rosie Lexis@tibary: Dotvary Statue ICLR: Appeal Cases/1897/CLARKE APPELLANT; AND THE EARL OF DUNRAVEN AND MOUNT-EARL RESPONDENT.THE "SATANITA.” [1897] A.C. 59 [1897] A.C. 59 [HOUSE OF LORDS.] CLARKE APPELLANT; AND THE EARL OF DUNRAVEN AND MOUNT-EARL RESPONDENT.THE “SATANITA,” 1896 Nov. 19. LORD HALSBURY L.C., LORD HERSCHELL., LORD MACNAGHTEN., LORD SHAND., LORD DAVEY. ‘Admiralty - Collision - Damages - Contract overriding Limitation of Liability - Merchant Shipping Act Amendment Act 1862 (25 & 26 Vict. c. 63) s. 54 Two yachts were entered by their respective owners for a club race, each owner undertaking with the club to be bound by the club sailing rules. By the rules the owner of any yacht disobeying any of the rules was to be liable for ‘all damages arising therefrom.” One of the yachts in breach of a sailing rule, through improper navigation without the actual fault or privity of the owner, ran into and sank the other yacht: - Held, that there was a contract between the owners upon which the owner of the damaged yacht could sue the owner of the other, and that upon the true construction of the rules the words “all damages" excluded the operation of s. 54 of the Merchant Shipping Act Amendment Act 1862 which limited the liabilty to 8). per ton. The decision of the Court of Appeal ([1895] P. 248) affirmed, THIS Mudhook Yacht Club having advertised a regatta to be held on the Clyde in July 1894, the appellant entered his yacht the Satanita, and the respondent entered his yacht the Valkyrie, for a first-class race in the regatta, each owner signing a letter to the secretary of the club undertaking that while sailing under the entry he would obey and be bound by the sailing rules of the Yacht Club Association. Those rules contained a number of regulations to be observed in races, and among them rule 18 which corresponded to art, 14 of the Regulations for Preventing Collisions at Sea. By rule 24, *.... fa yacht, in consequence of her neglect of any of these rules, shall foul another yacht, or compel other yachts to foul, she shall forfeit all claim to the prize, and shall pay all damages." By rule 32, "Any yacht disobeying or infringing any of these rules, which shall apply to all yachts whether sailing in the same or different races, shall be disqualified from receiving any prize she would [1897] A.C. 59 Page 60 otherwise have won, and her owner shall be liable for all damages arising therefrom.”While sailing under the entry the Satanita, without the actual fault or privity of the owner, broke the 18th rule and ran into and sank the Valkyrie. The respondent and the master and crew of the latter vessel brought an action in the Admiralty Division against the appellant claiming damages. The appellant paid into court a sum as the amount of damages for which he was answerable under the Merchant Shipping Act ‘Amendment Act 1862 c. 3 s. 54(1), calculated at the rate of 8/, per ton on the registered tonnage of the Satanita, Bruce J., before whom the action was tried, held that even if there was a special contract binding the appellant, the words in the rules "all damages" were not so express as to override the statutory limitation. The Court of Appeal (Lord Esher M.R., Lopes and Rigby LU.) reversed this decision, holding hat as against the respondent the appellant was not entitled to limit his liability, and condemned him in the damage proceeded for by the respondent and in costs.(2) The defendant brought the present appeal. Nov. 13, 16. Sir R. T. Reid, Q.C., and E. H. Pollard, for the appellant. By the Merchant Shipping Act Amendment Act 1862 c, 63s, 54 the owner of any ship - where without his actual fault or privity any loss or damage is by reason of the improper navigation of the ship caused to any other ship, goods or merchandise thereon - shall not be answerable in damages to an aggregate amount exceeding 8. per ton of the faulty ship's registered tonnage. This limitation of liability was well known and long established when these Yacht Sailing Rules were drawn up, and must have been in the contemplation of the persons who drew the rules, as well as of the owners of yachts who race. Agreements as well as statutes are construed with reference to the existing state of the law, and where it is intended to waive a protection of the law very clear and express words must be used to shew the intention. Assuming that (1) Repealed by the Merchant Shipping Act 1894 c. 60, of whch the corresponding section is 503. (2) (1895). 248. 