COURT OF APPEAL - Reports of Cases Relating to Maritime Law : containing all the decisions of

Dec. 15, 16, and 18, 1914.

(Before Lord Cozens-Ha r d y, M .R ., Ke n n e d y

and Sw in p e n Ea d y, L.JJ.)

Asso c iated Po r t l a n d Ce m e n t Ma n u f a c

tu r e r s (1900) Li m i t e d v. As h to n, (a) A P P E A L P R O M T H E K I N G ’ S B E N C H D I V I S I O N . C h a rte r-p a rty — " T h ir d s ” or s h a rin g system —

Owner and m aster— Loss o f cargo through unseaworthiness o f vessel— L ia b ilit y o f owner

— P o s itio n of master.

A ketch was owned by two co-owners, and worked on the basis th a t the m aster took tw o -th ird s o f the gross fre ig h ts , ou t o f w hich he p a id the mate and the crew, the provisions, and expenses o f the voyage. The owners took on e -th ird o f the gross fre ig h ts , subject to deductions f o r p o r t dues.

The owners provided f o r the upkeep a n d in s u r  ance o f the vessel. The ketch loaded a cargo un de r a ch a rte r-p a rty made by the master, w hich cargo was lost, as was alleged by the owners thereof, throu gh the unseaworthiness o f the vessel. A n actio n was accordingly brought by the owners o f the cargo ag ainst one o f the c o -o w n e rs o f th e k e tc h .

I t was decided by P ic k fo rd , J . (12 Asp. M a r. Law Cas. 501; 110 L . T . Bep. 776) th a t the alleg atio n o f the p la in tiffs th a t the ketch was unseaworthy a t the tim e when she sailed was w e ll-fo u n d e d ; and th a t the c o n d itio n o f the ketch was not due to the lo ad ing berth a t w hich she was moored being defective or dangerous. B u t P ic k fo rd , J.

decided th a t the contract o f c h a rte r-p a rty was made by the m aster pe rson ally ; a n d th a t the defendant was therefore no t liable.

The p la in tiffs appealed. ,

H eld, th a t the find in gs o f P ic k fo rd , J . m fa v o u r o f the p la in tiffs on ths issues o f unseaworthiness a n d c o n d itio n o f the vessel were a b u n d a n tly supported by the evidence, and could n o t there

fo re be disturbed by the C o u rt o f Appeal.

B u t held, th a t there was a contract o f charter- p a rty between the p la in tiffs and the defendant, although there was no reference the re in n o r in the b ill o f la d in g to the “ owner ” o f the vessel;

th a t the m aster was not bailee o f the vessel, but was the agent or servant o f the o w n e r; and th a t the re a l control o f the vessel rested w ith the defendant, and not w ith the master.

Bernard v. Aaron (9 J u r. N . S. 470) distinguished.

Steel v. Lester (37 L . T. Bep. 642; 3 C. P . D iv.

121) applied. #

D ecision o f P ic k fo rd, J. (ubi sup., p. 501) on this p o in t reversed.

Ap p e a l by th© p la in tiffs fro m th© decision of P ickfo rd , J. (u b i sup.) and cross-appeal by the

defendant. „ . .. .

The facts of the case sufficiently appear trom the judgments.

Compston, K .C . (with him A. Cohen), for the appellants, referred, on the question of the con

tract of charter-party, to

D r y v . B osw ell, 1 Cam p. 329 ; F ra z e r v . M a rs h , 13 E a s t, 238 ;

(a) Reported by E. A. SOBAt o h l e y, Esq., B a rrister-a t-L a w .

M A R IT IM E LA W CASES. 41

Ap p. ] As s o c i a t e d Po r t l a n d Ce m e n t Ma n u f a c t u r e r s (1 9 0 0 ) Li m. v. As h t o n. [ Ap p*.

C o lv in v . N ew be rry, 1 C l. & F . 2 8 3 ;

B a u m w o ll M a n u fa c tu r von C a rl S cheible r v.

Furness, 7 A sp . M a r. L a w Cas. 59, 130, 263 ; 68 L . T . R ep. 1 ; (1893) A . C. 8 ;

M anchester T ru s t L im ite d v . Furness, W ith y , a n d Co. L im ite d , 8 A sp . M a r. L a w Cas. 5 7 ; 73 L . T . R ep. 1 1 0 ; (1895) 2 Q. B . 539 ;

B e rn a rd v . A a ro n , 9 J u r. N . S. 470.

The defendant’s cross-appeal was then heard.

Roche, K.C . (with him D u n lo p ), for the cross

appellant, referred, on the question of the unsea

worthiness of the vessel, to

The Moorcock, 6 A sp. M a r. L a w Cas. 357, 3 7 3 ; 60 L . T . R ep. 6 5 4 ; 14 P . D iv . 64.

