T-3394-74
Circle Sales & Import Limited and Worter Mer
chandising (Plaintiffs)
v.
Wilh. Wilhelmsen, Barber Lines, Wolfe Steve
dores (1968) Ltd., Steveco Terminal Operators
Ltd. and the owners and charterers of the ship
Tarantel (Defendants)
and
T - 3395 - 74
Marie-Anne Novelties Incorporated and Nosans
Trading Co. Inc. (Plaintiffs)
v.
Wilh. Wilhelmsen, Barber Lines, Wolfe Steve
dores (1968) Ltd., Steveco Terminal Operators
Ltd. and the owners and charterers of the ship
Tarantel (Defendants)
Trial Division, Walsh J.—Montreal, April 5;
Ottawa, May 27, 1977.
Maritime law — Contract — Bills of lading — Himalaya
clause — Whether third parties not privy to contract can
benefit from clause — Tort — Negligence — Liability for
goods stolen from port warehouse.
The plaintiffs are suing the carriers and handlers for goods
stolen from a Port of Montreal warehouse. They allege that the
defendants were negligent in providing adequate security for
the goods in the warehouse and that the defendants breached
the contract with the plaintiffs. The defendants, some of whom
were not parties to the contract or bill of lading, claim the
benefits of a Himalaya clause and a clause limiting liability to
the actual time aboard ship.
Held, the action is allowed. Without making any general
conclusion as to whether a properly worded Himalaya clause
can extend its protection to stevedores or warehousemen even
against their tortious conduct, neither Wolfe nor Steveco can
claim the benefit of that clause since their liability resulted not
from contract but from tort, or delict as it is known in the
Province of Quebec. Since the loss clearly took place by theft
from the shed in the Port of Montreal after the goods had been
delivered to them by the carrier, the extent of their liability for
their negligence is to be determined accqrding to the law of the
Province of Quebec.
ACTION.
COUNSEL:
David Beard, Q.C., for plaintiffs.
Marc Naddn for plaintiffs.
Edouard Baudry for Steveco Terminal Oper
ators Ltd. and Wolfe Stevedores (1968) Ltd.
Sean Harrington for Wilh. Wilhelmsen,
Barber Lines and the owners and charterers
of the ship Tarantel.
SOLICITORS:
DuVernet, Carruthers, Toronto, for plaintiffs.
Martineau, Walker, Allison, Beaulieu,
MacKell & Clermont, Montreal, for plain
tiffs.
Chauvin, Marler & Baudry, Montreal, for
Steveco Terminal Operators Ltd. and Wolfe
Stevedores (1968) Ltd.
McMaster, Minnion, Patch, Hyndman,
Legge, Camp & Paterson, Montreal, for
Wilh. Wilhelmsen, Barber Lines and the
owners and charterers of the ship Tarantel.
The following are the reasons for judgment
rendered in English by
WALSH J.: These two actions were tried to
gether on common evidence as suggested by coun
sel for all parties since the facts and the contractu
al and/or delictual liability or immunity from
liability of the several defendants is identical in
both cases, the only difference being of course in
the nature and quantity of the merchandise lost
and value of same in each case. The Circle Sales
& Import Limited's claim is for the loss of 60
cartons of walkie talkies in the amount of $10,436
while the claim of Marie-Anne Novelties Incorpo
rated is for the loss of 34 cartons of hair dryers in
the amount of $1,982.45.
Plaintiff, Worter Merchandising, sold and
shipped the walkie talkies from Hong Kong to the
purchaser, Circle Sales & Import Limited in
Montreal on the vessel Tarantel owned and
managed by defendant, Wilh. Wilhelmsen and
chartered by defendant, Barber Lines, Limited.
Each of the 60 cartons contained 20 boxes of the
walkie talkie sets. By calculations made from the
total weight and volume of the shipment it would
appear that each carton would weigh about 30
pounds and measure about 15 inches in each direc
tion if it were a perfect cube. Similarly the 34
cartons of hair dryers were sold and shipped from
Nosans Trading Co. Inc. from Yokohama to Mar-
ie-Anne Novelties Incorporated in Montreal and
on the same voyage of the vessel Tarantel. In this
case 254 cartons of general merchandise were
involved of which the 34 were not delivered. The
order had been for 1,200 hair dryers contained in
50 cartons with 24 boxes in each carton and again
by calculations from the total weight and volume
of the shipment it would appear that each carton
weighed about 22 pounds and would measure
about 13 inches in each direction if a perfect cube.
Counsel for Wilh. Wilhelmsen, Barber Lines, and
the Owners and Charterers of the ship Tarantel
admitted that for the purposes of these actions
both the companies can be considered as carriers
together with the ship.
Wolfe Stevedores (1968) Ltd., hereinafter
referred to as "Wolfe" were the stevedores who
unloaded the merchandise and stored same in a
security locker in a shed in the Port of Montreal
leased from the National Harbours Board by
Steveco Terminal Operators Ltd., hereinafter
referred to as "Steveco". There was no direct
contract between either the shippers or the carrier
and Steveco. Steveco is a company formed by
Wolfe and another stevedoring firm, Brown and
Ryan, to rent the terminal space in question, each
of the principals owning 50% of Steveco. Accord
ing to the evidence of Mr. Wolfe, Steveco negotiat
ed the lease with the National Harbours Board
and provided the security in accordance with Na
tional Harbours Board requirements and its
expenses would then be charged to its principals
Wolfe and Brown and Ryan, no attempt being
made for Steveco to make any profit; in fact
Steveco was administered by the personnel of the
two principal companies having no personnel of its
own in the section of the harbour in question,
namely sheds 39 to 42 inclusive. Another firm,
Saguenay Shipping leased one of the sheds, shed
42, and participated in the security, Brown and
Ryan being their stevedore contractors.
The vessel unloaded in the Port of Montreal on
September 26 and 27, 1973, the merchandise
being discharged into shed 39 and the merchandise
for which the claims are made was apparently
stolen from the security locker in the said shed on
the night of October 2-3. Plaintiffs claim for dam
ages for breach of contract and also hold defend
ants responsible for the negligent acts of their
servants, agents and employees. Although a large
number of allegations of negligence are made
against the carrier, the evidence failed to support
any such conclusion. With respect to the allega
tions of negligence of Wolfe and Steveco it is
alleged inter alia that they failed to keep proper
watch on the shipment thereby eliminating pilfer-
age, that they failed to deliver it to plaintiffs as
was contracted for, they failed to properly super
vise their servants, agents and employees,
employed inadequate and incompetent foremen,
checkers and supervisory personnel, employed inef
ficient and inadequate watchmen to guard the
shed goods in the shed at Montreal, which shed
was improper and unsafe, permitted unauthorized
personnel and the public, in general, access to the
shed, failed to keep the doors of the said shed
properly locked and watched as required, and per
mitted easy access to the shed by failure to keep a
proper watch on the shed and the security locker
when they knew or should have known that con
stant patrols and a diligent watch was required at
all times. As a result of this it is contended in the
amended statement of claim that this conduct
amounted to gross negligence of the said defend
ants thereby disentitling them to the protection of
any of the rights or indemnities of which they
might otherwise have the benefit by law or by the
bills of lading and that there has also as a result
been a fundamental breach of contract so as to
disentitle them to any limitation of liability which
might otherwise be available to them. It may be
said here that it was conceded by counsel for
defendants that since none of the cartons in ques
tion was worth more than $500 the issue of limita
tion of liability does not arise in this case. Plain
tiffs further plead the provisions of the Bills of
Lading Act' and of the Canada Shipping Act 2 .
