T-4655-75
Northland Navigation Co. Ltd. and Northland
Shipping (1962) Co. Ltd. (Plaintiffs)
v.
Patterson Boiler Works Ltd. (Defendant)
Trial Division, Collier J.—Vancouver, June 20, 23
and 24, 1980, March 1, 1983.
Maritime law General average — Defendant's goods
being transported in plaintiffs' barge — Tug towing barge
taking in water in heavy seas Barge cast adrift — Cargo
later saved Casting adrift was general average sacrifice
Expenses incurred saving cargo also giving rise to general
average Expenditures for common safety of vessel and
cargo Whether tug's owners must contribute — Services
akin to salvage but plaintiffs carriers, not salvors Provi
sions in bill of lading — No evidence tug unseaworthy
Canada Shipping Act, R.S.C. 1970, c. S-9, s. 536(1).
The plaintiffs' claim is for a general average contribution by
the shipper of eleven steel buoys. The plaintiff, Northland,
owned a barge called the Lakelse. The defendant arranged for
its goods to be transported by plaintiff. Since a self-propelled
ship was unavailable, the plaintiff decided to use the Lakelse
and engaged the Sea Comet, a tug, to tow the barge from
Vancouver to Prince Rupert. Heavy seas were encountered on
the voyage. The Sea Comet was taking in water and experienc
ing engine trouble. The Lakelse was cast adrift and it ran
aground on a reef. Attempts to free the barge proved unsuc
cessful. Northland decided to abandon the barge but to try to
save the cargo. The barge was abandoned to underwriters and
general average adjusters appointed. The entire cargo was
removed. General average was provided for in the bill of lading.
Plaintiff argues that a general average situation arose when
extraordinary expenditures were incurred first to save the barge
and cargo and later to save the cargo only. Defendant's submis
sion is that the extraordinary sacrifice came when the barge
was cut adrift and that everything after was a salvage
operation.
Held, plaintiffs should have judgment. There is little modern
case law on general average since most claims are settled.
General average arises where there has been (I) extraordinary
sacrifice or (2) expenses incurred to preserve the ship and
cargo. It was clear that the Sea Comet was in danger and it
may be that both the tug and barge would have sunk had the
latter not been let free. Its casting adrift was a general average
sacrifice. Furthermore, the expenses incurred in the attempts to
save the barge and cargo gave rise to general average. The
Court could not agree with defendant's submission, that expen
ditures from the time the barge was found stranded until
formal abandonment were not for the common safety of vessel
and cargo. On the evidence, there was nothing to warrant
treating the barge as irrecoverable from the outset.
The argument that, if general average were found applicable,
the owners of the Sea Comet must contribute, was troublesome.
This case was similar to Walthew and Another v. Mavrojani
and Others (1870), 5 L.R. Ex. 116 where expenses were
incurred in an attempt to refloat the vessel after the cargo had
been saved. It was there held that since the common peril had
expired, the cargo need not contribute. Here, the expenditures
on saving the barge and cargo had nothing to do with the Sea
Comet's safety. As is said in the text Carver's Carriage by Sea
at paragraph 850 under the heading General average expendi
ture: "... any extraordinary expenses for the peculiar benefit of
the ship, or for the preservation of some portion of the cargo,
must be borne wholly by the interest for which it has been
made".
The defendant's argument, that as the services were in the
nature of salvage, the action had been launched out of time
(subsection 536(1), Canada Shipping Act), could not be sus
tained. While the services were akin to salvage, they were not
salvage in the legal sense. Plaintiffs were carriers, not true
salvors who, as strangers, volunteer to save a vessel and its
cargo from danger at sea. Plaintiffs' claim is not for salvage
services but for a general average contribution.
Nor can effect be given to the argument that defendant is not
liable because the bill of lading mentioned carriage by self-
propelled vessel rather than by barge. There was a clause in the
bill of lading reserving to the carrier the right to substitute
vessels.
Finally, there was no evidence in support of the defence
contention that the tug was unseaworthy. That the Sea Comet,
in heavy seas, took water into her engine room does not prove
unseaworthiness.
CASES JUDICIALLY CONSIDERED
APPLIED:
Birkley and others v. Presgrave (180I), I East 220;
[1801-1802] R.R. 256 (K.B.); Kemp v. Halliday (2)
(1865), 6 B. & S. 723; [1863-1865] R.R. 579 (Q.B.);
Walt hew and Another v. Mavrojani and Others (1870), 5
L.R. Ex. 116.
