Date: 20000628
Docket: T-2580-97
ACTION IN REM AGAINST THE VESSEL CANMAR CONQUEST
AND IN PERSONAM AGAINST GUARDIAN INSURANCE
COMPANY OF CANADA AND CANADA MARITIME LIMITED
BETWEEN:
RAINBOW TECHNICOLOURED WOOD VENEER LTD.,
ALL THOSE PERSONS HAVING AN INTEREST IN THE
CARGO LADEN ON BOARD THE VESSEL "CANMAR CONQUEST"
Plaintiffs
- and -
GUARDIAN INSURANCE COMPANY OF CANADA,
CANADA MARITIME LIMITED,
THE OWNERS AND CHARTERERS
OF THE VESSEL "CANMAR CONQUEST",
THE VESSEL "CANMAR CONQUEST"
Defendants
REASONS FOR JUDGMENT
DUBÉ J.:
[1] The plaintiff Rainbow Technicoloured Wood Veneer Ltd. ("Rainbow") owner of the cargo, a guillotine press, imported from its supplier in Italy Emme Elle S.P.A. de Canzi ("Emme Elle") has launched the instant action against the defendant Guardian Insurance Company of Canada ("Guardian"), the cargo insurer, and against the defendant Canada Maritime Limited ("Canada Maritime"), the carrier and owner of the defendant's vessel ("Canmar Conquest") for damage to the cargo in the course of ocean carriage from Italy to Canada in late December 1996 and early January 1997.
[2] Shortly before the trial, the action against Canada Maritime was settled and this one day trial was held only against Guardian.
[3] Guardian does not deny that it insured the cargo and that it was totally damaged, but denies responsibility on grounds of the exclusions under Institute Cargo Clauses (A) which forms part of its policy of insurance and more particularly clauses 4.3 (an exclusion clause) and 8.1 (a duration clause). Both clauses read as follows:
| 4. In no case shall this insurance cover |
| 4.3 loss, damage or expense incurred by insufficiency or unsuitability of packing or preparation of the subject-matter insured (for the purpose of this Clause 4.3 "packing" shall be deemed to include stowage in a container or liftvan but only when such stowage is carried out prior to attachment of this insurance or by the Assured or their servants) |
| 8-8.1 This insurance attaches from the time the goods leave the warehouse or place of storage at the place named herein for the commencement of the transit, continues during the ordinary course of transit and terminates either |
| 8.1.1. on delivery to the Consignees or other final warehouse or place of storage at the destination named herein, |
[4] In its defence, Guardian alleges that the preparation and packing of the container were performed in Italy at the place of the supplier and that the securing of the cargo within the container consisted of small 3 X 2 inch timber pieces used as toe bracing at the bottom of the units, which securing was totally inadequate and improper.
[5] The evidence at trial does establish Guardian's allegations. John M. Jaffray, a marine and cargo surveyor, testified as an expert on behalf of Guardian and his affidavit was filed in accordance with the Rules of the Federal Court. He attended the premises of Racine Terminal in the Port of Montreal in January 1997 and witnessed the destuffing of the guillotine from its container. He described the damage to the cargo as well as to the container. He examined the floor area of the container for evidence of the type of securing employed in the container. What he saw was a few pieces of timber with nails in same. He "found nothing that would indicate that this machinery had been adequately secured".
[6] William McGarr Morrison, another marine and cargo surveyor, was also present at the inspection along with Mr. Jaffray and two other surveyors Messrs. Gerry Funnekotter and Clifford Parfett. He assessed the methods of securing the cargo and found them to be "totally inadequate and improper". The only evidence of securing of any kind were small pieces of 3 x 2 inch timber with nails driven through them. "The nails were bent and twisted and many of the small pieces of timber were broken and heavily scored". In his view, the damage was caused by improper mooring. Under cross-examination, he accepted that heavy weather was to be expected in the winter on the North Atlantic Ocean but asserted that all cargoes should be secured accordingly. For the benefit of the Court, he indicated by way of two diagrams the proper way to secure a cargo. Exhibit D3 shows the actual securing of the guillotine inside the container and exhibit D4 the way the cargo should have been secured.
[7] In both diagrams, the cargo is the smaller rectangle with the letter "M" (for machine) within the larger rectangle which represents the container.
[8] Exhibit D3 shows the guillotine secured, only at the base, by small blocks. Exhibit D4 shows the cargo properly secured by heavy timber scaffolding securing the cargo to the wall of the container. The expert explained that a similar structure would have to be placed on both sides of the cargo.
[9] Exhibit D4 also shows another possible effective means of attachment, a long solid wire surrounding the cargo and attached to the base of the container. The wire must be tightened by a turnbuckle showed at the right-hand side of the wire.
[10] Another marine surveyor, Clifford Parfett retained by Rainbow to assess the damage, was called by Guardian but not as an expert witness since Rainbow would not produce his report. I allowed him to testify on material facts. He told the Court what he saw in the container at the Racine Terminal at the Port of Montreal, exactly what the other surveyors saw and described at the trial.
[11] The evidence adduced at the hearing clearly established that the guillotine press in question puchased by Rainbow from Emme Elle was loaded and secured into the container by Segheria Car. At. Di Corti Carluccio ("Segheria"), Emme Elle's subcontractor. Segheria placed the container on board a truck on which it was driven from the plant at Barzano to the vessel. It is common ground that upon its arrival in Montreal, the cargo was found to be a total loss and the damages are valued at $104,473.23 with interests on the claim from February 7, 1997 to judgment at 7.5%.
[12] Since the action is against the insurer Guardian and no longer against the carrier Canada Maritime, the issue to be determined is whether or not the loss was covered by the insurance policy namely Institute Cargo Clauses (A) and more particularly the duration clause 8.1 and the exclusion clause 4.3. It seems to me that the language of those clauses is clear. Under clause 4.3, damage incurred by insufficiency of packing into a container leads to exclusion from insurance coverage if packing is carried out prior to the attachment of the insurance or is carried out by the assured. In the instant case, packing was not carried out by the assured but it was carried out prior to the attachment. Under clause 8.1, the insurance attaches from the time the cargo leaves the place of storage. And when the guillotine left the place of storage of Emme Elle the stocking had already been carried out and, as it turned out, not properly carried out.
[13] There is no jurisprudence directly on point because the interpretation of those two clauses is crystal clear. Insufficiency of packing and clause 4.3 are discussed in Arnould's Law of Marine Insurance and Average1, and more precisely at paragraph 215 (p. 215) as follows:
| 215 As has already been noted, insufficiency or unsuitability of packing is treated as a separate exclusion from cover under this sub-clause, and the exclusion is qualified by providing that stowage in a container or liftvan shall be deemed to be included in "packing", but only when such stowage is carried out prior to attachment of the insurance or by the assured or their servants. This provision appears to be drafted on the assumption that damage due to defective packing in containers will not be excluded, under the wider provisions of the inherent vice exceptions at Clause 4.4, in the circumstances contemplated by Clause 4.3 in which the container is not to be treated as "packing". |
[14] In the case at bar, the insufficiency of packing occurred prior to attachment of the insurance. That condition by itself results in the exclusion of coverage, whether or not the packing was carried out by the assured or his servants.
[15] It follows that this action is dismissed with costs.
OTTAWA, Ontario
June 28, 2000
Judge
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1 Volume III, Sixteenth Editioin by Jonathan C.B. Gilman.
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