They also invoke the doctrine of res ipsa loquitur
since the merchandise was received by the said
defendants in good order as evidenced by clean
bills of lading. The carrier's defence is to the effect
that the bill of lading comprises the contract of
R.S.C. 1970, c. B-6 and amendments thereto.
2 R.S.C. 1970, c. S-9, s. 611 and amendments thereto.
carriage and that they are entitled to invoke the
conditions and exceptions therein to which plain
tiffs agreed, that the goods were discharged in
Montreal in apparent good order and condition,
that if they were not delivered this did not result
from any quasi delict or breach of contract on the
part of said defendants whose responsibility ceased
once the goods left the ship.
Wolfe's defence is to the effect that by agree
ment made with the carrier it was to provide the
following services:
a) stevedoring services, i.e. discharging goods carried on the
"TARANTEL" to the port of Montreal;
b) terminal services including storing the cargoes carried on
the said vessel to Montreal.
It contends that the stevedoring operations were
carried on in a prudent, careful and workmanlike
manner in accordance with any instructions
received from the principals and similarly with
respect to the terminal operations, that any loss or
damage resulted from the activities of thieves
and/or other criminal elements for which it is not
responsible having taken all reasonable steps to
protect the cargo. It invokes in particular a con
tractual defence to the effect that plaintiffs assent
ed in the bill of lading to a stipulation that ser
vants, agents or independent contractors including
stevedores be entitled to avail themselves of the
defences and limits of liability which the carrier
was entitled to under the contract evidenced by the
bill of lading and in particular reference is made in
the pleadings to clauses 3 and 5 of the bill of
lading which read in part as follows:
3. IDENTITY OF CARRIER AND HIMALAYA CLAUSE.
All defences under this B/L shall inure also to the benefit of
the Carrier's agents, servants and employees and of any
independent contractor, including stevedores, performing any of
the Carrier's obligations under the contract of carriage or
acting as bailee of the goods, whether sued in contract or in
tort.
For the purpose of this clause all such persons, firms or legal
entities as alluded to above shall be deemed to be parties to the
contract evidenced by this B/L and the person, firm or legal
entity signing this B/L shall be deemed to be their agent or
trustee.
5. PERIOD OF RESPONSIBILITY.
If this Bill of Lading is not issued for a shipment to or from
U.S. Ports, then notwithstanding any other provisions herein,
goods in the custody of the Carrier or his agents or servants
before loading and after discharge, whether awaiting shipment
or whether being forwarded to or from the vessel, landed,
stored ashore or afloat, or pending transhipment, at any stage
of the whole transport, are in such custody at the sole risk of
the Merchant and thus the carrier has no responsibility whatso
ever for the goods prior to the loading on and subsequent to the
discharge from the Vessel.
The defendant, Steveco, pleads that it was hired
by Wolfe to render limited services in relation to
operations being conducted at certain sheds and
terminals in the Port of Montreal including the
terminal in question for which it was remunerated
by Wolfe, such services consisting in providing
terminal space, a watching service and a shed
cleaning service. It contends that it performed
these services faithfully, properly and diligently,
that it did not at any material time have care,
possession, custody or control of any of the cargoes
belonging to plaintiffs nor authority, control or
direction over persons entering or leaving the shed
or moving thereabout, and that it did not commit
any act whether of commission or omission con
stituting negligence in causal connection with any
logs of plaintiffs' cargo, and moreover, having no
contractual relationship with plaintiffs, there is no
lien de droit between it and plaintiffs.
While Wolfe and Steveco have separate and
distinct corporate identities, their counsel made it
clear that there is no conflict of interest between
them, both being insured by the same insurer and
that it was therefore quite in order for him to
represent both of them. It is evident, therefore,
that while the legal liability of each of them, if
any, to plaintiffs may be different it makes little
practical difference whether judgment is rendered
against one or the other of them or both of them
and certainly it is not an acceptable defence to
plaintiffs' action for each of said defendants to
attempt to pass the responsibility to the other, with
Wolfe contending that it performed its terminal
operations in a prudent and careful manner by
engaging Steveco as its agent to do this and Steve-
co contending that since its only contract was with
Wolfe to provide terminal space together with a
watching and shed cleaning service it did not at
any time have care, possession, custody or control
of the cargoes nor authority, control or direction
over persons entering or leaving the shed since any
such control was exercised by Wolfe employees or
agents hired by it. If there was negligence which
led to the theft of the merchandise from the shed
then it must have been the negligence of employees
or agents of one of the said two companies for
whom they are responsible unless they can estab
lish it was the negligence of Pinkerton's the secu
rity firm engaged to provide security for the shed
in question. The evidence on this point which I will
deal with later does not disclose that this latter
company, which was not named as a defendant
should be held solely responsible so as to exonerate
Wolfe and Steveco. Neither can I accept on the
evidence made before me Wolfe's defence that it is
not responsible because the theft resulted from the
activities of thieves or criminal elements despite its
having taken all reasonable steps to protect the
cargo in question. Theft is in no way equivalent to
an act of God and is not by itself a valid defence
for a party who has the responsibility of protecting
goods in its care and custody.
On April 6, 1973, the National Harbours Board
wrote Steveco Terminal Operators Ltd. granting
them an occupancy permit for sheds 39, 40 and 41.
One of the terms set out in the letter is that it is
subject to the "regulations governing the occupan
cy and use of transit sheds for the handling of
cargo" dated March 1, 1973. Of especial signifi
cance is clause 9 to the effect that Saguenay
Shipping Limited, Brown and Ryan Limited and
Wolfe Stevedores (1968) Ltd., all of whom were
sent a copy of the letter shall within 15 days bind
themselves in writing jointly and severally with
Steveco Terminal Operators Ltd. to acquit and
execute all obligations imposed on the permittee
by the permit. The regulations which go into some
detail as to the conditions of occupancy deal with
security in clauses 54, 55 and 56. Clause 54 states
that there must be a security guard on duty inside
the shed whenever the shed is open but that when
it is closed, unless in the opinion of the Harbour
Master the type of cargo justifies a security guard
being on duty at all times, continuous watching is
not required. Each shed must, however, be checked
inside at least every two hours to make sure that
the cargo is safe and no fire hazards exist. Clause
55 provides that the Board reserves the right to
take over all security services at any time upon 30
days' notice to the permittee and such security
service shall replace the watching service carried
out by the permittee and the cost shall be borne by
the permittee. Provision is made for the Port
Manager to order the Director of Police and Secu
rity of the Harbour to take such measures as the
Director may judge are best calculated to ensure
the security of the cargo and persons on the prem
ises, all at the expense of the permittee. No steps
were taken to bring this clause into effect. Clause
56, however, specifies what are the minimum
standards of security which require that during
business hours gate control shall be maintained by
a security guard who shall inspect trucks leaving
the premises and collect the guard's copy of the
delivery receipt, the guard shall sign and return
the stub portion of the control card to the driver
and in cases where cargo is moved from open
areas, a security guard shall be on duty and follow
the same procedure. Security lockers shall be
secured with a padlock supplied by the Board
subject to the Key Control System presently in
existence.
On April 17, 1973, Steveco Terminal Operators
Ltd. entered into a security agreement with Pink-
erton's of Canada Limited by virtue of which the
latter agreed to provide uniformed guards at sheds
40 and 41 for a total coverage of 425 hours
weekly. The rate was to be $2.80 per guard hour
and $3.70 per lieutenant hour with an overtime
rate of $3.50 per guard hour for all hours exceed
ing the normal schedule of 425 hours weekly. In
accepting this agreement Steveco Terminal Opera
tors Ltd. indicated in a letter of May 3, that at no
time had they guaranteed 425 watching hours per
week.
