2004 BCSC 460 North King Lodge Ltd. v. Gowlland Towing Ltd. et al

Before: The Honourable Mr. Justice Sigurdson

Reasons for Judgment

Counsel for the Plaintiff:	J.W. Bromley
Counsel for the Defendant, Gowlland Towing Ltd.:	D.F.McEwen Q.C. G.G. Blue
Counsel for the Defendant, T.& D. Carter Holdings Ltd.:	J.D. Buchan C.V. Allin
Date and Place of Trial:	August 5-8, 11-15, 18-20, & 22, 2003
	Vancouver, B.C.

INTRODUCTION

[1] This trial concerns the sinking of a vessel near Port Neville. The only issue is liability.

[2] The plaintiff, North King Lodge Ltd., was the owner of a vessel called the Sea Lion VI. In 2000, it entered into an oral agreement with a logging contractor, the defendant T.& D. Carter Holdings Ltd., for the hire of the Sea Lion VI for about two months for use near Port Neville as an overflow accommodation facility for T.& D. Carter's workers. About ten days after the Sea Lion VI had been originally moored offshore, at T.& D. Carter's request, North King moored it closer to shore for easier access.

[3] The Sea Lion VI was then moored with an anchor off its bow, two stern lines tied to shore and three lines off its port side tied to a booming ground. The booming ground was built for Ashlaur Trading, the company for which T.& D. Carter was logging.

[4] On December 9, 2000, after the logging had ended, Gowlland Towing, the company which had built the booming ground, at the instruction of Ashlaur Trading removed the boom and the bundles of wood that were boomed there. In the process, it disconnected the port lines of the Sea Lion VI which were attached to the booming ground.

[5] In the later evening of December 11, 2000, employees of the logging company remaining at the camp found the Sea Lion VI submerged.

[6] Between December 9 and the evening of December 11, 2000, when the Sea Lion VI sank, there was some communication between the logging company and the owner of the vessel. The content and timing of these discussions is in issue.

[7] The plaintiff's insurer has paid the owners $700,000, the amount of coverage for the vessel. It brings this subrogated claim against T.& D. Carter, alleging that it was in breach of the responsibilities it had by virtue of being in possession, care and control of the vessel. As against Gowlland Towing, the plaintiff alleges negligence, in altering the moorage of a safely moored vessel, which resulted in the loss.

[8] T.& D. Carter says that its charter of the vessel was a time charter under which the care and control of the vessel remained at all times with the owner. The oral lease agreement provided for North King to provide a watchman, but there was no watchman after early November. There is an issue whether that term was waived by the parties.

[9] T.& D. Carter says that if it had responsibility for the care of the vessel, it was not in breach of any obligation it may have had. It says that the damage to the vessel was due to the lack of care of the owner or of Gowlland Towing.

[10] Gowlland Towing says that North King was a trespasser and that Gowlland Towing was entitled to remove the trespassing item, the lines attached to the boom. It says that it met the standard of care it owed. Alternatively, Gowlland Towing says that if the standard of care is higher, it met it by taking reasonable steps to satisfy itself that the vessel was secure when it altered the mooring lines, notified those on shore who were apparently in charge of the Sea Lion VI, and took away the booming ground.

[11] Gowlland Towing argues that if it was negligent in removing the booming ground that the damage nevertheless occurred more than two days after the booming ground was moved. It contends that the negligence of the owner and the logging company, not its negligence, were the proximate and effective causes of the loss. Gowlland Towing contends that the loss could have been avoided, even if the vessel had grounded, by reasonably prompt action on the part of the owner or the logging company. Further, Gowlland Towing contends that if it was negligent and that negligence contributed to the loss, the plaintiff was contributorily negligent. In that case, it submits that the liability of the defendants is several.

[12] The plaintiff and T.& D. Carter say that if they are at fault, it should be apportioned among all three parties. They contend that Gowlland Towing is arguing on the basis of the last clear chance, a legal doctrine that they say is anachronistic.

[13] T.& D. Carter also says that the insurer cannot sue it because, under the insurance contract, it is entitled to the benefit of the waiver of subrogation clause, an interpretation the plaintiff disputes.

[14] The parties called expert witnesses who gave evidence on subjects such as mooring vessels, the normal practice and their experience in tying to log booms, the purpose of various lines, the possible causes of the grounding of the vessel, possible steps to avoid problems when they arise, the effect of currents and tides in Port Neville, and the time required to get assistance to Port Neville.

ISSUES

[15] The issues that arise in this case are:

1.	What caused the Sea Lion VI to sink?
2.	Liability of T.& D. Carter:
		(a)	What was the nature of the contract for the hiring of the Sea Lion VI?
		(b)	Who had responsibility for the care and control of the vessel?
		(c)	What was the purpose of the provision in the agreement between T.& D. Carter and North King that the plaintiff would provide a watchman?
		(d)	Was that term waived?
		(e)	Was T.& D. Carter in breach of any obligation it had for the safety of the vessel?
		(f)	Is T.& D. Carter liable for the damage to the Sea Lion VI and, if so, on what basis?
3.	Liability of Gowlland Towing:
		(a)	Was North King a trespasser and if so, what duty was owed by Gowlland to North King?
		(b)	If not, what was the nature of the duty owed by Gowlland to North King in the circumstances?
		(c)	Was Gowlland Towing in breach of the duty that it owed?
		(d)	If Gowlland Towing was in breach of a duty it owed, was it an effective proximate cause of the loss?
4.	If several parties were at fault, how should fault be apportioned?
5.	Is T.& D. Carter entitled to the benefit of the waiver of subrogation clause in the insurance policy between the plaintiff and its insurer?

