Carriage of Goods

Carriage of Goods

Here you will find information and cases summaries relating to the carriage of goods by sea and multi-modal (combined carriage). For infomation on Air Carriage or Road/Rail Carriage go to Carriage by Air or Carriage by Road/Rail.

Introduction

Part 5 of the Marine Liability Act (formerly the Carriage of Goods by Water Act) governs the carriage of goods by sea to or from Canada and within Canada. The Act implements the Hague-Visby Rules and provides for the possible future implementation of the Hamburg Rules. Pursuant to the Hague-Visby Rules the carrier of the cargo is liable for any loss of or damage to the cargo unless the loss or damage is caused by an excepted peril. The carrier is, however, entitled to limit liability to the greater of 666.67 SDRs per package (approximately C$1,200) or 2 SDRs per kilogram (approximately C$3.60). The time limit for bringing a suit against the carrier is one year from the date of discharge of the goods.

For an overview of Canadian Law of Carriage of Goods by Sea see the paper Canadian Law of Carriage of Goods by Sea: An OverviewFor a list of the cargo regimes in force in various countries see A SURVEY OF THE CARGO BY SEA CONVENTIONS, prepared by George F. Chandler III of Hill, Rivkins & Hayden, Houston, Texas.

Case Summaries

Synopsis of significant developments in 2007-2008

The most interesting case of 2007-2008 in relation to carriage of goods is Boutique Jacob Inc. v Pantainer Ltd., 2008 FCA 85, where the Federal Court of Appeal corrected an error of interpretation in respect of s. 137 of the Canada Transportation Act holding that shipper means the entity that contracted with the rail carrier. The case also dealt with the intricacies of multiple bills of ladings and Himalaya clauses as does the case of Alcoa, Inc.v.CP Ships (UK) Ltd., 2007 ONCA 686 . In Timberwest Forest Corp. v. Pacific Link Ocean Services Corporation, 2008 FC 801, the Federal Court held that the Hague-Visby Rules will not apply to cases where the incorporated standard bill of lading states the cargo is carried on deck even though the bill of lading is not actually issued.

Multi-modal - Bailment on Terms - Himalaya Clause - Rail Carriage - s.137 Canadian Transportation Act

Boutique Jacob Inc. v Pantainer Ltd., 2008 FCA 85, reversing in part 2006 FC 217

This was an action by the Plaintiff for damage to cargo caused during a train derailment. The Plaintiff had contracted with the first Defendant, Pantainer, for the carriage of its cargo from Hong Kong to Montreal. Pantainer then sub-contracted the entire carriage to OOCL. OOCL in turn contracted with Canadian Pacific for the carriage of the cargo by rail from Vancouver to Montreal and it was during this portion of the carriage that the damage occurred. The carriage documents were an express bill of lading issued by Pantainer and an electronic waybill issued by OOCL which referred to OOCL's standard terms that were available on the OOCL website. At issue in the case was the liability of each of the Defendants and which bill of lading exclusions or limitations they were entitled to rely upon. With respect to the liability of Pantainer, the trial Judge held that it would have been liable as a contracting carrier but it was entitled to rely upon a clause in its bill of lading that excluded its liability for loss or damage that could not be avoided by the exercise of due diligence. With respect to OOCL, the Judge held that it was liable as a sub-bailee on terms and that the terms were those referred to in the OOCL electronic waybill. The Judge further held that these terms exonerated OOCL from liability for loss or damage that could not be avoided by the exercise of due diligence. The trial Judge also held that OOCL was entitled to rely upon the similar exemption in the Pantainer bill of lading via the Himalaya clause in that bill of lading. With respect to the liability of Canadian Pacific, the Judge referred to s. 137 of the Canadian Transportation Act, which prohibits a railway from restricting or limiting liability except by written agreement signed by the shipper. The trial Judge held that shipper in s.137 meant the plaintiff and not OOCL. As a consequence, this provision precluded Canadian Pacific from relying upon the Himalaya and limitation clauses in either the Pantainer or OOCL bills of lading. The trial Judge further held that Canadian Pacific could not rely upon any limitation clause in its published tariff as this had been displaced by a limitation provision in the confidential rate agreement between OOCL and Canadian Pacific. In result, Canadian Pacific was held liable for the Plaintiff's damages calculated at the discounted selling price of the goods.

On appeal, the main issue was the trial Judges interpretation of s. 137 of the Canada Transportation Act. The Court of Appeal overturned the trial Judge on the issue of the interpretation of s.137. Specifically, the Court of Appeal held that the term shipper meant OOCL, the entity that contracted with Canadian Pacific, and not the Plaintiff. Accordingly, there was a written agreement between Canadian Pacific and the shipper and the prohibition in s. 137 did not apply. The Court of Appeal next considered the applicable limitation amount. The Court noted that the agreement between OOCL and Canadian Pacific was subject to Canadian Pacifics tariff which limited liability, inter alia, to an amount equal to the liability of the steamship company. The Court of Appeal held that this provision entitled Canadian Pacific to limit its liability to the amount prescribed by the OOCL bill of lading which was $2 per kilogram. The Court of Appeal disagreed with the trial Judge concerning the inconsistency of the limitation provision in the confidential agreement and tariff. The Court of Appeal held that the provisions were not inconsistent. Finally, the Court of Appeal held that the Himalaya clauses in either the Pantainer or OOCL bills of lading entitled Canadian Pacific to rely upon the limitation clauses in either bill of lading.

Multi-modal - Theft - Limitation of Liability - Himalaya Clause

Alcoa, Inc.v.CP Ships (UK) Ltd., 2007 ONCA 686, reversing in part 2006 CanLii 34210

The Plaintiff contracted with the first Defendant for the carriage of a cargo of aluminum from Massena, New York to Italy. The first Defendant had an arrangement with the second Defendant for the performance of the inland portion of the carriage from Massena to Montreal. It was intended that the first Defendant would then complete the carriage by sea from Montreal. However, during the course of the inland transit the container was stolen when left unattended by the truck driver. The main issue in the case was whether the Defendants were entitled to limit their liability for the loss pursuant to the terms of the first Defendant's standard bill of lading. The Plaintiff argued that a document entitled Straight Form Bill of Lading had been issued when the cargo was picked up by the second Defendant and that this bill of lading, which contained no limitation clauses, governed. The trial Judge held, however, that this bill of lading was a mere acknowledgement of receipt. The trial Judge noted that on four prior occasions the Plaintiff had shipped goods with the first Defendant and that on each occasion the Defendant had issued its standard form bill of lading. Based on this prior practice, the trial Judge held it was this bill of lading which governed even though it had not been issued at the time of the loss. The trial Judge next considered the Himalaya clause and the multi-modal clause in the bill of lading and concluded that they applied to the benefit of both Defendants. Finally, the trial Judge considered and rejected an argument that there had been a fundamental breach by the Defendants, noting that there was nothing deliberate about the conduct of the Defendants that would warrant denying them the protection of the limitation clause. In result, the Plaintiff was awarded $4,000 being the limitation amount in the bill of lading.

On appeal, the Ontario Court of Appeal held that the trial Judge had applied the wrong limitation provision. Specifically, the bill of lading provided various limits depending on where the transport occurred. The trial Judge applied the limitation for Multi-Modal Transport outside the United States where COGSA is not contractually applicable. The Court of Appeal said the appropriate clause was the one dealing with multi-modal transport in Europe or within a state other than the United States. This provision gave a higher limit of $65,000.

