
complicated case may take years. It is highly convenient and
desirable, almost necessary, that the task should not be further
enlarged and complicated by questions whether the casualty was
caused by some fault or faults of one or more of the parties.
Moreover, such questions would naturally be settled by litigation or
arbitration, as they go beyond the sphere of general average and may
affect other matters. The average adjusters ought to be able to
produce figures which, so far as they are concerned, are final
figures. When they have produced their final figures the question of
enforcement arises, and it is at this stage that the second part of rule
D comes into play. The average adjustment shows X owing to Y £
100, but that showing is without prejudice to any remedies which
may be open to X for Y's fault having caused the casualty. [The
italics are my own.]
It is true that in the same paragraph of his reasons for judgment Mr.
Justice Pearson analysed r. D in the following manner so as to mean
that [at pp. 92-3 and pp. 214-5]:
The first part refers to the rights to contribution in general average
as they will be set out in the average adjustment, and these are
properly and naturally called "rights" because normally the holder of
such rights is entitled to receive payment. But the second part of the
rule provides that the first part is not to prejudice remedies for faults.
That implies that in some cases the remedies referred to in the
second part of the rule will override the rights referred to in the first
part; in other words, the second part operates as a proviso,
qualifying, overriding, cutting down or derogating from the first
part. The rights may be nullified or defeated or diminished or
otherwise affected by the remedies. In that sense the rights referred
to in the first part of the rule are prima facie rights because they are
subject to the remedies.
I think it is this latter passage and particularly the statement "that the
first part is not to prejudice remedies for faults" which led Mr.
Justice Noel to conclude that the second part of r. D referred to any
fault committed by one of the parties to the general average. In my
view, when Mr. Justice Pearson's reasons for judgment are read as a
whole, it is apparent that the faults to which he was referring were
faults causing the casualty which in turn gave rise to the general
average sacrifice. The words "such fault" as they occur in the last
line of r. D are, in my view, to be construed as referable to "the
fault" referred to in the earlier part of the section and the remedies
which are preserved are therefore those against the party whose fault
was responsible for the event which gave rise to the general average
sacrifice.
Although I am of opinion that r. D is only effective to preserve
remedies which may be open against one of the parties whose fault
gave rise to the sacrifice, it does not follow that all damages to or
loss of "cargo . . . caused in the act of handling, discharging,
reloading and stowing" are to be made good as a general average,
because it is to be borne in mind that under the provisions of r. XII
this applies "when and only when the cost of those measures
respectively is admitted as general average".
The only losses or damages to be admitted as general average are
those referred in r. C which reads:
Rule C
Only such losses, damages or expenses which are the direct
consequence of the general average act shall be allowed as general
average.
As has been pointed out, the unloading of the cargo at Levis was the
general average act and the handling and reloading at that port were
all part of the general average procedure, but it is contended on
behalf of the respondent that the damage caused to the pig-iron
cargoes was not a "direct consequence of the general average act" as
it was caused by the negligence of the master and those who were
employed by him to carry out the procedure.
In carrying out the general average procedure, the master acts on
behalf and for the benefit of both the cargo owners and the ship and,
in the present case, the master entrusted the discharging and
reloading of the cargo to Hayes, Stuart and Co., who are the general
average surveyors, but I agree with Mr. Justice Noel that this did not
relieve the master of the ultimate responsibility for carrying out the
procedure properly.
The meaning to be given to the words "direct consequence" as
employed in r. C is the subject of a closely reasoned judgment
delivered by Lord Denning, M.R. in Australian Coastal Shipping
Com'n v. Green et al., [1971] 1 Lloyd's Rep. 16, in which he reviews
a great many of the authorities and concludes, at p. 21, that:
238
"Direct consequences" denote those consequences which flow in an
unbroken sequence from the act: whereas "indirect consequences"
are those in which the sequence is broken by an intervening or
extraneous cause and the learned Judge adds:
I realize that this is not very helpful: because the metaphor of
"breaking the chain" of causation means one thing to one man and
another thing to another. But still we have to do the best we can with
it.
Lord Denning proceeds to state his own view in the following terms:
If the master, when he does a "general average act" ought reasonably
to have foreseen that a subsequent accident of the kind might occur -
or even that there was a distinct possibility of it - then the
subsequent accident does not break the chain of causation. The loss
or damage is the direct consequence of the original general average
act.
It appears to me that even if Lord Denning's view be accepted, it
does not mean that a master is to be relieved of responsibility for his
own negligence by contending that it was "reasonably foreseeable".
In my view, if it be shown that loss or damage to cargo has been
caused through the negligence of the master in carrying out the
general average procedure, it can no longer be said that it was a
direct consequence of the general average act. The chain of
causation is broken by the intervention of a new cause and, in my
view, it cannot have been the intention of the committee which
adopted the York/Antwerp Rules that a master should be able to
claim a general average loss because he was able to foresee the
possibility that he would be negligent.
The question of fact which must determine the outcome of this
appeal is whether the damage to the cargo was caused by negligence
for which the appellants are responsible. Notwithstanding the
stipulation and obligation to keep the cargoes separate by which the
appellants were bound, the evidence is clear that neither the master
nor the surveyors and adjusters employed by the appellants took any
steps to protect the pig-iron from being intermingled at Levis.
It is apparent from the master's evidence that he turned over the
unloading, handling and reloading of the cargo to the surveyors and
not only failed to exercise any supervision, but appears to have
regarded himself as under no obligation to participate in the
procedure. In this regard he have the following evidence:

Q.: Well, which do you do? Do you maintain control of everything?
Were you in charge or were they? A.: They were in charge so far as
discharging and loading of the cargo was concerned.
Q.: The care of the cargo . . . A.: Rested with them.
.: You gave up the care did you? A.: Well, yes.
The role of the general average surveyor or adjuster in carrying out
the general average procedure is described in the evidence of Mr.
George Hayes who is president of Hayes, Stuart & Co. Ltd., the
company which was retained on behalf of the appellants to act in
that capacity during the unloading and reloading of the Oak Hill at
Levis. Mr. Hayes gave evidence on behalf of the respondent and in
the course of his direct examination he was asked about the function
of such a surveyor and he said:
Q.: Is he a watchman? A.: No, he is not a watchman.
Q.: Who employs the watchman? A.: Ordinarily people are
employed through the vessel's agents, the watchman, and the
stevedores et cetera. It is ordinarily the agent.
Q.: Did you employ the stevedores, your firm? A.: No, we did not.
Q.: Did you employ the watchman? A.: No, we did not.
Q.: You say they are employed by the ship's agents? A.: Ordinarily
the ship's agents on behalf of the master. He is the master's servant
for loading what is necessary.
[And later]
Q.: And who makes the decisions, for example, you have already
said the employee of the charterers and the watchman and so on is
not by you, who gives instructions - you have already said the
employment of stevedores and the watchman is not made by you,
who gives instructions to those stevedores and those watchmen? A.:
Actually the watchman and the stevedores are the servants of the
master of the ship. Although you do have discussions with the
master and the stevedores and yourself and you have meetings in
order to solve the problems in hand to get at the best manner if the
cargo should be wet or under water, the best manner of handling it,
but ordinarily this is a meeting between all interests concerned and it
is agreed accordingly.
Q.: But then the master carries out whatever decisions he wishes and
so on? A.: Yes, in theory the master has the final say.
Finally, on cross-examination by the appellants' Counsel, Mr. Hayes
said of the general average adjuster:
. Ordinarily, a good general adjuster discusses every move with the
Master of the ship or the Chief Officer.
There is no evidence of supervision by the surveyor at Levis and
indeed the appellants did not bring a single witness as to what took
place there with respect to the handling of the cargo and in fact their
only answer to the allegation of negligence was that the Port of
Levis was so ill-equipped for the reception of pig-iron that the
mixing and breaking might have taken place without anybody's
negligence.
The evidence as to negligence was furnished by the two expert
surveyors who examined the cargo at Genoa and who gave evidence
on behalf of the appellants. One of these witnesses, Alfonso Oliva,
after acknowledging it to be indisputable that the greater quantity of
the mixture and breakage occurred at the time of the forced
discharge at Levis, was crossexamined with respect to the mixture
and made the following answers:
Q.: In enclosure no. 2 it shows, for example, in hold no. 5 instead of
twelve hundred and fifty-six (1256) long tons there was twelve
hundred and ninety-five (1295) and it says, "Mixed with remaining
cargo"; that is pretty sloppy mixing and loading, is it, Mr. Oliva,
negligent or sloppy? A.: Yes.
Q.: I show you hold no. 4 before grounding in enclosure no. 1,
eighteen hundred and fifty (1850) tons of Hematite and in enclosure
no. 2 there are only seventeen hundred and nine (1709) tons of
Hematite and it's mixed with the remaining cargo. What do you
think of that? Is that negligent? A.: Yes, indisputably it is negligent.
The other surveyor, Captain Baldi was in general agreement with the
fact that the cargo "had been badly handled" at Levis.
239
This is the evidence of the opinion of highly qualified experts who
were called on behalf of the appellants; it is uncontradicted and in
my opinion substantiates the finding of Mr. Justice Noel that [at pp.
228 and 347]:
The damage here was indeed caused by the combined acts of
negligence of the surveyors and of the captain and his officers and
crew in the management of the cargo at a time when the ship was
not navigating but was moored in dock where it remained during the
whole operation of unloading and reloading. I think it important to
stress the fact that the respondent's claim is a claim for damages for
negligent performance of a contract of carriage and is not a claim in
general average. The appellants are the only party claiming in
general average and there is an express denial of their right so to
plead, so that the burden rests upon the appellants under the
pleadings to prove that the loss sustained is a general average loss.
This position is reinforced by the provisions of r. E of the
York/Antwerp Rules which reads:
Rule E
The onus of proof is upon the party claiming in general average to
show that the loss or expense claimed is properly allowable as
general average.
This burden cannot, in my opinion, be discharged without proof that
the loss and damage complained of were "the direct consequence of
the general average act".
In entering upon the general average act and in making all
reasonable and necessary expenditures consequent thereon, the
master is to be taken as acting with the implied authority of the
cargo-owners as well as the ship, but this authority does not extend
so as to identify the cargo-owners with the negligence of the master
or those employed by him in carrying out the general average
procedure or to derogate from his overriding responsibility to care
for the cargo in his capacity as the servant of the shipowner.
In my opinion, the expenses incurred in handling the cargo at Levis
were a direct consequence of the general average act, but the
combined negligence of the master and of the surveyors and
stevedores who were acting as his servants which occasioned the
damage, was not attributable to the general average act; it
constituted a separate and independent cause which can only be said
to have been foreseeable if it is to be taken that the master should
foresee the possibility of his own negligence and that of his servants.
As I have indicated, I cannot subscribe to this proposition and it
follows that, in my opinion, the appellants have not shown that the
damage complained of was "the direct consequence of the general
average act".
As will be seen, I agree with the assessment made by the learned
trial Judge of the negligence which he found to have been proved in
this case of which he said:
N.B.: The decision of the Supreme Court of
Israel in Zim Israel Navigation Ltd. v. The
Israeli Phoenix Assurance Company Ltd.
(The Zim Marseilles) [1999] ETL 535
(Casebook at pp. 240-247) is not reproduced
here.

