Drew Brown Ltd. v. The ‘Orient Trader’

Drew Brown Ltd. v. The ‘Orient Trader’
Collection
Supreme Court Judgments
Date
1972-12-22
Report
[1974] SCR 1286
Judges
Ritchie, Roland Almon; Hall, Emmett Matthew; Spence, Wishart Flett; Pigeon, Louis-Philippe; Laskin, Bora
On appeal from
Canada
Subjects
Action
International law
Decision Content
Supreme Court of Canada
Drew Brown Ltd. v. The ‘Orient Trader’, [1974] S.C.R. 1286
Date: 1972-12-22
Drew Brown Limited (Plaintiff) Appellant;
and
The Ship “Orient Trader” and her owners (Defendants) Respondents.
1972: March 14, 15, 16; 1972: December 22.
Present: Ritchie, Hall, Spence, Pigeon and Laskin.
ON APPEAL FROM THE EXCHEQUER COURT OF CANADA
Conflict of laws—Contracts—Carriage of goods by sea—Proper law of the contract—Deviation—Application of foreign law where contract rescinded or repudiated.
Interest on claim—Interest on general average.
The respondents contracted to carry two shipments of tin slabs from Malaysia to Hamilton, Ontario. The two bills of lading contained, as is the common practice liberty clauses which purported to permit to the carrier great discretion, and clauses providing that the contract was to be subject to U.S. Law. The vessel proceeded to Toronto rather than Hamilton and it was agreed that the tin be trucked to Hamilton. Due to cargo slippage and possible danger in unloading the tin the stevedores after unloading some of the tin insisted on requirements involving much extra time and work. Thereupon, the carrier decided to proceed to Ashtabula, Ohio and discharge its cargo, including the tin, there. A fire broke out in a hold prior to the vessel departing from Toronto. The ship was a total loss and the cargo seriously damaged. There was no connection established between the deviation and the occurrence of the fire. The owners of the tin, as holders for value of the bills of lading, brought an action for damage to the cargo and the carrier counter-claimed for contribution in accordance with the general average terms of the contract. The owners of the tin contended that the deviation resulted in the rescission or repudiation of the contract which was therefore of no effect, that accordingly the clause providing that the contract was subject to U.S. Law was ineffective and that the Court should determine the rights of the parties on Canadian Law. In terms of U.S. Law the carrier could succeed unless the deviation caused the fire. The trial Judge dismissed the claim of the owners and allowed the counter-claim for general average adjustment but refused to allow
[Page 1287]
interest to the date of judgment and this was the subject-matter of a cross-appeal.
Held (Hall and Spence JJ. dissenting): The appeal should be dismissed and the cross‑appeal should be allowed.
Per Ritchie J.: This action is brought claiming damages for breach of a contract manifested by bills of lading which contain a clause requiring them to be construed in accordance with U.S. Law, unless otherwise provided. As the parties gave legal force to their agreement in accordance with U.S. Law, that is the proper law of the contract. It was proved that U.S. Law would not hold the respondent liable in the absence of causal connection between the deviation and the fire and as no such connection was established the respondent cannot as carrier be found liable in damages.
Per Pigeon J.: All questions of substantive law pertaining to a breach of contract are governed by the law of the contract. Under the law of the United States an unreasonable deviation does not appear to deprive a carrier of the protection of the Fire Statute.
Per Laskin J.: The unreasonable deviation did not, per se, bring the contracts of carriage to an end; it entitled the appellant to avoid or terminate them and to sue for damages subject to the terms of the proper (in this case U.S.) law. The respondent is entitled to succeed in the claim for general average contribution and should have interest from the date of the general average adjustment to this date of judgment.
Per Hall and Spence JJ., dissenting: Having determined by reference to U.S. Law that there was an unreasonable deviation in the performance of this contract the contract is at an end. The appellant is not bound by either the provisions of the Fire Statute of the United States or the provisions of U.S. Law as to the interpretation of the contract. The law of the United States and the law of the U.K. and of Canada makes the liability of a carrier that of an insurer
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subject to exceptions. The respondents have failed to bring themselves within these exceptions.