Also produced was the agreement between
Barber Lines and Wolfe Stevedores (1968) Ltd.
whereby the latter undertook to load and discharge
all vessels owned, managed, controlled or char
tered by Barber Lines inter alia in the Port of
Montreal. A clause providing that in the event that
checking and watching services are required Wolfe
would arrange to provide them as agent for Barber
Lines on the express condition that it would incur
no liability whatsoever for pilferage, theft or mys
terious disappearance of goods arising from any
cause whatsoever and that Barber Lines agrees to
indemnify Wolfe in the event it be called upon to
pay any sums as a result of such pilferage, theft or
mysterious disappearance was struck out of the
contract. Mr. Wolfe when testifying minimized the
significance of this stating merely that this clause
was too severe for Barber Lines to accept so was
struck out, but that this did not mean that Wolfe
had not undertaken to provide security and watch
ing services. Although the occupancy permit only
refers to sheds 39, 40 and 41 and the agreement
with Pinkerton's to sheds 40 and 41 it is common
ground between the parties that the entire complex
was covered consisting of sheds 39, 40, 41 and 42,
together with an open area on Laurier Pier upon
which container cargo can be unloaded. The entire
area is surrounded by a fence with a gate with a
gatekeeper's shed at the far end of shed 42. The
only other entrance is a gate across train tracks
which can be opened to permit a train to enter to
pick up cargo. This is only opened to permit a train
to pass through and then is immediately locked.
There was no train traffic into or out of the area at
the relevant times. During the period from mid
night to 7.00 a.m. on the night of October 2-3
when Pinkerton's guard, Louis Philippe Pelletier
was on duty he only had to open the gate near shed
42 once to admit a garbage truck which left in
about 10 minutes. This clearly was not the means
by which the merchandise was stolen from the
locker in shed 39. Each of the sheds is 500 to 600
feet in length and the entire complex is not less
than 2,500 feet in length so that the guard on his
rounds from the gate at the end of shed 42 which
he would keep locked at night had to walk nearly a
half mile in each direction to go to the far end of
shed 39. Each shed has a large door at each end
for the entry and departure of trucks which are
locked at night by means of heavy chains fastened
into a sort of slotted clamp on the inside and hence
can only be opened from inside the shed. There are
also side doors opening on to the dock which are
similarly securely locked from the inside when
cargo is not being loaded or unloaded. Three of
these open directly from the dock into the security
locker which itself is a fenced in area inside shed
39 with a special lock for which there is only one
key which is supposed to be kept in the possession
of the security guard. The security guards gain
access to the sheds through a small locked door for
pedestrians, entering into the area beside the main
end door where the checkers would check cargo
out of the sheds in the daytime when trucks are
coming and going. Unless the shed is being used at
night for the discharge of or delivery of cargo,
therefore, which is unusual and was not the case in
the present instance all the large truck doors are
kept locked by the chain from the inside. The
fenced in special security locker where valuable
cargo or cargo which is apt to be stolen is kept can
only be opened by the security guard who has the
key, in the presence of the trucker who is to take
delivery of the cargo and a checker. The wire
fencing around it although about 15 feet high does
not go right up to the ceiling of the shed, however.
The security guard in making his rounds is sup
posed to enter into each shed and walk from one
end to the other of it to see that everything is in
order before proceeding on to the next shed where
he does the same. He then returns to his post at
gate 42 walking by the outside of the sheds—that
is to say the side away from the water. The guard
on duty on the night in question, Louis Philippe
Pelletier, testified that he did not circle the sheds
however and never examined the water side of
them. All the side doors open on to the dock which
is 15 to 18 feet wide and it would appear from
photographs taken the next day that there is a
drop of some 15 feet from the edge of the dock to
the water level where a raft is floating beside the
dock. Two of the shed doors opening into the
security locker from the dock, which slide open
from bottom to top, were found on the morning of
the 3rd partially opened at the bottom with piles of
cardboard cartons and pallets partially concealing
the opening at the bottom which was left open to
the extent of two or three feet. This opening could
have readily been detected however had the guard
walked by on the water side of shed 39 during the
night. It is evident that one of the dock doors
opening into the locker either had not been proper
ly locked from inside the night before with the
chain or someone had got into the locker and
opened the doors from the inside, but could not of
course lock them again in the same manner from
outside, so after the merchandise was stolen the
doors were left partially opened with the opening
concealed as much as possible.
Lieutenant Allard, a Pinkerton's security guard
who had been on duty from 7.00 a.m. to 5.00 p.m.
and on an extra shift from 5.00 p.m. to midnight
on the night of October 2, 1973, testified that his
duties include the checking of the security locker.
He had seen to the placing of the 60 cartons of the
walkie talkies and 50 cartons of dryers in the
locker. When he made his rounds between 5.00
and 11.30 p.m. the pallets were still in place and it
was his responsibility to lock the shed doors at
night. Next morning he ascertained that two of the
doors opening on to the wharf had been opened
when the theft was discovered. He noticed a ladder
outside the shed in the morning which he had
never seen there before. He stated that to make a
complete round of the sheds would take about 45
minutes and that Pelletier was supposed to have
made an outside tour of the dock. Pelletier, the
night guard, who made a very poor impression as a
witness, stating that his memory was defective
since he is on medication, saw nothing and heard
nothing during the night but he said that he looked
around the end of the buildings but did not circle
them on the water side and that nobody had told
him what he was supposed to do.
Hurum Shipping and Trading Company Lim
ited, agents for Barber Lines in Montreal, had
written the Director of National Harbours Board
Security Police, sending copies to Wolfe in shed 39
and Wolfe at the head office and also to Mr.
Mathews, Operations Manager, on September 19,
1973, calling attention to the necessity for protect
ing certain valuable cargoes due to arrive on the
Tarantel on or about September 24 for unloading
at shed 39. Among items listed were the 60 cartons
of walkie talkies and the 50 cartons of hair dryers.
The letter concludes:
There are many other items of value, especially from Hong
Kong, but these are too numerous to mention. We wish to
thank you again for your co-operation and assistance with
regard to the protection of this cargo, as we are sure, that if it
was not for your interest and co-operation, pilferage would be
much greater than at present.
This has reference to the fact that thefts and
pilferages were a common occurrence in the Port
of Montreal and in fact evidence was submitted by
a lieutenant of police of the National Harbours
Board to the effect that in 1973 alone there were
37 instances of breaking and entering in the Port
of Montreal up to October 3. He testified that in
his opinion one night guard was clearly insufficient
to protect 4 sheds the result being almost non
existent security. The regulations of the Harbours
Board merely specify minimum security which a
permittee renting sheds in the harbour must pro
vide but one guard is not enough when there is
valuable merchandise in a shed because in order to
make his tours of inspection he has to leave the
entrance gate and an inspection every two hours at
regular intervals is insufficient. He stated that
there is always considerable activity in sheds 39 to
42'and, by analogy, in another complex which has
6 sheds, 4 security guards are on duty at night
making rounds each hour, and in yet another
complex with 7 sheds there is one guard at the
entrance and one in each shed when there is any
cargo in them.
