OWNERS OF DREDGER ” LIESBOSCH ‘
v.
OWNERS OF s.s. ” EDISON “.
Lord
Buck-
master.
Lord
Warring-
ton of
Clyffe.
Lord
Tomlin.
Lord
Russell of
Killowen.
Lord
Wright.
Lord Wright.
MY LORDS,
On the 26th November, 1928, the Respondents’ steamship
” Edison ” in proceeding to sea from the port of Patras fouled the
moorings of the Appellants’ dredger ” Liesbosch ” and did not free
them until she had carried the ” Liesbosch ” into the open sea,
where the ” Liesbosch “, being without crew on board, filled with
water in the heavy sea which was running, sank and became a total
loss. The Appellants issued a writ in the Admiralty Division,
and when the Respondents admitted sole liability for the collision
and loss (which they did not do until the 7th May, 1930) the claim
was referred to the Registrar and Merchants to assess the damages.
The Appellants, who are civil engineers, had entered into a
contract dated the 4th March, 1927, with the Harbour Board of
Patras for the construction under heavy penalties of piers and
quay walls at Patras; the work involved among other things a
considerable amount of dredging; for this work at the date of
the accident the Appellants were using the ” Liesbosch “, which
they had purchased in October, 1927, in Holland for £4,000, to
which must be added as part of the cost the sum of £2,000,
expended in fitting her out and transporting her to Patras.
She was insured for £5,520. There was evidence that in Holland
there were available for purchase by the Appellants in and
about December, 1928, one or more dredgers by which the
” Liesbosch ” might have been replaced, but the Appellants did
not then take steps to purchase a dredger in substitution for
the ” Liesbosch “; all their liquid resources were engaged in the
contract undertaking and in the deposit which under the contract
they had made. In January, 1929, the Patras Harbour Authorities
threatened to cancel the contract and forfeit the deposit unless the
‘ Liesbosch ” were replaced within a certain time. The Appellants,
owing to their financial embarrassments being unable to buy a
dredger, decided to hire one in the Mediterranean, and on the
11th May, 1929, hired from Ancona in Italy a dredger called the
‘ Adria “, at a high rate of hire; the ” Adria ” was somewhat
larger than the ” Liesbosch “, but more expensive to work and in
order to obtain her the Appellants were compelled along with her
also to take on hire a tug and two hopper barges. On 17th June,
1929, the ” Adria ” and her attendant fleet arrived at Patras and
commenced to work on the contract; until then work had been
suspended since the date the ” Liesbosch ” was lost, as the Harbour
Board would not let the Appellants do other work until dredging
was resumed. The monthly rate of hire of the ” Adria ” proved
so burdensome to the Appellants that the Harbour Board, in order
to help them, purchased the ” Adria “, under a contract dated the
30th June, 1929 from the Italian owners, for a sum in cash and
resold her to the Appellants for the same sum, payable in 48 monthly
instalments at 6 per cent, interest. The amended claim of the
Appellants before the Registrar and Merchants was filed on the
14th November, 1930. It was presented in five parts which were
as follows:—Part 1 was for the price paid for the substituted
” Adria “, viz., £9,177 3s. 4d. and £882 7s. 2d. for expenses con-
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nected with the purchase. Part 2 was for £2,922 1s. 2d. for
overhead charges and interest on capital invested, as being thrown
away during the period when work was stopped, that is from the
date the ” Liesbosch ” was lost until the ” Adria ” commenced
work. Part 3 was for £6,836 9s. 8d., being for hire paid for the
” Adria ” and her satellites from 4th May, 1929, to 3rd July, 1930.
Part 4 was for £1,078 16s. 1d., being for the extra expense in
working the ” Adria ” while on hire over what would have been
the cost of working the ” Liesbosch “. Part 5 was for
£2,353 10s. 3d. for profit alleged to have been lost owing to
the stoppage of work under the contract between the date of the
loss of the ” Liesbosch ” and the date when the “Adria ” recom-
menced work. On this claim the Registrar made his Report on the
7th May, 1931. In substance he admitted the Appellants’ claim,
though he reduced it from £23,514 to £19,820; he reduced certain
items, and in particular under Part 5, he held that as the Appellants
were able after the ” Adria ” arrived to resume the contract there
was no loss of profit during the period of delay, but merely a loss
of interest, which he put at rather over £700. The claim was put
forward in drachmas, but I have taken the agreed rate of exchange.
