Scottish Court of Session Decisions

On 3rd June 1909 James Main and others, three of the registered owners of the steam drifter “Gratitude,” and (2) Alexander Stewart and others, members of the crew, brought an action against W. H. Leask and others, owners of the steam drifter “Comely,” in which they sued for £400 as the profits they would have earned during the fishing season had the vessel not been lost. The “Gratitude” had become a total loss in consequence of a collision with the “Comely” on 8th October 1908.

The pursuers averred that the collision was due entirely to the fault of the defenders, and further averred The ‘Gratitude’ was insured for £2600, and this sum has been recovered from the insurance company. That sum, however, does not represent her full value at the time of the collision. The pursuers have in consequence of said collision suffered serious loss and damage. All the fishing gear on board … as well as the stores, and also the personal effects of the pursuers, have been lost.… In addition to the loss of these, the pursuers lost their respective interests in the profits of the fishing which they would have made but for the sinking of the ‘Gratitude,’ and which are moderately estimated at the sum of £400.… The ‘Gratitude’ was being worked under an agreement in terms of which the profits of the fishing (after deducting expenses) were to be allocated one-third to the owners of the boat, one-third to the owners of nets, and one-third to the crew.… In any event, the pursuers, or such of them as are registered owners of the ‘Gratitude,’ are entitled to recover said sum of £400, or proportional shares thereof, as representing the special or enhanced value of the vessel at the time of the collision. She was lost during the fishing season, and was engaged in fishing at the time of her loss. But for her loss she would have earned during the remainder of the season, in

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name of profits, not less than said sum of £400, which is a fair estimate of the average profits made by similar vessels, and which in particular were made by similar vessels in 1908. It was not possible to timeously obtain a substitute vessel to replace the ‘Gratitude.’.…”

The defenders pleaded, inter alia—“(4) In any event, the pursuers' averments as to loss arising from prospective fishing are irrelevant, and ought not to be remitted to probation; et separatim

On 11th February 1910 the Lord Ordinary ( Salvesen) repelled the first branch of the defenders' fourth plea-in-law and continued the cause. Leave to reclaim was granted.

Opinion.—“This action arises out of a collision which took place between the steam drifter ‘Gratitude’ and the steam drifter ‘Comely.’ As the result of the collision the ‘Gratitude’ became a total loss, and her underwriters, who are represented by the defenders in the present case, have already paid her insured value as at the time of the collision. The defenders further practically admitted liability for the loss of fishing gear, stores, and personal effects belonging to the pursuers, and expect that they will be able to adjust the figures with them. The argument which I heard in the Procedure Roll relates entirely to a claim of £400, the estimated amount of the profits which the pursuers would have earned had they continued the fishing in which they were engaged to the end of the season. The defenders maintain that the averments as to the loss arising from prospective fishing ought not to be remitted to probation, on the ground that this is consequential loss, which cannot be recovered from the defenders. This contention raises an interesting question as to the measure of damage recoverable where a ship has been totally lost through a collision.

“If the case fell to be decided upon principles of common law, I do not think I could hold the pursuers' claim for loss of earnings as so remote and consequential as to be irrecoverable in law. It is not unlikely that the crew of a fishing vessel who have been hired either at fixed wages or on the footing of sharing the profits of the fishing adventure may suffer a real and tangible loss if the vessel on which they were employed is sunk in consequence of the wrongful act of another. On the other hand, if a different rule has been fixed and acted upon in Admiralty cases, it would be inadvisable to unsettle an established practice.