FACTS

[16] The plaintiff, North King Lodge Ltd., was the owner of the Sea Lion VI, a wooden-hulled vessel built in 1905. It was 130 feet long, 25 feet wide and had a draft of 16 feet. During the regular season North King moored the Sea Lion VI and operated it as a fishing lodge.

[17] The principal of North King is Rick Wood. His wife, Bev Wood, runs the North King office in Ladysmith, British Columbia.

[18] T.& D. Carter Holdings Ltd. is a logging contractor. Douglas Carter is the principal. T.& D. Carter has an office near Ladysmith where Mr. Carter's sister runs the office.

[19] Ashlaur Trading, whose president is Douglas Saunders, owned a timber license near Port Neville. In 2000, T.& D. Carter was acting as a logging contractor for Ashlaur Trading.

[20] Port Neville is located on the coast of British Columbia on an inlet off Johnstone Strait. T.& D. Carter operated a camp at Port Neville where it had trailers to house its workers.

[21] At Port Neville, T.& D. Carter dropped off the harvested logs in the booming ground owned by Ashlaur Trading. The booming ground had been built for Ashlaur Trading by Gowlland Towing Ltd.

[22] Gowlland Towing is a towboat and booming company, the president of which is Glen Wheeler.

[23] The booming ground was located offshore at the logging camp. It was a temporary one made up of two strings of seven boomsticks, each string connected to the shore by a cable. The boomsticks were joined together with chains and the seaward end of each string of seven boomsticks was made up of a doubled boomstick connected to a rock anchor by cable several hundred feet offshore. The logs and boomsticks were the property of Ashlaur Trading and could be removed in their entirety.

[24] T.& D. Carter found that it needed more room to house its crew. In 1988, when it had a similar need, T.& D. Carter had leased the Sea Lion VI as a bunkhouse for its logging crew at Bonwick Bay.

[25] In October 2000, Rick Wood, on behalf of North King, and Doug Carter, on behalf of T.& D. Carter, entered into an oral agreement to lease the Sea Lion VI to T.& D. Carter as an accommodation vessel for a period that was expected to last for about two months, until mid-December 2000.

[26] The terms of the oral agreement were that T.& D. Carter would pay $8,000 per month and pay for fuel and that North King and T.& D. Carter would split the cost of a watchman provided by North King. Mr. Wood of North King suggested that there be a watchman. North King agreed to deliver the accommodation vessel to Port Neville, moor it and take it out when T.& D. Carter was finished using it. There was no discussion of insurance.

[27] The vessel was delivered by North King to Port Neville on October 16, 2000. It was taken there under the command of Captain Michael Heavenor. He moored the vessel well offshore. It was anchored with a anchor line about 300 feet, a port bow line about one-third of the way back tied in a north-easterly direction to the beach, and a stern line in a north-westerly direction to the beach. At this time, it was moored east of the booming ground.

[28] As the Sea Lion VI was offshore, access to the Sea Lion VI was only by boat. This arrangement was inconvenient and Mr. Carter asked Mr. Wood to move the Sea Lion VI to a location which would allow his employees access by land.

[29] On October 26, 2000, Rick Wood and his stepson, Clay Barney, flew up to Port Neville and relocated the Sea Lion VI. Brad Wood, Rick Wood's son, was also there. Rick Wood is 58 years old, is not a certified mariner but is a commercial fisherman and has owned several large vessels. He did not consult the chart of the Port Neville area when re-mooring the vessel, or do any manual sounding.

[30] The vessel was moved to the west side of the booming ground. It was located near an area called Piles Pieux on the marine charts. Mr. Wood set the anchor and, with the assistance of the crew of T.& D. Carter, pushed the Sea Lion VI towards the stiff leg of the booming ground to tighten the anchor.

[31] Neither North King nor T.& D. Carter asked Ashlaur Trading for permission to tie to its booming ground.

[32] There were three lines from the vessel to the boomstick on the port side of the Sea Lion VI, although there is some issue as to how those lines were positioned and how the vessel was tied. The vessel had two stern lines to the beach, about ten feet apart, one being to a rock and the other to a cable at shore edge, slightly underwater.

[33] The angle of the vessel and the angle of the anchor off the vessel are in dispute, as is the closeness of the vessel to the stiff leg. I find that the vessel was quite tight to the boomsticks at the stern port corner. There is a dispute about its precise alignment.

[34] The question is whether the anchor was off the bow of the vessel slightly to the starboard as Mr. Wood said or whether it was, as other witnesses indicated, straight off the bow. I find that there was about 300 feet of anchor chain in about 41 feet of water and generally the line was straight but slightly to the starboard off the bow.

[35] I find that the Sea Lion VI was moored at an angle of approximately 10-15 degrees off the boom. The distance from the boomsticks to the bow was greater than the distance from the boomsticks to the stern. This is consistent, at least in part, with an initial drawing prepared by Mr. Wood and the evidence of several witnesses. I do not accept as reliable the evidence of Mr. Wood or his sons that the vessel was parallel to or tight against the boomsticks for the length of the vessel.