He made no finding as to the value of the ” Liesbosch ” at the
date of the collision, but held in effect that: ” having regard to
” all the existing circumstances, such as the severe terms of their
” contract in regard to penalties and their want of liquid
” resources ” they had acted reasonably and that the hiring of the
” Adria ” to complete an important contract with a public body
was a direct and natural result of the collision. He did not in
terms find that but for financial reasons the ” Liesbosch ” could
have been replaced by purchasing an equivalent dredger, say in
Holland, at a reasonable price and with little delay, but his finding
that it was admitted by the Appellants that they had not then the
means to purchase a dredger does not contradict the evidence led
by the Respondents that there were in Holland at the date of the
collision suitable dredgers for sale. On objections being taken to
the Registrar’s Report, Langton, J., before whom the matter came,
disallowed the Respondents’ objections that the damages claimed
were too remote and confirmed the Report, with a trifling variation.
On Appeal, the Court of Appeal, allowed the Appeal with costs,
holding that the Registrar had proceeded on a wrong basis in
allowing damages which were too remote in law, and ordered
Judgment to be entered for £9,177 3s. 4d. with interest from the
26th November, 1928, to the date of their order at 5 per cent. From
this order the matter comes before your Lordships’ House.
The substantial issue is what in such a case as the present is
the true measure of damage. It is not questioned that when a
vessel is lost by collision due to the sole negligence of the wrong-
doing vessel the owners of the former vessel are entitled to what
is called restitutio in integrum, which means that they should re-
cover such a sum as will replace them so far as can be done by
compensation in money, in the same position as if the loss had not
been inflicted on them, subject to the rules of law as to remoteness
of damage. The Respondents contend that all that is recoverable
as damages is the true value to the owners of the lost vessel, as at
the time and place of loss. Before considering what is involved in
this contention, I think it desirable to examine the claim made
by the Appellants, which found favour with the Registrar and
Langton, J., and which in effect is that all their circumstances, in
particular their want of means, must be taken into account and
hence the damages must be based on their actual loss, provided
only that, as the Registrar and the Judge have found, they acted
reasonably in the unfortunate predicament in which they were
placed, even though but for their financial embarrassment they could
have replaced the “Liesbosch” at a moderate price and with
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comparatively short delay. In my judgment the Appellants are
not entitled to recover damages on this basis. The Respondents’
tortious act involved the physical loss of the dredger; that loss
must somehow be reduced to terms of money. But the Appellants’
actual loss in so far as it was due to their impecuniosity arose
from that impecuniosity as a separate and concurrent cause,
extraneous to and distinct in character from the tort; the
impecuniosity was not traceable to the Respondents’ acts, and in
my opinion was outside the legal purview of the consequences of
these acts. The law cannot take account of everything that follows
a wrongful act; it regards some subsequent matters as outside
the scope of its selection, because ” it were infinite to trace the
” cause of causes “, or consequences of consequences. Thus the
loss of a ship by collision due to the other vessel’s sole fault, may
force the shipowner into bankruptcy and that again may involve
his family in suffering, loss of education or opportunities in life,
but no such loss could be recovered from the wrongdoer. In the
varied web of affairs, the law must abstract some consequences as
relevant, not perhaps on grounds of pure logic but simply for
practical reasons. In the present case if the Appellants’ financial
embarrassment is to be regarded as a consequence of the Respon-
dents’ tort, I think it is too remote, but I prefer to regard it as an
independent cause, though its operative effect was conditioned by the
loss of the dredger. The question of remoteness of damage has been
considered in many authorities and from many aspects, but no case
has been cited to your Lordships which would justify the Appel-
lants’ claim. A dictum was quoted by Mr. Raeburn from the speech
of Lord Collins in Cliffern Oil- Coy. v. Edinburgh and District
Water Trustees, 1907, A.C. 291, at p. 303. ” It was contended
‘ that this implied that the defenders were entitled to measure
‘ the damages on the footing that it was the duty of the Company
‘ to do all that was reasonably possible to mitigate the loss and
‘ that if through lack of funds they were unable to incur the
‘ necessary expense of such remedial measures the defenders ought
‘ not to suffer for it. If this were the true construction to put upon
‘ the passage cited I think there would be force in the observation,
‘ for in my opinion the wrongdoer must take his victim talem qualem,
‘ and if the position of the latter is aggravated because he is with-
‘ out the means of mitigating it so much the worse for the wrongdoer
‘ who has got to be answerable for the consequences flowing from
‘ his tortious act “. But as I think it is clear that Lord Collins is
here dealing not with measure of damage but with the victim’s duty
to minimise damage, which is quite a different matter, the dictum is
not in point.