N o reply on this question was called for.

Lord Cozens .Ha r d y, M .R .— I t is impossible in my view to differ from the finding of the learned judge in the court below upon the question of the unseaworthiness of the vessel.

Ke n n e d y, L .J .— I agree.

Sw in f e n Ea d y, L.J.— I agree.

Roche, K.C . and D u n lo p , for the respondent to the plaintiffs’ appeal, referred, on the ques

tion of the contract of charter-party, to

Thom as v. E d w a rd s, 2 M . & W. 215 ; 2 Sru. L . CaB.

1 1 th e r it . , p. 390 ;

B oon v . Q uance, 102 L . T . Rep. 443 ; C u tle r v . W indsor, 23 M ass. R ep. 335 ;

Steel v . Lester, 37 L . T . R ep. 642 ; 3 C. P . D iv . 121 ;

The F a n n y ; The M a t h ild a , 5 A sp . M a r. L a w Cas.

75 ; 48 L . T . R ep. 7 7 1 ;

A b b o tt’s L a w o f M e rc h a n t Ships and Seamen, 1 4 th e d it., p. 63.

[Lord Cozens-Ha r d y, M .R . referred to Jones v.

Owners o f S h ip A lice and E liz a (3 B. W . C. C.

495). Ke n n e d y, L.J. referred to Carver’s Law of Carriage by Sea, 5th edit., s. 853.]

Gompston, K.C. replied on this question.

C u r. adv. v u lt.

Dec. 18, 1914.—The following written judg

ments were delivered:—

Lord Cozens Ha r d y, M .R — This action is brought to recover the amount of the loss of a cargo of cement shipped at a wharf belonging to 4he plaintiffs to Fowey in a ketch called the M y rtle . The M y rtle sank in calm weather in the Channel. The plaintiffs alleged and the defen

dant denied that she was unseaworthy when she sailed, and that the loss was due to that. This issue has been found by Pickford, J. in favour of the plaintiffs. I t was alleged by the defendant, and denied by the plaintiffs, that the condition

° f the ketch was due to the berth being defective dangerous. This issue has also been found hy Pickford, J. in favour of the plaintiffs. W e nave already held that these findings by Pick- tord, J. are abundantly supported by the evidence, and cannot be disturbed by us.

There was a third issue: The plaintiffs alleged at|d the defendant denied that there was a contract between the plaintiffs and the defendant.

(rnd this issue was found by the learned judge in a^our of the defendant, and judgment was entered for the defendant. From this judgment

ce plaintiffs appeal.

I t is admitted that the defendant was the

° wner of the M y rtle , though at some date, not 0 early ascertained, Smith became co-owner.

Vo l. X I I I . , N . S.

For simplicity I shall treat Ashton as sole owner.

I t is also admitted that Cole was the master. I t is not disputed that the M y rtle was being worked on “ the thirds system” and that the master took two-thirds of the gross freights, and thereout paid the mate and the craw and the cost of the provisions and expenses of the voyage. On the other hand, the master handed over to the owner one-third of the gross freights less port dues, the owner providing the ship and paying for her upkeep.

In this state of things, two documents were executed by Cole: (1) A charter-party, dated the 11th June 1913, by which Cole, described only as

“ of the good ship or vessel called the M y r tle ,”

chartered the M y r tle to the plaintiffs to convey cement from the charterers’ wharf to Fowey at certain rates of freight. I t is not necessary to refer in detail to the terms of the charter-party.

(2) A bill of lading dated the 17th June 1913 in which Cole is described as “ master of the said ship.” The conditions of the charter-party are incorporated.

In neither document is there any reference to the owner. The defendant contends that the only contract was with Cole, and that there is nothing to show that he was agent for, or servant of, an undisclosed principal. I am unable to accept this view. The observations of Lindley, L.J. in M anchester T ru s t L im ite d v. Furness, W ith y , and Go. L im ite d (ub i sup.) are important on this point. [H is Lordship read them, and continued:]

I think all tbe facts of the case must be looked at to ascertain whether Cole was really a bailee of the M y r tle or was the agent or servant of the owner. In truth this is a question of fact rather than of law. Unfortunately there is nothing in writing to define the relations between the owner and Cole. The owner did not give evidence, either in court or by commission. W e are left to spell out the truth as best we can from admitted facts.

Cole says he usually arranged the freight, as he did in this instance. He speaks of his “ wages ”

— a word to which I do not wish to attribute undue importance, but which oertainly is not what a bailee or hirer would be likely to use. He admits that he was appointed by the owner and could be removed at the end of the voyage, though not— except, I presume, on the ground of mis

conduct— during the course of the voyage.

