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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Pacific Steam Navigation Co. v. Thomson, Airman, & Co., Ltd [1919] ScotLR 518_1 (04 July 1919) URL: http://www.bailii.org/scot/cases/ScotCS/1919/56SLR0518_1.html Cite as: [1919] ScotLR 518_1, [1919] SLR 518_1 |
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Page: 518↓
[Sheriff Court at Glasgow.
The bill of lading of a cargo of nitrate provided—“Freight is to be paid as per margin and to be collected on the gross weights, measurements or number taken at port of discharge … it being expressly agreed that freight is to be considered as earned and must be paid, ship and/or cargo lost or not lost. In the course of her voyage the vessel was damaged by collision and a small part of the cargo was in consequence dissolved by sea water and was thus lost. The owners of the vessel claimed freight in terms of the bill of lading not only on the part of the cargo delivered but also on the part lost. Held ( dub. Lord Dundas) that freight was only due on the part delivered— per the Lord Justice-Clerk and Lord Salvesen on the ground that the bill of lading did not apply to partial loss of cargo, and per Lord Guthrie on the ground that there was no standard by which the weight of the lost cargo could be ascertained, and that therefore the clause was incapable of execution.
Page: 519↓
The Pacific Steam Navigation Company, shipowners, Liverpool, pursuers, brought an action in the Sheriff Court at Glasgow against Thomson, Aikman&Company, Limited, defenders, for payment of £674, 11s. 11d., being the balance of freight claimed by them as due on a cargo of nitrate carried by them on board their vessel the s.s. “Ortega” from Mejillones in the Republic of Chili to Liverpool.
The bill of lading contained the following clause—“15. Freight for the said goods without discount or deduction to be paid as per margin, and to be collected on the gross weights, measurements or number taken at the port of discharge, and according to the conditions stated in the company's tariff, it being expressly agreed that freight is to be considered as earned, and must be; paid ship and/or cargo lost or not lost.”
The parties averred (as amended)—“(Cond. 5) In the course of her said voyage the said vessel was damaged by collision with s.s. ‘Oronza’ of Liverpool. Said collision occurred on or about 9·40 p.m. on November 18th, 1917, and about one hour after said s. s. ‘Ortega’ had passed the Black Head, County Clare, on the West Coast of Ireland, on her voyage to Liverpool. In consequence of said collision sea water entered No. 3 hold and dissolved a part of said nitrate stowed therein, whereby a quantity of said nitrate was lost. At Liverpool there were actually delivered 15,708 bags containing 1400 tons 3 cwts. 3 qrs. 14 lbs. of nitrate, and the parties agreed that 93 tons 3 qrs. 23 lbs. was the weight of nitrate lost through said I collision and not delivered. The weight of the nitrate lost in consequence of the said collision was in fact 93 tons 3 qrs. 23 1bs. (Ans. 5) Admitted. (Cond. 6) The defenders have paid the freight on the cargo actually delivered, but decline to pay the freight on the cargo lost, for which they are also liable in terms of the provisions of the bill of lading. The said freight amounts to £674, 11s. 11d. ( Ans. 6) Admitted that the defenders have paid freight on the cargo delivered. Quoad ultra denied that there is any freight due.”
The pursuers pleaded—“1. The defenders being due and owing to the pursuers the sum sued for as balance' of freight as condescended on, decree should be granted as craved. 2. The defenders' statements are irrelevant.” I The defenders pleaded—“1. The sum: sued for not being due and resting-owing by the defenders to the pursuers, decree of; absolvitor should be granted with expenses. 2. The pursuers' averments are irrelevant.”
On 12th November 1918 the Sheriff-Substitute ( Thomson) repelled the second plea-in-law for both parties and allowed a proof, and on 22nd Novernber, on defenders' motion,; granted leave to appeal to the Court of Session.
Argued for the appellants—The special clause “ship and/or cargo lost or not lost” contemplated total loss of cargo— Borrow—man and Others v. Drayton, 1876, 3 Asp. 303. “Cargo” meant the entire load of the ship, and there was nothing in the context of this particular bill of lading to alter the natural meaning of the word. If the cargo alone was lost and wholly lost freight was to be considered as earned and must be paid. The pursuers claimed a composite standard for fixing freight, viz., freight on the part delivered and freight on the part lost. This, however, was precisely what was negatived in the case of Spaight v. Farnworth, L.R. 1880, 5 Q.B.D. 115. If there was to be any innovation on the common law rules as to freight it must be expressed in clear and unambiguous terms— Elderslie Steamship Company v. Borthwick, [1905] AC 93, 42 S.L.R. 854. It was clear that in the present case the word “cargo” was used collectively and not distributively. If the pursuers' contention were given effect to, two different standards would have to be applied, one of which was defined and the other was a matter of speculation.
Argued for the respondents—The pursuers were entitled to freight on the cargo delivered and also on what was lost through an excepted peril— Great Indian Peninsula Railway Company v. Turnbull, 1885, 53 L.T. 325, where it was held that the words “steamer lost or not lost” only covered what was lost through an excepted peril. The contested words in the present bill of lading meant whether ship and/or cargo or any part of them lost or not lost. If the defenders were right they would only have to pay freight on what was actually delivered, however small that was, even if it only amounted to one ounce. If on the other hand that small balance of the cargo were also lost before delivery, liability, on the defenders' contention, for freight on the whole of the cargo lost would at once emerge. This, however, wasan unreasonable result and not a natural reading of the language in the bill of lading. If the defenders' construction was right the word “ship” would receive no meaning, e.g., if the ship were lost and part of the cargo were salved. Their construction would have received complete effect if the words of the bill of lading had read “cargo lost or not lost” without reference to ship. The words “lost or not lost” simply meant “even if lost,” and had the same effect as in a policy of insurance on a ship lost or not lost, i.e., at the date of insurance. There was no contradiction between the two standards for measuring freight, because they did not apply together, for the reason that the same cargo could not be both lost and delivered. The standard of freight to be applied to the part of the cargo that was lost was not any more a matter of speculation than the standard to be applied on the defenders' contention if the whole of the cargo was lost.
