A-619-81
H.B. Nickerson & Sons Limited (Appellant)
v.
Insurance Company of North America, General
Security Insurance Company, Commonwealth In
surance Company, and The Central National In
surance Company (Respondents)
Court of Appeal, Pratte, Le Dab and Marceau
JJ.—Ottawa, September 20 and October 26, 1983.
Maritime law — Loss of ship — Burden of proof —
Plaintiff not discharging onus of proving loss due to peril of
sea as failing to disclose explanation for sinking — Action
dismissed — Whether in view of ship's alleged seaworthiness
loss may be attributed to peril of sea by inference — Appeal
dismissed — Finding of absence of lack of integrity not
equivalent to positive conclusion of seaworthiness prior to
sinking — No attempt by plaintiff before Trial Judge to
address question of seaworthiness — Onus on plaintiff to
establish peril of sea dominant and effective cause of loss, not
to identify exact cause of loss — Standard of proof balance of
probabilities — Proof by inference valid and owner to succeed
if by convincing proof of seaworthiness judge satisfied that any
cause other than one falling under concept of peril of sea
improbable — Whether evidence convincing enough matter of
appreciation by presiding judge — Evidence not overwhelming
— Marine Insurance Act, 1906, 6 Edw. 7, c. 41 (U.K.), ss.
39(5), 55(1), First Schedule, Rules for Construction of Policy,
R. 7 — Marine Insurance Act 1909 (Commonwealth), s. 45(5).
This is an appeal from the dismissal of the plaintiffs action
against insurers to recover damages for the loss of its vessel.
The vessel sank as a result of incursion of sea-water through the
ship's scuppers. To succeed, the plaintiff had to show that the
loss had been caused by a peril of the sea within the meaning of
the policy. As the evidence failed to disclose any probable
explanation for the sinking, the Trial Judge held that the
plaintiff had not satisfied the onus of proof and accordingly
dismissed the action. The plaintiff submits that the Trial Judge
failed to appreciate that as the vessel's seaworthiness had been
established, its loss could, by inference, be attributed to a peril
of the sea, in accordance with the reasoning of the High Court
of Australia in Skandia Insurance Co Ltd v Skoljarev and
Another (1979), 26 A.L.R. 1. To justify his submission, the
plaintiff relied on a passage in the reasons for judgment of the
Trial Judge to the effect that none of the experts who had
examined the ship testified to any lack of integrity in the ship's
hull. The plaintiff interpreted that passage as constituting a
finding equivalent to a finding of seaworthiness, fully estab
lished by the evidence. It is further contended that if the Trial
Judge had appreciated the significance of the existence of
evidence of seaworthiness, he would not have relied on the
Marion Logging Co. Ltd. v. Utah Home Fire Insurance Co.
case (1956), 5 D.L.R. (2d) 700 (B.C.S.C.), where no evidence
of seaworthiness had been adduced. In that case, the evidence
disclosed no explanation for the sinking of the ship, and the
Court held that if the plaintiff failed to discharge the onus of
proving its case, then judgment was to go to the underwriter.
Held, the appeal should be dismissed.
Per Marceau J. (Pratte and Le Dain JJ. concurring): The
Trial Judge's finding as to an absence of any apparent lack of
integrity constitutes a negative finding; it is not a finding
equivalent to a positive conclusion of seaworthiness at any time
prior to the accident. Moreover, it is a finding that refers
strictly to the condition of the hull and is based solely on an
examination carried out long after the sinking. At trial, the
plaintiff made no attempt to address, positively and by clear
evidence, the question of the seaworthiness of its vessel at any
specific time before the accident. There is thus no essential
distinction between this case and the Marion case as to the
issue of seaworthiness.
For purposes of defining the legal position of the parties as to
the evidence to be adduced at the trial of an action between
shipowners and insurers following the loss of a vessel, recourse
is to be had to three basic principles of law set out in the
Skandia case: (1) to make good his claim, the owner must
prove that the loss was attributable to a peril of the sea, i.e. a
fortuitous accident or casualty of the sea; (2) where, with the
privity of the assured, the ship is sent to sea in an unseaworthy
state, the insurer is not liable for any loss attributable to
unseaworthiness; (3) the standard of proof applicable is that
resulting from an assessment of the balance of probabilities.
The onus is to establish that a peril of the sea is the dominant
and effective cause of the loss, not of identifying the exact
cause.
