Sunrise Co. v. Lake Winnipeg (The), [1991] 1 S.C.R. 3

Sunrise Co. v. Lake Winnipeg (The), [1991] 1 S.C.R. 3

Sunrise Company Limited and Ceres Hellenic

Shipping Enterprises Ltd. Appellants

v.

The Ship Lake Winnipeg and Her Owners Respondents

and between

The Ship Lake Winnipeg and Her Owners Appellants

v.

Sunrise Company Limited and Ceres Hellenic

Shipping Enterprises Ltd. Respondents

Indexed as: Sunrise Co. v. Lake Winnipeg (The)

File Nos.: 21264, 21288.

1990: May 23; 1991: January 17.

Present: Lamer C.J.* and Wilson, La Forest, L'Heureux‑Dubé, Sopinka, Gonthier and McLachlin JJ.

on appeal from the federal court of appeal

Maritime law ‑‑ Liability ‑‑ Loss of earnings while ship in dry dock ‑‑ Dry dock repairs required after ship grounded avoiding collision ‑‑ Near collision fault of other vessel ‑‑ Ship ran aground a second time on way to anchorage through no fault of vessel involved in first incident ‑‑ Damage from both incidents repaired concurrently ‑‑ If effected consecutively, repair arising from first incident requiring more time than repair from second incident ‑‑ Whether negligent vessel responsible for lost earnings for entire period in dry dock or whether losses for time spent repairing damage from second incident should be set off.

Maritime law ‑‑ Negligence ‑‑ Ship grounded avoiding collision ‑‑ Near collision found to be fault of other vessel ‑‑ Findings of fact indicating negligence ‑‑ Whether or not palpable error in findings of fact of trial judge.

The Kalliopi L, while downbound on the St. Lawrence River, met but did not collide with the upbound Lake Winnipeg and went aground. The trial judge found the Lake Winnipeg entirely responsible for this grounding. The ship ran aground a second time while proceeding to an anchorage area and was further damaged. This incident was unrelated to the first and occurred through no fault of the Lake Winnipeg. The damage caused by the first incident required 27 days in dry dock to repair. The repairs necessitated by the second incident were effected during this 27-day period and would have required 14 days in dry dock if they had been done separately. The time in dry dock solely attributable to the first incident, therefore, was 13 days.

The sole issue raised by the appeal by Sunrise Company Limited was responsibility for the loss of profit resulting from Kalliopi L's 27 days in dry dock. The appeal by the Lake Winnipeg (the cross‑appeal) raised the issue of liability of the Lake Winnipeg for the first grounding. At trial, the Lake Winnipeg was found to be solely responsible for the first grounding and held liable for the lost revenue flowing from the 27 days in dry dock consequent on that grounding. The Court of Appeal upheld the finding as to responsibility for that grounding but deducted the damages for lost revenue for the 14 days required to repair the damages caused by the second grounding from the damages that arose because of the 27 days in dry dock. Both parties appealed to this Court.

Held (Gonthier and McLachlin JJ. dissenting in part): The appeal by Sunrise Company Limited should be allowed.

Held: The appeal by the ship Lake Winnipeg should be dismissed.

Per Lamer C.J. and Wilson, La Forest, L'Heureux‑Dubé and Sopinka JJ.: It is not enough to consider whether the ship was detained by the wrongful act of the defendant. It is essential to consider whether damages were caused to the plaintiff by reason of such detention. Sequence in and of itself means little; the perspective must be broadened by an examination of the existing state of the vessel.

The case law on the subject matter is consistent. In particular, The Carslogie and The Haversham Grange can stand side by side and lead to a principled resolution of the issue here. The Lake Winnipeg was solely responsible for the first incident and accordingly was solely responsible for the profit loss flowing from the 27 days in dry dock. It was not sufficient here merely to determine that the damage caused by the second incident was a cause of the detention. The second incident, while it caused time in dry dock, did not result in any loss of profit. The profit‑making enterprise was brought to a halt by the meeting with the Lake Winnipeg. Repairs due to the second incident were completed within the 27 days detention required by the first incident and therefore did not diminish the ship's profit‑earning capacity.

The nature of the second casualty, whether tortious or otherwise, was irrelevant in any determination as to profit‑earning capacity. The link between the second incident and the loss of profit suffered by the Kalliopi L was merely coincidental, not causal.

Per Gonthier and McLachlin JJ. (dissenting in part): The party responsible for the initial damage need not always bear the whole of the loss resulting from detention, regardless of intervening causes which may also require detention. Damages are to restore the plaintiff to the position it would have been in but for the tortious conduct of the defendant ‑‑ no less and no more. The matter to be determined is what loss the plaintiff has established to have been caused by the defendant's wrongful act, viewing the matter as it stands at the time of trial, and taking into account any factors which have diminished the loss in the interval following the defendant's tort. To the extent that an event which occurs after and independently of the tort diminishes the loss caused by the tortious event, that diminution must be reflected in the award for damages.

The diminution in a loss due to detention caused by a subsequent event can be recognized by pro rata apportionment. This approach is philosophically compatible with the contributory negligence approach to damages now prevalent in virtually all areas of tort law, and reflected in legislative provisions such as the Canada Shipping Act and the Ontario Negligence Act. Contributory negligence per se, although arguably available on the legislation, was not canvassed in the case at bar.

The rule of apportionment might be summarized as follows: (1) where there are two or more contributing causes to the loss of use of the vessel as a profit‑earning machine; and (2) where each cause, considered independently, makes it necessary to detain the vessel to effect repairs, which are made concurrently; (3) then, to the extent that the two or more sets of repairs are effected concurrently, the loss due to detention is equally allotted between the causes; and (4), to the extent that the time is not used concurrently to repair both sets of damage, the resultant losses are borne solely by the party that caused those losses.

The effective cause of the grounding was the wrongful act of the Lake Winnipeg and the manner in which it forced the Kalliopi L into the perilous position close to the southern bank of the river. Liability was not imposed on the Lake Winnipeg because it chose to enter the narrow channel, but because in exercising this choice, it was under a duty to ensure that its actions did not threaten the safety of the downbound ship as it negotiated this part of the channel. No reversible or significant error occurred at trial or on appeal.

Cases Cited

By L'Heureux‑Dubé J.

Considered: The Haversham Grange, [1905] P. 307; Carslogie Steamship Co. v. Royal Norwegian Government, [1952] A.C. 292; The Chekiang, [1926] A.C. 637; referred to: The Hauk (1927), 30 Ll. L. Rep. 139; Baker v. Willoughby, [1969] 1 Q.B. 38; Stene and Lakeman Construction v. Evans and Thibault (1958), 1958 CanLII 232 (AB SCAD), 24 W.W.R. 592; Performance Cars Ltd. v. Abraham, [1962] 1 Q.B. 33.

By McLachlin J. (dissenting in part in appeal by Sunrise Company Limited)

Carslogie Steamship Co. v. Royal Norwegian Government, [1952] A.C. 292; The Oinoussian Friendship, [1987] 1 Lloyd's Rep. 258; Baker v. Willoughby, [1969] 3 All E.R. 1528; Ruabon Steamship Company v. London Assurance (1899), 9 Asp. M.C. (N.S.) 2, rev'g [1898] 1 Q.B. 722; The Haversham Grange, [1905] P. 307; Marine Insurance Co. v. China Transpacific Steamship Co. (The Vancouver) (1886), 11 App. Cas. 573; The Acanthus, [1902] P. 17; The Chekiang, [1926] A.C. 637; The Ferdinand Retzlaff, [1972] 2 Lloyd's Rep. 120; Stein v. The Ship "Kathy K", 1975 CanLII 146 (SCC), [1976] 2 S.C.R. 802.

Statutes and Regulations Cited

Canada Shipping Act, R.S.C. 1970, c. S‑9, ss. 635, 638.

Negligence Act, R.S.O. 1980, c. 315, ss. 2, 4, 5.

Authors Cited

McGregor, Harvey. McGregor on Damages, 15th ed. London: Sweet & Maxwell, 1988.

McGuffie, Kenneth C. The Law of Collisions at Sea. (British Shipping Laws, vol. 4.) London: Stevens & Sons, 1961.

APPEALS from a judgment of the Federal Court of Appeal (1988), 96 N.R. 310, allowing in part an appeal from a judgment of Cullen J. Appeal by Sunrise Company Limited and Ceres Hellenic Shipping Enterprises Ltd. allowed, Gonthier and McLachlin JJ. dissenting in part. Appeal by the ship Lake Winnipeg and Her Owners dismissed.

T. H. Bishop, for Sunrise Company Limited and Ceres Hellenic Shipping Enterprises Ltd.

Sean Harrington and Nicholas Spillane, for the ship Lake Winnipeg and Her Owners.