[36] After the vessel was relocated on October 26, 2000, T.& D. Carter constructed a gangway that allowed access directly to the vessel from shore. This ramp and float arrangement allowed T.& D. Carter's employees access to the mid-starboard side of the vessel by foot.

[37] From all of the evidence, I conclude that the vessel, depending on the tide, was in the range of 30 to 60 feet from the shore, occasionally somewhat less.

[38] The vessel remained safely in this position until at least December 9, 2000.

[39] The agreement between North King and T.& D. Carter provided that there would be a watchman. Clay Barney, Rick Wood's stepson, was the initial watchman. Brad Wood and Mr. Barney stayed in the vessel until October 29, 2000. When Mr. Barney was the watchman, he slept on the Sea Lion VI. He was replaced by Mr. Wohlund, whose employment was later terminated. I will discuss the parties' knowledge of and actions concerning the watchman provision when I discuss whether this term was waived.

[40] The owner had hull insurance for $700,000 but because it did not have the proper endorsements or had not notified the insurer and paid the appropriate premium, it did not have coverage for the Sea Lion VI from October 16 to November 10, 2000. Even though Mr. Wood knew that there was no insurance coverage on October 26 when he moved the vessel, he said he did so because Mr. Carter was in a hurry.

[41] On November 10, North King obtained an endorsement from the insurer which read:

… in consideration of an additional premium of $2,450 permission is granted for the "Sea Lion" to be chartered and used as an accommodation facility at Port Neville, B.C. for the period November 10, 2000 to December 19, 2000.

The insurance was obtained by Mr. Wood by phone on November 10, 2000.

[42] Logging for T.& D. Carter was coming to an end around December 7, 2000.

[43] On December 7, 2000, Gowlland Towing received word from Ashlaur Trading that it was to go and pick up the boom and the booming ground.

[44] Captain Adam Sweeney with his deck hand, Len Gardiner, employees of Gowlland Towing, arrived at Port Neville on December 8, 2000 at about 1:30 p.m. to boom the logs dumped in the ocean by T.& D. Carter.

[45] By the time Gowlland Towing arrived at Port Neville on December 8, 2000 and began booming the bundles of logs, there were only a few employees of T.& D. Carter left at the Port Neville site. Logging by T.& D. Carter had ceased on December 7 and most of the crew left the area around December 8. T.& D. Carter was doing wrap-up work. The few remaining loggers stayed in the camp trailers on shore. One was Dennis Stubbs, the foreman, and another was Larry Rumley, a mechanic.

[46] As of December 10, Mr. Rumley, Mr. Stubbs, and Mr. Simmonds of T.& D. Carter, as well as a couple of tree cleaners, were working in the camp, but none of the T.& D. Carter employees were on board the Sea Lion VI. The employees of T.& D. Carter were not generally working in the area of the Sea Lion VI.

[47] David Simmonds, an equipment operator and mechanic with T.& D. Carter and a partner with Mr. Carter in another company, flew into Port Neville on December 9, 2000. As he arrived, the booming ground was in the middle of the inlet, being towed away by Gowlland Towing. About 24 hours, or a little less, after the Gowlland tug had arrived, it took the boom away.

[48] I return to the time when Gowlland Towing's tug, the Gowlland Chief, arrived at Port Neville on December 8, 2000. When Captain Sweeney and Mr. Gardiner arrived at Port Neville at about 1:30 p.m., they became aware for the first time that the Sea Lion VI was tied to the booming ground.

[49] They had not expected to see the Sea Lion VI tied to the boomsticks. Captain Sweeney could see that the Sea Lion VI had its anchor out but he did not inspect to see how the Sea Lion VI was moored. That afternoon Captain Sweeney and his deck hand were otherwise occupied making up a boom in the northeast side of the booming ground.

[50] In the afternoon, Captain Sweeney went on shore to get some swifter wires. He spoke to a man he believed to be the foreman, and together they looked for, but could not find, swifter wires. Captain Sweeney was dispatched to Port McLeod to obtain some. He and Mr. Gardiner took the tug out of Port Neville at 18:30 and returned at 21:00 on December 8. By then, it was dark and they were not able to complete another boom until the next day.

[51] On the morning of December 9, the crew of the Gowlland Chief resumed work on the boom at 7:30 a.m. and completed its work at 10:30 a.m. The last boom was composed in part from the southern string of boomsticks.

[52] At 9:14 a.m., Captain Sweeney called Mr. Wheeler, the president of Gowlland Towing, and told him that the Sea Lion VI was alongside the booming ground with lines from the Sea Lion VI to the booming ground. Mr. Wheeler had not previously been aware that the Sea Lion VI was tied to the booming ground.

[53] After a discussion, Mr. Wheeler told Captain Sweeney that if he thought the vessel would be all right if the lines were let loose, then that would be okay with Mr. Wheeler. They did not discuss the possibility of leaving a boomstick and the lines from the Sea Lion VI tied. Mr. Wheeler also said to let someone in camp know.

[54] Captain Sweeney sent his deck hand, Mr. Gardiner, ashore to advise "someone" in camp that they were taking the boom away.