[Canadian General Electric Co. Ltd. v. Pickford and Black Ltd., [1972] S.C.R. 52 applied; Livesley v. Horst, [1924] S.C.R. 605; Allen v. Hay (1922), 64 S.C.R. 76, Federal Commerce and Navigation Co. Ltd. v. Eisenerz-G.m.b.H. [1974] S.C.R. 1225, referred to]
APPEAL from a judgment of the Exchequer Court of Canada dismissing a claim for damages and allowing a counter-claim but without interest; CROSS-APPEAL from the refusal to award interest on the counter-claim. Appeal dismissed, cross-appeal allowed.
F.O. Gerity, Q.C., and T. Marshall, for the appellant.
A.R. Paterson, Q.C., and D.B. MacDougall, for the respondents.
RITCHIE J.—I agree with the reasons for judgment prepared for delivery by my brother Pigeon.
This action is brought claiming damages for breach of a contract of carriage manifested by bills of lading containing a clause which requires them to be construed in accordance with the law of the United States of America unless otherwise provided.
The appellant’s cause of action arises out of the contract and although the deviation which was proved to have taken place entitles the appellant to declare itself as no longer bound by its terms, the rights generated by that contract subsist and its breach forms the basis of the appellant’s action.
As the parties gave legal force to their agreement in accordance with the law of the United States of America, that is the proper law of the contract and the law by which, in accordance with their own choice, the legal rights and remedies of the parties, in relation to the carriage of the appellant’s cargo, are to be determined.
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As it was proved at trial that United States law would not hold the carrier respondent liable for damage to the cargo, unless there was proof of a causal connection between the deviation and the fire, and as no such causal connection has been established, the carrier cannot be found liable for damages resulting to his goods from the fire.
As I have indicated, like my brothers Pigeon and Laskin, I would dismiss this appeal with costs and I would allow the respondent’s cross-appeal with costs for the reasons stated by my brother Laskin.
The judgment of Hall and Spence was delivered by
SPENCE J. (dissenting)—This is an appeal from the judgment of Chief Justice Wells, sitting as Local Judge in Admiralty, pronounced on May 28, 1971. By that judgment Chief Justice Wells dismissed a claim by the appellant for the sum of $21,686.78 which had been claimed by the appellant as compensation for the damage to slabs of tin, and allowed a counterclaim by the respondents in the sum of $112,367.48, being the amount of the general average adjustment charged against the appellant under an adjustment of general average made on May 1, 1968.
The appellant took its action as holder for value of two bills of lading whereby the respondents had contracted to carry two shipments of tin slabs from Penang in Malaysia, to Hamilton. The bills of lading were identified as bill of lading No. D.B. 2 and bill of lading No. D.B. 3, and were produced at trial as exhibits 1 and 2. Each shipment weighed 56,000 lbs. The slabs of tin were loaded in the Orient Trader on or about June 5, 1965, the bills of lading purported to be of that date. The Orient Trader had arrived at Penang with No. 5 lower hold filled to capacity. Across the hatch which provided entry from the ’tween deck to the lower hold had been laid hatch beams set in sockets at each side of said hatchway and then across these beams,
[Page 1290]
about 6 in number, were laid hatch boards so as to constitute a solid board covering over the hatchway. According to the evidence of Pateras, the Chief Officer of the Orient Trader, the slabs of tin were loaded in the ’tween deck area of hold No. 5 across the ship from the one wing of the ship to the other. The slabs were loaded on the deck of the ’tween deck hold to about 6 slabs in depth and then were also loaded over the forepart of the hatch cover to a depth of two or three slabs. As I have said, these slabs were consigned to Hamilton, Ontario.
After the slabs had been loaded at Penang, the Orient Trader took on another 92 metric tons of rubber consigned to Ashtabula, Ohio, and according to the evidence of Pateras, this rubber in bales was laid across the top of the slabs both on the tin which had been loaded on the deck of the ’tween decks and on the hatch cover. After the rubber had been loaded in Penang on top of the tin, it was impossible to see the square of the hatch from above. The Orient Trader then departed from Penang and called at Betawan, where it loaded a further 102 metric tons of rubber, also consigned to Ashtabula. When this rubber had all been loaded into No. 5 ’tween deck hold it filled the hold and came right up to the coaming of the hatch, that is, the coaming around the hatch on the main deck, and this was the situation which Captain Agar observed when he first boarded the Orient Trader in the Port of Toronto.