//L'Heureux-Dubé J.//

The judgment of Lamer C.J. and Wilson, La Forest, L'Heureux-Dubé and Sopinka JJ. was delivered by

L'Heureux‑Dubé J. -- I have had the advantage of the opinion of my colleague, Justice McLachlin but, with respect, cannot adopt her reasons nor reach the result she proposes as regards the principal appeal. I however agree with her reasons and disposition in the cross‑appeal.

Although my colleague has set out the facts, for clarity I will summarize them here.

On June 7, 1980, the Kalliopi L, while downbound on the St. Lawrence River, met but did not collide with, the upbound Lake Winnipeg. Immediately after the meeting, the Kalliopi L went aground. The trial judge found that the Lake Winnipeg and her owners were entirely responsible for this grounding. In proceeding to an anchorage area, the Kalliopi L again, though through no fault of the Lake Winnipeg, went aground and suffered further damage. The second incident was unrelated to the first. Each grounding alone would have required the Kalliopi L to proceed immediately to dry dock for repairs once her cargo had been discharged. The time in dry dock necessitated by damage repairs occasioned by both incidents was 27 days. The detention in dry dock for repairs from the first incident alone would have required the full 27 days. If, however, repairs relating to the second incident were carried out separately, only 13 days in dry dock would have been necessary.

Liability for the cost of repairs is not an issue in the principal appeal as each party assumed responsibility for these costs. The loss in dispute is that resulting from the detention of the ship. Accordingly, the sole issue raised by the principal appeal is who is responsible for the loss of profit resulting from the detention for 27 days of the Kalliopi L.

The cross‑appeal raises the issue of liability of the Lake Winnipeg for the first grounding. At trial, Cullen J. held that the Lake Winnipeg was solely responsible for the first grounding and further, that the Lake Winnipeg was liable for the 27 days detention consequent on the first grounding. On appeal, Hugessen J. for the Court upheld the trial judge's finding that the Lake Winnipeg was wholly responsible for the first grounding but held that the trial judge erred in holding the Lake Winnipeg responsible for the entire 27 days in dry dock. Since I agree entirely with the reasons of my colleague for dismissing the cross‑appeal, I will deal exclusively with the issue raised by the principal appeal.

Based upon the principles my colleague derives from the case law, she concludes that the losses suffered as a result of the delay of the ship should be apportioned between what she finds to be the two parties who caused that detention, the Lake Winnipeg and the Kalliopi L. According to her analysis, to the extent repairs are effected concurrently, the loss is apportioned equally, otherwise the loss falls on the party causing that loss.

While I agree with my colleague that The Haversham Grange, [1905] P. 307, and Carslogie Steamship Co. v. Royal Norwegian Government (The Carslogie), [1952] A.C. 292, bear heavily in the resolution of the issue in this case, I must respectfully disagree with her analysis and the conclusions she draws from the cases. It is my opinion that The Haversham Grange, and The Carslogie, are consistent with one another and are applicable to the issue confronting us in this appeal.

Before turning to these cases I will refer briefly to the works of McGuffie, The Law of Collisions at Sea (1961), and McGregor, McGregor on Damages (15th ed. 1988). At page 000 of her reasons, McLachlin J. sets out a passage from each and concludes that "[there] is a welter of confused and confusing jurisprudence, a state of affairs reflected in the fact that the two leading scholars commenting on it arrive at different conclusions as to the rules applicable to this case." Both authors attempt to summarize the law in this area; McGuffie sets out a number of propositions, while McGregor divides the case law into four separate areas. To end up with a true comparison, one must choose a proposition from each that proceeds from the same jurisprudential base. Due to the summary nature of the works, there is some difficulty in comparing their respective positions. I will however attempt to set out what, in my opinion, are the proper corresponding propositions.

To begin with, to be meaningful the proposition cited by my colleague from McGregor's work must, in my opinion, be viewed in its proper context. For ease of reference I will reproduce here the proposition McLachlin J. extracts from McGregor at p. 000 of her reasons:

It would therefore seem clear that even where only one casualty is caused tortiously and the other without liability upon anyone, as by heavy weather, the dock expenses and loss of profits will be attributable solely to the casualty first in time. If that is the casualty caused by the tortfeaser he will be wholly liable, but if it is the casualty caused by the heavy weather the plaintiff will have no redress.

This quotation occurs within a larger discussion centred on The Haversham Grange, a discussion that attempts to solve the question of liability when two events, each in isolation, render a ship unseaworthy and consequently in need of dry dock. Such a situation is mirrored by the facts in the instant case. At page 787, McGregor concludes that in such a case:

. . . the sequence of casualties becomes important and the loss of profits and the dock expenses will be properly attributed to the first in time.

McGregor goes on to discuss The Haversham Grange and the House of Lords decision in The Carslogie, and how these cases lead one to this result. It is within this larger context, a discussion of The Haversham Grange, that the above quotation must be evaluated.

In order to compare this statement with one of the propositions set out by McGuffie, one must choose that proposition which flows from the same case, The Haversham Grange. The proposition so chosen, located at p. 398 reads:

(6)If it is necessary to effect collision repairs in respect of two collisions, damages for detention are payable by the wrongdoer in the first collision, so far as not increased by the second.

In my opinion, this comparison is the more accurate one. In addition, the summaries found in McGregor's work offer more in the way of factual background and analysis. The propositions found in McGuffie's work seem vacuous in comparison, due to the acontextual fashion in which they are presented. In my opinion, his analysis is unhelpful and confusing.

As far then as these two authors are concerned, I respectfully disagree with my colleague's conclusion that they are in conflict. Furthermore, I feel more comfortable in relying upon the work of McGregor.

I turn now to a consideration of The Carslogie, and The Haversham Grange. It is my contention that the results in these two cases are not inconsistent, and further, that the proper application of these two cases resolves the issue here.

The facts of The Haversham Grange are strikingly similar to those in the present case; therefore I will set them out at some length. The ship Maureen was struck by the ship Caravellas and, on the following day, was struck by the Haversham Grange. The damage incurred as a result of either collision would have necessitated time in dry dock. The repairs consequent upon the two collisions were carried out at the same time. The repairs due to the second collision did not increase the amount of time spent in dry dock. Carried out alone, repairs due to the first collision would have required 22 days, while repairs due to the second collision would have required only six. The owners of the Maureen claimed against the Haversham Grange for the six days detention time.

The Registrar rejected the Maureen's claim. Gorell Barnes, President, on a motion in objection to the Registrar's decision, upheld the decision of the Registrar on the ground that as the Maureen had already been rendered unseaworthy and in need of dry docking due to the first incident, the repairs required by the second collision were not a factor in her delay and thus the Haversham Grange should bear no responsibility for the time spent in dry dock.

It must be stressed that, on appeal, the claim against the Haversham Grange for loss of profit was abandoned. Therefore, the bulk of the reasons rendered on appeal were concerned solely with the issue of dock dues and other expenses which the Court of Appeal apportioned between the two wrongdoers. In so far as the issue of the claim for detention of the ship was discussed, the Court of Appeal confirmed the opinion of the President. At page 317 Collins M.R. stated:

It turns out that the ship must have been, and in point of fact was, detained the whole time in dock by the repairs which had to be executed in consequence of the damage done by the first of the two ships, the Caravellas, and that in point of fact although the repairs occasioned by the Haversham Grange were done simultaneously, the ship was not detained an hour longer by reason of that fact. In view of that state of things, it seems to me impossible to say that any claim for demurrage exists against the Haversham Grange, and that, therefore, so far as that part of the case is concerned, it must be dismissed.

The internal inconsistency in The Haversham Grange that my colleague refers to appears to have been eliminated by the House of Lords in The Carslogie which overruled the Court of Appeal on the issue of dock dues. While I will discuss this in greater length when I turn to The Carslogie, I would like to note at this point that consideration of that portion of the case apportioning dock dues seems inappropriate in view of the fact that the House of Lords emphatically rejected the reasoning on this point. Therefore, I do not think that any conclusion can be drawn from that part of the case as regards the point in issue here.

In a case prior to The Carslogie, the House of Lords considered the Court of Appeal's reasons in The Haversham Grange on the issue of loss of profits. In The Chekiang, [1926] A.C. 637, an owner of a ship damaged in a collision decided that while the ship was in dry dock for repairs it might as well have its annual refit done, a refit not due for another four months. The question arose as to whether the owner was responsible for that period of detention necessitated by the decision to refit. In this context, Lord Phillimore considered The Haversham Grange, and approved of the Court of Appeal's reasons on the detention issue. He extracted from the Court of Appeal's reasons a larger and more general expression of principle. At page 653, Lord Phillimore set out the principle in these words:

If a vessel has got to go into dry dock for a periodical survey for class or in the case of King's ships by the practice of the Admiralty, or to repair previous damage, her detention for repairs due to some collision which occurs after the previous damage or after the determination to put her into dry dock has been made, will not be a charge against the wrongdoer; otherwise it will.