Carriage of Goods - Deck Carriage - Marine Insurance - Waiver of Subrogation - 3rd parties

Timberwest Forest Corp. v. Pacific Link Ocean Services Corporation, 2008 FC 801

This was a subrogated claim for the loss of approximately C$1 million worth of logs while en route from Vancouver to California. The logs were all carried on the deck of a barge. The issues in the case were: first, whether the cargo was sufficiently described as deck cargo to remove it from the application of the Hague-Visby Rules; and second, whether the waiver of subrogation clause in the Plaintiffs insurance policy protected all of the Defendants or just the specifically named contracting carrier. The contract of carriage was contained in a letter of understanding and set of standard terms and conditions which incorporated a bill of lading that was contemplated to be issued. The bill of lading, which was never in fact issued, included on its face a statement that all cargo was carried on deck unless otherwise stated. The Plaintiff argued that a printed statement of deck carriage in a standard bill of lading that was not actually issued was not sufficient compliance with Art 1(c) of the Hague-Visby Rules to oust the application of the Rules. The motions Judge held, however, that the Plaintiff was bound by the terms of the contract including the bill of lading terms and these contained a clear statement as to deck carriage. In result, the Rules did not apply. The second major issue in the case concerned a clause in the Plaintiffs policy of insurance which specifically waived subrogation against the contracting carrier. The contracting carrier had entered time charters for the tug and barge with two affiliated companies who actually carried out the contract through their employees. The issue was whether these other companies and their employees could take the benefit of the waiver of subrogation clause which did not name them specifically or by class. The motions Judge reviewed the complicated history of the waiver of subrogation clause and concluded that it was intended to waive subrogation against the carrier or tower, terms that were used indiscriminately. As the other parities fell within the definition of carrier in the bill of lading, they were entitled to the benefit of the waiver of subrogation clause. He further held that extending the benefits of the waiver of subrogation to these other entities would be a permissible incremental change in the law.

Contract of Affreightment Negotiations - Essential Terms - Damages

Catalyst Paper Corp. v. Companhia de Navegao Norsul , 2008 BCCA 336, reversing 2007 BCSC 610 1

This was an action for breach of a long term shipping contract. The contract was a three year contract of affreightment for the carriage of paper products to South America. The contract was negotiated using the accept/reject process. The main issue in the case was whether a final agreement had ever been concluded between the parties. The trial Judge found that there was a concluded agreement. On appeal, the British Columbia Court of Appeal extensively reviewed the evidence and concluded that a notional reasonable observer would not find a clear agreement between the parties on an essential term, cargo care. Accordingly, there was no agreement.

Carriage - Freight - set off - jurisdiction - Ciffa Terms

Locher Evers International v. Canada Garlic Distribution Inc. 2008 FC 319

This was an action for the recovery of freight in relation to the carriage of produce from China to Toronto. The Defendant did not dispute the freight was owing but alleged a right to set-off and argued that the agreement ousted the jurisdiction of the Federal Court. The agreement between the parties expressly incorporated the Ciffa terms and those terms contained a no set-off clause which the Court had no difficulty enforcing. With respect to the jurisdiction issue, unfortunately, it is not clear from the judgment how this issue arose. There was apparently a jurisdiction clause but its contents are not set out. Nevertheless, the Court does say that the issue was raised too late.

Carriage of Goods - Rust Damage - Failure to Prove Damage on Discharge

Lovat inc. v. Blue Anchor Line, 2007 FC 491

This was an action for damage to a bearing shipped from Toronto to Turkey. The bearing was allegedly damaged by rust when it was delivered at its destination in Turkey. The evidence was that the cargo was in apparent good condition when discharged from the last carrying vessel at Istanbul, however, when it was delivered to its final destination in Turkey by truck it was found to be unwrapped and rust damaged. The contract of carriage with the Defendants was for carriage only to the Port of Instanbul. The on-carriage from Istanbul was under a separate contract with a non-party. The Court was of the view that the expert evidence submitted was not sufficient to establish the rusting damage occurred in the possession of the Defendants. The Court accepted the evidence of the Defendants expert that an accurate assessment of the source of the rust damage required x-rays, chemical analysis and microscopic examination, none of which was done. Water samples and silver nitrate tests were inconclusive and there was no evidence submitted as to the composition of the alloy in the bearing or as to what might have caused the rust. Accordingly, the action against the carriers was dismissed.

Carriage Freight - Interpleader

Rio Tinto Shipping (Asia) Pte Ltd. v. Korea Line Corporation, 2008 FC 1376

In this matter the applicant, a voyage charterer, applied to pay into court the freight which it admitted was owing. The reason was that there were conflicting claims by two parities as to entitlement to the freight. The Court recognized the conundrum of the applicant and allowed it to pay the freight into court in satisfaction of its liability in respect thereof.

Indemnity Deck Carriage Hague-Visby Rules

Gearbulk Pool Ltd. v Seaboard Shipping Co., 2006 BCCA 552 affg. 2005 BCSC 1620This matter involved a claim for indemnity by the Plaintiff ocean carrier against the Defendant for damages the Plaintiff was ordered to pay in the matter of Timberwest Forest Ltd. v Gearbulk Pool Ltd. et al., 2003 BCCA 39 (the underlying action). In the underlying action the cargo of lumber was comprised of two consignments destined to two different consignees. The carrier had the right to stow the entire cargo on deck, however, because there was space available, some cargo was stowed under deck. In total, 86% of the entire shipment was loaded on deck and 14% under deck. Bills of lading were subsequently issued by the Defendant as agent for the Plaintiff containing a statement that the cargo was stowed 86% on deck and 14% under deck. (This apportionment, though accurate for the entire shipment, was not demonstrably accurate with respect to each individual consignment or bill of lading.) The deck cargo was damaged at the discharge port. The carrier sought to avoid liability by relying upon an exclusion clause in the bills of lading for damage to deck cargo. The courts in the underlying action held, however, that the carrier was not entitled to rely upon the exclusion clause as the deck cargo was not sufficiently identified as deck cargo to take it outside of the Hague-Visby Rules. The carrier then brought this action claiming that it was entitled to indemnity because the Defendant had breached a contract of affreightment between the Plaintiff and Defendant. The contract of affreightment provided that the Defendant would indemnify the Plaintiff for any losses caused by any variance between the carrier's bill of lading to the Defendant and the Defendant's bill of lading to the shippers. The Plaintiff's bill of lading to the Defendant contained the statement Stowed on Deck: 2,304,088 FBM of which 1,982,204 FBM loaded on deck without liability for loss or damage howsoever caused. The Defendant's bills of lading to the shippers contained, as indicted above, a breakdown in percentages of the on deck and under deck stowage. The trial Judge and the Court of Appeal held, however, that the cause of the failure of the exemption clause and the Plaintiff's liability in the underlying action was not the variance between the bills of lading but was because the Plaintiff's supercargo did not take steps during the loading to adequately identify what was loaded on deck and under deck. The description of the cargo stowage had to be sufficient to permit a shipper to determine the extent of the risk presented by the on deck cargo. This required sufficient identification of the cargo to determine not just the quantity but also the value of the cargo stowed on deck.

