[1] In this action, Logistec Stevedoring Inc. ("Logistec") seeks to recover from Amican Navigation Inc. ("Amican") the sum of $240,382.36 representing its invoices for stevedoring services performed in the loading and stowing of some 115 military vehicles and containers of supply equipment as well as 940 metric tons of flour packaged in 18,810 bags onboard the M.V. Cosmos in Montreal in May 1995 and approximately 4,000 cubic metres of bundled lumber onboard the M.V. Fernando Pessoa in Halifax in July 1995.
[2] The Cosmos and the Fernando Pessoa had been time-chartered by Pegasus Lines S.A. ("Pegasus") and Amican was its general agent in Montreal in 1995 as well as agents for other shipping lines.
[3] The Government of Canada was the shipper of the military shipment consisting of jeeps and supplies destined to Croatia and was also the shipper, on behalf of CIDA, of the flour destined to Algeria. Julimar Lumber Ltd. ("Julimar") was the shipper of the bundled lumber destined to Dubai and Kuwait.
[4] In both cases, the contract with the shippers was full liner terms which means the contracting party or the carrier is responsible for loading and unloading the cargo. He hires a stevedoring company such as Logistec.
[5] Pegasus defended Logistec's claim by filing a statement of defence on April 3, 1996. It pleaded, as to the Cosmos, that Logistec had agreed to load and stow the military cargo in one day for $11,000 Cnd. and the flour in the lower tween-decks of holds numbers 1 and 4 of the ship. It alleged Logistec did not follow Amican's recommendations on how to stack the flour. Pegasus also pleaded Logistec's deficient or inadequate stevedoring led to its failure to stow the entire quantity of flour in the lower tween-decks, holds numbers 1 and 4. Logistec's failure, Pegasus pleaded, resulted in the flour taking up the space assigned for the military cargo, and also caused some of the flour cargo to be hand-stowed in lockers on the upper tween-deck hold number 4 forcing extra labour, overtime and dunnage not agreed to by Pegasus. Because of Logistec's low productivity, Pegasus pleads, the Cosmos could not sail from Montreal until Saturday May 20, 1995 at 16h00 after having arrived there at 04h00 on Monday, May 15, 1995. It says the Cosmos should have sailed on or before Thursday, May 18, 1995.
[6] With respect to the Fernando Pessoa, a specialized and specially designed vessel to carry lumber on or under deck, Pegasus says Logistec represented the lumber cargo would be loaded within a period of not exceeding two days but that did not happen. The Fernando Pessoa arrived at Halifax on Tuesday, July 18, 1995 and was ready to load at 08h00 that day. However, it is pleaded, by July 20, 1995, less than one third of the lumber cargo had been loaded onboard and, as a result, Pegasus, and later her Master, notified Logistec the lumber cargo was being loaded and stowed in an unsatisfactory manner.
[7] Pegasus counterclaimed against Logistec for damages in the amount of $70,000.
[8] Amican filed its statement of defence on April 3, 1996. It denied any liability to Logistec. It said that at all material times and to Logistec's knowledge, Amican acted as the general agent of Pegasus and, as such, it cannot be held personally a party to any stevedoring contract, if any, entered into on behalf of Pegasus with the plaintiff. In the alternative, Amican said should it be held a party to any stevedoring contract with Logistec, it raised all of the grounds of defence, counterclaim and/or third party proceedings for indemnity raised by Pegasus in its pleadings.
[9] Before this matter came to trial:
(a) Pegasus' third party claim against Julimar had been struck by order of Justice MacKay on November 15, 1999, for failing to comply with Prothonotary Morneau's orders of February 19, 1999 and June 1, 1999 and its failure to prosecute the action with diligence; and
(b) Pegasus's statement of defence and counterclaim against Logistec had been struck and the counterclaim dismissed by order of Prothonotary Morneau dated November 22, 1999 for the same reason as put forward by Justice MacKay.
[10] At the beginning of trial, counsel for Pegasus, who also represented Amican, informed me he was without instructions to resist a motion by Logistec for default judgment. I entered default judgment against Pegasus in the amount of $240,382.36 plus costs as well as pre-judgment and post-judgment interest at an annual rate of interest equivalent to the average prime commercial bank rate fixed at 6.42%.
[11] The trial proceeded on the basis of Logistec's claim against Amican and Amican's primary defence of its being a general agent of Pegasus and not personally responsible as well as on Amican's subsidiary defences which were those expressed by Pegasus in its statement of defence.
[12] In compliance with Prothonotary Morneau's order to Amican to identify which items of Logistec's two invoices were contested and which items were not challenged, counsel for Amican advised the items which were not accepted were specified in telex transmissions from Amican to Logistec dated September 1, 1995 in respect of the loading and stowing of the Cosmos and the telex communication of September 12, 1995 in respect of the loading and stowing of the Fernando Pessoa.
THE ISSUES
[13] There are potentially two issues in this action:
(1) First, whether Amican is personally liable for the payment of Logistec's stevedoring charges? If Amican is not personally liable, that is the end of the matter.
(2) If Amican is personally liable for payment of Logistec's stevedoring charges, the next question which arises is whether Amican is entitled to any adjustment to the invoices sent by Logistec on the basis of its contested items.
ANALYSIS
(1) Issue No. 1 -- Is Amican personally liable?
(a) The material documents
(i) With respect to the M.V. Cosmos
[14] As noted, Logistec loaded and stowed military equipment and flour on the M.V. Cosmos in the Port of Montreal in May 1995.
[15] The first communication in respect of stevedoring services for the Cosmos came on Tuesday, April 4, 1995. That day, Amican sent to Mike Donahue, a Vice-President at Logistec, the following message which I reproduce in part:
Re: D.N.D. Vehicle Movement to Croatia, in May
We have been awarded the movement for DND . . . movement of vehicle and containers to Croatia in May.
