Supreme Court of Canada
Western Assurance Co. v. Ontario Coal Co. of Toronto, (1892) 21 S.C.R. 383
Date: 1892-10-10
The Western Assurance Company (Plaintiffs) Appellants;
and
The Ontario Coal Company of Toronto (Defendants) Respondents.
1892: June 20, 21; 1892: October 10.
Present: Strong, Taschereau, Gwynne and Patterson JJ.(Sir W.J. Ritchie C.J. was present at the argument but died before judgment was delivered.)
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Marine insurance—General average—Insurance on hull—Cost of saving cargo—Average bond.
A vessel loaded with coal stranded and was abandoned. Notice of abandonment was given to the underwriters on the hull. The cargo was not insured. The owners of the cargo offered to take it out of the vessel but the underwriters preferred to do it themselves and an average bond was executed by the underwriters and owners by which they respectively agreed to pay the said loss according to their several shares in the vessel, her earnings as freight and her cargo, the same to be stated and apportioned in accordance with the established usage and law of the province in similar cases by a named adjuster. Efforts having been made to save both vessel and cargo, resulting in a portion of the latter being taken out but the remainder and the vessel being abandoned, the adjuster apportioned the loss making the greater part payable by the owners of the cargo. In an action on the bond to recover this amount:
Held, affirming the decision of the Court of Appeal, that the owners of the cargo were only liable, under the bond, to pay such amount as would be legally due according to the principles of the law relating to general average; that the cargo and vessel were never in that common peril which is the foundation of the right to claim for general average; that the money expended, beyond what was the actual cost of the salvage of the cargo saved, was in no sense expended for the benefit of the cargo owners; and the defendants having paid into court a sum sufficient to cover such actual cost the underwriters were not entitled to a greater amount.
APPEAL from a decision of the Court of Appeal for Ontario affirming the judgment of the Queen’s
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Bench Division which also affirmed the decision of Boyd C. in favour of the defendants.
The claim in question arose under the following circumstances:—
The plaintiffs were insurers of the schooner Gleniffer, which was stranded in the Humber Bay, a few miles from Toronto, on 27th November, 1889, whilst attempting to make the port of Toronto, bound from the port of Oswego, and laden with a cargo of coal belonging to the defendants, which was uninsured, and she was abandoned by her master and crew.
On the morning of the 28th November the owner of the vessel—one Matthews—called upon Mr. Kenny, the managing director of the appellant company, and notified him of the loss, and either on that or the following day he gave written notice of abandonment to the underwriters.
Mr. Kenny without delay secured the services of Captain Donnelly an experienced and successful wrecker, who visited the vessel at the earliest opportunity and who, after consideration, advised that the best course to take was to make an attempt to save both vessel and cargo.
The plaintiffs also secured by telegram, and with the utmost possible despatch, a wrecking expedition from Port Colborne, which was on the spot as soon as the exigencies of the weather would permit.
Owing to stress of weather the wrecking expedition was not able to commence work until 2nd December, on which day the defendants gave notice to the plaintiffs to the effect that unless the latter would commence and continue delivering the coal in question on or before the 4th December, the defendants would proceed to unload the same, and would look to the
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underwriters for any damage suffered by reason of delay.
On the following day, and before any of the coal was delivered, the plaintiffs and defendants executed an average bond which, after setting out the loss of the vessel, contained the following covenant:—
Now we, the subscribers, being owners, shippers or consignees, or the agents or attorneys of owners, shippers or consignees, of said vessel or cargo, or underwriters on said vessel, cargo or freight, do hereby, for ourselves, our executors and administrators, and our principals, severally and respectively, but not jointly, nor one for the other, covenant and agree to and with each other, and also separately to and with the owners and underwriters of the said schooner Gleniffer, that the loss and damage aforesaid, and such other incidental expenses thereon as shall be made to appear to be due from us, the subscribers to these presents, or our principals either as owners, shippers or consignees of said vessel or cargo, or as underwriters upon said vessel, cargo or freight, shall be paid by us respectively, according to our parts or shares in the said vessel, her earnings as freight, and her said cargo, or our interest therein, or responsibility therefor, and that such losses and expenses be stated and apportioned in accordance with the established usage and laws of this province in similar cases, by Captain Robert Thomas, Adjuster of Marine Losses.
This bond was signed by their manager for the appellant company and the respondent company as owners of the cargo.
After the execution of the said bond coal to the extent of 578 900/2000 tons were removed from the vessel and delivered to the respondents, and attempts were made to save the vessel but without success, and she was accordingly abandoned. Only a small portion of the material was saved.
