The King v. Canada SS. Lines

The King v. Canada SS. Lines
Collection
Supreme Court Judgments
Date
1950-06-23
Report
[1950] SCR 532
Judges
Rinfret, Thibaudeau; Rand, Ivan Cleveland; Kellock, Roy Lindsay; Estey, James Wilfred; Locke, Charles Holland; Cartwright, John Robert; Fauteux, Joseph Honoré Gérald
On appeal from
Canada
Subjects
State
Decision Content
Supreme Court of Canada
The King v. Canada SS. Lines, [1950] S.C.R. 532
Date: 1950-06-23
His Majesty The King (Defendant) Appellant,
and
Canada Steamship Lines Limited (Suppliant) Respondent,
His Majesty The King (Defendant) Appellant,
and
H. J. Heinz Company Of Canada Limited, Cunningham & Wells Limited, Raymond Copping, W. H. Taylor Limited, Canada And Dominion Sugar Company Limited (Suppliants) Respondents,
and
Canada Steamship Lines Limited Third Party Respondent.
1950: February 20, 21, 22, 23, 24; 1950: June 23.
Present: Rinfret C.J. and Rand, Kellock, Estey, Locke, Cartwright and Fauteux JJ.
ON APPEAL FROM THE EXCHEQUER COURT OF CANADA
Crown-Lease of shed by Crown to water carrier—Damage caused to lessee and to third parties by negligence of servants of Crown—Whether lease exempts from liability by negligence—Whether gross negligence—Third party proceedings—Exchequer Court Act, R.S.C. 1927 c. 34, s. 19(c)—Water Carriage of Goods Act, 1 Ed. VIII, c. 49. A shed, leased by appellant to respondent C.S.L. and in which were stored respondent's and third parties' goods, caught fire while appellant's employees, acting within the scope of their duties, were doing repairs to it in compliance with appellant's obligation to maintain the shed under clause 8 of the lease.
Clause 7 provided that "the lessee shall not have any claim or demand against the lessor for detriment, damage or injury of any nature … to the said shed … or materials … goods … placed, made or being … in the said shed".
By clause 17 it was provided that "the lessee shall … indemnify … the lessor … against all claims and demands … based upon, occasioned by or attributable to the execution of these presents, or any action taken or things done or maintained by virtue hereof, or the exercise in any manner of rights arising hereunder".
The trial judge held that appellant's employees had been negligent and that clause 7 could not be invoked as their negligence amounted to "faute lourde". For the same reason, he dismissed the third party proceedings instituted by appellant under clause 17. At the hearing, this Court declared that the finding of negligence by the trial judge could not be disturbed.
Held: The intention of the parties to be gathered from the whole of the document was that, as between the lessor and the lessee, the lessor should be exempt under both clauses 7 and 17 from liability founded on negligence (Locke J. contra as to clause 7).
Held also: The conduct of appellant's employees did not amount to "faute lourde".
Per Locke J. (dissenting in part): As there was here a double liability—the contractual obligation on the part of the Crown to maintain the shed under clause 8 and the liability of the Crown under s. 19 of the Exchequer Court Act—the liability in negligence not having been expressly or by implication excluded, remains and therefore clause 7 does not afford an answer to respondent's claim.
Glengoil Steamship Co. v. Pilkington (1897) 28 S.C.R. 146; Phillips v. Clark [1857] 2 C.B. (N.S.) 156; Price v. Union Lighterage Co. [1904] 1 K.B. 412; Hutter v. Palmer [1922] 2 K.B. 87; McCawley v. Furness Ry. Co. (1872) L.R. 8 Q3. 57; Reynolds v. Boston Deep Sea Fishing Co. (1921) 38 T.L.R. 22; Beaumont Thomas v. Blue Star Line Ltd: [1939] 3 All E.R. 127 and Alderslade v. Hendon Laundry Ltd. [1945] 1 All E.R. 244 referred to.
APPEALS by the Crown against the judgments of the Exchequer Court of Canada, Angers J. 1, holding that the lease did not exempt the Crown from liability for damage done by the gross negligence of its servants and allowing respondent's petition of right.
