Supreme Court of Canada
Falconbridge Nickel Mines Ltd. et al. v. Chimo Shipping Ltd. et al., [1974] S.C.R. 933
Date: 1973-05-07
Falconbridge Nickel Mines Ltd. et al. (Plaintiffs) Appellants;
and
Chimo Shipping Limited et al. (Defendants) Respondents.
1972: October 26, 27; 1973: May 7.
Present: Fauteux C.J. and Abbott, Ritchie, Pigeon and Laskin JJ.
ON APPEAL FROM THE EXCHEQUER COURT OF CANADA
Shipping—Carriage of goods—Unloading on barges—Loss of cargo—Weather conditions—Negligence of shipowner—Limitation of carrier’s liability to shipper—Value of goods not mentioned in bill of lading—Meaning of the words “unit” and “package”—Carriage of Goods by Water Act, R.S.C. 1970 (Can.), c. C-15, s. 2—Rules in Schedule, Arts. I and III and Art. IV, Rule 5.
A tractor and a generator which had been carried from Montreal to Deception Bay aboard a ship, owned by respondent and subject to the provisions of the applicable Rules under the Carriage of Goods by Water Act, pursuant to a contract of carriage evidenced by a bill of lading entered into between respondent and appellant, were lost after having been loaded onto a barge belonging to respondent also, which barge at the time of the loss was lying alongside the ship.
The Exchequer Court limited the liability of the ship to $1000, on the basis that the tractor and generating set should be treated as two shipping units for each of which the liability of the respondent should not exceed $500 under the Carriage of Goods by Water Act and its Schedule. Hence the appeal to this Court by appellant, and the cross-appeal by respondent denying any negligence on its part.
Held: The appeal and the cross-appeal should be dismissed.
The agreement between Chimo and Falconbridge for the transportation of cargo from Montreal to Deception Bay was from its inception a contract of carriage within the meaning of the Rules. It is to be taken as “covered” by the bill of lading, and the obligation assumed by the shipowners to unload the cargo onto barges and take it to shore was a part of that contract. Moreover, the fact that the unloading
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of the cargo carried in the hold of the ship was effected by delivery through the use of the barge did not convert the cargo into deck cargo, and the Rules are applicable.
The cause of the damage was the acts and omissions of the master and of the officers responsible for the ship, and the danger of damage to the cargo arising from the weather conditions could and should have been guarded against, by adequately securing it to keep it from sliding, and by tethering the barge to the ship. It follows that the loss was not caused by a “peril of the sea” within the meaning of Art. IV of the Rules, or by the unseaworthiness of the barge, which was quite seaworthy.
So far as the amount to which respondent is entitled to limit its liability is concerned, the relevant rule is Rule 5. The freight rate unit is stated in the contract of carriage, and the rate is also shown on the bill of lading. The word “unit” used in the context of Rule 5 means, according to the English and Canadian authorities, a shipping unit, that is, a unit of goods. And the tractor here in question is a piece of cargo within the meaning of Art. III, Rule 3. Further, the word “package” found in the context of Rule 5 means, according to legal commentary and judicial decisions, an individual item of cargo specialized in the document of title relating to the carriage of goods, and nothing more.
Taking the unit as being that of the article may produce anomalies, but the rule does not seem to permit qualification. The responsibility for seeing that the value of the thing shipped is declared and inserted on the bill is on the shipper and any consequential hardship must be charged against his own failure to respect that requirement.
APPEAL and CROSS-APPEAL from a decision of the Deputy Judge in admiralty for the Quebec Admiralty District. Appeal and cross-appeal dismissed with costs.
D.L.D. Beard, Q.C., and B.L. Eastman, for the plaintiffs, appellants.
T.H. Bishop, for the defendants, respondents.
The judgement of the Court was delivered by
RITCHIE J.—This is an appeal from a judgment rendered by Mr. Justice Kerr sitting in his capacity as Deputy Judge in Admiralty in the
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Quebec Admiralty District, whereby he found that a tractor and generator valued at $70,001.64 and $57,841.56 respectively, which had been carried from Montreal to Deception Bay in the Province of Quebec on board the ship P.M. CROSBIE under a contract of carriage evidenced by a bill of lading entered into between Chimo Shipping Limited and Falcon-bridge Mines Limited, had been lost through the negligence of the ship owner (Chimo Shipping Limited) after having been loaded aboard a barge (C-242-A) belonging to that company and carried by the P.M. CROSBIE, which at the time of the loss was lying alongside that ship at Deception Bay.