Paul Guay, the supervisor of investigation for
Pinkerton's, who was at that time their supervisor
of security, testified that they had discussed the
provision of additional security at night with
Saguenay Shipping but that Steveco refused it
because of the additional cost. With only one
watchman who has to check the inside of the
sheds, punch the clocks, look at any outside cargo
stored on Laurier Pier and then return to his post
it is unlikely that he would be able to see if
anything was. missing. According to his evidence
the special lock on the security cage would have
only one key which would be in the possession of
the day shift guard and the night guard would not
be given this. He would only have the key to the
entrance doors to the sheds.
Maurice Ste. Marie, the supervisor for the
Montreal Harbour for Wolfe at the time, testified
that he advised the National Harbours Board
police when special cargo is due to arrive, having
been so advised in this case by Hurum Shipping.
The ship finished unloading on September 27.
Normally special cargo is delivered within two
days although at that time it was allowed to
remain in the sheds for 5 days before any demur-
rage charges were made. The special security
locker would have been opened from time to time
during this period in the presence of a trucker
picking up merchandise there, a checker and the
guard who had the key. The merchandise only has
a code number on it; the National Harbours Board
police are given a copy of the manifest. Some of
the cases remaining in the locker showed evidence
of having been partially opened so as to determine
the contents. Some of the cargo for Marie-Anne
Novelties had been damaged when removed from
the vessel so it had to be counted and packed again
which might account for some of the delay in
delivery.
One can only theorize as to how the merchan
dise was stolen but the police witnesses all suggest
and the evidence indicates that it was removed
from the security locker by the doors opening on to
the dock and then lowered from there onto a boat
during the night. Depending on the size of the
boat, one or more trips might have been required
to load 94 cartons without the aid of cranes, cargo
nets or other equipment available to stevedores in
the daytime. Presumably the cartons would have
to be carried down a ladder from the side of the
dock to the boat one or at most two at a time. Even
if two or three persons were engaged in the theft it
would certainly take a considerable length of time,
and had the security guard made a circuit around
the dock side of the shed at any time while these
operations were in progress he could hardly have
failed to hear or see them. Quite possibly one of
the thieves served as lookout so that whenever the
security guard approached shed 39 operations
would be suspended until he had left that area. It
is also a matter of speculation as to how one of the
thieves got inside the security locker so as to open
the doors from the inside. The ladder found on the
dock next morning might perhaps explain this. It
might perhaps have been brought into the shed
during the day by one of the longshoremen or
someone dressed like one of them or a trucker
whose presence would not be noted during busy
working hours. Perhaps in some manner a dupli
cate key had been made to the door of the shed
enabling the thief to enter at night, or perhaps he
even slipped in while the security guard was at the
far end of the shed if the guard had omitted to
lock the entrance door of the shed behind him
after entering it, and concealed himself until the
security guard left. In any of these events it would
not be difficult for the thief to climb over the fence
surrounding the security locker with the aid of a
ladder and lift it up after him to help him down on
the inside, and then after opening the doors on to
the dock to use the ladder for loading the stolen
merchandise on a boat. Another possibility is that
one of the thieves entered the security locker
during the day when it was opened to permit a
trucker to remove other merchandise. Perhaps if
he was known as a longshoreman his presence
would not be noted by the checker or security
guard and he might have been able to conceal
himself in the locker until night time. Lieutenant
Allard, a Pinkerton's security guard on duty
during the day and evening hours of October 2 did
not think that this was possible as he claimed he
entered into the locker and looked around it when
verifying that the outside doors were locked. An
examination of the photographs filed as exhibits
however indicates that with merchandise stored
high on pallets with narrow aisles between them it
should not be too difficult for a daring thief to
keep himself hidden in the locker from a guard
who was entering same merely to see if all the
pallets of merchandise appeared to be in order and
the shed doors securely locked with their chains.
However it was done there is no doubt that the
merchandise was stolen from the security locker in
shed 39 sometime after midnight on the night of
October 2-3, 1973, and that it is unlikely that this
theft could have been accomplished with success
had sufficient security been provided. While the
guard, Pelletier, appears to have been poorly
instructed as to his duty, and to be of doubtful
competence at best, it is evident that no one guard
could provide adequate security for so large an
area. If more guards were not provided it was not
because Pinkerton's had not suggested this but
because Steveco and Wolfe were unwilling to pay
for the necessary extra guard or guards, and this
despite having received due notice and being well
aware that certain cargo, which, while not of great
intrinsic value, was nevertheless of a nature to
make it easy to steal and supposedly to subse
quently dispose of, would be in the security locker
on the night in question. Despite the history of
breaking and entering and thefts in the Montreal
Harbour at the time of which both said defendants
were well aware, they chose to save money by not
providing an extra guard to watch the security
locker in shed 39 during the night. If this had been
done the theft could not have taken place and the
theft was neither unforeseeable nor unpreventable.
I therefore find negligence on their part. No negli
gence can be found against Barber Lines for
employing Wolfe Stevedores (1968) Ltd., a well-
known and experienced stevedoring firm to look
after the discharging of cargo and warehousing of
same until delivery nor was the loss in any way
attributable to any fault of the owners of the ship
Tarantel.
The question to be decided, however, and it is a
difficult one is the effect of the bill of lading and
other agreements on the contractual liability and
immunities and limitation of liability of the several
defendants. In addition to clause 3 (the Himalaya
clause) and clause 5 of the bill of lading already
recited, it should be noted that the memorandum
of agreement between Barber Lines and Wolfe
Stevedores (1968) Ltd., provided in clause 7:
It is further expressly understood and agreed that the com
pany will include the Contractor as an express beneficiary, to
the extent of the services to be performed hereunder, of all
rights, immunities and limitation of liability provisions of all
contracts of affreightment, as evidenced by its standard bills of
lading and/or passenger tickets, issued by the company during
the effective period of this agreement....
The question of whether Himalaya type clauses
in a bill of lading evidencing the contract of car
riage are available as a defence or limitation of
liability to third parties such as stevedores and
warehousemen not parties to this contract is one
which has caused much difficulty for the courts in
all countries and which perhaps has still not been
satisfactorily resolved in Canada. In the United
States a judgment of the Court of Appeals, 2nd
Circuit, in the case of Bernard Screen Printing
Corporation v. Meyer Line and Universal Termi
nal & Stevedoring Corporation', dated July 14,
1972, held, after referring to the Supreme Court
judgment in the case of Robert C. Herd & Co. v.
Krawill Machinery Corp., 1959 A.M.C. 879, that
an ocean carrier and cargo owner may contractu
ally extend to a stevedore the benefit of the
COGSA $500 package limitation provided this is
clear from the bill of lading. In doing so they
affirm the Trial Division ruling that the stevedore
was an "independent contractor", this being the
term used in the clause in question limiting liabili
ty of the shipper or consignee as carrier, bailee or
otherwise howsoever in contract or in tort. The
Herd case had held at page 883:
We therefore conclude that there is nothing in the provisions,
legislative history and environment of the Act, or in the limita-
tion-of-liability provisions of the bill of lading, to indicate any
intention, of Congress by the Act, or of the contracting parties
by the bill of lading, to limit the liability of negligent agents of
the carrier.
The Bernard Screen judgment goes on to say at
pages 1921-22:
This language has prompted a belief that a cargo-carrier and
a cargo-owner may contractually extend to a stevedore the
benefit enjoyed by carriers under COGSA's $500 limitation on
damages, and we consider ourselves bound by a previous deci
sion of this court permitting parties to do precisely that. In
language unmistakably clear, Judge Bonsai, relying upon Herd,
held in Carle & Montanan, Inc. vs. American Export
Isbrandtsen Line, 1967 A.M.C. 1637, ... that a negligent
stevedore was entitled to the benefit of the $500 limitation of
liability when the applicable bill of lading contained language
set forth in the margin.
