Date: 20030707
Docket: T-1836-90
Citation: 2003 FC 837
BETWEEN:
ELDERS GRAIN COMPANY LIMITED
and
CARLING O'KEEFE BREWERIES OF CANADA LIMITED
Plaintiffs
AND:
THE VESSEL M/V "RALPH MISENER" AND THE OWNERS
AND ALL OTHERS INTERESTED IN THE VESSEL M/V "RALPH MISENER"
and
MISENER HOLDINGS LIMITED
and
MISENER SHIPPING
Defendants
[1] On May 31, 1989, during the discharge of a cargo of alfalfa pellets from hold no. 4 of the vessel "RALPH MISENER" at Quebec City, a fire broke out and damaged the cargo. As a result, the plaintiffs, the owners of the cargo, commenced the present proceedings against the defendant shipowners to recover their loss.
[2] The plaintiffs say that their loss results from negligence and breach of contract on the part of the defendants. The defendants deny responsibility for the plaintiffs' loss and counterclaim for the loss which they suffered by reason of the fire on board their ship.
THE FACTS:
[3] The relevant facts can be summarized as follows. Pursuant to a bill of lading dated at Surrey, B.C., on May 22, 1989, the defendants agreed and undertook to carry 3976.760 metric tons ("MT") of Canadian first class sun cured alfalfa pellets of 1/4" diameter (the "cargo") from Thunder Bay, Ontario, to Quebec City. The cargo was ultimately destined to be carried from Quebec City to Saudi Arabia on the vessel "RICH ALLIANCE", having been sold by the plaintiffs to the Saudi Livestock, Transport and Trading Co. of Riyadh, where the cargo was to be used to fatten sheep for religious purposes.
[4] Before proceeding further, I should say a few words about the vessel. The "RALPH MISENER" is a classic Great Lakes gearless bulker with five cargo holds, each of which is provided with six pontoon hatch covers. The holds are lit by 150 watt spotlights set behind glass portholes in the port and starboard underdeck passageways. Four spotlights are mounted on both sides of each hold. There are no electrical supplies which traverse the holds and the cable routes are via the underdeck passageways. The holds are ventilated by means of small breather pipes, but there is no powered ventilation.
[5] The cargo was loaded at Thunder Bay at the Western 10 elevator in hold no. 4 of the vessel on May 22, 1989. Prior to the commencement of loading, inspectors from Agriculture Canada came on board the vessel to inspect the holds and certified that they were fit for loading. One loading spout of 18" to 24" in diameter was used to load the cargo. Loading, which commenced at 0805 hrs at the aft end of the vessel, proceeded uneventfully until completion at 1253 hrs. According to the first mate of the vessel, Mr. Farook Kooka, the loading of the cargo proceeded in an extremely dusty atmosphere and, as a result, it was very difficult to see the cargo as it was being loaded. During the loading operations, Mr. Kooka and the third mate, Mr. Lincoln Joseph, were on watch.
[6] I should point out that neither Mr. Kooka nor the captain of the vessel, Peter Schultz, had ever carried a cargo of alfalfa pellets. I should also add that no information whatsoever regarding the cargo was given by the plaintiffs to the defendants prior to and during the voyage of the vessel from Thunder Bay to Quebec City.
[7] The cargo loaded on board the vessel at Thunder Bay was made up of two parcels. The first one, which consisted of approximately 1500 MTs, arrived in Thunder Bay in September of 1988. The second parcel arrived in Thunder Bay in May 1989. Both parcels came from the plaintiffs' dehydration plant in Creston, B.C.
[8] In addition to its cargo of alfalfa pellets, the vessel loaded cargos of canola and wheat at Thunder Bay. Specifically, canola was loaded in hold no. 2 and wheat was loaded in holds nos. 1, 3 and 5.