[55] Mr. Gardiner testified that he did advise someone; however, he did not know if that person was a T.& D. Carter employee or what his relationship was to the Sea Lion VI, other than that Mr. Gardiner had seen him on the ramp. Although the witnesses from T.& D. Carter disagree that they were told, I find that Mr. Gardiner told someone on shore that they were removing the booming ground, and that person was likely an employee of T.& D. Carter.

[56] The person Mr. Gardiner spoke to appeared surprised, which Mr. Gardiner reported to Captain Sweeney. No one requested that the booming ground or part of it remain in place.

[57] Captain Sweeney and Mr. Gardiner untied the lines. Mr. Gardiner went on the walkway on to the Sea Lion VI. Mr. Gardiner did not check the anchor, although he observed it was not hanging down. Mr. Gardiner did not notice any movement of the Sea Lion VI in a lateral direction when the lines to the booming ground were removed. Captain Sweeney estimated the distance between the stern and the shore was about 20 feet, that the lines were not slack, and nothing about the anchor or the stern lines caused him concern. According to Captain Sweeney, when the port lines were untied, the distance from the booming ground did not change in any noticeable way. At the time of the removal of the lines the tide was flooding, and the current running into the inlet would push the Sea Lion VI closer to the boomsticks and would tend to take tension off the lines.

[58] At around 10:30 a.m., the Gowlland Chief removed the log boom from the area where the booming ground had been. Gowlland Towing commenced the tow of the booms, including all boomsticks and the winder, to Port Harvey on December 9, 2000 at 11:30 a.m. This was the last contact the Gowlland Towing employees had with the Sea Lion VI.

[59] The Sea Lion VI was now moored with its anchor and two stern lines, but no longer any lines affixed on the port side.

[60] T.& D. Carter was aware by the late morning of December 9, that the boom was gone. Mr. Simmonds, for example, had seen the boom in the middle of the inlet as he flew in to Port Neville late that morning.

[61] It is an agreed fact that on December 9, 2000, between 10:00 a.m. and 11:00 a.m., Bev Wood, the wife of Rick Wood, was advised by Patty Clark, the sister of Doug Carter and an employee of T.& D. Carter, that the logging was finished and that Rick Wood could go pick up his boat. No other information was given to North King by Ms. Clark in that telephone call. North King was not told that day that the booming ground had been, or was about to be, removed.

[62] On December 9 and 10, Mr. Wood placed calls to Captain Heavenor to arrange the return of the Sea Lion VI, leaving a message once and speaking to his answering machine.

[63] Mr. Wood did not speak to Mr. Carter on December 9 and did not enquire whether the logs were about to be removed or how long the booming ground would remain in place. He did not attempt to contact another mariner other than Captain Heavenor. When the call came on December 9, Mr. Wood knew that the charter was essentially over. Mr. Wood did not consider what might happen to the vessel if the boom was towed away.

[64] There was no communication between North King and T.& D. Carter on December 10, 2000.

[65] On December 11, at 8:03 in the morning, Mr. Rumley of T.& D. Carter reported by phone to Mr. Carter that he observed that the Sea Lion VI had shifted its position with the bow swinging outward toward the mouth of the inlet in a south-westerly direction. He observed that the Sea Lion VI had swung about 45 degrees towards the mouth of the inlet.

[66] Mr. Simmonds also reported by phone to Mr. Carter at 10:46 a.m. on December 11 that the vessel looked like it was "trying to leave the inlet". Although Mr. Simmonds was not phoning because of the Sea Lion VI, he was "very concerned" and he confirmed to Mr. Carter that the Sea Lion VI was moving parallel to the beach.

[67] There is an issue as to when and what was reported by Mr. Carter to Mr. or Mrs. Wood of North King. It is difficult to resolve this issue because both Mr. Wood and Mr. Carter have very poor memories. They also both have hearing problems.

[68] There is a dispute as to whether Mr. Carter called Mr. Wood in the morning of December 11. Mr. Carter says that he reported the movement of the Sea Lion VI to Mr. Wood in the morning of December 11. Mr. Carter testified that he called after waiting a half hour, or upwards to an hour, after the call from Mr. Rumley, and spoke to Mr. Wood who told him, he said, that his mariner was storm bound, was not too concerned as he had set the anchor, and there was nothing that he could do about it. Mr. Wood and Mrs. Wood denied receiving that call or a message. Mrs. Wood said that they were at their office that morning until about 9:30 and thereafter had an answering machine. There is no record of this call in the documentary evidence.

[69] Mr. Carter said that after he got the call from Mr. Simmonds later in the morning, he called the plaintiff several hours later. This by Mr. Carter's evidence would be his second call to the Woods that day.

[70] There was clearly an afternoon call on December 11, 2000 from Mr. Carter to Mrs. Wood, but there is dispute over the time, and to some extent the content, of the call.

[71] Mr. Carter said the call was about 2:00 p.m., or between 2:00 and 3:00, and Mrs. Wood says it was between 3:00 and 4:00 p.m. Because it is a local call there is no record of this call, unlike some of the other calls that are long distance calls or cellular telephone calls.

