Supreme Court of Canada
Coast Ferries Ltd. v. Century Ins. Co. of Canada et al.,  2 S.C.R. 477
Coast Ferries Limited (Plaintiff) Appellant;
Century Insurance Company of Canada et al. (Defendants) Respondents.
1974: February 18, 19, 20; 1974: June 28.
Present: Martland, Ritchie, Spence, Dickson and de Grandpré JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA
Insurance (Marine)—Inchmaree clause—Loss caused by negligence of master covered provided such loss not result of want of due diligence by owner—Unseaworthiness of vessel caused by wrong loading for which master to blame—Proximate cause of casualty—Owner wanting in due diligence—Marine Insurance Act, R.S.B.C. 1960, c.231, s. 41(5).
A policy of marine insurance invoked by the appellant, the owner of a motor vessel employed in the coastal trade, contained the normal insuring agreement protecting against the perils of the sea and other risks, including the Inchmaree clause. The latter provided that loss or damage caused by the negligence of the master was covered provided such loss or damage did not result from want of due diligence by the owner. Both Courts below found that the proximate cause of the casualty was the unseaworthiness of the vessel caused by wrong loading for which the master was to blame. No general allegation of peril of the sea was put before the Court and the allegation of shifting of the load was not proven.
The trial judge found that the loss was one covered by the policy because the owner was free from blame. The Court of Appeal reversed the trial judgment on the ground that the owner was wanting in due diligence in seeing that the vessel was properly loaded.
Held: The appeal should be dismissed.
The Court of Appeal was correct on the question of due diligence. The owner failed to supply proper loading instructions and did not take the basic precaution to verify the conduct of its master.
APPEAL from a judgment of the Court of Appeal for British Columbia, allowing an appeal from a judgment of Ruttan J. Appeal dismissed.
Timothy P. Cameron, for the plaintiff, appellant.
D. Brander Smith, for the defendants, respondents.
The judgment of the Court was delivered by
DE GRANDPRÉ J—The appellant, the owner of the motor vessel “Brentwood”, is claiming from the respondent underwriters their share of the sum of $110,000, plus various expenses, under a time policy covering hull and machinery against certain marine risks.
In the Supreme Court of British Columbia, Ruttan J. found that the loss was indeed one covered by the policy but refused to accept plaintiff’s contention that the risks insured against had entailed a constructive loss and gave judgment for $65,000 to which he added sue and labour expenses of $2,800. An appeal and a cross-appeal were entered and the Court of Appeal of British Columbia found in favour of underwriters and dismissed the action. By its appeal to this Court, plaintiff prays (1) for a declaration that the motor vessel “Brentwood” was damaged by a risk insured against and (2) for a further declaration that the damage amounted to a constructive total loss.
The facts are simple and I cannot do better than to quote from the reasons for judgment in the Court of Appeal:
The vessel was a converted automobile ferry employed in the coastal trade, carrying freight between Vancouver, B.C. and Loughborough Inlet, and way points. Her master was K.R. Watt and her mate
P.J. Snow, both holding certificates of competency as Masters of home trade vessels limited to 350 tons.
On October 23, 1969, at about 0330 hours, the vessel was off Point Atkinson when she was found to be taking water. The master and crew abandoned her; she rolled over on her starboard beam, shed her deck cargo, and righted herself. The master boarded her and found the main engines still operating and beached her at Garrow Bay, one-half mile away.
The learned trial judge found that the proximate cause of the casualty was the unseaworthiness of the vessel caused by wrong loading, for which the master was to blame, but the owner was not.
The learned trial judge concluded that the casualty was caused by the vessel sailing with a free-board of only 18” at the stem, and that was aggravated by a rake of 1 foot down by the stem. At the vessel’s full speed of 7½ knots, she generated a bow wave 2 feet high, with the result that even in the dead calm sea the wave broke over the sponson shaped bow and made its way along the deck into the ventilators, which were properly left open under the prevailing conditions, and into the hold, further depressing the head and increasing the inrush of water until she lost her stability and rolled over.
Both Courts below found that the proximate cause of the casualty was the unseaworthiness of the vessel caused by wrong loading for which the master was to blame. I am certainly not ready to disturb these concurrent findings of fact. Indeed, they are well supported by the evidence.
The policies of insurance invoked by appellant contain the normal insuring agreement protecting against the perils of the sea and other risks, as well as the Inchmaree clause. The relevant part of the latter (taken from one of the policies) reads:
This insurance also specially to cover (subject to the Average Warranty) loss of or damage to the subject matter insured directly caused by the following:—
Negligence of Master, Charterers other than an Assured, Mariners, Engineers or Pilots:
Provided such loss or damage has not resulted from want of due diligence by the Assured, the Owners or Managers of the Vessel, or any of them.
Before the trial judge, plaintiff appellant put its case thus in the words of Ruttan J.:
The owner as plaintiff has stated in the pleadings that the loss was due to the negligence of the master and crew in the loading and in the eventual handling of the vessel immediately prior to her foundering. In the alternative it is alleged that the loss was caused by a peril of the sea which arose by the cargo shifting damaging the vessel and so causing an incursion of sea water whereby she sank.
