REASONS FOR JUDGMENT AND
JUDGMENT
OF THE PRELIMINARY ISSUES OF
LIMITATIONS
ON THE DEFENDANTS’ LIABILITY
AND THE
NATURE OF THE SHIPPING
DOCUMENT AT ISSUE
I. Introduction
[1]
By agreement between
the parties, at this stage of the proceeding the Court is asked to address only
specific preliminary issues regarding limitations of liability between the
parties as set out below. I have determined that it is also necessary to
consider the nature of the shipping document at issue.
[2]
In the main action, the
Plaintiffs (Cami Automotive, Inc. and Aisin World Corporation of America) claim
damages, pre-judgment interest, costs, and such further and other relief as may
be granted by this Court, against the Defendants (WSL Shipping Lines, Inc., Borgestad
Shipping, and Canada National Railway) for damage to cargo (the Goods)
resulting from the derailment of train cars while the cargo was being
transported from Vancouver, British Columbia to Toronto, Ontario.
[3]
Both Defendants WSL
and Borgestad claim against the Defendant CN for indemnity from any judgments
rendered against them, damages, pre and post judgment interest, costs and any
other relief as may be granted by this Court.
[4]
WSL also claims
compensation for the damage to the containers in which the Goods were shipped.
[5]
Finally, CN makes a
third party claim against WSL arguing that if the Plaintiffs have sustained any
damage in this matter, WSL must be liable for the loss. CN therefore seeks
indemnity from any judgment rendered against it, pre and post judgment
interest, costs, and such further relief as may be granted by this Court.
II. Facts
[6]
The parties to this
action submitted an agreed statement of facts. I reproduce below the agreed
statement of facts as filed with the Court. The schedules referenced in the
agreed statement of facts are included in the record but are not reproduced in
annex to these reasons.
1.
The Plaintiff, Cami
Automotive, Inc. (Cami), is a company registered to do business in the Province of Ontario with offices at 300 Ingersoll Street, Ingersoll, Ontario. Cami is an independently incorporated joint venture
between Suzuki Motor Corporation and General Motors of Canada Ltd. and
manufactures automobiles at a plant located in Ingersoll,
Ontario, Canada.
2.
The Plaintiff, Aisin
World Corporation of America (AWA), is a company registered to do business in
the State of Michigan. It is in the business of selling parts
and components manufactured by Aisin AW Co. Ltd. of Japan to automobile manufacturers including Cami.
3.
The Defendant, WSL
Shipping Lines Inc. (WSL), is a company registered to do business in the State
of Washington, with offices at 840 South 333rd Street, Federal
Way, Washington. WSL
operates as an ocean carrier and multimodal transportation company and serves
customers in approximately 10 ports in Japan, Korea, China
and North America. WSL has a fixed-day, weekly sailing schedule from various
ports and carries forest products, containerized and oversized cargo.
4.
The Defendant, AS
Borgestad Shipping (AS Borgestad), is a company or partnership registered to do
business under the laws of Norway, and was at all material times the registered
owner of the ship “WSL Anette” (the Ship), a container vessel of 28,805 gross
tons registered at Nassau, Bahamas.
5.
The Defendant,
Canadian National Railway Company (CN) is a company incorporated under the laws
of Canada with a head office at 935 rue de la
Gauchetiere, Montréal, Quebec, and with offices at 4000 Deltaport Way, Ladner, BC. CN
is a transcontinental railway providing freight services including the
intermodal movement of containers.
6.
WSL was the charterer
of the Ship pursuant to a charter agreement with AS Borgestad.
7.
Since 1991 or 1992,
WSL has provided ocean carriage and multimodal carriage services to Cami on an
annual basis, carrying various containers for Cami from Japan to Canada via the port of Seattle, Washington, USA.
8.
Cami and WSL have
historically entered into an annual service contract providing for carriage of
containers from Japan to Toronto, Ontario, via the port of Seattle, Washington (the Service Contract).
9.
As was customary,
Cami and WSL entered into individual Service Contracts for the 2004 and 2005
shipping years. Cami and WSL have been unable to locate copies of the signed
Service Contracts for 2004 and 2005. Copies of the unsigned Service Contracts
for 2004 and 2005 are collectively attached as Schedule “1”.
10.
In this case,
pursuant to its Service Contract with Cami, WSL issued a shipping document
numbered WWSUAE123NGS4007 and dated December 2, 2004 at Nagoya Japan (the WSL Shipping Document). It was understood by WSL and
Cami that the terms of any agreement between them would include, inter alia,
the applicable Service Contract and the particular WSL Shipping Document.
11.
As was customary,
upon shipment, an original two-sided WSL Shipping Document was provided by WSL,
or its agents, to AWA or its agents. AWA retained the original of the WSL
Shipping Document.
12.
By the WSL Shipping
Document, WSL acknowledged having received on board the Ship then lying at Nagoya, Japan, a cargo of 15 sealed containers with cargo
as described on the WSL Shipping Document. As regards the present action, the
cargo which is the subject matter of this action consists of automatic
transmission assemblies (the Assemblies) and automatic transmission control
modules (the Modules) carried on custom designed racks in five of the 15
containers (collectively, the Goods) as follows:
|
Container No.
|
Contents
|
|
TTNU1900026
|
Packages 20 P/T
(152 U/T and 152 P/C) 15,705kg
|
|
TRLU2372215
|
Packages 20 P/T
(152 U/T and 152 P/C) 15,705kg
|
|
TRIU3769835
|
Packages 20 P/T
(152 U/T and 152 P/C) 15,705kg
|
|
TOLU3036890
|
Packages 20 P/T
(152 U/T and 152 P/C) 15,705kg
|
|
IPXU2237809
|
Packages 20 P/T
(152 U/T and 152 P/C) 15,705kg
|
13.
As was customary with
containerized cargo, the containers were delivered to WSL in Japan with seals intact, and, as was customary, WSL did not
inspect the Goods. The Goods were carried on 19 custom designed racks each
holding 8 Assemblies and one custom designed rack holding 152 Modules. Attached collectively as
Schedule “3” are photographs of the Goods taken after the Derailment in
the warehouse at CN yard Concord, Ontario, as follows:
(a)
transmissions
off the racks (Schedule 3A);
(b)
transmissions
on the racks (Schedule 3B); and
(c)
empty
racks (Schedule 3C).
14.
The Plaintiffs Cami
and AWA were, at all material times, purchasers and sellers respectively of the
Goods on terms FOB [Free On Board] Nagoya,
Japan. Attached as Schedule “4” is a copy of the
sales invoice from AWA to Cami.
15.