The following findings of fact made by Mr. Justice Kerr, and which I adopt, serve to clarify the status of the parties:
(1) (Page 263)—At the time of the loss of the tractor and generating set the plaintiff Falconbridge owned the generating set and had an interest in the tractor, as lessee, under a rental agreement with the plaintiff Janin, which in turn had rented the tractor from its owner, the plaintiff Hewitt. Falconbridge was also the shipper and consignee named in the bill of lading which was issued.
(2) (Page 267)—In my opinion, while there were mutual arrangements between Chimo and Clarke, respecting which only some general evidence was given, the evidence does not show a contractual relationship between Clarke and Falconbridge in respect of the voyage and cargo concerned, nor anything from which liability on the part of Clarke, either in tort or contract, to any of the plaintiffs can be found.
(3) (Page 268)—The evidence of Capt. Jorgensson and Mr. Munro establishes, in my opinion, that Munro Jorgensson was acting only as an agent for Chimo, seeking customers and acting as a go-between between them and Chimo, and preparing proposals for acceptance or rejection by them, but without any authority to make a contract for any of them. It had no ownership in the Crosbie, no control over the ship or its crew. In my opinion, the evidence does not show a contractual relationship between Munro Jorgensson and Falconbridge in respect of this voyage or
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cargo and there is no liability in tort or contract on the part of Munro Jorgensson.
In essence, in my opinion, the contract was between Chimo and Falconbridge.
The arrangements between Falconbridge and Munro Jorgensson, acting as agent for Chimo concerning the terms upon which the cargo was to be carried to Deception Bay, were settled as early as February 24, 1966, and are set out in a letter from the ship’s agent which bears that date and reads, in part, as follows:
CARRIER: Chimo-Clarke Northern Services
TONNAGE: Approximately 1,000 weight tons to include about 700 tons of Drummed Oil and Gas, 100 tons of Calcium Chloride, 100 tons Lumber and various Pieces of Machinery, Miscellaneous Cargo to vessel’s capacity—on or below deck.
Loading Port: Montreal
Destination: Deception Bay, Ungava.
Rate: $34.00 per ton of 2,000 pounds or 40 cubic feet, whichever is the greater. Freight considered prepaid. National Harbours Board Wharfage at Montreal for account of shipper at current rate which is presently 600 per cargo ton.
…
Discharge: To be discharged by vessel on barges and taken to shore. Responsibility of discharging barges for account of shipper.
The bill of lading dated at Montreal on September 10, 1966, specifies the P.M. CROSBIE as the carrying ship and was made subject “to the provisions of the Rules as applied by the Water Carriage of Goods Act 1936 (Canada)” (now the Carriage of Goods by Water Act, R.S.C. 1970 (Can.), c. C-15) and finding that these Rules applied to the contract of carriage here in question, the learned trial judge applied the provisions of art. IV rule 5, limiting the liability of the carrier or the ship, on the basis that the tractor and generating set should be treated as two shipping units for each of which
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the liability of the respondent should not exceed $500. The award of damages to the appellants was accordingly limited to $1,000. It is from this latter finding that the appellants now appeal asserting that the Water Carriage of Goods Act and the Rules which form a Schedule thereto (hereinafter called the “Rules”) did not apply to the cargo after it had been off-loaded from the P.M. CROSBIE onto the barge C-242-A, and in any event that the Rules had no application to deck cargo, and finally that even if art. IV rule 5 applied, the respondents’ liability should not be limited by treating the tractor and generating set as two shipping units but should rather be calculated in accordance with the number of freight units of which each item of cargo was composed.
The main contention advanced on behalf of the appellants was that the accident happened after the goods had been discharged from the ship and therefore beyond the period contemplated in the Water Carriage of Goods Act and that in any event the barge C-242-A was not a “ship” within the meaning of the Act. In this regard, counsel for the appellants referred to art. I (e) of the Rules which defines “carriage of goods” as follows:
(e) “carriage of goods” covers the period from the time when the goods are loaded on to the time when they are discharged from the ship.