Kindly let us have your best rate LUMPSUM for this loading at Montreal based on a RORO type operation alternative a LOLO type operation.
We trust this operation can be effected within an eight hour shift with no overtime.
Await your quote, in return.
Regards,
Amican Navigation Inc., Montreal
[16] This message from Amican Navigation Inc. to Logistec was on Amican letterhead reading "Amican Navigation Inc." and displayed at the bottom in a box a winged horse and beside the box the words "General Agents, Pegasus Lines Ltd. S.A.". This setup will be referred throughout these reasons as the Pegasus setup.
[17] Logistec did not respond until it had received on May 3, 1995, the ship specifications of the Cosmos and a list of the military cargo. Again this transmission from Amican was on the Pegasus setup.
[18] On May 4, 1995, Mike Donahue made a quote addressed to: "Mrs. Rita Chirola, Amican Navigation Inc.", which was not accepted.
[19] On May 5, 1995, Mike Donahue sent a fax addressed to: "Mrs. Rita Chirola, Amican Navigation Inc.", re the M/V Cosmos, the material part of which reads as follows:
Thank you for your fax of May 3/95 with revised cargo list as of 26 April 1995. During our discussions, you indicated stowage of jeeps in # 1 and 4 T.D., balance of cargo in 2 and 3, containers on deck.
. . .
We shall employ shore cranes to load all cargo, two gangs are required to have cargo loaded in one day.
Our offer for stevedoring and terminal basis "all in" is $11,000.00 cnd. on straight time. Exclusions are denoted hereunder:
1. Port of Montreal wharfage
2. M.E.A. cargo assessment
3. Labour lashing, securing and securing material
Tailgate of 10 containers X 20' will be invoiced at $25.00 per unit.
. . .
Securing labour, straight time.
All other terms/conditions are per our standard contract form.
Mike Donahue,
Vice President, Commercial Services
[20] The record does not disclose a written acceptance by Amican. The military jeeps started to arrive at Logistec Terminal in the Port of Montreal a few days later.
[21] The stevedoring arrangements for the loading and stowage of the flour developed on Friday, May 13, 1995, when Rita Chirola of Amican contacted Mike Donahue by telephone to ask him if Logistec could handle the loading of some 940 metric tons of bagged flour on the M/V Cosmos. The M/V Cosmos had already been loading flour, using the stevedoring services of a company other than Logistec, at the Côte Ste-Catherine Terminal of Trac World but no further loading could take place there because of draft limitations in the immediate area necessitating the taking on of the remaining flour in the Port of Montreal. I should add here that Logistec had tried to obtain the business which went to Trac World and had expressed its quote to Amican in a letter dated April 5, 1995, which was not accepted by Amican.
[22] Rita Chirola, then Traffic Manager at Amican, and Mike Donahue, along with Mario Blanchet, head of Logistec's Montreal Terminal, had verbal discussions and came to a verbal agreement that day.
[23] Logistec's Montreal terminal began receiving containers of bagged flour on Saturday, May 13, and Sunday, May 14, 1995, in order to be ready to commence the following Monday loading and stowing the bags of flour, some of which were slung on pallets.
[24] It was only on Wednesday, May 17, 1995, Mr. Ken Wolfe, also a Vice-President at Logistec, sent a fax message to: "Amican Navigation Inc. - Montreal, attention Mme Rita Chirola", confirming the arrangements made by Mike Donahue the previous Friday. Mr. Donahue left on Saturday, May 13, 1995 for a week's holiday. This is what Mr. Wolfe wrote to Amican:
m.v. "COSMOS" -- MONTREAL
We refer to your telephone conversations with Mike Donahue and Mario Blanchet with regard to the handling of flour that arrived loaded in containers, was destuffed, placed on pallets and loaded into vessel with one-way Marino slings. The following is our understanding of the rates quoted to you:
1. Receiving full 20' container -- $25.00 per unit, 40' container -- $50.00 per unit; and on overtime 20' container -- $50.00 per unit, 40' container -- $100.00 per unit
2. Destuffing flour from containers including placing cargo on pallets equipped with Marino slings $19.00 per metric ton
3. Provision of Marino slings $4.95 per sling
4. Stuffing of jeeps in containers $98.00 per unit
5. Securing labour straight time $45.00 per man hour
6. The rate for loading cargo is based on standard stevedoring terms and conditions. Cargo loaded in lockers will be charged on a per gang hour basis.
7. Some containers were received with cargos unitized in the container. Once actual productivity is known, a suitable and appropriate discount will be offered.
8. Some of these pallets were dismantled in the container and additional labour was employed to re-palletize. This labour will be invoiced at $45 per man hour.
9. In order to use the maximum available space available on the vessel, some flour must be loaded by hand. The rate of $26.95 per metric ton is predicated on loading cargo with Marino slings. Once actual tonnage and productivity is known, we will indicate the rate on this portion of cargo.
All other terms and conditions will be as per our letter of May 5, 1995. [emphasis mine]
(ii) With respect to the M/V Fernando Pessoa
[25] The stevedoring arrangements for the Fernando Pessoa were initiated over the telephone on July 5, 1995 when Chris Peters of Amican contacted Ken Wolfe of Logistec for a quote for loading lumber on this ship.
[26] Ken Wolfe responded that day by quoting a rate of $9.00 per cubic meters of lumber. He wrote the following letter addressed to: "Amican Navigation Inc. -- Montreal, Attention Mr. Chris Peters" with a duplicate copy of that telefaxed message to Captain Aage Roren, General Manager of Logistec's Operations in Halifax:
M/V FERNANDO PESSOA -- HALIFAX, N.S.