The earliest case to which I was referred was that of the ‘ Columbus,’ 3 W. Rob. 158. In that case the owner of a fishing smack, who was also its master, maintained that in addition to the value of the smack at the date of her loss he was also entitled to a sum of £89, which he stated he would have earned in wages as master of the smack during twelve months after the date of the collision, and £75 which he claimed as the average profits of the smack for the same period. Both claims were rejected by Dr Lushington, who, after admitting that the principle upon which the Court proceeds in all matters of this kind is a restitutio in integrum, ‘in other words the principle of replacing the party who has received the damage in the same position in which he would have been provided the collision had not occurred,’ proceeds as follows — ‘Although this is the general principle of law, all courts have found it necessary to adopt certain rules for the application of it; and it is utterly impossible in all the various cases that may arise that the remedy which the law may give should always be to the precise amount of the loss or injury sustained. In many cases it will of necessity exceed, in others fall short of, the precise amount.… In respect to the question more immediately under consideration at the present moment, I do not recollect a case, and no case has been suggested to me, where a vessel has been considered as a total loss and, the full value of that vessel having been awarded by the Registrar and merchants, any claim has been set up for compensation beyond the value of that vessel. When I first read the papers in this case I looked with much care and attention to see whether any precedent could be found, whether any single instance had occurred in the numerous cases that have arisen not only in my own time but in that of my predecessors, but I found none; and the learned counsel who argued the case on behalf of Mr Woodward does not appear to have been more successful in his researches.’ At a later stage of the same opinion he says—‘If the principle to the contrary contended for by the owner of the smack in this case were once admitted, I see no limit in its application to the difficulties which would be imposed upon the Court. It would extend to almost unlimited ramifications; and in every case I might be called upon to determine not only the value of the ship but the profits to be derived on the voyage in which she might be engaged; and, indeed, to those of the return voyage, which might be said to have been defeated by the collision. Upon these considerations alone I should not, I conceive, be justified in admitting this claim.’

The matter was again considered in the case of the ‘ City of Rome,’ 8 Asp. Mar. Law Cases, p. 542, where a claim was made on behalf of the owners and crew of a fishing vessel. The Registrar disallowed the claim which had reference to the value of the fish which it was estimated would have been caught between the time the smack was sunk and the termination of the fishing season, and his report was sustained by Sir James Hannen. After stating that he was at first favourably inclined to the claim, he came to be of opinion that it must be disallowed in toto—‘There is a difficulty (he says) in arriving at a conclusion of what would adequately compensate the owner of a vessel which has been run down for the loss he has sustained; but, as has been pointed out by Dr Lushington, some definite rules must be adopted by courts as their guide; and he has laid

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down with his usual clearness and force the rule which guided him, and which, as far as I can see, has continued to guide his successors in their judgments; and I cannot accept the suggestion of Dr Stubbs that two or three deliberate decisions of Dr Lushington have become obsolete because some cases, which are apparently inconsistent, have been decided in the registry; and it is remarkable that when the strongest of those cases comes to be sifted it turns out to be no authority at all, being a case not of total but of partial loss. I consider the matter is concluded by authority, that where there is a total loss the question of the value of the fishing loss at that time is what is to be taken into account, without reference to the prospect of what the vessel would have earned if she had gone on a longer or shorter voyage than the one on which she was engaged at the time.’