DISTINGUISHED:
Monarch Towing & Trading Co. Ltd. v. British
Columbia Cement Co. Ltd., [1957] S.C.R. 816.
REFERRED TO:
The Ocean Steamship Co. v. Anderson, Tritton & Co.
(1883), 13 Q.B.D. 651 (C.A.); reversed (1884), 10
App.Cas. 107 (H.L.); The J.P. Donaldson, 167 U.S. 599
(U.S.S.C. 1897).
COUNSEL:
M. A. Clemens for plaintiffs.
B. J. McConnell for defendant.
SOLICITORS:
Campney & Murphy, Vancouver, for plain
tiffs.
Meredith & Company, Vancouver, for
defendant.
The following are the reasons for judgment
rendered in English by
COLLIER J.: The plaintiffs' claim is for
$8,981.02 as a general average contribution from
the defendant.
There were several defences raised. I shall refer
to them later.
The defendant was the owner and shipper of
eleven steel buoys. The buoys were to be sent to its
customer, the Ministry of Transport, at Seal Cove,
Prince Rupert, B.C.
The plaintiff, Northland Shipping (1962) Co.
Ltd., was the owner of a barge called the Lakelse.
It was also the parent company of the plaintiff
Northland Navigation Co. Ltd. The two compa
nies carried on business under the general name of
"Northland".
They operated passenger and cargo ships, as
well as tugs and barges, to northern ports on the
west coast of British Columbia (see Exhibit 9, the
sailing schedule effective August 30, 1971).
The defendant had used Northland services for
some time. For shipments to Prince Rupert they
assumed their goods would be carried on self-
propelled vessels, rather than on barges towed by
tugs.
In December of 1972 the defendant arranged to
ship the eleven buoys to its customer at Seal Cove.
The buoys were delivered to the Northland dock in
Vancouver on December 21. On the normal sailing
schedule, as shown in Exhibit 9, the goods would
have been loaded on the MIS Island Prince on
December 22 (route 8) or perhaps on the MIS
Northland Prince on December 26 (route 3). But,
as was customary in December, many of the
Northland vessels were taken off their runs for dry
dock inspection.
The defendant knew of this practice. It knew
some of the regular sailings would be cancelled.
Northland, on November 15, 1972, sent a sailing
schedule for Christmas and New Year 1972
(Exhibit 5). The plaintiffs' evidence was that
Exhibit 5 would have been sent to the defendant,
as a matter of routine, because the defendant was
one of its regular customers. The defendant,
through its witness, could not say whether a copy
of Exhibit 5 was received. I find the probabilities
are that the defendant did, in fact, receive the
revised schedule. It showed the Island Prince sail
ing for December 22 had been cancelled. The next
sailing for Prince Rupert was set for December 29,
1972. This voyage was to be by the barge North-
land 101 (route 10). The route was from Vancou-
ver to Kitimat, but Exhibit 5 showed Northland
101 was going to Prince Rupert as well. The
revised schedule had a note that the terminal at
Vancouver would be closed from Friday, Decem-
ber 22 to 8.00 a.m., December 27, 1972.
As earlier stated, the defendant's buoys were
delivered to the Northland dock on December 21.
The defendant had blank Northland bills of
lading. The bill of lading (Exhibit 2) was prepared
by the defendant. Opposite the word "vessel" there
is a blank which was not filled in. Nor was the
voyage number. The bill of lading shows the cargo
was originally designated to be loaded on barge
101 which was to leave Vancouver on December
29. That portion of the bill of lading was filled in
by a representative of the plaintiffs.
A decision was made by the plaintiffs to use the
barge Lakelse for the cargo to Prince Rupert, and
the Northland 101 for the cargo to Kitimat. The
two barges were similar, but the Northland 101
was somewhat larger. There was apparently, at
this particular time, more freight for Kitimat than
there was for Prince Rupert.
The plaintiffs engaged a tug, the Sea Comet, to
tow the Lakelse. On December 31, in Milbanke
Sound, the tug and tow encountered heavy seas.
Water broke over the stern of the tug, flooding the
bilge and entering the engine room. The engine
began to shudder. The tow line was let go, setting
the Lakelse adrift. The Sea Comet headed for
shelter. The next morning the Lakelse was found
aground on Pidwell Reef just off Swindle Island.
Attempts were made by the plaintiffs, on Janu-
ary 1, to pull the barge free. Those attempts were
unsuccessful. The vessel's bottom had been pierced
in several places. Further unsuccessful attempts
were made on January 5.
It appeared as if both the barge and her cargo
would have to be treated as a constructive total
loss.