We refer to our telephone conversation of today's date wherein you requested a rate for loading 2200 CBM's of lumber on the above captioned vessel from place of rest in Terminal to stowed in vessel. We pleased[sic] quote as follows:
1. Stevedoring with ship's gear from place of rest in terminal to stowed in vessel – $9.00 per CBM
2. M.E.A. assessment in accordance with their tariff which is currently $1.58 per metric ton or $1.26 per CBM.
3. Detentions caused beyond the control of the stevedore – $600.00 per gang hour. Overtime, Monday to Friday evenings and Saturday all day, $300.00 per gang hour; overtime Sundays and holidays $600.00 per gang hour.
4. The above rate does not include securing labour or materials. If this would be required, it would be charged at the rate of $41 per man hour plus cost of materials. [emphasis mine]
5. Tailgating, wharfage and throughput would be for the account of shippers.
All other terms and conditions would be in accordance with standard stevedoring contract form. [emphasis mine]
[27] The next day, Mr. Ken Wolfe was away from Montreal on business. Mr. Chris Peters contacted Mike Donahue to tell him Logistec's quote was too high but that he would get the business if Logistec quoted $7.50 per CBM. On July 6, 1995, Mike Donahue sent to Chris Peters, Amican Navigation Inc., the following fax:
To: Mr. Chris Peters
Amican Navigation Inc.
Re: M/V FERNANDO PESSOA -- HALIFAX, N.S.
We confirm our agreement a few moments ago of your offer of $7.50 per CBM.
All other terms and conditions per K. Wolfe's fax dated July 5, 1995.
Mike Donahue
Vice-President, Commercial Services
[28] On July 6, 1995, Chris Peters sent to its contact at Julimar, a message which Julimar subsequently re-faxed the next day to Anthony Steele, a Logistec official at Halifax. Amican's written message to Julimar was on the Pegasus setup and signed by Chris Peters, Amican Navigation Inc., as "Agents for Pegasus Lines S.A". It read in part:
Confirming our telecon, we have appointed Logistec Stevedoring in Halifax to load anywhere between 2100/4000 CBMs packaged lumber for Dubai, and will provide you with the consignment info as soon as same available. However, believe you are familiar with their operation. [emphasis mine]
[29] On July 10, 1995, Amican sent an unsigned letter to Captain Roren written on the Pegasus setup, simply reading "Amican Navigation Inc." without the additional words seen previously "As Agents for Pegasus Lines, S.A.". Amican's letter enclosed a copy of the description of the vessel and said "the cargo intended should be about 2300 cbm and intention to load No. 3 hold Port about 500 cbm, balance on deck 2/3/5/ thus should be able to load with three gangs, if necessary--lashing/securing being prepared prior sailing Grand Cacouna".
[30] On Friday, July 14, 1995, Amican sent another letter to Logistec--Halifax, to the attention of Anthony Steele on Pegasus setup which simply closed "Amican, Montreal". It enclosed a proposed space-stowing plan.
[31] On July 16, 1995, Amican sent another message to Logistec--Halifax, to the attention of Anthony Steele. It contained another stowage plan. Amican's message was on a telecopy cover sheet on Pegasus setup. The telecopy message was signed or initialled by Glenn Stedman under the words "Regards, Amican, Mtl.".
[32] On July 17, 1995, another message was sent by Amican to Logistec Halifax, to the attention of Anthony Steele. It addressed again the stowage plan. The message was not on Pegasus setup. It was simply closed "Amican, Montreal".
[33] On July 20, 1995, another message from Amican to Logistec--in the same form as the July 17, 1995 letter. It advised Logistec "the stowage of the cargo is improperly maintained" and "we are losing cbm space in the number 3 hold". This letter advised Logistec that "production is very slow and this is a very good logger"; Amican said it failed to understand as the gear was ideal and no breakdowns were experienced. Amican said it expected better production immediately. This letter was unsigned and ended with the words "Regards, Amican, Montreal".
[34] On July 21, 1995, on Pegasus setup, Amican sent two unsigned messages "Kindest regards, Amican Navigation Inc., Montreal" to Logistec in Halifax, but copied to Logistec in Montreal, which read "we hereby submit to you copy of the letter from the Master of the Vessel, which is self-explanatory and was not received by your representative on board". The enclosure was a letter from the Master of the Fernando Pessoa addressed to Logistec-Halifax and dated July 20, 1995. It read:
Dear Sirs:
Please be advised that loading rates and general stowage of lumber you are achieving in my vessel is a lot far to be satisfactory.
In my own name and in behalf of Charterers, Amican, I protest against it hoping that you will improve rates and stowage.
[35] On June 15, 1995, Logistec forwarded to Amican its invoice for the performance of its services in loading the army cargo and the flour cargo on the M/V Cosmos. It amounted to $160,926.37.
[36] On August 11, 1995, Logistec forwarded to Amican its invoice related to the loading of lumber on the Fernando Pessoa. It amounted to $79,455.99.
[37] As noted, on September 1 and September 12, 1995, Logistec received telefax messages from Amican disputing certain items on the loadings. Those messages were signed "Respectfully yours, Amican Navigation Inc. As Agents for Pegasus Lines S.A.".
(b) The testimony on this issue
[38] Mike Donahue and Ken Wolfe, both Vice-Presidents at Logistec in 1995, were involved in the negotiations of the stevedoring contracts and both testified at trial.
[39] Mike Donahue, who negotiated the stevedoring contracts for the Cosmos, testified that his counterparts at Amican were Glen Stedman, who did not testify at trial, and Rita Chirola, who did, and neither of them told him Amican was acting as agent for Pegasus Lines S.A. for the movement of the military goods and the flour. He said he took no notice of the winged horse and the words "General Agents for Pegasus Lines S.A." at the bottom of Amican's letterhead, received on April 5, 1995 by him when Amican asked for the quote on the military cargo.