In the Carle & Montanan case the limitation
clause had included "all agents and all stevedores
and other independent contractors whatsoever"
stating that "[none of them] is, or shall be deemed
to be liable with respect to the goods as carrier,
bailee or otherwise howsoever, in contract or in
tort".
3 1972 A.M.C. 1919.
The Trial Judge in the Bernard Screen case had
distinguished the previous judgment in the case of
Cabot Corp. v. S.S. Mormacscan 4 in which the
Court of Appeals had interpreted the language in
a bill of lading limiting liability to "all persons
rendering services in connection with the perform
ance of this contract", reiterating the necessity for
construing limitation of liability clauses strictly,
and referring to the Herd case as authority for the
proposition that the intention of the parties must
be expressed in "clarity of language", indicated
doubt as to whether the language "all persons
rendering service" was designed to include steve
dores loading the goods for another shipper.
In the present case the clause in the bill of
lading reads as follows:
All defences under this B/L shall inure also to the benefit of
the Carrier's agents, servants and employees and of any
independent contractor, including stevedores, performing any of
the Carrier's obligations under the contract of carriage or
acting as bailee of the goods, whether sued in contract or in
tort.
For the purpose of this clause all such persons, firms or legal
entities as alluded to above shall be deemed to be parties to the
contract evidenced by this B/L and the person, firm or legal
entity signing this B/L shall be deemed to be their agent or
trustee.
The wording of this clause would, under the
American jurisprudence be sufficient to give
Wolfe a valid defence, although possibly not
Steveco which is not a direct party to the contract
between Barber Lines and Wolfe, but was an
agent of Wolfe and not of the carrier.
At one time the matter appeared to be settled in
England by the case of Scruttons Ltd. and Mid
land Silicones Ltd. 5 in which the Privy Council
held, with Lord Denning dissenting, that steve
dores are not entitled to rely on the limitation of
liability contained in the bill of lading since the
word "carrier" in the Act did not include a steve
dore and there was nothing in the bill of lading
which stated or even implied that the parties to it
intended the limitation of liability to be extended
to stevedores, and that the carrier did not contract
4 l971 A.M.C. 1130.
5 [1962] A.C. 447.
as agent for the stevedores. A possible distinction
is made however by Lord Reid at page 474 in
which he stated:
I can see a possibility of success of the agency argument if
(first) the bill of lading makes it clear that the stevedore is
intended to be protected by the provisions in it which limit
liability, (secondly) the bill of lading makes it clear that the
carrier, in addition to contracting for these provisions on his
own behalf, is also contracting as agent for the stevedore that
these provisions should apply to the stevedore, (thirdly) the
carrier has authority from the stevedore to do that, or perhaps
later ratification by the stevedore would suffice, and (fourthly)
that any difficulties about consideration moving from the steve
dore were overcome. And then to affect the consignee it would
be necessary to show that the provisions of the Bills of Lading
Act, 1855, apply.
In the present case unlike the bill of lading in the
Midland Silicones case these conditions appear to
be present with the possible exception of the fourth
condition which I will deal with later. In fact it
would appear that the wording of the Himalaya
clause in the present case is expressly designed to
cover the conditions outlined in the Midland Sili-
cones case, in which Lord Reid further stated at
page 474:
But again there is nothing of that kind in the present case. I
agree with your Lordships that "carrier" in the bill of lading
does not include stevedore, and if that is so I can find nothing
in the bill of lading which states or even implies that the parties
to it intended the limitation of liability to extend to stevedores.
Even if it could be said that reasonable men in the shoes of
these parties would have agreed that the stevedores should have
this benefit, that would not be enough to make this an implied
term of the contract. And even if one could spell out of the bill
of lading an intention to benefit the stevedore, there is certainly
nothing to indicate that the carrier was contracting as agent for
the stevedore in addition to contracting on his own behalf. So it
appears to me that the agency argument must fail.
At page 494 in the same case Lord Morris of
Borth-y-Gest states:
The broad proposition contended for by the stevedores calls
for examination. My Lords, there is a clear pronouncement of
your Lordships' House that only a person who is a party to a
contract can sue on it (Dunlop Pneumatic Tyre Co. Ltd. v.
Selfridge & Co. Ltd.) [1915] A.C. 847. If then A (for good
consideration) promises B that he will make a gift - to C, no
claim for the gift can be made by C against A. There will be no
difference in principle if A promises B that he will not claim
from C that which C ought to pay to him (A). On a claim
against him by A, C could not set up the promise which A had
made to B. I exclude for present purposes contracts relating to
land, and any questions of agency or assignment or trust or any
statutory provisions. So if A contracts (for good consideration)
with B that he (A) will not sue C if C is negligent, and if C by
negligence causes damage to A, C cannot defend himself by
asserting a contract to which he is a stranger. This will be so
whether C is or is not a servant of B. It will be an a fortiori case
if A (for good consideration) promises B that he (A) will not
sue B if damage is caused to A by the negligence of C. If A had
occasion to sue C the latter could not set up the promise of A to
B and even if he could, the promise would not avail for it would
only have been a promise not to sue B.
However, more recently, and the importance of
the date October 1973 which will appear later,
Privy Council in the case of The New Zealand
Shipping Company Limited v. A. M. Satterth-
waite & Company Limited (The ` Eurymedon") 6
went into this further and reached a somewhat
different conclusion on the facts before it although
with two dissenting opinions. At page 538 Lord
Wilberforce refers to the judgment of the Midland
Silicones case having left open the case where one
of the parties contracts as agent for the third
person and refers to Lord Reid's four propositions
(supra). At page 539 he states:
... their Lordships would accept ... to say that the bill of
lading brought into existence a bargain initially unilateral but
capable of becoming mutual, between the shippers and the
appellants, made through the carrier as agent. This became a
full contract when the appellant performed services by dis
charging the goods. The performance of these services for the
benefit of the shipper was the consideration for the agreement
by the shipper that the appellant should have the benefit of the
exemptions and limitations contained in the bill of lading.
The judgment concludes at page 540:
In the opinion of their Lordships, to give the appellant the
benefit of the exemptions and limitations contained in the bill
of lading is to give effect to the clear intentions of a commercial
document, and can be given within existing principles. They see
no reason to strain the law or the facts in order to defeat these
intentions. It should not be overlooked that the effect of
denying validity to the clause would be to encourage actions
against servants, agents and independent contractors in order to
get round exemptions (which are almost invariable and often
compulsory) accepted by shippers against carriers, the exist
ence, and presumed efficacy, of which is reflected in the rates
of freight. They see no attraction in this consequence.
In Canada Mr. Justice Kerr in the case of
Falconbridge Nickel Mines, Ltd., Janin Construc
tion, Ltd., and Hewitt Equipment, Ltd. v. Chimo
6 [1974] 1 Lloyd's Rep. 534.