In the course of the, trial, plaintiff appellant sought to enlarge this allegation by referring to a more general plea of peril of the sea but this amendment was refused by the judge:
I decreed that if such an amendment were to be made, there would have to be an adjournment as requested by defence counsel, and plaintiff therefore abandoned the motion.
Plaintiff appellant was therefore left under the general clause with the sole allegation that the cargo had shifted. On this point, the trial judge made a finding that no such shifting had taken place. There certainly is enough evidence to support this finding and I accept it.
The only question in issue at this stage of the proceedings is the following: Does the Inchmaree clause permit recovery by appellant? In other words, did the negligence of the master, as found by the Courts below, exist without “want of due diligence by the Assured”?
The trial judge found that the assured owner did not lack of due diligence. The Court of Appeal reversed the judgment of the trial Court. Davey J.A., speaking for the Court, declares himself “fully satisfied on the evidence that the owner was wanting in due diligence in seeing that the vessel was properly loaded”. The reasons of the Court of Appeal are very well summarized in the following extract of the reasons for judgment signed by Davey J.A.:
But when the owner left full responsibility for the loading to the master it became its duty to furnish the master with sufficient information about minimum freeboard and trim for the vessel (among other data) to enable the master to exercise sound judgment in loading in the light of his skill and experience. The owner did not do so. Therein lay its want of due diligence. That information was especially necessary because the owner’s standing instructions required the master to load the cargo on the vessel (mostly on the deck for which the vessel was well suited) in the inverse order to which it was to be unloaded according to the order of ports of call. Such procedure on occasion required heavier items of deck cargo to be placed well forward, which would depress the bow. On some occasions the owner, not the master, changed the usual order of ports of call to avoid excessive draught at the stem.
In 1960 the owner thought it desirable to learn something of the hydrostatic characteristics of the “Brentwood” and had Mr. Allan, a naval architect, perform inclination tests on the vessel to secure that information. The purpose of the tests was “to obtain an indication of the limits of cargo, distribution of cargo, and cargo weight” that the vessel could carry. Allan gave a written report to the owner (ex. 37). The report showed a minimum safe freeboard midship of 1’6” at even trim, which would substantially exceed 2 feet at the stem. Capt. Torn said that he maintained a minimum freeboard of 2½ to 3 feet at the bow. Mr. Allan discussed verbally with O.H. New, the presi-
dent of the owner, the question of trim because they both knew it was possible to load the vessel by the head, and they both agreed it would be undesirable to take the vessel any great distance with the trim below level by the head (A.B. 275), because that raised problems of taking water over the bow, steering and the vessel’s behaviour.
None of the information verbal or written was given to Capt. Watt, notwithstanding the owner had gone to some expense to obtain it.
The written report was on board the vessel in a drawer under the master’s bunk along with other papers of the ship, but Capt. Watt had not seen it, and no one seems to have told him about it. He said so far as he knew there was no stability information on the vessel at the time of the accident.
Mr. Allan said that he would expect a deep sea master to be able to read the inclination report, and extract necessary information from it, but not a master holding only a limited coastwise certificate; that coastal masters are not in the habit of making calculations from inclination test reports, but they do judge stability by their experience and the feel of the ship, and many are excellent in their use of these “seat of the pants” methods.
I think it clear from Capt. Watt’s evidence that he could not have utilized fully the information contained in the inclination test report, even if he had seen it, and of course it would have given him no information about the limits of trim, because Mr. Allan did not include that in his report, but covered it in verbal discussion with Mr. New. Obviously, placing the report of the inclination tests on board the vessel was quite an inadequate substitute for proper loading instructions based upon the inclination tests.
Mr. Allan found it incredible that a master would load the vessel so that it had a rake of 1 foot down by the head with a freeboard at the stem of only 18”. From that it would appear that an experienced master without any loading instructions should have seen the folly of so loading the vessel. But in my respectful opinion that does not excuse the lack of diligence of
the owner in not supplying proper loading instructions. It emphasizes the need for them.
With these reasons I am in full agreement. As a matter of fact, other circumstances disclosed by the evidence clearly show to my mind that the appellant owner did not take the basic precaution to verify the conduct of his master:
1. on many previous occasions the ship was sent to sea with a cargo the weight of which was in excess of the maximum prescribed by Mr. Allan, the naval architect consulted by the appellant in 1960;
2. there were no draft marks on the vessel;
3. no system was devised by the owner to maintain logs showing freeboard, trims, etc.
The duty of due diligence imposed upon the owner is not satisfied if for years he closes his eyes and does nothing. His obligation is to act reasonably in the circumstances and the evidence in the present case discloses that the appellant’s main competitor maintains a much better procedure.
The parties also referred us to s. 41, para. 5 of the Marine Insurance Act, R.S.B.C. 1960, c. 231, which reads as follows:
(5) In a time policy there is no implied warranty that the ship shall be seaworthy at any stage of the adventure, but where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness.
In view of the fact that we were not asked to examine the problem in the light of the general insuring clause, and in view of my conclusion on the question of due diligence, I do not find it necessary to examine this point.
For the above reasons, I would dismiss the appeal with costs.
Appeal dismissed with costs.
Solicitors for the plaintiff, appellant: McMaster, Bray, Moir, Cameron & Jasich, Vancouver.
Solicitors for the defendants, respondents: Bull, Housser & Tupper, Vancouver.