The Skandia case stands for the proposition that in a lawsuit
against insurers following the loss of his vessel, the owner may
prove by inference—which is a perfectly valid means of evi-
dence—that the accident was due to a peril of the sea and he
will succeed in doing so if, by a positive and convincing proof of
seaworthiness, he can satisfy the judge that any cause other
than one falling under the concept of peril of the sea is
improbable. However, the contention that, applied to the case
at bar, that proposition would necessarily lead to a conclusion
different from that arrived at by the Trial Judge, if the latter's
findings as regards the apparent condition of the hull of the
vessel were to be qualified as some positive evidence of seawor-
thiness, is untenable. The question of whether, in a particular
case, the evidence is strong and convincing enough to render
reasonable the drawing of the suggested inference is a matter to
be appreciated by the presiding judge. If the findings of the
Trial Judge about the apparent integrity of the hull are to be
construed as positive findings relating to seaworthiness, the
evidence resulting therefrom is certainly not "overwhelming" as
in the Skandia case. There is no reason to believe that the Trial
Judge may have forgotten or disregarded his findings in that
respect when he found that there was no basis for inferring,
without the weight of the evidence pointing in that direction,
that the proximate cause of the sinking was more probably a
peril insured against than one not covered by the policy.
CASES JUDICIALLY CONSIDERED
APPLIED:
Marion Logging Co. Ltd. v. Utah Home Fire Insurance
Co. (1956), 5 D.L.R. (2d) 700 (B.C.S.C.).
DISTINGUISHED:
Skandia Insurance Co Ltd v Skoljarev and Another
(1979), 26 A.L.R. 1 (H.C.).
REFERRED TO:
Leyland Shipping Company, Limited v. Norwich Union
Fire Insurance Society, Limited, [1918] A.C. 350 (H.L.);
Stein, et al. v. The Ship 'Kathy K", et al., [1976] 2
S.C.R. 802; Century Insurance Company of Canada, et
al. v. Case Existological Laboratories Ltd. et al., [1983]
2 S.R.C. 47.
COUNSEL:
P. B. C. Pepper, Q.C. and P. J. Cavanagh for
appellant.
W. David Angus and Peter Cullen for
respondents.
SOLICITORS:
Fraser & Beatty, Toronto, for appellant.
Stikeman, Elliott, Tamaki, Mercier & Robb,
Montreal, for respondents.
The following are the reasons for judgment
rendered in English by
PRATTE J.: This is an appeal from a judgment
of the Trial Division [sub nom. Riverport Sea-
foods Limited v. Insurance Co. of North America,
judgment dated October 1, 1981, Federal Court—
Trial Division, T-68-76, not reported] dismissing
the plaintiff's action against the defendant insurers
to recover damages for the loss of its vessel the
J.E. Kenney.
The plaintiffs action was founded on the insur
ance policy issued by the defendants. In order to
succeed, the plaintiff had to show that the loss of
the J.E. Kenney had been caused by a "peril of the
sea" within the meaning of the policy. The J.E.
Kenney was a steel-hulled trawler; she sank on
May 7, 1975, while she was berthed alongside a
dock at Riverport, Nova Scotia, where she had
returned the previous day to unload a catch of fish.
While the J.E. Kenney was being unloaded, it was
observed that she had a small list to port. That list
gradually increased, however, so as to finally
permit the incursion of sea-water into the ship
through her scuppers and thus render the sinking
inevitable. The evidence did not disclose why the
J.E. Kenney had thus listed and sank. The Trial
Judge held that, as the cause of the loss was
unknown, the plaintiff had not discharged the
burden of establishing that the loss had been
caused by a peril of the sea. He accordingly dis
missed the action. After referring to the judgment
of Macfarlane J. in Marion Logging Co. Ltd. v.
Utah Home Fire Insurance Co. (1956), 5 D.L.R.
(2d) 700 (B.C.S.C.), a case which was not without
similarity with the case he had to decide, the Trial
Judge expressed his conclusion as follows [at page
9]:
No explanation of the proximate cause of the Kenney sinking
at her berth on a calm night is to be found in the evidence.
While it might be different in the case of a vessel at sea, there
is no basis for inferring, without the weight of the evidence
pointing in that direction, that the proximate cause of the
sinking of a vessel in the Kenney's situation was more probably
a peril insured against than one not covered by the policy.
The action is dismissed with costs.
Counsel for the appellant attacked the decision
of the Trial Judge on a very narrow ground. He
submitted that the Trial Judge had failed to
appreciate that, as the seaworthiness of the plain
tiff's ship had been established, its loss could, by
inference, be attributed to a peril of the sea. The
decision of the High Court of Australia in
Skandia Insurance Co Ltd v Skoljarev and
Another,' said he, showed that such an inference
ought to have been made. According to counsel,
the error of the Trial Judge in not realizing the
importance of the evidence of seaworthiness was
made clear by his reliance on the judgment of
Macfarlane J. in Marion Logging Co. Ltd. v. Utah
Home Fire Insurance Co. since, in that case, the
seaworthiness of the vessel had not been estab
lished.
(1979), 26 A.L.R. 1 (H.C.).