A. J. Campbell K.C. and J. Desrochers for the appellant.
H. Hansard K.C. and R. E. Morrow for Canada Steamship Lines and H. J. Heinz Company. John Bumbray K.C. for Cunningham & Wells, for Copping and for W. H. Taylor Ltd.
John L. O'Brien K.C. and John Nolan for Canada and Dominion Sugar Co. Ltd.
The Chief Justice: These are appeals from judgments of the Exchequer Court of Canada rendered by Angers J. in November, 1948 2.
By the first judgment, the Court below maintained with costs the Petition of Right of the Respondent Canada Steamship Lines, Limited, for the sum of $40,713.72.
By the second judgment, the Court below maintained with costs the Petition of Right of the Respondent H. J. Heinz Company of Canada, Limited, for the sum of $38,430.88.
By the third judgment, the Court below maintained with costs the Petition of Right of the Respondent Cunningham and Wells, Limited, for the sum of $15,159.83.
By the fourth judgment, the Court below maintained with costs the Petition of Right of the Respondent Raymond Copping, for the sum of $1,662.37.
By the fifth judgment, the Court below maintained with costs the Petition of Right of the Respondent W. H. Taylor, Limited, for the sum of $3,670.25.
By the sixth judgment, the Court below maintained with costs the Petition of Right of the Respondent Canada and Dominion Sugar Co., Limited, for the sum of $108,310.83.
Third Party proceedings were instituted by the Appellant against the Respondent Canada Steamship Lines, Limited, in each of the above cases, except, of course, the petition directly made by Canada Steamship Lines, Limited, itself.
These six cases were tried together and all arise out of a fire which, on May 5, 1944, completely destroyed the Canada Steamship Lines Ottawa street freight shed located on the Lachine Canal in the inner harbour of Montreal.
The damages awarded to each of the Petitioners were established by admissions filed in each case and, therefore, the only question remaining to be decided was as to the responsibility of the Appellant, which the learned trial judge found against the latter. At the hearing in this Court, after the conclusion of the argument of the Appellant's counsel, the Court declared that the findings of negligence on the part of the Appellant's employees, as made in the judgments appealed from, could not be disturbed. It follows that the judgments in favour of the Respondents H. J. Heinz Company of Canada, Limited; Cunningham and Wells, Limited; Raymond Copping; W. H. Taylor, Limited; and Canada and Dominion Sugar Co., Limited, must be confirmed with costs of the appeal against the Appellant.
With regard, however, to the petition of Canada Steamship Lines, Limited, and the Third Party proceedings, other considerations apply, in view of the existence between the Appellant and Canada Steamship Lines, Limited, of a lease whereby the latter was put in possession of the freight shed owned by the Appellant. It is the effect of that lease with regard to the respective claims of Canada Steamship Lines, Limited, and His Majesty which stands to be discussed.
The lease in question, dated the 18th of November, 1940, gave to Canada Steamship Lines, Limited, the right and privilege to occupy, use and enjoy the shed for the purpose of receiving and storing therein freight and goods loaded into or unloaded from vessels owned and operated by them. It was there agreed between the parties that the lease was made and executed upon and subject to the covenants, provisoes, conditions and reservations thereafter set forth and contained, "and that the same and every of them, representing and expressing the exact intention of the parties, are to be strictly observed, performed and complied with". One of these covenants, provisoes, conditions and reservations is contained in Clauses 7 and 8 of the lease; and another is contained in. Clause 17, which it is convenient to reproduce here:
7. That the Lessee shall not have any claim or demand against the Lessor for detriment, damage or injury of any nature to the said land, the said shed, the said platform and the said canopy, or to any motor or other vehicles, materials, supplies, goods, articles, effects or things at any time brought, placed, made or being upon the said land, the said platform or in the said shed.
8. That the Lessor will, at all times during the currency of this lease, at his own cost and expense, maintain the said shed, exclusive of the said platform and the said canopy. 17. That the Lessee shall at all times indemnify and save harmless the Lessor from and against all claims and demands, loss, costs, damages, actions, suits or other proceedings by whomsoever made, brought or prosecuted, in any manner based upon, occasioned by or attributable to the execution of these Presents, or any action taken or things done or maintained by virtue hereof, or the exercise in any manner of rights arising hereunder.