[40] Mike Donahue testified his belief Amican was acting as a principal was triggered by the words "We have been awarded the contract" when Amican was soliciting the quote from Logistec. According to Mike Donahue, these words conveyed to him that Amican itself had the contract.
[41] He said if Amican had told him they were working for someone else, he would have investigated the third party and would have put into place financial arrangements such as a deposit to protect Logistec.
[42] Ken Wolfe negotiated the stevedoring contract for Julimar's lumber onboard the Fernando Pessoa with Chris Peters of Amican.
[43] Mr. Wolfe was clear in his recollection that he asked Mr. Peters, who did not testify at trial, whether the movement was for Amican's account and he replied yes. He testified that, if Amican had been acting solely as an agent, Chris Peters would have told him that fact.
[44] Aage Roren is Logistec's Director of Operations in Halifax and Anthony Steele was a supervisor there in 1995. Both testified at trial. Counsel for Amican put to both of them correspondence they had received from Amican on Pegasus setup. Counsel for Amican made particular reference to Exhibit B-21, a letter dated July 6, 1995, from Chris Peters on Pegasus setup where Chris Peters signed "Amican Navigation Inc. as Agents for Pegasus Lines S.A.". This document, as previously noted, is a fax to Julimar indicating that Logistec had been appointed as the stevedoring company. That document was refaxed by Julimar to Anthony Steele who testified that all this document was telling him is that Logistec was appointed by Amican and he placed no significance on the words "As Agent for Pegasus Lines S.A.". As far as he was concerned, Logistec was dealing with Amican. Captain Roren testified along similar lines and indicated, on cross-examination, he noticed the winged horse for the first time at trial when it was drawn to his attention. He testified negotiations for the contracts were made through the Montreal headquarters.
(c) The legal principles
[45] Both parties relied upon the Supreme Court of Canada's judgment in Q.N.S. Paper Co. v. Chartwell Shipping Limited, [1989] 2 S.C.R. 683.
[46] The legal issue before the Court in Chartwell, supra, was as to Chartwell's liability on a stevedoring contract awarded by it to Q.N.S. which remained unpaid and where Chartwell had not disclosed its principal but had consistently represented it was acting as agent only.
[47] In a 4-3 decision, Justice La Forest wrote for the majority and Justice L'Heureux-Dubé wrote for the minority where the central point separating them was as to the scope of Canadian maritime law. On this point, Justice La Forest held Canadian maritime law encompassed the common principles of tort, contract and bailement and he would add agency. He said the nature of the case before the Court is an action in contract, the issue being whether the agent is bound by the contract.
[48] Having determined the applicable maritime law is found in the principles of the common law of contract and agency, Justice La Forest then turned to the issue and this is what he wrote at pages 698-699 of the reported case:
. . . the issue whether an agent contracted personally, or solely in the capacity of agent (in which case only the principal is bound), is a matter of construction of a particular contract. I leave aside, of course, any custom that may exist at any particular port or in a particular trade. In this case, the relevant documents reveal that Chartwell consistently attempted to bring home to Q.N.S. that its sole responsibility was as an agent. In the body of its letters, it identified itself as "Managing Operators [i.e., as agents] for the Charterers" or as acting "On behalf of our principals", and it consistently signed "as Managing Operators only". While the simple addition of the word "agent" or its equivalent following a signature can easily be read as a mere description of the signatory, that cannot be said of "as agent only". Those words do more. They are obviously directed to limiting or explaining a liability, and not merely to describing the person signing or his authority to do so. . . What particularly impresses in the present case is Chartwell's insistent repetition in its correspondence that it is acting as an agent and in its repeated signature "as agent only". [emphasis mine]
[49] Justice La Forest then referred to Justice Brandon's decision in Bridges & Salmon, Ltd. v. The "Swan", [1968] 1 Lloyd's Rep. 5, at page 13:
. . . if he [the agent] states in the contract, or indicates by an addition to his signature, that he is contracting as agent only on behalf of a principal, he is not liable, unless the rest of the contract clearly involves his personal liability, or unless he is known to be the real principal. [emphasis mine]
[50] Justice La Forest continued:
Counsel for the respondent drew our attention to para. 321 of the Restatement of the Law (Second): Agency 2d (1958), vol. 2 at p. 70, which states that unless otherwise agreed, a person purporting to make a contract with another for a partially disclosed principal is a party to the contract. While the failure to reveal the identity of one's principal may give rise to an inference that the agent was intended to be a party, like my colleague I am unwilling to adopt any hard and fast rule regarding the intention of the parties. Certainly, any inference such as I have described would be displaced by a contract evincing the clear intent of this one.
[51] Justice L'Heureux-Dubé agreed Chartwell had revealed it was acting as an agent through the use of the words "acting on behalf of our principals" and "as managing operators". She touched upon the consequences and effects of such revelation. She said this at pages 738-39:
. . . both parties are in a position to bargain for the contractual protection they desire. If both parties are prepared to contract on the basis that the existence of a mandator is disclosed but the specific mandator is left unidentified, they can do so. This may be useful to both parties for example, where the identity of the mandator changes from time to time because the mandatary is acting as intermediary on behalf of a number of mandators, or where the relations among the various intermediaries follow a well-defined custom of the trade... . To require that the mandatary be identified would make such bargains impossible or more cumbersome and thus thwart the will of the parties. On the other hand, where the mandatary fails to reveal the existence of a mandator, causes the third party to believe that it is acting in its own name, misleads the third party as to the existence of the mandator, or does not make it possible for the third party to identify the mandator, the third party was not in a position to bargain for its own protection and the mandatary will be held personally liable... . In short, the agreement must be examined as a whole to determine whether it was the will of the parties that the mandatary be bound in its own name or, rather, contract only as mandatary. [emphasis mine]
(d) Conclusion on this issue
[52] In this case, three stevedoring contracts were negotiated between Amican and Logistec: two for the Cosmos and one for the Fernando Pessoa. For the military contract, Amican invited a quote from Logistec saying "We have been awarded the ‘movement'..."; this statement appearing on Amican letterhead with the Pegasus setup. Once the cargo and vessel specifications were known, all negotiations took place orally with Amican turning down Logistec's first bid on May 4, 1995, at $12,995 all in but orally accepting Logistec's second bid the same day at $11,000 all in.