[9] After an uneventful voyage, the vessel arrived at Quebec City at 0214 hrs on May 31, 1989 and berthed at section 18 thereof, where the vessel was to unload its alfalfa cargo and the wheat loaded in holds nos. 1 and 3. Discharge of the wheat cargo commenced at 0810 hrs. Discharge of the alfalfa pellets commenced at approximately 1600 hrs and at approximately 1740 hrs, smoke was noticed coming out of the cargo on the port side. The relevant entry made by the first mate in the deck log records the following:
Noticed smoke coming out of cargo on port side no. 4 hold. Went into hold no. 4 and checked cargo. Light smoke and heat. Used fire hose to cool and also hosed cargo in hold no. 4 port side. 1915 hrs - harbour police arrived. 1920 hrs - firefighters arrived and use fire hoses in hold no. 4. Open no. 4 manhole, cover port side and check sign for heat. No heat felt. 2150 hrs - firefighters stop fighting fire. Fire watch posted. Fire hoses connected and ready.
[10] When smoke was discovered, the discharge operation was halted. By that time, 1520 MTs of the alfalfa cargo had been unloaded. Quebec City firefighters arrived at 1920 hrs and they proceeded to fight the fire by the use of water and foam. According to the firefighters, the fire was deep-seated and as a result, they had to dig approximately 15 to 20 feet into the hold in order to effectively fight it. At approximately 2135 hrs, the firefighters declared the fire to be under control and at approximately 2215 hrs, they departed from the vessel. It should be noted that prior to the arrival of the firefighters, the ship's crew had used two hoses to pour water down into the area of the cargo hold where smoke had been seen.
[11] The evidence establishes that the fire originated on the port side of hold no. 4, deep within the cargo and approximately at or below the level of the top of the lower hopper tank platting directly beneath the cargo light in the area of cargo hatch cover no. 23.
[12] At 0840 hrs on the following day, discharge of the wheat cargo from hold no. 3 recommenced and was completed around 1000 hrs. At that point in time, all of the cargo loaded at Thunder Bay and destined for Quebec City had been discharged, save for the remainder of the alfalfa cargo in hold no. 4.
[13] At 1015 hrs, the vessel left section 18 for section 21, where it awaited further instructions. Following receipt of instructions, the vessel proceeded to section 52, where the damaged alfalfa was unloaded by way of gantry cranes. On June 2, 1989, the vessel left section 52 at approximately 1608 hrs and at approximately 2015 hrs, smoke was seen coming from the area of the wet cargo. Temperature readings showed the temperature to be somewhere between 110oF and 125oF.
[14] At 2244 hrs on June 2, 1989, the vessel proceeded to Havre St-Pierre and then to Seven Islands to load other cargos. From Seven Islands, the vessel proceeded to Prescott, Ontario, where it arrived on June 9, 1989. At Prescott, the remaining alfalfa cargo was unloaded. Photographs taken at Prescott show the presence of mould in the alfalfa pellets. I should note that the hatch covers remained on the holds during the entire voyage from Quebec City to Prescott.
[15] As a result, both the plaintiffs and the defendants seek damages for their loss. The plaintiffs seek a sum of US$ 320,000, and the defendants, the plaintiffs by counterclaim, seek a sum of CDN$ 91,436.71. The respective quanta are admitted.
THE PARTIES' SUBMISSIONS:
[16] The plaintiffs submit that as a clean bill of lading was issued by the master of the vessel, the burden is on the defendants to prove or to explain the cause of loss. Since the cause of the loss remains unknown, the plaintiffs say that the defendants must therefore bear responsibility for the damages caused by the fire.
[17] The defendants, as I have already indicated, deny responsibility for the loss. Their main submission is that the cargo was a dangerous cargo, i.e. it was of an inflammable nature and hence, pursuant to Article IV, Rule 6 of the Schedule - Rules Relating to Bills of Lading (the "Hague Rules") - to the Carriage of Goods by Water Act, R.S., c. C-15 (the "Act"), the plaintiffs are liable for all damages and expenses incurred by the defendants.
