Aris Steamship Co. Inc. v. Associated Metals & Minerals Corporation, [1980] 2 SCR 322

Supreme Court of Canada

Aris Steamship Co. Inc. v. Associated Metals & Minerals Corporation, [1980] 2 S.C.R. 322

Date: 1980-04-22

Aris Steamship Co. Inc. (Defendant in the Trial Division and Respondent in the Federal Court of Appeal) Appellant;

and

Associated Metals & Minerals Corporation (Plaintiff in the Trial Division and Appellant in the Federal Court of Appeal) Respondent.

and

The Ship “Evie W” (Defendant in the Trial Division)

and

Worldwide Carriers Limited (Defendant in the Trial Division)

1980: January 28, 29; 1980: April 22.

Present: Ritchie, Dickson, Estey, McIntyre and Chouinard JJ.

ON APPEAL FROM THE FEDERAL COURT OF APPEAL

Maritime law—Time charter—Delay in delivery of cargo—Liability of owner and of charterer—Jurisdiction of the Federal Court—Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 22.

The action of the respondent Associated Metals & Minerals Corporation (one of the plaintiffs in the Trial Division of the Federal Court) was for damages resulting from delays in the shipment and delivery of a cargo of pig iron carried aboard the vessel Evie W, a ship owned by the appellant Aris Steamship Co. Inc. (“Aris”) which had entered into a time charter with Worldwide Carriers Limited (“Worldwide”). The trial judge awarded damages to the respondent against the charterer Worldwide but dismissed the action against the owner Aris. The Federal Court of Appeal set aside the judgment at trial and rendered judgment in favour of the respondent against Aris. Hence the appeal to this Court. On appeal the question of the jurisdiction of the Federal Court was also raised but it was found that there was jurisdiction in the Federal Court to entertain this action.

Held: The appeal should be dismissed.

As to the issue of jurisdiction, in light of the recent judgment of this Court in Tropwood A.G. v. Sivaco Wire & Nail Co. et al., [1979] 2 S.C.R. 157, this Court

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is satisfied that the Court of Appeal reached the correct conclusion.

The substantive question involved in this appeal is whether the damages sustained by the plaintiff are recoverable from Aris as owner or Worldwide as charterer. This Court, like the Court of Appeal, cannot subscribe to the trial judge’s view that there was no contractual relationship between Aris and the plaintiff relating to the delivery of the cargo and that the bills of lading were signed by the captain as agent for the charterer but inclines rather to the view that both the captain and the charterer were acting as agents for the owner in fulfilling the terms of the contract evidenced by the bill of lading. The charter party here is virtually identical with that which was in issue in Paterson Steamships Ltd. v. Aluminum Co. of Canada Ltd., [1951] S.C.R. 852, where this Court decided that under such a charter, and in the absence of an undertaking on the part of the charterer, the owner remains the carrier for the shipper, and in issuing bills of lading the captain acts on his own behalf and not on behalf of the charterer.

Paterson Steamships Ltd. v. Aluminum Co. of Canada Ltd., [1951] S.C.R. 852, applied; Tropwood A.G. v. Sivaco Wire & Nail Co. et al., [1979] 2 S.C.R. 157, Quebec North Shore Paper Co. v. Canadian Pacific Limited, [1977] 2 S.C.R. 1054; McNamara Construction et al. v. The Queen, [1977] 2 S.C.R. 654, referred to.

APPEAL from a judgment of the Federal Court of Appeal[1] which set aside the judgment of the Trial Division and rendered judgment in favour of the respondent. Appeal dismissed.

Roland G. Chauvin, Q.C., for the appellant.

Donald J. Wright, Q.C., and R.N. Waterman, for the respondent.

The judgment of the Court was delivered by

RITCHIE J.—This appeal concerns the disposition of an action for a claim falling within the words “claim arising out of any agreement relating to the carriage of goods in… a ship” as they occur in s. 22(2)(i) of the Federal Court Act, R.S.C. 1970, c. 10.

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No question was raised at the trial level as to the jurisdiction of the Federal Court to entertain this action but it is apparent that in appealing the defendant interpreted such cases as Quebec North Shore Paper Company v. Canadian Pacific Limited[2] and McNamara Construction (Western) Limited v. The Queen[3], as resulting in the jurisdiction of the Trial Division of the Federal Court being so restricted as to exclude the present claim.

In the Court of Appeal Chief Justice Jackett found that there was jurisdiction in the Federal Court, and it is really not necessary in my opinion to explore the point further because the appeal was heard before Chief Justice Laskin had rendered the unanimous judgment of this Court in Tropwood A.G., and the Owners of the Vessel Tropwood v. Sivaco Wire & Nail Company and Atlantic Lines & Navigation Company, Inc.[4], wherein he explored the recent cases dealing with the jurisdiction of the Federal Court and concluded his comments of s. 22 by saying (at p. 161):

What is important to notice is that the heads of jurisdiction specified in s. 22(2) are nourished, so far as applicable law is concerned, by the ambit of Canadian maritime law or any other existing law of Canada relating to any matter coming within the class of navigation and shipping.

In light of this judgment I am satisfied that Chief Justice Jackett reached the correct conclusion as to jurisdiction.