Shipping, Ltd., Clarke Steamship Company, Ltd.,
and Munro Jorgensson Shipping, Ltd.' examined
the jurisprudence that existed at that time very
thoroughly in reaching a conclusion that the bill of
lading clauses in that case did not relieve defend
ants from consequences of their negligence or limit
their liability in respect of loss. At pages 295-296
he deals with the principles to be applied to clauses
purporting to exempt one party to a contract from
liability, referring to the decision of the Judicial
Committee of the Privy Council in Canada
Steamship Lines Ltd. v. The King 8 in which it was
stated at pages 207-208:
In considering this question of construction their Lordships
have had in mind articles 1013 to 1021 of the Civil Code of
Lower Canada and also the special principles which are appli
cable to clauses which purport to exempt one party to a
contract from liability. These principles were stated by Lord
Greene M.R. in Alderslade v. Hendon Laundry Ld. [[19451
K.B. 189, at p. 192] as follows: "Where the head of damage in
respect of which limitation of liability is sought to be imposed
by such a clause is one which rests on negligence and nothing
else, the clause must be construed as extending to that head of
damage, because it would otherwise lack subject-matter.
Where, on the other hand, the head of damage may be based on
some other ground than that of negligence, the general princi
ple is that the clause must be confined in its application to loss
occurring through that other cause to the exclusion of loss
arising through negligence. The reason is that if a contracting
party wishes in such a case to limit his liability in respect of
negligence, he must do so in clear terms in the absence of which
the clause is construed as relating to a liability not based on
negligence."
It appears to their Lordships that none of the Judges of the
Supreme Court regarded this passage as being in any way in
conflict with the law of Lower Canada, and Kellock J. observed
[[1950] S.C.R. (Can.) 5501: "It is well settled that a clause of
this nature is not to be construed as extending to protect the
person in whose favour it is made from the consequences of the
negligence of his own servants unless there is express language
to that effect or unless the clause can have no operation except
as applied to such a case."
Their Lordships think that the duty of a court in approaching
the consideration of such clauses may be summarized as fol
lows:—
(I) If the clause contains language which expressly
exempts the person in whose favour it is made (hereafter
called "the "proferens") from the consequence of the negli
gence of his own servants, effect must be given to that
provision. Any doubts which existed whether this was the law
in the Province of Quebec were removed by the decision of
the Supreme Court of Canada in The Glengoil Steamship
Company v. Pilkington [(1897) 28 S.C.R. (Can.) 1461
' [1969] 2 Ex.C.R. 261.
8 [1952] A.C. 192.
The Supreme Court case of Canadian General
Electric Company Ltd. and Pickford & Black
Ltd. 9 in a judgment rendered in June 1970, before
the Eurymedon judgment of the Privy Council,
dealt at page 43 with an argument which had not
been raised in the lower Courts as to extending to
stevedores the limitation of liability for damages in
accordance with the provisions of Article IV, Rule
5 of the Rules in the Schedule to the Water
Carriage of Goods Act, R.S.C. 1952, c. 291 which
had been incorporated in the contracts of carriage
evidenced by the through bills of lading, Ritchie J.
in rendering the judgment of the Court stated at
pages 43-44:
... it is perhaps as well for me to point out that as the
stevedoring company is a complete stranger to the contract of
carriage it would not be affected by any provisions for limita
tion of liability or otherwise contained in the bills of lading and
if the respondent was in breach of its duty to take reasonable
care of the goods which it was stowing in the ship, it must
accept the normal consequences of its tort. The law in this
regard is, in my opinion, correctly stated in the reasons for
judgment of the majority of the House of Lords in Midland
Silicones v. Scruttons Limited, [[19621 A.C. 446, [1962] 1 All
E.R. 1], where the relevant cases are fully discussed.
The respondent contends that the appellant took an active
part in the loading and stowage of the cargo and that it was
thus a party to the way in which the ship was stowed and to any
defects there may have been in such stowage. The learned trial
judge, however, made the following finding:
I think the responsibility for proper stowage was on the
part of the defendant stevedores and the evidence does not
show that they ever even themselves assumed that the plain
tiffs were relieving them of the responsibility for proper
stowage.
I agree with this finding which does not appear to have been
disturbed by the Exchequer Court.
The most recent authority on the subject is an as
yet unreported case in the Quebec Court of Appeal
bearing No. 09-000703-73 Ceres Stevedoring Co.
Ltd. v. Eisen Und Metall A.G. and Canadian
Overseas Shipping Ltd. The judgment rendered by
Owen J. on December 20, 1976, dealt with a
Himalaya clause extending to independent con
tractors employed by the carrier exemptions from
liability resulting directly or indirectly from any
act, neglect or default while acting in the course of
their employment, and specifying that the carrier
is deemed to be acting as agent or trustee on
behalf of such servants or agents including
independent contractors, who are thereby deemed
9 [1971] S.C.R. 41.
to be parties to the contract evidenced by the bill
of lading. The Court found as a fact that the loss
was due to the negligence of the stevedoring com
pany and then considered the question of whether
it could benefit by the exemption. After analyzing
the jurisprudence including the American case of
Herd v. Krawill (supra), the British case of Mid
land Silicones v. Scruttons (supra) and the
Supreme Court case of Pickford & Black (Lake
Bosomtwe) (supra), he points out at page 11 of his
unreported judgment:
However in February 1974 the Judicial Committee of the
Privy Council in the "EURYMEDON", [ 1974] 1 Lloyd's Rep.
523, held, by a three to two decision, that the stevedore was
entitled to the benefit of the Himalaya clause in the bill of
lading. In the lower courts the Supreme Court of New Zealand
had held that the stevedore was protected while the New
Zealand Court of Appeal allowed the appeal and held that the
consignor and the stevedore were not contractually bound inter
se.
He then quotes the passage of Lord Wilberforce
with respect to giving effect to the clear intentions
of a commercial document which I have already
quoted (supra), and follows this judgment by
giving the terminal operator and longshoreman the
benefit of the exoneration clause. He then goes on
to deal with the question of whether their conduct
did not constitute gross negligence, however, and
refers to the Supreme Court of Canada case of
The King v. Canada Steamship Lines 10 in accept
ing the definition of Pothier, OEuvres de Pothier,
1861 ed., Tome II, p. 32, which reads:
[TRANSLATION] According to this doctrine gross negligence,
lata culpa, consists in not applying to the affairs of another the
care which the least careful and most stupid people do not fail
to apply to their affairs. This fault is contrary to good faith.
He finds on the facts before him that the steve
dores and terminal operators were guilty of gross
negligence. Finally he discusses whether the exon
eration clauses in the bill of lading can protect
them against gross negligence. Again discussing
the case of The King v. Canada Steamship Lines
he points out that the learned judges of the
Supreme Court found that gross negligence did not
exist in that case so that any statements which
were then made on whether gross negligence would
cancel the protection of the non-responsibility
clause must be considered as obiter. Rinfret C.J. at
page 540 had expressed the opinion that he could
1° [1950] S.C.R. 532.
not conclude that gross negligence would render
the clause inoperative and Kellock J. had
expressed doubt as to whether gross negligence
could be invoked at all. The Privy Council judg
ment in that case, although it reversed the
Supreme Court judgment on the question of the
non-responsibility clause did not deal with the
question of whether such a clause would apply in
case of gross negligence. The Trial Judge had held
that non-responsibility clause afforded no protec
tion against gross negligence and Owen J. states at
page 15:
In this case the only court that was faced with the question
now under consideration was the Exchequer Court and its well
reasoned judgment is strong authority for the proposition that
clauses of non-responsibility do not exempt from liability for
gross negligence.
He concludes:
... I would hold that a clause contracting out of responsibility
for negligence is invalid with respect to gross negligence or
"faute lourde" as being contrary to public policy. This would
be subject to Pothier's definition of " faute lourde" which
should limit the application of the doctrine to very rare cases.