Interestingly, this case also foreshadowed the decision of the House of Lords in The Carslogie which overruled that portion of the Court of Appeal's reasons in The Haversham Grange that apportioned dock dues. At page 653, Lord Phillimore disapproved of the manner in which the dock expenses were dealt with, calling the ground used by the Court of Appeal to distinguish between them and the damage due to detention, "not very easy to appreciate" but left reconsideration for the future.

I turn now to The Carslogie. This more recent House of Lords decision is, in my view, consistent with The Haversham Grange. Furthermore, The Carslogie, renders the decision in The Haversham Grange internally consistent and provides strong support for the result, a result that should, in my opinion, obtain on the facts of the case before us.

The facts in The Carslogie are these. The Carslogie ran into the Heimgar. There was an admission of liability on the part of the Carslogie. Temporary repairs were effected but permanent repairs had to be carried out in the United States. Important for an understanding of the result in this case is the fact that, after the collision with the Carslogie and prior to crossing the Atlantic, the Heimgar was given a certificate of seaworthiness, authorizing her to be continued in her present class without fresh record of survey, subject to permanent repairs at the owner's convenience. She was held to be fit to carry dry and perishable cargoes. During the crossing of the Atlantic, the Heimgar encountered heavy weather and sustained such damage as rendered her unseaworthy. This necessitated immediate dry docking. Thus, prior to encountering rough weather on the Atlantic, the Heimgar was a seaworthy vessel, capable of earning profits for her owners. Repairs due to the collision and to heavy weather, as well as the owner's repairs were all carried out at the same time. Of the 50 days in dry dock, it was agreed that 10 days should be allocated to the repair of the collision damage and 30 for the weather damage. The question for the House of Lords was whether the owners of the Carslogie were liable for the 10 days detention. The House of Lords answered this question in the negative.

In order to support my contention that the result in this case is consistent with and supportive of that in The Haversham Grange, it is necessary to quote at some length from the reasons in The Carslogie. It will be seen that the House of Lords both clarifies the reasoning of the Court of Appeal in The Haversham Grange, and also resolves the issue facing them in a manner consistent with that case.

After setting out some of the basic principles referred to by my colleague McLachlin J., Viscount Jowitt offered what is, to my mind, one of the most important principles in resolving questions of liability for loss of profit in cases such as these. At pages 300‑301, he stated:

If I may use the expression of Bucknill L.J. . . . damages are payable for the detention of a ship because she is "a profit‑earning machine". If she ceases to be a profit‑earning machine it follows that she can sustain no damage from being detained until she again becomes capable of earning profit. In other words, it is not enough to consider whether the ship was detained by the wrongful act of the defendant. It is essential to consider whether damages were caused to the plaintiff by reason of such detention. [Emphasis added.]

Viscount Jowitt proceeded to distinguish the cause of detention from the cause of loss of profit, a distinction that is seized on in all of the opinions in the case. Viscount Jowitt noted that the cause of loss of profit in this case was the heavy weather damage since the Heimgar was a profit‑making, seaworthy vessel after the collision and prior to the crossing of the Atlantic. While the collision may have been a cause of her detention, it did not figure in the loss of profits.

As to The Haversham Grange, Viscount Jowitt disapproved of that portion of the case dealing with dock dues but noted at p. 303 that, ". . . the decision as to damages for delay was correct." At page 306 he stated that there was no conflict between the result in The Carslogie and The Haversham Grange. He reconciled these cases, along with The Hauk (1927), 30 Ll. L. Rep. 32, a case similar to The Carslogie, supra, with these words:

My Lords, both in The Hauk and in the present case the unseaworthiness was caused by an event which happened after the collision, and I see nothing in the rule laid down in The Haversham Grange which in any way conflicts with the decision in The Hauk. That rule . . . rightly treats the first wrong‑doer who renders the vessel unseaworthy as responsible for the consequent delay, notwithstanding the act of a second wrong‑doer who also rendered the ship unseaworthy . . . .

Although the opinions of the other Lords depart little from the reasoning of Viscount Jowitt, I will nevertheless refer to them briefly.

Lord Normand also had little difficulty in reconciling The Carslogie and The Haversham Grange. He made clear that the sequence of events is largely irrelevant. Viewed superficially in terms of sequence, the cases are indeed hard to reconcile. After discussing The Haversham Grange, Lord Normand, at p. 310, provided the proper perspective, a perspective similar to that enunciated by Viscount Jowitt and one that allows the two cases to stand together:

As in that case [The Haversham Grange] so in this the claim fell to be disallowed because the plaintiffs failed to prove that the ship could have earned profits during the period of detention caused by the repairs rendered necessary by the defendants' tort.

Further, at p. 311:

Bucknill L.J. fell into what I humbly think is the error of supposing that The Haversham Grange is authority for a rule that liability for detention attaches to a tortfeasor merely because the damage done by his tort is prior in time to a subsequent damage, whether caused by a tort or by some other cause . . . if the fact is that one of two casualties made the vessel unseaworthy and the other did not, the problem of liability is solved and the time sequence is irrelevant. In The Haversham Grange the time sequence was important because the damage suffered by the Maureen in each of the two collisions was enough to make her unseaworthy. [Emphasis added.]

Like the other Lords, Lord Normand concluded that, as the Heimgar was a profit‑earning vessel prior to incurring the heavy weather damage, the loss of earnings was not caused by the collision.

Lord Tucker made the same important point; sequence in and of itself means little. Only when the perspective is broadened by an examination of the existing state of the vessel can a principled decision regarding liability be made. He noted that an examination of the cases from the viewpoint of where liability is found ultimately to rest, on the intervening or initial casualty, is misleading and confusing. He explained, at pp. 316-17:

. . . both the Hauk and the Heimgar were rendered unseaworthy by events which happened after the collision in each case. So far as the claim for demurrage was concerned in The Haversham Grange, it was rejected not because the collision between the Maureen and the Haversham Grange was subsequent to the collision with the Caravellas, but because it turned out that the Maureen must have been and in point of fact was detained the whole time in dock for the repairs which had to be executed in consequence of the damage done by the Caravellas which had rendered her unseaworthy. It was immaterial that the damage done by the Haversham Grange would also by itself have made the Maureen unseaworthy or that it occurred after the first collision. [Emphasis added.]

The judgment of Lord Morton of Henryton is to the same effect.

Before applying this reasoning to the facts of the case before us, I will briefly comment on the comparison of loss of profit cases in the shipping area with personal injury cases. While, as my colleague McLachlin J. points out at p. 000 of her reasons, the general principles may be the same, their application is of necessity different. Inherent differences in the nature of the injuries sustained militate against any meaningful comparisons between the two areas. The problems that may arise upon such an attempt can be seen in the difficulties experienced by the court in the personal injuries case referred to by McLachlin J., Baker v. Willoughby, [1969] 1 Q.B. 38.

Another example in the case law of an attempted comparison can be found in Stene and Lakeman Construction v. Evans and Thibault (1958), 1958 CanLII 232 (AB SCAD), 24 W.W.R. 592 (Alta. S.C.A.D.). At trial, The Carslogie was held to be inapplicable. On appeal, McBride J.A. implicitly warned against such comparisons. At page 596 he spoke of his inability to find any meaningful similarities in the shipping cases:

I find it difficult to see any similarity or parallel between a seaworthy motor vessel damaged but still requiring further repairs because of original collision damage, then later and further severely damaged in mid‑Atlantic, and the plaintiff Stene's position after the doctors had done all they could for him with respect to the first accident and he had made his maximum recovery and had started to learn accountancy.

It seems to me that a more meaningful use of the principles in the shipping cases occurs in Performance Cars Ltd. v. Abraham, [1962] 1 Q.B. 33, in that, as in the shipping cases, the issue revolved around property damage. In this case, a car was involved in two collisions. The damage done was slight although the first collision necessitated the respraying of the whole of the lower part of the car. As the plaintiff was unable to recover the amount needed for respraying from the first tortfeasor, he reasoned that, as the damage caused by the second tortfeasor would have independently required respraying, he would look to the second tortfeasor for recovery of this cost. Lord Evershed M.R. in coming to a conclusion, relied partly on the reasoning in The Carslogie and The Haversham Grange. At page 40, he concluded:

In my judgment in the present case the defendant should be taken to have injured a motor‑car that was already in certain respects (that is, in respect of the need for respraying) injured; with the result that to the extent of that need or injury the damage claimed did not flow from the defendant's wrongdoing. [Emphasis added.]