The rule that may be gathered from these two cases, that where a ship is totally lost in consequence of a collision the owner can recover no more than the value of the ship as at the date of her loss, has not been followed in later cases. In the ‘ Kate,’ 1899, P.D. 165, Sir F. H. Jeune, after a careful review of the reported decisions, held that the owner of a vessel which was lost on a voyage to a North American port when under charter to load a cargo for the Continent was entitled to recover not merely the value of the vessel as at the date of the collision but her value as at the end of the chartered voyage, plus the profits lost under the charter-party; and in commenting on the authority of the cases just cited he said—‘It is no doubt a sound principle in the case of total loss that, speaking generally, to give a sum which will replace the vessel is to give all that justice demands. It may in each case be fairly enough assumed that the substituted vessel will in the future be as profitable to her owner as that which has perished would have been, but to carry this principle so far as to say that a vessel lost at the commencement of her voyage is compensated for by her value without regard to her profits during the voyage, when the owner could not in fact replace his lost vessel and earn these profits, appears to me to press theory into conflict with fact’ (p. 171). This principle was acted upon and carried further in the case of the ‘ Racine,’ 1906, P.D. 273. There the vessel lost was proceeding from a home port with cargo to a foreign port, thence to proceed under charter to another port and home under charter from that port, and the Court held that the owner was entitled to recover her value as at the date when she would have accomplished the last of the three voyages, together with such a sum as would represent the profit which would have been realised under the three successive charters, less a reasonable percentage for contingencies. The same rule was applied by Lord Stormonth Darling in the case of Parker, 7 S.L.T. 304, where the ship at the time of the accident was under charter to sail with cargo from Swansea to Portland with the object of getting a freight there to the United Kingdom, which would compensate for the relatively unprofitable outward freight which she had agreed to take. No charter had in fact been concluded for the return voyage, but the Lord Ordinary held that a highly remunerative freight could in fact have been secured, and he assessed the damage on the footing that the owner was entitled to loss of profit on the contemplated round voyage. The defenders maintained that the latter case had no application, because it was not a case of total loss, and that a different principle in assessing damage had always been followed in the case of a vessel partially damaged through collision. It is true that no such artificial rule as that laid down by Sir James Hannen in the ‘ City of Rome’ has ever been applied to cases of partial damage, but I confess that I can see no reason for the distinction. In the ‘ Risoluto,’ 8 P.D. 109, a French fishing brig came into collision with an Italian barque and was compelled to put into a port for repairs. On her repairs being completed she returned to the fishing ground before the close of the fishing season. Her owners and crew were allowed £880 as the loss sustained by the interruption of the fishing, and I apprehend that if owing to the length of time the repairs took to execute the whole fishing had been lost an additional sum would have been allowed. Why in the present case should the owner and crew not receive compensation for the loss of the season's fishing which they apparently sustained by the loss of the ‘Gratitude’? Of course if it can be shown that they secured or could have secured other employment, the claim for loss of profits would fall to be abated to the extent that similar profits could have been or actually were made, but I think it highly improbable that the owner could in fact have replaced his lost vessel so as to earn the profits which he anticipated by the employment of the ‘Gratitude’ during the particular fishing season, which is of comparatively short duration, and it may well be that his crew would have found it impossible to secure any employment.

I agree with Sir Francis Jeune that in very many cases the owner of a vessel which is lost on a trading voyage is sufficiently remunerated by getting the full value of his vessel, with interest at 5 per cent. from the date of the collision, but there must be cases where compensation arrived at on these lines would, even in the case of the owner, not repay him for his loss. In the ‘ Argentino,’ 14 A.C. 519, the case was figured of a whaling vessel fitted out for a particular cruise being lost by a collision, and so losing the season's fishing. To give the owner back his capital would not compensate him for the loss he suffered, unless it could be shown that another vessel equally suitable could have been obtained in time to despatch her to the whaling grounds during the season when that fishing can be prosecuted. So in the case of a vessel built for a particular trade, and which cannot be replaced except by

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building another, it may often happen that interest at 5 per cent. on her value would fall far short of the profit which the owner had earned in previous years and might reasonably have expected to have earned in the year in which the casualty occurred. In the House of Lords it was stated by Lord Herschell that there is no special rule of the Admiralty Court governing the question as to the damages recoverable as the result of a collision, and that ‘the law there administered in relation to such a matter is the same as prevails at common law.’ I hold, therefore, that there is no rule which excludes the owners of a vessel lost by collision from recovering against the wrongdoer such loss, whether actual or prospective, as they can show that they have suffered through the wrongful act.

If this be so as regards the owner, still more is it the case with regard to the other pursuers. The owner would at least get compensation to the extent of the value of his ship, with interest at 5 per cent. from the date when she was lost, but the fishermen whom he employed on the footing that they were to share the profits of the fishing would not participate in that compensation, and would, if the defenders', contention were well founded, get nothing at all except compensation for the loss of their personal effects. I think there might be many cases where such a rule would operate serious injustice, and this case may be one of them. The ordinary crew of a trading vessel may have no difficulty in obtaining employment in other ships when the one in which they were engaged is sunk in a collision, but even here there may be cases of great hardship if such a rule as the defenders contend for were to be rigidly applied. It is not always easy for a master to get an equally good berth with that which he held on the vessel which was lost, and although Dr Lushington disallowed the claim of the master in the case of the ‘ Columbus,’ it must be kept in view that he was also the owner of the smack, and that there were special circumstances which indicated that he need have suffered little or no loss if he had accepted the offer of the defenders to take back his smack, which they had raised and offered to repair. At all events it seems to me that the pursuers here may have just as good a claim as the master and crew of the ‘Risoluto,’ and I think they are entitled to prove it if they can. I shall accordingly repel the first branch of the defenders' fourth plea-in-law and continue the cause; and as the defenders desire an opportunity of submitting my judgment to the Inner House I shall grant leave to reclaim.”