A decision was made between January 6 and
January 9 to abandon the barge, but to try and
save the cargo. Northland (1962) on January 9,
1973, formally abandoned the barge to the
underwriters.
General average adjusters were appointed. Most
of the cargo owners were advised that attempts
were going to be made to save the cargo and that
in the plaintiffs' view a general average situation
existed.
Attempts were made from January 7 on to shift
the barge so the cargo could be unloaded. Finally
and luckily, fortuitous action of the elements shift
ed the barge into a position where removal of the
cargo was possible. By January 25, the entire
cargo had been removed.
Clause 9 of the bill of lading provided, in part,
as follows:
9. General Average shall be adjusted according to York Ant-
werp Rules, 1950, and, as to matters not therein provided for,
according to the laws and usages of the Dominion of Canada
and the General Average shall be prepared by Average Adjust
ers selected by the carrier, the said Adjusters to attend to the
settlement and collection of the Average subject to the custom
ary charges.
A statement in respect of general average pay
ments and contributions was prepared by the
adjusters. There are two main breakdowns. The
disbursements and expenses incurred from Janu-
ary 1 to January 7 are classed as general average.
The disbursements and expenses incurred from
then on are shown as special charges on cargo.
As indicated at the outset of these reasons, the
claim for contribution by the defendant is
$8,981.02 calculated as follows: the contributory
value of the defendant's cargo was $16,285, the
amount assigned to general average was $1,873.01
and to special charges on cargo, $7,245.51. The
defendant was allowed $137.50 in respect to some
minor damage to one or more of the buoys.
Counsel for the plaintiffs, in putting forward
their case, said a general average situation arose
when extraordinary expenditures were made first
to try and save the barge and the cargo, and finally
in respect of the cargo only. The defendant con
tended general average was not applicable in that
case; the extraordinary peril or sacrifice was when
the barge was cut adrift; everything which
occurred after was in the nature of a salvage
operation.
I have had some difficulties with these opposing
contentions. There is little modern case law on
general average. Most claims do not get into
litigation.
It is necessary, I think, to go back to certain
basic principles. The words of Lawrence J., in
Birkley and others v. Presgrave' have been cited
many times.
All loss which arises in consequence of extraordinary sacri
fices made or expenses incurred for the preservation of the ship
and cargo comes within general average, and must be borne
proportionably by all who are interested.
It is to be noted general average can arise either
where there has been an extraordinary sacrifice, or
where there have been extraordinary expenses
incurred, for the preservation of ship and cargo.
Jettison of cargo is a well-known illustration of an
extraordinary sacrifice. Other illustrations, where
there have been sacrifice of parts of a vessel or her
tackle, particularly in the sailing days, can be
found in some of the older cases.
1 (1801), 1 East 220, at p. 228; [ 1801-1802] R. R. 256
(K.B.), at p. 263.
The casting adrift of the Lakelse, in this case,
can perhaps be said to be an extraordinary sacri
fice made in respect of the safety of the tug, the
barge, and the cargo on board the latter vessel.
There was no evidence before me as to all the
reasons which may have influenced the master of
the Sea Comet to let the tow line go. Obviously,
from the agreed facts, the tug itself was in some
danger. It may well be that tug and tow were in
danger of going down, if the barge had not been let
free.
The defendant's contention does not, in my view,
take proper account of the distinction between a
general average sacrifice and a general average
expenditure.
A general average sacrifice involves intentional and physical
loss of, or damage to, the property in a common maritime
adventure, i.e. ship, cargo, or freight, and examples of sacrifices
include damage to the ship by voluntary stranding, or the
jettison of cargo and the consequent loss of any freight at risk
thereon.
A general average expenditure, on the other hand, is nothing
more than the expenditure of money for the purpose of securing
services or facilities necessary to save the property imperilled in
a common maritime adventure. Examples which will be dealt
with more fully in this Chapter include the hire of tugs, lighters
and labour to discharge cargo and refloat a stranded vessel, or
the cost of entering a port of refuge. 2
The casting adrift of the Lakelse, in the knowledge
it would inevitably strand or go under, can be
characterized as a general average sacrifice.
But equally, in my view, the expenses first laid
out by the plaintiffs to try and save both barge and
cargo, after the stranding on Pidwell Reef, gave
rise to general average. Blackburn J., in Kemp v.
Halliday (2) 3 put it this way:
2 Lowndes & Rudolph, General Average and York-Antwerp
Rules (10th ed. 1975) para. 241 (p. 120).
See also: Carver's Carriage by Sea (12th ed. 1971) paras.
