A contract of affreightment was entered into by Ellerman Lines Ltd (the appellant) as the carrier and Gibbs Nathaniel Ltd (the respondent) as the shipper. The cargo was loaded on board the City of Colombo at Cochin, India, for delivery to Toronto, Canada, under several bills of lading issued in February 1976. The vessel arrived at Montreal on 10 April. It was scheduled to depart that port for Toronto on 24 April. Departure was delayed, however, until 2 July. The delay was caused by repairs to the vessel's main engines which were found to be damaged on 14 April.

The respondent offered security in the form of an average bond and demanded delivery of the cargo at Montreal. The appellant refused to deliver the cargo at Montreal rather than at Toronto and further purported to exercise a lien on the cargo to secure its claim for general average contribution.

On 17 May 1976, the respondent took action in the Federal Court of Canada to apply for a mandatory injunction ordering the appellant to deliver the cargo at Montreal solely against the provision of general average security. On the same day, Walsh J granted the injunction.

The appellant disagreed with that decision, asserting that a general average situation did exist at Montreal and that the common adventure could not be terminated there by the action of the respondent in taking delivery of the cargo pursuant to the order made by the Court on 17 May 1976. It was argued that the respondent remained liable to contribute in general average for the expenses incurred after delivery of the cargo.

The question was whether the delivery of the cargo put an end to the general average situation and the common adventure.

Held: Appeal dismissed.

The contract of affreightment governing the carriage provided for the adjustment of general average 'according to the York-Antwerp Rules 1974'. It was clear from this that the parties intended the York-Antwerp Rules 1974 to apply both in determining whether a general average situation came into existence and, if it did, the respective amounts that each interest concerned could be obliged to contribute.

As to the question of the existence of general average, the general rule was that a general average situation usually existed before the cargo was delivered. If there was a general average, the next question was whether it was still in existence immediately after the cargo was delivered. To decide the issues mentioned above, rr A and 11.b of the York-Antwerp Rules 1974 should be considered.

According to the evidence, a general average situation existed at Montreal because of the detention of the vessel at that port for the repair of engine damage required for the safe prosecution of the voyage. This would appear to follow from the provisions of Rule 11.b of the York-Antwerp Rules 1974.

The respondent by its injunction proceedings of 17 May 1976, requested delivery of the cargo at Montreal and, subject to giving a general average bond, that request was granted. By its delivery, the cargo passed out of the control of the vessel and into the custody and control of the respondent. The legal effect was to sever the connection between the cargo and the vessel permanently and to bring the common adventure to an end. Therefore, expenditures incurred after that separation were not incurred for the common safety of the ship and the cargo but for the safety of the ship alone. Nothing in the York-Antwerp Rules 1974 or in the contract of affreightment required the respondent to contribute in general average toward such expenses. Nor could the Court find that the respondent committed itself to do so by virtue of some other agreements entered into before the cargo was delivered. The general average bond, it might be assumed, guaranteed payment of an amount that was properly payable. In any event, it was not suggested that the bond provided a basis for a contribution from cargo beyond that set forth in the York-Antwerp Rules 1974.

The respondent was therefore not liable to contribute in general average.