Multimodal Liability of Rail Carrier Estoppel Waiver

Canadian Forest Products Ltd. v. B.C. Rail et al., 2005 BCCA 369Wood pulp was loaded in apparent good order and condition onto rail cars in the BC interior, discharged at a port terminal and then loaded on board the carrying vessel. At final discharge, the pulp was found contaminated with wood splinters and rejected for use by the receivers customer. The Plaintiff claimed against the rail carrier, the loading terminal and the ocean carrier. The evidence was that wood splinter contamination was a known risk from using wood floored or lined rail cars but the Plaintiff had selected such rail cars over ones with steel floors. There was also evidence that the rail cars when delivered for loading were often not cleaned and that employees of the the Plaintiff had to inspect and sweep them. Such debris could have been a source of wood splinter contamination. At trial, the Plaintiff invited the Court to apply a presumption that the party liable is the last party to handle the cargo when the contamination was found. Specifically, the Plaintiff argued that the ocean carrier should be found liable on the basis of the presumption, or if the ocean carrier rebutted the presumption, the terminal should be liable, or if the terminal in turn rebutted the presumption, the rail carrier should be liable. The trial Judge found that the handling at the terminal and on board the vessel presented little or no opportunity for the contamination to arise since the vessel was of steel construction and wood was not used in connection with storage and loading at the terminal. These two Defendants had rebutted the presumption but the rail carrier had not. However, the claim against the rail carrier was also dismissed as the trial Judge held that the Plaintiff had waived its right to claim for dirty rail cars by having its own employees sweep the cars and, further that the Plaintiff was estopped from claiming for wood contamination from the wood flooring as the Plaintiff had knowingly selected wood-lined rail cars thereby accepting the risk of wood contamination. Arguments as to lack of title to sue and whether the pulp was improperly rejected were also considered and rejected by the trial Judge. The Plaintiff appealed the dismissal as against the rail carrier. On appeal the British Columbia Court of Appeal noted that the starting point was the obligation of a common carrier not to damage goods in its possession and to provide suitable accommodation for the carriage of the particular goods. The application of these common law principles led to the conclusion that the rail carrier was liable unless there was a waiver or estoppel. The Court of Appeal considered and concluded that there was no estoppel or waiver. In reaching this conclusion the Court of Appeal noted that the reason for choosing wood lined rail cars, which was known to the rail carrier, was to minimize condensation damage to the pulp. The Court further noted that the reason the Plaintiff had its own employees sweep the rail cars was to avoid delays in shipping. Given these reasons for the Plaintiff's conduct and the fact that the Plaintiff was not more knowledgeable than the rail carrier about how to ship pulp, the Court found there was no estoppel and no waiver. In result, the Plaintiff's appeal was successful and the rail carrier was found liable.

Mis-Delivery/Theft Onus of Proof Hearsay Evidence Post-Discharge Exclusions Hague-Visby Rules

Shtutman v Ocean Marine Shipping Inc., 2005 FC 1471The Plaintiff alleged that the carrier was liable for the loss of the contents of a container carried by sea from Halifax to Conakry. Specifically, the Plaintiff alleged that the carrier had either mis-delivered the container or that the contents of the container had been stolen while the container was in the possession of the carrier. Unfortunately, the Plaintiff's case depended primarily on the admissibility of letters from the consignee which stated that the container was empty when received and had no lock or seal. The Judge reviewed the law relating to the admissibility of hearsay evidence and noted that such evidence may be admissible if it meets the twin tests of reliability and necessity. The Judge found that this test had not been met and refused to admit the letters. The Judge further accepted the evidence of the Defendant's witness that the container had been delivered to the consignee. Accordingly, the Judge held that the Plaintiff had failed to meet the onus on it of proving the loss of the cargo while in the possession of the carrier. The Judge further held that the exclusion clause on the reverse of the carrier's bill of lading would have applied in any event since clauses excluding or limiting liability after discharge from the ship were not invalidated by Art. III r. 8 of the Hague-Visby Rules.

Carriage Fire Dangerous Goods Hague Rules Appeal Standard of Review

Elders Grain Company Limited et al. v The Ralph Misener et al., 2005 FCA 139 affg. 2003 FC 837This matter involved the carriage of a cargo of alfalfa pellets from Thunder Bay to Montreal. During the discharge of the cargo in Montreal a fire broke out damaging the cargo and the carrying ship. The Plaintiffs claimed for the damage to the cargo and the Defendants counter-claimed for the damage to the ship. The Plaintiffs argued that the bills of lading, which were clean, created a prima facie presumption against the Defendants that the cargo was received in good order and condition. The trial Judge, however, held that during the loading the cargo was surrounded by a cloud of dust which made visual inspection difficult and that under these circumstances the presumption did not apply. The trial Judge then turned to the cause of the fire and reviewed the evidence of the various experts and witnesses. He concluded that the evidence overwhelmingly supported the conclusion that spontaneous combustion caused the fire. He next considered whether the alfalfa pellets were a dangerous cargo within the meaning of Article IV r. 6 of the Hague Rules. He noted that the word dangerous had to be given a broad meaning and concluded with little difficulty that the cargo was indeed dangerous since if not properly stored it could ignite. He further held that there was no evidence the Defendants consented to the shipment of the cargo with knowledge of its dangerous character. The Plaintiffs failed to advise the Defendants of its flammable nature and failed to provide any information to the Defendants with respect to the cargo. In their defence the Plaintiffs argued that pursuant to Art. IV r. 3 of the Hague Rules they could not be liable to the Defendants without proof of an act, fault or neglect. The trial Judge rejected this argument, holding that a shipper's liability for damage caused by dangerous goods was strict both under Art. IV r. 6 and at common law. In result, the Plaintiffs' action was dismissed and the Counterclaim was allowed. The Plaintiffs appealed. At the Court of Appeal the Court first noted that the standard of review depended on the nature of the questions appealed from. The standard of review for pure questions of law is one of correctness. The standard for questions of fact is whether the trial judge made a palpable and overriding error i.e. one that gives rise to a reasoned belief that the trial judge must have forgotten, ignored or misconceived the evidence in a way that affected his conclusion. The standard for a mixed question of law and fact is that of palpable and overriding error unless it is clear that the trial judge made some extricable error in principle with respect of the characterisation of the legal test or its application. Applying these standards of review the Court of Appeal upheld the trial Judge and dismissed the appeal.

Damages Compound Interest

Elders Grain Company Limited et al. v The Ralph Misener et al., 2004 FC 1285

In this matter the Defendant had been successful in its counterclaim and now sought compound interest. The Court referred to the Supreme Court of Canada decision in Bank of America Canada v Mutual Trust Co., [2002] SCR 601, wherein it was held that compound interest will generally be limited to breach of contract cases where the parties agreed, knew or should have known compound interest would apply. Compound interest may also be awarded in other cases but subject to the requirement of proving that damage component. The Court refused the claim for compound interest holding that there had been no agreement and that the Defendant had not proved that damage component.

Carriage by Sea Delivery Without Bill of Lading

Asian Exports International v Zim Israel Navigation Co. Ltd. et al., 2004 FC 225

In this matter the Plaintiff had paid for goods that were shipped from China and was the named consignee on a non-negotiable bill of lading. The vendor however refused to give the Plaintiff the original bill of lading by which to obtain delivery of the goods from the carrier. When the container arrived the Plaintiff commenced suit against the vendor and ocean carrier and arrested the container. The Plaintiff obtained the release of the container by posting a bank guarantee as security. The Plaintiff later brought the present motion to have the security returned. The only party that appeared on the motion was the ocean carrier who requested that the Plaintiff be required to execute a hold harmless agreement as a condition of the order. The Prothonotary declined this request but did provide in the order that any claim by the vendor against the ocean carrier was barred.