The argument proceeds by reference to art. I (b) of the Rules defining the “contract of carriage” as applying:
…only to contracts of carriage covered by a bill of lading or any similar document of title, in so far as such document relates to the carriage of goods by water…
and finally reference is made to s. 2 of the Water Carriage of Goods Act which reads as follows:
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2. Subject to the provisions of this Act, the Rules relating to bills of lading as contained in the Schedule (hereinafter referred to as “the Rules”) have effect in relation to and in connection with the carriage of goods by water in ships carrying goods from any ports in Canada to any other port whether in or outside Canada.
It is contended also that the latter section can have no application because the “ship” specified in the bill of lading is the P.M. CROSBIE and it is to be inferred that the parties did not intend the barge to be regarded as a “ship” within the meaning of art. I (d) of the Rules which provides that:
(d) “ship” means any vessel used for the carriage of goods by water;…
This latter contention is said to be supported by the terms of the letter of February 24, 1966, to which I have already referred, where reference is made to the fact that the cargo is “To be discharged by vessel on barges and taken to shore. Responsibility of discharging barges for account of shipper.”
These contentions cannot, in my opinion, prevail. There does not appear to me to be any justification for proceeding on the assumption that the Rules are to be construed as only applying to the period between the time when the goods are loaded on the ship and the time when they are discharged. I think rather that the agreement between Chimo and Falconbridge for the transportation of the cargo in question in the P.M. CROSBIE from Montreal to the beach head at Deception Bay was from its inception a contract of carriage within the meaning of the Rules and to which the Rules apply. In this regard I refer to the following paragraph of the reasons for judgement of Devlin J. in Pyrene v. Scindia Navigation Company, which was expressly approved by Mr. Justice Rand in rendering the judgement of this Court in Anticosti Shipping Company v. St-Amand.
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In my judgment whenever a contract of carriage is concluded, and it is contemplated that a bill of lading will, in due course, be issued in respect of it, that contract is from its creation “covered” by a bill of lading, and is therefore in its inception a contract of carriage within the meaning of the Rules and to which the Rules apply. There is no English decision on this point; but I accept and follow without hesitation the reasoning of Lord President Clyde in Harland and Wolff v. Burns and Laird Lines.
It follows that in my opinion the Rules apply to the contract as evidenced by the letter of February 24th which is to be taken as being “covered” by the bill of lading and that the obligation assumed by the ship owners to discharge the cargo from the vessel onto barges and to take the same to shore was a part of that contract. For these reasons, as well as for those which have been set out at length by Mr. Justice Kerr in his reasons for judgment at p. 281, I agree with his finding that:
In the present case the carrier carried barges on the Crosbie for use in lightering cargo from that ship to shore, and it used the barges for that purpose. It was bound to lighter the goods by its contract of carriage. In that situation, it is my view that the Rules applied to the lightering. The lightering should be considered as a part of the discharging operation, but even if the discharging of the goods concerned from the Crosbie was completed when they were put on the barge, the barge was a ship used by the carrier in performing its obligation to carry the goods by water under the contract of carriage covered by the bill of lading and consequently, in my view, the Rules applied to that portion of the carriage.
The appellants’ contention that the cargo in question was excluded from the operation of the Rules because it was “deck cargo” is, in my opinion, untenable because the generating set and tractor were carried to the harbour of Deception Bay in the hold of the Crosbie which was the carrying ship, and the fact that the cargo was discharged by delivery through the use of the barge did not, in my opinion, convert it into deck cargo.
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In applying the Rules to the circumstances here disclosed, the overriding consideration in my opinion is the obligation assumed by the carrier under art. III (2) which reads:
2. Subject to the provisions of Article IV, the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried.
and in this regard the key finding made by the trial judge with which I am in full agreement is to be found at p. 271 of his reasons for judgment where he said:
In my opinion, the responsible officers of the Crosbie did not exercise the care that reasonably prudent and experienced ship’s officers would ordinarily exercise to ensure the safety of the two expensive pieces of equipment. They did not exercise the care which was reasonably and practically possible and which they were bound to take in a situation that had elements of danger which they were aware of or should have been aware of. The least that could have been expected of them, if they were willing to risk the tractor and generating set on the barge in uncertain and worsening weather, was to ensure that the equipment was sufficiently secured to prevent it from sliding off the flush deck of the barge.
When Captain Bugden first saw the barge bumping against the ship and the tractor moving towards the side of the barge, he sought to get some one to secure the barge; but it was then too late to control events and prevent the equipment from going off the barge. However, that was a situation which the responsible officers should not have allowed to come into being. In my opinion there was, to use the words of Duff C.J. in Canadian National Steamships v. Bayliss:
…inattention to precautions which would, it is not unreasonable to consider, have, probably, had the effect of preventing the loss.