[18] The defendants submit that, in any event, they are not liable for the loss suffered by the plaintiffs by reason of Article IV, Rule 2(b) of the Hague Rules, which provides that a carrier shall not be responsible for any loss or damage resulting from fire, unless caused by its actual fault or privity. The defendants say that their fault or privity is not at issue in these proceedings.
[19] Finally, the defendants invoke Article IV, Rule 2(q) of the Hague Rules, which they say relieves them of responsibility with respect to "any other cause arising without [their] actual fault and privity ... or without the fault or neglect of their agents or servants...".
THE STATUTORY PROVISIONS:
[20] The relevant statutory provisions, i.e. Article IV, Rules 2(b), 2(q) and 6, read as follows:
| 2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from: [...] (b) fire, unless caused by actual fault or privity of the carrier; [...] (q) any other cause arising without the actual fault and privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.
[...]
6. Goods of an inflammable, explosive or dangerous nature to the shipment whereof the carrier, master or agent of the carrier has not consented, with knowledge of their nature and character, may at any time before discharge be landed at any place or destroyed or rendered innocuous by the carrier without compensation, and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment.
If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they make in like manner be landed at any place or destroyed or rendered innocuous by the carrier except to general average, if any. |
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2. Ni le transporteur ni le navire ne seront responsables pour perte ou dommage résultant ou provenant : [...] b) d'un incendie, à moins qu'il ne soit causé par le fait ou la faute du transporteur; [...] q) de toute autre cause ne provenant pas du fait ou de la faute du transporteur ou du fait ou de la faute des agents u préposés du transporteur, mais le fardeau de la preuve incombera à la personne réclamant le bénéfice de cette exception et il lui appartiendra de montrer que ni la faute personnelle ni le fait du transporteur ni la faute ou le fait des agents ou préposés du transporteur n'ont contribué à la perte ou au dommage.
[...]
6. Les marchandises de nature inflammable, explosive ou dangereuse, à l'embarquement desquelles le transporteur, le capitaine ou l'agent du transporteur n'auraient pas consenti, en connaissant leur nature ou leur caractère, pourront à tout moment, avant déchargement, être débarquées à tout endroit ou détruites ou rendues inoffensives par le transporteur sans indemnité et le chargeur de ces marchandises sera responsable de tous dommages et dépenses provenant ou résultant directement ou indirectement de leur embarquement.
Si quelqu'une de ces marchandises embarquées à la connaissance et avec le consentement du transporteur devenait un danger pour le navire ou la cargaison, elle pourrait de même façon être débarquée ou détruite ou rendue inoffensive par le transporteur, sans responsabilité de la part du transporteur si ce n'est du chef d'avaries communes, s'il y a lieu. |
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BILL OF LADING AS PRIMA FACIE EVIDENCE:
[21] The plaintiffs argued that since the master of the vessel issued a clean bill of lading, there was a presumption that the alfalfa pellets had been received in good order and condition and that consequently, the burden of explaining the loss fell on the defendants. On the basis of the evidence before me, I cannot subscribe to that submission. Although the bill of lading is clean, it is clear that it was extremely difficult, if not impossible, for those on board the vessel to properly observe the condition of the alfalfa pellets as they were being loaded onto the vessel at Thunder Bay.
[22] Mr. Kooka, the first mate, who was on watch when the cargo was loaded, testified in no uncertain terms that during the loading operation, the vessel was surrounded by a cloud of dust which made visual observation very difficult. In this regard, I wish to point out that the rate of loading of the cargo was 14.79 cubic feet of cargo per second. Thus, in a cloud of dust, those on board the ship observing the passing of the cargo from the loading spout into hold no. 4 could not, in my view, properly observe the condition of the cargo. In these circumstances, I am of the view that the clean bill of lading does not constitute prima facie evidence that the cargo was loaded in good order and condition.
THE CAUSE OF THE LOSS:
[23] I now turn to the cause of the loss. In my view, the evidence leads to one conclusion only, i.e. that spontaneous combustion of the alfalfa cargo is the true cause of the loss. My reasons for this conclusion are as follows.