WSL and CN were
parties to Confidential Transportation Agreement No. 009246 (the Confidential
Contract) under which CN agreed to transport commodities, including the Goods,
for WSL from its Vancouver Intermodal Terminal in Surrey, B.C., to its Brampton
Intermodal Terminal in Brampton, Ontario. The Confidential Contract
expired on April 30, 2005. Relevant excerpts from the Confidential Contract are
attached as Schedule “5”.
16.
As part of its
obligation to carry the Goods from Nagoya, Japan, to Toronto, Ontario, Canada, WSL subcontracted carriage of the Goods
from Vancouver, British
Columbia, to Toronto, Ontario, to CN. Truck transport of the Goods from the CN
container yard in Toronto to Ingersoll, Ontario was to be for Cami’s account.
17.
Ocean carriage from
the port of Nagoya, Japan to Seattle, Washington, took place in December 2004.
On or about December 20, 2004, the Goods were carried by truck from Seattle, Washington, to Vancouver,
British Columbia, and delivered into the care, custody
and control of CN at CN’s Vancouver Intermodal Terminal. The Goods departed
CN’s Vancouver Intermodal Terminal on CN Train Q11251 30 on December 30, 2004.
18.
CN
created an electronic data interchange (EDI) waybill for each of the five
containers, copies of which are attached as Schedule “6”. No hard copy
documents were generated.
19.
On
or about January 2, 2005, during rail transit of the 15 containers including
the Goods by CN from Vancouver, British Columbia, to Toronto, Ontario, there was a derailment
of railway cars at or near Longlac, Ontario, resulting in physical damage to some or all of
the Goods (hereinafter referred to as the Derailment). Attached as Schedule “7”
are photographs of the derailment scene.
20.
Terms
of the Confidential Contract were not disclosed to AWA or to Cami at any time
prior to the Derailment. However the Plaintiffs were aware that the contract of
carriage with WSL would necessitate WSL subcontracting the carriage of the
Goods from Vancouver to Toronto to CN.
21.
Attached
as Schedule “8” is CN Freight Tariff CN007589-AZ.
22.
By
Order of the Court made March 5, 2008, it was ordered, inter alia, that:
(1) all issues concerning any question as to damages shall be determined
separately after trial on the remaining issues, if such issues need to be
decided; and (2) the parties shall proceed to trial on the remaining issues
(i.e., liability and any limitation of liability) with evidence adduced by way
of Statement of Agreed Facts and Documents, affidavit evidence of witnesses,
examination for discovery questions and answers, and affidavits of expert
witnesses, without prejudice to any party’s right to seek leave to call a
witness at trial.
[7]
The
trial of this action proceeded on February 24, 2009 and continued until
February 26, 2009.
[8]
By consent
Order dated May 14, 2009, the March 5, 2008 bifurcation Order was amended as
follows:
Pursuant
to Rule 107 of the Federal Courts Rules, all issues pertaining to any
limitations of liability available to the Defendants in relation to the claims
by the Plaintiff shall be determined by trial separately from the issues of
liability of the Defendants generally and the assessment of any damages. The
determination of any available limitations of liability shall be on the
assumption that the Defendants are liable to the Plaintiff but that assumption
is without prejudice to any defences that the Defendants may later raise when,
and if, the issues of liability generally and the assessment of any damages are
tried.
As a result of the above amended Order, by
consent, only issues relating to limitations of liability available to the Defendants
will be addressed in these reasons.
III. Issues
[9]
The parties to this
action agree that the following questions are before the Court for
determination:
(1) Can WSL limit its
liability by the terms of the WSL Shipping Document and, if so, what is that
limitation?
(2) Can CN limit its
liability to the Plaintiffs by the terms of the Confidential Contract and, if
so, what is that limitation?
(3) Can CN limit is
liability to the Plaintiffs by the terms of the WSL Shipping Document and, if
so, what is that limitation?
[10]
Before turning to the
above issues, it is useful to determine whether the WSL Shipping Document is a
bill of lading or a waybill.
IV. Analysis
1) Is the WSL
Shipping Document a bill of lading or a waybill?
Introduction
[11]
Determination
of the nature of the shipping document used will have an important bearing on
the issues raised in this
proceeding. To that end it is therefore useful to understand the distinction
between the various shipping documents used in the industry, and particularly,
for our purposes, the distinction between a bill of lading and a waybill.
[12]
A bill of lading is
defined as “a document used in international sales to process the delivery of
goods by sea. It is widely employed in liner shipping and on chartered ships in
some trades.” (Edgar Gold, Aldo Chircop & Hugh Kindred, Maritime Law (Toronto: Irwin Law, 2003), at 408.)
[13]
The courts have
generally accepted that a bill of lading serves three purposes: it is a receipt
for the goods, it represents the contract of carriage and it is a document of title:
see Canadian General Electric Co. v. Armateurs du St-Laurent Inc.,
[1977] 1 F.C. 215 at para. 14; The Rafaela S. [2005] 1 Lloyd’s Rep. 347
at para. 38 (The Rafaela S. (HL)).
[14]
During the nineteenth
and well into the twentieth century, a bill of lading was the main instrument
used to process the carriage of goods by sea. Later in the twentieth century,
however, the advantageous advances in cargo handling techniques achieved by the
introduction of computers and containers have transformed the carriage of goods
by liner ships. As a result of these changes, a variety of new transport
documents have been developed and put increasingly into use in place of bills
of lading. These new documents include straight bills of lading and waybills. Bills
of lading, straight bills of lading, and waybills are now all commonly issued
in connection with contracts for the carriage of goods. (Gold, Chircop &
Kindred, Maritime Law (Toronto: Irwin Law, 2003), at 407).
[15]
Straight bills of
lading “are those which make the goods deliverable to an identified person as
consignee and either contain no words importing transferability or contain
words negativing transferability” (Carver on Bills of Lading, Sir
Guenter Treitel & F.M.B. Reynolds, ed., 2nd ed, (London:
Thomson-Sweet & Maxwell, 2005), at 1-007). Straight bills of lading remain,
however, documents of title and as stated above, must be presented at the port
of discharge in order to effect delivery (The Rafaela S. (HL), at para.
20).
[16]
Therefore, it is now
understood that a bill of lading may be negotiable or non-negotiable depending
on its terms. Both forms of a bill of lading require, however, that the
carrier, or its agents, may only deliver the cargo to the holder of the bill (Timberwest
Forest Corp. v. Pacific Link Ocean Services Corp., 2008 FC 801, at para. 13).
In other words, whatever its form, a bill of lading must be presented at the
port of discharge to ensure the delivery of the goods. This is because both a
negotiable and non-negotiable bill of lading are documents of title (The
Rafaela S, [2003] 2 Lloyd’s Rep. 113 (C.A.) (The Rafaela S (CA)) at
143, paras. 136-141, aff’d The Rafaela S. (HL) at paras. 20-21).