11897] A.C. 59 Page 61 there was a contract between the appellant and respondent and that the contract was broken by the improper navigation of the Safanita, the contract must be construed with reference to the statutory limitation of liability, and there being no words shewing clearly an intention to waive the protection, the appellant is entitled to claim it. The words “all damages" mean any damages, all kinds of damages, the word being used in the plural, not in the singular. Liability in full might, itis said, attach in cases where the statute does not apply, for some breach of the sailing rules which does not amount to improper navigation; but a breach of the sailing rules would be evidence of improper navigation, and where the damage happens by "improper navigation” within the meaning of the statute, the operation of the statute is not excluded except by express words. In construing an agreement by which one person undertakes for a money consideration to render services to another, for instance the obligation of a railway carrier, the words are construed most strictly against the contractor, for if he intends to limit his liability he must clearly express the intention. But there is no such principle of construction in a case like the present where each party undertakes similar obligations: the onus is on the person seeking to make out the liability. It is in the highest degree unlikely that ‘owners of yachts would intend to race with unlimited liability. Some of the yachts are of small value and enter for small races, which are sailed at the same time with the largest. Is it likely that the owner of a small yacht would deliberately make himself liable for many thousands of pounds for injuring one of the more valuable yachts or a mark= boat?rosie Lexis@tibary: Dotvary Statue Sir Walter Phillimore, Joseph Walton, Q.C., and L. Batten, for the respondent, were not heard, Nov. 19, LORD HALSBURY L.C. My Lords, in this case the controversy between the parties appears to me to be reduced to a somewhat narrow point. No doubt there are consideralions which apply equally to merchant vessels and to yachts which might have induced the parties to enter into a different contract from that which Ithink they have entered into, No 11897] A.C. 59 Page 62 doubt the persons who drew up the terms on which the different competitors were to race were different persons from those who are now litigants at your Lordships’ Bar, but | think it cannot be doubted that the substance of itis that the persons who are going to race agree to race upon these terms with each other, That being so, the whole question tums upon what is the contract. it has been urged upon us that unless the parties Used very clear language they must be supposed to be contracting according to the known state of the law with regard to ships coming into collision. | do not deny that considerations of that sort are intelligible and reasonable. On the other hand, | think it cannot be denied that the case of yachts is different from that of merchant vessels. I do not say that such a consideration would be conclusive; but remember that these are competing vessels, and where you are speaking of these first-class yachts competing in a yacht-ace you might as well value a race-horse by its weight, 50 many pounds of flesh, as speak of the value of a yacht according to its tonnage. Of course, it may be said in respect to merchant ships also, that that is a very rough test of the value of the ship, and that the object of itis to limit the risk, That is true also; but the conditions under which merchant ships sail and yachts sail are different. Merchant ships must be on the seas at all times and in all weathers, both by day and by night, and it may well be that the considerations that would induce people, so to say, to diminish the stakes upon which they were running their vessels would not be applicable to the case of yachts, which presumably are intended to race in conditions of light and of weather in which they are not exposed to the same risks. My Lords, | only put these matters forward as considerations which may be properly urged on both sides; but in truth the whole question must come back to what is the language which the parties have used, and what is the meaning of that language. Now, apart from any other consideration, looking to the fact that part of the contract is that disobedience of the rules shall make the party who is guilty of the disobedience liable to [1897] A.C. 59 Page 63 damages - "all damages” - if! am to assume that the parties must have known what the condition of the law was in reference to ordinary merchant ships, | think the balance is in favour of those who contend that it would have been proper and appropriate, if they had intended to have that limitation of liability, to put some words in the contract to place it beyond doubt. These words are not legal words - they are popular words: you pay “all damages” if you disobey the rules. I cannot help thinking, therefore, that the true intention of the parties (which, after all, is the thing we have to look at) is to be found in the language they have used; and, having regard to the considerations | have referred to, it appears to me that the word “all” has no significance at all unless itis intended to be used in its popular and natural meaning, and that the expression that they are to pay “all damages” does not mean damages as limited by the Merchant Shipping Act. If | am to look at the language of the contract - though I do not say it is one of those cases which you can pronounce to be absolutely clear (| can quite understand a different view being taken for the reasons | have pointed out) - to my mind the intention of the contract is that the parties are not to be bound by the limitation of the Merchant Shipping Act, but that all damages are to be paid by the person disobeying the rules. Under these circumstances, my Lords, | do not see my way to disagreeing