This argument was based on the assumption
that the seaworthiness of the J.E. Kenney had been
established. In order to justify that assumption,
counsel did not refer us to any particular passage
of the evidence, but merely relied on a passage of
the reasons for judgment which he interpreted as
stating a finding equivalent to a finding of seawor-
thiness, which finding, said he, was fully justified
by the evidence. The passage of the reasons for
judgment relied on by counsel reads as follows [at
page 7]:
The Kenney was inspected by the Court. Her condition, in all
material respects, was said to be identical to that immediately
after she was raised. None of the experts or knowledgeable
seamen who have examined the Kenney have testified to any
lack of integrity in her hull that would account for the entry of
water up to the point where such obvious openings as the
scuppers, gurry shute and, eventually, the trawl ramp sank
below water. The evidence simply does not disclose a probable
cause of the entry of water prior to that obvious flooding stage.
I cannot agree with the appellant's interpreta
tion of that portion of the reasons. The above-
quoted paragraph contains three sentences. Nei
ther the first one nor the third one can be said to
contain any finding equivalent to a finding of
seaworthiness. As to the second sentence, it does
not express any finding of fact but merely states
that certain witnesses did not say certain things.
Far from being a finding of fact, this was merely
part of the Judge's summary of the evidence.
The Trial Judge, therefore, did not find that the
ship was seaworthy and it seems, from his refer
ence to the judgment in Marion Logging Co. Ltd.
v. Utah Home Fire Insurance Co., that he did not
even direct his mind to that question. In those
circumstances, the question to be answered is
whether the evidence, as we read it, established the
seaworthiness of the ship. Counsel for the appel
lant did not try and help us to answer that question
since, as I have already said, he merely made the
general assertion that a finding of seaworthiness
was fully justified in the circumstances without
referring us to any particular passages of the
evidence.
From the evidence, as I read it, I cannot con
clude that the ship was seaworthy. There was
certainly no evidence of her unseaworthiness, apart
from the facts that her ballast tanks were defective
and that she sank without any apparent reason. On
the other hand, the only indications of her seawor-
thiness were that she had not been found
unseaworthy before the accident and that those
who had the occasion to examine her after the
accident failed to find anything wrong with her.
This is insufficient, in my view, to conclude that
she was seaworthy. The evidence does not disclose
in any way the kind of examination that was made
of the ship after the accident and none of those
who had examined her testified that she was
seaworthy.
For these reasons, I would dismiss the appeal.
* * *
The following are the reasons for judgment
rendered in English by
LE DAIN J.: I have had the advantage of read
ing the reasons for judgment of my brothers Pratte
and Marceau. I agree with them that the appeal
must be dismissed. There is a suggestion in the
learned Trial Judge's reference to what was said in
the Marion Logging case that he may have over
looked the possible relevance of seaworthiness as a
basis, in the circumstances, for an inference that
the loss was caused by a peril of the sea, but
assuming that, I agree with my colleagues that the
Trial Judge did not make a finding of seaworthi-
ness and with my brother Pratte that the evidence
does not warrant such a finding.
* * *
The following are the reasons for judgment
rendered in English by
MARCEAU J.: In the early morning hours of
May 7, 1975, the J.E. Kenney, a steel hull fishing
trawler, built in 1965, measuring 136 feet long by
27 feet in width with a gross tonnage of 371 tons,
sank while moored alongside her berth at River-
port, Nova Scotia. The J.E. Kenney was part of
the fleet of the appellant, a major company which
owns fishing vessels and fish-packing plants in the
Maritime provinces. The appellant held a marine
time hull policy of insurance, subscribed to jointly
by the four respondent firms of underwriters, cov-
ering twenty-nine vessels, one of which was the
J.E. Kenney, insured specifically for a basic value
of $500,000 plus $37,000 for electronic equipment.
The foundered vessel was soon pronounced a "total
constructive loss" within the terms of the insur
ance contract and consequently, the appellant
claimed maximum indemnity under the policy.
The claim, however, was denied on the basis that it
was not clear the loss had occurred under circum
stances making it recoverable under the policy.
The appellant had no choice but to commence
proceedings in the Trial Division of this Court. It
took a long time before the pleadings were com
pleted and the trial itself extended over a period of
several months. The action was finally dismissed
by judgment dated October 1, 1981. This is an
appeal against that judgment. 2
The learned Trial Judge gave carefully written
reasons for his judgment. The legal reasoning he
followed to arrive at his conclusion can be summa
rized in the two following propositions: (a) under
and by virtue of the policy of insurance covering
the J.E. Kenney, the defendants had agreed to
bear and take upon themselves only risks associat
ed with "adventures and perils of the sea", 3 so that
in order to establish its case, the insured plaintiff
had the onus of proving that the loss for which it
z The plaintiff in the Trial Division was Riverport Seafoods
Limited, an associate company of H.B. Nickerson & Sons
Limited. After the Trial Division judgment was rendered,
Riverport Seafoods Limited was wound up and its assets were
transferred to its parent company, H.B. Nickerson & Sons
Limited, which assumed its liability. It was agreed by counsel
and, on motion, ordered by the Court that the name of H.B.