He then discusses the possible apportionment of
responsibility between the stevedores and ware-
housemen, and while concluding that this appor
tionment should be decided in a recursory action
from a strictly procedural point of view, he consid
ers it desirable to decide the question immediately
so alters the joint and several condemnation, con
cluding that each defendant should share the dam
ages equally.
Reference should be made to one more
unreported case, a judgment of Mr. Justice
Schultz in the Supreme Court of British
Columbia, in record No. 27396/75, Calkins &
Burke Ltd. and Far Eastern Steamship Company
v. Empire Stevedoring Co. Ltd. He refers to York
Products Property Ltd. v. Gilchrist Watt and
Sanderson Property Ltd." a Privy Council case in
which Lord Pearson stated at page 14:
" [1970] 2 Lloyd's Rep. 1.
Both on principle and on old as well as recent authority it is
clear that, although there was no contract or attornment be
tween the plaintiffs and the defendants, the defendants by
voluntarily taking possession of the plaintiffs' goods in the
circumstances assumed an obligation to take due care of them,
and are liable to the plaintiffs for their failure to do so (as
found by the trial Judge). The obligation is at any rate the
same as that of a bailee whether or not it can with strict
accuracy be described as being the obligation of a bailee.
He discusses the Pickford and Black, the Scrut-
tons v. Midland Silicones Ltd. and the New Zea-
land Shipping (Eurymedon) cases among others in
some detail pointing out that in the latter case
three judges of the Court of Appeal had reversed
the Trial Judge and in the Privy Council three
judges allowed the appeal but two dissented and
states at page 14:
Neither the judgment of the House of Lords, nor that of the
Privy Council, while often of strong persuasive value, is binding
upon a trial Judge in British Columbia. On the other hand, a
judgment of the Supreme Court of Canada is determinative of
the law in Canada.
While this statement of principle is undoubtedly
true, it must be remembered that when the
Supreme Court rendered its judgment in the Pick-
ford and Black case it was relying on the Midland
Silicones case, the Privy Council judgment in the
Eurymedon case not having yet been rendered. I
now also have before me the unanimous judgment
of the Quebec Court of Appeal extending the
validity of a Himalaya clause to stevedores and
warehousemen.
There must remain some doubt in our law there
fore until the matter is definitely settled by the
Supreme Court by judgment subsequent to that of
the Privy Council in the Eurymedon case and to
that of the Quebec Court of Appeal in the Ceres
Stevedoring Co. case as to whether a properly
worded Himalaya clause can extend to stevedores
and warehousemen non-responsibility and limita
tion of liability clauses granted to the carrier in the
bill of lading by adopting the device of stating in
the Himalaya clause that the carrier is acting in
the bill of lading as agent or trustee for them
although they are not themselves parties to the
contract.
In this connection reference was made in argu
ment to article 1029 of the Quebec Civil Code
which reads as follows:
1029. A party in like manner may stipulate for the benefit of
a third person, when such is the condition of a contract which
he makes for himself, or of a gift which he makes to another;
and he who makes the stipulation cannot revoke it, if the third
person have signified his assent to it.
and it was contended that the stevedores and
warehousemen by carrying out duties in connec
tion with the handling of the goods have in effect
signified their assent to the contract of carriage
made between the shipper and carrier and evi
denced by the bill of lading. It was further con
tended that the fourth criterion set out by Lord
Reid in the Midland Silicones case (supra) to the
effect that it was necessary to establish that some
consideration move from the stevedores was in fact
accomplished by the work done by the stevedores
and warehousemen in connection with the han
dling of the merchandise involved in the shipment.
Defendants contended that in so far as contracts
carried out in the Province of Quebec are con
cerned the existence of article 1029 of the Quebec
Civil Code overcomes the difficulties encountered
in common law jurisdictions with respect to the
effect of contracts on third parties not parties to
the contract. In the present case I do not believe
that the Quebec Civil Code can be invoked in any
event in connection with the interpretation of the
bills of lading. The bill of lading for the walkie
talkies consigned to Circle Sales & Import was
entered into in Hong Kong and that for the hair
dryers consigned to Marie-Anne Novelties in
Tokyo. The bills of lading should therefore not be
interpreted according to the laws of Quebec even
though the actual loss of the merchandise in ques
tion occurred there. If we were dealing with out
ward shipments from Quebec where the bill of
lading was issued article 1029 might then be
invoked although I would in any case consider it
highly regrettable if principles of Canadian mari
time law which should be the same throughout the
country could be so interpreted as to lead to a
different result with respect to a bill of lading
made in Quebec from that with respect to an
identical bill of lading made in one of the other
provinces.
One further argument should be dealt with
respecting the claim of defendants Wolfe and
Steveco to protection by virtue of the non-responsi
bility clauses in the bill of lading. The agreement
between Wolfe, referred to as the contractor in the
agreement and Barber Lines referred to as the
company for the provision of the stevedoring and
warehousing services made on the standard form
of Wolfe Stevedores Ltd. contains a clause 2 read
ing in part as follows:
2. In the event that receiving, delivery, checking and/or watch
ing services are required, it is expressly agreed that the Con
tractor will provide or arrange for the provision of such services
as Agent only for the company and on the express condition
that the Contractor, its agents and employees shall thereby
incur no liability whatsoever for misdelivery, pilferage, theft or
mysterious disappearance of goods, arising from any cause
whatsoever, and the company agrees to indemnify the Contrac
tor in the event it be called upon to pay any sums as a result of
such misdelivery, pilferage, theft or mysterious disappearance
of goods.
This clause was struck out in the agreement be
tween the parties. Wolfe is now claiming for itself
and for Steveco the benefit of the Himalaya clause
in the bill of lading so as to protect it to the same
extent as the carrier is protected against any
claims whether in contract or in tort, yet in the
very contract by which it agreed to provide these
services to the carrier it consented to the striking
out of a clause relieving it from liability for theft
or mysterious disappearance of the goods arising
from any cause whatsoever. It certainly cannot
claim as an agent of the carrier greater protection
from plaintiffs' claims than that contained in this
agency contract, and for this reason alone Wolfe
and Steveco cannot contend in the present case
that the Himalaya clause protects them from loss
resulting from their own negligence or tort.
Without making any general conclusion there
fore as to whether a properly worded Himalaya
clause can extend its protection to stevedores or
warehousemen even against their tortious conduct
I find that on the facts of the present case neither
Wolfe nor Steveco can claim the benefit of same,
their liability resulting not from contract but from
tort, or delict as it is known in the Province of
Quebec. Since the loss clearly took place by theft
from the shed in the Port of Montreal after the
goods had been delivered to them there by the
carrier the extent of their liability for their negli
gence is to be determined according to the law of
the Province of Quebec. Since, unlike the judg-
ment of the Quebec Court of Appeal in the Ceres
Stevedoring case I have not concluded that the
benefit of the protection of the Himalaya clause
extends to them it is unnecessary for me to consid
er the further conclusion reached by Owen J. in
that case whether the negligence was not ordinary
negligence but constituted gross negligence as
defined by Pothier and approved by the Supreme
Court of Canada in The King v. Canada Steam
ship Lines (supra) as being [TRANSLATION] "neg-
ligence ... in not applying to the affairs of another
the care which the least careful and most stupid
[person would] not fail to apply to [his own]
affairs". If it had been necessary to do so, I would
have been inclined to go this far on the basis of the
evidence before me. Wolfe and Steveco knew or
must be deemed to have known of the frequency of
thefts from sheds in the Port of Montreal at the
time, they had been warned in advance that cargo
of a nature to be easily stolen would be in their
sheds at a certain time and requested to place
same in the special security locker which was done.