[17]
A waybill, on the
other hand, is distinguished from both bills of lading and straight bills of
lading based on the fact that waybills are not documents of title. As such,
they need not be presented to the carrier (The Rafaela S. (HL), at
para. 46; Gold, Chircop & Kindred, at 414). A waybill remains,
however, a receipt for goods and evidence of a contract of carriage.
[18]
I will now turn to
the positions of the parties with respect to the nature of the WSL Shipping
Document at hand.
Position
of the parties
[19]
It is the position of
the Plaintiffs that the WSL Shipping Document is a straight bill of lading. WSL
is of the view that its Shipping Document is a waybill.
[20]
The WSL Shipping
Document is the best evidence of the contract between the parties. Its
interpretation requires that its terms be considered in the context of
the intentions of the parties as evidenced by the contract as a whole (BG
Checo International Ltd. v. British Columbia Hydro & Power Authority,
[1993] 1 S.C.R. 12 at 23-24).
[21]
To that end we turn
to the plain language of the terms of the contract. The jurisprudence teaches
that we may consider the surrounding circumstances or commercial setting of the
contract in determining the intention of the parties: see Canada Law Book
Co. v. Boston Book Co. (1922), 64 S.C.R. 182, at 185.
Plain
language of the WSL Shipping Document
[22]
Captain Noel Asirvatham
(Captain Asirvatham), the National Sales Manager Canada for the Defendant WSL,
annexed to his affidavit a copy of the WSL Shipping Document as exhibit “A” and
a copy of what he describes as a WSL bill of lading as exhibit “B”. Both
exhibits are reproduced in the schedule to these reasons. Upon comparing the
two documents, I observe the following:
1.
On the top left hand
side of exhibit “A” we find the term “waybill”. The term “original bill of
lading” is found at the same location on exhibit “B”. I note that these terms
appear where you would expect to find the title of the document.
2.
On the top right hand
side of both exhibits “A” and “B”, beneath the WSL logo, we find a box
containing the printed term “Bill of Lading No.” which provides a space for the
document number.
3.
There is a stamp on
exhibit “A” which reads:
Straight Bill of Lading
(Waybill)
Delivery
will be made to the named consignee, or his authorized agent, on production of
proof of identity at the port of discharge or delivery, whichever is
applicable.
CARGO
MAY NOT BE DIVERTED, RECLAIMED OR CONVEYED. Delivery of cargo may not be
delayed except to satisfy carrier’s lien.
4.
There is a stamp on
exhibit “A” which reads: “Non-Negotiable Waybill”
5.
There are terms attached
to the shipping document in exhibit “A”. It is not disputed that there are
identical terms attached to the WSL bill of lading, although not found in
exhibit “B”.
6.
At the very bottom of
both exhibits “A” and “B” there is a space provided in which to indicate the
number of documents signed. Exhibit “A” shows that only one (1) document was
signed, whereas exhibit “B” shows that three (3) are to be signed.
[23]
Consideration of the
differences between the two documents will assist in determining the nature of
the WSL Shipping Document.
[24]
The fact that we find
the term “waybill” on the WSL Shipping Document where one would expect
to see the title of the document is indicative of a waybill. This is especially
persuasive in the circumstances given that the term “original bill of lading”
is found at the same location on the document purported to be an example of a
WSL bill of lading, as evidenced in exhibit “B” of Captain Asirvatham’s
affidavit.
[25]
There is printed on
both documents the term “Bill of Lading No.”. This may be indicative of a bill
of lading. However, as stated above, the documents also contain terms that are
stamped on their face. It is well established that printed terms are
subordinate to stamped terms. Metalfer v. Pan Ocean [1998] 2 Lloyd’s
Rep. 632 at 636-637; John D. McCamus, The Law of Contracts (Toronto: Irwin Law, 2005), at 726-727). Here, for the
following reasons, both stamped terms suggest that the impugned shipping
document is a waybill. Therefore, this printed term is of little assistance in
determining the issue.
[26]
The stamp found on exhibit
“A” which states “Non-Negotiable Waybill” in my view requires no elaboration.
It is indicative of a waybill.
[27]
The other stamp found
on exhibit “A”, reproduced above at item 3 in para. 22, includes in part the
words “Straight Bill of Lading (Waybill)”. As explained above, it is understood
that waybills are not straight bills of lading. Due to the apparent confusion
of terms, these words are of little assistance in determining the true nature
of the shipping document.
[28]
This other stamp on
exhibit “A” also indicates that delivery is to be made to the named consignee
“on production of proof of identity at the port of discharge”. There is no
requirement that the WSL Shipping Document be presented at the port of
discharge. It is settled jurisprudence that a straight bill of lading
must be presented at the port of discharge. As stated earlier, this
characteristic of a straight bill of lading distinguishes it from a waybill
which is not a document of title. It follows, therefore, that the stamp found
on exhibit “A”, dispensing with the requirement to produce the shipping
document at the port of discharge, suggests that the document is a waybill.
[29]
Next, Captain
Asirvatham, well aware of the ongoing practice relating to the preparation and
use of the WSL Shipping Document between the parties, attests that WSL only uses
two forms of shipping documents: waybills or bills of lading, with identical terms.
Since the terms on both documents are identical, they cannot be used to
differentiate between the two forms of shipping documents used by WSL. In my
view, these terms will be applicable to the shipping document whether it is
found to be a bill of lading or a waybill notwithstanding that the terms refer
to a bill of lading.
[30]
Finally, the evidence
indicates that bills of lading, which are documents of title, are usually
issued in triplicate so that a copy is available for production at the port of
discharge. In this case, only one copy of the WSL Shipping Document was issued.
This is consistent with the fact that the document is not a document of title. This
factor is a further indication that the shipping document in question is a
waybill.
[31]
To summarize, on its
face, the WSL Shipping Document is entitled “waybill”, both stamps suggest that
the WSL Shipping Document is a waybill, and the terms attached to the shipping
document cannot be used to differentiate between a waybill and a bill of
lading. Further, only one copy of the WSL Shipping Document was issued, and its
presentation was not required for delivery of the Goods. In my view, the above
findings indicate that the shipping document is a waybill and not a bill of
lading. I now turn to consider whether the intention of the parties is
supportive of such a conclusion.
The
Intent of the Parties
[32]
There is little evidence
in this case concerning the intention of the parties regarding the WSL Shipping
Document. We do know that Cami and WSL have been doing business together since
1991 or 1992, and have customarily entered into annual service contracts. Captain
Asirvatham’s undisputed testimony is that, due this longstanding relationship, WSL
and Cami deal on a “waybill” basis in order to simplify the transportation of
commodities for both parties. The Plaintiffs have adduced no evidence on this
point. Captain Asirvatham explains that, a “waybill basis” means that, in
contrast to a “bill of lading”, the document is not meant to be negotiable and
the tendering of the document is not necessary to effect delivery of the cargo.