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After the expenditure had been incurred the matter was placed in the hands of Captain Robert Thomas for adjustment, and the total expenditure as found by him was $2,551.98, which was apportioned as follows:—
| To the appellants, as the owners of the material saved..................................... |
$ 237 53 |
To respondents, as the owners of the cargo, the sum of...................................
|
|
|
|
|
The claim of the plaintiffs is for the amount apportioned against the defendant company, viz., the said sum of $2,314.45 and interest thereon, the whole expenditure, as is admitted, having been paid by the plaintiffs.
The defendants, without admitting liability, paid into court $557.98, which they alleged to be the amount for which they could have procured the delivery of the coal saved from the vessel to their docks in Toronto. The plaintiffs declined to accept it.
The action was tried before the Chancellor of Ontario, by whom it was dismissed and the money in court was directed to be paid to the plaintiffs. This decision was affirmed by the Divisional Court and the Court of Appeal.
Osler Q.C. and Chrysler Q.C. for the appellants. This loss was the subject of general average. Kemp v. Halliday; Svensden v. Wallace; Job v. Langton; Moran v. Jones; Grover v. Bullock.
The vessel and cargo were in a common danger and the expenditure was made for the preservation of both. The case is therefore within the rule laid down by Brett M.R. in Svensden v. Wallace5; see also
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Walthew v. Mavrojani; Nelson v. Belmont. Lowndes on General Average, under the head of “Complex Salvage Operations,” where the cases are collected.
Delamare Q.C. for the respondents cited Kemp v. Halliday4; Gerow v. British American Assurance Co.; Dancey v. Burns; Anderson v. Ocean SS. Co.
STRONG J.—The average bond sued upon must, I think, be construed, as all the three courts below have construed it, as an obligation to pay such sums as should be legally due according to the principles of the law relating to general average. The question, therefore, is whether beyond the amount paid into court anything is shown to have been due by the respondents in respect of general average.
It seems very clear, as has been successively held by the learned Chancellor who tried the cause, and by the unanimous judgments of the Queen’s Bench Division and the Court of Appeal, that nothing was properly due from the respondents.
In the first place the coal which formed the schooner’s cargo and the vessel herself were never in that common peril which is the very foundation of the right to claim for general average. The money expended, beyond what was the actual cost of the salvage of the coal saved and which is covered by the money paid into court, was in no sense expended for the benefit of the cargo owners. The respondents offered to discharge their coal themselves at their own expense, but the underwriters refused this and insisted upon keeping
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the coal on board. This they clearly had no right to do.
The case of Kemp v. Halliday is a conclusive authority in favour of the respondents. In that case Mr. Justice Blackburn says:
I do not mean to say that in every case where a ship with a cargo is submerged and the two are in fact raised together by one operation the expenditure must necessarily be for the common preservation of both. I think it is in every case a question of fact whether it was so; and if the cargo could be easily and cheaply taken out of the ship and saved by itself it would not be proper to charge it to any portion of the joint operation which in that case would not be incurred for the preservation of the cargo.
It is abundantly proved in the present case that the coal could have been more cheaply saved by itself, as the respondents proposed it should be, than by the expensive and risky operations necessary to save the schooner, operations which, moreover, proved fruitless as regards the vessel. The case of Kemp v. Halliday was on appeal affirmed by the Exchequer Chamber.
In Job v. Langlon the Court of Queen’s Bench had previously pronounced a similar decision; and in Walthew v. Mavrojani, the Court of Exchequer Chamber approved of the decision of Job v. Langton17.
Mr. Carver in his work on Carriage by Sea thus states the law as settled by the decided cases:
If for example a ship is sunk with her cargo and the whole is raised together at an expense which, if made good by general average contributions, would throw a burden on the cargo greater than the cost of saving it separately, the whole expense ought not to be so treated.
And again the same learned writer says:
The burden thrown on the cargo must not be greater than the expense of saving it by itself.
The amount paid into court is ample to cover the cost which would have been actually incurred in sav-
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ing the cargo by itself, and if the above authorities are law, which there is no reason to doubt, that is the utmost amount for which the respondents could be made liable, which is conclusive of the case in their favour.
The appeal must be dismissed with costs.
TASCHEREAU J.—I would dismiss this appeal. Chief Justice Hagarty’s judgment in the Court of Appeal seems to me unanswerable.
GWYNNE J.—The true construction of the agreement, in my opinion, is that the respondents would pay to the appellants whatever amount, when settled by Capt. Thomas in accordance with the law of the province, should be found to be due by them for general average on their cargo. If nothing was so due, and clearly under the circumstances nothing was, nothing was recoverable under the bond. The appeal must therefore be dismissed.
PATTERSON J.—Concurred.
Appeal dismissed with costs.
Solicitors for appellants: McCarthy, Osler, Hoskin & Creelman.
Solicitors for respondents: Urquhart & Urquhart.
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