[24] Initially, there was a suggestion made that the fire had been caused by heat from a cargo hold spotlight. However, the plaintiffs did not pursue this avenue, in view of the conclusion reached by their expert, Mr. Jean-René Dumont, that a spotlight could not have caused the cargo to ignite. In that regard, I note that two of the defendants' experts, Dr. James Lygate and Captain Clifford Parfett, also came to the conclusion that a spotlight could not have caused the ignition.
[25] The possibility that a cigarette may have caused the loss was left open by Mr. Dumont in his report in chief when, after concluding that spontaneous combustion could not have caused the cargo to ignite, he stated at page 17 of his report that the only possible cause was "most probably related to an accidental or intentional human intervention".
[26] Dr. Lygate, in his rebuttal report and in his viva voce evidence, addressed this possibility and concluded that "it is extremely unlikely that a discarded cigarette could have ignited this fire" (See para. 4.20 of his report, dated March 8, 2002). The laboratory experiments conducted on behalf of Dr. Lygate and the reasons he gives in support of his conclusion appear to me convincing, and I therefore accept his opinion on this point.
[27] The only other possible cause of loss raised in these proceedings is the spontaneous combustion of the cargo. Mr. Dumont, a chemist called as an expert by the plaintiffs, rejected this cause. However, three experts called by the defendants, namely, Dr. Lygate, Mr. Dale Pulkinen and Captain Clifford Parfett, concluded that spontaneous combustion was the probable cause of the fire.
[28] I begin with Mr. Dumont's evidence. In concluding as he did that spontaneous combustion could not have caused the fire, Mr. Dumont recognized that alfalfa pellets could, under certain conditions, ignite. However, he was of the view that those conditions were not present in the case at bar.
[29] Firstly, he noted that during the nine-day voyage of the vessel from Thunder Bay to Quebec City, no rain/water had reached the cargo in hold no. 4. In his view, if water had reached the alfalfa pellets, clumps on the top of the cargo would have been noticed when the hatch covers were removed in Quebec City.
[30] Secondly, he performed a biodegradation experiment on alfalfa pellets at his company's facility in Laval. Although the humidity of the pellets was artificially increased, no increase in the temperature or gas production was observed during an eight-day period. Consequently, in Mr. Dumont's opinion, spontaneous combustion of the cargo inside hold no. 4 could not be the cause of the fire. As a result, Mr. Dumont concluded that the only possible cause of the fire was related to accidental or intentional human intervention.
[31] I now turn to the defendants' experts and begin with the evidence of Mr. Pulkinen, a nutritionist from Tisdale, Saskatchewan, with degrees in animal science and animal nutrition. From 1984 to 1989, Mr. Pulkinen was the Executive Director of the Canadian Dehydrators Association.
[32] Mr. Pulkinen was requested by the defendants to file a report in rebuttal to the that filed by Mr. Dumont, and specifically, he was asked to comment on Mr. Dumont's conclusion that spontaneous combustion was not a possible cause of the fire which occurred on May 31, 1989. In Mr. Pulkinen's opinion, the methodology adopted for the laboratory test performed by Mr. Dumont failed to take into consideration important principles of microbiological degradation of feedstuffs. Specifically, Mr. Pulkinen says that Mr. Dumont's conclusion is wrong and that it should not be given any weight, for the following reasons:
1. Mr. Dumont adjusted the moisture content of the pellets by adding water thereto, when he should have been adjusting the humidity of the air. Consequently, the onset of microbiological activity, i.e. of mould, "became almost impossible" by reason of the methodology followed by Mr. Dumont.
2. Mr. Pulkinen explained that spontaneous combustion was a two-stage process. Firstly, the onset of mould and, secondly, the chemical reaction which leads to combustion if specific conditions are present, i.e. heat buildup and a supply of oxygen. According to Mr. Pulkinen, the tests performed by Mr. Dumont should have been conducted on samples of mouldy alfalfa pellets in order to determine the probability of spontaneous combustion.
