Date: 19990831
Docket: T-1296-95
ACTION IN REM AGAINST THE VESSEL "FEDERAL ST. CLAIR"
(NOW RENAMED THE "HUI FU") AND HER OWNERS AND ALL OTHERS INTERESTED IN THE VESSEL "FEDERAL ST. CLAIR" (NOW RENAMED THE "HUI FU") AND IN PERSONAM AGAINST FEDERAL PACIFIC LTD., UBEM N.V., AND FEDNAV INTERNATIONAL LTD.;
| BETWEEN: |
| VOEST-ALPINE STAHL LINZ GmbH |
| -and- |
| PREUSSAG HANDEL CANADA CORPORATION |
| -and- |
| SAMUEL ET FILS & CIE LTÉE |
| -and- |
| ALL THOSE PERSONS HAVING AN INTEREST IN THE CARGO LADEN ON BOARD THE VESSEL "FEDERAL ST. CLAIR" (now renamed the "HUI FU") |
| (B/L No. 3CDANMOSP-009) |
| Plaintiffs |
| AND: |
| FEDERAL PACIFIC LTD. |
| -and- |
| UBEM N.V |
| -and- |
| FEDNAV INTERNATIONAL LTD. |
| -and- |
| THE OWNERS AND ALL OTHERS INTERESTED IN THE VESSEL "FEDERAL |
| ST. CLAIR" (now renamed the "HUI FU") |
| -and- |
| THE VESSEL "FEDERAL ST. CLAIR" (now renamed the "HUI FU") |
| Defendants |
| REASONS FOR ORDER AND ORDER |
| BLAIS J. |
[1] This is an action in damages arising out of the carriage of 35 hot dipped galvanized steel coils (the"cargo") which were carried from Antwerp, Belgium to Montreal, Canada pursuant to bill of lading no. 3 CDANMOSP-009 dated and issued at Hamburg, Germany on or about November 15, 1993.
[2] The plaintiff Preussag Handel Canada Corporation seeks to recover from the defendants the total sum of $70,536.08. Parties agreed in the present matter with respect to the quantum of the claim which is detailed as follows:
| Credit for damage to the material; 672 425 lbs. - 76 117 lbs. (total weighted damaged cargo - weighted damaged cargo carried under bill of lading SP-008) |
| 596 308 lbs. x $10.25 CWT= $61,121.57 |
| GST (7%) $ 4,278.51 |
| Credit for inspection of coils |
| 32 at $150.00= $4,800.00 |
| GST (7%) $ 336.00 |
| Grand Total $70,536.08 |
FACTS
[1] The plaintiffs are the owners, shippers and consignees of the cargo, made of 32 hot dipped galvanized steel coils, the whole of which was carried from Antwerp, Belgium to Montreal, Canada, pursuant to bill of lading no. 3CDANMOSP-009 dated and issued at Hamburg, Germany. The sequence of events which gave rise to the actual claim started with the manufacture of the hot dipped galvanized steel coils in Austria, sometimes during the month of September 1993. The coils then left Austria on October 14, 1993 and were transported by barge on the Rhine-Maine-Danube canal to arrive two weeks later, at the beginning of November 1993, at Antwerp. The cargo was then loaded on board the ship Federal St.Clair on November 15, 1993, which left Antwerp to arrive in Montreal on November 30, 1993. On December 1 and 2, the cargo was unloaded from the ship in Montreal. Between December 6 and 15, the cargo was moved, by truck, from the harbour of Montreal to the warehouse of Samuel et Fils & Cie in Laval, suburb of Montreal. It was not until February of 1994 that the plaintiff Samuel et Fils & Cie discovered the damage which is the object of the present claim, and which corresponds with the moment that the coils were unrolled for use.