Nickerson & Sons Limited be substituted, in the style of cause,
for that of Riverport Seafoods Limited.
The relevant clause in the contract reads as follows:
Touching the adventures and perils which we, the said
Assurers, are contented to bear and take upon us, they are of
the seas (it is understood and agreed that "sea" or "seas"
where used in this form is intended and does include rivers,
lakes and/or other inland waters), Men-of-War, Fire, Light
ning, Earthquake, Enemies, Pirates, Rovers, Thieves, Jetti
sons, Letters of Mart and Countermart, surprisals, Takings
at Sea, Arrests, Restraints and Detainments of all Kings,
Princes and Peoples, of what nation or quality soever, Bar-
ratry of the Master and Mariners, and all other perils, losses
and misfortunes that have or shall come to the hurt, detri
ment or damage of the said vessel, etc., or any part thereof,
including all risks incidental to steam and steam navigation.
was seeking indemnity was related to a peril
insured against and to no other; (b) the plaintiff
had been unable to satisfy the onus that rested
upon it since the evidence had failed to disclose
any probable explanation for the sinking of the
vessel.
To appreciate properly this second proposition
in thé reasoning of the Trial Judge, some knowl
edge of the basic facts and of the content of the
evidence is required.
It was the day before she sank, in the middle of
the night, that the J.E. Kenney had returned to
Riverport, after a fishing voyage, a cargo of fish
aboard. Her crew had tied up, port side to the
wharf, under the "fish sucker", and had gone
home. The ship was to be taken over by the shore
personnel upon their coming on duty at 08:00
hours.
During the day, a discharging gang had attend
ed to unloading the fish, while another gang had
been involved in refuelling the vessel, placing new
fresh water and stores aboard, and attending to
matters of maintenance and repairs. Among those
matters of maintenance and repairs, there was an
unusual problem that had to be specially looked at,
a problem that had developed in the last days of
the voyage: on May 3, while at sea, the two ballast
tanks located at the stern of the vessel, outboard of
the stern ramp, had unaccountably filled and, after
being pumped empty, had refilled again in a space
of eight to twelve hours. The mechanic assigned to
investigating the problem had not yet been able to
determine its nature at the end of his working day,
so the decision had been taken to leave one of the
tanks, the starboard one, full and the other, empty,
to see if leakage would occur overnight. All work
on the ship had stopped at 17:00 hours.
At the time the shore personnel had left for
home, the ballast tank problem was not the only
oddity about the vessel. When the day crew had
come on duty in the morning, the list of the vessel
had nothing abnormal since it was about two
degrees to port, but, during the day and specially
between 16:00 and 17:00 hours, the list had
increased noticeably. The shore captains, alerted,
had inspected the vessel but they had seen no
subject of concern and had given no special
instructions as to safety precautions for the night.
The vessel, along with all the other vessels in port,
had then been left as usual in the care of a single
watchman who was to be relieved at midnight by a
second watchman.
During the evening hours, the list to port of the
vessel continued to increase. By midnight, it was
about twenty degrees. The valves on the port scup
pers and gurry chutes on the processing deck were
not secure and sea-water could enter the hull
freely through these openings once they were
below the water-line and no doubt some were
below water with such a pronounced list. It seems
that the vessel reached what the naval architects
refer to as "the angle of down flooding" around
midnight; her sinking was then irreversible. It was
about 03:30 hours when the J.E. Kenney sank.
While the greater part of the evidence before
the Trial Judge was aimed at establishing those
facts which I have just rapidly summarized and
others immediately connected therewith, some of
it, with experts on both sides, was naturally con
cerned with the explanation of what happened to
the J.E. Kenney. The plaintiff advanced the theory
that the vessel had been snagged on the wharf by a
spike protruding from one of the pilings. The
defendants, for their part, suggested that the water
in the starboard ballast tank (which, as mentioned
above, had been left full at the end of the day)
could have somehow flowed across into the port
tank through the pipe system connecting both
tanks initiating, in so doing, a process that cul
minated in a listing sufficient to bring the vessel to
"the angle of down flooding". This part of the
evidence did not impress the Trial Judge who
rejected as simply unacceptable the "snagging the
ory" and found totally unsupported by the evi
dence the defendants' suggested hypothesis. In the
view of the Trial Judge, the evidence had simply
not disclosed any "probable" cause for the entry of
water into the vessel prior to and up to the point
where such obvious openings as the scuppers,
gurry chutes and, eventually, the trawl ramp went
below water.