3. At page 3 of his rebuttal report, under the heading "Spontaneous Combustion in Stored Alfalfa Pellets", Mr. Pulkinen makes the following statement:
Biological materials such as alfalfa pellets, which have been subjected to excessive moisture and/or humidity, can initiate a microbiological growth response. This growth produces additional moisture and heat. If confined within an insulating location, this process will continue and cause a rise in temperature. At a certain temperature, the biological process will terminate and a chemical reaction will initiate. If an adequate supply of oxygen is introduced, spontaneous ignition will occur.
[33] Relying on Guidelines for the Safe Processing and Storage of Alfalfa Pellets by Mill Mutual Fire Prevention Bureau, Bulletin No. F803-73, issued in 1973, Mr. Pulkinen then goes on to set out the three factors which are considered relevant for spontaneous combustion to occur, namely, the moisture content of the pellets, their temperature and their fines content. In his view, proper storage management of the alfalfa pellets is the key to avoiding the onset of spontaneous combustion. In that respect, he again refers to the Mill Mutual Guidelines, supra, which recommend a number of steps for the safe storage of alfalfa pellets, i.e. the removal of fines before storage and/or spreading of fines in storage, pellet moisture testing before storage, proper aeration procedures during storage, equalizing stored pellet temperature to the ambient temperature and monitoring stored product temperature.
[34] Because spontaneous combustion or heating of alfalfa pellets in storage can be a serious problem for alfalfa processors in Western Canada, many have adopted Mill Mutual's recommendations in developing their own storage management procedures. After a survey of four alfalfa pelleting plants in Saskatchewan, the purpose of which was to determine whether stored product fires had occurred and to collect information regarding the circumstances of these fires, Mr. Pulkinen concluded that all instances of fires had occurred where there was a high moisture/high humidity zone within the alfalfa pellets. He also concluded that the high moisture/high humidity was probably caused by a concentration of fines and/or inadequate ventilation. In his view, inadequate ventilation or the absence of proper monitoring equipment allowed the problem to reach "the smoke point and eventual spontaneous combustion" before detection.
[35] In this regard, Mr. Pulkinen points out that the subject cargo had been stored in silos for a considerable amount of time. It will be recalled that one parcel of alfalfa pellets arrived in Thunder Bay in September of 1988 and remained in a silo until it was loaded on board the vessel on May 22, 1989. The second parcel arrived in Thunder Bay in May 1989, but had probably been in storage for a period of six to twelve months prior to its arrival in Thunder Bay. The storage conditions regarding the earlier parcel are unknown, except for the fact that the parcel remained in a silo at the Western 10 grain elevator from September 1988 to May 1989. There is no evidence before me with respect to the ventilation system, if any, at the Western 10 elevator, nor is there any evidence of a fines removal system.
[36] Consequently, in Mr. Pulkinen's opinion, the fact that the subject cargo remained in storage for a considerable number of months prior to its loading on the vessel would promote the occurrence of convection currents which would, in turn, favour the formation of high moisture/high humidity zones at the upper level of the stored produced and/or in the centre core thereof if fines were concentrated and not removed. In Mr. Pulkinen's view, these sites "could potentially proliferate the onset of mould". With respect to mould, Mr. Pulkinen points to the photos taken at Prescott on June 9, 1989, which clearly show mouldy lumps of alfalfa pellets. Thus, mould was present 18 days after the loading of the cargo at Thunder Bay and 9 days after the fire was first noticed. These observations lead Mr. Pulkinen to the following opinion:
In my opinion, the cause of the fire was very likely due to spontaneous combustion arising from the microbiological degradation (moulding) of pellets. I believe that the mould formation was underway long before the fire started. Even though firefighting operations included spraying part of the cargo with water, we know from the CEP Report (Mr. Dumont's Report) that wetted pellets do not form mould in 8 days unless, throughout the entire period, ambient temperatures had remained in excess of 300C and relative humidity in excess of 800. I am informed that such was not the case. I conclude that the mould formation commenced earlier and probably commenced during the long period of time the cargo was in storage in Thunder Bay.