It is apparent that Clauses 7 and 8 have to do with the direct claim of Canada Steamship Lines, Limited, and Clause 17 is invoked by the Appellant in connection with the Third Party proceedings.
Taking first Clauses 7 and 8, the contention of the Appellant is that they relieved him of any claim or demand by the Canadian Steamship Lines, Limited, for the damage suffered by the latter in the circumstances.
The fire was caused by the employees of the Appellant, while they were repairing the shed, and it is clear that, when carrying out those repairs, the Appellant was complying with his obligation to maintain the shed by force of Clause 8. It could not be disputed that the employees were then acting within the scope of their duties or employment, thus bringing into play Section 19(c) of The Exchequer Court Act (R.S.C. 1927, c. 34), by force of which this claim for injury to the property of the petitioners resulting from the negligence of the servants of the Crown could be determined against the Appellant.
I have already said that the finding of the learned trial judge to the effect that there was in this matter negligence of the employees acting within the scope of their duties or employment could not be disturbed, and it follows that the Appellant was rightly condemned to pay the damages claimed by the Canada Steamship Lines, Limited, unless Clause 7 of the lease comes to the rescue of the Appellant.
The learned trial judge decided that it did not so operate. The ground for so deciding was that, in the opinion of the learned judge, the evidence has established that the fire, which destroyed the shed or warehouse in question and its contents, was caused by the gross negligence of the officers and servants of the Crown and that, in such a case, the Appellant could not invoke Clause 7.
It was common ground that the gross negligence referred to in the judgment appealed from is the equivalent of what is called "faute lourde" in the French Civil Code, and it was not disputed either that the lease must be interpreted and applied according to the law of the Province of Quebec.
The learned judge devoted almost the whole of his judgment to a discussion of what constituted "faute lourde". But, of course, the question whether "faute lourde" exists is not merely a question of fact; it is also a question of law. The facts found must be brought within the proper legal definition of "faute lourde".
On that point, it does not seem to me that one can be on safer grounds than to adopt the definition of POTHIER. This learned author, who might truly be looked upon as being in most respects the basis of the Civil Code of Quebec, says that the "faute lourde consiste à ne pas apporter aux affaires d'autrui le soin que les personnes les moins soigneuses et les plus stupides ne manquent pas d'apporter à leurs affaires".
Here, the so-called "faute lourde", in the mind of the learned judge, would have resulted from the fact that, in order to enlarge a hole in a steel beam—an operation which admittedly would not require more than three or four minutes at most—the employees used an oxyacetylene torch and two experts testified that, instead of the torch, they should have used a drill or a reamer.
As the operation of the torch on the metal was expected to cause sparks to be emitted, the employees had installed a wooden beam or board, seven to eight feet long, nine to ten inches wide and one inch thick. The board started from the roof of the shed and came down to about three feet from the floor. The object of it was to prevent any spark flying from the spot of the operation unto bales of cotton waste stored in the shed. The bales incidentally caught fire and from there the fire spread all over the shed and destroyed all its contents. How the spark found its way to the bales of cotton waste, notwithstanding the board placed by the employees for the very purpose of preventing such an event, remained unexplained, as the whole occurrence happened so quickly that one of the employees, who had been placed inside the shed in order to guard against a possible mishap, had to escape hurriedly and did not even have time to use a pail of water which had been put at his disposal as an additional precaution. It should be stated, however, that in cross-examination, Newill, one of the experts heard, admitted that blow torches are used currently in many industries, in repairs to buildings and for the purpose of burning holes.
The judgments appealed from proceed to examine whether the Appellant could invoke any relief, under Clause 7 of the lease, and conclude as follows:
After carefully perusing the doctrine set forth by the authors, French and Canadian, and adopted by the Courts of the Province of Quebec and the Supreme Court of Canada, with respect to the bearing of the exculpatory clause in the lease Exhibit A in the case of gross negligence, I have reached the conclusion that this clause does not exempt the respondent from his responsibility in connection with the damages suffered by the suppliant as a consequence of the fire.
