Page 1

Status: Positive or Neutral Judicial Treatment

*499 The British Columbia and Vancouver's Island Spar, Lumber, and Saw-Mill
Company, Limited v Nettleship
Court of Common Pleas
2 June 1868

(1867-68) L.R. 3 C.P. 499

Byles , J. , Bovill , C.J. , Keating , Montague Smith and Willes , JJ.
1868 June 2
Measure of Damages—Carrier—Non—Delivery—Loss of Profits—Ship and Shipping—Delivery of
Goods on board.
The plaintiffs delivered to the defendant's servants on a quay at Glasgow, for shipment on board the
defendant's vessel which lay alongside, several cases containing machinery, which was intended for
the erection of a saw-mill at Vancouver's Island. The master gave a bill of lading for them, describing
the cases as containing “merchandize.” The defendant knew generally of what the shipment
consisted. On the arrival of the vessel at her destination, one of the cases, which contained
machinery without which the mill could not be erected, could not be found on board; and the plaintiffs
were obliged to send to England to replace the lost articles:—
, that the defendant was liable for the loss of the machinery, as delivery to the defendant's servants
alongside the vessel was equivalent to a delivery on board.
, also, that the measure of damages for the breach of contract was, the cost of replacing the lost
articles in Vancouver's Island, with interest at 5 per cent. upon the amount until judgment, by way of
compensation for the delay.
FIRST count of the declaration upon a charterparty between the defendant, the owner of the ship
Kent , and the plaintiffs, whereby it was agreed that the Kent should proceed to Liverpool, and there
load a cargo, and should therewith proceed to Victoria and Vancouver's Island, and deliver the same
on payment of freight. Averment that goods were loaded on board the ship by the plaintiffs for the
voyage, and that all conditions were fulfilled and performed necessary to entitle the plaintiffs to have
the same delivered at a certain port in Vancouver's Island. Breach, that a box of machinery, part *500
of the goods shipped, was not delivered, whereby the plaintiffs sustained damage by losing the value
of the box and its contents, and also by reason of the other goods which were delivered being by the
loss of the box rendered wholly useless to the plaintiffs, by reason of the contents of the said box
being part with the goods which were delivered of certain machinery.
The second count was upon a bill of lading, and was for the loss of the same box of machinery as in
the first count mentioned, and damage was alleged as in the first count.
Pleas, traversing the making of the charterparty and bill of lading, the loading, and the breaches, and
also the delivery and receipt of the goods respectively as alleged. Issue thereon.
The cause was tried before Bovill, C.J., at the sittings in London after last Hilary Term. It appeared
that a large quantity of machinery for the construction of a sawing-mill, packed in cases, was sent
from the works of the engineers who made it, to the quay at Glasgow, alongside which the Kent was
lying; that several other vessels were also loading at the same spot; that a mate's receipt was given
and a bill of lading afterwards signed by the captain for the whole number of cases; and that, on the
arrival of the Kent at Vancouver's Island, although the hatches had never been opened during the
voyage, one of the cases, which weighed about two tons and a half, and which contained a large
quantity of the smaller and more important parts of the machinery, and without which the mill could
not be erected, was not to be found.
His Lordship told the jury that, if the case was delivered alongside the vessel into the custody of the
defendant's agents, the defendant was as much responsible for it as if it had actually been shipped;
and he left it to them to say whether or not it was so delivered. The jury found that it was. A verdict
 Page 2