The reasoning of the learned Trial Judge, as I
summarized it above, can now be fully appreciated
but I think the very words used to express it must
be known. Here is how the learned Judge put it in
his reasons once his analysis of the evidence was
completed [at pages 8-9]:
The parties have agreed that the insurance policy, Exhibit
C-15, is to be construed in accordance with the laws of England
relating to marine insurance generally and hull and machinery
insurance in particular. The onus is on the plaintiff to establish
a prima facie case that the Kenney sank because of a peril
insured against. Only after that, must the defendants show that
she sank for a cause not covered.
The plaintiffs position is that the Kenney's loss was occa
sioned by a peril of the sea covered under the general clause of
the policy in issue. It asserts no other basis for its claim. The
position is put succinctly in the final paragraph of its argument
in chief.
In short, the Plaintiff contends that the loss of the KENNEY
was due to an accidental incursion of seawater, and that this
is a peril insured against under the general clause of the
policy which insures against perils of the sea and all other
light (sic) misfortunes that may come to the detriment of the
ship, Whether this incursion was originally caused by some
negligence is irrelevant, there being no warranty in the policy
nor any exclusion against negligence, and an accident re
maining an accident even though induced by the negligence
of any party.
In Marion Logging Co. Ltd. v. Utah Home Fire Insurance
Co., Macfarlane J., of the Supreme Court of British Columbia,
reviewed many of the authorities to which I have been referred
in very similar circumstances. He decided (at pages 703-704):
Considering the evidence in this case, I am unable to find
the means by which the water, which eventually caused the
sinking of the boat, entered it. As I have already said, no
explanation of the sinking of the ship was found in the
evidence. It seems then to me to be a case which must be
decided according to where the onus of proof lies. On the
question of the onus of proof, the ordinary rule is where upon
the evidence the Court is left in doubt whether the loss was
due to a peril insured against or to a cause not covered by the
policy, then the plaintiff having failed to discharge the
burden which lies upon him of proving his case, there must
be judgment for the defendant underwriter ....
I find myself in precisely that position.
The appellant does not attack the judgment of
first instance on the ground that the Trial Judge
would have incorrectly instructed himself as to the
legal principles applicable to the case. It is beyond
question that, before a valid claim can be submit
ted under a marine insurance contract governed by
the laws of England, the assured must be able to
prove satisfactorily that the loss occurred from a
peril insured against, i.e. a peril of the sea. Rule 7
of the Rules for Construction of Policy set out in
the First Schedule to the Marine Insurance Act,
1906 (U.K.) [6 Edw. 7, c. 41] states that: "The
term `perils of the seas' refers only to fortuitous
accidents or casualties of the seas. It does not
include the ordinary action of the winds and
waves." Consequently, not every loss caused by the
entry of sea-water into a vessel is a loss caused by
the direct operation of a peril of the sea; it may be
due to some other cause neither accidental nor
fortuitous such as the ordinary action of the wind
and waves or wear and tear. If the assured fails to
prove satisfactorily that the loss was due to a
fortuitous accident or casualty of the sea, a doubt
will remain as to whether it was one that the
insurers had agreed to bear and the right to indem
nity will not have been established. (See:
Goodacre, J. K., Marine Insurance Claims, espe
cially pages 93 et seq.; Arnould on Law of Marine
Insurance and Average, Vol. II, pages 599 et seq.;
Templeman on Marine Insurance, pages 205 et
seq. See the cases cited in the Marion Logging Co.
Ltd. case referred to by the Trial Judge and in
Skandia Insurance Co Ltd v Skoljarev and
Another (1979), 26 A.L.R. 1 (H.C.).) It is like
wise beyond question that in order to so establish
that the loss occurred from a peril insured against,
the insured has to prove in the words used in the
relevant section of the Marine Insurance Act,
1906 4 that the "proximate cause" of the loss was a
peril of the sea, the words "proximate cause"
referring not necessarily to the ultimate or
immediate cause of the loss in a possible succession
of causes, the ultimate effect of which was the loss,
but referring rather to the dominant and effective
cause, the one that has really triggered the natural
sequence of causes that led to the loss. (See:
Chalmers' Marine Insurance Act 1906 [8th ed.],
pages 73 et seq.; Templeman, op. cit., pages 195 et
seq.; see also, among others, Leyland Shipping
Company, Limited v. Norwich Union Fire Insur
ance Society, Limited, [1918] A.C. 350 (H.L.).)
