Indexed as:

L.B. Tanker Inc. v. Shediac Bulk Shipping Co.

Between

L.B. Tanker Inc., plaintiff, and

Shediac Bulk Shipping Co. Ltd., defendant

And between

McAsphalt Industries Limited, plaintiff, and

Shediac Bulk Shipping Co. Ltd., defendant

[1985] O.J. No. 1055

No. 5262/81

 Ontario Supreme Court - High Court of Justice

 Non-Jury Sittings - Windsor, Ontario

McRae J.

Judgment: March 11, 1985.

(15 pp.)

Counsel:

R. Reynolds, for L.B. Tanker Inc.

N. Frawley, for McAsphalt Industries.

R. Colautti, for Shediac Bulk Shipping.

1 McRAE J.:-- Two actions were tried together involving separate plaintiffs but the same defendant. The action commenced first is that of L.B. Tanker Inc; and the defendant, of course, is Shediac Bulk Shipping Co. Ltd. The second action is that of McAsphalt Industries Limited.

2     A very brief history of what occurred is that the plaintiff, McAsphalt, in the fall of 1980 had a recently acquired and overhauled tug named the "Tusker". About mid-October, 1980 the defendant's officer Brian Ritchie telephoned the plaintiff company to charter the tug to push or pull a bare then being in the final stages of a refit in Windsor, Ontario. The tug "Tusker" was in the Toronto harbour.

3     On October 23, 1980 Ritchie from the defendant company was in Windsor and surveyed the tug. He contacted Mr. Mark Donofio and arranged verbally and directly with Donofio of the plaintiff company, McAsphalt, to travel to Windsor for the purpose of taking under tow, or more specifically pushing the barge empty to Toronto. The defendant had arranged to transport fuel oil from Toronto to Kingston, initially for one trip, and hopefully for future trips which would be arranged if the first one went satisfactorily.

4     The first issue is who shall be paid for a ten-day wait in Windsor after the tug "Tusker" arrived beside the barge the "Liquilassie". Mr. Donofio testified that he was told by Ritchie for the defendant to have the "Tusker" in Windsor by November 1, 1980; that Ritchie spoke to him on October 23rd. Ritchie's evidence is that on October 23rd he did speak to Donofio and then went back east to New Brunswick.

5     On the week-end of October 24th and 25th Captain Sanderson of the tug "Tusker" visited Windsor to see his family and have a look at the barge, but merely to see if the tug would fit, according to his evidence. Monday morning, after consultation between Sanderson and Donofio, the "Tusker" left for Windsor.

6     The "Tusker" arrived in Windsor in the very early morning, 4:30 a.m. on October 29th, and remained there ready to move the barge whenever it was ready. Unfortunately, a survey done on or about November 1st indicated that the barge needed further steam-cleaning, and delay resulted.

7     There is no doubt that everyone involved thought that the "Tusker" would be ready to leave about November 1st. I accept the evidence of Mr. Donofio that he was told by Mr. Ritchie to have the "Tusker" there by November 1st, and to have it there a day early. I have no difficulty accepting his evidence where it conflicts with that of Mr. Ritchie. There are reasons why Ritchie wanted the tug there at that time. As I have said, he believed the barge would be ready to go. He was obviously anxious to service his good customer, the Sun Oil Company, who needed the barge in Toronto. He arranged to have a sometime employee, Mr. McFaden, arrive in Windsor for November 1st, anticipating a November 1st departure. McFaden had a very minor duty to perform to blow pressurized air through the lines which would only take him a few hours. Clearly, Mr. Ritchie thought the barge would be ready to leave by November 1st.

8     Mr. Ritchie in his evidence contradicted Mr. Donofio, but I accept Mr. Donofio's evidence. Ritchie said that Donofio and Mr. Bergeron the owner of the barge, were going to get together to arrange when the barge was ready to sail and that it was their responsibility to see that the "Tusker" did not get there before it was ready to sail. This would indeed have been very imprudent of Mr. Ritchie if that was the scheme, but it was not the scheme. Mr. Ritchie never protested in writing, although he did later protest verbally to Donofio about the cost of the "Tusker" sitting in Windsor and his company being charged at the rate of $3,500 a day.