This is an appeal from a judgment of the Federal Court of Appeal, which is now conveniently reported in [1978] 2 F.C. 710, by which that Court set aside a judgment rendered at trial by Mr. Justice Walsh which had awarded damages to Associated Metals & Minerals Corporation (hereinafter sometimes referred to as the plaintiff), against the defendant, Worldwide Carriers Limited (hereinafter referred to as “Worldwide”) and which by the same judgment dismissed the plaintiffs action against the defendant, Aris Steamship Co. Inc. (hereinafter referred to as “Aris”) and also the cross-demand of that company. In the

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result the Court of Appeal rendered judgment in favour of the plaintiffs against Aris and dismissed that company’s cross-appeal.

The plaintiff’s action is one for damages allegedly resulting from delays in the shipment and delivery of a cargo of pig iron carried aboard the vessel Evie W, a ship owned by Aris which had entered into a time charter with Worldwide, the last paragraph of which read as follows:

26. Nothing herein stated is to be construed as a demise of the vessel to the Time Charterers. The owners to remain responsible for the navigation of the vessel, Acts of Pilots and tugboats, insurance, crew, and all other matters, same as when trading for their own account.

It is thus clear that no part of the ownership of the vessel was transferred to Worldwide under this contract. As is usual in the case of such a time charter, the arrangement was that the ship was available to Worldwide which was responsible for obtaining cargo to fill the hull as circumstances and convenience dictated; the master and crew were provided by the owner Aris, and bills of lading covering cargo to be shipped were executed by the Master on the owner’s behalf. Clause 8 of the charter defines the role of the Master as follows:

8. That the Captain shall prosecute his voyages with the utmost despatch, and shall render all customary assistance with ship’s crew and boats. The Captain (although appointed by the Owners) shall be under the orders and directions of the Charterers as regards employment and agency; and Charterers are to load, stow, trim and discharge the cargo at their expense under the supervision of the Captain, who is to sign Bills of Lading for cargo as presented, in conformity with Mate’s or Tally Clerk’s receipts. Without prejudice to this Charter Party.

In the present case arrangements were made through Worldwide and its associates in the business, for a cargo of pig iron owned by the plaintiff to be taken aboard at Koverhar, Finland, destined for Toledo, Ohio and Hamilton, Ontario, a voyage which would obviously involve the use of the St. Lawrence Seaway. In accordance with arrange-

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ments I have indicated, the bill of lading covering this cargo was signed by Captain Skovelis who was a director and shareholder of Aris. A separate cargo of plywood-veneer in which the plaintiff had no interest whatever was loaded on the same ship in Finland for transit to Great Lakes ports.

Various difficulties attributable to heavy weather and other marine hazards which need not be detailed, were encountered on the voyage from Finland although the trial judge made no finding as to perils of the sea. In any event, the weather which was encountered forced the vessel to put in to Greenoch for repairs on October 19, and once again gales of near hurricane force made it necessary for the ship to seek refuge at Plymouth and Falmouth in England, from which latter port she finally sailed on November 5. In the result, a voyage commenced at Koverhar in Finland on October 4, 1967, did not terminate until arrival at Montreal, Quebec, on the 22nd of November of that year, at which time it was found necessary to discharge some of the plywood-veneer cargo in order to lighten the vessel which was overloaded for Seaway transit. This unloading, and the intervention of a strike, resulted in Worldwide notifying the shippers of the veneer that it would not deliver that cargo as agreed but would offload it in Montreal. A dispute arose as to whether Worldwide or the shipper should defray the cost of offloading and this culminated in the plywood cargo owners arresting the ship. A further dispute then arose between Aris, Worldwide and the insurer as to which would post a bond to allow the vessel to proceed thus causing added delays resulting in arrangements having to be made for as much of the pig iron as possible to be shipped to its proper destination by other vessels. A substantial part of the pig iron cargo could not however be shipped in this fashion and it was necessary for the shipper to arrange for the transportation of this remaining cargo to its destination by rail. It is the cost of this latter arrangement which is the subject matter of the plaintiffs claim for damages in the present case.

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The learned trial judge made the following comment on the facts which I have recited:

It is true that if the vessel had not been overloaded for Seaway transit none of the plywood veneer cargo need have been discharged in Montreal and she could have proceeded through the Seaway as soon as the necessary Seaway fittings and repairs were completed and delivered plaintiffs’ cargo to its appointed destination in accordance with the terms of the charter. However, despite the necessity of discharging part of the veneer cargo in Montreal and the resulting delays consequent thereon, I have concluded that she still could have proceeded through the Seaway in time to deliver the cargo before the winter freeze up had not two events taken place which prevented this, namely:

(a) the decision by the time-charterers, Worldwide, on November 22, 1967, to terminate the voyage at Montreal and their notification of this decision to the owners of the plywood cargo, which decision was made solely by them, without consultation with, and approval of either the owners, Aris, or of the plaintiffs; and

(b) as a consequence of this notification the seizure put on the vessel by the parties interested in the plywood cargo on November 23, 1967.