While in the case before us liability for the cost of repairs is not in issue, I have referred to this case to illustrate what is, in my opinion, a more appropriate context for meaningful use to be made of those principles laid down in the shipping cases. The conclusion reached by Lord Evershed M.R. is also helpful in the search for a principled conclusion in the case presently before us.

I turn now to the disposition in this case. As I have hopefully made clear above, the two leading cases, The Haversham Grange and The Carslogie can stand side by side and lead to a principled resolution of the issue in the present appeal. The necessary result is that the Lake Winnipeg, which was solely responsible for the first incident which required 27 days in dry dock, is wholly responsible for the profit loss due to this detention. It is not sufficient in this case merely to determine that the damage caused by the second incident was a cause of the detention. Notwithstanding an affirmative answer to this question, one must, on the principles set out above, answer the further and more important question of liability for loss of profit. While the second incident caused time in dry dock it did not have as a consequence any loss of profit. This conclusion is necessitated both on principle and on the clear reasons on this point offered by the House of Lords. The profit‑making enterprise was brought to a halt by the meeting with the Lake Winnipeg. Repairs due to the second incident were completed within the 27 days detention required by the first incident. The second incident did not therefore, have as a consequence a diminution in profit‑earning. Thus this further question in the determination of liability must be answered in the negative.

As was made clear above, the nature of the second casualty, be it tortious or otherwise, is irrelevant in this determination. It does not seem useful then, in focussing on the nature of the second incident, to characterize this case as a Carslogie‑type case as does my colleague McLachlin J, at p. 000 of her reasons:

The Carslogie, unlike The Haversham Grange but like the case at bar, was a case where the intervening event was not the act of another tortfeasor.

Such a characterization has little place in what is, in my respectful opinion, the proper analytical framework. At page 31 of his factum the appellant states:

. . . if the first casualty directly prevented the vessel from continuing her profit‑making venture and the length of the period of repairs arising from the first casualty exceeded that of any repairs resulting from any other cause, such as a second accident, then the detention and dry docking expenses fall upon the party responsible for the first accident, whether the second accident was caused by the fault of the ship owner, the fault of a third party or the fault of no one, such as heavy weather.

In my opinion, the appellant has, on the facts of this case, asserted a correct proposition of law, one that commends itself to me both on the cases and on principle. On my interpretation of the case law in reaching a result in this case, there is no need to "conjure up explanations aimed at reconciling the disparate results in The Haversham Grange and The Carslogie". When one adopts the view I take of the cases, in my opinion the result here is clear.

In summary, there is no causal link between the second incident and the loss of profit suffered by the owners of the Kalliopi L, such damage being merely coincidental. The Lake Winnipeg must, as a consequence bear the responsibility for the full 27 days detention in dry dock.

For the foregoing reasons, I would dismiss the cross‑appeal with costs, set aside the judgment of the Court of Appeal as regards the principal appeal and restore the findings of the trial judge, the whole with costs both in the Court of Appeal and in this Court.

//McLachlin J.//

The reasons of Gonthier and McLachlin JJ. were delivered by

McLachlin J. (dissenting in part) --

Introduction

This appeal involves a dispute over who should bear the losses resulting from the detention of a ship to repair the damage caused by two unrelated groundings. The respondents were found liable for the injury to the appellant's ship that resulted from their meeting in the Brockville Narrows section of the St. Lawrence. The repair of this damage would have taken 27 days. Before the repairs were made, the ship ran aground again in an unrelated incident, and suffered damage to another section of the hull. The repair of this injury would have required that the ship be taken out of service for the disputed 14 days. Repairs to the damage arising from both incidents were made some time later in Greece. Because the repairs were effected at the same time, the total time the ship was out of operation was 27 days -‑ the time it would have taken to repair the damage from the first mishap.

The issue on the appeal is whether the defendants are liable for the loss sustained as a result of the ship's being out of commission the whole period of 27 days, or whether the defendants are entitled to have deducted the 14 days which would have been required in any event to repair the damage caused by the second incident. The trial judge awarded the plaintiffs damages against the defendants for the full 27 days. The Federal Court of Appeal deducted the 14 days from this on account of delay attributed to the second incident. The plaintiffs appeal.

The defendants cross‑appeal alleging that the first incident was caused wholly or in part by the negligence of the plaintiffs.

Facts

The appellant, Sunrise Company Limited, is the owner of the Kalliopi L, a ship of approximately 16,000 tons and 585 feet. The appellant, Ceres Hellenic Shipping Enterprises Ltd., was the agent and operator of the vessel. The respondent vessel, the Lake Winnipeg, is a ship of approximately 19,000 tons and 828 feet.

On June 7, 1980, the Kalliopi L was travelling down the St. Lawrence Seaway, in transit from Thunder Bay, through Montréal, its final destination being the Black Sea. It was carrying a cargo of rye. The Lake Winnipeg was travelling upbound through the Seaway. There was evidence from an independent witness to the effect that the Lake Winnipeg was travelling in the centre of the channel. Downbound ships have the right of way, according to the Rules passed pursuant to s. 635 of the Canada Shipping Act, R.S.C. 1970, c. S‑9. As required, the appellant vessel had given notice of its location at a checkpoint, and this information was available to the respondent vessel.

When he saw the Lake Winnipeg the pilot of the Kalliopi L gave one signal blast, thus indicating a port‑to‑port meeting. This signal was acknowledged by the captain of the Lake Winnipeg but was not acted upon. When it became apparent that the Lake Winnipeg was not moving to the starboard (right) side of the channel, as it was required to do in order to avoid a collision, the pilot of the Kalliopi L moved further to his starboard side of the channel. As a result of being forced into the area adjacent to shore, the Kalliopi L became a victim of "bank suction". While trying to free itself from this interaction with the starboard (southern) bank the ship yawed across the river, ran aground on the northern side of the channel and sustained damage. The precise location at which the ship grounded was at the eastern end of Smith Island, near Brockville, Ontario. The ships met in the Brockville Narrows, an area which was described as dangerous by the trial judge, due to the channel's narrow width, a bend in the channel, a cross channel component in the current, and rocks. Visibility that day was excellent. While proceeding upbound to an anchorage area, the Kalliopi L sustained damages in a second grounding. The respondents were not involved in this incident.

The ship, while damaged by these two incidents, remained capable of making its planned, projected journey with its cargo across the Atlantic. After being unloaded, it was repaired in Greece. The total time for all repairs was 27 days ‑‑ the amount of time it would have taken to repair the damage arising from the first incident alone. Fourteen days of this period was also used for the repair of damage arising from the second incident. During this time, the owners incurred costs of dry docking the ship and suffered a loss of earning capacity. The allocation of these consequential losses is the subject of this appeal.

Judgments Below

Federal Court of Canada, Trial Division (Cullen J.)

The trial judge held that the Lake Winnipeg had every opportunity to avoid problems because it had warning of the presence of the Kalliopi L and it could have calculated how to avoid meeting in the Brockville Narrows. He held that the appellants were not in any way negligent in the situation and that the respondents were completely responsible for the collision. Having so held, he considered it unnecessary to deal with the issue of apportionment of liability under the Canada Shipping Act.

With regard to damages, he held:

I feel bound on the evidence to find that 27 days dry docking was required, and the damage caused by the second grounding was coincidental to the main damage caused by the first grounding. If there had been no second grounding, the 27 days would still have been required for repairs.

Federal Court of Appeal (Pratte, Hugessen and Desjardins JJ.)

Hugessen J. noted, for the court, that, in the absence of palpable and manifest error, an appeal court would not interfere with the findings of a trial judge. As there was evidence to support each of the findings of fact, the court declined to disturb the finding that the Lake Winnipeg was entirely responsible for the collision.

On the question of damages, Hugessen J. held that the trial judge erred in finding that the entire 27 days in dry dock were due to the first grounding. He cited and quoted Carslogie Steamship Co. v. Royal Norwegian Government, [1952] A.C. 292, for the proposition that the real question to be asked in cases such as these was not whether the ship had been detained by the wrongful act of the defendant (a question which led the trial judge to conclude that the defendant must compensate for 27 days of demurrage) but rather whether, assuming that the ship was detained by the wrongful act of the defendant, damages in the amount claimed were caused by the detention. Citing The Carslogie and The Oinoussian Friendship, [1987] 1 Lloyd's Rep. 258, for the rule that the plaintiff must prove that the claimed loss was one which was actually sustained as a result of the wrongful action, Hugessen J. concluded at p. 316:

Applying the rule so stated to the admitted facts of the present case, the repairs due to the second grounding were exclusively for the account of the owners of the "Kalliopi L" and were as immediately necessary as those due to the first grounding. In those circumstances, her owners cannot recover a loss of hire and related damages for the fourteen days during which the ship would not have been a profit‑making machine even if the first grounding had not taken place.