ADMISSIONS BY THE PARTIES
[2] The parties have made the following admissions in their written pleadings:
| - The defendant Federal Pacific Ltd. admits being the owner of the vessel "Federal St. Clair"; |
| - The defendant Fednav International Ltd. admits being the time-charterer of the vessel "Federal St. Clair"; |
| - Plaintiffs admit that there was no inspection of the contents of the cargo upon discharge from the vessel at Montreal on December 1 and 2, 1993. |
PLAINTIFFS" ARGUMENTS
[3] The plaintiffs submit that the cargo was received by the defendants in good order and condition at Antwerp as evidenced by the bills of lading. In this regard, plaintiffs suggest that the various annotations found on the defendants' bills of lading have no bearing on the nature of the damages that were noted upon delivery of the cargo, i.e. localised wetting. The plaintiffs suggest that the cargo was damaged whilst under the care, custody and control of the defendants i.e. during the voyage from Antwerp to Montreal due to condensation and water ingress.
[4] The plaintiffs submit that they have met the burden of proof as provided for under the Hague/Visby Rules and consequently a presumption of liability lies against the defendants.
[5] The plaintiffs submit that the defendants failed to establish that the damages are attributable to one of the exceptions set out in the Hague/Visby Rules. The plaintiffs submit that the cargo pre-loading survey dated November 15, 1993 by UBEM filed as exhibit P-7 with photographs attached and the bills of lading, clearly demonstrate that the cargo which was loaded on board the Federal St. Clair in Antwerp was received by the defendants in good order and condition.
[6] The UBEM survey report states that its mission is to survey and report on the condition of mentioned cargo, prior to loading on board of vessel as well as to assist the Master in clausing the Mate"s Receipts appropriately. Under bill of lading SP009 indicating Montreal as the destination, the survey report contains the following remarks:
| Metal packing PRS [partly rusted stains] where uncoated; inner & outer edges of packing dented where lifting gear marked; core envelopes slightly gaping, where gaping contents exposed. |
[7] This description of the coils is supported by photographs 5 and 6 accompanying the report and which show that the state of the cargo upon loading appears to be quite different from the state in which the coils were found at Samuel et Fils & Cie in Montreal. The partly rusted stains and the gaping in the metal envelopes are considered minor defects which would not lead to the kind of damage observed in Montreal.
[8] Based on the testimony of Steve J. Bodzay, chemist, who conducted an analysis for sea salt contamination, it was found that only one of the five samples submitted showed evidence of sea salt contamination.
[9] Plaintiffs submit that a survey produced by Francisco Lebrero, cargo surveyor for the Hayes Stuart Inc. indicates that the coils with wrappers were rusted to varying degrees. This survey took place on February 9, 1994 at the premises of the ultimate consignees i.e. Samuel et Fils & Cie in Laval. The cause for damage, after examination, was attributed to contact with water at some point in transit. The report also acknowledges that clean receipts were given for apparently damaged packages for the reasons that the damages were concealed and that the damage was found after de-canning the coils. According to expert, damage occurred on the ship due to wet condition in the holds.
[10] The plaintiffs submit that the survey report by R.P. Bernhardt & Co. performed on November 31, December 1 and 2, 1993 also demonstrates that the cargo was damaged on discharge since rust lines typical of condensation having drained off bottoms of hatch covers, were observed on cargo in holds.
[11] The plaintiffs established that the cargo, upon discharge in Montreal, was transported to the Samuel et Fils & Cie premises from December 6 to December 15, 1993 by trucks, pursuant to delivery receipt of National Harbours Board filed as exhibit P-10. The plaintiffs also submit that Samuel et Fils & Cie, being the ultimate consignee, received and immediately stockpiled the steel coils in the warehousing section of their production facility, pending production requirements. The warehousing area is fully sheltered and temperature controlled. It was only when time came to process the coils that the consignee realized the damages.
DEFENDANTS" ARGUMENTS
[12] It is, of course the submission of the defendants, that the damage did not occur during transportation as evidenced by bills of lading which indicate that the cargo was loaded with some damage notation. Moreover, the cargo was received without complaint.
[13] Defendants submit that not every ship hire surveyors, but in cases of such cargo, i.e. steel, it is advisable since claims for damages often follow.
[14] Defendants submits that the burden rests with plaintiffs, since the damage was concealed and that they have to prove on a balance of probabilities that the cargo was loaded in good condition and that it was received in damaged condition.