Carriage of Goods Damage to Vessel Seaworthiness Improper Stowage Liability of Shipper Apportionment

Sea-Link Marine Services Ltd. et al. v. Doman Forest Products Limited, 2003 FCT 712

A cargo of lumber was partially lost during carriage on SEA-LINK YARDER a dumb barge under tow between ports on Vancouver Island. During a portion of the transit on the outer coast of Vancouver Island the tug and tow encountered heavy weather and the cargo shifted resulting in loss of some cargo and damage to the barge. A claim was initially made for damage to the cargo and the barge owner counterclaimed for damage to the barge. The cargo claim was settled and discontinued and the action proceeded on the counterclaim. The carriage was subject to an agreement that placed responsibility for loading and lashing on the shipper. The tug crew had inspected the lashing, recommended additional lashings and attached the lashing to the barges side wall fittings. The lashing was done by the crew because the shippers employees were concerned about doing so. This was the second voyage between the parties. In the previous voyage, the tug crew had told the shippers more cargo could be loaded next time. No information had been provided to the Master by the owner as to the barges load lines or stability or the amount of cargo it could carry. The Court held that the agreement placed responsibility for loading on the shipper and the tug crew did not intermeddle in the loading with respect to the lashing. The shippers argued that the barge owner, if held partially responsible, could not recover as the damages could not be separated, however, referring to Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., [1997] 3 S.C.R. 1210, the Court held that principles of contributory negligence could be applied in maritime law. The shippers also argued that the tug Master had been negligent in proceeding with the tow or continuing with the tow given the weather forecasts for gales and the actual weather conditions. The Court found no negligence in this regard. The shippers also argued that the barge was unseaworthy on various grounds including that the Master did not know how much cargo it could carry and the barge was loaded below its load lines. The Court, however, found the barge was not unseaworthy. Nevertheless, the Court did find that there were errors on the part of the Defendants and apportioned liability 60% to the shippers and 40% to the Defendants. Unfortunately, the particular faults of the Defendants warranting the apportionment are not clear from the judgment.

Freight Bankruptcy of Freight Forwarder

Mediterranean Shipping Company SA v BPB Westroc Inc., 2003 FC 942

This was an action by the Plaintiff carrier to recover freight from the Defendant shipper. The Defendant's defence was that it had paid the freight to its freight forwarder. Unfortunately, the freight forwarder went bankrupt without remitting the payments to the carrier. The Prothonotary reviewed the applicable case law and held that a shipper is liable to a carrier for payment of freight unless it presents clear and unequivocal evidence that the carrier released it from liability. The Prothonotary held that the Defendant had failed to discharge this onus and was therefore liable to the carrier for the freight.

Deck Carriage Meaning of Goods Exclusions Hague-Visby Rules

Timberwest Forest Ltd. v Gearbulk Pool Ltd. et al., 2003 BCCA 39

This case concerned the meaning of goods as defined in the Hague-Visby Rules and deals with the need for clarity and accuracy in descriptions of deck cargo. The Plaintiffs were the shippers and consignees of 1725 packages of lumber carried from Vancouver to Antwerp. The cargo was comprised of two consignments destined to two different consignees and covered by two separate bills of lading. The carrier had the right to stow the entire cargo on deck, however, because there was space available, some cargo was stowed under deck. The carrier made no effort to identify the specific packages loaded on or under deck but merely kept track of the amount of lumber loaded in each location. In total, 86% of the entire shipment was loaded on deck and 14% under deck. Bills of lading were subsequently issued containing a statement that the cargo was stowed 86% on deck and 14% under deck. The deck cargo was damaged at the discharge port. The Defendant sought to avoid liability by relying upon an exclusion clause in the bills of lading for damage to deck cargo. The Plaintiffs argued that the contracts of carriage were governed by the Hague-Visby Rules and that pursuant to Article 8(3) the exclusion clause was null and void. Specifically, the Plaintiffs argued that the 86% - 14% description of the stowage was neither a sufficient description of the deck cargo nor accurate in respect of the individual bills of lading. Both at trial and on appeal the courts agreed with the Plaintiffs. The Court of Appeal agreed with the motions Judge that the stowage notations on the bills of lading were unreliable with respect to the individual consignments. The Court of Appeal also agreed with the motions Judge that, because the specific packages carried on deck were not identified, it was impossible to determine the values of the cargo on deck. The Court of Appeal held that the uncertainty in the description of the deck cargo was analogous to an absence of information concerning deck carriage. In result, Court of Appeal held the carriage was governed by the Hague-Visby Rules and the exclusion clause was inapplicable.

Burden of Proof - Apparent Good Order - Hidden Damage

American Risk Management Inc. v APL Co. Pte. Ltd., 2002 FCT 1023

This was an action for damage to a cargo of 52 rolls of fabric carried by land, sea and rail from Pakistan to Toronto, Ontario. The cargo was initially received at its destination without any notations as to damage. However, a few days later it was discovered that the rolls were damaged by mould and stains. The Plaintiff argued that the carrier was prima facie liable having received the cargo in good order and condition and delivered it in a damaged condition. The court held, however, that the damage was hidden and that under these circumstances the Plaintiff was required to prove delivery in good order and condition by means other than the bill of lading. The court further noted that the absence of evidence of damage to other cargoes carried in the containers buttressed the Defendants contention that nothing out of the ordinary transpired during the carriage.

Hague Visby Rules - Burden of Proof - Water Damage

Nova Steel Ltd. et al. v The Kapitonas Gudin et al., 2002 FCT 100

Samuel Son & Co. v The Kapitonas Gudin et al., 2002 FCT 101

These cases were for damage to rolled coils carried from Latvia to Montreal. The coils were pitted, allegedly by sea water. The Defendants denied liability arguing the damage was caused by the excepted perils of peril of the sea (condensation), act or omission of the shipper (defective packaging) or inherent defect (mill defects in the coils). After reviewing the evidence, the Trial Judge considered whether the Plaintiffs had satisfied their initial burden of proving tender of the cargo in good condition and held that the Plaintiff had not met this burden. In so holding, the Judge noted that the bill of lading was claused partly rust stained wet before shipment. Further, there was no evidence of how the cargo was stored before shipment or how it was conveyed to the loading port. The fact that the Plaintiffs had not proven tender of the cargo in good condition did not, however, end the matter. The Judge held the Plaintiffs could still establish liability by showing by a preponderance of evidence that the Defendants were the proximate cause of the damage. The Judge held that the Plaintiffs had met this burden through overwhelming evidence that the coils were damaged by exposure to sea salt during the voyage. The Judge found that the Defendant ship was unseaworthy in that it was not watertight and had allowed sea water to enter the holds during the voyage. On the issue of damages, the Defendants challenged the allowances that had been established and agreed between the Plaintiffs and their insurers. The Judge held that these allowances were supported by evidence and represented the loss actually suffered by the Plaintiffs.

Freight Forwarder - Failure to Ship

Vandenburg v Randy Houston International, [2002] O.J. No. 485

The Plaintiff hired the Defendant to ship her goods from Toronto to Nigeria. Based on representations made by the Defendant, she understood that it was experienced in the shipment of such goods. The Plaintiff travelled to Nigeria but her goods never arrived. She claimed against the Defendant for the return of the freight she had paid and for her expenses. The Defendant counterclaimed for the costs of storing the Plaintiffs goods. The court held that the contract had been frustrated by the failure of the Defendant to ship the Plaintiffs goods, a failure which the court found was due to the lack of expertise of the Defendant. Accordingly, the court awarded the Plaintiff damages of $10,000 (the maximum amount allowed within that courts jurisdiction). With respect to the counterclaim, the court awarded damages for storage in the amount of $2,000.00. (Editors note: Unfortunately the Reasons do not indicate why the counterclaim was allowed in this amount or at all.)