The learned judge accordingly gave judgment in favour of the Suppliant against the Appellant.
It will be seen, therefore, that although recognizing that in the case of simple negligence ("faute ordinaire", "faute légère"), Clause 7 would have operated as relieving the Appellant from any claim or demand for "detriment, damage or injury of any nature" to the "materials, supplies, goods, articles, effects or things at any time brought, placed, made or being upon the said land, the said platform or in the said shed"—and that is to say, for the damages claimed in the Petition of Right of Canada Steamship Lines, Limited—the Petitioner is entitled to recover in this particular case, because the employees of the Crown, in this instance, were guilty of gross negligence or of "faute lourde"; and that, in the premises, this circumstance prevented the Crown from obtaining relief under Clause 7.
No other ground can be found in the judgment for maintaining the Petition of Right against the Appellant in favour of the Respondent Canada Steamship Lines, Limited.
This calls, therefore, for the examination of two points: (1) Whether the facts justify a finding of "faute lourde" in the circumstances in this case; and (2) whether, in law, the existence of "faute lourde" would operate as an exception to the bearing of Clause 7 in the lease.
Applying to the facts the definition of POTHIER above recited, I do not think, with respect, that it can be said that there was a "faute lourde" committed by the employees of the Crown. That definition goes extremely far; the words used by POTHIER are: "… le soin que les personnes les moins soigneuses et les plus stupides ne manquent pas d'apporter à leurs affaires". Upon the evidence, I do not find it possible to state that the employees here can be placed in the category of "les personnes les moins soigneuses et les plus stupides".
As already stated, the evidence shows that the use of blow torches for the purpose of burning holes is made currently in many industries and by men of construction and demolition companies. The operation was to last only a few minutes. The men had no drill or reamer with them at the time. Stopping the work to go and get a drill or reamer might have meant a long delay and much inconvenience. It was only natural that for this extremely short work they should use the instruments or tools which they had immediately at hand. They were only doing what admittedly is being done currently in works of that kind. Moreover, they had taken the precautions which ordinarily and in their own mind would be adequate: the board installed between the place where they were burning the hole and the goods inside the shed; the pail of water; and the man placed on the bales of cotton waste, so that he could at once see a possible spark flying towards the bales and act on the spur of the moment to extinguish any beginning of a fire. It seems that it would be very exacting indeed to ask for any further precaution. It was both improbable and very nearly impossible to expect that a spark would reach the bales. It is enough to say that, under those circumstances, the finding that the employees were negligent and have caused the fire through such negligence should not be reversed by an Appellate Court, as was decided by this Court at the close of the Appellant's argument. With respect, I am unable to agree that what the men did was the act of "les personnes les moins soigneuses et les plus stupides". It is unnecessary, of course, to add that there can be here found neither "faute intentionnelle" nor "faute volontaire". And if, as many authors and commentators on the Civil Code think that, with very slight "nuance", the notion of "faute lourde" should be taken as the equivalent of "dol", it would be stressing the definition of "faute lourde" to its extreme limit to decide that the negligence of the Crown's employees amounted here to gross negligence or "faute lourde".
This would be sufficient to dispose of the ground upon which the learned trial judge refused to give to the Crown-Appellant the benefit of Clause 7 of the lease.
But it is not amiss to add that on the authorities and true interpretation of a clause, such as Clause 7, I could not either come to the conclusion that gross negligence or "faute lourde" should render Clause 7 inoperative. Since the decision of this Court in the case of The Glengoil Steamship Company v. Pilkington 3 the matter, in the Province of Quebec, must be taken to have been settled that a clause of that character is neither illegal nor void, and that the jurisprudence, both in France and in the Province of Quebec, now sanctions the validity of such a contract (Glengoil Case, Pages 156 and 157). It is generally admitted that such a stipulation of non-responsibility is not contrary to public order. This principle was reaffirmed by this Court in Vipond v. Furness, Withy and Company 4.