As the Orient Trader sailed through the Indian Ocean it encountered rough weather, with winds up to 8 on the Beaufort scale, and the respondents in their pleadings pleaded “perils of the sea”. However, the Ship’s Officer, Pateras, in his evidence described such weather as only what one would expect in that part of the Indian Ocean in the month of June, and therefore I think, as did Chief Justice Wells, that the defence of the “perils of the sea” may well be ignored.
The Orient Trader, rather than proceeding directly to Hamilton when it reached Lake Ontario, turned into the Port of Toronto, as it
[Page 1291]
had much cargo to unload in that port. It was arranged between respondents and the appellant that the 1,120 slabs of tin would be unloaded in the Port of Toronto and would be carried by truck from the port to the consignee’s place of business in Hamilton. The appellant had acquiesced in this revision of the contract and had arranged for a dispatch of the trucks from Hamilton to pick up the load of tin.
The Orient Trader arrived in Toronto during the evening of Saturday, July 17, 1965. No unloading took place on that evening but the discharging did proceed from 8:00 a.m. on Sunday, the 18th of July. Captain Agar, who was Superintendent of Cullen Stevedoring, produced at trial the working report for such discharge of cargo. That report showed that on the 18th, hold No. 3 alone was opened, but on Monday, the 19th of July, a gang was discharging from hold No. 5 from 8:00 a.m. to 12:00 noon, and another stevedoring gang worked from 1:00 p.m. to 5:00 p.m. Again, on July 20th, the gang worked on hatch No. 5 from 8:00 a.m. to 12:00 noon, but thereafter were shifted to hatch No. 4. The reason given for this alteration in their unloading was that when the Ashtabula rubber which covered the tin slabs had been removed from over the forepart of the No. 5 ’tween deck hatch cover, it was discovered that one of the beams across that hatch, and upon which the hatch boards rested, had slipped from its socket from the port side and had fallen so that it rested on the cargo below. The end of the hatch beam had only descended about 18 inches, but it resulted in the hatch boards tipping so they formed a V or trough and into that trough had slipped both bales of rubber and slabs of tin. Moreover, the wall of rubber bales just to the stern of those which had been removed from the forepart of the hatch had commenced to tip forward so that they overhung the forepart of the hatch. The stevedores regarding this situation as dangerous, refused to work, and upon some safety officers being called and inspecting the situation, that refusal was confirmed and approved. The witness Peacock, an official of Peacock Shipping Limited, the special agents for Hurum Shipping Limited,
[Page 1292]
who in turn were agents in Canada for the owners of the Orient Trader, came on board the Orient Trader and inspected this situation. He called his New York office and advised them of the situation and was told that a Captain Goussetis, representing the Hurum Shipping Company, would come to Toronto immediately. He deferred any decision until the latter’s arrival. On the next day, that is, July 21, 1965, Captain Goussetis, together with Peacock, inspected the condition and conferred with the stevedores. Captain Goussetis testified that they, i.e., the stevedores, wanted to discharge the whole ’tween deck and thereby ascertain that there was nothing wrong except the slipped beam and that such a procedure would have entailed sixteen hours or more stevedoring work.
Captain Goussetis continued to testify that the consignees of the rubber shipment in Ashtabula, Ohio, were very anxious to have that cargo, which totalled 2,100 tons, delivered to them and there were another 1,400 tons to be delivered to Detroit, and that therefore he suggested that the Orient Trader proceed to Ashtabula, and there having unloaded the rubber which had been stowed on top of the shipment of tin, with which this action is concerned, then unload that shipment of tin and ship it back to Hamilton by truck. It would appear that Goussetis imparted this intention to Mr. Peacock and Mr. Peacock notified Mr. Taylor, an official of the appellant company. Mr. Peacock testified that Mr. Taylor “was not very pleased about it but I think recognizes the situation that we are under”. Mr. Taylor also testified and his evidence was:
I objected vehemently. It was late in the morning, I had a contract for the delivery of the tin in question to the Steel Company of Canada in Hamilton during July and I couldn’t see how I could keep my terms of the contract if the goods were to be taken to Ashtabula.