The case in re Polemis v. Furness Withy & Co., 1921,
3 K.B. 560 a case in tort of negligence was cited as illustrating
the wide scope possible in damages for tort; that case, however,
was concerned with the immediate physical consequences of the
negligent act, and not with the co-operation of an extraneous
matter such as the Plaintiffs want of means. I think, therefore,
that it is not material further to consider that case here. Nor
is the Appellants financial disability to be compared with that
physical delicacy or weakness which may aggravate the damage in
the case of personal injuries, or with the possibility that the injured
man in such a case may be either a poor labourer or a highly paid
professional man. The former class of circumstances goes to the
extent of actual physical damage and the latter consideration goes
to interference with profit earning capacity; whereas the Appellants’
want of means was, as already stated, extrinsic.
I agree with the conclusion of the Court of Appeal that the
Registrar and Langton, J., proceeded on a wrong basis and that
the damages must be assessed as if the Appellants had been able
to go into the market and buy a dredger to replace the ” Liesbosch “.
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On that basis it is necessary to decide between the conflicting views
put forward, on the one hand by the Respondents, that all that is
recoverable is the market price of the dredger, together with cost
of transport to Patras and interest, and on the other hand by the
Appellants that they are also entitled to damages in addition for
loss during the period of inevitable delay before the substituted
dredger could arrive and start work at Patras. The Respondents
in support of their contention relied on the Columbus, 3 W.
Rob. 158, in which Dr. Lushington refused in respect of a fishing
vessel any compensation save on the basis of the smack’s market
value with interest; he gave as an illustration of the same principle
the case of an East Indiaman with a valuable freight on board sunk
in collision by a wrongdoing vessel; in that case, as in the case of
the humble fishing vessel, the compensation would in his opinion be
thus limited. He said that ” The true rule of law in such a case
“would, I conceive, be this, viz., to calculate the value of the
” property destroyed at the time of the loss and to pay it to the
” owners as full indemnity to them for all that may have happened
” without entering for a moment into any other consideration. If
” the principle contended for by the owners of the smack 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
” endless 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 even to those of the return voyage which might be
” said to have been defeated by the collision “.
But, for all the eminence of Dr. Lushington, the simple but arbi-
trary rule he thus enunciated has not prevailed at least as regards
ships under profitable freight engagement. Perhaps it was felt
that, in the words afterwards used by Lord Sumner in the Chekiang,
1926, A.C. 637, at p. 643, ” The measure of damage ought not to
” be governed by mere rules of practice nor can such rules override
” the principles of law on this subject.” Lord Sumner also
distinguishes ” a rule of thumb ” from what is binding law. In
these cases the dominant rule of law is the principle of restitutio
in integrum, and subsidiary rules can only be justified if they give
effect to that rule. A view of the practice of the Admiralty Court
differing from that of Dr. Lushington was stated by Sir Robert
Phillimore in the Northumbria, L.R. 3, Admiralty and Ecclesiastical
C, and in the Kate, 1899, P.165, it was expressly held that in the case
of a vessel being totally lost by collision, while on her way in ballast
to load under a charter, the proper measure of damages against
the vessel solely liable for the collision was the value of the
vessel at the end of her voyage, plus the profits lost under the
charter party. The same principle was extended in the Racine,
1908, P. 273, to a vessel sunk while on her voyage under
charter from her home port to a foreign port, from which
port she was chartered to proceed to another port, from which
again she was chartered back to her home port; it was held
that the owner was entitled to recover the presumed net loss of
freight on all three charters less 10 per cent, for contingencies and
her value on her return to the home port at the end of the three
charters. But in the Philadelphia, 1917, P. 101, it was decided
that the value must be determined as at the time of the loss (the
market had in that case risen between the date of the loss and the
presumed date of her arrival at the end of the voyage) together
with the proper net sum in respect of her existing charters, subject
to allowance for contingencies. It is now clear, accordingly, that
the arbitrary rule suggested by Dr. Lushington is not law, though
the decisions just cited, however just in the result, cannot be
regarded as logical or complete. The true rule seems to be that
the measure of damages in such cases is the value of the ship to
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her owner as a going concern at the time and place of the loss. In
assessing that value regard must naturally be had to her pending
engagements, either profitable or the reverse. The rule, however,
obviously requires some care in its application; the figure of damage
is to represent the capitalised value of the vessel as a profit earning
machine not in the abstract but in. view of the actual circumstances.