The leading case on that subject in the Province of Quebec is Canadian National Railway Company v. La Cité de Montréal 5. This judgment was delivered for the Court of King's Bench (Appeal Side) by Surveyer J. It was there decided that
La clause d'un contrat stipulant immunité en faveur d'une partie, pour le cas de dommages susceptibles d'être causes par sa propre faute, sans distinguer entre la faute contractuelle et la faute délictuelle, telle distinction n'existant pas dans notre loi,—n'est pas contraire à l'ordre public,—est légale et valide.—En conséquence, dans l'espèce, une compagnie de chemin de fer dont la voie traverse à niveau la rue d'une municipalité, peut s'immuniser et se garantir par contrat avec la dite municipalité contre la responsabilité lui résultant d'accidents pouvant survenir à la traverse, même par la faute de ses propres employés.
The judgment relies on LAURENT, Vol. 16, No. 230; MARCADE, Vol. 4, Nos. 506-7; and a former judgment of the Court of King's Bench (Appeal Side) in Canadian Northern Quebec Railway Co. v. Argenteuil Lumber Company 6, where the Court of Appeal decided:
A party to a contract may legally stipulate that he will not be responsible for the negligence of his employees. Therefore a clause in an agreement between a Railway Company and a private individual for the building of a siding, connecting with the company's railways, which purports to exempt the company from liability for injury or loss caused by its negligence or that of its servants in use of said siding, is not as being against public order, as far as the fault of the company's employees is concerned.
The same judgment cites SIREY, 1882-2-24, to the effect that the definition of "faute lourde" in France is: "La faute commise à dessein et en pleine connaissance de cause". This clearly cannot be applied to the negligence of the Crown's employees in the present case, and we should add that, if such be the law as between private litigants, a fortiori should the Crown be given the benefit of such law in view of the limited responsibility of the Crown in these matters.
Clause 7 itself provides for no exception whatever. It covers "any claim or demand … for detriment, damage or injury of any nature … to materials, supplies, goods, articles, effects or things at any time brought, placed, made or being upon the said land, the said platform or in the said shed".
It is obvious that the clause covers the goods, articles, effects or things, the damage or injury to which is claimed for by the Petitioner-Respondent in the premises. There could be no possible exception to the non-liability of the Appellant under the clause.
Applying Articles 1013 and following of the Civil Code dealing with the interpretation of contracts, I must say that, here, the meaning of the parties is not doubtful, it is not susceptible of two meanings, and, although the terms are quite general and all-embracing, I cannot see how they could be said not to extend to the goods destroyed by the fire in the present case, nor is it evident that the parties did not intend to contract to cover those goods (C.C. 1020).
Both on the interpretation of the clause in accordance with the Civil Code, as well as in law and on the facts, I am of opinion that Clause 7 of the lease between His Majesty and Canada Steamship Lines, Limited, should receive its application and the Petition of Right of Canada Steamship Lines, Limited, should be dismissed with costs, in this Court and in the Exchequer Court.
Dealing now with the Third Party proceedings, they were all dismissed by the learned trial judge again on the ground that the existence of "faute lourde", as he found, should exclude the right of the Appellant to be indemnified by the Respondent Canada Steamship Lines, Limited. This calls for a discussion of the effect of Clause 17 of the lease.
In that connection, I need not repeat what is already said above on whether the negligence of the Crown's employees can be styled gross negligence or "faute lourde". My conclusion on the facts leads to a decision that none could be found in the circumstances of this case. It would follow that the ground of the learned trial judge for excluding Clause 17 is not well founded.
There remains, however, to interpret Clause 17 and to see whether, upon its true construction, the Appellant was entitled to call upon the Respondent Canada Steamship Lines, Limited, to indemnify Him and save Him harmless from the claims of the other Petitioners.
For that purpose, Clause 17 may be divided into two parts: the first part reads:
That the Lessee shall at all times indemnify and save harmless the Lessor from and against all claims and demands, loss, costs, damages, actions, suits or other proceedings by whomsoever made, brought or prosecuted …
It does not seem doubtful that this first part upholds the contention of the Appellant.
actions … brought or prosecuted, in any manner based upon, occasioned by or attributable to the execution of these Presents, or any action taken or things done or maintained by virtue hereof, or the exercise in any manner of rights arising hereunder.