was thereupon entered for the plaintiffs for 3000l., the full sum claimed, subject to the opinion of the
Court as to the principle upon which the damages were to be ascertained by an arbitrator; and the
following order of nisi prius, embodying the grounds upon which the plaintiffs' claim was founded was
drawn up by consent, for the guidance of the Court:—
1. The defendant was part-owner of the ship Kent . The master of that ship, who was also a
part-owner of her, knew when he *501 agreed to carry the goods referred to in the charterparty and
bill of lading sued upon, that the said goods, consisting of different parts of machinery, were intended
for a mill to be erected and used in British Columbia for the purpose of the business of the plaintiffs in
cutting and sawing timber.
2. The said master at the same time knew that the missing box contained part of the said machinery.
The defendant had no personal knowledge as to the contents of the box or the nature of the cargo,
save that it consisted of machinery.
3. The actual cost to the plaintiffs of replacing the missing machinery, including freight to British
Columbia, was 353l. 17s. 9d.
4. The time occupied in replacing it was between eleven and twelve months, during which time the
whole of the mill of which the missing portion formed part was stopped and useless. The defendant
contended that the missing machinery could have been replaced much earlier.
5. The plaintiffs alleged that a fair rate of hire, or use and occupation value, at British Columbia, of the
missing portion, taken by itself, from the time when it ought to have been delivered until the time it
was replaced, would be 2646l. 2s. 3d. The defendant contended that there was no known rate of hire,
or use and occupation value, at British Columbia, for the said missing portion.
6. The plaintiffs alleged that a fair rate of hire, or use and occupation value, at British Columbia, of the
whole machinery of which the said missing portion formed part, to be applied to the purposes for
which it was required by the plaintiffs for the said period, was 2646l. 2s. 3d. The defendant contended
that there was no known rate of hire, or use and occupation value, at British Columbia, for the whole
machinery.
7. The plaintiffs alleged that their actual loss greatly exceeded these amounts: but the defendant
contended that the plaintiffs' alleged loss (if any) beyond the said sum of 353l. 17s. 9d. proceeded
from other causes. The plaintiffs claimed the actual cost of replacing the said machinery, and also a
rental or use and occupation value of the whole of the machinery, or of such part as the Court might
think them entitled to, from the time the missing portion ought to have been delivered until it was
replaced.
*502
8. The above figures were stated hypothetically; and it was agreed that it should be left to the
arbitrator to ascertain the amounts in accordance with the opinion of the Court, and also to ascertain
any other amounts or facts which according to the opinion of the Court might be decided to be
material in determining the amount of damages.
Sir G. Honyman, Q.C. , in Easter Term last, moved for a rule nisi to reduce the damages by the
amount claimed beyond the cost of replacing the machinery which was lost, or as the Court might
think fit; and also for a new trial, on the ground of misdirection. He submitted that the Lord Chief
Justice ought to have told the jury that the responsibility of the defendant did not commence until the
goods were actually put on board; citing Grant v. Norway . 1
BYLES, J.
My Lord left it to the jury in this case to say whether the goods in question were delivered into the
charge of the servants of the defendant. I see no misdirection in that. Gattorno v. Adams2 is rather an
authority against the defendant. The necessity and convenience of commerce require that the owner's
liability should commence from the moment the goods get into the hands of his servants. The rule will
go therefore only for a reduction of damages.
BOVILL, C.J., KEATING, J., and MONTAGUE SMITH, J.
concurred 3
Rule nisi.
 Page 3

C. Pollock, Q.C. , and Watkin Williams , shewed cause. The plaintiffs claim to be entitled by way of
damages for the defendant's bleach of contract, beyond the cost of replacing the lost machinery, to
compensation for the loss of profits which they sustained whilst their mill by reason of the loss
remained idle. It is to be observed that the whole of the machinery was to be despatched by the
defendant's ship, and that the defendant knew that the cases contained *503 machinery for a mill;
and that distinguishes this case from Hadley v. Baxendale . 4 The plaintiffs are entitled to be put, as to
all the ordinary consequences of a breach, in the same condition as if the contract had been
performed, so far as a money compensation can do it: Ogle v. Lord Vane . 5 In Pothier, Traité des
Obligations, Part 1, c. 2, s. 159, the general rule is thus stated: “Damages and interests are the loss
which a person has sustained, or the gain which he has missed.” He then puts, amongst others, the
case of a letting of a house: “So, if I have let my house to a person in his quality as a tradesman, or
for the purpose of being used as an inn, and the tenant is evicted, the damages and interests for
which I am answerable to him will not be confined to the expense of removal and the advance of
rents. The loss of custom, if he cannot meet with any other suitable house in the neighbourhood,
ought also in some degree to be taken in the account; for, having let my house for the purpose of a
shop or an inn, this kind of damage is one whereof the risk is foreseen, and to which I am considered
as having tacitly submitted.” Cory v. Thames Ironworks Company 6 , though not an authority which
governs this case, may be referred to as giving a limit. It having been sought there to limit the rule in
Hadley v. Baxendale 7 to such consequences of a breach as the defendant had notice of, Cockburn,
C.J., says 8 : “I think the construction which Mr. Coleridge seeks to put upon the case of Hadley v.
Baxendale 9 is not the correct construction as applicable to such a case as this. If that were the
correct construction, it would be attended with the most mischievous consequences; because this
would follow, that, whenever the seller was not made aware of the particular and special purpose to
which the buyer intended to apply the thing bought, but thought it was for some other purpose, he
would be relieved entirely from making any compensation to the buyer, in case the thing was not
delivered in time, and so loss was sustained by the buyer.” To limit the plaintiffs' damages to the cost
of replacing the missing articles would be gross injustice.
*504
[BOVILL, C.J., referred to Wood v. Bell10 , Fletcher v. Tayleur 11 , and Russell v. Bandeira . 12 ]
In Smeed v. Foord13 , which was an action for not delivering a threshing-machine within the time
limited by the contract, the plaintiff was allowed to recover substantial damages in respect of the
expense of stacking his wheat, of loss arising from its deterioration by rain, and of the expense of
kiln-drying it,—these being expenses which must reasonably be supposed to have been
contemplated by the parties as the result of a breach of the contract. The rule was also much
considered in Wilson v. Lancashire and Yorkshire Railway Company . 14 Here, the proper measure of
damages is, besides the cost of replacing the lost articles, the reasonable value of such a mill for the
period during which the plaintiffs were deprived of the means of carrying on their business therein.
Sir G. Honyman, Q.C. , and Lanyon , in support of the rule. The plaintiffs are entitled to 353l. 17s. 9d.,
the cost of replacing the lost goods, but no more. This is an action for a breach of contract, not for a
tort. In order to render the defendant liable for the consequences resulting to the plaintiffs from the
breach of contract, the plaintiffs must shew that the defendant had notice that the case in question
contained an important part of the machinery, in the absence of which no part of it could be used;
they must also shew that he was aware that the case contained articles which could only be obtained
in England. Nothing of the kind was communicated to the defendant. All he knew was that this was
part of a large shipment, and that it was described in the bill of lading as a box of “merchandize.”
Mere knowledge, however, will not do: it must be something which impliedly makes it part of the
contract. Pothier, Part 1, c. 2, s. 162, supports the view. “Sometimes,” he says, “the debtor is liable for
the damages and interests of the creditor, although extrinsic; which is the case when it appears that
they were contemplated in the contract, and that the debtor submitted to them either expressly or
tacitly, in case of the non-performance of his obligation.” *505 That carries out what is stated in the
notes to Vicars v. Wilcocks . 15 In Smeed v. Foord 16 , Crompton, J., says:

“We must not, in my opinion, extend the doctrine of Hadley v. Baxendale17 , which was
the case of a carrier entrusted as such by one party with goods to be delivered to
another, to a case like the present, in which the contract was for the delivery by one of
the contracting parties to the other of a specific article intended for a particular purpose
known to both of them.”
 Page 4

[WILLES, J. You must add to that the qualification of Cockburn, C.J., in Cory v. Thames Ironworks
Company . 18 Bare knowledge will not do: it must be a knowledge which forms the basis of the
contract.]
The whole foundation of the plaintiffs' argument fails in that respect. The rule was further considered
in Rice v. Baxendale19 , and O'Hanlan v. Great Western Railway Company . 20 The utmost measure of
damage here will be as in the last cited case, charging profits of trade for money lying idle. See also
Sedgwick on Damages, p. 69, ed. 1858; andGee v. Lancashire and Yorkshire Railway Company . 21
BOVILL, C.J. In this case it is agreed that the verdict shall stand for the plaintiffs for 353l. 17s. 9d., the
cost of replacing the articles lost, with the cost of carrying them to their destination. The difficulty
arises in respect of the plaintiffs' claim for damages for the delay in replacing the contents of the lost
box, nearly twelve months having been thus consumed by reason of the impossibility of completing
the machinery in Vancouver's Island. Are the plaintiffs entitled to damages in respect of that delay?
and if so, upon what principle are those damages to be assessed? It is to be observed that the
defendant is a carrier, and not a manufacturer of goods supplied for a particular purpose. The extent
of the carrier's liability is to be governed by the contract he has entered into, and the obligations which
the law imposes upon him. He is not to be made liable for damages beyond what may fairly *506 be
presumed to have been contemplated by the parties at the time of entering into the contract. It must
be something which could have been foreseen and reasonably expected, and to which he has
assented expressly or impliedly by entering into the contract. The defendant admits that he is liable
for the value of the articles which were lost. Beyond that, I think he is responsible for the delay, as a
consequence of his breach of duty. In considering the question of delay, and the principle upon which
the damages for it are to be assessed, many serious considerations arise. No stronger instance can
be put than that of a failure of an engagement to pay acceptances at maturity. The non-payment may
cause the destruction of the creditor's trade; and the debtor may know that inevitable ruin will be the
result. And yet what in that case is the measure of damages which the creditor is entitled to recover?
Has it ever been held to be the actual amount of the damage sustained? Certainly not. The true
measure is, a reasonable compensation for the non-performance of the contract. In practice that is
now settled on the principle of allowing interest, varying sometimes in amount. In the present case, a
claim is made for the loss incurred by the stoppage of the works during the time that the whole
machinery remained useless by reason of the absence of the missing box. But, was that stoppage a
consequence that was known or could be contemplated? The defendant certainly knew that the box
contained part of the machinery. But it was not shewn that he knew it contained a material part, and
that without it none of the machinery could be put together. If he had no such knowledge, how can it
be said that he intended to become responsible for the consequences which are now sought to be
imposed upon him? Such damages must be purely speculative. All the defendant could know was
that a mill was intended to be erected. He could not speculate upon the sort of business intended to
be carried on, or as to whether the carrying it on would entail profit or loss. It is impossible that all
these contingencies could have been contemplated by the parties at the time of entering into the
contract, as the probable consequence of a breach of it. Suppose the whole of the machinery had
been lost by a peril of the sea, through the negligence of the captain, or suppose it had been stolen,
could the plaintiffs have claimed the value of the *507 articles and also damages for the loss of the
use they might have made of them? Where has such a principle ever been laid down? The measure
of damages may be very different in cases of fraud. But I know of no case nor any principle which can
justify such a claim as this in an action for a breach of contract. My Brother Willes has handed me a
case of collision decided by Dr. Lushington in the Admiralty Court, the case of The Columbus . 22 The
claim there was for the loss of profits and master's earnings during the time the damaged vessel was
under repair. In delivering judgment, the learned judge says: “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.” And in another part of the judgment he says:
“Supposing, for instance, that this vessel had been an East Indiaman, bound on her outward voyage
to the East Indies with a valuable cargo on board, for the transportation of which not only would the
owners be entitled to a large amount of freight, but the master might be entitled to considerable
contingent profits from the allowances made to him upon such a voyage. Could this Court take upon
itself to decide upon the amount of these contingencies, and to decree the payment of the same in
addition to the payment of the full value of the ship? I am clearly of opinion that it could not. 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 a full indemnity to them for all that
may have happened, without entering for a moment into any other consideration.” If that be the true
rule in the case of a wrongful act committed by a vessel, how much more forcibly it applies where the
 Page 5