[33]
Dispensing with the
negotiability and title aspects of the bill of lading is indicative of a desire
to employ the use of a less onerous shipping document. This has become
commonplace in modern cargo transportation, as mentioned earlier in these
reasons, through the use of waybills.
[34]
Given that the Plaintiff
Cami and WSL have been doing business since 1991 or 1992, and have customarily
entered into annual service contracts involving the shipment of containerized
goods, given the movement towards the use of simplified shipping documents in
the industry, and given Captain Asirvatham’s uncontradicted evidence, I am left
to conclude that the parties intended the use of a more efficient and expedited
shipping process which, in the circumstances, involves the use of a waybill.
[35]
Based on the above
analysis, I therefore find that the parties intended to contract on a waybill
basis. This is consistent with the language of the waybill. I therefore find that
the WSL Shipping Document at issue is indeed a waybill.
2) Can WSL limit its liability by the
terms of the WSL Shipping Document (waybill) and, if so, what is that
limitation?
[36]
As previously stated,
WSL entered into a contract of carriage with Cami evidenced by the
waybill and its attached terms. WSL also entered into a Confidential Contract
with CN to provide for the inland carriage of goods to destination.
[37]
The Plaintiffs claim
that WSL’s liability should be determined by the Confidential Contract WSL negotiated
with CN. WSL, on the other hand, submits that its liability to the Plaintiffs
is governed by the terms of the waybill.
[38]
In my view, this question
is resolved by reference to the terms of the Confidential Contract. Term 5 of
the Confidential Contract is entitled “Liability and Claims” and reads as
follows:
Except
as otherwise provided in any schedule to this contract, the liability of CN for
any alleged loss, damage or delay to the Commodity shall be identical to the
standards applicable to a Canadian rail common carrier, as specified in Railway
Traffic Liability Regulations, SOR/91-488.
[39]
Clearly, it is only
CN’s liability which is contemplated in this contract. Since WSL has not otherwise
agreed with Cami to limit its liability in accordance with the terms of the
Confidential Contract, WSL’s liability to the Plaintiffs is not limited by the
Confidential Contract. I therefore reject the Plaintiffs’ argument. I now turn to
the terms of the waybill.
What
is the limitation?
[40]
Clause 8 of the
waybill provides that “the ocean carrier’s responsibility with respect to the
goods shall in all cases, including where the goods are lost or damaged while
in the custody of the inland carrier, be governed by COGSA or the Hague Rules,
whichever is applicable, as provided in Clause 2 herein.” “Ocean Carrier” is
defined in Clause 1 of the waybill as follows:
“Ocean
Carrier” shall mean Westwood Shipping Lines, the owners, the operator, demised
charterer, and also any time charterer or person to the extent bound by this
bill of lading who performs the ocean transportation of the cargo described on
the face of the bill of lading.
In
the instant case there is no dispute that WSL is the Ocean Carrier for the
purposes of the waybill. Liability issues between Cami and WSL are therefore
governed by clause 8 of the waybill.
[41]
Pursuant to Clause 8
of the waybill, WSL’s liability is governed by COGSA or the Hague Rules,
whichever is applicable, as provided in Clause 2 of the waybill. Clause 2 is a Clause
Paramount which essentially sets out by which regulatory regime the parties
agreed to be bound. It reads as follows:
This
bill of lading shall have effect subject to all of the provisions of the United
States Carriage of Goods by Sea Act, approved April 16, 1936 (“COGSA”). If,
however, the Hague Rules or the Hague-Visby Rules (collectively “the Hague
Rules”) are made compulsorily applicable to this bill of lading in the country
where a dispute hereunder is adjudicated, then this bill of lading shall have
effect subject to the Hague Rules. Nothing herein shall be deemed a
surrender by the Ocean Carrier of any of its rights or immunities or an
increase of any of its responsibilities or liabilities under COGSA or the Hague
Rules, whichever applicable. The provisions of COGSA or the Hague Rules
whichever applicable apply to GOODS stowed on deck, and shall govern before the
GOODS are loaded on and after they are discharged from the vessel and
throughout CARRIAGE of GOODS by the OCEAN CARRIER and the INLAND CARRIER, if
the CARRIAGE includes through transportation, and until the GOODS are
delivered. The OCEAN CARRIER shall also have the benefit of all other statutes
of the United States or any other country which may be
applicable and which grant the OCEAN CARRIER exemption from or limitation of
liability. [Emphasis added.]
[42]
Since COGSA applies
only if the Hague-Visby Rules are not compulsorily applicable to this waybill
in Canada, the first step in determining which regime governs the
transportation under this waybill is to examine whether or not the Hague-Visby
Rules are compulsorily applicable.
[43]
Section 43 of the Marine
Liability Act (2001, c.6) is the statutory provision giving the
Hague-Visby Rules force of law in Canada in respect of contracts for the
carriage of goods by water between different states. These states are enumerated
in Article X of the Hague-Visby Rules. It is undisputed that both Canada and Japan are contracting states for the purposes of Article X.
(Affidavit of Shuji Yamaguchi, signed January 29, 2009).
[44]
The Hague-Visby Rules
only apply to “contract[s] for carriage”. This term is defined in article 1 of
the Hague-Visby Rules as those contracts covered by “a bill of lading or any
similar document of title”. Since the Shipping Document at issue is not a bill
of lading, in order for the Hague-Visby Rules to compulsorily apply, the
waybill must be a “similar document of title”. As mentioned above, it is
clear, that waybills, by definition, are not documents of title.
[45]
Since the impugned
shipping document is not a bill of lading or similar document of title the
Hague-Visby Rules do not compulsorily apply. It follows therefore, pursuant to
Clause 2 of the waybill, that the applicable regulatory regime in this instance
is COGSA.
[46]
Professor William
Tetley, in his treaties entitled Marine Cargo Claims, 4 Ed, (Quebec:
Thompson Carswell, 2008) vol. 2 at 2304, informs us that countries such as the
U.K., South Africa, New Zealand, Singapore, Australia, and the Nordic
countries, have all passed legislation which enables the Hague-Visby Rules (or
adaptations thereof) to apply to sea waybills. Clearly then, those
jurisdictions did not consider that the Hague-Visby Rules applied to sea
waybills on their own accord. No such legislation providing for the application
of the Hague-Visby Rules to sea waybills has been passed in Canada.
[47]
COGSA contains a
specific limitation of liability formula. This is found at subsection 4(5)
which reads:
Neither
the carrier nor the ship shall in any event be or become liable for any loss or
damage to or in connection with the transportation of goods in an amount
exceeding $500 per package lawful money of the United States, or in case of
goods not shipped in packages, per customary freight unit, or the equivalent of
that sum in other currency, unless the nature and value of such goods have been
declared by the shipper before shipment and inserted in the bill of lading.