[15] It is the submission of defendants that the packing of this particular cargo suggests that damage could have occurred at any time during its long history of transportation from Austria to Montreal.
[16] Defendants rely on the report filed by John Bernhardt following a survey conducted upon discharge of the cargo in Montreal and which indicates that the condition of the stowage was good. Only slight moisture and rust lines typical of condensation having drained off bottoms of hatch covers, were observed on cargo in holds.
[17] It is submitted, as testified by Mr. Bernhardt, that the survey conducted did not raise enough concern, or of a particular nature, to notify Fednav International Ltd. as would have been done if it was felt that such notice was required.
[18] Further, there were no events - or indications of any event - which would have caused or contributed to the particular type of damage claimed and there were no other claims presented for damage to similar cargo carried in the same hold of the vessel during the voyage.
[19] Defendants submit that the photographs of the coils upon discharge show less rust than the photographs taken at the warehouse of the consignee. Furthermore, dock receipts show no notation of bad order.
[20] Defendants also rely on the testimony provided by expert, Adam Perkowski, marine surveyor, who does not agree with the suggestion of other expert that the coils may have been sitting in water because if this was the case there would have been a circular tide mark delimiting the presence of water on the metal sheets. The expert further explains that if condensation in hold number 5 was not reported in his survey it is because none of consequence was noted. As regards to the sea salt water detected on one of the coils, it may have been caused by a loose joint while the ship was labouring hardly at sea, allowing for sea water ingress.
[21] Representations by defendants suggest that the external condition of the packing is not indicative of the condition of the coils inside and that normal atmospheric conditions would not rust the packing even over a 5 month period of time.
ANALYSIS
[22] The only issue that this Court needs to determine is whether the damage to the cargo occurred during transportation or not.
[23] The burden of proof is therefore central to the issue and maritime law provides for the following guidelines:
| Where the bill of lading states that the goods are shipped in "apparent good order and condition", the shipowner is estopped, as against the cargo owners, from proving that the goods have defects which would have been apparent on reasonable examination.1 |
[24] Three general principles of proof run as unbroken threads through Hague and Hague/Visby Rules jurisprudence.2
| - The carrier is prima facie liable for loss or damage to cargo received in good order and out-turned short or in bad order; |
| - The parties are in general required to make proof of whatever facts are available to them; |
| - The onus of proof does not mean providing all the circumstances to the point of absurdity, but means making proof to a reasonable degree. |
[25] The author William Tetley, at page 142 of his book Marine Cargo Claims, explains that the Rules do not set out an order of proof in a marine cargo claim and its defence. However, he states that there is a surprising similarity in the order of proof demanded by the courts of nations which have adopted the Hague and Hague/Visby Rules.
[26] The order is presented as follows:
| (i) The claimant must first prove his loss; |
| (ii) The carrier must then prove a) the cause of the loss, b) that due diligence to make the vessel seaworthy in respect of the loss was taken and c) that he is not responsible by virtue of at least one of the exculpatory exceptions of the Rules; |
| (iii) Then, various arguments are available to the claimant; |
| (iv) Finally, there is a middle ground where both parties may make various additional proofs. |
1. What the Claimant must Prove
| Initially, it is the claimant who has the burden of proof, and to make his case he must prove all six of the following facts: |
| a) That the claimant is the owner of the goods and/or is the person entitle to make the claim; |
| b) The contract or the tort (delict); |
| c) That the person claimed against is the responsible person; |
| d) That the loss or damage took place in the carrier"s hands. This is usually done by proving the condition of the goods when received by the carrier and the condition at discharge; |
| e) The physical extent of the damage or the loss; |
| f) The actual monetary value of the loss or damage. |
2) What the Carrier must Prove
The carrier must then prove all three of the following:
| a) The cause of the loss; |
| b) Due diligence to make the vessel seaworthy at the beginning of the voyage, in respect of the loss; |
| c) One of the following exculpatory clauses: |
| i) Error in navigation and management of the ship; |
| ii) Fire; |
| iii) Perils of the Sea and similar exceptions, being Acts of God; Acts of War; Acts of Public Enemies; Restraint of Princes; Quarantine; Strikes; Riots; Saving Life; |
| iv) Act or omission of the shipper; |
| v) Inherent vice; |
| vi) Insufficiency of packing; |
| vii) Latent defects; |
| viii) Any other cause; |
3) The Various Arguments then Available to the Claimant
| a) Negligence at loading; |
| b) Negligence in stowage; |
| c) Lack of the cargo; |
| d) Negligence at discharge.3 |
[27] A confirmation of the above rational regarding the order of presentation for the evidence is found in Francosteel Corp. v. Fednav Limited (1991) A.M.C. 1078, (1990) 37 F.T.R. 184 where justice Rouleau affirms the following:
| It is clear from the jurisprudence that the plaintiff bears the burden of proving that the goods were damaged while in the carrier"s possession; this is generally accomplished by proof that the goods were tendered in good condition to the carrier, and were ultimately received in a damaged condition. This accomplished, the carrier must show that the damage fits within an excepted clause of the Hague Rules; if they succeed, the onus shifts to the plaintiff to adduce evidence that the damage was caused by the carrier"s negligence. If, on the other hand, the carrier cannot establish that the damage is due to an excepted cause, the burden remains on him to prove that the loss was not caused by his negligence. (See Vancouver SS. Co. v. Herdman & Sons (1933) 45 Ll. L. Rep. 223; Kruger Inc. et al v. Baltic Shipping Co. (1989) 57 D.L.R. (4th) 498 at p. 502; Associated Metals and Minerals Corp. v. Etelac Suomin Laiva (1989) A.M.C. 677; Caemint Food Inc. (1981) A.M.C. 1801). |
[28] Based on this accepted order, this Court has to decide initially whether the plaintiffs have met their burden of proof that the cargo was received in good order at Antwerp on November 13, 1993 and that it was received in a damaged condition at the port in Montreal.
[29] Upon hearing the testimony of witnesses, some of which were experts, and upon studying the exhibits constituted of reports with photographs, receipts and bills of lading, I am convinced that the damage effectively occurred whilst under the care, custody and control of the defendants i.e. during the voyage from Antwerp to Montreal due to condensation and water ingress.
[30] The most revealing proof being the photographs submitted with the survey reports, which consistently show that the coils, even though they were not in mint condition prior to loading at Antwerp since some partly rusted stains were noticed, have nevertheless suffered significant damages which could have only occurred during the voyage, as photographs taken upon discharge in Montreal show signs of heavy rust.
[31] In my opinion these findings are supported by all four reports presented to the Court, notwithstanding the different terms used to describe the conditions of the coils as illustrated by the photographs. The surveys in question are the following:
| 1. UBEM survey report which is a cargo pre-loading survey conducted at the request of Fednav International Ltd. at Antwerp City Docks from November 12 to 15 , 1993; |
| 2. R.P. Bernhardt & Co. survey report upon discharge on board of the Federal St. Clair, conducted at the request of Fednav International Ltd. in Montreal on November 30 and December 1 & 2, 1993; |
| 3. Fisher-Perkowski survey report conducted at the request of Fednav International Ltd. at the port of Detroit, on December 6-8, 1993; and |
| 4. Hayes Stuart Inc. survey report conducted at the request of Preussag Handel Canada Corporation, on the premises of the ultimate consignee, Samuel et Fils & Cie on February 9, 1994 and subsequent dates. |
[32] The R.P. Bernhardt & Co. survey report upon discharge on board of the Federal St. Clair, conducted at the request of Fednav International Ltd. in Montreal on November 30 and December 1 & 2, 1993; reported the condition of stowage as being "good, with slight moisture and rust lines typical of condensation having drained off bottoms of hatch covers". Based on the condition shown by the photographs accompanying the report, in particular photographs numbered 1, 2 and 24, I cannot agree with this description. If I compare those photographs with those taken in Antwerp and accompanying the UBEM survey, particularly photographs numbered 5and 6, I am convinced that the damage occurred during the voyage between Antwerp and Montreal.