[72] I find that the first call that Mr. Carter made to the Woods that day was most likely made at about 2:00 p.m., or shortly thereafter. I find that Mr. Carter's recollection of an earlier call on December 11 is mistaken. Although there was no good reason for him not to call earlier, if he did try to, he did not speak to Mr. Wood or leave a message on the North King answering machine. He testified that he did not like speaking to answering machines. I find that Mr. Carter has a poor memory about whether he called Mr. Wood in the morning of the 11th. He appeared nervous dealing with this subject but I did not place much weight on that. The fact that he says that he waited a half hour or more after the first call and several hours after the Simmonds call suggests he did not treat it as seriously as he now wishes he had. In a prior statement he was unsure to whom he spoke during the first call. The tenor of the call between Mrs. Wood and Mr. Carter, in the afternoon, suggests it was the first call on the subject matter between the parties that day. Mr. Carter may, to some extent, be mixing up a call later that night when he refers to Mr. Wood's comment that his mariner was storm bound, or is reconstructing the matter inaccurately. Mr. Carter was generally frank in his evidence, even though I find he was mistaken as to his first call.

[73] I think that to a degree that Mrs. Wood's recollection of the content and time of the call between 3:00 and 4:00 p.m. with Mr. Carter is affected by her desire to place the call in the best light from the plaintiff's perspective. Mrs. Wood said that Mr. Carter in the afternoon told her that the vessel was "a bit" parallel to the beach and it had moved "a bit", and that when she asked him if he was sure it was not in danger and up on the beach, he said no. Mr. Wood was in the bath and Mrs. Wood reported to him, I find, that the vessel was roughly parallel to the beach. Mr. Wood said, "We have to get up there". I think that Mrs. Wood, to explain her husband's actions, is de-emphasizing the concern that Mr. Carter was imparting, but that Mr. Wood understood there was a risk to the Sea Lion VI.

[74] Mr. Wood knew from the telephone call to his wife that the Sea Lion VI had swung toward the beach and he would have thought that for it to become parallel, a stern line would have had to become disconnected. Mr. Wood must have known then that the boom was gone for the vessel to be parallel to the shore. Although he said that "we have to get up there", he testified he did not think it was a necessity to take immediate action and that he did not know tug companies.

[75] Mr. Wood did not call Mr. Carter to find out the precise circumstances of the Sea Lion VI.

[76] After the call between Mrs. Wood and Mr. Carter on the afternoon of December 11, Mr. Wood made arrangements to go up to Port Neville the first thing the next morning.

[77] The employees of T.& D. Carter did not take any steps to ensure the mooring was safe and secure after they noticed that it was pointing out to the mouth of the inlet in the morning.

[78] During December 9, 10 and 11, Port Neville experienced very low and very high tides. Low tide on December 11, 2000 was approximately 1.3 feet at 20:09, the lowest tide in the period between October 26 and December 11, 2000. During a flood tide the current flowed into the inlet parallel to the shore and during an ebb tide the current ran out or to the west or in a starboard direction from the moorage the Sea Lion V1 had over the last 40 days.

[79] Mr. Rumley of T.& D. Carter testified that at 5:00 p.m. on December 11, he observed the vessel floating normally, but he could not recall the direction it was pointing. Mr. Stubbs said that he had pumped up the generator on the evening of December 11 and the vessel was fine then. There is an issue about the reliability of this evidence given the observations of T.& D. Carter employees earlier in the day that the vessel was parallel to the beach or appeared to be leaving the inlet. Mr. Stubbs was aware that his colleagues had reported that the vessel had shifted.

[80] Was Mr. Stubbs accurate in his recollection that he went to the vessel to fill up the day tank on the evening of December 11 at around 5:00 p.m.? Mr. Rumley said that he looked out at 5:00 p.m. and the vessel appeared no worse and was floating properly. Mr. Rumley and Mr. Stubbs appeared to be credible that the vessel appeared all right at 5:00 p.m. Other credible evidence, in particular the evidence of Captain Rose, an expert witness under cross-examination by Mr. McEwan, suggests that the angle of the vessel would be obvious by that time. I accept that evidence. Accordingly, I conclude, on a consideration of all of the evidence, that Mr. Stubbs was mistaken that he went down to the Sea Lion VI to pump the generator at 5:00 p.m. on December 11. I conclude that if, during the day, the vessel had swung out, by the evening it was dark and it was not then apparent to the T.& D. Carter employees in the vicinity that there was a problem with the vessel’s mooring.

[81] On the evening of December 11, 2000, following the Monday night football game on television, Mr. Rumley, as he was about to retire for the evening, heard a beeping noise from the Sea Lion VI and observed it to be listing and down at the bow.

[82] It is an agreed fact that at approximately 10:30 p.m. on December 11, 2000, the vessel was found to have grounded and during the course of the rising tide it flooded and sank.

[83] Mr. Rumley telephoned Mr. Carter at about 10:00 p.m. to advise him of the sinking of the Sea Lion VI. Mr. Carter telephoned Mr. Wheeler to request tug assistance but he had no tugs in the area and gave him the number of Jarl Towing in Kelsey Bay.

[84] The Jarl Towing tug arrived at 01:30 on December 12, and found the Sea Lion VI aground, listing to starboard and partially submerged.

[85] On the evening of December 13, the Sea Lion VI was re-floated.

[86] The insurers or underwriters paid out to North King the amount under the policy of $700,000.

[87] This action was commenced on June 12, 2001.

DISCUSSION

[88] This is a maritime case. As noted by the Supreme Court of Canada in ITO International Terminal Operators v. Miida Electronics Inc., [1986] 1 S.C.R. 752, Canadian maritime law is “a body of federal law encompassing the common law principles of tort, contract and bailment”. Common law principles in these three areas of law are at issue in this case.