[53] For the flour cargo, Logistec responded in April 1995 to an Amican oral invitation. Logistec had responded by its April 5, 1995 letter referring to the telephone conversation and "your advice of having secured this cargo". As noted, Logistec did not obtain the contract which went to Trac World. However, when Trac World at Côte Ste-Catherine could no longer load flour on the Cosmos, Rita Chirola contacted Mike Donahue to explore the possibility the remaining flour could be loaded from Logistec's terminal in the Port of Montreal. All negotiations were conducted orally and acceptance was also made that way. The terms and conditions governing the stevedoring charges for loading the flour were confirmed on May 17, 1995 by Ken Wolfe when Mike Donahue was on holidays.
[54] In terms of the stevedoring services for loading and stowing Julimar's lumber at the Port of Halifax, Chris Peters called Ken Wolfe for a quote. Mr. Wolfe responded to Amican referring to their telephone conversation "wherein you requested a rate for loading 2200 CBMs of lumber". Mr. Wolfe's response is his letter of July 5, 1995. Mr. Peters then called Mr. Donahue to tell him Mr. Wolfe's quote was too expensive. Mr. Donahue responded by dropping Logistec's rate to $7.50 per cbm. Verbal acceptance followed and Julimar was advised in writing, on Pegasus setup, of Logistec's appointment.
[55] The question to be resolved is whether Amican contracted as a principal or agent or, alternatively, if it contracted as agent for its disclosed principal Pegasus, and did it do so in such a way as to also be personally liable (see "The Swan", supra, at page 12).
[56] I have come to the conclusion Amican contracted as principal and not as agent in each of the contracts it entered into with Logistec but, if I am wrong on this point, I also find that Amican, if it contracted as an agent, did so in such a manner as to remain personally liable for the payment of Logistec's stevedoring charges.
[57] My reasons for finding that Amican contracted for stevedoring services as a principal in each of the three cases are as follows:
(1) Amican represented to Logistec, in writing (for the military contract) that it had been awarded the contract. In the case of the lumber, it represented expressly orally it was acting as principal and in the case of flour it conveyed the same message when it told Logistec it "had secured the cargo".
(2) the Pegasus setup for the military contract inviting the quote does not tell Logistec that Amican is contracting as an agent only for an undisclosed principal but simply tells it is the general agent for Pegasus without more. Amican did not make it explicit, as did Chartwell, supra, it was contracting as an agent only for an undisclosed principal--the reference to Amican as general agents for Pegasus is more descriptive than words qualifying liability. The same can be said for the flour cargo. In the case of lumber, representations were made orally at the time of the formation of the contract.
(3) the uncontradicted evidence is that Amican never disclosed orally, at the time of forming the contracts, that it was acting solely as an agent;
(4) the relevant time for making known a person is acting as agent only is at the time of the formation of the contract. I discount the exchanges between Amican and Logistec on Pegasus setup even with the words "as agent for Pegasus Line S.A." that pertain to operations.
(5) while the course of dealings between Logistec and Amican were not substantial in the pre 1995 years, when Amican and Logistec dealt together in 1993 for the shipment of a military cargo out of Quebec City, Amican paid the stevedoring charges.
[58] There is a second branch to Amican's liability and, as noted, even if it could be said that Amican contracted as an agent, in my view, it would still remain liable. Justice Brandon, in "The Swan", supra, which was approved in Chartwell, supra, discussed the underlying principle in such a case stating it depends upon the intention of the parties, an intention to be gathered from (1) the nature of the contract; (2) its terms; and (3) the surrounding circumstances. The intention which the Court looks at is an objective intention of both parties, based on what two reasonable business persons making a contract of that nature, in those terms, and in those surrounding circumstances, must be taken to have intended.
[59] The reasons which I previously cited in favour of a finding of Amican contracting as a principal also apply to this second branch but I would emphasize non-disclosure by Amican while the contract was being negotiated; the purpose behind disclosure in cases such as this is compelling, as was pointed out by Justice L'Heureux-Dubé in Chartwell, supra. It lets the parties decide what to do when the matter of agency comes up and there is the disclosure of a principal whether named or unnamed. As was stated by both Mike Donahue and Ken Wolfe, if Amican had disclosed it was acting as agent only, Logistec would have further examined the situation to determine whether the principal was credit worthy and whether some kind of security for the payment of stevedoring costs ought to be put into place. I believe this to also have been Amican's expectation. In the context of maritime shipping, I find specific disclosure by Amican that it was an agent only, is the way reasonable persons would behave.
[60] As a result, I find Amican personally liable for the payment of the outstanding stevedoring charges arising out of the services Logistec performed for Amican.
ISSUE NO. 2 -- THE ITEMS CONTESTED BY AMICAN
[61] As noted, Logistec forwarded to Amican its two invoices covering its stevedoring services.