As previously indicated, it appears that although the veneer cargo had been damaged and this was evident when the unloading from the deck commenced, the parties interested in the plywood would nevertheless apparently have been willing to let the ship proceed to destination as may be inferred from the message from their surveyors of November 22. Once they had been advised, however, that the vessel would not proceed through the Seaway they then had a claim not only for the damages already ascertained to the veneer wood but also for delays in delivery, or non-delivery, to the final destination and quite properly had the vessel seized. It was this seizure which prevented the completion of the voyage and not the overloading for Seaway transit which could readily be and was, in fact, remedied in time to permit this transit to be made.

Moreoever, defendant Worldwide refused to put up a bond to permit the vessel to proceed, which was of course consistent with its previous decision to terminate the voyage at Montreal, in any event.

The owner of the plywood-veneer cargo is not a party to this action and while its dispute with Worldwide culminating in the seizure of the vessel,

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was a factor in causing the damage of which the plaintiff now complains, it nevertheless has no bearing on the question of the liability of Aris to Associated Metals and Minerals Corp. The true issue here is whether the damages sustained by the plaintiff are recoverable from Aris as owner or Worldwide as charterer; whether or not the owners of the plywood cargo have a good cause of action against Worldwide and, indeed, whether, in that event, the latter company would be entitled to be indemnified by Aris are questions which do not arise here.

The trial judge adopted the view that there was no contractual relationship between Aris and the plaintiff relating to the delivery of the cargo and that the bills of lading were signed by the captain as agent for the charterer. Like Chief Justice Jackett, and for the reasons which he states, I cannot subscribe to this proposition and on the other hand incline to the view that both the captain and the charterer were acting as agents for the owner in fulfilling the terms of the contract evidenced by the bill of lading.

I adopt the following passage from the reasons for judgment of Chief Justice Jackett as containing an accurate assessment of the relationship of the parties:

I turn to the substantive question involved in the appeal, which as I understand it is whether, on the facts of this case, the learned Trial Judge erred in holding that the appellant’s contract of carriage was not a contract with the respondent as the owner and operator of the vessel whose servant, the Master of the vessel, in accordance with the complicated arrangements that governed the entering into of contracts with shippers for carriage of goods on the vessel, signed the bills of lading in respect of the carriage of the appellant’s goods. I have not been able to identify any respect in which the facts in this case differ from the facts that were under consideration by the Supreme Court of Canada in Paterson Steamships Ltd. v. Aluminum Co. of Canada Ltd. [1951] S.C.R. 852 in such a way as to avoid the same conclusion in this case as was reached by the Supreme Court of Canada in that case. In the absence of some relevant difference, I am of the view that the learned Trial Judge erred in not holding that the appellant’s contract of carriage was with the respondent.

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The charter party considered in the Paterson[5] case was indeed virtually identical with that which is at issue here and after reciting certain of its provisions, Mr. Justice Rand went on to say at p. 854:

Under such a charter, and in the absence of an undertaking on the part of the charterer, the owner remains the carrier for the shipper, and in issuing bills of lading the captain acts as his agent. In this case, the bill of lading was signed for the captain by the agents appointed by the charterers certainly for themselves and probably for the vessel also and that fact raises the first of the only two points deserving consideration.

It is, I think, too late in the day to call in question the relation to the time charterer or his or the ship’s agent towards cargo. The charterer has purchased the benefit of the carrying space of the ship; he is the only person interested in furnishing cargo; and the captain is bound to sign the bills of lading as presented, assuming them not to be in conflict with the terms of the charter party. The practical necessities involved in that situation were long ago appreciated by the courts and the authority of the charterer to sign for the captain confirmed.

In the same case Mr. Justice Locke delivered reasons for judgment which included the following paragraph at p. 860:

While the charterer was thus empowered to decide on the manner of the employment of the ship and to appoint agents for the ship at points of call, possession of the vessel remained in the appellant through the Captain. The rule applicable is stated by Channell J. in Wehner v. Dene Steam Shipping Company, [1905] 2 K.B. 92 at 98, as being that in ordinary cases, where the charterparty does not amount to a demise of the ship and possession remains with the owner, the contract is made not with the charterer but with the owner. In Carver, 9th Ed. p. 250, the following passage appears:

It would seem then that the ship owner is a party to the bill of lading contract; and, that being so, he must be entitled on his side to treat the contract of the

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shipper as made with himself as principal and to sue for breaches of it. This is, in fact, recognized by allowing him to make claims under the bills of lading against consignees; for example, for demurrage and for freight, even though the bills of lading refer to a charter party. In effect, then, the contract is in general with the ship owner; and the master should be regarded as having made it on his behalf and not on behalf of the charterer.

It will be seen that I agree with the Federal Court of Appeal in holding that Aris Steamship Co. Inc. as the owner of the carrying vessel is responsible for the damage sustained by the plaintiff. I would accordingly dismiss this appeal and dispose of the matter in the manner proposed by Chief Justice Jackett.

This appeal is dismissed with costs.

Appeal dismissed with costs.

Solicitors for the appellant: Chauvin, Marler & Beaudry, Montreal.

Solicitors for the respondent: Lang, Michener, Cranston, Farquharson & Wright, Toronto.