1. What caused the Sea Lion VI to sink?

[89] What caused the Sea Lion VI to ground on December 11, 2000? For 45 days beginning October 26, 2000 the Sea Lion VI was moored close to shore, tied by two stern lines, an anchor off its bow, and three port lines to the boomsticks, without apparent difficulty.

[90] After the booming ground was removed on December 9, the ocean in the area of the Sea Lion VI was subject to extreme low and high tides. At some point over the next two days, the vessel moved on an ebb tide to starboard and grounded.

[91] I find that the main reason that the Sea Lion VI moved to the starboard was the removal of the lines to the boom ground that had earlier restricted that movement.

[92] The pumps on the Sea Lion VI were turned off. Low water on December 11 was at about 20:00 hours. The bow fell on the falling tide and went underwater. The expert evidence suggests, and I find, that it either fell over or water entered through hatches, vents and the spurling pipe and then it was filled.

[93] The vessel where it sank was about 125 feet from shore. It then had only one stern line on the starboard side. The starboard stern line appeared to be of two colours which suggests that it was joined or extended at some point. There was no explanation for when and how that line was lengthened or changed. It was an agreed fact that there were originally two stern lines and there is no evidence as to when the port stern line was disconnected or came loose, although it no doubt had broken loose or become disconnected by the morning of December 11.

[94] The photographs taken on December 12, 2000 show that the port stern line had been broken and the Sea Lion VI was lying on the remains of the float. The port stern line could have prevented the vessel falling off to the southwest. Once that line parted, the vessel could move to the southwest, and in doing so, move towards the beach, allowing the stern to ground.

[95] The defendant Gowlland Towing called Captain John Dolmage as an expert, who indicated in his report that "the question must be asked why the Sea Lion grounded on December 11, 2000 and did not ground, or at least did not ground noticeably on December 9 or 10, 2000". Although the vessel went parallel to the shore prior to sinking on December 11, it may well have gone aground at low tide before the night of December 11. It could have grounded during low tide on the 9th or the 10th but it was not until the evening of December 11 that it either fell over or fell forward and flooded.

[96] I find that it is too speculative to determine at what point the starboard stern line was extended or repaired. I do not think it is a reasonable inference on the evidence to conclude that lengthening that line was the cause of the vessel grounding.

[97] The fact that early in the morning on December 11 the vessel was observed to have changed position and "wanted to leave the inlet" suggests, and this is supported by Captain Dolmage’s evidence, that the anchor line may then have been slack. Further, I think that a stern line was probably disconnected at that point. However, the vessel was secure in its location for 45 days, even in times of significant storms. The most likely cause of its grounding, upon a consideration of all of the evidence, was the removal of the lateral support from the port side to the log boom.

[98] I conclude that the vessel grounded because over three days it moved starboard in the current after the lines to the booming ground were removed.

2. T.& D. Carter

[99] Did T.& D. Carter owe a duty of care to North King for the safety of the Sea Lion VI? If so, how did that duty arise, what was its scope and was it breached?

[100] A related issue arises. What were North King's obligations for the safety of its vessel during the term of the hiring and how did they arise?

Parties' Positions

[101] North King asserts that T.& D. Carter had an implied obligation to keep the plaintiff notified of the condition of the vessel, particularly if there was any danger, and that there was an implied obligation to advise North King when logging was completed and the vessel ceased to be occupied. Reasonable advance notice, it says, could have allowed Mr. Wood to attend to the vessel in a timely way.

[102] Mr. Bromley argues that T.& D. Carter had the vessel in its care, custody and control, and by taking no steps to protect it, in the circumstances, T.& D. Carter is responsible for the vessel's damage. North King argues that after the vessel shifted, T.& D. Carter should have done something to protect it; it should have sought assistance or tied a line from the vessel to heavy equipment.

[103] In summary, the plaintiff says there were implied terms of the contract that were breached by T.& D. Carter: failing to notify the plaintiff in a timely way that the logging was ending; failing to notify the plaintiff that the vessel was empty; failing to notify the plaintiff that the boom was gone and the moorage had changed; and, failing to notify the plaintiff in a timely way or at all that the vessel had shifted or that it may be at risk.

[104] T.& D. Carter contends that it did not have an obligation to take care for the safety of the vessel given the nature of its agreement with North King. It says that the obligation to care for the vessel rested with North King which had a contractual obligation to provide a watchman.

[105] Mr. Bromley argues that if there was an obligation on the part of North King to provide a watchman, there was a variation of the contract by the parties' conduct or that term was waived by agreement. Mr. Bromley's argument is that in those circumstances, after the term was waived or varied, it was implied that the lessee was then responsible for the safe moorage of the vessel until it was returned to the plaintiff.

[106] The relationship between North King and T.& D. Carter was contractual. There were no express terms for the care of the vessel. Were there implied obligations?

[107] T.& D. Carter’s counsel says that, in classic maritime law terms, the lease of the vessel was a time charterparty rather than a charterparty by demise. Mr. Allin points to this passage from Maritime Law by Christopher Hill, 5th ed. (London: LLP Reference Publishing, 1998) at 179:

A fundamental feature of a time charter is that the charterer has no possession or control of the vessel. The Master and crew remain in the employment of the shipowner and at all times are his servants in law.