Pickford, J., contrary, I think, to his real opinion, thought he was bound by B e rn a rd v.

A a ro n (9 Jur. N . S. 470), decided in 1863, which, as he said, could scarcely be distinguished from the subsequent case of Steel v. Lester (37 L. T.

Rep. 642 ; 3 C. P. Div. 121) decided in 1877. A careful examination of B e rn a rd v. A a ro n (ubji sup.) satisfies me that that case does not really assist us. In the first place, the sole question was whether Sharpley, one of two co-owners, who ha'1 not appointed the master, was liable for the acts and defaults of the master appointed by Aaron, the other co-owner. I t was held that Aaron had hired Sharpley’s share. In the Becond place, it was an action of tort, and this is an action ex contractu. I t is worth mentioning that B e rn a rd v. A aro n (u b i sup.) appears never before to have been cited, and certainly it has not been treated as an authority laying down any principle.

On the other hand, Steel v. Lester (u b i sup.) is a direct authority in point. I t has b e e D recognised

M A R IT IM E LA W CASES.

Ap p.] ^As s o c i a t e d Po r t l a n d Ce m e n t Ma n u f a c t u r e r s (1900) Li m. v. As h t o n. [A ,p p;

by the text writers: (see Carver’s Law of Carriage by Sea, 5th edit., sect. 49). The vessel there was worked on “ the thirds system.” The facts are in all material points identical with those ot the present case, except that the owner took one-tbird of the net profits, whereas in the present case the defendant Ashton took one-third of the gross profits. That distinction might be of importance if it were necessary for the plaintiffs to establish a partnership between the defendant and Cole, but not otherwise. As was pointed out by Lindley, J., the arrangement did not amount to a demise or anything of the kind. His Lordship said (at pp. 127,128 of 3 C. P. D iv : “ The facts are that for about three months after the defen

dant had bought this ship, he traded with it on his own account, employing Lilee as skipper at standing wages, before the passing ot the Merchant Shipping Act 1873. T h a t arrangement was altered, and the question is the true ettect of the alteration. I will first consider what it was.

I t was this, that instead of Lilee being employed at standing wages, the defendant Lester, still remaining owner, allowed Lilee, who was master, to take management of the ship on the terms that Lilee should pay Lester one-third of the profits.

W h a t is the true substance and result or that arrangement? W e are asked to say that it amounted and was equivalent to a demise ot the ship by the owner to the master, throwing the whole responsibility of the management on the master and taking it off the shoulders of the owner. I do not think such an arrangement amounted to a demise or anything of the kind.

I look on it either as a mere mode ot paying Lilee for his services— the owner paying him a share of profits instead of fixed wages, and retain- in s control over the master, but leaving tbe master to choose his ports and m en; or it was this, viz., that the defendant Lester, still remain

ing owner, became partner with the master for the adventure, sharing the profits with him. I rather think that the latter is the true view. But in either view the result is that the sloop was managed by Lilee for the joint benefit of himselt and the owner. T hat is a consequence from which there is no escape. The true conclusion on the facts is that Lilee was either the partner or agent of the owner, and if partner he was still agent of the owner for the managment ot the vessel. I do not think the agreement between them amounted to a demise of the ship, so as to render the master solely responsible. The real control rested with the defendant, not with the master, and that is perhaps the critical test. _

The respondent’s counsel referred to the decision of this court in Boon v. Quance (102 L . T. Rep. 443) as laying down that there can be no contract ot service between the owner and the master ot a vessel worked on “ the thirds system, and that the relationship must be that of bailment. B ut in Jones v. Owners o f S h ip A lice a n d E ltz a (J B W 0 0 495) it was clearly explained that such was not the effect of the decision in Boon v.

Quance (u b i sup.). I t is a question of tact to be decided upon the evidence in each case: (see also S m ith v. K o rlo ck, 109 L . T. Rep. 196). ,

Moreover the question under the Workmens Compensation Act 1906 is whether the relation- Bhip of master and servant exists, and an answer to that question in the negative would be m no way decisive upon the question whether the

owner of a vessel is answerable for the contracts made by the master. As was pointed out in Steel v. Lester (u b i sup.), the question is whether the master was agent of the owner tor the management of the vessel. Cases under the Workmen’s Compensation Act 1906 are of little

assistance. . . . . i

The result is that in my opinion the appeal must be allowed and judgment entered for the plaintiffs for the amount claimed.