Consequently, I find that the loss of the tractor and generating set resulted from a chain (or a “network”, to use an expression of Lord Shaw in another case) of causes which had its commencement by the master and officers of the Crosbie putting the tractor and generating set on the barge in the prevailing weather and leaving them unwatched without ensuring that they were adequately secured to keep them from
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sliding and without ensuring that the barge was adequately moored to the Crosbie, and which had its culmination soon afterwards in the tractor sliding on the flat steel deck of the barge and making it so unstable as to cause the equipment to slide overboard. The acts and omissions of the master and responsible officers amount to negligence, in my opinion.
The respondent has cross-appealed alleging that the evidence does not disclose negligence for which it is responsible and asserting that it was in any event exempt from liability by reason of the provisions of art. IV of the Rules in that the loss resulted from a “peril of the sea” and that due diligence had been exercised to make the ship seaworthy. The allegation of no negligence is disposed of by the learned trial judge’s finding which I have adopted, but the effect of this finding on the other two contentions requires a little further consideration. Article IV (1) provides that:
1. 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 carier to make the ship seaworthy,…
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.
2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from,…
(c) perils, danger, and accidents of the sea or other navigable waters;…
The provisions of this latter Rule are invoked by the cross appellant on the ground that the tempestuous seas and water spouts which characterized the turbulent weather at Deception Bay on the 20th of September, constituted a peril of the sea within the meaning of the rule and thus exempted the carrier and the ship from responsibility for any loss which ensued.
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The meaning of the phrase “perils of the sea” in this context has been discussed in a number of cases and from time to time has given rise to what appears to be some conflict of judicial opinion which was in my view attributable to the slightly different approach taken in marine insurance cases to that taken where the sole question at issue relates to the interpretation of the bill of lading, but the cases of Parrish and Heinbecker Limited et al v. Burke Towing and Salvage Company Limited, Goodfellow Lumber Sales v. Verreault and N. M. Paterson and Sons Limited v. Mannix, appear to me to make it plain that this Court has approved and adopted at least for bill of lading cases the test laid down by Sir Lyman Duff in Canadian National Steamships v. Bayliss, where he said of the defence of “perils of the sea”:
The issue raised by this defence was of course an issue of fact and it was incumbent upon the appellants to acquit themselves of the onus of showing that the weather encountered was the cause of the damage and it was of such a nature that the danger of damage to the cargo arising from it could not have been foreseen or guarded against as one of the probable incidents of the voyage.
The italics are my own.
It is clear from the finding of the learned trial judge that the cause of the damage in the present case was “the acts and omissions of the master and responsible officers” of the P.M. CROSBIE and that the danger of damage to the cargo arising from the weather conditions could and should have been guarded against. It follows that in my view there is no substance in the cross appellant’s argument that the loss was caused by a “peril of the sea”.
The further contention of the cross appellant that it is exempt from liability under art. IV (1) because there was no evidence of “want of due
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diligence” on the part of the carrier to make the ship seaworthy must be predicated on the assumption that the “loss or damage” was one “arising or resulting from unseaworthiness” and as I have indicated, I view this loss as having been occasioned by negligence in failure to adequately secure the cargo so as to keep it from sliding and failure to tether the barge to the ship.
The obligation with respect to seaworthiness is stipulated in art. III (1) which reads:
1. The carrier shall be bound, before and at the beginning of the voyage, to exercise due diligence to,
(a) make the ship seaworthy;…
and it is established by the case of Maxine Footwear Company Limited v. Canadian Government Merchant Marine Limited, that the words “before and at the beginning of the voyage” in this context mean “the period from at least the beginning of the loading until the vessel starts on her voyage.”
In my view the voyage with which we are here concerned is the voyage from Montreal to Deception Bay and, as the learned trial judge has found that “the barge was relatively new, undamaged and in good condition to receive cargo when loading commenced on September 20th” I think it is sufficiently clear that due diligence had been taken to make it seaworthy within the meaning of art. III (1) and art. IV (1) of the Rules. There is no doubt that a ship may be made unseaworthy before it starts on the voyage by the way it is loaded because faulty stowage may affect the ship’s stability and thereby cause it to be unfit to withstand the weather and seas to be anticipated on the contemplated voyage. The cargo in question here was not lost because the barge was unseaworthy, but because it slipped off the deck
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of a seaworthy barge owing to the faulty and negligent manner in which it was left by the ship’s officers and crew. I accordingly do not think that the issue of unseaworthiness or “due diligence” arises so as to exempt the carrier from the provisions of art. III rule 2.