He then goes on to make the following additional remarks:
The chemical reaction leading to spontaneous combustion was likely initiated at or prior to the time the product was removed from storage and loaded onto the Ralph Misener. Further, I do not have information concerning the fines content of the cargo on board the vessel. However, the loading of the Ralph Misener constitutes at least a third handling operation for the cargo. Regardless of the fines content after loading in the storage bins in Thunder Bay, the loading operation onto the vessel involved dropping the pellets from a height of more than 60 feet ... The least that can be said is that the fines content would have been increased upon loading and remained at the increased level until the fire started. The fact that the fire was deep seated adds to the logical conclusion that one would expect combustion to occur where the concentration of fines would be the highest, as fines insulate hot spots thereby accelerating a rise in temperature. The lack of oxygen likely delayed the onset of smoke and fire until unloading was initiated in Quebec City.
[37] I now turn to Dr. Lygate, an internationally-recognized fire investigator with extensive formal fire engineering qualifications, who filed a report in chief and a rebuttal report to Mr. Dumont's report. For reasons similar to those given by Mr. Pulkinen, Dr. Lygate concludes that spontaneous combustion of the cargo is the likely cause of the fire. In reaching his conclusion, Dr. Lygate, like Mr. Pulkinen, relied in part on the Mill Mutual Guidelines, supra, which, inter alia, identify the moisture content of the pellets, their temperature and their fines content as the important factors leading to the spontaneous combustion of alfalfa pellets.
[38] Dr. Lygate pointed to the fact that during the discharge of the cargo, clumps were observed throughout the stow and from parts of the hold where it was unlikely that "firefighting water could have reached". At paragraph 5.3.16 of his report-in-chief, Dr. Lygate makes the following statement which, in my view, is entirely supported by the evidence:
Instead, what appears to have happened is that the hatch covers having been removed, air was admitted to the cargo and diffused through the pellets to the seat of the fire. The improved air supply encouraged the rate of smouldering to grow, until the combustion products were given off at sufficient rate that the fire was discovered at 1740 hrs. In my opinion, this is consistent with a deep-seated which was the result of spontaneous heating because the pellets were too moist.
[39] Captain Clifford Parfett, a marine surveyor from Montreal, was also called by the defendants to give his opinion with respect to the possible cause of the loss. After excluding as possible causes a cargo light and a hot piece of metal, Captain Parfett turned his attention to spontaneous combustion. By reason of the fact that alfalfa pellet producers across Canada appear to have been reasonably successful in preventing heating of their production by the use of sophisticated methods of temperature monitoring and proper ventilation, and by relying on the Mill Mutual Guidelines, supra, that specify that proper ventilation and temperature monitoring are essential factors in the prevention of moisture migration and temperature increases, Captain Parfett concluded that spontaneous combustion was the "only likely cause of the fire".
[40] In reaching this conclusion, Captain Parfett pointed out that his investigation had revealed that the Western 10 elevator did not appear to have a proper ventilation or temperature monitoring system in place in the fall of 1988 and in the spring of 1989.
[41] In my view, the evidence is overwhelmingly in support of the view that the probable cause of the fire is the spontaneous combustion of the alfalfa pellets. No other theory was put forward by the plaintiffs and I therefore find that the fire on board the vessel at Quebec City on May 31, 1989, was the result of spontaneous combustion.
[42] To conclude on this point, I will say a few words about the evidence given by Mr. Don Crane, who at the relevant time, was a grain merchandiser for the plaintiff Elders Grain Co. Ltd. I note that prior to 1989, Mr. Crane had been the general manager of an alfalfa dehydration plant owned by Allstate Grain Co., which was purchased at one point in time by the plaintiff Elders. Thus, Mr. Crane had considerable knowledge concerning the production and dehydration of alfalfa pellets.