with the judgment of the Court of Appeal; and | therefore move your Lordships that this appeal be dismissed with costs.LORD HERSCHELL. My Lords, | am of the same opinion. | cannot entertain any doubt that there was a contractual relation between the parties to this litigation, The effect of their entering for the race, and undertaking to be bound by these rules to the knowledge of each other, is sufficient, | think, where those rules indicate a liability on the part of the one to the other, to create a contractual obligation to discharge that liability, That being so, the parties must be taken to have contracted that a breach of any of these rules would render the party guilty of that breach liable, in the language of rule 24, to 11897] A.C. 59 Page 64 "pay all damages," in the language of rule 32, to be "liable for all damages arising therefrom." The language is. somewhat different in the two rules; but | do not think they were intended to have, with regard to payment or liability to damages, any different effect. It is admitted that the appellant broke one of those rules, and, having broken or disobeyed that rule, itis quite clear, on the assumption of a contract such as | have described, that there arose the liability to "pay all damages,” or "to be liable for all damages arising therefrom, But then itis said that under the Merchant Shipping Act, if one vessel is injured by the negligent navigation of another, the vessel that does the injury is only liable to the extent of 81, per ton unless there has been default on the part of the owner, and that the liability under these rules must be limited in the same way and to the same extent. My Lords, itis to be observed that the liability created by the contract is not a liability which exists at common law. It is a breach of any of the rules that is made the foundation of the liability. The common law creates liabilty in the case either of nawgation which is negligent at common law, or navigation which is to be deemed negligent as being a breach ofa statutory rule, That being so, it seems to me at the outset very seriously open to doubt whether it is possible to contend that a limitation of the common law liability in a particular case, namely, the negligent navigation ‘without default of the owner, is applicable at all to a liability which is created by contract between the parties in a given event, which event is not that upon which the limitation is imposed by the words of the statute. it was, ingeniously argued by Sir Robert Reid that a breach of these sailing rules would be an element in considering whether there had been negligence at common law, and | should not be disposed for a moment to dispute that there are circumstances under which that might be the case; but, after all, it would not be necessary in order to establish a liability under these rules to enter into any such question at all. Proof of breach of the rule would be enough to prove liability. My Lords, 1am not satisfied that there are no cases in which a liability would not arise under these rules, where there would be no liability at common law. Ifthat be [1897] A.C. 59 Page 65 50, it seems to me that the contention of the appellant would have a very strange result. A breach of the rule proved - prima facie liability - then the party who admits the breach of the rule says, “But | propose now to ask you to enter Upon the inquiry whether there was negligent navigation, because if | can succeed in shewing that my yacht was negligently navigated | shall cut down the liability which otherwise there would be nothing to restrict." My Lords, that seems to me in itself a cogent consideration when one is inquiring whether these words “all damages" can be cut down in the manner contended for on the part of the appellant. | do not see my way to put a restriction upon words ‘which prima facie do not import any restriction, and which have no necessary reference to the provisions of the Merchant Shipping Act creating limited liability, inasmuch as the liability of the person who enters into this contract is, not made to depend upon the circumstances in respect of which a limit is imposed by the Merchant Shipping Act. My Lords, it has been said that a contract such as the Court below have held to exist is a very unlikely contract for the parties to have entered into. | confess | am not satisfied of that either. The parties here are yacht-owners who are entering thelr yachts for a race in which other yachts will be engaged. | do not think there is anything extraordinary in thelr entering for that race upon the terms that they shall be liable for all damage, because the contract gives of course the correlative right of being entitled to all damage. The question to whom that contract would be an advantage would depend on the size of the injured vessel and the injuring vessel in the particular case, which could not be foreseen; therefore it does not seem to me extraordinary that a contract of this sort should be entered into. And again, whilst it is a most uncommon thing for merchant vessels engaged in an adventure to be actually navigated byrosie Lexis@tibary: Dotvary Statue the owner, that is not at all an uncommon thing in the case of