Freight - Set-off - Hague-Visby Rules - Limitation/Prescription - Exculpatory Clauses

Mediterranean Shipping company S.A. v Sipco Inc., 2001 FCT 1046

The Plaintiff in this action claimed against the Defendant for ocean freight owing in respect of the carriage by sea of nine containers from Toronto to the Persian Gulf. The Defendant admitted non-payment of freight but alleged that it was entitled to a set-off and brought a counterclaim alleging breaches of the contract by the Plaintiff. Specifically, the Defendant alleged that seven of the containers were shipped together, that six of those seven containers arrived on time at the port of discharge, that the seventh container did not arrive until months after its scheduled arrival, and that as a consequence the clearance through customs of all of the containers was delayed. The issues in the case were the entitlement to set-off and whether the Plaintiff had been negligent in its handling of the containers. On the first issue the Trial Judge reviewed the Anglo-Canadian authorities and concluded that there could be no right of set-off against freight under a contract for the carriage of goods by sea unless the contract specifically provided otherwise. As the contract did not provide otherwise, there was no right of set-off. The Trial Judge next turned to the counterclaim. The first defence raised against the counter-claim was that the claim had not been brought within the one year time period fixed by the Hague-Visby Rules. The success of this argument depended upon whether the prescription period set by the Rules ran from the date of discharge or the date of actual or constructive delivery to the consignee. The Trial Judge held that the prescription period runs from delivery not discharge and that any clauses in a bill of lading declaring delivery takes place at discharge are null and void. The Trial Judge further held that delivery takes place on the day the last piece of cargo is delivered, the seventh container in the case at bar. Accordingly, the Judge held the counterclaim had been commenced within time. The Judge next considered various defences raised by the clauses in the bill of lading, namely: a scope of voyage clause which gave the carrier complete discretion as to the ports at which to call; a period of responsibility clause which provided the carrier was not liable for damages occurring in the period before loading or after discharge; and a clause providing that there could be no claims for failure of the carrier to meet arrival or departure dates. The Judge held that these various clauses were contrary to the Hague-Visby Rules and therefore null and void pursuant art. 3 r. 8 of the Rules. The Judge next considered the damages suffered as a consequence of the breach of contract by the Plaintiff but found that the Defendant had failed to prove any damages. In result, therefore, the claim for freight was allowed and the counterclaim was dismissed.

Standing to Sue - Collisions

Porto Seguro Companhia De Seguros Gerais v The Federal Danube et al., (January 31, 2001) No. T-2057-85 (F.C.T.D.), [2001] F.C.J. No. 152

This was the re-trial of an action that had been previously dismissed by the Federal Court Trial Division in a judgment reported at [1995] 82 F.T.R. 127. That judgment was ultimately overturned by the Supreme Court of Canada and a new trial ordered on the grounds that the Trial Judge erred in refusing to hear three expert witnesses because assessors had been appointed by the court (see [1997] 3 S.C.R. 1278).

The Plaintiff was the cargo underwriter who had indemnified the cargo owners for damages suffered as a result of a collision in the St. Lawrence Seaway between the Beograd and the Federal Danube. The Plaintiff argued that the Federal Danube was wholly at fault for the collision and liable for the damage to the cargo in the principal amount of $4.4 million. There were two issues in the case; the standing of the Plaintiff to bring the action in its own name and the liability for the collision. On the first issue, the Defendant argued that under Canadian maritime law the Plaintiff ought to have commenced the action in the name of the cargo owners. The Court, however, held that the matter was governed either by the law of Brazil (where the insurance contract was made) or the law of Quebec and that in either case the insurers became subrogated to the rights of their insured upon payment and were entitled to bring the action in their own name. With respect to the second issue, the liability for the collision, the Court held that the Beograd was wholly at fault for the collision. The faults found against the Beograd included: navigating through the anchorage area rather than in the navigation channel; navigating at an unsafe speed; and, failing to keep out of the way of an anchored vessel. In reaching the conclusion that the Beograd was wholly at fault the Court noted that where a vessel underway strikes a vessel at anchor the underway vessel is prima facie at fault unless it is proven the accident could not have been avoided by the exercise of ordinary skill. In the result, the Plaintiffs action was dismissed.

Hague-Visby Limitations - Turkish Law

Barzelex v The "EBN Al Waleed", 2001 FCA 111

This was an appeal from the Federal Court Trial Division. The bill of lading contained a general paramount clause incorporating the Hague Rules as enacted in the country of shipment. The country of shipment was Turkey. However, Turkey had enacted the Hague Rules twice into its legislation. Initially, the Rules were enacted through ratification of the convention. This enactment gave a limitation of 100 pounds sterling gold value (approximately $12,500) per package or unit. Later the Rules were enacted as part of Turkey's Commercial Code. This enactment, as amended, gave a limitation of 100,000 Turkish Lire (approximately $2.31) per package or unit. At issue in the case was which of these limitations applied. The Plaintiff argued and led expert evidence that the enactment in the Commercial Code applied only to internal shipments. The Trial Judge found as a fact however that under Turkish law the Commercial Code applied to international shipments as well as internal shipments. The Plaintiff then argued that a $2.31 limitation per package or unit was unconscionable and should not be enforced. The Trial Judge held that it was the result of a contractual provision which the Plaintiff could have avoided by declaring a value for the goods. The Plaintiff appealed. The Federal Court of Appeal dismissed the appeal saying they were not satisfied the Trial Judge had erred and that on the evidence before him it was open to him to make the findings he did.

Summary Judgment - Misdelivery

Kanematsu GMBH v Acadia Shipbrokers Limited et al., (2000) 259 N.R. 201 (F.C.A.)

This was an appeal from a motion in which the Plaintiff was granted summary judgment against the Defendant charterers for having induced the ship owner to deliver up the cargo to a third party without proper presentation of the bill of lading. The Defendants argued that the case was not appropriate for summary judgment as the facts were too complex. The motions judge, however, held that the fundamental issue was whether the cargo had been delivered without the surrender of the original bill of lading. As this was admitted, summary judgment was granted. On appeal, the Federal Court of Appeal set aside the order for summary judgment. The Court of Appeal held that the Defendants were not the ship owner and therefore were not prima facie liable for delivery of the cargo without proper presentation of the bill of lading. The case against the Defendants was for inducing breach of contract by the shipowner. This required proof that: (1) the Defendants knew there was a contract; (2) they induced its breach; and, (3) damages were suffered as a consequence. The Court of Appeal held that there was a real doubt whether the Defendants had knowledge of a contract between the Plaintiff, as holder of the bill of lading, and the shipowner. Further, the Court of Appeal thought there was doubt about whether the Defendants intended to induce a breach of the contract. These were serious factual issues which required a trial on the merits.

Costs of Discharge and Re-stowage

Canadian Forest Products Inc. v Termar Navigation Co. Inc., (March 15, 2000) No. A-934-97 (F.C.A.), [2000] F.C.J. No. 450

This was an appeal from a judgment of the Trial Division reported at [1998] 2 F.C. 328. The claim was by the carrier to recover the costs of discharging and re-stowing the Plaintiff's cargo after it shifted when the vessel encountered a large wave in rough seas. The Trial Judge held that the Plaintiff was not obliged to pay the discharge and re-stowing costs either under the terms of the bill of lading or on the basis of bailment, agency of necessity, quantum meruit or unjust enrichment. On appeal, the Court of Appeal merely indicated that they were in substantial agreement with the reasons of the Trial Judge and dismissed the appeal.

Claim for Freight - Set-off

Pantainer Ltd. v 996660 Ontario Ltd., (March 17, 2000) No. T-231-99 (F.C.T.D.), [2000] F.C.J. No. 334

This was a claim for freight charges owing. The Defendant alleged that it was entitled to a set-off for damage caused to cargo carried by the Defendant. The Court held the general rule was that freight is to be paid without deduction and that the Defendant accordingly had no right of set-off.

Deck Cargo Exclusion Clauses

Canadian Pacific Forest Products Limited et al. v The"Beltimber" et al.,(1999), 175 D.L.R. (4th) 449, (F.C.A.).