It is perhaps well that I should say also that I agree with the learned trial judge, for the reasons which he has stated, that the negligence here disclosed was not an act of “negligence or default of the master, mariners or the servants of the carrier in the navigation or in the management of the ship within the meaning of art. IV rule 2.”
It will be seen from the above that I agree with the learned trial judge in his finding that the respondent was responsible for the loss of the tractor and generating set in question, and I agree with him also as to the values which he placed upon these pieces of equipment. There remains, however, the question of the amount to which the respondent is entitled to limit its liability pursuant to the Rules and to the provisions of the Canada Shipping Act, which is now chapter S-9 of the Revised Statutes of Canada, 1970. The relevant Rule is rule 5 of art. IV which reads as follows:
5. Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with goods in an amount exceeding five hundred dollars per package or unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.
In finding that the tractor and the generating set were two separate units with respect to each of which the respondents’ liability is limited to $500, the learned trial judge canvassed a number of authorities, but I think that priority
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should be given to the two cases in which this difficult question has been dealt with in our own courts.
In the Anticosti Shipping Case, supra, a truck was damaged while being carried from the Island of Anticosti to Rimouski in the St. Lawrence. It is plain that the truck was not crated or packaged in any way and in the course of his reasons for judgment, Mr. Justice Rand indicated that in applying art. IV rule 5, to the circumstances, he was concerned exclusively with the meaning of the term “unit” as it occurs in that rule. The reasoning in this regard is reproduced in the reasons for judgment of the learned trial judge at p. 290 and reads as follows:
The word “unit” would, I think, normally apply only to a shipping unit, that is, a unit of goods; the word “package” and the context generally seem so to limit it. But there has been suggested and in some cases the rule specifies the unit of the charge for freight. Neither the bill of lading or the evidence here throws any light on the freight rate unit. There seems to have been only a flat charge of $48 plus $3 wharfage fee; there is no indication, for example, of a rate based on tonnage or any other weight quantity. The weight of the truck is shown, but to assume that the charge is calculated on a rate for 100 pounds would bring a fractional figure which is most unlikely to represent the actual basis. The sum of $500 would scarcely be taken as a fair limitation of the value of the average 100 pounds weight of freight; in this case the amount would be the product of 102.16 units at $500 each or $51,000 which seems disproportionate to any policy estimate to be attributed to the rule. And the absence itself of any reasonable ground for extending the word to that type of measure, with the other considerations, excludes its application here.
It will be seen from this passage that Mr. Justice Rand was careful to limit the scope of his judgment to the particular facts before him, and it is apparent to me that he was not purporting to decide how the rule should be construed in a case where the “bill of lading or the evi-
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dence… throws any light on the freight rate unit.”
In the present case, as I have indicated, the freight rate unit is specified in the contract of carriage (i.e. the letter of February 24, 1966) as $34 per ton of 2000 pounds or 40 cubic feet whichever is the greater, which rate is also noted on the face of the bill of lading, and the difficult question to be determined is whether this factor of itself serves to distinguish the present case from that of the Anticosti.
Mr. Justice Rand’s reference to the fact that “in some cases the rule specifies the unit of the charge for freight” is clearly a reference to the provisions of the Carriage of Goods by Sea Act, 46 U.S. Code, s. 1304(5) as follows:
Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States or in case of goods not shipped in packages, per customary freight unit or the equivalent of that sum in other currency unless the nature and value of the goods had been declared by the shipper before shipment and inserted in the bill of lading.
The italics are my own.
It is contended on behalf of the appellant that the phrase “or in the case of goods not shipped in packages, per customary freight unit” as it occurs in the U.S. statute is designed to clarify the meaning intended to be conveyed by the words “per package or unit” as they occur in the Hague Rules upon which art. IV rule 5 is based and to which the U.S. statute also owes its origin. On this assumption it is submitted that the word “unit” in the Canadian Rule refers to unit of freight and that in the present case the limitation of liability should be calculated according to the freight rate as specified in the contract of carriage and on the face of the bill of lading, (i.e. $34 per ton of 2000 lbs. or 40 cubic feet).