The defenders reclaimed, and argued—(1) The claim of the crew for loss of profits, or rather wages, could not be admitted. Their loss was damnum absque injuria. A wrongdoer, though liable in damages to the owner of property destroyed by him, was not liable to any third party who by reason of contract or otherwise with the owner of the property destroyed had suffered loss through its destruction—Mayne on Damages, 8th ed. p. 97; Simpson v. Thomson, (1877) L.R., 3 A.C. 279; Anglo-Algerian Steamship Company, Limited v. Houlder Line, Limited, [1908] 1 KB 659. The crew were not joint adventurers; they were employees of the owners, though paid for their labour by a share of the profits. (2) The claim on the part of the owners for loss of profits was also bad. Where a collision resulted in total loss the owner of the vessel lost could not recover in name of damages anything more than the full value of the vessel at the time of the loss—the “ Columbus,” 1849, 3 W. Rob. 158; the “ Clyde,” 1856, Swaby 23; the “ City of Rome,” (1887) 8 Asp. Mar.Cas. 542, note. The only exception to that rule was where the vessel was at the time of the collision running under a charter-party with a definite fixed freight. In that case the chartered freight could be recovered. To that exception the cases relied on by the pursuers, viz., the “ Kate,” [1899] P 165; the “ Racine,” [1906] P 273, were referable. In Parker v. North British Railway Company, December 23, 1899, 7 S.L.T. 304, the circumstances were very special, because it was there held proved as a fact that the vessel which had been lost could have got a charter-party at a very profitable rate if she had arrived at a certain port. Further, that was a case of partial loss, and the claim made there was not of the highly speculative nature of the claim put forward in the present case. The very speculative nature of the present claim was illustrated by the fact that the pursuers did not and could not aver the duration of the herring-fishing season, as it was subject to great variation. Esto that the pursuers were entitled to be placed in the same position as they would have been had there been no collision, they would be so placed if they got the full value of the vessel at the time of her loss, with interest therefrom till payment.

Argued for the pursuers (respondents)—(1) The claim of the crew was clearly valid. They were not the employees of the owners, but were joint-adventurers with them, and that gave them an interest in the vessel requisite to entitle them to sue — Marsden on Collisions, 5th ed., p. 96. Their position was in fact more analogous to that of charterers than of employees. The cases of Simpson v. Thomson, cit., and Anglo Algerian Steamship Company, Ltd. had therefore no application. (2) The claim of the owners for loss of profit was equally valid. There was no distinction in regard to the measure of damages between cases of partial and cases of total loss, for the so called rule of the “ Columbus” and the “ Clyde” had been departed from — the “ Harmonides,” [1903] P 1, per Gorrell Barnes, J., at p. 6; the “ Kate,” cit.; the “Racine,” cit.; Parker v. North British Railway Company, cit. In all cases the owner of the vessel lost was entitled to be placed in the position he would have been but for the collision—the “ Amalia,” 1864, 34 L.J. Ad. 21; the “ Harmonides,” cit.; and it made no difference whether the vessel was under charter-party or not. A charter-party was merely one mode of proving the loss that had been sustained

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but that loss might be proved in other ways. The sole question was whether the claim was one for a sum which was definitely ascertainable and which could be easily ascertained, or was a claim for a random sum such as was disallowed in the “ Columbus,” cit.—the “ Clarence,” 1850, 3 W. Rob. 283; the “ Argentino,” [1888] L.R., 13 P. D. 191, per Bowen, L.J., at p. 202, aff. L.R., 14 A.C. 519. In this case the pursuers' claim for loss of fishings could be easily ascertained, and such claims had been allowed — the “ Risoluto,” (1883) L.R., 8 P.D. 109.

At advising—