question depends on contract, where the consent of the defendant is to be implied. It is difficult to see
any proper way of compensating the plaintiffs for the delay they have suffered, except by applying the
rule which obtains in the case of non-payment of money, viz. by allowing interest on the value of the
goods which had to be replaced. I think this will meet the justice of the case, and be consistent with
law.
*508
WILLES, J.
I am of the same opinion. Cases of this kind have always been found to be very difficult to deal with,
beginning with a case said to have been decided about two centuries and a half ago, where a man
going to be married to an heiress, his horse having cast a shoe on the journey, employed a
blacksmith to replace it, who did the work so unskilfully that the horse was lamed, and, the rider not
arriving in time, the lady married another; and the blacksmith was held liable for the loss of the
marriage. The question is a very serious one; and we should inevitably fall into a similar absurdity
unless we applied the rules of common sense to restrict the extent of liability for the breach of a
contract of this sort. The rule of the Civil Law, as stated by Pothier 23 , was, in the absence of fraud, to
award for the breach of a contract relating to a chattel double the value of the chattel itself. But he
goes on to say that this is “an arbitrary or positive law, which, as such, has not any authority in the
provinces of France. But the principle on which it is founded, of not allowing a debtor who is free from
the imputation of any fraud to be charged with damages and interests resulting from the
non-performance of his obligation, beyond the sum to which at the utmost they might be expected to
amount, being founded upon reason and natural equity, we ought to follow this principle, and
moderate the damages and interests, when they are excessive, agreeably thereto, leaving this
moderation to the discretion of the judge.” What, then, is the rule which ought to govern a case of this
sort? I am disposed to take the narrow view, that one of two contracting parties ought not to be
allowed to obtain an advantage which he has not paid for. The conclusion at which we are invited to
arrive would fix upon the ship-owner, beyond the value of the thing lost, and the freight, the further
liability to account to the intended mill-owners, in the event of a portion of the machinery not arriving
at all or arriving too late through accident or his default, for the full profits they might have made by
the use of the mill if the trade were successful and without a rival! If that had been presented to the
mind of the ship-owner at the time of making the contract, as the basis upon which he was
contracting, he would at once have rejected it. And, though he knew from the shippers the use they
intended to *509 make of the articles, it could not be contended that the mere fact of knowledge,
without more, would be a reason for imposing upon him a greater degree of liability than would
otherwise have been cast upon him. To my mind, that leads to the inevitable conclusion that the mere
fact of knowledge cannot increase the liability. The knowledge must be brought home to the party
sought to be charged, under such circumstances that he must know that the person he contracts with
reasonably believes that he accepts the contract with the special condition attached to it. The case of
Ogle v. Lord Vane 24 is not much to the purpose: the arrangement as to damages took place after
breach. Several circumstances occur to one's mind in this case to shew that there was no such
knowledge on the defendant's part which would warrant the conclusion contended for by the plaintiffs.
In the first place, the carrier did not know that the whole of the machinery would be useles if any
portion of it failed to arrive, or what that particular part was. And that suggests another consideration.
He did not know that the part which was lost could not be replaced without sending to England. And,
applying what I have before suggested, if he did know this, he did not know it under such
circumstances as could reasonably lead to the conclusion that it was contemplated at the time of the
contract that he should be liable for all those consequences in the event of a breach. Knowledge on
the part of the carrier is only important if it forms part of the contract. It may be that the knowledge is
acquired casually from a stranger, the person to whom the goods belong not knowing or caring
whether he had such knowledge or not. Knowledge, in effect, can only be evidence of fraud, or of an
understanding by both parties that the contract is based upon the circumstances which are
communicated. That is indicated by Pothier in the passage referred to, and distinctly pointed out in
the case of the canon. And that, no doubt, is what was intended by the Lord Chief Justice in Cory v.
Thames Ironworks Company . 25 In conclusion, referring to the rule for the assessment of damages
laid down in the case of collisions, see the vast field of inquiry which would be opened out, involving
speculations of the wildest kind, if we are to *510 take into consideration the plaintiffs' intention to
erect a mill, and to set up for the first time a trade the probable profits of which are wholly incapable of
calculation or approximation. It would be making a guess, in order to impose upon the carrier for the
mere breach of a contract an extent of liability which we should decline to fix even upon a wrong-doer.
Take the case of a barrister on his way to practise at the Calcutta bar, where he may have a large
number of briefs awaiting him: through the default of the Peninsular & Oriental Company he is
 Page 6