849 and 850 (pp. 723-724) and para. 901 (p. 767); Arnould'.s
Law of Marine Insurance and Average (16th ed. 1981) Vol. II,
para. 915A (p. 798); The Ocean Steamship Co. v. Anderson,
Tritton & Co. (1883), 13 Q.B.D. 651 (C.A.), per Brett M.R. at
p. 662; reversed (1884), 10 App.Cas. 107 (H.L.).
3 (1865), 6 B. & S. 723 at p. 746; [1863-l865] R.R. 579
(Q.B.), at p. 595.
In order to give rise to a charge as general average, it is
essential that there should be a voluntary sacrifice to preserve
more subjects than one exposed to a common jeopardy, but an
extraordinary expenditure incurred for that purpose is as much
a sacrifice as if, instead of money being expended for the
purpose, money's worth were thrown away. It is immaterial
whether the shipowner sacrifices a cable or an anchor to get the
ship off a shoal, or pays the worth of it to hire those extra
services which get her off.
Until the decision was made to abandon the
barge, both vessel and cargo were in peril. The
measures taken to try and save or rescue both, and
the resultant expenditures, were, as I see them,
extraordinary in nature. The expenses incurred to
that point are properly allocable as general aver
age expenditures.
Counsel for the defendant contended the barge
itself was, for practical purposes, from the moment
she was found stranded, a total loss; the expendi
tures incurred from then until she was formally
abandoned as a total loss, were not for the
common safety of vessel and cargo.
I disagree.
The initial efforts made to save both cargo and
barge were, in my view, reasonable. There was
nothing in the evidence before me, to warrant
treating the Lakelse, from the outset, as
irrecoverable.
It was further contended, on behalf of the
defendant, that if general average was applicable,
the owners of the tug Sea Comet must contribute.
This is a troublesome point. There seems to be
little or no authority in England and Canada. In
the United States there is varying authority. 4 The
Sea Comet, to my mind, should not, in this case,
be called on to contribute. The expenditures laid
out in the attempt to recover barge and cargo had
nothing to do with the safety of the tug. There
was, at that time, no common tripartite peril; the
jeopardy, and the general average efforts towards
recovery, were in respect of barge and cargo
4 See Parks, Law of Tug, Tow and Pilotage (1st ed. 1971)
pp. 286-293. But the Supreme Court of the United States in
The J.P. Donaldson, 167 U.S. 599 (U.S.S.C. 1897) ruled
against contribution by a tug, where barges had been cut adrift
and they, and their cargo, lost.
alone.' There may be some factual circumstances
in which, on the basis that tug and tow form a
single maritime adventure, contribution may be
had from the tug. They are not present here. I do
not find Monarch Towing & Trading Co. Ltd. v.
British Columbia Cement Co. Ltd. 6 of help. There
the tonnage of both tug and tow were combined
for the purposes of calculating limitation of liabili
ty under the Canada Shipping Act, R.S.C. 1952,
c. 29. But the factual situation was quite different
from that here. The result depended to a large
extent on the effect of the statutory provisions in
respect of limitation of liability.
I turn now to the expenses incurred after the
Lakelse was abandoned to the underwriters.
Those expenditures were, in my opinion, proper
ly allocated as particular charges on the barge's
cargo. From approximately January 9, 1973 on,
the plaintiffs' efforts were directed towards rescue
of the cargo alone. Those efforts, with their trans
lation into money, were successful. The facts in
this case fall, to my mind, within the principles set
out in Carver's (previously cited) at paragraph 850
(page 723):
General average expenditure. Again, a closely similar princi
ple requires that some kinds of extraordinary expenditure made
for the benefit of the adventure as a whole shall be borne by all
concerned. Expenditure incurred by the shipowner in the
performance of his contract ordinarily falls upon him alone.
And any extraordinary expenses for the peculiar benefit of the
ship, or for the preservation of some portion of the cargo, must
be borne wholly by the interest for which it has been made.
[My underlining.]
and in Arnould's (previously cited) at paragraph
918 (pages 804-805):
5 For a somewhat analogous situation, see Walthew and
Another v. Mavrojani and Others (1870), 5 L.R. Ex. 116. A
vessel stranded. Her cargo was moved to a place of safety.
Subsequently, extraordinary expense was incurred in order to
refloat the vessel. It was held the common risk or peril had
expired, and cargo could not be required to contribute. The
expenses were for the ship alone. Hannen J. said at p. 126:
... only expenses which are incurred in the preservation of
ship and cargo from a common danger are included in
general average. Here I find as a fact that all common
danger was at an end when the cargo was on shore, and that
the owner of the cargo is therefore not liable to contribute.