Q. What response did you get to this protest?
A. It was more or less a fait accompli. There was nothing I could do about it, nor could the shipping agent do anything.
[Page 1293]
The estimate of the delay in the arrival of the shipment of tin at Hamilton had the Orient Trader proceeded to Ashtabula, Ohio, there unloaded the rubber and then in turn transshipped the tin to Hamilton varied from four days to nine or ten days, according to evidence given by witnesses called by the respondent.
The unloading of the hatches of the Orient Trader had been well nigh completed, the ship was preparing to depart from Toronto when a fire broke out in hold No. 4. The evidence given by the District Chief of the Toronto Fire Department, who was also the District Deputy Fire Marshall, was that the fire alarm was received at 2.22 p.m. The Toronto Fire Department responded immediately with automotive equipment and also fire tugs, including one new one being used on the first occasion. Water was poured into hold No. 4 until about 2.40 p.m. Captain Mann, the Toronto Harbour Master, ascertained that the Orient Trader was so low in the water that her keel cleared the bottom by less than a foot and he feared that so soon as the keel would touch bottom the ship would roll and sink right alongside Pier No. 11 to which she had been tied. Captain Mann therefore ordered that the Orient Trader be towed away from the pier and outside of the shipping channels. Mr. Peacock evidently agreed with this, but as Captain Mann testified, the decision was his alone to make and he made it. Across the harbour lay Ward’s Island with a sandy bottom off it and Captain Mann decided that the Orient Trader “could be beached easier and safer” there. Mr. Peacock directed that the Orient Trader be beached by the bow. She was beached, water continued to be poured into the hold and the fire was still burning at 1 p.m. on July 22nd, when Fire Marshall Carson arrived. The result of the fire was that all cargo, including the slabs of tin, was very seriously damaged. The Orient Trader became a total loss and was scrapped.
The general average adjustment fixed against the appellant amounted to $112,367.48 and the appellant sustained damages of $21,686.78 cov-
[Page 1294]
ering total loss of a portion of the shipment of tin and partial damage to the balance, causing it to be sold at a loss, together with various disbursements, such as survey fees. The appellant sued for such damages by a writ issued on August 2, 1968, and the respondents asserted their counterclaim in a statement of defence, dated March 18, 1969.
The first consideration in determining the issues involved in the appeal depends on the conditions of the contract between the parties, i.e., the bills of lading. These two bills of lading are exact counterparts and reference need only be made to one of them. Chief Justice Wells has cited in his lengthy and very carefully considered reasons for judgment the various provisions of the bills of lading. He quoted first the clause paramount:
Except as provided in the following paragraph designated ‘A’, this Bill of Lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States of America, approved April 16, 1936, and the Carrier (which term shall be deemed to include the ship and the ship-owner) shall be entitled to avail itself of all the rights and immunities and all other restrictions upon liability contained in said Act, even although the goods are not being carried to or from a port in the United States, and shall not be deemed to have surrendered any of its said rights or immunities or restrictions upon liability or to have increased any of its responsibilities or liabilities; whenever said Act shall apply, any term of this Bill of Lading which is repugnant to said Act to any extent shall be void to that extent but no further.
Clause A is not relevant, but Clause B provides:
B. The Carrier shall further be entitled to avail itself of the provisions of Sections 181 to 189 (both inclusive) of Chapter 46 of the Code of Laws of the United States of America and of all statutes supplemental and amendatory thereof and of the like statutes of other countries in so far as they may be applicable.
Clause 30 of the bill of lading:
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Unless otherwise provided, this bill of lading shall be construed in accordance with the law of the United States of America. Nevertheless, paragraph No. 16 of this bill of lading (“Both-to-Blame Clause”) to remain in effect, even if unenforcible in the Courts of the United States of America. At the Carriers’s option, the Courts of the United States of America shall have exclusive jurisdiction of all disputes arising hereunder.