This declaration, if embodied in the bill of lading, shall be prima facie
evidence, but shall not be conclusive on the carrier.
[48]
The parties have also
agreed on a valuation of the Goods in Clause 14 of the waybill which is very
similar to the language of COGSA itself. Clause 14 states:
It
is agreed and understood that the meaning of the word “package” includes
containers, vans, trailers, pallets and unitized cargos and all pieces,
articles or things of any description whatsoever except goods shipped in bulk.
In
the event of any loss or damage to goods exceeding in actual value $500 per
package lawful money of the United States, or in case of goods not shipped in
packages, per customary freight units, the value of the GOODS shall be deemed
to be $500 per package or per customary freight unit as the case may be, and
OCEAN CARRIER’S liability, if any, shall be determined on the basis of a value
of $500 per package or per customary freight unit unless the nature of the
GOODS and a higher value shall be declared by the MERCHANT in writing before
shipment and inserted herein and extra charges paid. Charges for excess value
declarations shall apply as per OCEAN CARRIER’S tariff. In the event of a
higher value being declared by the MERCHANT in writing and inserted herein and
extra freight being paid thereon if required, the OCEAN CARRIER’S liability, if
any, for loss or damage to or in connection with the goods shall be determined
on the basis of such declared value and pro rata of such declared value in the
case of partial loss or damage, provided such declared value does not exceed
the actual value of the GOODS.
[49]
The parties have
agreed, therefore, that in the event of damage to goods exceeding in actual
value $500 per package lawful money of the United States, the packages will be
deemed to have a value of $500 lawful money of the United States. This is
consistent with the limitation of liability provisions set out in COGSA.
[50]
Determining the total
amount of WSL’s liability will rest, therefore, on what is meant by a
“package”. This term is not defined in COGSA, and clause 14, cited above, does
nothing more than state that essentially anything can be a package except goods
carried in bulk. Clearly the Goods are not bulk.
[51]
The Plaintiffs
contend that “package”
is to be defined as the
individual Assemblies and Modules. Both CN and WSL contend that “package”
should be defined as a pallet.
[52]
Both Canadian and
American jurisprudence teach that the interpretation of the term “package” must
be done in accordance with the intention of the parties (J.A.
Johnston Co. v. Tindefjell (The),
[1973] F.C. 1003, at para. 10). Evidence
of this intent is found in the contractual agreement between the parties as set
forth in the shipping document as well as the surrounding circumstances (International
Factory Sales Service Ltd. v. Alexandr Serafimovich (The), [1976] 1 F.C.
35, at para 28, aff’d Consumers Distributing Co. v. Dart Containerline Co. [1979]
F.C.J. No. 1113; Tindefjell, at para. 10; Binladen BSB Landscaping v.
M.V. Nedlloyd Rotterdam, 759 F. 2d 1006, at 1012). It is well accepted in
the U.S. jurisprudence that a “package”, under
COGSA, must refer to the result of some preparation for transportation “which
facilitates handling but which does not necessarily conceal or completely
enclose the goods” (Binladen, at 1012). See also Royal Ins. Co. of
America v. Orient Overseas Container Line Ltd., 408 F. Supp. 2d. 415 (Dist. Ct., 2005) rev’d on other grounds 525 F. 3d. 409 (Sixth Circuit
C.A., 2008). Evidence of packaging and preparation for transport are also
important factors in determining what constitutes a package in Canadian
jurisprudence (Dart Containerline Co., at para. 25; Serafimovich,
at para. 37).
[53]
Given the similarity between
the American and Canadian approaches in interpreting the term “package” under
COGSA and the Hague Rules respectively, my analysis will be
informed by jurisprudence of both jurisdictions. Whether a “package” is defined
as a pallet or as individual Assemblies and Modules will depend on the
intention of the parties as evidenced by the language of the waybill and the
surrounding circumstances, including preparation for transportation.
[54]
On the face of the
waybill, it is unclear whether anything is written under the column “NO. OF
PACKAGES”, however, at the lower portion of the waybill and across this column,
we find written “(15) containers only”. No party to this proceeding argues
that a container is a package. Therefore, nothing can be concluded from the
information in this column.
[55]
Also on the face of
the waybill, in the column entitled “DESCRIPTION OF PACKAGES AND GOODS,” we
find included the words: “15 containers (300 pallets
<2,280U/T&2,280P/C>)”. The evidence indicates that each container
contained 20 custom designed pallets, 19 of which held eight Assemblies and one
which held 152 Modules. It follows that the above entry found on the
face of the waybill indicates the following cargo: 15 containers containing in
total 300 custom designed pallets which hold in total 2,280 Transmissions and
2,280 Modules.
[56]
On the second page of
the waybill we find the “container summary sheet”. Here all 15 containers are
listed, and a series of columns serves to describe each one. Under the column
entitled “Packages”, for each container it is written “20 P/T (152
U/T&152P/C)” which, as stated above, means 20 pallets containing 152 Assemblies
and 152 Modules. In my view, a plain reading of this form indicates that it is
the pallet that is considered to be the package. This is consistent with
information contained in the column describing “packages” on the face of the
waybill. This interpretation is also consistent with the Australian
jurisprudence. In El Greco (Australia) Pty. Ltd. and Another v. Mediterranean
Shipping Co. S.A., [2004]
2 Lloyd’s Rep. 537 (Fed. C. Aust.), the Federal Court of Australia found at para. 287 that under the Hague Rules, “[i]f the
bill identifies X packages each containing Y pieces or items of cargo then
there will be X packages not Y unites enumerated.”
[57]
The evidence reveals
that it is customary for WSL to use specially designed custom pallets provided
to it by the Plaintiffs. The Plaintiff AWA fabricates the racks or pallets in
accordance with the Plaintiff Cami’s specifications and is also the owner of
the pallets. Clearly then, the decision to use pallets is the Plaintiff’s. This
factor has led American courts to find that the pallet is not merely used by
the carrier to secure the Goods in place, but rather that the pallet is used by
the shipper to prepare the goods for shipment, and is thus a “package” (Standard
Electrica, S. A. v. Hamburg Sudamerikanische
Dampfschifffahrts-Gesellschaft,
375 F.2d 943, at 946 (2d Cir. N.Y. 1967)).
[58]
The evidence also
reveals that the transmissions are put onto the racks without being individually
covered. Rather, a plastic cover was placed over the pallet holding eight
transmissions. Christine Michelle Osborne, a witness for the Plaintiff Cami, attests
that the logical purpose of the plastic cover is to protect the Goods from
water damage or debris, a common purpose in packaging. She also attests that that
packaging of the Goods, in this case, meant the placing of the Goods on
the custom made pallets.