9     Unfortunately, I think that what happened with respect to this period of time is that Mr. Ritchie made a bad business decision and did not use sufficient care to ensure that the tug would not arrive until the barge was ready. It was clearly his responsibility. This is dramatically emphasised by the fact that some time later, probably the week-end November 24th or 25th, he signed a contract from Mr. Donofio which had been mailed to him on October 29, 1980. Mr. Ritchie specifically agreed, knowing at this time that the tug had been in Windsor ten days too soon, that a charge of $3,500 a day would be invoiced from the time the "Tusker" reached the "Liquilassie".

10     Mr. Colautti for the defendant Shediac raises the doctrine of promissory estoppel. He claims that the plaintiff McAsphalt cannot assert and rely on the strict contractual terms because of an alleged assurance given by Donofio to Ritchie not to worry, citing Re Tudale Explorations Ltd and Bruce (1978), 20 O.R. (2d) 593, which held that a party may not resile from an unambiguous assurance. Even if such a statement from Mr. Donofio had been made, and I cannot find on the evidence that it was made, the words, "don't worry about it", do not amount to unambiguous words or conduct within the meaning of the Tudale case.

11     In view of the clear wording of the contract and the duty courts have to enforce written contracts between commercial parties, particularly when they are experienced and seasoned businessmen, the defendant Shediac is clearly responsible for the rental of the tug during that period of time in addition to the subsequent times for which it has paid.

12     The action involving L.B. Tanker involves another part of the claim of the plaintiff McAsphalt, and I will deal with them together later. However, the second action, the L.B. Tanker action includes a claim for the deductible portion of an insurance policy.

13     The barge and the tug "Tusker", while steaming through Lake Ontario in heavy seas on their way back from Montreal, had a collision while making a manoeuvre. A substantial amount of damage resulted to the barge, the "Liquilassie", below the waterline. Initially it was thought that the damage gas about $5,000, but by the time all the inspectors and surveyors looked at it and it had been repaired in Florida, the total amount of damage was about $57,000, of which the L.B. Tanker's insurance company paid everything except the $10,000 deductible.

14     The responsibility for this $10,000 has been in issue between the parties, L.B. Tanker Inc. and the defendant Shediac. Determination of this issue requires a review of the negotiations between L.B. Tanker Inc. for the "Liquilassie" and the defendant for the charterer of that vessel.

15     The "Liquilassie" was a former lake ship which was in the process of being refitted to serve as a barge. The engines were removed; a "V" was cut into the stern so that as if they were one ship. The L.B. Tanker had been refitted, had had one earlier cargo, and work was ongoing in October when negotiations commenced for this charter.

16     Mr. Bergeron, the president of the plaintiff company, the owner of the "Liquilassie", the barge, was negotiating through Cunningham, a ship's broker in Oakville, as was the defendant Shediac. Cunningham was the agent for both Shediac and L.B. Tanker the plaintiff. According to Mr. Cunningham himself, he was agent for both parties. Mr. Ritchie testified that he felt that Cunningham was Shediac's agent. In any event, there were a series of telephone conversations between the plaintiff and Cunningham and between the defendant and Cunningham to negotiate the terms for a charter. Both Mr. Brookes, the financial partner in the plaintiff company who lives in Louisiana, and Mr. Bergeron dealt with Cunningham; Ritchie apparently dealt on behalf of the defendant Shediac with Cunningham.

17     The question that has to be determined before I can determine who was responsible for the deductible portion of the damage is: under what terms did the defendant Shediac charter the barge? The defendant says that a contract that was entered into here in Windsor, and which was drawn by a solicitor on behalf of L.B. Tanker, governs. That contract appears in the book of exhibits, as exhibit 12 on page 83, and to it is appended a blank form of a tanker "time charter party" which appears in the same exhibit on page 90.

18     The defendant says that that is the contract between the parties which governed this charter. A reading of the tanker time charter party item 15 provides:

"The owner shall provide and pay for all provisions, deck and engine room stores, galley and cabin stores and galley and crew fuel, and insurance on the Vessel; wages of the Master, Officers and Crew; consular fees pertaining to the Master, Officers and Crew; all fresh water used by the Vessel ..."