It will be apparent therefore from the latter clause that the issue in this action must in so far as the interpretation of the contract is concerned, be determined in accordance with the laws of the United States of America. Dicey, in the 8th ed., at p. 1113, outlines the manner in which this foreign law is to be proved as follows:
(i) Expert evidence. It is now well settled that foreign law must, in general, be proved by expert evidence. Foreign law cannot be proved merely by putting the text of a foreign enactment before the court, nor merely by citing foreign decisions or books of authority. Such materials can only be brought before the court as part of the evidence of an expert witness, since without his assistance the court cannot evaluate or interpret them.
Duff J., as he then was, adopted a similar view in Allen v. Hay[1], at pp. 80-81:
It is not disputed that the plaintiff must fail if the right of recovery depends upon the rules of the law of British Columbia. It is therefore incumbent upon him to prove the law of the State of Washington. This he must prove as matter of fact by the evidence of persons who are experts in that law. These experts may, however, refer to code and precedents in support of their evidence and the passages and references cited by them will be treated as part of their testimony; and it is settled law that if the evidence of such witnesses is conflicting or obscure the Court may go a step further and examine and construe the passages cited for itself in order to arrive at a satisfactory conclusion.
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In compliance with this requirement, the parties adduced the evidence of two attorneys from the United States of America, Mr. Martin F. Scholl for the appellant, and Mr. Tallman Bissell for the respondents. Both of these witnesses gave long and very carefully detailed evidence which was examined with particular care by Chief Justice Wells who described the witnesses as very eminent counsel. It is my intention to have regard only to their testimony and to the authorities cited and discussed by those two witnesses when dealing with the law of the United States of America. My first consideration will be with the clause in the bill of lading which has been referred to in United States jurisprudence as a liberties clause. This clause, No. 1, reads as follows:
1. The steamer shall have liberty to sail without pilots, to proceed via any route, to proceed to and stay at any port or ports whatsoever in any order in or out of the route or in a contrary direction to or beyond the port of destination once or oftener for bunkering or loading or discharging cargo or embarking or disembarking passengers or any other purposes whatsoever, and to carry the within cargo into and then beyond the port of discharge named herein and to return to and discharge the said cargo at such port, to tow or to be towed, to make trial trips with or without notice, to adjust navigational instruments, or to repair or drydock with or without cargo on board, to take any reasonable measures in order to inspect and/or repair damages, including but not limited to tipping or listing vessel with or without cargo onboard, all as part of the contract voyage.
Both Mr. Scholl and Mr. Bissell referred to such liberties clauses and gave it as their expert opinion that despite the wording of such clauses the courts in the United States invariably interpreted them to require that the owner must act reasonably. Mr. Bissell testified:
Now, all bills of lading, or almost all bills of lading today, and this one in particular, contain clauses which purport to permit the carrier to do almost
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anything he wants, and these so-called “liberty clauses” are not construed to be given their literal meaning. However, in attempting to find out whether a deviation is unreasonable or not the courts do look at the terms of the bill of lading and interpret the so-called liberties clauses in a way which is fairly applicable to the agreed or contract voyage. In other words, the courts have said these—to suggest the clause, the carriers must act reasonably under all the circumstances.
Therefore, the extremely broad provisions of the liberties clause, clause No. 1 which I have quoted, must always be considered in the light of determining what was reasonable conduct of the owner under all the circumstances. Mr. Scholl testified:
Even if the liberties clause—so called—were broad enough to permit the over carriage, the deviation or the alleged deviation they [United States Courts] still would consider whether the act of over carriage or the decision to over carry was reasonable under all the circumstances.
(The underlining is my own.)
Mr. Scholl cited Surrendera (Overseas) Private Limited v. S.S. Hellenic Hero[2], where Cashin J. said at p. 101:
Thus I find that clause 5 the [liberties clause] was applicable to the situation presented. Nevertheless the respondent is entitled to the protection afforded by clause 5 only if, in its deviating from Vizag to Madras respondent acted reasonably under all the circumstances.
I therefore proceed on this principle to consider whether the acts of the owner were reasonable under the law of the United States commencing with the loading of the shipment of tin in Penang and continuing until the occurrence of the fire in the harbour at Toronto.