This was an appeal from a decision of the Trial Division. The case involved the loss of a part cargo of lumber carried on deck from Canada to Europe. The bills of lading were claused "on deck at shipper's risk" and clause 8 of the bill of lading was a "liberty" clause which specifically allowed the carrier to stow goods on deck. It provided that: "Goods stowed on deck shall be at all times and in every respect at the risk of the shipper/consignees. The carrier shall in no circumstances whatsoever be under any liability for loss of or damage to deck cargo, howsoever the same may be caused...". The Plaintiff argued, inter alia, that this clause did not protect the carrier as it did not include an express reference to negligence. The trial judge agreed with the Plaintiff and further noted that the express references to negligence in the "Both to Blame" and "Transshipment" clauses of the bill of lading implied negligence was not excluded in clause 8. On appeal, the Federal Court of Appeal agreed with the Trial Judge that negligence was not excluded. The Federal Court of Appeal held that the liability of a carrier of goods by sea is not confined to acts of negligence. Such a carrier is liable for failing to deliver the goods safely and for breach of the implied warranty of seaworthiness as well as for negligence. Because of the existence of these other heads of liability, the failure to include an express reference to negligence in the exclusion clause was fatal. The Federal Court of Appeal expressly distinguished the case of Mackay v Scott Packing and Warehousing Co., [1996] 2 F.C. 36 (C.A.) in which a similarly worded clause was held sufficient to exclude liability for negligence. In doing so, the court noted that the Defendants in the Mackay case were freight forwarders who did not have the common law liabilities of a carrier by sea.

Freight Charges

Morlines Maritime Agency Ltd. v IKO Industries Ltd.,(December 7, 1999) No. T-2522-96 (F.C.T.D.).

The issue in this case was whether the shipper was liable for the ocean carrier's freight charges when it had already paid the freight forwarder who went bankrupt without paying the carrier. The court relied upon the decision in C.P. Ships v Les Industries Lyons Corduroys Lte., [1983] 1 F.C. 736, where it was held that the debtor/shipper must pay the creditor/carrier his freight charges unless the shipper establishes either:

1. that the carrier authorized the third party/forwarder to receive the money on his behalf, or,

2. that the carrier held the third party/forwarder out as being so authorized, or

3. that the carrier by his conduct or otherwise induced the shipper to come to that conclusion, or

4. that a custom of the trade exists to the effect that both carrier and shipper would expect payment to be made to the third party/forwarder.

The court held that the third and fourth branches of this test had been met. The court relied upon the fact that the carrier never dealt directly with the shipper and never advised the shipper that it expected payment from them. Even after the forwarder began to have financial difficulties the carrier never contacted the shipper. This was conduct, the court held, that induced the shipper to believe that the forwarder was authorized to receive payments on behalf of the carrier. With respect to the fourth branch of the test, the court was satisfied that both the carrier and shipper expected the shipper to make payment to the forwarder and the forwarder to make payment to the carrier.

Suit Time Extensions

Riva Stahl GmbH v The "Bergen Sea" et al., (1999), 243 N.R. 183, (F.C.A.).

This was an appeal from a decision of the Trial Division in which an application for summary judgment by the Defendants based on a time limitation defence was allowed. The case illustrates the dangers to Plaintiffs of suit time extensions. The Plaintiffs in the case obtained a suit time extension from the shipowner to June 13, 1995. This extension was conditional on the Plaintiffs obtaining a similar extension from charterers. The Plaintiffs did obtain a suit time extension from charterers but it was to a date of June 30, 1995. This extension was also conditional on the Plaintiffs obtaining a similar extension from owners. The Plaintiffs were unaware of, or failed to appreciate that, the extensions were not similar in that they expired on different days. The Plaintiffs issued a Statement of Claim on June 28, 1995, two days before the charterer's extension expired but after the owner's extension had expired. Both Defendants brought a summary judgment application to dismiss the action as being out of time. The Trial Division granted the application holding that there was no binding agreement to extend suit time to either June 13, 1995 or June 30, 1995, and further holding that the Defendants had not waived the time bar defence and were not estopped from raising it by reason of their continued negotiations with the Plaintiffs. The Court of Appeal agreed with the Trial Judge that there were no effective time extensions in place when the action was commenced and that there was no waiver or estoppel.

Damages - Limitation - Interest - Costs

MacKay v Scott Packing & Warehousing Co.,(1999), 164 F.T.R. 6, (F.C.T.D.).

This was a reference to determine the damages of the Plaintiff based upon a limitation of liability clause contained in the contract of carriage. The limitation clause limited the defendant's liability to 10 pounds sterling per cubic foot of the cubic capacity of the item lost or damaged or, at the Defendant's option, to the cost of repair or replacement. The Plaintiff argued that as the Defendant did not measure the cubic capacity of the articles upon shipment that it should not be entitled to limit its liability. The court disagreed. The Defendant sought to have its liability in respect of some items limited by the repair or replacement option. The court, however, held that the Defendant had not exercised the repair or replacement option and was therefore not entitled to limit its liability on this basis. The court awarded the Plaintiff pre-judgment interest compounded semi-annually. With respect to costs, the court awarded the Plaintiff its costs up to the time of the Defendant's settlement offer. Thereafter, the Defendant was awarded costs.

Fraudulent Misrepresentation - Conversion

Westwood Shipping Lines v Geo International Inc. et al., (1999), 165 F.T.R. 290, (F.C.T.D.).

This was an action for fraudulent misrepresentation against the General Manager of the corporate Defendant. The corporate Defendant was the "Notify Party" on order bills of lading. The corporate Defendant obtained delivery of the cargo from the Plaintiff without surrendering the original endorsed bills of lading and without paying the purchase price to the shipper/vendor. In an earlier summary judgment motion ( Reasons dated June 24, 1998) the Plaintiff obtained judgment against the corporate Defendant and its President for conversion. The Plaintiff now sought judgment against the General Manager. The evidence established that the General Manager convinced the Plaintiff to release the goods by advising they were urgently needed and by representing that the original bills of lading would be forwarded when received. The Plaintiff argued that the General Manager knew the bills of lading would never be forwarded or was wilfully blind. The court, however, was not convinced that the General Manager had acted fraudulently. The court noted that, at the time, the corporate Defendant was a going concern and was receiving fifty to sixty containers per year. The court found it difficult to believe that the General Manager knew the goods would not be paid for. In result, the action was dismissed.

Himalaya Clause

Kodak v Racine Terminal (Montreal) Ltd.,(1999), 165 F.T.R. 299, (F.C.T.D.).

This was an application for summary judgment by a cargo owner for damage to a shipment of paper. The cargo was damaged by the crane operator of the Defendant terminal during unloading. The only issue in the case was whether the terminal could rely upon a Himalaya clause contained in the bill of lading. Although there was no written contract between the terminal and the ocean carrier authorizing the ocean carrier to insert a Himalaya clause, the terminal sought to rely upon a contract with the predecessor of the current carrier, whose business the current carrier had acquired. This contract, however, contained a clause prohibiting assignment unless consented to in writing. Express written consent was never obtained. The court held that failure to obtain the prior written consent was fatal. The court further held that the clause requiring written consent was fatal to the Defendant's alternate argument that there had been a novation of the contract. In result, the terminal was not entitled to rely upon the Himalaya clause.

Carriage By Sea - Burden of Proof - Identity of Carrier

Voest-Alpine Stahl Linz GmbH v The "Federal St. Clair" et al.,(August 31, 1999) No. T-1296-95 (F.C.T.D.).

This was an action for damage to 35 steel coils. The coils were manufactured in Austria and carried by barge to Antwerp where they were loaded on board the Defendant vessel and carried to Montreal. A pre-loading survey at Antwerp noted some minor rusting to the coils. The cargo was not surveyed at Montreal. It was carried from Montreal to the consignee's premises where it was put in storage. Approximately two months later, when the coils were unrolled for use, they were discovered to be in a rusted condition. They were then surveyed and the surveyor concluded that the damage was attributable to contact with water in the vessel's holds (although only one of five samples indicated salt water contamination). The Defendants argued that the Plaintiff had failed to prove the damage occurred while the cargo was in its possession. The court, however, held that the Plaintiff had proven on the balance of probabilities that the damage occurred during the voyage from Antwerp to Montreal. The court further held that the burden was therefore on the Defendants to show the damage was caused by an excepted peril and that they had exercised due diligence to make the vessel seaworthy. The Defendants failed to discharge this burden. A secondary issue in the case was whether the time charterer of the vessel was liable together with the vessel's owner. On this issue the court held that the usual role of the time charterer is to find space on a vessel. Once it has booked the space the carrier or the owner issues the bill of lading which becomes the contract of carriage. The court found no specific undertaking by the time charterer to carry the goods and therefore the case against it was dismissed.