These acts of neglect, even if committed during the general average The next decision (see page 241 below) is
procedure cannot, in my view, be held as those of the plaintiff so as
to prevent the latter from successfully recovering the damages to its
Jules H. Bache v. Silver Line, Limited 1940
cargo. AMC 731 (2 Cir. 1940), which appears in the
Casebook at p. 248.
The amount of $107,621.26, representing the loss or damage to the
cargo as determined at the time of discharge at Genoa, does not
appear to have taken account of the minor damage which any such
cargo might have sustained in the course of enforced loading and
unloading at Levis, even if there had been no negligence, but as no
evidence was called by the appellants to indicate the extent of such
incidental damage, if any, and as there does not appear to be any
dispute as to quantum, I do not think that this Court is in a position
to interfere with the award made by the learned trial Judge.

From time to time in the course of these reasons I have referred to

the responsibility of the "shipowners" and I should perhaps make it
plain that this responsibility is shared by the time charterers and that
the liability of the two appellants is joint and several.

For all these reasons I would dismiss this appeal with costs.

DISPOSITION:
Appeal dismissed.

240
 JULES S. BACHE, Libellants-Appellants,

v.

SILVER LINE, LIMITED, Claimant.

1940 AMC 731

UNITED STATES CIRCUIT COURT OF APPEALS,

SECOND CIRCUIT February 26, 1940

L. HAND, CHASE and PATTERSON, Ct. JJ.

CARGO DAMAGE -Rubber in Bales -. 124.. Stowage -.

BILLS OF LADING -193.. Inherent Vice -. Crude Rubber -. 194..

Insufficient Package..

The custom of stowing crude rubber bales over rattans and without
dunnage between the tiers of rubber held proper and reasonable (up
to any height).

If bales of rubber are so twisted in stowage as to require more than

the normal adjustment of the slicing machines in the factories there
is actionable damage.

A dilemma results from the propositions that (1) if customary

stowage is likely to twist the bales the vessel must give stowage that
will protect the bales, as for example, by fewer tiers, while (2) if the
goods as wrapped or cased are not fitted to endure ordinary hazards
of the voyage, the ship is not liable for resulting damage. When
these two doctrines clash, the trade must come to some
accommodation between ideal perfection of stowage and entire
disregard of the safety of the goods; the standards so arrived at
become customary and go into the contract and are the measure of
the carrier's liability. The burden of proof of unreasonableness of
customary stowage is on the cargo interests. Considering all the
factors, the demands of consignees of crude rubber bale cargo for
such stowage as will prevent the small amount of twist which
sometimes occurs are unreasonable demands.

241