Mr. Scholl testified that a court in the United States would consider all of the circumstances that gave rise to the events which occurred in
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the Port of Toronto in order to determine whether an unreasonable deviation had resulted.
Q. Secondly, as to the dealings with the plaintiff’s goods, being as has been related in evidence over-stowed by rubber and on arrival in Toronto being in such condition that either the ship owner was unwilling or did not care to discharge sufficient cargo to reach them and do the job in safety and made the decision that it would be more appropriate for him to continue the voyage and discharge them at another place, what is your view of the law that might be applied by a court of the United States in those circumstances?
A. I would think they would find it was an unreasonable deviation by reason of which the carrier became the insurer of the cargo and responsible for the damages that occurred thereafter.
Q. And insofar as the clauses of the contract depended on a foreign law would the carrier have the benefit of any of them?
A. He would not.
Q. Nor whether they were dependent on foreign law or not, is that the case?
A. Under our law he would not have the benefit of any contractual clause.
In my opinion Mr. Bissell gave evidence to the same effect. One paragraph of his evidence, I think, summarizes his statement:
So, under this present bill of lading I think a United States court would consider the question of deviation in the terms I have just outlined, including assessing the conduct of the carrier or the ship in the light of what was reasonable under the circumstances here at Toronto and also in the light of the bill of lading clauses of which I have spoken, one, five and twenty.
Therefore, to recapitulate very shortly the circumstances, the shipment of tin was loaded at Penang bound for Hamilton and after it was in the ‘tween deck hold there was loaded over the top of it a shipment of rubber bound for Ashtabula, Ohio. Although the ship, during the voyage over the Indian Ocean, encountered
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heavy weather, on the evidence of her First Officer, such weather could be expected in those seas at that time of year and no defence of “perils at sea” has been established. The ship was directed into the port of Toronto and it was determined that the shipment of tin should be unloaded in that port and trans-shipped by truck to Hamilton, Ontario, its designation by the terms of the contract. This arrangement was assented to by the appellant and, in my view, does not constitute a deviation but a mere variation of the contract. However, on arrival in Toronto, the respondents attempted to unload the shipment of tin first removing only a part of the rubber which the respondents had stowed over the top of the tin, that part being the rubber stowed over the forepart of the hatch to the lower hold. When the collapse of the hatch beam was discovered and the straight wall of rubber left standing over the aft part of the hatch started to overhang the portion of the hatch which had been cleared, the stevedores, confirmed by the safety inspectors, refused to work in the hatch because of the dangerous conditions. To quote Captain Goussetis, the Port Captain of the respondents in charge of loading and discharging operations:
The thing what they wanted to do was discharge the whole ’tween deck, to be sure that there is nothing wrong except these beams which seemed to be out of place. At the time you couldn’t see any further.
According to Captain Goussetis’ evidence, to have removed the whole of the rubber from the ’tween deck hold would have taken more than 15 working hours, but Captain Agar said that the 80 tons of rubber over the square of the hatch could have been removed in between 4 and 4½ hours. Rather than subject the ship to this delay, the respondents determined to sail on to Ashtabula, Ohio, have their crew sort out and bolster the rubber cargo en route and then have the stevedores in Ashtabula, Ohio, unload first the rubber and then the appellant’s shipment of tin, trans-shipping the load back from Ashtabula, Ohio, through the Canadian Customs at
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the border and into Hamilton, Ontario. On all of the evidence it would appear that this would have caused a delay of from 8 to 10 days.
The determination to sail on to Ashtabula with the appellant’s cargo still in the hold, apart from a few slabs which had been unloaded prior to the collapsed hatch beam having been discovered, was transmitted to the appellant’s agent Taylor about noon on Wednesday, July 21, 1965, and Mr. Taylor objected vehemently to such a decision. No objection can be taken to the respondents stowing the rubber bound for Ashtabula over the appellant’s tin bound for Hamilton, although the tin was due to be unloaded at Hamilton at an earlier stop on the voyage than Ashtabula, Ohio. The respondents were entitled to load their ship as completely as its size permitted in order to take the maximum profit from the voyage. However, particularly in the view of the proviso to s. 4(4) of the Carriage of Goods by Sea Act:
Provided however that if the deviation is for the purposes of loading or unloading cargo or passengers it shall, prima facie, be regarded as unreasonable.