The meaning of the word “unit” as it occurs in the phrase “package or unit” in rule 5 has
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given me very great difficulty but I am now satisfied that no substantial assistance can be obtained from the U.S. cases because of the clear difference in the wording of the rule and such authorities as exist in this country and in England appear to me to bear out the statement of Mr. Justice Rand that the word in this context means a shipping unit, that is a unit of goods. In this regard the learned trial judge referred also to the case of Sept Iles Express Inc. v. Clement Tremblay, where the District Judge in Admiralty who presided at trial considered himself bound by the Anticosti Case, basing his reasoning in part on the finding that:
…no declaration of the value of the car was inserted in the bill of lading which document does not indicate, and there is no evidence to show what freight was charged or whether freight was charged at a flat rate or was based on the tonnage of said vehicle.
On appeal to the Exchequer Court, Mr. Justice Kearney found that the learned trial judge had overlooked evidence of the freight rate which was supplied in certain exhibits tendered by the plaintiff, but he nevertheless considered himself bound by the Anticosti Case. This decision of Mr. Justice Kearney is therefore, in my view, the only Canadian authority which is directly in point as it is concerned with the loss of an uncrated truck shipped under a contract of carriage where the freight rate was specified.
In the course of his reasons for judgment, Mr. Justice Kearney said, at p. 218:
Counsel for the shipper pointed out that in the United States the word “unit”, as contained in our Act and the corresponding British Act, was replaced with the phrase “customary freight unit”. (See Carver—Carriage of Goods by Sea, 9th ed., at pp. 1102 and 1108.) Although it is said that this alteration “would appear to have been made to clarify the meaning of unit rather than change it”, I am not satisfied that such is the case.
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In this latter regard reference may profitably be made to the case of The Bill, a decision of the United States District Court for the District of Maryland, where the history of the United States Carriage of Goods by Sea Act of 1936 is fully traced, and after making reference to the authority of Knauth on Ocean Bills of Lading, 1937, pp. 99 to 110, Mr. Justice Chestnut went on to say in reference to the Hague Rules:
In them (Art. 4, s. 5) the parallel limitations of liability clause read: “In an amount exceeding 100 pounds sterling per package or unit. These Hague rules have subsequently been adopted in a number of other countries including Great Britain (1925) and the United States (1936). The phraseology of the British statute followed the Hague rules with respect to the wording of the limitation clause. But it will be noted that in the United States Act the phrase “per unit” has been expanded or changed to read “per customary freight unit.” There was considerable delay (1923-1936) before this country passed its Act. In the intervening years several successive Bills were introduced in which the phraseology of the limitation clause at times read “$100 per package of unit”; “$500 per package or unit”; “$500 per package or, in case of goods not shipped in packages, per customary freight unit.” Various hearings were held on these several Bills over this period of years. During these hearings, or some of them, other varying phraseology was suggested from time to time by interested parties including among other phrases “per declared freight unit.” The final Bill which was subsequently passed was introduced on January 17, 1935 in the Senate (S. 1152) containing the phraseology “$500 per package, lawful money of the United States, or in case of goods not shipping in packages, per customary freight unit.” (Italics supplied.) There appears to be no committee report which clearly explain the quoted phrase “per customary freight unit”; but it seems reasonably clear that the phraseology finally adopted was intended to be more definite than the shorter phrase “per unit” contained in the Hague rules.
It is thus plain to me that it was only after considerable debate that the United States adopted the present form of their statute and I am satisfied that the words “per package or, in
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case of goods not shipped in packages, per customary freight unit” do constitute a change from the Hague Rules as adopted in Great Britain and in Canada, and I do not think that they afford any substantial guidance in the solution of the problem as to the meaning of the phrase “per package or unit” as it occurs in art. IV, rule 5.
The approach adopted in the Anticosti Case is borne out by the view adopted by Temperley and Vaughan in their text book on the Carriage of Goods by Sea Act, 1924 (4th ed. (1932) pp. 81-82) where it is said:
1. The word “unit” connotes one of a number of things rather than a thing standing by itself, and with reference to goods carried by ship, it does not seem appropriate to describe the whole of a cargo or parcel of cargo in bulk. Further, the natural interpretation of the word “unit” in the phrase “package or unit” appears to be that it has been added in order to cover parts of a cargo similar in a general way to a package, but not strictly included in that term, which properly implies something packed up or made up for portability and would therefore not include such a thing as a log of wood or a bar of metal. The word “unit” has, it is suggested, been added in order to embrace such things and not to extend the scope of the Rule to bulk cargoes or parts thereof. Moreover, the whole purpose of Rule 5, which is directed against excessive claims for things of undisclosed abnormal value, supports this limited interpretation of the word.