Counsel for the appellant, in his written memoran
dum, states as his starting point that "the Kenney
° Which reads as follows:
55.—(1) Subject to the provisions of this Act, and unless
the policy otherwise provides, the insurer is liable for any loss
proximately caused by a peril insured against, but, subject as
aforesaid, he is not liable for any loss which is not proximate-
ly caused by a peril insured against.
sank because of the incursion of sea water through
its scuppers and chutes", but he did not seriously
dispute, at the hearing, that the "proximate cause"
of the loss in this case had to be the "effective"
cause of the entry of water responsible for the
listing of the vessel to the point where her scuppers
and gurry chute openings were submerged.
The appellant does not attack either the Trial
Judge's detailed analysis of the evidence and his
precise findings of fact. Counsel for the appellant
is fully aware that an appellate court's role is not
to retry the case on the facts and while the Court
must ascertain that the Trial Judge has not made
some clear error in his appreciation of the evidence
as a whole, it is "not ... its function to substitute
its assessment of the balance of probability for the
findings of the judge who presided at the trial"
(Ritchie J. delivering the judgment of the Court in
Stein, et al. v. The Ship `Kathy K", et al., [1976]
2 S.C.R. 802, at page 808). More precisely, the
appellant does not dispute that the sequence of
events was as reported by the Trial Judge and that
the evidence could not support either of the two
theories advanced to explain the sinking of the
vessel.
It should finally be made clear at this juncture
that the appellant did not alter in any way, before
this Court, the position it took in the Court of first
instance to the effect that the J.E. Kenney's loss
was occasioned by a peril of the sea and therefore
was recoverable under the general clause of the
policy (the one quoted above). A special "Inch-
maree clause" also formed part of the policy, a
clause covering losses due to special causes not
properly covered by the general clause, namely
losses due solely to negligence of the master,
mariners, engineers, or pilots, provided no "want
of due diligence by the Assured, the Owners or
Managers of the vessel"' had been involved. The
appellant does not rely on this Inchmaree clause.
The allegations of negligence by the shore person
nel and of want of due diligence by the owners
5 The clause reads thus:
This insurance also specially to cover (subject to the
average warranty) loss of or damage to the subject matter
advanced by the respondents in their factum are
therefore totally irrelevant.
The attack on the judgment of first instance is
based, as I understood it, on the following submis
sion. In deciding the case against the appellant for
failure to satisfy the onus of proof, the learned
Trial Judge, it is submitted, failed to appreciate
that some of his findings had attested to the
seaworthiness of the J.E. Kenney prior to her
sinking, a fact that had fundamental significance
in the circumstances of the case. Indeed, it is
contended, if the learned Judge had appreciated
the significance of the existence of evidence of
seaworthiness, he would not have found refuge in
the reasoning followed in the Marion case, where
no evidence of seaworthiness had been adduced; he
would have seen, rather, that the only principles
applicable were those enunciated in the recent
insured directly caused by the following:
Accidents in loading, discharging or handling cargo or
in bunkering;
Accidents in going on or while on drydocks, graving
docks, ways, gridirons or pontoons;
Explosions on shipboard or elsewhere;
Breakdown of or accidents to nuclear installation or
reactors not on board the insured vessel;
Breakdown of motor generators or other electrical ma
chinery and electrical connections thereto, bursting of
boilers, breakage of shafts, or any latent defect in the
machinery or hull, (excluding the cost and expense of
replacing or repairing the defective part);
Contact with aircraft, rockets or similar missiles, or with
any land conveyance;
Negligence of Charterers and/or Repairers, provided
such Charterers and/or Repairers are not Assured(s)
hereunder;
Negligence of Master, Mariners, Engineers, or Pilots;
(including all risks of default and/or error in
judgement);
Provided such loss or damage has not resulted from want
of due diligence by the Assured, the Owners or Managers
of the vessel, or any of them. Masters, Mates, Engineers,
Pilots or Crew not be considered as part owners within the
meaning of this clause, should they hold shares in the
vessel.
decision of the High Court of Australia in the
Skandia Insurance case (cited above) where, in a
situation similar to the one at bar, the action of the
assured has been sustained.
I cannot agree with the appellant's submission.
On the one hand, I see no positive finding of
seaworthiness in the reasons for judgment of the
Trial Judge and I have not been able to extract
from the evidence facts that invited a clear finding
to that effect. On the other hand, even if some
evidence of seaworthiness had been present as
contended and recognized as such, the principles
enunciated and the reasoning following in the
Skandia Insurance case would not have precluded
the conclusion reached by the Trial Judge.
1. The finding in the judgment appealed from,
which counsel for the appellant considers equiva
lent to a finding of seaworthiness, is first set forth
in the introductory paragraph of the reasons where
it is laconically stated [at page 1]: "Inspection
after [the vessel] was raised disclosed no probable
explanation of the sinking." It is clarified only
later in a long paragraph. Before reading the text,
it should be explained that the hulk of the J.E.