[33] Counsel for the defendants valiantly defended its theory before the Court to suggest that the damages might as well have occurred at any point between Austria and the warehouse of the consignee. But the fact is that there is no information on storage condition at manufacture in Austria; no information on the transportation condition from Austria to Antwerp; and no information on storage condition at Antwerp before loading. Moreover, the warehousing of the consignee in Laval is fully sheltered and temperature controlled.
[34] Based on these observations, it is incumbent upon the Court to conclude that on a balance of probabilities, it very well appears that the cargo was loaded in good condition in Antwerp and discovered in damaged condition, more than two months after discharge, on the premises of the consignee when the coils were unrolled for the first time since arrival.
[35] Referring to the Hayes Stuart Inc. survey and particularly to photographs 1 to 6, I am convinced that the coils, when unrolled, revealed water stains to varying degrees. Also, it appears that the water stains recurred on the same area on successive laps in all five coils examined by the expert from Hayes Stuart Inc., indication of localized wetting / partial immersion in water4.
[36] The plaintiffs having met their burden of proof, a presumption of liability lies with the carrier which then has to demonstrate to the Court another cause for the loss and that due diligence was observed to make the vessel seaworthy at the beginning of the voyage, in respect of the loss, or one of the exculpatory clauses.
[37] I consider that the defendants did not succeed in rebutting the presumption that the cargo was loaded in good order and condition at the port of Antwerp and I find in favour of the plaintiffs.
IDENTITY OF CARRIER
[38] Position was taken by the plaintiffs that both Federal Pacific Ltd. as ship owner and Fednav International Ltd. as time charterer are liable since they operated under a joint venture.
[39] Both parties agreed that the Hague/Visby Rules5 is the applicable convention between the parties. Article I provides:
| Definitions In these Rules the following expressions have the meanings hereby assigned to them respectively, that is to say, (a) "carrier" includes the owner or the charterer who enters into a contract of carriage with a shipper; (b) "contract of carriage" applies only to contracts of carriage covered by a bill of lading or any similar document of title, in so far as such document relates to the carriage of goods by water, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter-party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same; |
Définitions Dans les présentes règles, les mots suivants sont employés dans le sens précis indiqué ci-dessous : a) "_transporteur_" comprend le propriétaire du navire ou l'affréteur, partie à un contrat de transport avec un chargeur; b) "_contrat de transport_" s'applique uniquement au contrat de transport constaté par un connaissement ou par tout document similaire formant titre pour le transport des marchandises par eau, il s'applique également au connaissement ou document similaire émis en vertu d'une charte-partie à partir du moment où ce titre régit les rapports du transporteur et du porteur du connaissement; |
Article III, subparagraph 8 further states:
| 8. Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with goods arising from negligence, fault or failure in the duties and obligations provided in this Article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. |
8. Toute clause, convention ou accord dans un contrat de transport exonérant le transporteur ou le navire de responsabilité pour perte ou dommage concernant des marchandises provenant de négligence, faute ou manquement aux devoirs ou obligations édictés dans le présent article ou atténuant cette responsabilité autrement que ne le prescrivent les présentes règles sera nul, non avenu et sans effet. |
[40] Mr. Justice Nadon in Union Carbide Corp. v. Fednav Ltd. [1997] F.C.J. No. 655 undertook a review of cases from the Supreme Court and addressed the issue of who is a carrier and who is a time charterer. The learned judge stated at page 254 that the principles of law applicable to this issue were long ago settled by the Supreme Court of Canada in Paterson Steamships Ltd. v. Aluminum Co. of Canada, [1951] S.C.R. 852.
[41] It is this Court"s understanding that the usual role of a charterer is only to find space on a vessel. Once the time charterer has booked space on a vessel it finds cargo and asks the carrier or the owner of the vessel to carry the cargo. Then, the carrier or the owner issues a bill a lading which becomes the contract of carriage between cargo interests and the carrier.