Here, the enquiry must be whether the actions brought by H. J. Heinz Company of Canada, Limited; Cunningham and Wells, Limited; Raymond Copping; W. H. Taylor, Limited, and Canada and Dominion Sugar Company, Limited, are included within the actions, suits or proceedings enumerated and specified in that last part.
Undoubtedly, unless it were so, it would be difficult to attribute a meaning to that clause, although the rule of interpretation contained in Article 1014 of the Code states that:
When a clause is susceptible of two meanings, it must be understood in that in which it may have some effect rather than in that in which it can produce none.
It would not follow, therefore, that the mere fact of coming to the conclusion that the clause might produce no effect would be sufficient to dispose of the present discussion. Article 1014 contemplates that there may be clauses in contracts which are susceptible of producing no effect, if no meaning can be attributed to them. It is only when a clause is susceptible of two meanings that preference must be given to the meaning having some effect rather than to the meaning which produces none.
Here, however, after the most careful consideration, I cannot find two meanings in Clause 17.
The Crown is seeking to be indemnified by Canada Steamship Lines, Limited, and to be saved harmless from and against claims and demands, suits or proceedings brought against it for loss, costs and damages based upon, occasioned by or attributable to the execution of the lease.
As we have seen, Clause 8 thereof compelled the Crown "at all times during the currency of the lease, at its own cost and expense, to maintain the shed" in which the goods destroyed by the fire had been placed and were then in the shed. Maintaining the shed was one of the obligations of the Crown arising under the lease and attributable to the performance or execution of the lease. The loss, cost or damages to the other claimants or Petitioners, which form the basis for the Third Party proceedings against the Respondent Canada Steamship Lines, Limited, are certain claims and demands for their loss, cost and damages in actions, suits or proceedings brought or prosecuted in a manner attributable to the execution and performance of the lease by the Crown; and, accordingly, they are brought strictly within the application of Clause 17. This, to my mind, was exactly the intention of the parties to the lease when the latter was agreed to between them. The result, of course, is unfortunate because it has the effect of placing upon the shoulders of the Canada Steamship Lines, Limited, the full burden of the damages which resulted from the fire caused by the negligence of the employees of the Appellant; but the law of the contract is the law of the parties; and this result is brought about only as a consequence of the stipulations to which the Lessee submitted itself when it signed the lease. And it is not unnatural that, having rented the shed to Canada Steamship Lines, Limited, the Crown should have insisted that, if any loss occurred during the currency of the lease and such loss was claimed against the Crown, it, in turn, would be entitled to be indemnified and saved harmless by the Lessee. Canada Steamship Lines, Limited, agreed to that, and, in deciding that the Third Party proceedings must be maintained against it, the Court is only applying the inevitable result and consequence of what it agreed to.
I am, for all these reasons, of opinion that the judgments must be confirmed in so far as are concerned the petitions of H. J. Heinz Company of Canada, Limited; Cunningham and Wells, Limited; Raymond Copping; W. H. Taylor, Limited, and Canada and Dominion Sugar Co., Limited, and the appeals from these judgments should be dismissed with costs; but the appeal should be maintained as against Canada Steamship Lines, Limited, both in respect to its own petition against His Majesty and also with regard to the Third Party proceedings, which ought to be maintained against it in each case of H. J. Heinz Company of Canada, Limited; Cunningham and Wells, Limited; Raymond Copping; W. H. Taylor, Limited, and Canada and Dominion Sugar Co., Limited. The judgments rendered in favour of Canada Steamship Lines, Limited, on its own petition and on the Third Party proceedings should, therefore, be set aside; its petition should be dismissed and the Third Party proceedings maintained against it, together with all costs in each instance in favour of the Appellant both in this Court and in the Exchequer Court.
Rand J.:—On the argument, the Court intimated that, notwithstanding Mr. Campbell's able argument, the finding of Angers, J. 7 on the facts could not be disturbed. There remain, therefore, three questions: first, whether under paragraph 7 of the lease, the Crown is exempt from liability for the loss suffered by the respondent; whether, under paragraph 17, the Crown is entitled to call upon the respondent for indemnity against the claims of the third parties; and whether the negligence was "faute lourde" against which, it is contended, an indemnity would be contrary to public order.