The value of prospective freights cannot simply be added to the
market value but ought to be taken into account in order to
ascertain the total value for purpose of the damage, since if it
is merely added to the market value of a free ship, the owner
will be getting pro tanto his damages twice over. The vessel cannot
be earning in the open market, while fulfilling the pending charter
or charters. Again, the present valuation of a future charter
becomes a matter of difficulty in the case even of successive charters,
still more in the case of long charters, such for instance as that in
the Lord Strathcona s.s. Co. v. Dominion Coal Co., 1926, A.C. 108.
which was for ten St. Lawrence seasons, with extension at the
charterers option for further eight seasons. The assessment of the
value of such a vessel at the time of loss, with her engagements,
may seem to present an extremely complicated and speculative
problem. But different considerations apply to the simple case of
a ship sunk by collision when free of all engagements, either being
laid up in port or being a seeking ship in ballast, though intended
for employment, if it can be obtained, under charter or otherwise.
In such a case the fair measure of damage will be simply the
market value, on which will be calculated interest, at and from the
date of loss, to compensate for delay in paying for the loss. But
the contrasted cases of a tramp under charter or a seeking tramp
do not exhaust all the possible problems in which must be sought
an answer to the question what is involved in the principle
restitutio in- integrum. I have only here mentioned such cases as
the step to considering the problem in the present case. Many,
varied and complex are the types of vessels and the modes
of employment in which their owners may use them. Hence the
difficulties constantly felt in defining rules as to the measure of
damages. I think it impossible to lay down any universal
formula. A ship of war, a supply ship, a lightship, a dredger
employed by a public authority, a passenger liner, a trawler, a
cable ship, a tug boat (to take a few instances), all may raise
quite different questions before their true value can be ascertained.
The question here under consideration is again different; the
‘ Liesbosch ” was not under charter nor intended to be chartered,
but in fact was being employed by the owners in the normal
course of their business as civil engineers, as an essential part
of the plant they were using in performance of their contract
at Patras. Just as, in the other cases considered, what must be
ascertained is the real value to the owner as part of his working
plant and ignoring remote considerations at the time of loss; if it
were possible without delay to replace a comparable dredger exactly
as and where the ” Liesbosch ‘ was at the market price, the
Appellants would have suffered no damage save the cost of doing
so, that is in such an assumed case the market price, the position
being analogous to that of the loss of goods for which there is a
presently available market. But that is in this case a merely
fanciful idea. Apart from any consideration of the Appellants
lack of means, some substantial period was necessary to procure
at Patras a substituted dredger; hence, I think, the Appellants
cannot be restored to their position before the accident unless
they are compensated (if I may apply the words of Lord Herschell
in the Greta Holme, 1897, A.C. 596, at p. 605) ” in respect
” of the delay and prejudice caused to them in carrying out
” the works entrusted to them “. He adds : ” It is true these
” damages cannot be measured by any scale.” Lord Herschell was
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there dealing with damages in the case of a dredger which was out
of use during repairs, but in the present case I do not think the
Court are any the more entitled to refuse, on the ground that there
is difficulty in calculation, to consider as an element in the value to
the Appellants of the dredger the delay and prejudice in which its
loss involved them; nor is it enough to take the market value, that is,
the purchase price (say in Holland) even increased by the cost of
transport, and add to that 5 per cent, interest as an arbitrary
measure. It is true that the dredger was not named in the contract
with the Patras Harbour authority, nor appropriated to it; but it
was actually being used, and was intended to be used, by the
Appellants for the contract work. I am not clear if that view is
what is meant by Scrutton, L.J., in his Judgment in this case when
he quotes the word of Barnes, J., in the Harmonides, 1903, P. 1,
” The real test is : what is the value of the vessel to the owners
” as a going concern at the time the vessel was sunk “, and
continues : “I should add at that place, for if the vessel had
” to be replaced at Patras expense and time might have been
” added to the cost of the vessel replaced.” In the Harmonides
(supra) Barnes J., had to consider in the case of an Atlantic
passenger liner, not her mere value in the general market, but her
actual value to her owner in a business sense; he refused to confirm
the Registrar’s Report putting her value in the market at £18,000,
but heard fresh evidence and fixed the value at £31,000 as being
the real value to the owners. The problem there was in principle
the same as the problem in this case. A nearer parallel is afforded
by Clyde Navigation Trustees v. Bowring, 32 LI. L.R, p. 35, and 33
LI. L.R. p. 319, in which the Court of Session in Scotland, affirming
Lord Morison, held that the Plaintiffs, whose dredger had been
rendered a total loss by the negligent navigation of the Defendants’
vessel, were entitled, if they were to be placed in the same position
as if the injury had not been done them, to have a value placed
on their dredger as the value to them, based on three elements :
(1) The cost of procuring a comparable dredger; (2) cost of adapting
it to their requirements; (3) compensation for loss of user. The
Court rejected the contention that there was any absolute rule fixing
the compensation at the market value with interest from the date
of the collision. The late Mr. Registrar Roscoe in his valuable
work on ” Damages in Maritime Collision ” cites at p. 42 of the 3rd
Edition the case of the Pacaure, a lightship which was sunk in
collision; the owners, the Mersey Docks and Harbour Board, were
allowed in addition to the value of the sunken vessel the cost of
a substituted vessel for 366 days. I should prefer to state that
such extra cost was an element in assessing the loss of value to the
owners of the lightship, though it may be no different result would
follow from the difference in statement.