19     The plaintiff L.B. Tanker Inc. denies that that is an umbrella agreement and was entered into at the request of she defendant so that the defendant would have control of this vessel for a one-year period. I think all parties are agreed that the defendant had some concern that having introduced the "Liquilassie" into the oil trans-shipment business that the "Liquilassie" might then move out on its own and cut out the defendant from future contracts if the parties did not enter into such an agreement. A reading of the agreement which was dated November 7th confirms that that was certainly the primary purpose of this contract. The contract states on its first page:

"And whereas the parties have agreed that Shediac shall have the right to arrange Charter Contracts on behalf of Tanker for the vessel "Liquilassie", for service charter contracts relating to the Canadian Petroleum Industry being carried out on the Great Lakes and Eastern Canadian Sea Board;

And whereas Tanker has agreed to grant to Shediac an option to purchase by the right of first refusal upon the vessel, "Liquilassie ..."

20     It is clear that the primary thrust of this overall umbrella contract is to protect the defendant and, as I have said, to give any contracts dealing with the L.B. Tanker for the next 12 months to Shediac.

21     Paragraph "A" of the contract reads:

"Tanker hereby grants to Shediac the following:

(a) The exclusive right to arrange Charter Contracts on behalf of Tanker of the Tank Barge vessel "Liquilassie" for service charter contracts in connection with the Canadian Petroleum Industry under the terms and conditions set forth in Part 1 below;"

22     It gives an option to purchase again for the purpose of giving the defendant Shediac control over that barge for a year. But the agreement does not specifically provide for a particular charter. I think it is admitted on all sides that those charters are negotiated each time it is chartered, whether it is a charter between L.B. Tanker and Shediac, or whether it is a charter between Shediac as the charterer and a third party. That is the purpose of this clause.

23     The document headed "Tanker time charter party", which is appended to the agreement, is intended to cover future contracts that are negotiated as an outline of the type of agreement that will be entered into between Shediac and outside companies or parties who wish to charter the barge. This is exactly what Mr. Bergeron said it was intended to do and I accept that as a fact. I saw Mr. Bergeron in the witness box; I was impressed with him. He is not an aggressive person. He seemed to be honest; he seemed to be anxious to compromise and to make this transaction function throughout. I cannot find that this was the specific contract between the parties in this particular case. The specific contract between the parties in this case was that negotiated by Mr. Cunningham, reflected in the various telexes, finalized in the booking note signed by the plaintiff L.B. Tanker Inc. and sent by Mr. Cunningham to the defendant Shediac on November 10th for their signature. Now, Shediac never sent it back, but this is the strongest possible evidence that this was the intention of the parties and that the contract between Shediac and L.B. Tanker is to be found in the booking note of November 10th. The booking note clearly says that the rate is to be $1,000 a day, which rate the defendant admits, and that the on-survey is to be paid by the owners, in this case L.B. Tanker Inc., and the off-survey by the charterers, Shediac. Page 2 reads: "The charterers pay Tovalop"; Mr. Ritchie on behalf of the charterers admits that Tovalop, which is a type of insurance, was his responsibility, as well as any deductibles thereunder, and for $10,000 deductible under hull and P. and I. policies.

24     Mr. Ritchie takes the position that he can accept some of these terms but not all of them. That is not a tenable position for him to take, in my view. Of course, this booking note was mailed to the defendant Shediac on November 10th, or very shortly thereafter, and the parties proceeded without Shediac ever signing it, but they proceeded with further charters after that. The ship only sailed from Windsor on November 9th, so that even the first oil delivery had not occurred when this booking note was finalized by the defendant's own broker.

25     There was a charter to deliver oil to Kingston, come back empty; and another charter to deliver oil to Kingston, come back empty; another charter to deliver oil to Montreal, come back to Oshawa; another one from Oshawa, to Millbank, New Brunswick near Chatham, and on the terms of that booking note of November 10th were the terms under which all of those charters were carried out.

26     The Supreme Court of Canada dealt with a similar fact situation in Saint John Tug Boat Co. Ltd. v. Irving Refining Ltd. [1964] S.C.R. 614, where Mr. Justice Ritchie stated at p. 621:

"The question to be determined on this appeal is whether or not the respondent's course of conduct during the months in question constituted a continuing acceptance of these offers so as to give rise to a binding contract to pay for the "stand-by" services of the tug at the rate specified in the invoices furnished by the appellant.