[43] Mr. Crane explained that alfalfa pellets, after going through the dehydration process, could remain in storage for years. He testified that he had never had a combustion problem in his storage area, since his company had strict internal guidelines concerning the safety of the product. He explained that mould would generally appear on pellets approximately 7 to 10 days after completion of the dehydration process and that portable temperature probes were used to monitor the temperature of the product. Mr. Crane also explained that the internal guidelines provided for the removal of fines and proper ventilation in the storage area.
[44] I retain from Mr. Crane's testimony the fact that there was a concern that unless proper steps were taken, alfalfa pellets could heat up and eventually ignite. This is why the temperature of the pellets was constantly monitored to prevent future problems.
[45] Mr. Crane testified that he did not have, nor could he produce any records of sampling/analysis of the pellets which were shipped from Creston to Thunder Bay. He made it clear that there were no records concerning both parcels of alfalfa pellets which were loaded on the "RALPH MISENER". Mr. Crane indicated that he was not familiar with the Western 10 elevator operation and therefore he could not give any evidence in that regard. He also stated that he could not remember his company having given any instructions with respect to the storage and handling of the pellets either to the Western 10 elevator or to the defendants.
[46] In my view, Mr. Crane's testimony supports the opinion evidence given by Mr. Pulkinen, Dr. Lygate and Captain Parfett that temperature monitoring systems and proper ventilation are essential to prevent alfalfa pellets from reaching the point of combustion.
WAS THE CARGO OF ALFALFA PELLETS A DANGEROUS CARGO?:
[47] The answer to this question is an obvious one. The cargo was indeed dangerous. If not properly stored, it could ignite and hence cause the loss of the ship and of other cargos.
[48] In Effort Shipping Co. Ltd. v. Linden Management S.A. and another" (The "Giannis NK"), [1998] 1 Lloyd's Rep. 337 at 341, the House of Lords stated that it had been settled law since Chandris v. Isbrandtsen-Moller Co. Inc., (1950) 83 Ll.L.Rep. 385, that the word "dangerous" in the expression "goods of ... [a] dangerous nature" had to be given a broad meaning and that consequently, the expression "dangerous goods" was not confined to goods of an inflammable or explosive nature.
[49] In the present matter, the defendants, invoking Article IV, Rule 6 of the Hague Rules, say that the plaintiffs are liable for the loss which they suffered as a result of the fire. In my view, the defendants are correct in their submission. For ease of reference, I again reproduce Article IV, Rule 6:
| 6. Goods of an inflammable, explosive or dangerous nature to the shipment whereof the carrier, master or agent of the carrier has not consented, with knowledge of their nature and character, may at any time before discharge be landed at any place or destroyed or rendered innocuous by the carrier without compensation, and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. [Emphasis added]
If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they make in like manner be landed at any place or destroyed or rendered innocuous by the carrier except to general average, if any. |
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6. Les marchandises de nature inflammable, explosive ou dangereuse, à l'embarquement desquelles le transporteur, le capitaine ou l'agent du transporteur n'auraient pas consenti, en connaissant leur nature ou leur caractère, pourront à tout moment, avant déchargement, être débarquées à tout endroit ou détruites ou rendues inoffensives par le transporteur sans indemnité et le chargeur de ces marchandises sera responsable de tous dommages et dépenses provenant ou résultant directement ou indirectement de leur embarquement. [Le souligné est le mien]
Si quelqu'une de ces marchandises embarquées à la connaissance et avec le consentement du transporteur devenait un danger pour le navire ou la cargaison, elle pourrait de même façon être débarquée ou détruite ou rendue inoffensive par le transporteur, sans responsabilité de la part du transporteur si ce n'est du chef d'avaries communes, s'il y a lieu. |
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There is no evidence that the defendants consented to the shipment of alfalfa pellets with knowledge of its dangerous character. The evidence is also clear that the plaintiffs failed to provide any instructions and/or information to the defendants with respect to their cargo and, more particularly, failed to inform the defendants of the inflammable nature of the alfalfa pellets. In these circumstances, I cannot but conclude that the plaintiffs are liable under Article IV, Rule 6.