Kenney was raised from underwater sometime
after the sinking and then towed from Riverport to
Halifax where it still was when the trial took place
five years later. The text is the following [at
page 7]:
The Kenney was inspected by the Court. Her condition, in all
material respects, was said to be identical to that immediately
after she was raised. None of the experts or knowledgeable
seamen who have examined the Kenney have testified to any
lack of integrity in her hull that would account for the entry of
water up to the point where such obvious openings as the
scuppers, gurry shute and, eventually, the trawl ramp sank
below water. The evidence simply does not disclose a probable
cause of the entry of water prior to that obvious flooding stage.
This paragraph, as I read it, says in effect that
the Judge himself had not seen any lack of integri
ty in the hull of the vessel when he saw it in
Halifax and that none of those who had had
occasion to examine the vessel since she had been
raised had testified to such a lack of integrity
capable of accounting for the entry of water up to
the point where the sinking had become inevitable.
The statement is of course central in the reasoning
of the Trial Judge but the finding therein is merely
what I would call a "negative finding", i.e. the
absence of any apparent lack of integrity, a find
ing, moreover, that refers strictly to the condition
of the hull and is based solely on an examination
carried out long after the sinking. I fail to see how
such a finding could be seen as equivalent to a
positive conclusion of seaworthiness at any time
prior to the accident. Incidentally, counsel speaks
of a finding of seaworthiness "immediately prior to
the accident of its sinking", but he fails to give any
clear indication of the point in time he has in
mind. Obviously, he cannot refer to the three
hours immediately preceding the moment the
vessel went down nor to the evening hours when
the vessel was undoubtedly taking on water. He
could hardly refer to the time when the vessel was
left for the night when, as we now know, she was
not in a condition to stay afloat until morning
(although this could be the relevant time, since it
can probably be said, in the circumstances of the
case, that the free decision to leave the vessel
unattended for the night had the same effect as
would have had a decision to send her to sea in
spite of her unfitness for the voyage). In any event,
it clearly seems to me that the appellant before the
Trial Judge was only concerned with the circum
stances of the sinking of its vessel and the possible
explanation therefor and that it never tried to
address, positively and by clear evidence, the ques
tion of her seaworthiness at any specific point in
time before the accident, although it may have
taken pains to dispel, on particular points, doubts
raised by the defendants as to her proper
condition.
I see no essential distinction between this case
and the Marion case referred to by the learned
Judge in so far as the issue of seaworthiness was
concerned.
2. There is more, in my view. Even if the Trial
Judge had been entitled to consider the absence of
any apparent lack of integrity in the hull of the
vessel as some positive evidence regarding her
possible seaworthiness at some point prior to the
accident, I do not think that the principles laid
down in the Skandia Insurance decision and the
reasoning therein adopted would have necessarily
required his disposing of the case any differently.
In the Skandia Insurance case, the fishing vessel
Zadar, shortly after leaving port, sank in a calm
sea as a result of the rapid entry of sea-water into
its engine room. Unable to explain the cause of the
accident, the owners adduced strong evidence of
the seaworthiness of the vessel when sent to sea
and pleaded that the sinking was therefore due to
an unknown but fortuitous cause. The insurers did
not call any witnesses but nevertheless attacked,
by cross-examination, the evidence of the owners
in an effort to show that the vessel had sunk
because of the bad condition of the piping to the
bail tank, a condition of unseaworthiness, in their
submission, that was known to the owners when
she put to sea. The Trial Judge found that the
piping was not defective and gave judgment for the
owners. The Full Court (i.e the Court of Appeal)
agreed with the Trial Judge holding that the
owners had proved that the loss had been sustained
as a result of a peril of the sea, while the insurers
had failed in their suggestion that the vessel had
been in an unseaworthy condition. The case was
brought before the High Court of Australia. The
position of the insurers was that the onus of proof
had been misapplied, more precisely, that the
Courts below had failed [at page 7] "to appreciate
that the respondents [owners], in order to prove
that the loss was due to perils of the sea, bore the
onus of showing that the loss was not attributable
to unseaworthiness".
In dismissing the insurers' final appeal, three of
the five Judges, but in particular one of them,
Mason J., gave lengthy reasons. These reasons
contain a thorough examination of the authorities
in this branch of the law, but their particular
interest, as I read them, resides not so much in the
way they review with remarkable clarity some
principles of admiralty law but in the manner in
which they throw light upon the application of the
rules of evidence in the disposition of a case involv
ing principles of admiralty law. Unfortunately, the
judgment is too extensive to be reproduced, but
here is what I understand to be the essential
teaching contained therein.