At advising—
The two rival contentions are (1) that the merchant must pay freight on the cargo delivered at the stipulated rate of £7, per.
Page: 520↓
I think this is a case where the rule contra proferentem may well be applied in determining as to the true construction of the clause we have to consider. The initial clause of article 15 is that freight is “to be paid as per margin.” The marginal clause provides for the rate of freight per ton of 2240 lbs. payable at destination. But article 15 goes on to say that the freight “is to be collected on the gross weights; . . taken at the port of discharge.” I think “to be paid as per margin” means no more than that the freight at the stipulated rate is to be “payable at destination.” But it is to be “collected” on the gross weights taken at the port of discharge. Both of these provisions can be fullymet if some cargo arrives.
There might, however, be a total loss of the cargo, in which case it would be impossible to apply the standard stipulated for as to “collection.” The lost or not lost clause would, it was argued, apply in that event, when the freight would have to be paid as per margin, viz., £7, 5s. per ton of 2240 1bs.—the quantity being determined prima facie by the bill of lading. The result as to freight in the event of a total loss of the cargo does not, however, arise in this case—for here the cargo arrived in part. The initial clause of article 15, including the provision as to collection, therefore applies in terms, and in my opinion it is not legitimate to superinduce on that provision the results alleged by the shipowners to follow from the lost or not lost clause.
If any cargo arrives, the data for determining the amount to be paid as freight with perfect accuracy are complete. I do not think there were intended to be two co-existing methods of determining the amount payable as freight. The provision as to the “collection” if and when it comes into operation, as it does when part of the cargo arrives and is discharged in terms of the bill of lading, excludes in my opinion the application of any other standard or measure by which the amount of freight can be fixed, and I think it implies that no freight is to be paid except for the cargo which has arrived. The lost or not lost clause has been very carelessly adopted. For the most part it can plainly have no application at all to the payment of freight. Whether the ship is lost or not freight will have to be paid if the cargo arrives, and will have to be paid as per margin. So too if the cargo is not lost freight will have to be paid as per margin. In my opinion the words which remain—“cargo lost”—do not apply when all but a small portion of the cargo does arrive.
It may be that if no cargo arrives freight can still be claimed under the lost or not lost clause, but that point does not arise in this case, and I express no opinion upon it.
In my opinion the defenders have already paid all the freight that is due, and they ought therefore to be assoilzied.
It seems to be common ground that the phrase “ship lost or not lost” has been imported from contracts of marine insurance, and that when used in a policy it implies that there has been a total loss of the ship, and the main argument for the appellants was that a similar implication applies to the words “and/or cargo.” Such a construction of the clause gives full effect to the words actually used. Three alternatives in this view would seem to be contemplated, namely, either that the ship was lost, or the ship and cargo or the cargo alone. That the last contingency should be specially provided for may be explained on the footing that the bill of lading provides for the transhipment of the cargo in certain cases, and in this event the cargo might conceivably be lost although the ship to which the bill of lading applies might arrive. The construction put forward by the shipowners involves the insertion of the words “wholly or partially,” the application of which would have to be confined to the cargo, for if the cargo was delivered it would be no concern of the cargo owners whether the ship was seriously damaged in the course of the voyage. Of the two constructions I prefer the former. I think parties, according to the natural meaning of the words used, must have contemplated and provided for the case of the ship and cargo being lost, or the cargo being lost in some other vessel after it had been transhipped, and not the numerous and complex circumstances which might arise if the ship was lost and a portion of the cargo salved, or a portion of the cargo were lost by collision or otherwise although the ship reached its destination. Even reading the clause according to the simpler construction it is very difficult to reconcile it with the provision that freight is to be paid according to the gross weight at the port of discharge, which ex hypothesi the cargo would never reach. But perhaps the true view of the clause is that it falls to be treated as providing for the exceptional case of the cargo never reaching its destination, in which case it would seem that the intake weight would be the only measure of the amount of freight to which its owners were entitled. The words at the end of the clause appear
Page: 521↓
It appears to me that the most reasonable construction of the latter part of clause 15 is to hold it applicable, in the case of cargo, both to total and partial loss. No reason has been suggested why freight should be payable on undelivered cargo when the whole contents of a ship have been lost, whereas if any portion has been saved no freight is payable on the part, however large, which has been lost. But this does not end the matter. The question still remains—How is the weight of the lost cargo to be ascertained, to which the rate of £7, 5s. per ton is to be applied? The material does not exist as in Spaight's case. The weight as ascertained at the port of loading cannot bind the shippers, who repudiate responsibility for this weight on the face of the bill of lading. It appears to me that there is no standard by which the weight of the lost cargo can be ascertained, and therefore that the clause is incapable of execution.
I accordingly agree in the result arrived at by your Lordships that the defenders must be assoilzied.
The Court assoilzied the defenders.
Counsel for the Pursuers and Respondents— Sandeman, K.C.— Normand. Agents— Boyd, Jameson, & Young, W.S.
Counsel for the Defenders and Appellants— Dean of Faculty (Murray, K.C.)— W. T. Watson. Agents— Beveridge, Sutherland, & Smith, W.S.