yachts, Of course, if the yacht were navigated by the ‘owner and there were negligent navigation, he would be liable for all damages; and that may have been a consideration which led to a contract of this description being made a condition of yachts entering for the race. It puts upon a level, [1897] A.C. 59 Page 66 upon an equality as regards liability to one another, a yacht which is being navigated by the owner and a yacht which is being navigated by some other person on his behalf or employed by him. Therefore, there seems to me to be nothing monstrous, nothing absurd, in the contract which has been held to exist by the Court below, which would justify this House, or any tribunal, in saying that the parties never could have intended to enter into a contract of this description, and that it must have some other interpretation. My Lords, | go no further than that - I do not know ‘whether that was the reason - | do not care whether that was the reason why the provision in question was inserted; but when you seek to cut down what is the prima facie meaning of a contract, and to impose a limitation upon the general words which are used in it, if you seek to do so by considerations such as those which have been urged upon your Lordships with great force by the leamed counsel for the appellant, then you must make it manifest that it is a contract which there could be no reasonable ground for the parties to have entered into, My Lords, there is one other consideration which weighs with me also. Amongst these sailing rules there are rules which are a mere repetition of the ordinary navigation rules. Now, it is very difficult to understand what effect the insertion of these particular rules would have unless it be to make a breach of them result in a liability to pay all damages. They exist, and they would have applied, as being amongst the ordinary rules of navigation, whether they had been among these sailing, rules or not, unless they were excluded by agreement between the parties. The parties have chosen for some reason or other to insert these among the sailing rules by which they have become contractually bound, and from a breach of which this lability was to arise, | am not sure that I have heard any reason {or their insertion unless it be this, that they become then not only the ordinary sailing rules, but part of a contract a breach of which creates a liability to pay “all damages,” to which the statute does not extend. My Lords, whether all the results of these rules have been contemplated may be a question. it may be that when they [1897] A.C. 59 Page 67 are scrutinised in the light of the occurrence that took place here, it may be thought desirable, or necessary, to make alterations in them - with that your Lordships have nothing to do - your only function is to construe the rules as they stand; and so construing them | find myself quite unable to differ from the judgment of the Court below, LORD MACNAGHTEN. My Lords, | am of the same opinion {ido not think that the appellant can avail himself of the limitation of liability prescribed by the Merchant Shipping Act. It seems to me that the expression "all damages arising therefrom" means what it says, and that the generality of this expression is not to be cut down or restricted by anything outside the rules. ‘The leamed counsel for the appellant do not, | think, get rid of the dificulty (if there be any dificuty), or advance their argument in the least, by translating the word “all” into the word "any," as they proposed to do. They have stil to aualify the expression “any damages" by the words “recoverable by law." Ido not see why the language which the framers of the rules have adopted should be changed, or why the language, as we find it, should not have its full and ordinary signification. It does not lead to any absurd or unreasonable result. In fact, as the leamed judges of the Court of Appeal point out, when you consider the conditions of amateur racing and the qualifications, or possibly in some cases the want of qualification, of the helmsman, the result according torosie Lexis@tibary: Dotvary Statue the respondent's construction of the rule is only what one would suppose must have been intended, On the other hand, if the appellant's view is adopted, you have this consequence - anomalous certainly, if not unreasonable - that the yachtsman's liability is limited if he breaks both the sailing rules and the statutory rules of navigation; if he only breaks the sailing rules, his liability is unlimited: the minor offence carries the heavier penalty, There is less danger in transgressing the law than in departing from the rules of the game. The suggestion that every breach of the rules is improper navigation so as to attract, 11897] A.C. 59 Page 68 the statutory limitation of liability is more ingenious, | think, than sound. | agree that the appeal must be dismissed, LORD SHAND. My Lords, | concur, LORD DAVEY. My Lords, | concur, and | have nothing to add to the reasons which have been given. Order appealed from affirmed and appeal dismissed with costs. Lords’ Journals, November 19, 1896. Solicitors for appellant: Thomas Cooper & Co. Solicitors for respondent: Waltons, Johnson, Bubb & Whatton.