[50] In The "Giannis NK", supra, an argument was put forward by the cargo owners that a shipper's liability under Article IV, Rule 6 was qualified by the provisions of Article IV, Rule 3, which reads as follows:
| 3. The shipper shall not be responsible for loss or damage sustained by the carrier or the ship arising or resulting from any cause without the act, fault or neglect of the shipper, his agents or his servants. |
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3. Le chargeur ne sera pas responsable des pertes ou dommages subis par le transporteur ou le navire et qui proviendraient ou résulteraient de toute cause quelconque sans qu'il y ait acte, faute ou négligence du chargeur, de ses agents ou de ses préposés. |
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In other words, the cargo owners argued that a shipper will only be responsible for the damages caused by a dangerous cargo if he knows or has the means of knowing that the goods are dangerous. A shipper should only be liable where fault or neglect on his part has been demonstrated. The defendant shipowners countered by arguing that Article IV, Rule 6 was a free-standing provision covering the specific subject matter of dangerous goods.
[51] After a careful review of the relevant case law, the House of Lords concluded that Article IV, Rule 6 was a free-standing provision and that it was neither expressly, nor by implication, subject to Article IV, Rule 3. In their Lordships' opinion, Article IV, Rule 6 imposed strict liability on shippers when they shipped dangerous goods, and this whether they were at fault or not.
[52] The House of Lords then turned its attention to the shipment of dangerous goods at common law. Although that question did not have to be decided in view of their Lordships' conclusion regarding Article IV, Rule 6, Lord Lloyd indicated that it was nonetheless appropriate in the circumstances to decide the issue. After reviewing the leading authorities, in particular, Brass v. Maitland, (1856) 6 E. & B. 470, where there was a difference of opinion with respect to whether a shipper was liable without fault on his part, the House of Lords concluded with the majority in Brass v. Maitland, supra, that a shipper's liability for shipping dangerous goods at common law did not depend on his knowledge or means of knowledge that the goods were dangerous.
[53] Consequently, whether a shipper's liability stems from Article IV, Rule 6 or at common law, his liability will be the same. In the present matter, the plaintiffs are in breach of Article IV, Rule 6 of the Hague Rules for having shipped a dangerous cargo, the nature and character of which was unknown to the defendants. Consequently, the plaintiffs are liable for all damages and expenses caused to the vessel and her owners.
CONCLUSION
[54] For these reasons, the plaintiffs' action will be dismissed and the defendants' counterclaim will be allowed. The plaintiffs shall be condemned to pay to the defendants the sum of CDN $91,436.71 with interest at the prime bank lending rate from June 9, 1989 to the date of this Judgment. With respect to post-Judgment interest, it shall be payable in accordance with subsection 37(1) of the Federal Court Act. As to costs, they shall be spoken to.
"M. Nadon"
JUDGE
O T T A W A, Ontario
July 7, 2003
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1836-90
STYLE OF CAUSE: ELDERS GRAIN CO. LTD. et al v. THE "RALPH MISENER" et al.
PLACE OF HEARING: QUEBEC CITY QC and MONTREAL QC
DATES OF HEARING: April 8-12, 2002; August 19-21, 2002; September 13, 2002.
REASONS FOR JUDGEMENT : NADON J.
DATED: JULY 7, 2003
APPEARANCES:
Normand Laurendeau FOR PLAINTIFFS
Andrew Penhale
John G. O'Connor FOR DEFENDANTS
Jean Grégoire
SOLICITORS OF RECORD:
Robinson Sheppard Shapiro FOR PLAINTIFFS
Montreal QC
Langlois Gaudreau O'Connor FOR DEFENDANTS
Quebec City QC