The test of whether conduct, unaccompanied by any verbal or written undertaking, can constitute an acceptance of an offer so as to bind the acceptor to the fulfilment of the contract, is made the subject of comment in Anson on Contracts, 21st ed., P.28, where it is said:

'The test of such a contract is an objective and not a subjective one, that is to say, the intention which the law will attribute to a man is always that which his conduct bears when reasonably construed, and not that which was present in his own mind. So, if A allows B to work for him under such circumstances that no reasonable man would suppose that B meant to do the work for nothing, A will be liable to pay for it. The doing of the work is the offer; the permission to do it, or the acquiescence in its being done, constitutes the acceptance'.

In this connection reference is frequently made to the following statement contained in a judgment of Lord Blackburn in Smith v. Hughes, which I adopt as a proper test under the present circumstances:

'If, whatever a man's real intention may be he so conducts himself that a reasonable man would believe that he was consenting to the terms proposed by the other party and that other party upon that belief enters into a contract with him, the man thus conducting himself would be equally bound as if he had intended to agree with the other party's terms."

27     I find that the defendant Shediac was bound by the terms of the booking note of November 10, 1980 and that they are liable for the $10,000 deductible damage to the plaintiff L.B. Tanker Inc.'s barge. They are likewise liable to deliver the barge to a location equivalent to Windsor at the finality of the charter. The charter ended in Millbank, New Brunswick in the vicinity of Chatham. The plaintiff L.B. Tanker Inc. and in this case McAsphalt, because they performed the actual service, are entitled to recover. It was always their understanding and their agreement as well with the defendant that they would be compensated by the defendant for equivalent redelivery at the end of the charter agreement.

28     The plaintiff, in this case McAsphalt, are entitled to be compensated because they had performed a service; they performed it on the understanding and with the agreement of both plaintiffs and the defendant that the barge would be delivered to Halifax which would be much closer, of course, than Windsor, at the end of the charter.

29     The plaintiff McAsphalt Industries are entitled to judgment for that $10,244 as well.

30     That covers all the major items. The only minor items are underpayment of the defendant of $1,400. The defendant Shediac agreed that there was an underpayment of $1,400 on the $1,100 per day charter rate so that the plaintiff L.B. Tanker Inc. is entitled to that in addition to the $10,000 deductible I have already stipulated they are entitled to.

31     The plaintiff L.B. Tanker Inc., it is agreed, is also entitled to $1,200 for the Tovalop part of the insurance. The plaintiff L.B. Tanker is also entitled to the off-hire survey cost which was agreed to in the booking note of November 10th in the amount of $330. They are entitled to the pilotage in the amount of $325.45 for leaving Millbank on the way to Halifax.

32     Mr. Ritchie attempted to claim an invoice for $600 dated December 21, 1980, which reads: "Shifting 'Liquilassie' and 'Seaway Trader' around Woodside sugar dock." He gave conflicting evidence about this. He said that he paid one invoice and sent the second invoice to the "Liquilassie", the company L.B. Tanker for payment. He claims that, but denies that he had paid an invoice. It was an example of his carelessness with the facts and very much, in my view, affected his credibility along with other things he said. I am inclined to give him credit for half of that or $300.

33     He also sent the plaintiff L.B. Tanker Inc. a bill for overtime for his employee J. Crocker. I can see no justification for this at all. He rented the barge as a bare boat or barge. So, in addition to the $10,000 for the deductible, the plaintiff L.B. Tanker is entitled to the sum of $3,415.21.

34     It is conceded that the agreement between the plaintiff McAsphalt and the defendant Shediac holds the plaintiff safe from the defendant's counter-claim. Signed by both parties, Shediac and McAsphalt, the agreement includes a clause that McAsphalt will not be responsible for the acts, defaults, negligence, gross or otherwise of the Master or the crew of such tug or tugs or any of their servants or agents or else whatsoever. Therefore, the defendant Shediac's counter-claim for the $10,000 deductible is dismissed.

35     Judgment will go the plaintiff L.B. Tanker in the amount of $13,415 plus costs, plus pre-judgment interest at 12 percent from December 31, 1980.

qp/s/mes