Issues

1.Sunrise Company Limited v. The Lake Winnipeg -‑ Whether the defendants are liable for damages for the loss of use of the plaintiff's vessel for the full period of detention, without deduction for the 14 days the vessel would have been detained in any event for the repair of damages arising from a second, unrelated incident.

2.Lake Winnipeg v. Sunrise Company Limited ‑- Whether the trial judge was palpably wrong in concluding that the first incident was caused solely by the negligence of the defendant.

The Appeal ‑ Issue 1: Allocation of Damages

The Question

As in so many cases, the question posed on this appeal dictates, at least in part, the response. The submissions of the parties reveal that they view the case as posing two quite different questions.

The plaintiffs argue that having established that the defendants damaged their ship and that repair of that damage required 27 days in dry dock when the ship could not earn profits, they are entitled to damages for the whole of the 27 days, regardless of intervening damage which may have been repaired at the same time. This argument presupposes that the question for the Court is the following: was the ship detained by the wrongful act of the defendants? If the answer to this question is yes, the plaintiffs, in their submissions, should recover damages for the full term of detention.

The defendants argue that the 14 days that the ship would have been in dry dock anyway due to the second accident must be deducted from the total of 27 days in calculating damages. Implicit in this position is the assertion that the plaintiffs must establish more than the fact that the detention was caused by the defendants' negligence in order to recover damages for the full period of detention. The plaintiffs must establish not only that the defendants' wrongful act caused the detention, but also that that act caused damages (loss of earning capacity) in the amount claimed. Thus put, the question is whether the damages claimed (as opposed to the detention) were caused by the defendants' negligence. The answer to this question, the defendants say, is negative. Since the damages are for loss of earning capacity, i.e., the use of the ship as a money‑making machine, damages can be awarded only for the amount of time which the ship would have been making money but for the defendants' negligence. That period, the defendants argue, is only 13 days, since for 14 days of the 27 days of detention the ship was laid up in any event due to other causes.

The Federal Court of Appeal based its analysis on the conclusion that the proper question to ask was the second question. The trial judge erred, it concluded, in asking only the first question.

I agree with the Court of Appeal as to the question before the Court. The matter was considered by the House of Lords in The Carslogie in terms that have never been departed from. I reproduce a portion of that case relied on by the Court of Appeal, complete with the emphasis Hugessen J. added (at p. 315):

...damages are payable for the detention of a ship because she is a profit‑earning machine'. If she ceases to be a profit‑earning machine it follows that she can sustain no damage from being detained until she again becomes capable of earning profit. In other words, it is not enough to consider whether the ship was detained by the wrongful act of the defendant. It is essential to consider whether damages were caused to the plaintiff by reason of such detention. So considered, it will be seen that the problem is not solved by answering the questions: Was the ship detained and if so what was the cause of her detention?' It is essential to answer the further question: `Assuming that she was detained and assuming that she was detained by the wrongful act of the defendant, did the plaintiffs sustain damages as a result of that detention?' [Emphasis in original.]

It is thus clear that the question is not merely whether the detention was caused by the defendants' act, but whether the damage (loss of use of the ship as a profit‑making machine) has been established to be caused by that act.

The Applicable Legal Principles

In this portion of my judgment I review the authorities and legal principles with a view to ascertaining what rule should govern the issue raised by this appeal. It will be my conclusion that the authorities (largely English), in so far as they bear on the particular question before us, are impossible to reconcile entirely when viewed in terms of their results. Thus, it is impossible to attempt to apply this case or that case in rote fashion to the issue raised by this appeal. Rather, we must return to the general principles which govern the award of damages and attempt to fashion an approach which is consistent with them and which is fair and just in all the circumstances.

The cases on the question of when the liability of tortfeasor for loss due to detention should be reduced because other repairs were done at the same time, at first glance, appear fraught with uncertainty and contradiction. Fastening on superficial aspects of the cases before them rather than fundamental principle, scholars and judges have often tied their opinions to factors such as the order in which the disabling incidents occurred, the degree of disability produced by the respective incidents and the cause of the respective incidents. The result is a welter of confused and confusing jurisprudence, a state of affairs reflected in the fact that the two leading scholars commenting on it arrive at different conclusions as to the rules applicable to this case.

McGuffie, in The Law of Collisions at Sea (1961), at pp. 397‑98, sets out the following rule:

... it is necessary to effect collision repairs and it is also necessary at that time to effect owner's repairs, for example, in respect of heavy‑weather damage, breakdown of engines, loss of propeller, etc., the owner must bear the detention, so far as not increased by the collision repairs.

McGregor, McGregor on Damages (15th ed. 1988), at p. 788, on the other hand, interprets the same cases relied upon by McGuffie as authority for the proposition that the cause of unseaworthiness that arises first in time must bear the cost of the detention:

It would therefore seem clear that even where only one casualty is caused tortiously and the other without liability upon anyone, as by heavy weather, the dock expenses and loss of profits will be attributable solely to the casualty first in time. If that is the casualty caused by the tortfeasor he will be wholly liable, but if it is the casualty caused by the heavy weather the plaintiff will have no redress.

On closer examination, however, it will be seen that virtually all the authorities adhere to the same fundamental principles ‑‑ principles moreover which are generally applicable to the assessment of damages.

Perhaps the most fundamental principle governing the assessment of damages in tort is the rule that the purpose of the damages is to restore the plaintiff to the position it would have been in had the tort not occurred ‑‑ restitutio in integrum. Damages are to be full and complete, but at the same time, the plaintiff is not entitled to compensation in excess of the actual loss which he has established to have been caused by the tort. This principle was affirmed as fundamental in The Carslogie.

A number of subsidiary principles flow from the fundamental maxim of restitutio in integrum. The first is the proposition that the onus is on the plaintiff to prove its loss, including the amount of damage it has suffered. As Viscount Jowitt put it in The Carslogie, at p. 300:

My Lords, at the outset I think it is well to bear in mind the elementary principle that it is for the plaintiff in an action of damages to prove his case to the satisfaction of the court. He has to show affirmatively that damages under any particular head have resulted from the wrongful act of the defendant, before he can recover those damages. This principle applies to maritime collisions as much as it does to collisions on land.

The second subsidiary principle which must be underlined is inherent in the first. It is the fundamental requirement that the loss must be causally connected with the defendant's wrongful act before damages for it can be awarded.

A third subsidiary principle of fundamental relevance is the rule that the amount of the loss is determined not as matters existed at the time of the defendant's wrongful act, but taking into account any diminution in the loss which may have occurred between the time of that act and the trial. Referring once more to Viscount Jowitt in The Carslogie, at p. 300:

... it is well established that in considering the damages occasioned by a wrongful act all those facts which have actually happened down to the date of the trial must be taken into account.

The same rule applies in damages for personal injuries. Thus Lord Pearson stated in Baker v. Willoughby, [1969] 3 All E.R. 1528, at p. 1535:

The original accident caused what may be called a "devaluation" of the plaintiff, in the sense that it produced a general reduction of his capacity to do things, to earn money and to enjoy life. For that devaluation the original tortfeasor should be and remain responsible to the full extent, unless before the assessment of the damages something has happened which ... diminishes the devaluation.... [Emphasis added.]

These are the main principles upon which the assessment of damages depends in a case such as this. Other propositions may figure collaterally. For example, it has often been observed that the mere fact that a plaintiff gains some advantage from a tortfeasor's act does not automatically give rise to a right of contribution: see, for example, Lord Halsbury in Ruabon Steamship Company v. London Assurance (1899), 9 Asp. M.C. (N.S.) 2 (H.L.), at p. 4. But this presupposes that a legitimate claim to damages has been established on the principles set out above. Another proposition referred to in argument is the maxim that a defendant takes its victim as it finds it. That proposition however has no application where the cause said to diminish the loss occurs after the defendant's act, as in this case.

The cases dealing with the award of damages in cases similar to ours generally reflect these principles and propositions, although some may seem difficult to reconcile on their facts.

I begin with the two leading English cases, The Haversham Grange, [1905] P. 307, and The Carslogie. They are inconsistent not only with each other, but, in the case of The Haversham Grange, internally inconsistent.

In The Haversham Grange, the Court of Appeal was faced with the question of how to allocate loss between two successive wrong‑doers. The plaintiff ship, the Maureen, was first struck by the Caravellas, the resulting damage requiring that the ship be dry docked for 22 days for repairs. The following day the Maureen was hit by the Haversham Grange and suffered damage that would require six days in the dry dock to repair. Both repairs were completed concurrently, with the damage resulting from the second incident being completed prior to that arising out of the first incident.