Ke n n e d y, L .J .— In this case the court has decided to affirm the judgment of Pickford, J. in so far as he held that the defendant s vessel the M y r tle was unseaworthy for the voyage in question. I t has also decided that that unsea

worthiness was not due to any fault ot the plaintiffs in regard to the condition of the berth in which the M y r tle lay at the time she took the cargo on board; and the unseaworthiness unquestionably caused the loss of the plamtiiis cargo on board the M y rtle . , .

The only question left for our judgment is whether, in relation to timecharter-party, the bill of lading, and carriage of the goods, Cole, the master of the M y rtle , was or was not the servant or agent of the defendant, who was the managing owner of the vessel, the alternative being that the master was the hirer of the vessel from the defendant, and, therefore, to be regarded as an independent contractor solely liable for the unsea worthiness.

The question really which I have so stated may be Btated in the terms in which, in the case of B a u m w o ll M a n u fa c tu r von C a rl Scheibler _ v.

Furness (u b i sup.), Lord Herschell put the question in that case, in which the facts were not an alleged demise to a master, but an alleged demise to a charterer. Using the language as it would be applied to the present case and quoting Lord Herschell, the question is whether there was a demise of this ship, or if not, strictly speaking, a demise, was there an agreement which put the vessel altogether out of the power and control of the then owner, and vested that power and control in the master, so that during the time that the hiring lasted she must be regarded as the vessel of the master and not as the vessel of the owner.

Now,in the present case there is not, as there was in the case from which I have quoted the language of Lord Herschell, a written agreement defining the terms on which the relation between the master and the defendant commenced or con

tinued to exist. There is language used in the evidence, as appearing in the shorthand notes, which leads one to the impression that there pro

bably was a letter, or may have been two letters which related to the arrangement— I shall use a neutral word—between the master and the defen

dant. B ut no document has been produced, and we have come to a conclusion upon that which is truly an inference from facts, upon evidence not altogether satisfactory and possibly incomplete, which depends upon the statements of the mastei himself and also of a person named Smith, who was a co-owner with the defendant, the managing owner, and who was called to give evidence for the defendant. The owner of the ship, the defen

dant himself, was not called, and the statement in the evidence, which I see no reason at all to dis

believe— I do not think it would be right to do so

—is that his absence waB due to illness. But whatever the cause, we have to spell out the

M A R IT IM E LA W OASES.

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Af f. ] As s o c i a t e d Po r t l a n d Ce m e n t Ma n u f a c t u r e r s (1 9 0 0 ) Li m. v. As h t o n. [ Ap p.

relations of the parties for oral evidence, and the inferences to be drawn from certain documents, the bill of lading and the charter-party, which are before us.

According to the evidence of Smith, when asked how the vessel was managed, he said that Ashton might have written to Cole saying he wanted Cole to work the vessel. I t is, of course, always unwise and very often unjust to press par

ticular words or expressions of a witness who is not a specially skilled witness, upon some matter upon which he may be presumed to have accurate knowledge. B ut I think the fact that the defen

dant applied, so to speak, to Cole to work the ship is to some slight extent, at any rate, rather calculated to give the impression that he was applying for a servant or agent rather than the impression of engaging a person who was brought into business relations to contract for the use of the vessel as a hirer.

Again, although in regard to these small vessels it may be—I do not know how it is in the present case— that the parties are' not in a high sense business persons, if there was no written agree

ment considering the change which a hiring of the vessel introduces in the relations of the parties who seek as shippers of goods to do business with the ship, I think it is to some extent more pro

bable that the termB, which nobody sought to reduce accurately into writing, were terms such as not infrequently exist with regard to some vessels in an oral employment of a captain to work them.

And more, it appears that this master was on more than one occasion wanted by the defendant to work this ship ; and the second engagement it is Btated was exactly in the same terms as the first.

W h a t were those terms ? The terms were that the master was to take two-thirds of the gross earnings and the owners to receive one-third of the gross profits after certain deductions. Those deductions appear upon the evidence of the master and of Smith to have been of three kinds : Harbour dues, towage dues, and brokerage. As an amount, I daresay those deductions would not often be considerable ; they might be very small. But, at any rate, it is a case in which deductions were made by the master from the gross takings before any portion of those takings was payable by him or payable by those over whom he had control to the owners at all. W ell, though to some extent the comment is applicable to all, I do think that the deduction of brokerage has some significance, because, assuming it was simply a demise of the ship to the master, it would not seem to be in the ordinary course, at any rate, that the master, who had the responsibility of working the ship, should be relieved of the cost of entering into the mercantile engagements of the

W dokumencie Reports of Cases Relating to Maritime Law : containing all the decisions of the courts of law and equity in the United Kingdom, and selections from the more important decisions in the colonies and the United States, 1918 Vol. 13 (Stron 86-91)