Paragraph 7 is as follows:—
That the Lessee shall not have any claim or demand against the Lessor for detriment, damage or injury of any nature to the said land, the said shed, the said platform and the said canopy, or to any motor or other vehicles, materials, supplies, goods, articles, effects or things at any time brought, placed, made or being upon the said land, the said platform or in the said shed.
As can be seen, this language is broad enough to embrace every claim against the Crown for damage to any property of the respondent in or on the land leased. For example, an aeroplane of the Air Force might, through negligence, get out of control and crash through the building, or sparks from a locomotive on the government railway might set fire to it. But they are claims against the "Lessor" and this means that they must arise within some scope of action under the lease. Are they, on the one hand, to be limited to damage resulting from breaches of covenant? The only express obligation on the Crown is that to maintain the "said shed exclusive of the said platform and the said canopy". Under the law of Quebec, which the parties take as governing, the duty to repair would arise after notification by the lessee. The Crown might deliberately or negligently delay such work in circumstances that might lead to damage, as, say, from rain or other inclemency of weather. The mere breach of the covenant, without damage to property, would be outside the paragraph. Or, on the other hand, are the parties to be presumed to have had in mind consequences incidental to any act arising out of the relation of lessor and lessee? Before coming to a conclusion on this question, I think it advisable to examine paragraph 17.
That paragraph reads:—
That the Lessee shall at all times indemnify and save harmless the Lessor from and against all claims and demands, loss, costs, damages, actions, suits or other proceedings by whomsoever made, brought or prosecuted, in any manner based upon, occasioned by or attributable to the execution of these Presents, or any action taken or things done or maintained by virtue hereof, or the exercise in any manner of rights arising hereunder.
The question here is this: what claims of third parties could arise against the Crown within the scope of matters bounded by the lease? There could be no contractual rights or duties: at most only delicts or quasi-delicts. But the non-liability of the Crown for wrongs done to the subject is a basic constitutional rule which was the law of Lower Canada in 1807 and remains the constitutional position of the Crown except so far as it has been changed by statute: Quebec v. The King 8. The Exchequer Court Act, by section 19(c), has created a right in the subject where he has been injured or his property damaged by the negligence of an employee of the Crown in the course of his duty and any liability within the Province of Quebec must arise out of such a delinquency. The only possible claims, then, within paragraph 17, are those founded in negligence.
The rule striking negligence from exceptions of liability arose out of the interpretation of contracts of carriage both by sea and by land. The nature of those undertakings as well as the early conditions under which they were performed dictated an insurer's responsibility against loss or damage unless caused by an Act of God, the King's enemies or inherent vice, to which there was added by law the obligation to use care, and in the case of ships, that they be seaworthy. But although the rule is not now confined to carriers, the researches of counsel have turned up no case of property which has not involved a bailment. The common factor in all has been the commitment of personal property by one person to another, a relationship in many instances of which duties by law and obligations by contract have not been wholly and satisfactorily integrated. But there is no such relation here and the rule must be examined anew.
The first question for a court is the rational consideration upon which the rule is based. In examining that, I disregard both the fact that the Crown is landlord and the ordinary rule of interpretation in the case of Crown grants. Since the matter is primarily in contract, the exception should appear as the presumed intention of the parties. In sea carriage there were obvious perils to be encountered, and if the ship owner stipulated for freedom from them, without more, it would be reasonable to assume that misconduct on his part was not contemplated. In some, at least, of the exceptions, the result could be explained in terms of causation, Although a peril was the immediate cause, yet as it was engaged with negligence, on the ordinary reasoning the loss would be attributed to the latter. But it was not only against negligence that the rule struck. The warranty of seaworthiness was in substance absolute, and yet, its breach, regardless of the nature or cause of it, was excluded from general exceptions or from exceptions of specific causes with which it co-operated.