[108] T.& D. Carter says that the terms of the charter show that it was a charter of a type where responsibility rests with the owner for its care and control. In support, it points to these facts: the vessel was for an accommodation bunkhouse at a specific location, the owner was responsible for getting it to Port Neville and back, the owner supplied the captain for navigation and moorage purposes, there was no arrangement for T.& D. Carter to pay for maintenance or repairs, the owner supplied fuel (which was reimbursed later), the lease was for a fixed period (estimated to be two months), the watchman was chosen by the owner, the owner placed insurance, and the owner was paid in advance.

[109] Mr. Allin argues that possession of the vessel never went to T.& D. Carter. He says that possession remained at all times with the plaintiff, and in those circumstances, there is no duty of care owed by the hirer in relation to the vessel.

[110] T.& D. Carter’s counsel argues that the sinking was caused by the failure on the part of North King to use due diligence and, in particular, to discharge its obligation to provide a watchman or act expeditiously when it knew that the vessel was no longer required.

[111] Mr. Bromley, for North King, disagrees. He argues that the contract is not a charter for a trip, but is something quite different, an accommodation. Even if it could be characterized as a time charter, he says there is nevertheless an obligation on T.& D. Carter to re-deliver the vessel in good order.

[112] Mr. Bromley argues that T.& D. Carter, not North King, had possession of the vessel and that it was a contract of bailment. He says there was an obligation on the hirer, T.& D. Carter, to use reasonable care and to restore the vessel to the owner at the end of the term. He says that the obligations include an obligation to provide proper notice that logging was completed and that the vessel was unoccupied, and to warn of any danger to the vessel.

What was the legal nature of the relationship between North King and T.& D. Carter; was it a contract of bailment?

[113] Bailment, as stated in Tyler and Palmer, ed., Crossley Vaines' Personal Property, 5th ed. (London: Butterworths, 1973) at 70 and 76:

… eludes precise definition because the term covers a host of legal relationships which have as a common denominator only that one is in possession of another’s chattel. Possession is the salient feature…

...

… judges and writers have more or less consistently treated bailment as an express or implied contract…

[Emphasis added]

[114] The hire of a chattel is a recognized class of bailment: see 2 Hals. (4th ed.) at ¶1802; Coggs v. Bernard (1703) 92 E.R. 106; Trident Construction Ltd. v. Capital Crane Ltd. (1987), 64 Nfld. & P.E.I.R. 300, [1987] N.J. No. 94 (Q.L.) (S.C.–T.D.); and D.J. Lowe (1980) Ltd. v. Roach (c.o.b. Vern’s Auto Repairs) (1994), 131 N.S.R. (2d) 268, [1994] N.S.J. No. 208 (Q.L.)(S.C.), aff'd (1995), 138 N.S.R. (2d) 79, [1995] N.S.J. No. 62 (Q.L.)(C.A.).

[115] In Hogarth v. Archibald Moving & Storage (1991), 57 B.C.L.R. (2d) 319, [1991] B.C.J. No. 2321 (Q.L.)(S.C.), at 323, Oppal J., as he then was, adopted the definition of bailment stated by the Ontario Court of Appeal in Punch v. Savoy's Jewellers Ltd. (1986), 26 D.L.R. (4th) 546 at 552:

Bailment has been defined as the delivery of personal chattels on trust, usually on a contract, express or implied, that the trust shall be executed and the chattels be delivered in either their original or an altered form as soon as the time for which they were bailed has elapsed. It is to be noted that the legal relationship of bailor and bailee can exist independently of a contract. It is created by the voluntary taking into custody of goods which are the property of another. Such is the situation in cases of sub-bailment: see 2 Hals., 4th ed., p. 688, para. 1501.

[116] Let me for a moment characterize the relationship in maritime law terms. N.E. Palmer, in Bailment, 2nd ed. (Sydney: The Law Book Company, 1991) at 193, describes the difference between the two types of charters that I have mentioned in relation to bailment:

In the case of ships and aircraft, the existence of a bailment depends upon the type of charterparty involved. The main distinction is very clearly drawn in a recent Law Commission Working Paper:

there are two main categories of charterparty, the charterparty by demise and the charterparty not by demise. . . . A charter by demise is in effect a contract for the hire of a chattel, and is governed by the general principles of the common law relating to contracts of hire… Charterparties not by demise, that is to say time charters and voyage charters, are contracts for the rendering of services by the owner, not for the hiring out of his ship.

[citations omitted]

[117] Counsel for T.& D. Carter says that the agreement between the parties was a time charterparty, while counsel for North King categorizes it as a charter by demise or a contract of bailment.

[118] Boyd and Foxton, ed., in Scrutton on Charterparties, 20th ed. (London: Sweet & Maxwell, 1996) write at 59:

Whether or not the charter amounts to a demise must turn on the particular terms of the charter. "The question depends, where other things are not in the way, upon this: whether the owner has by the charter, where there is a charter, parted with the whole possession and control of the ship, and to this extent, that he has given to the charterer a power and right independent of him, and without reference to him to do what he pleases with regard to the captain, the crew, and the management and employment of the ship…".

[119] It is not possible to fit the agreement between North King and T.& D. Carter into one of the traditional forms of charterparty arrangements. It was not chartered for a voyage, and it did not have a master and crew.