[62] The first invoice is dated July 15, 1995. It relates to the Cosmos and for services performed between May 15 to May 20, 1995. The total invoice cost is $160,926.37 broken down between the following elements:
Invoice No. Description Amount
67283 Loading Bags Flour $32,027.79
67284 Extra Labour $12,960.00
67285 Loading Army Cargo $17,624.75
67286 Overtime Differential $9,100.00
67287 Detention $22,460.66
67288 Carpenters $24,840.00
67289 Linesmen $1,440.00
67290 Receiving Containers, Destuff, Etc. $33,029.25
67291 Materials $173.00
67292 M.E.A. Assessment $7,270.92
$160,926.37
[63] Logistec's invoice relating to the Fernando Pessoa is dated August 11, 1995 and is in the total amount of $79,455.99 for the loading of that vessel between July 18 and July 23, 1995. Its elements are:
Invoice No. Description Amount
67747 Loading $29,835.99
67747 Overtime Differential $19,200.00
67747 Detentions $12,450.00
67748 Securing $11,480.00
67748 Materials $2,627.50
67748 Mooring Lines $3,862.50
$79,455.99
[64] I will deal with the stevedoring charges for the Fernando Pessoa but first some more background.
[65] As mentioned, Rita Chirola, Amican's Traffic Manager in 1995, was the only witness called by the defendant and, as I appreciate her testimony, she did not in any significant way rebut the detailed explanations provided by Logistec's witnesses but rather focussed on the agency relationship between Amican and Pegasus.
[66] The three contracts between Logistec and Amican are similarly structured and a brief explanation of their components is useful in order to appreciate the balance of these reasons. Those contractual components were:
(1) A base rate e.g. $7.50 per cubic meter of lumber; for the military cargo it was $11,000 "all in" and for the flour it was $26.95 per metric ton to be adjusted to actual tonnage and known productivity.
(2) Exclusions such as the Maritime Employers' Association's assessment, wharfage fees and securing labour and materials.
(3) Detentions, (e.g., non-productive labour when it rains or a ship's crane breaks down), overtime for working after 5:00 or working weekends or extra services requested.
(4) Items for the shipper's account such as unloading the trucks of lumber arriving at the wharf.
(5) All other items not covered subject to Logistec's standard stevedoring contract.
[67] As explained by Ken Wolfe, Logistec's standard stevedoring contract was developed in the 1970s by lawyers acting on behalf of the Eastern Canadian Stevedoring Association. It has industry-wide application. It has not changed since the many years of its first publication. Mike Donahue testified he had given Amican a copy of Logistec's standard form contract some 10 years ago. Amican's witness did not challenge that evidence. In any event, I am satisfied Amican knew of the standard terms and conditions of Logistec's stevedoring contract which are reflective of the collective agreement with the Stevedores' Union. It is the base cost to those requiring stevedoring services.
[68] Another factor which complicated the provision of stevedoring services by Logistec is that the ships, when they arrived at Halifax or Montreal, were already partly loaded. Lumber had been taken on the Fernando Pessoa in Grand Cacouna and flour had been loaded onboard the Cosmos by Trac World at Côte Ste-Catherine.
(a) The contested items -- the Fernando Pessoa
[69] Captain Roren provided the explanations for the services performed by Logistec in Halifax contested by Amican.
[70] In my view, based on his testimony, there is no justification for Amican wanting to make the adjustments it pressed on Logistec in its September 12, 1995 fax to the plaintiff (Exhibit "P-30").
[71] There is no doubt the productivity achieved by Logistec in loading the lumber onboard the Fernando Pessoa was a disappointment to both Logistec and to Amican. The anticipated production was approximately 75 cubic meters per hour but less than half of that was actually achieved.
[72] I accept the uncontradicted evidence of Captain Roren that there were a number of reasons for this lack of anticipated productivity:
(1) The lumber loaded in Grand Cacouna was not of the same shape and size as Julimar's lumber and this complicated stowage, e.g. created a jigsaw puzzle with the result that only one rather than four bundles of lumber could be handled by the ship's crane; much time was spent making cribbing to ensure that the bundled lumber fitted tightly when stowed and detention or non-productive time was incurred when steel plates had to be laid over stacked lumber in order to ensure that forklift trucks could operate safely.
(2) Productivity was also affected when lumber for various ports in Dubai and Kuwait arrived in Logistec's Halifax Terminal out of sequence.
(3) Productivity declined when Logistec was asked to remove previously stowed lumber from hold No. 3 and re-stow it with a different shape and size lumber which again prevented the efficient loading operations resulting in single crane lifts.
(4) Another complicating factor was that Logistec's initial quote was for the loading of 2,200 cubic meters of lumber. What was actually loaded onboard the vessel was 3,978.132 cubic meters of lumber.
[73] I comment briefly on each item Amican sought an adjustment from Logistec:
(1) Amican rejected $14,918.00 from invoice 67747 representing half of the actual stevedoring costs because of lack of productivity. Logistec had billed Amican its contract rate of $7.50 per cubic meter for 3,978 cubic meters of loaded lumber representing a charge of $29,835.99. I agree with Logistec the adjustment is unwarranted as the contract did not provide for the guarantee or promise of productivity although, for internal purposes, Logistec's rate was based on what it anticipated it could do. Logistec, on this item, billed at a contract price which Amican had agreed to pay.
(2) Amican's rejection of $19,200.00 for loading on Saturday and Sunday is not appropriate. Amican specifically instructed Logistec to work those days after Amican made arrangements to be paid for such overtime by Julimar.
(3) I do not see how Amican could object paying $3,750.00 for stowing previous cargo when it specifically requested Logistec to remove this previously stowed lumber from hold No. 3; I have the same view of Amican's deduction of $1,674.00 representing fifty percent (50%) of laying and removal of steel plate costs when such steel plates were necessary in order to permit the lift trucks to operate inside the holds and where this work was authorized by the Master of the vessel.
