Date: 20090716
Docket: T-1340-07
Citation: 2009 FC 727
Vancouver, British Columbia, July
16, 2009
PRESENT: The Honourable Mr. Justice Harrington
BETWEEN:
H. PAULIN & CO. LTD.
Plaintiff
and
A PLUS FREIGHT FORWARDER CO. LTD.
SCANWELL LOGISTICS (TORONTO)
INC.
SCANWELL LOGISTICS (TAIWAN)
LTD.
and BALTRANS LOGISTICS (CANADA)
LTD.
Defendants
REASONS FOR JUDGMENT AND JUDGMENT
[1]
In
this action Scanwell Logistics (Taiwan) Ltd., who issued “freight
prepaid” shipping documents, claims unpaid freight from H. Paulin Co. Ltd., the
ultimate receiver, for the carriage of 29 containers of cargo from Taiwan to Vancouver by sea, and
from there to Edmonton, Toronto and Montreal by rail.
There were three distinct contracts of affreightment covering this multi-model
transport. H. Paulin, the purchaser of the cargo, hired A Plus Freight
Forwarder Co. Ltd., who hired Scanwell Logistics (Taiwan) Ltd. who in
turn hired Orient Overseas Container Line Ltd. (OOCL). H. Paulin and one of its
suppliers paid freight charges to A Plus and Scanwell paid OOCL. No one has
paid Scanwell. It is common ground that A Plus is defunct.
[2]
Having
obtained judgment in Taiwan against A Plus, but being unable to
collect, Scanwell now looks to H. Paulin for payment. It asserts a number of
reasons why H. Paulin is liable to it, one being that A Plus was its
undisclosed agent, and another being that it is not bound by the “freight
prepaid” documents it issued. H. Paulin’s position is that Scanwell dealt with
A Plus as a principal in its own right. I find for H. Paulin and would dismiss
the claim with costs. Scanwell is bound by its representation that freight had
been paid.
[3]
Before
analysing the legal principles involved, it is incumbent upon me to describe
the relationships among the various parties, make findings in respect thereto
and to set out the somewhat complex history of these proceedings.
Background
[4]
H.
Paulin is a Canadian manufacturer and importer of various fasteners used in
domestic and industrial applications. The nuts, bolts and screws on sale at
local hardware stores may well have emanated from it, as may flanges and other
fasteners which hold parts of an automobile together.
[5]
It
regularly imports from the United States and Taiwan. Three of
its suppliers in Taiwan are Zyh Yin Entreprise Co. Ltd., Super Cheng
Industrial Co. Ltd. and Da Yang Entreprise Co. Ltd. Until 2004 it purchased
from Zyh Yin on a C.I.F. basis, and from the other two F.O.B. The goods
purchased from Zyh Yin tend to be somewhat dense and heavy. Goods purchased
from the other two may already be packaged for retail sale and thus be lighter
and more voluminous. Given that all these goods move in containers, which have
both volume and weight limitations, H. Paulin realized it could save freight by
consolidating a mixture of light and heavy goods in the same container.
This is where A Plus comes in.
[6]
A
Plus was to, among other things, stuff or arrange to stuff the containers. H.
Paulin continued to deal with its suppliers on not quite a C.I.F. or F.O.B.
basis. Zyh Yin continued to pay the freight, but now it was paid to A Plus. On
the F.O.B. shipments, H Paulin paid freight to A Plus. As to the overall
relationship between the two, we have to primarily rely upon the bills of
lading issued by A Plus. The gentleman at H. Paulin who had dealt with A Plus,
Jack Adair, died in June 2007, the month before this cargo arrived in Canada. Although we
have some e-mails from the principal at A Plus, Anderson Chen, and although
duly served, A Plus has not seen fit to appear in these proceedings.
[7]
A
Plus issued eight bills of lading covering the 29 containers. Five show Zyh Yin
as shipper; two show Super Cheng and one Da Yang. All are consigned to H.
Paulin or a division thereof and state that the cargo had been received on
board the OOCL Britain or the OOCL Singapore, as the case may be. In the
freight charge box all state “ocean freight as arrange” [sic]. However,
the Zyh Yin bills of lading also bear another notation “freight prepaid”. The
Super Cheng and Da Yang bills of lading do not, but I find that both Zyh Yin
and H. Paulin paid freight to A Plus before these proceedings were instituted.