[120] The question, I think, really is whether this contract of hiring, regardless of whether it can be characterized as a charterparty, is also a contract of bailment, and, if so, what were its terms.

[121] In Allison Concrete Ltd. v. Canadian Pacific Ltd. (1973), 40 D.L.R. (3d) 237 (B.C.S.C.), the contract was to hire a machine to do work for the hirer, although the machine was to be operated exclusively by its owner’s employees. Counsel had argued that in order to find a bailment, the Court had to be satisfied that possession was exclusive possession. At 244-245, the Court stated:

I am of the opinion that the defendant was in possession of the machine. These are my reasons. The contract was one of hiring; it is inherent in such a contract that possession of the chattel hired passes from the hirer to the hiree. The machine was delivered to the defendant. The machine was hired to the defendant for the period that it was required by the defendant for clearing track, upturned cars, etc., and it fell into the water clearly within that period. Neither the plaintiff, its operators nor anyone else could rightfully take the machine from the possession of the defendant because, the work not having been completed, the term of the hiring had not come to an end. During the term of the hiring no one could rightfully assert a claim for possession of the machine against the defendant.

I have not overlooked the consideration that by the contract the payloader was to be operated exclusively by the plaintiff's operators. This does not, in my view, touch the issue of possession: the contract was one of hiring with a condition that the machine be run exclusively by operators sent with the machine and in the general employment of the plaintiff. The defendant had the right to dictate the tasks to be performed by the machine and when and where it would do assigned tasks. The plaintiff's operators were to run the machine. It was within their discretion, not the defendant's, to decide how the machine should be manipulated to perform assigned tasks. I do not think this right to control the machines in performing assigned tasks derogates from the defendant's right of possession. …

[Emphasis added]

[122] I find that the contract between North King and T.& D. Carter was a form of bailment because possession was in the hirer, T.& D. Carter. Although the plaintiff was contractually obligated to provide a watchman, the vessel was moored where the defendant wished it moored, and the defendant had the right to occupy the vessel with whom it wanted. The plaintiff, other than having a watchman on board, did not otherwise direct who could be on or what could occur on the vessel.

What are the relevant terms of this contract of bailment?

[123] There are usual implied terms in a contract of bailment. Palmer in Bailment, supra, at 1249, states the normal duties that arise this way:

The hirer owes four principle duties: to pay the agreed rental, to take proper care of the chattel, to comply with the limitations upon his use of it and to restore it to the owner at the end of the hiring. These duties may, of course, be modified by agreement.

[124] Traditionally, the duty of care required of the bailee varied with the type of bailment. In contracts for hire of chattels, the following duties are commonly implied:

A. The duty to return the chattel in as good condition as when delivery was made, save for ordinary wear and tear. See: Allison Concrete, supra at 242; Brynjolfson v. Clay's Wharf, [1975] F.C. 319 (F.C.A.) at ¶4; and Crossley Vaines’, supra at 415.

B. To take reasonable care of the chattel. See: Palmer in Bailment, supra at 1263; Allison Concrete, supra at 242; and Crossley Vaines’, supra at 87.

C. To use reasonable skill in the management of the chattel. Where the bailee’s situation or profession is such as to imply skill, he is bound to use such skill in the management of the chattel. See: Palmer in Bailment at 1263; and Crossley Vaines’, supra at 87.

D. To use such care and diligence as a prudent or careful person would exercise in relation to his or her own property. See: A.I.M. Steel Ltd. v. Gulf of Georgia Towing Co. Ltd. (1964), 48 D.L.R. (2d) 549 (B.C.S.C.) at 555; and Crossley Vaines’, supra at 87.

E. The safekeeping of the goods and protection from loss or injury. The Court in D.J. Lowe, supra, quoted with approval from 2 Hals. (4th ed.) at ¶1801:

The element common to all types of bailment is the imposition of an obligation, because the taking of possession in the circumstances involves an assumption of responsibility for the safe keeping of the goods.

[125] Contracts of bailment, depending on their terms, may not contain the usual implied terms. While a term to take reasonable care of a chattel, and other similar terms, would normally be an implied term in most contracts of hire, whether that term is implied depends on the particular contract.

[126] Palmer in Bailment, supra, says at 1269:

The terms of the agreement may enlarge or reduce the hirer's common law liability for loss or damage to the chattel. Generally, such agreements take the form of an undertaking by the hirer to restore the chattel in a certain condition, irrespective of whether he has been at fault in permitting it to fall below that condition. Less commonly, the contract will place the risk of deterioration, even that arising from the default of the hirer, upon the owner of the goods. One such case was Brice & Sons v. Christiani and Neilsen [(1928) 44 T.L.R. 335]. The plaintiffs rented a crane barge to the defendants and undertook to insure it against all risks, the defendants paying the premium. A policy was taken out which failed to cover the machine against certain risks, one of which inevitably occurred, damaging the machine. The defendants, although unable to prove that the injury did not result from any default on the part of their servants, were relieved because the contract clearly indicated that they had declined to assume liability for risks to the machine.

Even more rarely, the hirer's common law duty of care may be squeezed out of existence by more specific covenants, which delineate every aspect of his responsibility and leave nothing to the implications of common law. …

Citation:	*North King Lodge Ltd. v. Gowlland Towing Ltd. et al.,*
	2004 BCSC 460