(4) the same can be said of the $5,740.00 represented by carpenters' time and $2,627.00 for lumber used to construct a catwalk in order to permit the ship's crew to reach the bow of the vessel since bundles of lumber had been stowed above deck. These services were specifically contemplated as being extra in the contract and were authorized by the Master.
[74] As a result, none of the adjustments sought by Amican are allowed.
(b) The contested items -- the Cosmos -- the flour
[75] I propose to go item by item.
(1) Amican rejected $6,605.85 surcharge for hand stowing the bags of flour in the lockers.
[76] Amican said if Mr. Stedman's instructions had been followed, there would have been no need to stow any (or very little) bags of flour in the lockers. Mr. Stedman instructed that the bags stowed in the lower tween decks should first be stacked under the wings as high up to the coamings as possible and from there proceed row by row to form a square below the hatches where the remaining cargo would then have been drop-stowed. Amican stated rather than doing this, once Logistec's men claimed they were no longer able to stow the bags under the wings, notwithstanding that pushers were employed to maximize the stow, they then had no choice but to utilize the lockers to make up for the space which was unused. This objection by Amican is at the heart of its complaint on how Logistec stowed the flour.
[77] Logistec countered by saying it followed Mr. Stedman's instructions by using its machine pushers to stack the bags of flour in layers or rows starting the stacking against the walls of holds Nos. 1 and 4.
[78] According to Logistec, the problem that developed was that the height of the lower tween decks of those two holds could only accommodate two stacks of bags of flour using pushers. There was not enough height to put a third layer in by machine pushers.
[79] According to Mario Blanchet's testimony, the stowage plan suggested by Mr. Stedman was followed all the way around the two holds. Then, flour bags were drop-stowed in the centre.
[80] The problem then was how to fill the space that remained, i.e. the difference between the height of two rows of flour bags which had been machine pushed and the ceiling of the lower tween decks of holds Nos. 1 and 4. Necessarily, this involved hand stowing.
[81] Logistec recommended to Mr. Stedman that, in order to maximize the remaining space left unfilled, because the length of the coamings were approximately ten feet, that extra men be hired in overtime to form a human chain so that each 50 lb. bag could be stowed the full length of the coamings, i.e. fill the empty space.
[82] However, according to Mario Blanchet, Mr. Stedman refused this plan of action. Mr. Stedman did not testify at trial.
[83] As a result, the space under the coamings could not be maximized necessitating using available locker space located on the upper tween decks of holds No. 1 and 4 where army vehicles were also stowed.
[84] I accept the explanation put forward by Logistec. Rita Chirola, the only witness to testify on behalf of Logistec, attempted to show Logistec badly stowed the flour cargo by referring to space calculations made by Amican which would indicate the tonnage stowed should have been greater in each of the lower tween deck of holds Nos. 1 and 4.
[85] It was pointed out, however, by Logistec, both in direct examination and in cross-examination of Rita Chirola, that Logistec actually stowed 455 metric tons in lower tween deck No. 4 when its maximum intake was 468 metric tons. In terms of lower tween deck No. 1, Logistec loaded 6,450 bags of flour representing 323 metric tons as compared to its maximum intake of 552 metric tons. However, Logistec said it could put no more flour in that tween deck because part of that tween deck had been previously loaded by Trac World in Côte Ste-Catherine.
[86] Based on these considerations, I find Amican's objection to paying Logistec's invoice, on this first item, unwarranted.
(2) Amican would not pay $1,625 in overtime differential on May 18, 1995.
[87] I am satisfied, after examining labour slip 2435, containing the Master's stamp, indicating the amount of labour was checked and found to be correct, there is no basis for Amican's objection.
(3) Amican rejected the amount of $10,260 on account of extra labour employed on May 20, 1995, since the sole reason the Cosmos was still in port on that day was because Logistec's dock workers misplaced two 40 feet containers of bagged flour which were finally located on the morning of May 20.
[88] Mario Blanchet testified Amican was wrong on this point.
[89] After tracing the backup records to invoice 67284 for this item, Mr. Blanchet has persuaded me that Amican's rejection is not supported by the evidence the labour slips, which make up this item, related to the requirement the flour be hand-stowed. It had nothing to do with two lost containers.
[90] Mr. Blanchet conceded that one container had been lost on May 19, but was found that day, destuffed of its flour content which had been palletized. He testified the loading of the flour in that container onboard the vessel would only have taken one-half hour and would have been accomplished on either May 19, or on May 20, when there was sufficient flour or military equipment which had not been loaded onboard the Cosmos to justify working the Saturday.
[91] I am satisfied with Mr. Blanchet's explanation which was supported by labour slips verified by the Master of the Cosmos.
(4) The fourth item rejected by Amican was the amount of $1,100 being a balance of minimum time on May 20.
[92] Mr. Blanchet, again by reference to the working records, demonstrated this item did not relate to May 20, but related to May 18 where no work was performed after 15h00 thus qualifying for the minimum time to 17h00. Again, the labour slips were stamped by the vessel's Master. On this basis, I see no ground for Amican's rejection.
(5) Amican said Logistec erroneously charged $2,160 for a full carpenter's gang on May 19, which was dismissed on account of rain.
[93] Mr. Blanchet went through the backup records to invoice 67288 which deals with carpenter charges and was able to satisfy me from the Master verified labour slips the carpenters did work that day working on lashings for the army vehicles in No. 4 upper tween deck. I find no basis for Amican's rejection.
(6) Amican rejected $1,350 for receiving twenty-seven twenty feet containers at the terminal because, Amican said, those containers were already at its terminal.
[94] Amican's rejection is not supported by the evidence. Logistec was able to show the twenty-seven twenty feet containers were stuffed with bags of flour forwarded to Logistec by Trac World for which Logistec issued dock receipts dated Sunday, May 14, 1995. This charge is in accordance with the contract, in my view.