[42] In the Carbide decision, referring to the Paterson Steamships decision where the usual provisions of such a charterer were stipulated, Mr. Justice Nadon found at page 255:
| In Paterson Steamship at 854, Rand, J., makes it clear that under such a time-charter party, the shipowner is the carrier and, in issuing the bill of lading, the master of the ship is his agent. The only caveat is in circumstance where it can be shown that the time charterer has specifically undertaken the carriage of the goods. |
[43] Further in the Carbide decision, counsel for plaintiffs had argued that both the owners and the charterers can be the "carrier" based on the theory of joint venture elaborated by Professor Tetley which is found at page 242 of his text Marine Cargo Claims , 3rd Ed., 1988. Professor Tetley states:
| Usually, suit is valid against both the owner and the charterer. In the Quarrington Court, it was held that a bill of lading issued by a charterer on its own form and signed by the charterer"s agent for the master in accordance with the master"s written authority, bound both the vessel owner and the charterer. Other decisions have held the charterer responsible in contract and the shipowner in tort. |
| Carriage of goods is effectively a joint venture of owners and charterers (except in the case of a bareboat charter) and, consequently, they should be held jointly and severally responsible as carriers. [footnotes omitted] |
[44] Mr. Justice Nadon commented on this argument made by counsel and which had been endorsed by Reed J., in Canastrand Industries Ltd. v. Ship Lara S. et al. [1993] 2 F.C. 553. He disagreed with the broad statement that once you have a time charter under the New York Produce Exchange Form, you enter automatically into a joint venture. Mr. Justice Nadon explains at page 264:
| Madam Justice Reed seems to have accepted Professor Tetley"s theory that where goods are loaded on a time chartered ship the owners of that ship and the time charterers are engaged in a joint venture insofar as the carriage of the goods is concerned. I cannot accept the soundness of this view. Firstly, such a conclusion defies the decisions of the Supreme Court in Paterson Steamships and Aris Steamship. Secondly, there cannot be a joint venture between owners and charterers unless there has been a meeting of the minds between the parties to the joint venture. Can it be said that, in entering into a time charter party in the New York Produce Exchange form, as is the case here, the owners and the charterers have agreed to jointly carry the goods loaded on the ship? In my view, it cannot be so said. Thirdly, in order to agree with Professor Tetley, one must forget that the Federal Court of Appeal has clearly held that the question as to who the carrier is one which depends upon the documents and the circumstances of the case. (See Lantic Sugar Ltd. v. Blue Tower Trading Corp. et al. (1994), 163 N.R. 191 (F.C.A.). 6 |
[45] It would therefore appear that in the absence of a specific undertaking, the theory of joint venture can only find application if upon the documents and the
circumstances of the case it is apparent that such a venture was entertained.
[46] There is no specific undertaking in the case at bar, and based on the theory of joint venture as delimited by Mr. Justice Nadon, and based on the documents, namely the bill of lading and the time charter, and the circumstances of this case, as described above, I reject the plaintiffs" argument and find that the carrier identified as Federal Pacific was not in fact engaged in a joint venture with the time charterer Fednav International for the delivery of the cargo.
CONCLUSION
[47] In view of the reasons expressed above, I am of the opinion that the plaintiff has met its burden of demonstrating that the carrier received the cargo in good order and condition at Antwerp, Belgium, but delivered it at Montreal in bad order. Since the carrier has not met its burden of proving that the damage to the cargo falls under one of the exceptions provided at Article IV of the Hague/Visby Rules, judgment is rendered in favour of plaintiffs against defendant Federal Pacific Ltd., shipowner, for the sum of $70,536.08 as per the parties agreement on the quantum of damages, plus interest at the prime commercial rate plus 2% per annum calculated on a compound basis from November 15, 1993 until payment with costs including experts, experts" evidence and reports.
[48] The action against the defendant time charterer Fednav International Ltd. Is dismissed with costs established at $2,000.
Pierre Blais
Judge
OTTAWA, ONTARIO
August 31, 1999
__________________1 Canadian Encyclopedic Digest, Shipping, Third Edition, 1998 Thomson Canada Limited, Carswell, " 334.
2 William Tetley, Marine Cargo Claims , Third Edition, 1988, Les Éditions Yvon Blais, p.133.
4 Hayes Stuart survey, page 5.
5 Carriage of Goods by Water Act, S.C. 1993, c.21, the Hague-Visby Rules, being Schedule I.