The learned authors of this work then refer to “an alternative view for which there is much to be said” and which they describe as follows:
…inasmuch as the term “unit” is commonly used to mean a standard of measure or enumeration, or one of a series of things split up either physically or notionally for the purpose of enumeration or measurement, the phrase “package or unit” here used must refer back to the particulars of enumeration or measurement which must be shown on the bill of lading as provided by Article III, rule 3…
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It is clear, however, that the authors prefer the former view. This interpretation is further borne out by the note to be found in Halsbury’s Laws of England, 3rd ed. Vol. 35 at p. 535 where the learned editors observed in a cryptic note speaking of the word “unit” as used in the rule: “…which latter term is no doubt apt to indicate an unboxed vehicle.”
As the learned trial judge has pointed out, there is also a short note by the editors of Scrutton on Charter Parties, 7th ed., at p. 427 to the effect that the word “unit” as used in the rule “probably means the unit of enumeration or measure shown in the bill of lading as provided by Article III rule 3”. This latter rule provides that the bill of lading shall show, amongst other things, “either the number of packages or pieces or the quantity of weight as the case may be…”, and it is my view that the tractor here in question is a piece of cargo within the meaning of that Rule.
In the case of Studebaker Distributors Limited v. Charlton Steamship Company, to which the learned trial judge also referred, Mr. Justice Goddard was not concerned with the interpretation of art. IV rule 5, but rather with the meaning to be placed on the word “package” in a clause of the bill of lading there at issue which provided, in part:
It is agreed and understood that the value of each package issued hereunder does not exceed the sum of $250 or its equivalent in the currency of the country where the vessel discharges.
In holding that this clause did not offend the provisions of the Harter Act, Mr. Justice Goddard also held that certain automobiles which had been placed on board for shipping “just as they came from the works” without any covering whatever, could not be classified as a package within the meaning of that clause, and in the course of his reasons for judgment he said:
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I confess I do not see how I can hold that there is any package to which the clause can refer. “Package” must indicate something packed. It is obvious that this clause cannot refer to all cargoes that may be shipped under the bill of lading; for instance a shipment of grain. It could apply to grain shipped in sacks but could not in my opinion possibly apply to a shipment in bulk. If the ship owners desire that it should refer to any individual piece of cargo it would not be difficult to use appropriate words as for instance “package” or “unit” to use the language of the Hague Rules.
Although it was not necessary for the decision of the case before him, it appears to me that Mr. Justice Goddard was clearly indicating his view that the word “unit” as used in the Hague Rules had the meaning of an “individual piece of cargo”. It is in any event apparent from the decision in the Studebaker Case and in Whaite v. Lancashire and Yorkshire Railway Company, where the Court was considering the words “parcel or package” as they occur in the Carriers Act, 11 Geo. 4 and 1 Wm. 4 Ch. 68, s. 1, that the word “package” means articles which are packed or crated and it would seem illogical to me to hold that a shipper who had taken the precaution of crating his goods would be limited to $500, whereas the shipper delivering his goods to the ship “just as they came from the works” and without any wrapping, would be entitled to apply a limitation based upon the freight rate.
Having regard to the fact that the Hague Rules, upon which the Rules in the Schedule to the Water Carriage of Goods Act are based, were initially formulated at an international convention convened at Brussels in 1924 for the purpose of establishing uniform rules relating to bills of lading amongst maritime nations, I think it to be helpful to consider the meaning attached to the words “colis ou unité” as they occur in the same context in the Rules adopted by the
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Republic of France which was one of the signatories of the Brussels Convention.
In the Traité Général de Droit Maritime, Vol. 2, by Rene Rodière, the learned author, after having referred to the decision of this Court in the Anticosti Case, went on to point out that a large unpacked machine is to be regarded in the same sense as a package for the purpose of interpreting the rule in question. The learned author concluded as follows: (at p. 302)
[TRANSLATION] The “package” is therefore the individual item of cargo specialized in the document of title relating to the carriage of goods. It is the specific item accepted by the carrier. We shall see below… that this concept prevails over a reference to weight, but only if the specification is adequate.