(7) Amican rejected the amount of $2,160 representing half of the carpenter hours used "as the original figure is abusive".
[95] Logistec, in invoice 67290, spelled out ninety-six hours for carpenters supplied to secure jeeps in containers per labour slip 9970. This work was not performed on the Cosmos but on shore and, as a result, does not evidence the Master's verification. Verification was conducted by Logistec's Mr. Lefebvre. I have no evidence on which this charge should be rejected as abusive. Amican's rejection is disallowed.
(8) Amican rejected $5,000 out of the $13,090 charged by Logistec for rain delay. Amican said these charges were excessive.
[96] The Master's verified labour slips indicated twenty-two gang hours of non-productive time on account of rain. It was Amican's decision to keep the gangs available at the vessel in the hope the weather would clear up rather than dismissing the gang. One additional complicating factor was that the flour could not be loaded when it rained.
(9) Amican rejected $2,032 because it said that, even though pushers were employed, Logistec's men should still have been able to continue stowing the cargo.
[97] This amount charged by Logistec was for delay incurred by the Logistec gang working at hold No. 3 when the shore crane servicing that hold had to be shifted to another hold to handle the loading of the pushers. Logistec has established its right to this amount.
(10) Amican challenged several small items in invoice 67287.
[98] I see no basis for the challenges and I cite:
(a) the rejected amount of $793.14 was not on account of lack of productivity but rather work done and verified by the Master for laying dunnage to protect the flour cargo;
(b) the amount of $595 should not have been rejected because it represented detention time while the ship's crew prepared a ship's crane for locker work;
(c) another rejected $595 item had nothing to do with the lockers but work done on hatch covers in preparation of the loading of containers on deck;
(d) another $595 rejected was payable, in my view, to Logistec when, on instructions from the Master, containers already onboard had to be shifted to another location which represented an extra service for Logistec.
(e) a rejected amount of $297.50 on account of productivity was wrong in that the labour slips show this amount was incurred by Logistec in paying its stevedores who were standing by when the ship's cranes were defective.
(11) Amican rejected the amount of $1,587.50 on the grounds Amican had already been billed for down time on account of a defective crane.
[99] In my view, this rejection is not justified. A review of labour slip 2435 shows there was no double billing. The amount rejected had nothing to do with stand-by time for a defective crane but rather for different work, namely waiting to load lockers.
(12) Amican was wrong to reject labour slip 2428 in the amount of $148.75 as being already billed for rain delays.
[100] An examination of this Master verified labour slip shows the work done was preparing the hatch covers to load the containers.
[101] As a result, none of the contested items in respect of the flour cargo have been substantiated by Amican.
(c) The contested items -- The Cosmos -- the military cargo
[102] The amount of $6,624.75 surcharge in respect of the military cargo was on the grounds Amican should not bear the costs of Logistec's lack of productivity. I do not accept Amican's rejection.
[103] When Amican negotiated the military contract with Logistec, there was no question of loading flour along with it. Logistec quoted Amican a fixed contract price of $11,000. The evidence before me clearly confirms that adding the flour at the last minute to the cargo of the Cosmos introduced certain inefficiencies in the loading of the military equipment for which, in the circumstances, Amican should be responsible for paying Logistec.
(d) Conclusion in respect of the stevedoring services for the Cosmos
[104] I am satisfied there is no merit to any of Amican's challenges to Logistec's invoices for its stevedoring services to the Cosmos which were fully backed up with proper written documentation and, in the case of the labour slips, were verified by the Master.
[105] I accept the evidence of Logistec's witnesses that Amican's representatives, Glen Stedman and the Master of the Cosmos, were fully apprised of all of the circumstances related to the loading and stowage and approved of Logistec's actions.
[106] As a result, Logistec is entitled to be paid in full for the amounts rendered.
[107] I would like to touch briefly upon one aspect of the cross-examination by counsel for Amican of Logistec's Mario Blanchet. He asked Mr. Blanchet where, in the contractual documentation related to the flour, was there any provision for detention.
[108] Mr. Blanchet admitted there were none in that contract, but pointed out that Logistec's May 17, 1995 letter provided "all other terms and conditions will be as per our letter of May 5, 1995".
[109] It turns out the May 5th letter deals with the military contract and not the flour contract. I am satisfied the reference should have been to Logistec's April 5, 1995 proposal for the handling of the flour which provides for detentions. Moreover, the evidence establishes Amican was aware of standard terms and conditions relating to detentions as they are standard throughout the Port of Montreal.
DISPOSITION
[110] For all of these reasons, the plaintiff is entitled to, from Amican, jointly and severally with Pegasus, the sum of $240,382.36 with costs plus pre-judgment and post-judgment interest at the annual rate of interest equivalent to the average prime commercial bank rate fixed at 6.42%.
François Lemieux
J U D G E
OTTAWA, ONTARIO
JUNE 21, 2001
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2311-95
STYLE OF CAUSE: LOGISTEC STEVEDORING INC. v. AMICAN
NAVIGATION INC. ET AL.
PLACE OF HEARING: MONTRÉAL
DATE OF HEARING: NOVEMBER 6, 2000
REASONS FOR ORDER OF LEMIEUX, J.
DATED: JUNE 21, 2001
APPEARANCES:
ALAIN PILOTTE
JEAN-SÉBASTIEN RIVARD FOR THE PLAINTIFF
JEAN-FRANÇOIS BILODEAU FOR THE DEFENDANTS
SOLICITORS OF RECORD:
DE MAN, PILOTTE
MONTRÉAL FOR THE PLAINTIFF
SPROULE & POLLACK
MONTRÉAL FOR THE DEFENDANTS
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