I am of the opinion that the conduct of the respondents constituted an unreasonable deviation from the contract.
It is the submission of the appellant that the deviation, being an unreasonable deviation from the terms of the bill of lading, constituted a fundamental breach of contract and therefore the appellant had the option of declaring the contract to have been voided and claiming against the respondent for the damage to the appellant’s goods as an insurer of such goods. That position is advanced in the appellant’s factum and was advanced during the course of the trial by the appellant’s counsel:
MR. GERITY: My Lord, I will have some submissions on that head. It will be my submission to your lordship that if it is decided that the contract was avoided, being a contract construed according to American law or the law of the United States, then the law of this country applies as to the liabilities of the parties in the circumstances. I will not be con-
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tending that the law of the United States has further application to the dealings of the parties.
Of course, to determine whether or not an unreasonable deviation did occur I necessarily had regard to the law of the United States of America. Both Mr. Scholl and Mr. Bissell discussed various cases upon this subject. They referred, inter alia, to Atlantic Mutual Insurers Company v. Poseidon Schiffahrt G.m.b.H.[3] a judgment of the United States Court of Appeals 7th Circuit, 1963, where Hastings, Chief Judge, at p. 874, adopted the statement of the court below:
All of these cases indicate that such material “deviations” constitute fundamental breaches of a contract of shipment, under the law, either before or after the enactment of the Carriage of Goods by Sea Act.
I cite this case as illustrating the result of an unreasonable deviation. I am not concerned with the application of the facts in that particular case to the facts in the present case. Similar indications were given in two other cases cited by Mr. Scholl: Surrendera (Overseas) Private Limited v. S.S. Hellenic Hero, supra, and United Nations Childrens’ Fund v. S.S. Nordstern[4]. I accept Mr. Scholl’s analysis of the law of the United States upon this point and am of the opinion that the deviation of the Orient trader being an unreasonable deviation caused a fundamental breach of the contract which breach entitled the appellant to exercise its option of declaring the contract void.
An apt statement of the effect of deviation in an English text may also be found in Carver, Carriage by Sea, 12th ed., (British Shipping Laws, vol. 3) at p. 626, citing Lord Wright in Hain S.S. Co. v. Tate and Lyle[5]:
The breach by deviation does not automatically cancel the express contract, otherwise the shipowner by his own wrong can get rid of his own contract. Nor does it affect merely the exceptions clauses, this would make those clauses alone subject to a condi-
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tion of no deviation, a construction for which I can find no justification. The event falls within the ordinary law of contract. The party who is affected by the breach has the right to say, “I am not now bound by the contract whether it is expressed in charterparty, bill of lading or otherwise”.
Another statement may be found in Bartle, Introduction to Shipping Law, at pp. 101-2:
The effect of deviation
Deviation in the sense in which we have been considering it is a fundamental breach of the contract of carriage. In such circumstances the charterer or cargo-owner has alternative remedies. He may either rescind the contract or he may waive the breach and thus be restricted to an action for damages.
In my opinion, the appellant, here as plaintiff, did elect to accept the repudiation by the respondents and declare the contract void. The appellant issued a statement of claim and in paragraph 8 thereof distinctly set out its claim that the respondents had terminated the contract by their action and therefore claimed damages for the loss of goods. In such circumstances, the provisions of the contract were no longer available to the respondent whose position was reduced to that of a common carrier. The liability under such circumstances was cited by Mr. Scholl from Gilmour and Black, the Law of Admiralty Part 2, p. 119:
The general law of maritime carriage made the public carrier of goods by sea absolutely responsible for their safe arrival, unless loss or damage was caused by the Act of God or of the public enemy, or by the inherent vice of the goods or the fault of the shipper—and (even where the loss was caused by one of these) the carrier was not negligent or otherwise at fault. Except for the qualification indicated this liability did not rest on fault. All the shipper had to do to make his case was to prove receipt for carriage in good order, and non-delivery or delivery in bad order. If the carrier could not show that one of the “exceptions” just listed was the cause of the loss or damage, he had to pay.