detained in Egypt or in the Suez boat, and consequently sustains great loss; is the company to be
responsible for that, because they happened to know the purpose for which the traveller was going? I
entirely agree with my Lord that the plaintiffs cannot recover damages beyond the sum necessarily
expended in replacing the lost box of machinery, and the freight, and interest upon the amount for the
time the plaintiffs were delayed.
BYLES, J. The subject having been exhausted by my Lord and my Brother Willes, I have nothing to
add. The verdict will stand for 353l. 17s. 9d., and interest at 5 per cent. until judgment, the costs of
this application to be allowed to the plaintiffs as part of their costs in the cause.

Representation

Attorneys for plaintiffs: Freshfields & Newman .

Attorneys for defendant: Thomas & Hollams .
Rule discharged.

1. 10 C. B. 665 .
2. 12 C. B. (N.S.) 560 .
3. See Meyer v. Dresser, 16 C. B. (N.S.) 646; 33 L. J. (C.P.) 289 .
4. 9 Ex. 341; 23 L. J. (Ex.) 179 .
5. Law Rep. 2 Q. B. 275; in error, Law Rep. 3 Q. B. 272 .
6. Law Rep. 3 Q. B. 181 .
7. 9 Ex. 341; 23 L. J. (Ex.) 179 .
8. Law Rep. 3 Q. B. at p. 189 .
9. 9 Ex. 341; 23 L. J. (Ex.) 179 .
10. 5 E. & B. 772; 25 L. J. (Q.B.) 148; in error, 6 E. & B. 355; 25 L. J. (Q.B.) 321 .
11. 17 C. B. 21; 25 L. J. (C.P.) 65 .
12. 13 C. B. (N.S.) 149; 32 L. J. (C.P.) 68 .
13. 1 E. & E. 602; 28 L. J. (Q.B.) 178 .
14. 9 C. B. (N.S.) 632; 30 L. J. (C.P.) 232 .
15. 2 Sm. L. C. 4th ed. p. 425 , et seq.
16. 1 E. & E. 602; 28 L. J. (Q.B.) 178 .
17. 9 Ex. 341; 23 L. J. (Ex.) 179 .
18. Law Rep. 3 Q. B. 181 .
19. 7 H. & N. 96; 30 L. J. (Ex.) 371 .
20. 34 L. J. (Q.B.) 154 .
21. 6 H. & N. 211; 30 L. J. (Ex.) 11 .
22. 3 Wm. Rob. 158 .
23. Traité des Obligations, Part i. c. 2, s. 164.
24. Law Rep. 3 Q. B. 272 .
25. Law Rep. 3 Q. B. 181 .

(c) Incorporated Council of Law Reporting for England & Wales

© 2022 Thomson Reuters