6 [1957] S.C.R. 816.
In the same way, where expenditures appear to have been made
not on behalf of both ship and cargo but on behalf either of the
ship alone, or of the cargo alone, they can give no claim to
general average contribution, but will be a charge on the owner
of the particular interest preserved by the adoption of the
course which necessitated such expenditures.
I point out this. Quite apart from the general
law as to general average contribution, and pay
ment of particular charges, the bill of lading in this
case specifically provides for payment of special
charges on cargo. I have already set out a portion
of clause 9. It goes on:
In the event of accident, danger damage or disaster ... the
goods, shippers, consigners or owners of the goods shall contrib
ute with the carrier in general average to the payment of any
sacrifices, losses or expenses of a general average nature that
may be made or incurred and shall pay salvage and special
charges incurred in respect of the goods.
The defendant raised further defences:
(a) The services rendered here, whether in
respect of barge and cargo together, or cargo
alone, were, it was said, pure salvage services; a
claim for salvage services must be brought within
two years of the date the services were rendered
(subsection 536(1) of the Canada Shipping Act,
R.S.C. 1970, c. S-9); these proceedings are out of
time. This contention, in my view, fails. While the
services rendered were akin to salvage, they were
not salvage in the classical or true legal sense. The
plaintiffs, as carriers, were not true salvors vis-Ã -
vis the defendant: in the sense of strangers to the
Lakelse and her cargo, who volunteered to save
the barge, and later the cargo only, from a danger
at sea. The claim here is not for salvage services,
but for a contribution to general average and to
particular charges on cargo.
This defence fails.
(b) The bill of lading, it is argued, provides for
carriage of the defendant's buoys in a self-
propelled vessel, not in a barge towed by a tug; the
defendant cannot therefore be liable. I do not
accept this contention. I have already found the
defendant probably received a copy of Exhibit 5
which set out the Christmas season cancellations
and substitute voyages. The defendant's personnel
knew, or ought to have known, the cargo to Seal
Cove would not be shipped on the self-propelled
Island Prince or Northland Prince. It would have
been apparent the buoys would be shipped on the
barge Northland 101 (Route 10), or on a substi
tute vessel. The bill of lading, in clause 1, provided
in part:
The carrier reserves the right to substitute another vessel
without notice at any time or place whether operated by itself
or others ....
Here, the Lakelse was substituted for the North-
land 101.
This defence also fails.
(c) The defendant contended the plaintiffs have
not proved which company rendered what service,
or which company incurred, or paid, expenses in
respect of services and materials supplied by
others. The evidence before me showed that the
parent company, Northland Shipping (1962) Co.
Ltd., ultimately paid all the expenses incurred. In
respect of services rendered or expenses incurred
by the other company, the subsidiary, the ultimate
payment was made by means of book-keeping
entries and adjustments between the two compa
nies. I see no substance in this particular defence
contention. The plaintiffs, one or the other, ren
dered services, or arranged for services and ma
terials, and incurred the consequent expense. The
defendant did not suggest otherwise. Nor did it
dispute the reasonableness of the amounts.
(d) The final defence contention is based on an
allegation that the tug hired by the plaintiffs was
unseaworthy; in those circumstances the plaintiffs
cannot claim, it is said, general average or particu
lar charges. Whether or not that is a sound legal
proposition, there is no evidence before me to
warrant a finding the Sea Comet was unsea-
worthy, or unfit for her task. The fact that, in
heavy seas, she took water into her engine room,
and it was felt necessary to set the barge adrift,
does not, logically or practically, connote unsea-
worthiness on the part of the tug. An action was
commenced on behalf of the plaintiffs' underwrit
ers against the tug owners claiming damages for
the loss of the Lakelse, and for expenses incurred.
Unseaworthiness of the tug was, among other
things, alleged. The action was settled. That, also,
does not establish unseaworthiness.
To sum up. The plaintiffs are entitled to recover
from the defendant $8,981.02, which includes the
latter's general average contribution and contribu
tion to particular charges on cargo. The plaintiffs
are entitled to their costs.
There remains the issue of interest. The loss
here occurred in January of 1973. The plaintiffs'
action was commenced on December 23, 1975.
The trial was not heard until June of 1980. There
has been great delay on my part in rendering my
decision. It seems to me the defendant cannot be
held responsible for interest over this whole period
of time. I will hear counsel as to what would be
fair and reasonable in respect of interest. Submis
sions can be made in writing. If an oral hearing is
desired, arrangements can be made through the
registry.
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.