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A series of English cases on the topic should be considered in order. In Joseph Thorley Limited v. Orchis Steamship Company Limited[6], the Court considered the situation where a carrier had deviated from the voyage as described in the bill of lading but where the shipment had arrived safely at the Port of London. During the unloading of the ship in the Port of London, the stevedores negligently mixed with the plaintiffs’ goods certain poisonous earth with the result that the plaintiffs’ goods became useless. The plaintiffs claimed damages and the carrier replied alleging an exception clause in the bill of lading which exempted the ship owners from liability for loss arising from, inter alia, negligence of stevedores employed in discharging the ship. It was held that the deviation had caused a rescission of the contract containing the bill of lading and that the defendant ship owner could not allege in its favour the exemption clause contained in such bill of lading.
Fletcher Moulton L.J. said at p. 669:
The cases show that, for a long series of years, the Courts have held that a deviation is such a serious matter, and changes the character of the contemplated voyage so essentially, that a shipowner who has been guilty of a deviation cannot be considered as having performed his part of the bill of lading contract, but something fundamentally different, and therefore he cannot claim the benefit of stipulations in his favour contained in the bill of lading. In what position does he stand? He has carried the goods to their place of destination, and is therefore entitled to some remuneration for that service, of which their owner has received the benefit. The most favourable position which he can claim to occupy is that he has carried the goods as a common carrier for the agreed freight. I do not say that in all circumstances he would be entitled as of right to be treated even as
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favourably as this, but in the present case the plaintiffs do not contest his right to stand in that position. That, however, still leaves him liable to the plaintiffs for the amount which they have recovered in this action.
Many years later, the same problem was considered again in the Court of Appeal and on appeal from there to the House of Lords in Hain Steamship Company Ltd. v. Tate & Lyle Ltd.[7] There again, a carrier contrary to the provisions of the bill of lading deviated from the course therein set out but was recalled to that course while it traversed the seas and then on leaving San Domingo, a port at which the provisions of the charter party required it to call, was stranded and damage to both ship and cargo resulted. It was held in the Court of Appeal that the deviation was unjustified and this unjustified deviation destroyed all provisions in the bill of lading or charter party as to the lien and general average. It is significant that the bill of lading contained a very broad liberties clause.
Scrutton L.J. said:
Unless it is possible to excuse the 265-mile deviation, it seems to me the ship-owner cannot claim the protection of any exception in the contract or claim general average contributions for sacrifices incurred in carrying out the joint adventure, because the joint adventure has been abandoned by doing something which is inconsistent with the contract under which the adventure is carried on. I understand Counsel for the ship to admit that if the loss had occurred while the “Tregenna” was on the deviation in the neighbourhood of Inagua Island, he would have had no answer, but to suggest that when he got back to his chartered route at San Pedro he was not liable for a loss incurred by some cause not connected with the deviation. In my opinion, the decision of this Court in Joseph Thorley v. Orchis Company, [1907] 1 K.B. 660, negatives this contention unless the shipowner can prove that if he had not deviated the same loss would have happened.
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In the House of Lords, the appeal was allowed upon the basis that the shipper, although not the endorser of the bills of lading had waived the right to object to the deviation. Lord Atkin, however, referred to the position had that waiver not occurred and at p. 601 said:
I venture to think that the true view is that the departure from the voyage contracted to be made is a breach of such a serious character that however slight the deviation the other party to the contract is entitled to treat it as going to the root of the contract, and to declare himself as no longer bound by any of its terms.
And on the same page said:
The party who is affected by the breach has the right to say, I am not now bound by the contract whether it is expressed in charterparty, bill of lading or otherwise. He can, of course, claim his goods from the ship; whether and to what extent he will become liable to pay some remuneration for carriage I do not think arises in this case for reasons I will give later: but I am satisfied that once he elects to treat the contract as at an end he is not bound by the promise to pay the agreed freight any more than by his other promises. But on the other hand, as he can elect to treat the contract as ended, so he can elect to treat the contract as subsisting: and if he does this with knowledge of his rights he must in accordance with the general law of contract be held bound.
Lord MacMillan was a member of the House of Lords which considered the appeal and specifically c