The Registrar allowed the claims against the Haversham Grange, holding that it must contribute to the loss notwithstanding that its wrongful act occurred after another's wrongful act which would have entailed all the charged. The owners of the Haversham Grange appealed. Counsel for the Maureen argued that since the injury caused by the Haversham Grange necessitated the dry docking of the ship that it should share in the costs incurred in placing the ship in the dock. The contrary argument, namely that the second accident produced no additional expenses in this respect was advanced on behalf of the Haversham Grange but was rejected by the Court of Appeal which, at p. 313 per Collins M.R., noted:

What ought to be taken as the cost of repairing the damage done by the wrongdoer? ... In this particular case the ship was put into dock for the purpose of effecting the repairs, and the right of the shipowner was to recover against each of the tortfeasors all the costs attributable to the wrong committed by him .... the result of the two wrongs together was that the ship had to go into dock, and the whole mischief was repaired[.] A sum had to be done to ascertain what the total cost of all the mischief was, and to apportion between the two delinquents the particular part of the cost attributable to the wrong caused by each of them....

Collins M.R. then cited at p. 314, The Vancouver (Marine Insurance Co. v. China Transpacific Steamship Co. (1886), 11 App. Cas. 573), and quoted his decision in Ruabon Steamship Company v. London Assurance, [1898] 1 Q.B. 722 (C.A.), at p. 732, for the following principle that was applicable to the question of apportionment:

I think the principle of that [the Vancouver] case is that, where repairs in respect of damage for which underwriters are liable have been executed simultaneously with repairs as to which the owner is uninsured, and an expense has been incurred which would have been necessary for either purpose alone, such expense is not to be wholly attributed to one set of repairs alone, but forms a factor in the cost of each, and must therefore be divided between them in some proportion, which primâ facie would be equally.

Thus it is clear that in principle the Court of Appeal in The Haversham Grange accepted the proposition that two tortfeasors who cause consecutive injuries to a ship which are repaired concurrently must share the resultant detention costs. However, the actual disposition of the case reflected this only in part. The Court applied an apportionment rule with respect to the dock dues and other fees for the relevant period. However, it went on to hold that the detention had not been extended by the second injury and that the first collision alone should bear the loss arising from the loss of use of the ship during detention.

The Carslogie, unlike The Haversham Grange but like the case at bar, was a case where the intervening event was not the act of another tortfeasor. The Carslogie had collided with and damaged the Heimgar. It was admitted that the Carslogie was solely to blame. Due to wartime conditions, it was not feasible to have the collision damage repaired in the U.K. After temporary repairs it was arranged that the Heimgar would sail to New York for permanent repairs. During the Atlantic crossing the ship sustained heavy‑weather damage which necessitated going into dry dock for repair, quite apart from the repair of the collision damage. The repair of the collision damage took 10 days while 30 days were allocated to the repair of the damage caused by the weather. In addition, the owner took advantage of the detention to make some non‑essential engine repairs.

The Court of Appeal decided that the owner of the damaged ship should be able to recover from the tortfeasor for the detention of the ship during the 10 days that was required to repair the collision damage. This decision was, however, overturned by the House of Lords.

The House of Lords set out the fundamental principles to which I earlier alluded ‑‑ restitutio in integrum and the "elementary principle that it is for the plaintiff in an action of damages to prove his case to the satisfaction of the court", as well as the necessity of considering not only "...whether the ship was detained by the wrongful act of the defendant," but "whether damages were caused to the plaintiff by reason of such detention", viewing the ship as a profit‑making machine.

Viscount Jowitt went on, at p. 301, to reason that the plaintiff had not proved that the defendant had caused any loss arising from the detention of the ship because the second intervening cause of the detention, the weather‑damage, would have required detention for the total period of detention in any event.

Still the fact remains that when she entered the dock at New York she was not a profit‑earning machine by reason of the heavy‑weather damage which had rendered her unseaworthy. If there had been no collision she would have been detained in dock for 30 days to repair this damage. I cannot see that her owners sustained any damages in the nature of demurrage by reason of the fact that for 10 days out of the 30 she was also undergoing repairs in respect of the collision.

Viscount Jowitt noted that the non‑essential repairs to the engines of the ship would not, in the absence of the heavy‑weather damage, have served to bar the owner from recovering damages for the ten‑day period during which the collision damage was being repaired. A number of authorities were cited for the proposition that while elective procedures performed during the repair of collision damage would not reduce the liability of the tortfeasor, necessary repairs to other elements of the ship would serve as a bar to recovery for the time of detention.

To this point, the decision is clear. The plaintiff must prove that the defendant's act, viewed at the time of trial, caused the loss claimed as a result of removing it from use as a profit‑earning machine. If an intervening event would have precluded the ship's use as a profit‑earning machine during the relevant period, then the claim has not been proved and the plaintiff fails.

It is in the obiter comments on The Haversham Grange that inconsistency appears. Viscount Jowitt noted that while the Court of Appeal in The Haversham Grange case had apportioned the dock dues between the two wrongdoers, the losses arising out of the delay were attributed solely to the first wrongdoer as the ship was already incapacitated at the time of the second collision. Pointing out that there can be no logical distinction between the claim for damages for delay and for dock dues, he opined that the decision of the Court of Appeal attributing the liability for the full value of the delay to the first tortfeasor was correct. It is hard to reconcile this opinion with the conclusion in The Carslogie that the plaintiff's claim should be reduced to the extent of the delay caused by the intervening damage.

There is little to be gained by attempting to conjure up explanations aimed at reconciling the disparate results in The Haversham Grange and The Carslogie. It is more profitable to focus on the statements of principle found in the two cases. The plaintiff must prove that the loss of use of the ship as a profit‑earning machine was caused by the defendant's acts. In looking at this question, the court is not confined to the time of the first accident but must consider intervening causes. Both cases accept that the result of applying these principles is that the plaintiff's claim may be reduced to the extent that the loss of use is found due to an intervening cause unrelated to the defendant's act.

The Haversham Grange and The Carslogie, whatever the difficulties of discerning their ratios on the facts and actual decisions, recognize the propriety of taking into account successive and concurrent causes of the detention in calculating losses arising from detention. They may be distinguished from another class of cases where that approach is rejected. These are cases holding that where a ship is damaged by a tortfeasor and the owner takes advantage of the time the ship is incapacitated to effect these repairs to have other optional work done, that need not be brought into account. Many of the cases relied on by the appellant fall in this category: see The Ruabon, supra, The Acanthus, [1902] P. 17; The Chekiang, [1926] A.C. 637; The Ferdinand Retzlaff, [1972] 2 Lloyd's Rep. 120, and The Oinoussian Friendship, supra. In such circumstances the owner is not required to bring the time which would have been spent on his own repairs into account. The cases typically refer to the owner's work as not having been "necessary". I view such cases as holding that the detention is not causally connected to the optional repair work. The work, not being immediately necessary, could be done at any time or with other owner‑related work. Thus there is no causal link between the detention of the ship and the work which the owner decides, as a matter of convenience, to have done at the same time. As a consequence, the defendant's act must be viewed as causing the whole of the detention and no set‑off for the owner's work is allowed.

In the result, I conclude that the authorities do not establish that the person responsible for the initial damage must always bear the whole of the loss resulting from detention, regardless of intervening causes which may also require detention. The authorities recognize that the goal of the award of damages must be to restore the plaintiff to the position it would have been but for the tortious conduct of the defendant ‑‑ no less and no more. To that end they insist that the matter is essentially one of determining what loss the plaintiff has established to have been caused by the wrongful act of the defendant, viewing the matter as it stands at the time of trial and taking into account any factors which have diminished the loss in the interval following the defendant's tort. In particular, if a subsequent incident intervenes which makes work necessary and that work is done at the same time as a previous incident, it is open to the court to conclude that because the ship would in any event necessarily have been out of commission during the time required to effect the repairs required by the second incident, the plaintiff has not established that the detention to that extent was caused by the defendant's act.

I take the general principles to which I have alluded as requiring that, to the extent that an event occurring after the tort and independently of the tort diminishes the loss caused by the tortious event, that diminution must be reflected in the award for damages. The next question is how that is best accomplished.

There are two possibilities. The first is that taken by the Federal Court of Appeal in this case. To the extent the loss is caused by a cause other than the tort, it is not compensable. On this approach, the plaintiffs would be entitled to damages for loss of use of their ship for 13 days, being 27 days less the 14 days that the ship would have been out of use in any event due to an unrelated cause. This was essentially the approach adopted in The Carslogie, where the plaintiff received nothing from the defendant because the subsequent event would have required detention for a longer period than required for the repair of the damage caused by the defendant.