In my judgment similar principles are applicable to the present
case; the difficulty in applying them is that the evidence called
before, and the findings made by, the Registrar and Merchants were
directed, as explained above, to a different measure of damage.
Scrutton, L.J., thus sums up the position : ” But what the owners
” have lost is their dredger. If the Court gives them their dredger
“at the time and place of loss as a profit-earning dredger, and gives
” them interest on that value from the time of the loss to the
” judgment, I do not see any room for a further award of profits “,
and he goes on to describe the indirect losses which they claim in
expense thrown away over the whole period they were without a
dredger and the heavy outlay incurred in hiring and working the
“Adria”, and for loss of profits. What Scrutton, L.J., in fact awards
as the value of the dredger to the Appellants at the time and place
of loss is £9,177, which was what was paid for the ” Adria ” in
September, 1930, but, as the Lord Justice points out, that
fact is not evidence of the market value of the ” Liesbosch “
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in November, 1928, when the ” Liesbosch’ was lost, any
more than is the cost to them of the ” Liesbosch ‘ when
they bought her or the amount for which she was insured.
It might seem to follow that Scrutton, L.J., is intending
to give some compensation, beyond the actual cost of re-
placing the ” Liesbosch “, for delay and prejudice in the contract
work; if not, I do not see how he is giving the value of the dredger
to the owner at Patras as a factor in his business as a going concern.
It is on the true value so ascertained that the interest at 5 per
cent, from the date of the collision will run, as further damages, on
the principles of the Court of Admiralty stated by Sir Charles
Butt in the Kong Magnus, 1891, P. 223, that is, damages for the
loss of the use of the money representing the lost vessel as from
the date of the loss until payment. Mr. Raeburn has pressed
that the matter should be sent back to the Registrar and
Merchants for the amount of damages to be assessed on the
principles accepted by this House. I have felt grave doubt
about this as I am not quite sure on what principle the Court
of Appeal have arrived at the sum they have awarded. But
the best opinion I can form is that they intended” to give
simply the replacement cost, without including in the value any
allowance for disturbance and prejudice during the necessary
period of delay. If that is so, though I agree with their dis-
allowance of the claim as put forward, I do not agree with the
disallowance, in ascertaining the value, of anything beyond the cost
of replacement. I do not think in a case like this, interest is a
compensation for that factor, because I think that factor must be
something to be taken into account in arriving at the figure of
value on which interest must run. On the whole I think Mr.
Raeburn is right in urging that the matter should be referred
back to the Registrar and Merchants to ascertain the true value
on the principles I have stated. From these it follows that the
value of the ” Liesbosch ” to the Appellants, capitalised as at the
date of the loss, must be assessed by taking into account (1) the
market price of a comparable dredger in substitution, (2) costs of
adaptation, transport, insurance, etc., to Patras, (3) compensation
for disturbance and loss in carrying out their contract over the
period of delay between the loss of the ” Liesbosch ” and the time
at which the substituted dredger could reasonably have been avail-
able for use in Patras, including in that loss such items as overhead
charges, expenses of staff and equipment, and so forth thrown
away, but neglecting any special loss due to the Appellants’
financial position. On the capitalised sum so assessed, interest will
run from the date of the loss. The result is that the Appellants
have substantially failed in the Appeal because they have failed
in their claim that the judgment of Langton, J., should be restored,
and accordingly they should pay to the Respondents three-quarters
of their costs of this Appeal. The order of the Court of Appeal
will be varied by substituting for the judgment for £9,177 3s. 4d.
a judgment for such sum as the Registrar and Merchants may
find on reference back to them. Save as so varied the order of
the Court of Appeal will stand. I cannot help expressing a hope
that the parties may now compose this remaining difference without
further proceeding in the Registry.
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