One test would seem to be whether the words of exemption can be given a reasonable application short of negligence, as was suggested by Atkin, L.J. (as he was) in Rutter v. Palmer 9. In the lease before us, the Crown has undertaken only one obligation, to maintain the building, and the only sources of liability are, failure to maintain and negligent performance. It is said that the former is within section 7 and the latter not. But what, in reasonableness, is the difference between a culpable refusal to carry out an obligation, which involves either an intentional or negligent disregard of it, and the performance in good faith but accompanied by less than reasonable care? If, for instance, the electric wiring of this building had, through deterioration, become dangerous, precisely the same results might have followed the neglect to repair as in this case; and if it goes to the reasonableness or even morality of the default, how can it be said that either one is more reasonable or more unreasonable than the other? I am unable to appreciate any jural distinction between them. As in the cases where unseaworthiness has overridden exceptions, it is irrelevant that there might be liability which did not involve culpability, although I should add that I do not see how there could be here.
Reverting, then, to paragraph 7 and considering it in the light of paragraph 17, it would seem rather absurd to say that the fire, so far as it damaged the goods of a third party, gave rise to a right in the Crown against the Steamship Company for indemnity, which, in my opinion, it would; but that claims for damage to like property of the Steamship Company were not within the broad language of paragraph 7.
It will be noticed that, although the duty to repair does not extend to the canopy or the platform, additions to the building made by the lessee, these are enumerated in paragraph 7. Damage to them arising out of a failure to repair the main part of the building can perhaps be imagined, but it would be very remote in cause and beyond any likely contemplation of the parties. It would seem much more probable that direct damage to them was in mind, a claim for which could be only from a negligent act.
The last question is whether the negligence in the work done was of such an outrageous character as to bring it within the principle of faute lourde. In view of the development of the law of insurance in the province and its radical departure from the Coutume de Paris, it would seem to be very questionable that the principle could now be invoked at all; but assuming it could, the scope would not in these days extend beyond the bounds laid down by Pothier in his definition:—
dans le fait de ne pas apporter aux affaires d'autrui le soin que les personnes les moins soigneuses et les plus stupides ne manquent pas d'apporter à leurs affaires.
It cannot seriously be contended that the conduct of these employees was of the character so described. They were doing their work in the ordinary manner; they had anticipated the possibility of sparks and had taken some considerable, and what they thought to be adequate, precautions against them. To say of their conduct that it was more indifferent than the most careless and the most stupid of men would exercise towards their own interests is either to disregard what they did or to misconceive the standard laid down.
The result is simply this: the Crown leases on terms that under no circumstances will it be responsible for damage to any property on the land: to the lessee it is said: you must bear that entire risk, against which you may, of course, insure yourself. As the respondent is a carrier, in custody of all the goods as such or as warehouseman, that risk is part at least of its ordinary responsibility: and in the work of repair, it is as if the persons doing it were employees of the respondent but at the cost of the Crown.
I would, therefore, allow the appeal, dismiss the petition of right and allow judgment on the counterclaim for indemnity, with costs in this Court and in the Court below.
Kellock J.:—This is an appeal by His Majesty from a judgment of the Exchequer Court 10 in proceedings arising out of the destruction by fire of certain goods, the property of the respondent and certain third parties. The respondent, Canada Steamship Lines, was the tenant of certain dock property under lease from the appellant upon part of which property was situate a freight shed which the Steamship Company used in connection with its business of transporting freight. The lease is dated the 18th of November, 1940, and is for a term of twelve years. Under its provisions the lessee had the right to construct, at its own expense, a loading platform along the southerly face of the freight shed and a canopy above. It also provided that the appellant would, during the currency of the lease, maintain the shed but not the platform or canopy.
Five or six days prior to the fire, the Steamship Company had complained to the appellant's superintendent as to the state of repair of the various doors in the shed and it was in the course of the repair of these doors on the 5th of May, 1944, by servants of the appellant that the fire occurred, completely destroying the shed and its contents.
The learned trial judge held that the fire was due to the negligence of the appellant's servants and we affirmed this finding on the hearing, subject to the question as to whether the negligence amounted to gross negligence, and the effect, if any, of such a finding. Judgment was given in favour of the Steamship Company against the appellant and also judgment in favour of the third parties. The learned judge further held that clause 7 of the lease, to be hereinafter referred to, could not be availed of by the appellant as a defence to th