This approach, while effecting a certain division of responsibility which might be considered just in some cases, suffers from defects. Where the subsequent event causes greater detention than the first, the plaintiff may be unable to recover anything against the defendant who caused the first loss (as in The Carslogie), a result which some would argue to be unfair. Moreover, it can be argued that applying strict logic, adoption of this approach might result in the defendant's recovering nothing in the case where its ship is damaged by two consecutive tortfeasors and the time required to effect both sets of repairs was the same.

The following example illustrates this conclusion. Assume that the ship was damaged in two separate and unrelated tortious collisions, and that the repair of the damage caused by each requires 10 days to complete. The ship is then taken out of service for 10 days and both repairs are performed concurrently. From the perspective of the first tortfeasor the fact that the ship had to be taken out of service for 10 days to repair the damage caused by the second tortfeasor would serve to bar the recovery of damages for the losses suffered during the detention. The second tortfeasor could obviously make precisely the same assertion and argue that it should not be held liable for the detention as the requirement to repair the damage caused by the first tortfeasor meant that the ship would not have been "a profit-earning machine" during the repair period even in the absence of the damage caused by the second tortfeasor. In short, where there are two operative causes of the detention, it can be argued by the parties respectively responsible for each that to the extent the detention was caused by the others' act, it is not responsible. This would serve to bar the owner from recovering any detention losses caused by concurrent repairs due to two separate incidents that the owner, by default, would end up bearing the loss.

This result would appear, ab initio, an incorrect one and particularly unfair when all of the damage was tortiously caused. To avoid such result, it is necessary to introduce a factor other than pure causation. What is required is a rule that says (a) that one of the two causes of the concurrent loss is responsible (e.g., the "first in time" rule) or (b) that the concurrent delay should be apportioned between the two causes of the concurrent loss.

This leads me to the second way in which the diminution in a loss due to detention caused by a subsequent event can be recognized, pro rata apportionment. This was the approach employed with respect to dock dues in The Haversham Grange at p. 314:

... where repairs in respect of damage for which underwriters are liable have been executed simultaneously with repairs as to which the owner is uninsured, and an expense has been incurred which would have been necessary for either purpose alone, such expense is not to be wholly attributed to one set of repairs alone, but forms a factor in the cost of each, and must therefore be divided between them in some proportion, which primâ facie would be equally.

This approach is philosophically compatible with the contributory negligence approach to damages now prevalent in virtually all areas of tort law, and reflected in legislative provisions such as the Canada Shipping Act, supra, and the Ontario Negligence Act, R.S.O. 1980, c. 315. (In Stein v. The Ship "Kathy K", 1975 CanLII 146 (SCC), [1976] 2 S.C.R. 802, this Court held that provincial contributory negligence legislation applied to marine collisions within the territory of the province.)

Section 638 of the Canada Shipping Act provides:

638. (1) Where, by the fault of two or more vessels, damage or loss is caused to one or more of those vessels, to their cargoes or freight, or to any property on board, the liability to make good the damage or loss shall be in proportion to the degree in which each vessel was in fault.

(2) Where, having regard to all the circumstances of the case, it is not possible to establish different degrees of fault, the liability shall be apportioned equally.

Similarly the Ontario Negligence Act in ss. 2, 4, and 5 recognizes and endorses the principle of apportionment:

2. Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering loss or damage for such fault or negligence, but as between themselves, in the absence of any contract express or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.

3. In any action for damages that is founded upon the fault or negligence of the defendant if fault or negligence is found on the part of the plaintiff that contributed to the damages, the court shall apportion the damages in proportion to the degree of fault or negligence found against the parties respectively.

4. If it is not practicable to determine the respective degree of fault or negligence as between any parties to an action, such parties shall be deemed to be equally at fault or negligent.

Contributory negligence per se, although arguably available on the legislation, was not canvassed in the case at bar. In the absence of findings of fact below and submissions of law on the applicability and impact of the legislation cited above, it is impossible to ascribe contributory negligence arising from the second incident to the respondents.

I see no reason, however, why the general principle of apportionment discussed in The Haversham Grange should not apply. This approach would recognize that there were two causes for the detention of the ship and the consequent loss of earning capacity ‑‑ the defendants' tortious act and the subsequent grounding incident. The question then is this: what in fairness is required to restore the plaintiffs to the position they would have been in had the first incident not occurred? The answer must be that 13 days alone is solely attributable to the defendants' fault and the defendants must bear the full amount of the loss resulting from detention for this period. The remaining 14 days of detention were used to repair damages caused by the defendants' tort as well as damages caused by the intervening incident. Fairness suggests that the loss flowing from this period be divided equally between the two causes of detention. In the result, the defendants would be required to pay damages for 20 days of detention.

This rule of apportionment might be summarized as follows:

(1) where there are two or more contributing causes to the loss of use of the vessel as a profit‑earning machine; and

(2) each cause, considered independently, makes it necessary to detain the vessel to effect repairs, which are made concurrently;

(3) then, to the extent that the repairs are effected concurrently (i.e., the same time is used to effect the two or more sets of repairs) the loss due to detention is equally allotted between the two or more causes; and

(4) to the extent that the time is not used concurrently to repair both sets of damage, the resultant losses are borne solely by the party that caused those losses.

This rule conforms with the fundamental principle that the plaintiffs are entitled to be placed in the same position as they would have been in had the tort never occurred. It embodies all the subsidiary rules that flow from this principle. It recognizes that the plaintiffs are entitled only to such loss as it can prove to have been caused by the defendants' act. It permits recognition of diminution of the loss of use claim due to intervening causes. It restricts the extent of any such diminution to other factors which can be shown to have actually caused the particular detention in question. It accords with the modern philosophy of apportioning damages between successive causes of loss. It avoids intricate arguments about factors such as the order of accidents, their impact on the use of the ship, and causation. And it has the advantage of being generally applicable to all causes and producing a fairer result than the all‑or‑nothing approach exemplified by The Carslogie.

Application of the Rule to the Case

As already indicated, application of the apportionment approach to the facts of this case entitles the plaintiffs to claim damages for 20 days' loss of use of its ship, being the 13 days exclusively required for the repair of damage caused by the defendants plus one‑half of the balance of the time which was used for those repairs as well as those caused by the subsequent grounding, for a total of 20 days.

The Appeal of the Lake Winnipeg v. Sunrise Company Limited

Issues

1.Did the trial judge palpably err in finding:

(a)the Lake Winnipeg was in mid‑channel when she met the Kalliopi L?

(b)the Kalliopi L had "reacted correctly" in her helm and engine manoeuvres?

2.Did the trial judge palpably err in:

(a)blaming the Lake Winnipeg for not staying below the Brockville Narrows;

(b)blaming the Lake Winnipeg for not having her Master on the bridge;

(c)not blaming the Kalliopi L for failing to slow to a moderate speed before meeting the Lake Winnipeg, and for failing to give a danger signal.

3.If both vessels are to blame, does the contributory negligence on the part of the Kalliopi L entirely bar recovery?

The Law -‑ Overturning a Trial Judge's Finding of Fact on Appeal

Stein v. The Ship "Kathy K", supra, is the leading decision of this Court on the appellate review of trial judge's decisions in maritime collision cases and is cited by both parties for the applicable law. Ritchie J. stated for the Court, at p. 806:

... Chief Justice Jackett, who delivered the judgment on behalf of the majority of the Court of Appeal, appears to have ignored the various findings of fact made by the trial judge, in favour of his own appreciation of "the balance of probability"....

With the greatest respect for the learned Chief Justice, I do not consider that this approach to the determination of the facts is justified under the circumstances, particularly having regard to the fact that evidence was taken from the individuals in charge of the respective vessels and that findings of credibility were involved in the trial judge's conclusions. I think that under such circumstances the accepted approach of a court of appeal is to test the findings made at trial on the basis of whether or not they were clearly wrong rather than whether they accorded with that court's view of the balance of probability.

After citing and quoting a number of authorities with respect to the standard to be employed when reviewing trial judge's findings of fact, Ritchie J. concluded, at p. 808:

These authorities are not to be taken as meaning that the findings of fact made at trial are immutable, but rather that they are not to be reversed unless it can be established that the learned trial judge made some palpable and overriding error which affected his assessment of the facts. While the Court of Appeal is seized with the duty of re‑examining the evidence in order to be satisfied that no such error occurred, it is not, in my view, a part of its function to substitute its assessment of the balance of probability for the findings of the judge who presided at the trial.

It was decided that the Court of Appeal had erred in supplanting the trial judge's findings of fact with its own and the determination of fault made at trial was restored.