Having done this they were content to protect this
merchandise at night by merely having one guard
normally stationed at a gate nearly half a mile
from the shed in question and who only made
inspection tours of the shed every two hours at
regular intervals. The presence of another guard
during the night for the shed in question, or more
specifically in the vicinity of the security locker in
the shed, would certainly have made the theft, in
the manner in which it was apparently carried out,
impossible. I am inclined to believe that even the
least careful and most stupid person would have
engaged another guard at least for the nights in
question, and that the theft was a direct conse
quence of failure to do this.
With respect to the amount claimed the evi
dence was somewhat unsatisfactory with unex
plained discrepancies in the figures submitted.
Plaintiff Circle Sales & Import Limited claims for
damages the amount of $10,436 with interest at
12% from the date of loss to the date of judgment.
In the Marie-Anne Novelties case the claim is for
$1,982.45 with interest at 12% from the date of
the loss to the date of judgment. In the calculation
filed as exhibits in the Circle Sales & Import
claim an invoice value of $7,320 U.S. is claimed
plus ocean freight of $270.43 making a total of
$7,590.43 U.S. which is converted at par as of
June 14, 1974, to $7,590.43 Canadian. Customs
duty of $1,060.05 is added and sales tax of,
$982.44 to make a total claim of $9,632.92. Inter
est is then calculated at 8% from October 2, 1973
to April 5, 1977, the date of the trial, in the
amount of $2,708.83, making a total claim of
$12,341.75. Similarly the Marie-Anne Novelties
claim shows an invoice value for the 34 cartons
lost of $1,158.72 U.S. to which is added $77.76
U.S. for a shortage of 4 1 / 2 dozen of glass ornaments
and $11.06 for two pieces of a game set also lost
covered by the same bill of lading.
A proportion of ocean freight amounting to
$235.85 is added making a total claim of
$1,483.39 U.S. converted at par to $1,483.39
Canadian. A proportion of duty, sales and excise
taxes is then added in the amount of $345.45
making a total of $1,828.84 Canadian to which is
added $514.28 for interest at 8% from October 2,
1973 to April 5, 1977, making a total claim of
$2,343.12. Maritime Insurance Company paid
Circle Sales & Import $10,436 for their claim,
taking subrogation and paid Marie-Anne Novel
ties $1,982.45 for their claim also taking subroga-
tion, and these were the amounts for which pro
ceedings were brought plus the claims for interest.
There is no explanation as to how these calcula
tions were made although it was suggested that the
value fo. insurance claims might be somewhat
different from invoice value plus ocean freight plus
customs duty and sales tax. Clause 16 of the bill of
lading provides that whenever the value of the
goods is less than the maximum liability per pack
age, the value for the purpose of claims for which
the carrier may be liable is to be the invoice value
plus freight and insurance if paid irrespective of
whether any other value is greater or less. How
ever, as indicated, the present claim succeeds on
the basis of tort and not as a result of the contract,
and I have found that the carrier itself is not
liable, so I do not conclude that this clause can be
used to determine the amount of damages to be
paid by Wolfe and Steveco which must be deter
mined by general principles according to the law of
the Province of Quebec. Since the amount claimed
in each of the actions is identical with the amount
of the insurance settlement and is not seriously
disputed by defendants, I conclude that in the
Circle Sales & Import case the value should be
established at $10,436 and in the Marie-Anne
Novelties case $1,982.45 as claimed. The only
question remaining is that of interest.
The Quebec Civil Code has an article dealing
with interest, namely article 1056c which reads as
follows:
1056c. The amount awarded by judgment for damages
resulting from an offence or a quasi-offence shall bear interest
at the legal rate as from the date when the action at law was
instituted.
There may be added to the amount so awarded an indemnity
computed by applying to the amount, from such date, a per
centage equal to the excess of the interest rate fixed according
to section 53 of the Revenue Department Act (Revised Stat
utes, 1964, chapter 66) over the legal interest rate.
The rate fixed according to section 53 of the
Revenue Department Act as amended by S.Q.
1971, c. 21, s. 5 and replaced by S.Q. 1972, c. 22,
s. 28 is that fixed by regulation and by Order-in-
Council 3784 of December 13, 1972, to take effect
December 20 this was fixed at 8%. The Quebec
Civil Code would only apply this, however, from
the date when the action was instituted which in
both of the present cases was September 20, 1974.
This whole question of interest was dealt with at
some length in a judgment of Addy J. of this Court
in the case of The Bell Telephone Company of
Canada-Bell Canada v. The Ship "Mar-Tirenno"
and owners 12 which was confirmed by the Court of
Appeal by judgment reported in [1976] 1 F.C.
539. In his judgment Addy J. stated at page 311:
It is clear that this Court, under its admiralty jurisdiction,
has the right to award interest as an integral part of the
damages suffered by the plaintiff regardless of whether the
damages arose ex contractu or ex delicto.
Later on the same page he states:
... the principle is based on the right of the plaintiff to be fully
compensated, including interest, from the date of the tort....
[Underlining mine.]
12 [ 1974] 1 F.C. 294.
and again at page 312 he states that interest in
these cases is awarded
... as part and parcel of that portion for which the defendant is
responsible of the initial damage suffered by the harmed party
and it constitutes a full application of the principle of restitutio
in integrum.
In the case before him the statement of claim only
asked for interest from the date of service and he
points out that since no amendment was made to
this it is obvious that the Court cannot award
interest for any time prior to the service of the
writ. He goes on to state at pages 312-313:
Had the statement of claim merely mentioned interest without
any specific time I would then have been obliged to consider
whether interest should be awarded from the actual date of the
accident.
With respect to the rate of interest he states at
page 314:
It seems clear to me, however, that if one is to consider the
right of the plaintiff to interest as a part of his damage under
principle of restitutio in integrum, then, in order to be fair, the
actual commercial rate of interest prevailing at the time should
be applied regardless of what rate of interest a judgment debt
should bear at this time or what rate of interest any govern
ment at the time should choose to pay on monies paid into
Court.
In the present case interest was demanded from
the date of the loss as part of the amount of
damages claimed, and, although initially the rate
sought was 12%, in calculating their claims both
plaintiffs reduced this to 8% which I find to be
proper under the circumstances. Judgment will
therefore be rendered in favour of Circle Sales &
Import Limited, Case T-3394-74 against Wolfe
Stevedores (1968) Ltd., and Steveco Terminal
Operators Ltd. jointly, each being responsible for
one half, for the sum of $10,436 plus interest on
this amount at 8% per annum from October 2,
1973 to the date of this judgment with costs, the
action against Wilh. Wilhelmsen, Barber Lines
and the owners and charterers of the ship Tarantel
being dismissed with costs. In the case of the
action brought by Marie-Anne Novelties Incorpo
rated bearing No. T-3395-74 judgment will be
rendered jointly against Wolfe Stevedores (1968)
Ltd. and Steveco Terminal Operators Ltd. each
being responsible for 50% in the amount of
$1,982.45 plus interest at 8% per annum from
October 2, 1973 to the date of this judgment with
costs, the action against Wilh. Wilhelmsen, Barber
Lines and the owners and charterers of the ship
Tarantel being dismissed with costs. As the cases
were heard simultaneously only 50% of the costs of
the trial will be allowed in each case. Interest on
the total amount allowed in each case shall bear
interest at the legal rate from the date of
judgment.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.