The “package” is a specialized individual thing and nothing else. We should avoid the idea, which tends to limit its meaning notably, that a package needs to be wrapped or boxed. That is the solution adopted by the English, German and Italian courts (referring to the Studebaker Distributors case, supra). There is no more justification for it than for that which regarded a package as something of relatively small size. Contrary to these two theories, a large unpacked machine is a “package” within the meaning of our law.
A fuller discussion of the same question is to be found in Cie. Générale Transatlantique c. Cies. The Marine Insurance Co,. La Prévoyance, Assurances Générales et autres, where it is said at p. 27:
[TRANSLATION] Whereas in the absence of a declaration of value at the time of shipping, as is the case here, the maritime carrier’s liability limit applies under Art. 4, para. 5 of the Convention “by package or unit”;
Whereas in interpreting this provision it must be remembered that the Convention applies specifically to “bills of lading”, and that the solution therefore lies in the customs—or technical requirements—relating to the drawing-up of these documents, as the latter is set out in Art. 3, para. 3 of the Convention;
Whereas in the present case the bills of lading issued to the shippers related to: (a) three crates having a total gross weight of 4,854 pounds, for the ARMCO company (Assurances Générales); (b) one crate with
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a gross weight of 19,750 pounds, or over 9 tons, for the Citroen company (La Prévoyance); (c) an unpacked Dodge car with a gross weight of 2,820 pounds and a volume of 44,880 cubic feet, destination Simon automobiles (The Marine Insurance Co.); and each of these crates and the car had thus been duly identified and specialized by the shipper, and accepted as such by the master; and the latter therefore received here a number of specified packages, and not merely a bulk quantity of goods of a certain weight or of a certain volume; and only in this latter case would it be proper to apply the limit of £100 gold on each unit selected by the parties, in the bill of lading, to value the good accepted;
Whereas, no doubt, one of the plaintiffs claims that the term “package” implies per se the idea of a limited load, and that a crate weighing 9 tons 500 pounds, or a car, are therefore not to be regarded as packages for the purposes of the rule limiting the liability of a maritime carrier; nonetheless, if such truly was the meaning of the word “package” hundreds of years ago, when porters had to rely on the strength of their shoulders to load bales of goods, the meaning has evolved since the last decades, so that, now that lifting and handling techniques permit loading and unloading of individual loads weighing far beyond what a man could lift, the term “package”, at least in the language of persons in the maritime transport business, that is to say in the sense in which it is used in the provision the construction of which we are now dealing with, means not only a small load but any individual specialized load, presented as such to the carrier, and so accepted by him, whatever its weight or volume;…
Superficially it may appear to be unjust that a shipper delivering unpackaged goods which obviously have a value of more than $50,000 should be limited to recover no more than $500, but, as Mr. Justice Rand said in the Anticosti Case:
We are left, then, to take the unit as being that of the article. That this may produce anomalies is indisputable, but the rule does not seem to permit qualification. The responsibility for seeing that the value of the thing shipped is declared and inserted on the bill is on the shipper and any consequential hardship must be charged against his own failure to respect that requirement.
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The italics are my own.
And in the same vein Mr. Justice Kearney said in the Sept lies Express Case, supra, at p. 218:
It is important to note that the so-called anomaly referred to by counsel for the appellant could have been eliminated and would never have arisen if the shipper had inserted the valuation which he attached to the motor vehicle in question;
…
In view of all the above, I am persuaded that the respondent is entitled to limit its liability to $500 in respect of each item of cargo and I accordingly agree with the learned trial judge that the total damage is to be limited to $1,000.
In my opinion the provisions for limitation of liability under the Canada Shipping Act s. 657, now s. 647, R.S.C. 1970 (Can.), c. S-9, would have applied to the circumstances of this case and I reject the suggestion on behalf of the appellants that the loss occurred as the result of the fault or privity of the owner. (See Robin Hood Mills v. Patterson Steamship Limited. It is, however, obvious that application of that section would not have reduced the damages below $1,000, and I accordingly do not need to consider this phase of the matter.
For all these reasons I would dismiss the appeal and the cross appeal with costs.
Appeal and cross appeal dismissed with costs.
Solicitors for the plaintiffs, appellants: Du Vermet, Carruthers, Beard and Eastman, Toronto.
Solicitors for the defendants, respondents: Beauregard, Brisset and Reycraft, Montreal.
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