Decisions Below

The Trial Judge

The trial judge reached the following conclusions with respect to the facts:

1.The Kal L made the necessary security call as a downbound vessel and the L Wpg was aware of the downbound vessel.

2.The Kal L made visual contact with the L Wpg at a distance of at least three miles, and possibly more because it was possible to see the top structure over the islands.

3.A signal blast was given by the Kal L (requiring a port to port passing) and it was heard and acknowledged by the L Wpg.

4.The Pampero and the Kal L passed safely by each remaining in her own channel.

5.The Kal L continued in her own channel throughout the passing, and was NOT subject to bank suction after passing the Pampero as suggested by Captain Moffett.

6.The L Wpg was in the centre of the channel and as she moved westward had a bow overhang placing her in the southern downbound channel.

7.The L Wpg never moved to starboard.

8.No danger signal was necessary from the Kal L in the circumstances.

9.The real problems began when the Kal L was forced to go further to starboard and closer to shore.

10.The speed of the L Wpg was less than 8 knots over the ground, the speed of the Kal L at 90 revolutions was approximately 9 1/2 knots overground with no current, and 10 1/2 to 11 knots over the ground with the current. The speed limit was 13 knots.

11.The current strength was approximately two knots, the width of the channel 450 feet and in addition to the two knots current, there is a south set to the current in the area of passing.

12.The ships were close together, probably 60 feet, when passing.

13.It was a clear day, with no winds or fog or rain. Visibility was excellent.

14.There was no failure of communication on the Kal L neither between the chief officer and the helmsman nor between the bridge and the engine room.

15.The first inkling that the captain of the Kal L had about trouble was the sound of the reversing of the engines.

16.The Kal L had the right of way as the downbound ship.

17.It was dangerous to pass in the narrows and preferable to wait until a downbound ship clears the Narrows.

The trial judge dismissed the assertions that the Kalliopi L was negligent with the following observations:

(1)[The Kalliopi L] was travelling within the speed limit and had every right to expect the upbound ship to move to starboard. She was using diesel fuel enabling better navigational response.

(2)Had she slowed down, her ability to navigate would have decreased, (and remember, she is travelling with a current, and all concede it is more difficult to navigate downbound with a current than upbound against a current ‑ hence the rule of right of way).

(3)No navigational aids were faulty.

(4)The pilot may have had other options but all concede it was doubtful they would have been more successful and some suggested any other move might well have caused a collision or a grounding, and this is after 7 years opportunity to give the situation careful thought. Captain Boucha did not have that luxury. The pilot on the Kal L faced an emergency situation, not of his own making, and reacted correctly and followed the best possible option in the circumstance.

(5)Again, it was suggested the five whistle danger signal should have been given. At the outset there was no cause for alarm. It is normal for two ships meeting to both be at the centre of the channel, and move to starboard at a time directed by the downbound vessel. The answers vary about how late the signal should be given, but even Captain Moffett suggested it was not unusual to give it at the very last minute and even to pass as close as 5 feet one from the other. There clearly was no need for the five signal blasts and by the time the Kal L was in serious trouble it was too late to benefit from any danger blasts.

For the reasons given above, the defendants are one hundred per cent responsible for the grounding of the Kalliopi L.

The Court of Appeal

The Court of Appeal reviewed the evidence in detail and concluded that it was capable of supporting the trial judge's conclusion. Accordingly, it declined to interfere.

Analysis

1(a)Whether the trial judge was in manifest and palpable error in finding the Lake Winnipeg was in mid‑channel when she met the Kalliopi L.

The Lake Winnipeg submits that the only witness that clearly stated that the Lake Winnipeg was in mid‑channel at the time of the meeting was Dionne and that his testimony was suspect because of his distance from the scene. It also submits that the trial judge erred in inferring that the ship remained at mid‑channel from the evidence of Boucha and Moshogiannis that it was in this position prior to the meeting of the ships.

Having reviewed the evidence on this matter, I conclude that it was open to the trial judge to reach the conclusion he did.

1(b)That the trial judge was in manifest and palpable error in finding the Kalliopi L had "reacted correctly" in her helm and engine manoeuvres.

The Lake Winnipeg disputes the trial judge's findings both with respect to the location of the Lake Winnipeg and with respect to the connection between the meeting of the two ships and the grounding of the Kalliopi L. In respect to the latter claim it contends that even if the trial judge was correct in finding the Lake Winnipeg was in the mid‑channel at the time of the meeting, there was "no, or at worst little, causal connection between that fact and the grounding."

After reviewing the material that led the trial judge to conclude that the Lake Winnipeg was the cause of the Kalliopi L's misfortune, I find myself in agreement with the Court of Appeal's assessment that even were the trial judge in error with respect to the correctness of the Kalliopi L's response to the impending collision, the effective cause of the grounding remained the wrongful act of the Lake Winnipeg and the manner in which it forced the Kalliopi L's into the perilous position close to the southern bank of the river.

2(a)Whether the trial judge fell into manifest and palpable error in fact and erred in law in blaming the Lake Winnipeg for not staying below the Brockville Narrows.

This issue and the following one are somewhat peripheral to the basis upon which the trial judge found the Lake Winnipeg liable for the grounding. In substance the trial judge appears to have taken the position that: (a) the Kalliopi L clearly had the right of way; and (b) it was dangerous to pass in the narrows and preferable for the upbound ship to wait until the downbound ship cleared the narrows. These observations led the trial judge to conclude:

The first matter of significance is that the downbound Kal L had the right of way, imposing a heavy obligation on the L Wpg to see to it that appropriate action was taken to facilitate safe passage. I have indicated that it was possible to pass in the narrows, but almost to a man the witnesses said it was to be avoided if at all possible because the Brockville Narrows is a dangerous area of the seaway. The L Wpg could have slowed down or anchored until the Kal L was out of the narrows. It did neither.

I do not read the other parts of the trial decision as imposing liability on the Lake Winnipeg by reason of the fact that it chose to enter the narrow channel, but rather as referring to this choice as imposing a duty on the Lake Winnipeg to ensure that its actions did not threaten the safety of the downbound ship as it negotiated this part of the channel. This approach to this issue was also adopted by the Court of Appeal. Even were it to be decided that the trial judge erred in concluding that it would have been preferable that the Lake Winnipeg have slowed to avoid meeting in the narrows, this would not constitute a significant or a reversible error.

2(b)Whether the trial judge fell into manifest and palpable error in fact and erred in law in blaming the Lake Winnipeg for not having her Master on the Bridge.

Although the trial judge commented on the absence of the Master from the bridge of the Lake Winnipeg, this observation did not in any way form part of the basis of the finding of liability. At best, this observation might have helped to explain why the Lake Winnipeg happened to be sailing in the middle of the channel and thereby crowded the Kalliopi L resulting in its grounding. It did not, however, bear directly on the basis of liability as it was the location of the ship in the water and not that of the Master on the ship that was the relevant fact. Therefore, even if this finding were rebutted, it would not affect the trial judge's conclusions with respect to liability.

2(c)Whether the trial judge fell into manifest and palpable error in fact and erred in law in not blaming the Kalliopi L for failing to slow to a moderate speed before meeting the Lake Winnipeg, and for failing to give a danger signal.

It is not clear on the evidence that the Kalliopi L was to blame for failing to slow or that the trial judge made an error in this respect. As with the other issues discussed above, I agree with the Court of Appeal's conclusions with respect to the findings of the trial judge in this regard.

3If both vessels are to blame, does the contributory negligence on the part of the Kalliopi L entirely bar recovery?

In view of my conclusion that no fault on the part of the Kalliopi L has been established, it is unnecessary to consider this issue.

Conclusion

I would allow the appeal (Sunrise Company Limited v. The Lake Winnipeg) to the extent of substituting a remedy based on apportionment for the set‑off method used by the Court of Appeal. The appellants are entitled to damages against the respondents for the loss of the use of their vessel for a total of 20 days, being the 13 days attributed exclusively to their conduct plus one‑half of the fourteen days used to repair damages caused by the respondents and damages attributable to the appellants.

I would dismiss the appeal in Lake Winnipeg v. Sunrise Company Limited.

Costs of both the appeals here and below will follow the event.

Appeal by Sunrise Company Limited and Ceres Hellenic Shipping Enterprises Ltd. allowed with costs, Gonthier and McLachlin JJ. dissenting in part.

Appeal by the Ship Lake Winnipeg and Her Owners dismissed with costs.

Solicitors for Sunrise Company Limited and Ceres Hellenic Shipping Enterprises Ltd.: Brisset, Bishop, Davidson, Montréal.

Solicitors for the Ship Lake Winnipeg and Her Owners: McMaster Meighen, Montréal.

• Chief Justice at the time of judgment.