[59]
Given this
description of the Goods by Christine Michele Osborne, I do not accept that the
individual Assemblies or Modules are packages. As the jurisprudence teaches, a
plain language meaning of “package” must connote some form of preparation for
shipment or protection during handling. The Assemblies and Modules, in this
case were never intended to be shipped individually or outside of a pallet. Indeed
the evidence of Ms. Osborne suggests that packaging involved the placement of
the transmissions on the pallets. While the Plaintiff’s U.S. law expert, Mr.
Russell Williams, Esq., cites cases for the proposition that pieces of cargo
within a pallet were packages, these cases involve pieces which are themselves
individually wrapped and referred to as cartons, pails, or the like. The
circumstances here are different, the transmissions and modules are not individually
wrapped, they are simply placed and secured on the pallet and then the pallet
is covered in plastic as a single unit.
[60]
The Assemblies and Modules
at issue here are not individually prepared for transportation. The evidence
clearly points to the placement of the units on the pallets as the method
adopted to prepare the goods for transportation. This supports the contention
that a pallet constitutes the “package” for the purposes of the waybill.
[61]
I find therefore, based
on the intention of the parties as evidenced by the language of the waybill,
the method by which the Goods were prepared for transportation, the purpose of the
pallets and the lack of individual wrapping for the Assemblies and Modules,
that a “package” for the purposes
of the waybill is defined as a pallet.
[62]
WSL’s liability
pursuant to section 4(5) of COGSA is limited to a maximum of $500 per package
which in the circumstances is a pallet. The value of a pallet will be
determined in accordance with Clause 14 of the waybill. As stated above, Clause
14 provides that in the event of loss or damage to goods which exceed in value $500
per package lawful money of the United
States, the value of that
package is deemed to be $500 lawful money of the United States.
It follows, in the circumstances, that loss or damage to a pallet will be
deemed to be $500 lawful money of the United States, if the value of that
pallet exceeds $500 lawful money of the United
States.
[63]
I note as well that,
at all times prior to the shipment, it was open to Cami to declare the value of
the cargo and seek greater coverage. This, of course, would likely have meant a
higher premium and increased transportation costs. By acting as it did, Cami
made a business decision. It balanced the increased costs of enhanced coverage
against the risk of a greater loss in the event of damage to the goods shipped
by reasons of the limitation of liability provisions in the shipping document.
3) Can CN limit its liability to the
Plaintiffs by the terms of the Confidential Contract and, if so, what is that
limitation?
[64]
The Plaintiffs are
not parties to the Confidential Contract entered into between WSL and CN. The
question is, whether absent privity of contract between CN and the Plaintiffs,
can CN nevertheless rely on the Confidential Contract with WSL to limit its
liability to the Plaintiffs. The English jurisprudence has addressed the issue
of lack of privity of contract in the context of bailment. In Morris v.
Martin, [1966] 1 Q.B. 716, the English Court of Queen’s Bench held that an
owner, in suing a sub-bailee for reward, is bound by the terms of the contract
between the bailee and sub-bailee if the owner had expressly or impliedly
consented to the terms of the subcontract. This approach was adopted in Canada
in the context of contracts for the carriage of goods by sea, and most recently
followed in Boutique Jacob Inc. v. Canadian Pacifique Railway Co., 2008
FCA 85 (Boutique Jacob (FCA)).
[65]
At first instance, in
Boutique Jacob Inc. v. Canadian Pacifique Railway Co., 2006 FC 217 (Boutique
Jacob (FC)), Mr. Justice de Montigny wrote at para. 27 of his reasons:
In
a maritime law context, the Privy Council also held that the authorization to
sub-contract the whole or any part of the carriage of the goods "on any
terms" demonstrated that the owner had "expressly
consented" to the sub-bailment of their goods on any terms, and that
the scope of that express consent was broad enough to include an exclusive
jurisdiction clause (See K.H. Entreprise (The) v. Pioneer Container (The),
[1994] 2 A.C. 324; see also Singer Co (U.K.) Ltd. v. Tees and Hartlepool
Port Authorty, [1988] 2 Lloyd's Rep. 164). [Emphasis added.]
[66]
The above finding is
undisturbed on appeal. Here, as in Boutique Jacob, the owner Cami agreed
that, “[t]he OCEAN CARRIER shall be entitled to subcontract on any terms
the whole or any part of the handling and CARRIAGE of the GOODS” (emphasis
added). As in Boutique Jacob, this indicates that Cami has expressly
consented to the terms of the sub-bailment to CN.
[67]
In Canada, the liability of rail carriers is governed by the Canadian
Transportation Act (1996, c. 10) (the CTA). Pursuant to section 137 of the
CTA, a rail carrier may only limit its liability by way of a written agreement
signed by the shipper. In Boutique Jacob (FCA), at para. 47, it was
found that the shipper, for the purposes of the CTA, is the entity which
directly contracts with the rail carrier. In that case, as in this case, it is
the ocean carrier who is the shipper for the purposes of the CTA. It follows,
therefore, that since the Confidential Contract is signed by WSL, the ocean
carrier, this would satisfy the section 137 requirement of the CTA. The
Confidential Contract is a written contract signed by the shipper.
[68]
Therefore, it appears
that a rail carrier may bind an owner of goods to the terms of a sub-contract in
accordance with the principles of bailment mentioned above. In Boutique
Jacob (FCA) the Court found that Boutique Jacob (the owner) was bound to
the tariff found in the Confidential Contract between OOCL (the ocean carrier)
and Pacific Rail, a common carrier. I now turn to the applicable provisions of
the Confidential Contract.
[69]
I begin by setting
out the relevant terms of the contract:
4.
INCORPORATION BY REFERENCE
This
contract incorporates by reference all tariffs, rules and regulations which are
applicable to the transportation of the Commodity except to the extent that
such tariffs, rules and regulations are in conflict with this Contract. In the
event of any conflict, the terms and conditions of this Contract shall govern.
5.
LIABILITY AND CLAIMS
Except
as otherwise provided in any schedule to this Contract, the liability of CN for
any alleged loss, damage or delay to the Commodity shall be identical to the
standards applicable to the Canadian
rail common carrier, as specified in Railway Traffic Liability Regulations,
SOR/91-488.
SCHEDULE
1, PART 1, NOTE 1
Rates
shown herein are subject to all rules, regulations, terms and conditions, and
accessorial charges as published in Tariff CNR 7589 series.
Position
of the parties
[70]
CN claims that, in
this contract, liability is limited by the terms of the CN Tariff 7589 (the
Tariff). CN argues that, pursuant to Clause 5, since the Tariff is found in the
schedule to the contract, liability is to be determined in accordance with the Tariff.