To define the legal position of the parties as to
the evidence to be adduced at the trial of an action
between the shipowners and the insurers following
the loss of a vessel, three basic principles of law
must be borne in mind. The first two are of marine
insurance law; they were discussed above: to make
good his claim, the owner must prove that the loss
was attributable to a peril of the sea as expressly
confirmed in subsection 45(5) of the Australian
Marine Insurance Act 1909 (subsection 39(5) of
the U.K. Act) "where, with the privity of the
assured, the ship is sent to sea in an unseaworthy
state, the insurer is not liable for any loss attribut
able to unseaworthiness". The third one is the
basic principle of the law of evidence to the effect
that, in civil matters, the standard of proof appli
cable is that resulting from an assessment of the
balance of probability.
Now, the question to be answered is how will the
owner make good his case? The simplest way for
him to do so is, of course, to satisfy the judge that
the loss was the result of a well-identified fortui
tous and accidental event. In view of the second
principle referred to above, the insurers may then
still avoid liability by proving that unseaworthi-
ness, with the privity of the assured, was a parallel
and primary cause of the loss, but without such
proof adduced by the insurers, the judge will have
to give judgment for the owner. But if the owner is
unable to point to a precise contribution of the
elements to account for the entry of sea-water into
the vessel and ultimately for the loss, is he
automatically devoid of any means to succeed?
Nothing requires that it be so. The onus is of
establishing that a peril of the sea was at the origin
of the loss, not of identifying the exact cause, and
the standard of proof applicable is only that of a
balance of probabilities. If the owner, although
unable to put his finger on the precise cause of the
loss, can nevertheless demonstrate on a balance of
probabilities that, because of the circumstances of
the case and the clear seaworthiness of his vessel,
most of the events that could not be included into
the concept of peril of the sea have to be disregard
ed as possible causes, he may very well satisfy the
onus that rested upon him. This is so, obviously,
because proof by inference or presumption is a
perfectly valid means of evidence and the inference
relied upon here may be quite reasonable in view
of the great extension given by the case law to the
concept of peril of the sea (see, in relation to this
last point, the recent judgment of the Supreme
Court [of Canada] in Century Insurance Company
of Canada, et al. v. Case Existological Laborato
ries Ltd. et al., [1983] 2 S.C.R. 47.
Stephen J., in his very brief reasons concurring
with Mason J., put the matter remarkably well [at
page 4]:
The insured did not, however, leave the evidence in that
state. Evidence was tendered of the seaworthy character of the
vessel. It led the learned trial judge to reject each of the
respects in which it was suggested by the insurer that Zadar
was in any respect unseaworthy. It must, I think, be concluded
that Zadar was a thoroughly seaworthy vessel until the happen
ing of whatever it was which caused her to founder.
Such a conclusion changes the whole picture. The unex
plained sinking of a thoroughly seaworthy ship in calm waters
cannot support an inference that her fate was the simple result
of her inability to withstand the ordinary action of the winds
and the waves. On the contrary, her seaworthiness distinctly
negates such an inference and, in the absence of any other
evidence, must instead lead to the inference that, whatever was
the unknown cause of the sudden entry of sea-water, it should
be regarded as some "fortuitous accident or casualty of the
seas", that is to say, some peril of the sea.
The Skandia Insurance case, therefore, stands
for the proposition that in a lawsuit against his
insurers following the loss of his vessel, the owner
may prove by inference that the accident was due
to a peril of the sea and he will succeed in doing so
if, by a positive and convincing proof of seaworthi-
ness, he can satisfy the judge that any cause other
than one falling under the concept of peril of the
sea is improbable. It is a clear and unquestionable
proposition, but I do not accept the contention
that, applied to the case at bar, it would necessari
ly lead to a conclusion different from that arrived
at by the Trial Judge, if the latter's findings as
regards the apparent condition of the hull of the
vessel were to be qualified as some positive evi
dence of seaworthiness. Indeed, the evidence
adduced in a court of law to convince the judge of
the seaworthiness of a vessel at some point in time
in the past will always be more or less complete
and compelling since it will derive mostly, in fact
even exclusively, from proof of absence of various
specific defects; and the question of whether, in a
particular case, it is strong and convincing enough
to render reasonable the drawing of the suggested
inference is a matter to be appreciated by the
presiding judge. If the findings of the Trial Judge
about the apparent integrity of the hull, here, are
to be construed as positive findings relating to
seaworthiness, the evidence resulting therefrom is
certainly not "overwhelming" like it was in the
Skandia Insurance case. There is no reason to
believe that the learned Trial Judge may have
simply forgotten or disregarded his findings in that
respect when he stated in the last paragraph of his
reasons [at page 9]:
No explanation of the proximate cause of the Kenney sinking
at her berth on a calm night is to be found in the evidence.
While it might be different in the case of a vessel at sea, there
is no basis for inferring, without the weight of the evidence
pointing in that direction, that the proximate cause of the
sinking of a vessel in the Kenney's situation was more probably
a peril insured against than one not covered by the policy.
This appeal, in my opinion, is ill founded and I
would dismiss it.
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.