Mis-delivery - Conversion

Westwood Shipping Lines v Geo International et.al (June 24, 1998) No. T-359-98 (F.C.T.D.)

This was an application for summary judgement by the Plaintiff carrier against the Defendant for conversion. The Defendant was the "Notify Party" on order bills of lading. The Defendant obtained delivery of the cargo without surrendering the original endorsed bills of lading and without paying the purchase price to the shipper/vendor. The Plaintiff maintained that the cargo was delivered only after the Defendant fraudulently misrepresented that the original bills of lading had been surrendered by the shipper. The Defendant denied any such representation had been made. The Court found it unnecessary to determine whether a fraudulent misrepresentation had been made. The Court held that the Defendant's actions in taking the goods without having paid for them amounted to conversion.

Liability of Terminal Operator - Limitation Clause - Himalaya Clause

Braber Equipment Ltd. v Fraser Surrey Docks Ltd., (October 10, 1998) Vancouver Registry No. C961205 (B.C.S.C.) affirmed, (October 6, 1999) Vancouver Registry No. CA025240 (B.C.C.A.)

This case involved damage to a container of equipment admittedly caused by the negligence of the terminal operator. The terminal operator sought to limit its liability to $100.00 per package pursuant to a limitation clause contained in its tariff. The Court found, however, that the Plaintiff had no knowledge of the tariff and was not bound by it. The Plaintiff's freight forwarder was aware of the tariff but as the decision to unload the container at the Defendant's terminal was made by the carrier and not the freight forwarder this did not assist the Defendant. The terminal operator further sought to rely upon the Himalaya clause in the carrier's bill of lading. The Court noted that the appropriate test to be met is the four point test enunciated in Scruttons Ltd. v Midland Silicones Ltd., [1962] A.C. 446 (i.e.. 1. that the bill of lading makes it clear that the stevedore is intended to be protected; 2. that the bill of lading makes it clear the carrier is contracting as agent for the stevedore; 3. that the carrier has authority from the stevedore to do that; and, 4. that any difficulties about consideration are overcome). The Court held that the terminal had failed to satisfy the third requirement. In obiter, the Court noted that if the Defendant was entitled to rely upon the Himalaya clause in the bill of lading there would be two inconsistent limitation provisions; the per package limitation under the bill of lading of 666.67 SDR per package and the $100 per package limitation under the Defendant's tariff. Following the decision in Meeker Log and Timber v The "Sea Imp VIII" (1996) 21 B.C.L.R. (3d) 101, the Court noted that two inconsistent exclusion/limitation clauses rendered both clauses null and void. On appeal, the terminal sought to re-argue the case on the basis of sub-bailment principles. The Court of Appeal declined to allow it to do so on the grounds that the record was not sufficient and there would be prejudice to the plaintiff. In result, the appeal was dismissed.

Stay of Proceedings - Jurisdiction Clauses - Carriage of Goods - Identity of Carrier

Jian Sheng Co. Ltd. v The "Trans Aspiration, (April 14, 1998), No.A-442-97 (F.C.A.).

This is an important case on the issue of the identity of the carrier under a bill of lading although the case arose in the context of a motion for a stay of proceedings under a jurisdiction clause. The Federal Court of Appeal held that where the bill of lading is signed for or on behalf of the Master it is a shipowner's bill and the shipowner is prima facie the carrier. The Court expressly rejected the notion that both the charterer and owner could be a carrier. See the full summary on the Arbitration/Jurisdiction Clauses page.

Summary Trial- Liability of Freight Forwarder

Canusa Systems Ltd. v The "Canmar Ambassador", (February 16, 1998) No. T-459-95 (F.C.T.D.)

This was a motion by the Plaintiff for summary judgment against the Defendant freight forwarder for damage caused to a cargo of heat shrunk tubing. The Defendant admitted that it had arranged the shipment of the goods and that the goods were damaged but argued that as freight forwarder it was not responsible for the damage. However, it had issued a "Combined Transport Bill of Lading" which provided it "shall be liable for loss of or damage to the goods occurring between the time when he takes the goods into his charge and the time of delivery". The "Combined Transport Bill of Lading" further provided for exceptions from this liability but the onus of proving such exceptions was on the freight forwarder. The forwarder had not proven any such exceptions. The Court granted summary judgment with a reference to determine the damages.

Recovery of Freight

American President Lines Ltd. v Pannill Veneer Co. Ltd., (September 17,1997) No.T-1706-94 (F.C.T.D.).

This was an action by an ocean carrier to recover freight charges. The Defendant shipper had retained a freight forwarder who made the carriage arrangements with the Plaintiff. The Plaintiff invoiced the freight forwarder who in turn invoiced the Defendant. The Defendant paid the freight forwarder but the forwarder became insolvent and did not pay the Plaintiff. The Court held that it was never intended that the Defendant would pay the Plaintiff and accordingly dismissed the action.

Proper Parties - Identity of Carrier - Proof of Damages

Union Carbide Corporation v. Fednav Limited,, (May 20, 1997) No. T-2403-81(F.C.T.D.).

This was a claim for damage to a cargo of synthetic resin shipped from Montreal to Bangkok and Manila on board the ship "Hudson Bay". The Plaintiffs were the shipper of the cargo and the consignees. The consignees purchased the cargo on cif Bangkok and cif Manila terms. The "Hudson Bay" was under time charter pursuant to a New York Produce Exchange Form time charter agreement. The bills of lading were signed by the charterer "by authority of master as agents only". The issues in the case were: whether the shipper was a proper Plaintiff, whether the charterer was liable in contract as a "carrier", whether the charterer was liable in tort for negligent stowage, and whether the Plaintiffs had properly proven their damages. On the first issue the Court held that the shipper was not a proper Plaintiff. The Court held that under the cif terms the risk of loss passed to the buyer upon shipment and further that pursuant to the Bills of Lading Act all rights of action in respect of the cargo were vested in the consignees. The Court also held that the rule in Dunlop v Lambert (1939) 7 ER 824, (which allows the shipper to recover substantial damages as trustee for the true owner of the goods) had no application because the claims were covered by the Bills of Lading Act.

On the second issue, the Court held that there could be only one carrier and, where the bills of lading are signed for or on behalf of the Master, that the carrier is the shipowner unless there is an express undertaking on the part of the charterer to carry the goods. The Court found that there was no such express undertaking notwithstanding that the charterer had described itself as the carrier in the booking note. In reaching this conclusion the Court refused to follow Canastrand Industries Ltd. v. The "Lara S", [1993] 2 FC 553, (affirmed by the Court of Appeal 176 N.R. 31), wherein Madame Justice Reed held that both shipowner and charterer should be jointly liable.

The Plaintiffs further argued that the charterer was liable in tort for negligently stowing the pallets more than three tiers in height. The Court found that the charterer was not aware of any restrictions in the height to which the pallets could be stowed and that it was not obvious they should be restricted to three levels. The Court further held that the charterer could not be liable for the negligence of the stevedores.

Finally, on the question of quantum, the Court held that evidence of the settlement of the Plaintiffs' cargo insurance claim was neither relevant to the question of, nor admissible to prove, the Plaintiffs' damages. The Court held that the Plaintiffs must testify as to the actual losses suffered by them and that it was not sufficient to simply rely on generic evidence of arrived sound market value and arrived damaged market value.

Booking Note - Parties

Domtar Inc. v. Lineas De Navigation Gema S.A. et.al., (April 11, 1997), No. T-2873-96 (F.C.T.D.).