[71]
The Tariff at issue is
entitled “Local Competitive Freight Tariff on Freight Loaded in or on Railway
Operated Intermodal Equipment and Transported on Railway Flat Cars”. It is a
116 page document consisting of 19 pages of rules and followed by detailed rate
tables. Item 300 of the rules is entitled “limitation of liability” and
provides a limitation of liability formula. CN contends that under this
provision of the Tariff, its liability is limited to the lesser of the four
amounts set out in the Tariff.
[72]
Both WSL and the
Plaintiffs argue that the Confidential Contract does not properly incorporate
the limitation of liability provisions of the Tariff, and, as a result,
liability is to be determined under the Railway Traffic Liability Regulations
SOR/91-488 (the Regulations) pursuant to Clause 5. They explain that while
the Tariff is referenced in the Schedule to the Confidential Contract, it is
referenced only in relation to rates. Thus, there are no terms within the
Schedule concerning the limitation of liability. The Plaintiffs therefore
contend that any incorporation of a limitation of liability by operation
of Clause 4 would conflict with clause 5 of the Confidential Contract. That
Clause expressly provides that CN’s liability is that of a common carrier as
specified under the Regulations.
[73]
CN takes the position
that the Tariff is properly incorporated. It argues that Clause 4 of the Confidential
Contract incorporates the Tariff by reference and Clause 5 refers to the
schedule wherein the Tariff is mentioned. Further, CN contends that, since the
Tariff is published on CN’s website, it has properly notified WSL of the
limitation of liability provisions found therein.
Analysis
[74]
Clause 5 is the only
clause in the Confidential Contract purporting to deal with limitations on
liability. This clause provides that CN’s liability is the same as the
standards applicable to a Canadian rail common carrier as specified in the Regulations
except where otherwise provided in a schedule to the Contract. While Clause
4 provides for the incorporation of the impugned Tariff by reference, it does
so only to the extent that the tariffs are not in conflict with the Confidential
Contract. If there is conflict, it is the terms of the Confidential Contract which
prevail. It follows that, based on the clear language of Clauses 4 and 5, the
limitation of liability provisions in the Tariff cannot be incorporated by
operation of Clause 4 because those provisions would be in conflict with the
terms of Clause 5. The only issue, then, is whether or not the provisions in
the Tariff pertaining to limitation of liability are properly incorporated into
a schedule to the Confidential Contract.
[75]
It is undisputed that
the terms contained in the Tariff regarding liability were not brought to WSL’s
attention, nor was the issue of the limitation of CN’s liability ever discussed
between the parties. As a result, there is no parole evidence to consider and I
need only look to the terms of the contract itself.
[76]
Clause 5 of the
Confidential Contract entitled “LIABILITY AND CLAIMS” contains a specific
liability formula. As previously mentioned, this formula limits liability to the
standards applicable to a Canadian rail common carrier as provided for in the Regulations
unless specified otherwise in a schedule to the contract. Nowhere in any schedule
is there mention of a limitation of liability. The notes to schedule 1 mention that
the rates found in the schedule are “subject to all rules, regulations, terms and
conditions, and accessorial charges as published in Tariff CNR 7589 series”. On
a plain reading, this suggests that the rates are subject to modification in
accordance with the Tariff. What is more, this wording incorporates the Tariff
into the Confidential Contract only in respect to rates. No reference is made
to limitation of liability, nor can one be inferred.
[77]
In my opinion, the
language of Clause 5 is clear. It incorporates the Tariff only for the purpose
of subjecting the rates to all rules, regulations, terms and conditions and
other charges as provided in the Tariff. No reference is made to the limitation
of liability provisions found in the Tariff. Clause 5 expressly provides that
liability of the carrier is subject to the Regulations unless otherwise
provided for in a schedule. The schedules to the Confidential Contract do not
otherwise provide.
[78]
Given that the
language of the Confidential Contract does not incorporate the liability
provision found in the Tariff, CN’s argument, that proper notice to WSL was
effected by virtue of publication on its website, is not relevant.
[79]
It is noteworthy that
CN now incorporates the full version of the type of limitation clause found in
CN Freight Tariff 7589 directly into the body of its schedule to its confidential
contracts under the heading “Lading Loss and Liability Application”.
[80]
Based on the above
analysis, I find that the limitation provisions of the Tariff are not
incorporated into the Confidential Contract. The liability regime agreed to by
WSL and CN pursuant to the Confidential Contract, is that which is found in the
applicable provisions of the Regulations. Therefore, the Plaintiffs,
having agreed to allow WSL to subcontract on any terms, are bound by the terms
of the confidential Contract which limits CN’s liability in accordance with the
Regulations.
[81]
I am mindful that, in
Boutique Jacob (FC) in finding that the Plaintiff was bound to the terms
of the subcontract, Justice de Montigny stated, at para. 33:
…The
terms and conditions found in OOCL’s waybill [the sub-carrier] are of the type
that would ordinarily be expected to be found in that sort of contract, and are
certainly not unreasonable or unconscionable. Moreover, these terms are very
similar to those accepted by Jacob [the Plaintiff] in Pantainer’s [non-vessel
operating carrier] bill of lading. Consequently, Jacob cannot argue that they
were taken by surprise and that they could not foresee the OOCL’s limitations.
[82]
In the present case,
the relevant terms of the subcontract are those which limit CN’s liability in
accordance with the Regulations. Since the Regulations are issued pursuant to
the CTA, they should be familiar to all in the industry and are not, in my view,
onerous or unreasonable. Nor can it be said that anyone has been taken by
surprise.
What
is this limitation?
[83]
Section 4 of the
Regulations provides that a rail carrier is liable in respect of goods in its
possession, for any loss of or damage to the goods or for any delay in their
transportation unless that liability is limited by the Regulations. Defences
available to the rail carrier are found at section 5(1) of the Regulations and
provide that a rail carrier shall not be liable for any loss or damage
resulting from (a) an act of God, (b) war or an insurrection, (c) a riot,
strike or lock out, (d) a defect in the goods, (e) any act, negligence or
omission of the shipper or owner of the goods, (f) an authority of law, or (g)
a quarantine. There is no evidence on the record to support any of these defences.
As a result, none of them apply in the circumstances. Therefore, CN is liable for
any loss of or damage to the Goods or for any delay in their transportation.
4) Can CN limit its liability to the
Plaintiffs by the terms of the WSL Shipping Document and, if so, what is that
limitation?
[84]
As previously discussed,
the limitation of liability provisions of the waybill are found at Clause 2,
the Clause Paramount, and Clause 14, the Valuation Clause. Clause 6 of the
waybill extends the benefit of these clauses to CN. Clause 6 is known in the
industry as an Himalaya clause.
[85]
Himalaya clauses were
developed in order to protect third parties. These clauses extend the benefits
of the contract of carriage to any third party engaged by the carrier to
fulfill the carrier’s obligations under the contract of carriage. Such clauses
are well accepted in the industry and are widely used. Clause 6 of the waybill
reads as follows:
The
OCEAN CARRIER shall be entitled to subcontract on any terms the whole or any
part of the handling and CARRIAGE of the GOODS. Every employee, agent and
independent contractor of the OCEAN CARRIER, including the Master, officers,
crew members of the vessel and stevedores, longshoremen, terminal operators,
INLAND CARRIER, and others used and employed by the OCEAN CARRIER in the
performance of services in relation to the GOODS and the goods of others, shall
be beneficiary of the bill of lading and shall be entitled to all defenses,
exemptions, and limitations of liability to which the OCEAN CARRIER is entitled
hereunder and under the applicable laws; and in, entering into this contract,
the OCEAN CARRIER does so not only on its own behalf, but also as agent and
trustee for each of the persons and companies described above, all of whom
shall be deemed parties to the contract evidenced by this bill of lading.
[86]
The language of
Clause 6 clearly extends the benefits of the waybill, including limitations of
liability to which WSL is entitled, to CN the “INLAND CARRIER”. As stated
earlier, the CTA provides that a rail carrier may only limit its liability by
way of a signed agreement by the shipper. For CN to be able to benefit from
the limitations of liability in Clause 6, it must therefore first be determined
whether the waybill at issue is a written agreement signed by a shipper within
the meaning of section 137 of the CTA.
[87]
I find the waybill at
issue to be a written agreement signed by the shipper for the purposes of
section 137 of the CTA. This is so because the waybill is a signed agreement by
WSL, which I have previously determined to be the shipper for the purposes of section
137. To find that the waybill is not such an agreement would be tantamount to
saying that, in Canada, Himalaya clauses cannot protect third
party rail carriers. Such a result would not be in keeping with the weight of
the jurisprudence. For example, the Federal Court of Appeal in Boutique
Jacob held that should the rail carrier not have the benefit of its
Confidential Contract it would, alternatively, be able to benefit under the
upstream Himalaya clauses (Boutique Jacob (FCA), at para. 59).
[88]
I now turn to
consider whether CN can, in the circumstances of this case, limit its liability
to the Plaintiffs by the terms of the waybill.
Position
of the parties
[89]
The Plaintiffs do not
take issue with the use of Himalaya clauses in general, however they submit
that by limiting its liability under the terms of the Confidential Contract, CN
cannot now rely on the terms of the Himalaya clause to limit its liability.
[90]
Both CN and WSL submit
that CN may benefit from the terms of the waybill.
Analysis
[91]
As explained above,
the Himalaya clause has the effect of extending to third parties all benefits
of the contracting parties under the waybill, including those provisions that
limit liability. In my view, the clear language of Clause 6 extends these
benefits to CN, notwithstanding the existence of the Confidential Contract.
Clause 6 provides, in part, that “…the Ocean Carrier shall be entitled to
subcontract on any terms…”, and that “…others used and employed by the Ocean
Carrier in the performance of services in relation to the goods and the goods
of others, shall be beneficiary of the bill of lading and shall be entitled to
all defenses, exemptions, and limitations of liability to which the Ocean
Carrier is entitled hereunder…”. It follows that, by agreement, WSL has the
right to subcontract to CN on any terms, and whatever the terms, CN remains a
beneficiary under the waybill. WSL and the Plaintiffs agreed to extend the
benefit notwithstanding any terms agreed to in the sub-contract.
[92]
Further, the Himalaya clause is specifically engaged where a subcontract for the
performance of part or the entire contract of carriage has been signed. To
allege that the existence of a subcontract is a bar to accessing the benefits
of the terms of the waybill ignores the very purpose of the Himalaya clause.
[93]
In K.H. Enterprise
v. Pioneer Container, [1994] 1 Lloyd’s Rep 593, at 603 Lord Goff of
Chieveley writes:
…If
it should transpire that there are in consequence two alternative regimes which
the sub-bailee may invoke, it does not necessarily follow that they will be
inconsistent; nor does it follow, if they are inconsistent, that the sub-bailee
should not be entitled to choose to rely upon one or other of them as against the
owner of the goods.
Therefore,
notwithstanding the existence of the Confidential Contract, CN has not
contracted out of the benefit of the waybill. Instead, CN should be free to
choose between the two regimes and limit its liability according to whichever
is most beneficial to it. CN can therefore elect to limit its liability under
the terms of the Confidential Contract or by the terms of WSL’s waybill.
What is the
limitation?
[94]
Should CN choose to
avail itself of the terms of the waybill, its limitation of liability would be
the same as that of WSL. As determined above, in the circumstances, WSL’s limitation
of liability is $50,000 USD It follows that CN’s limitation of liability would
also be $50,000 USD.
VI. Conclusion
[95]
In summary, as
mandated by the amended bifurcation Order, I conclude as follows in respect to limitations
of liability of the defendants CN and WSL. I find that WSL’s liability is
limited by the terms of the waybill and the contract of carriage is governed by
the terms of COGSA. As such, WSL’s limitation of liability is $500 USD per
package. In the circumstances I define a package to be a pallet. CN can choose
to avail itself of the limitation of liability agreed to in its Confidential
Contract or the limitation of liability in the waybill as against the
Plaintiffs. In the event CN chooses the latter, its limitation of liability is
the same as that of WSL.
[96]
The issue of costs is
reserved. The parties are to meet and endeavour to reach agreement with respect
to costs. On or before Friday, August 21, 2009, they should communicate with
the Court in order to advise as to whether they require any further time in
order to attempt to agree on costs. If there is no agreement, the Court will
receive written submissions as to costs no later than September 18, 2009.
JUDGMENT
THIS COURT ORDERS AND
ADJUDGES, for the reasons given above, that:
1. The WSL Shipping Document is a
waybill;
2. WSL’s liability is limited by
the terms of the waybill;
3. the contract of carriage is governed by the
terms of COGSA;
4. in
the circumstances, a “package” is defined as a pallet;
5. WSL’s
limitation of liability is $500 USD per package;
6. CN can choose to
avail itself of the limitation of liability agreed to in its Confidential
Contract or the limitation of liability in the waybill as against the
Plaintiffs. In the event CN chooses the latter, its limitation of liability is
the same as that of WSL; and
7. the issue of costs is reserved. On or
before Friday, August 21, 2009, the parties are to communicate with the Court
in order to advise as to whether they require any further time in order to
attempt to agree on costs. If there is no agreement, the Court will receive
written submissions as to costs no later than September 18, 2009.
“Edmond P. Blanchard”
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