This was a summary judgment application that concerned the identity of the parties to a booking note contract. See a more complete summary under Admiralty Practice. Excessive Freight Charges

Me Thierry Van Dooselaere v Unispeed Group Inc. and SGS Supervision Services, (January 27, 1997) No. T-1452-92 (F.C.T.D.).

This was an action by the Plaintiff shipper against the carrier and surveyors for excessive freight charges. The Plaintiff negotiated a freight rate for 1486 metric tonnes of creosoted poles. During the course of loading the poles it was discovered that the cargo occupied more space than anticipated and the carrier demanded additional freight which the Plaintiff was forced to pay. The Plaintiff subsequently retained a surveyor to measure the cargo. The surveyor did so and the Plaintiff paid on the basis of the survey. Upon delivery the cargo was again surveyed by two independent surveys both of whom agreed that the original survey significantly overstated the amount of cargo. The Court held that the carrier and the surveyor were jointly and severally liable for the excessive freight charges the Plaintiff was forced to pay.

Liability of Terminal Operator

Bethlehem Resources Corporation v Vancouver Wharves, (January 9, 1997), No. C943469, (S.C.B.C.).

This was a motion for summary judgment brought by the Plaintiff against the Defendant, a terminal operator, for shortages to ore concentrate shipped through the Defendant's facility. The relationship between the parties was governed by an agreement which specifically provided that the terminal would only be liable for "proven negligence". The Court held that normal shrinkage might have accounted for the shortages and further held that the Plaintiff had not proven an act of negligence to support the claim.

Breach of Booking Note

Alcan Aluminum Ltd. v Unican International S.A. et.al., (June 17, 1996) No. T-1217-90 (F.C.T.D.).

In this matter the Plaintiff claimed damages against the owner and time charterer of the "CarryBulk" for breach of a booking note contract. Due to engine problems the vessel did not have sufficient power to make its way through the ice to the agreed port of loading and the time charterer ordered the ship to another port where it loaded other cargo. The Plaintiff then made alternate, and very costly, arrangements to have other vessels carry its cargo. The time charterer also claimed damages from the Plaintiff arguing that it was the Plaintiff that breached the booking note contract by shipping its cargo on these other vessels. The Court held that the time charterer and not the Plaintiff was in breach of the booking note contract. The Court found the conduct of the time charterer was anticipatory breach and the Plaintiff was justified in making alternate arrangements to ship the cargo. The time charterer argued, in the alternative, that the substitution clause gave it a defence to the Plaintiff's claim but the Court held the substitution clause could offer no defence where the named vessel had already begun to perform under the agreement. The time charterer was therefore held liable. The owner, however, was not found liable as the Court held the booking note was signed by the charterer on its own behalf and not as agent on behalf of the owner. Although successful on the issue of liability, the Plaintiff was not completely successful on the matter of damages. Most of the damages claimed were disallowed on the basis that time was not of the essence and the Plaintiff could have waited and chartered another ship at a later date at a much more reasonable price. The Plaintiff's claim for compound interest was also disallowed. The trial Judge held that compound interest should only be awarded where the Plaintiff demonstrates that his or her loss cannot be fairly compensated without an award of compound interest.

Interest and Costs

Alcan Aluminum Ltd. v Unican International S.A. et.al., (September 25, 1996) No. T-1217-90 (F.C.T.D.).

In this matter the Plaintiff had been awarded damages against the Defendant ship owner for breach of a time charter. The parties could, however, not agree on issues of interest and costs and the case was referred back to the Court . The Court held that the Plaintiff was only entitled to pre-judgment interest at the legal rate of 5%. The Plaintiff was not entitled to pre-judgment interest at the prevailing commercial rates since it led no evidence on the point. The Plaintiff was, however, allowed to rely on Provincial legislation with respect to post-judgment interest and, pursuant to the applicable Provincial legislation, the Plaintiff obtained more than the legal rate. On the question of costs, the Defendant argued that two offers to settle it made should be taken into account in its favour. The Court, however, agreed with the Plaintiff that the offers could not be taken into account because the first was not a firm offer of settlement but only an offer by counsel to "recommend" a settlement and, the second was conditional. Onus of Proof - Clean Bills of Lading

Wirth Limited et.al. v The "Federal Danube", (May 10, 1996) No. T-1701-90 (F.C.T.D.)

This case concerned damage to a cargo of steel rails carried from Antwerp to Montreal. The carrier acknowledged receipt of the cargo at Antwerp in apparent good order and condition except for some slight rusting. Upon discharge at Montreal the cargo was noted as being in substantially the same condition except one rail was damaged. The cargo was then carried by Rail to Winnipeg. Upon delivery to the consignee at Winnipeg it was noted that approximately 10% of the rails had been damaged by scratches to their base. The scratches were slightly rusted by salt water mist indicating the damage occurred prior to arrival at Montreal. The Plaintiff argued that the carrier was liable as having received the cargo in good order and condition and delivered it in bad condition. The Court, however, stated that the clean bills of lading were not a statement that the cargo was in perfect condition when it arrived at Antwerp. The clean bills of lading meant only that upon a reasonable and practical examination of the cargo, no damage was visible. The Court noted that, except for one rail, the cargo was delivered at Montreal in the same condition as received at Antwerp, i.e.. with no visible damage. It was therefore held that the carrier was only liable for damage to one rail. Limitation Clause - Interpretation

Mackay v Scott Packing and Warehousing Co., (December 22, 1995), No.A-205094, (F.C.A.).

The Plaintiff in this case had entered into a contract with the Defendant moving company for the carriage of his personal possessions to England. A large number of articles became lost or damaged during transit. The Defendant accepted liability but argued that it was entitled to rely upon a limitation clause in its contract with the Plaintiff. The Plaintiff argued the limitation clause did not extend to cover the negligence of the Defendant and, in any event, it would be unconscionable or unreasonable to allow the Defendant to rely on the clause. Both the Trial Judge and the Court of Appeal rejected the Plaintiff's argument. The clause in question limited the Defendant's liability for any loss or damage " howsoever caused" . The Court of Appeal held that the phrase " howsoever caused" was wide enough to encompass negligence. The Court of Appeal further held that there was no unconscionability or inequality of bargaining power and it would not be unreasonable to enforce the clause.

Liability of Forwarding Agents

Brereton v. KLC Freight Services Ltd., (November 26, 1997) No. 485/95 (Ont. Ct. Gen. Div.)

This was an appeal of a judgement rendered by the Ontario Small Claims Court. The action involved a shipment of personal effects from Toronto to Trinidad. Sixteen pieces were delivered by the Plaintiff to the Defendant for carriage but only fifteen pieces were ultimately delivered. The contract between the Plaintiff and Defendant specified that the Defendant was not a carrier but was only a forwarding agent responsible for the selection of third party carriers. At trial, the Small Claims Court held that the Defendant was liable for the non-delivery on the basis of res ipsa loquitor. On appeal, the Ontario Court General Division held that the Defendant was not a carrier but was merely a forwarding agent and, as such, was not liable absent proof of negligence. As there was no evidence of negligence on the part of the Defendant, the appeal was allowed and the action dismissed.

Liability of Freight Forwarder

Bertex Fashions Inc. v Cargonaut Canada Inc., (May 29, 1995), No. T-651-93, (F.C.T.D.).

The issue in this case was the liability of a freight forwarder for damage to cargo shipped under a through bill of lading issued by the forwarder. The forwarder argued that it acted only as agent for the Plaintiff and was therefore not liable. The Court held, however, that the forwarder was liable as a carrier. The factors leading to this conclusion were the forwarder undertook to carry the goods, the forwarder charged the Plaintiff a lump sum as freight not as commission, and the Plaintiff was totally uninformed and unaware of the identity of the actual carriers.