The bills of lading also contain another box titled “forwarding agent
references”. The name of Baltrans Logistics Canada Limited was inserted.
[8]
All
eight bills of lading state that they are not negotiable unless consigned to
order, which they were not. They all state that three originals were issued and
add “if more than one originals [sic] issued, the others stand void when
one is accomplished”. This means that delivery would only be effected against
surrender of the bill.
[9]
A
Plus signed the bills of lading “as agent for carrier”. The boiler plate text
states that the Master of the ship affirmed the bill of lading and authorized
signature. A Master’s bill of lading usually evidences a contract with the
shipowner or, if the ship is demised chartered, with the demise charterer.
However, that cannot be so in this case. There is no evidence whatsoever that
the Masters of the OOCL Britain and OOCL Singapore were even aware of the
existence of A Plus. The bills of lading are issued on A Plus’ letterhead and
state that the issuer of the bill of lading is the “freight forwarder”. In
virtue of clause 2 thereof, A Plus undertook to perform, or in its own name to
procure, the performance of the entire transport, and assumed personal liability.
[10]
I
find that A Plus was acting as a Non Vessel Operating Common Carrier (NVOCC).
The bills of lading were straight bills of lading which means that title
to the goods did not pass by their consignment or endorsement. It was expressly
provided, however, that an original bill had to be surrendered in order to
obtain delivery.
[11]
The
Court only heard evidence with respect to one set of the original bills of
lading. There is no evidence that they were ever in the hands of the named
shippers. Copies, but not originals, were in the hands of H. Paulin. When this
action began, the set of originals was with Baltrans.
[12]
A
Plus in turn retained the services of Scanwell Logistics (Taiwan) Ltd. who issued
“Forwarder’s Cargo Receipts”. A Plus is identified as the shipper and Baltrans
Logistics Canada Ltd. as the consignee. Scanwell signed “as carrier”. The
receipts state on their face that they are not documents of title, and bear the
notation “freight prepaid”. Scanwell submits that it is also an NVOCC and that
its receipts incorporated the terms and conditions of the next bills of lading
issued by OOCL. It is not necessary to decide this issue.
[13]
In
the third set of contracts, Scanwell retained OOCL. Scanwell Logistics (Taiwan) Ltd.
appears as shipper on its bills of lading. The consignees are its Canadian
affiliates such as Scanwell Logistics (Toronto) Inc. The
bills of lading state that they are not negotiable unless consigned to order
which they were not. In addition the word “waybill” was typed in. All bills are
marked freight prepaid. Freight had not then been paid, but eventually was paid
by Scanwell. They also contain the “when one is accomplished” proviso.
[14]
Finally,
OOCL retained Canadian Pacific Railway to move the containers from Vancouver to Edmonton,
Toronto or Montreal, as the case
may be. The contract and financial arrangements between them are not before the
Court.
The proceedings
[15]
The
business between H. Paulin and A Plus was fairly high volume, with as many as
20 containers shipped per month. Come early 2007, Mr. Adair formed the
view that A Plus had been double invoicing, overcharging and levying improper
charges. He began “setting-off” against invoices which were due. He deducted at
least $400,000.00, but had not informed others at H. Paulin of exactly
what he was doing.
[16]
The
figures are a bit murky as the dispute between the two has not proceeded to
trial. Mr. Anderson Chen conceded some errors but was still of the mind
that A Plus was owed some $400,000.00, when the containers in question were
available for delivery in Canada.
[17]
Not
wanting to run the risk of these 29 containers being held up, H. Paulin paid
the freight charges on them in full. The payment matches the specific freight
charges to the penny; consequently, this is not a case where the debtor had not
allocated a payment against various debts, so that the creditor is then
entitled to attribute them as it sees fit (Mount Royal/Walsh Inc. v. Jensen
Star (The) (1988) 17 F.T.R. 289, varied in appeal [1990] 1 F.C. 199).
Furthermore, based on the affidavit of Mr. Chih-Yuan Chen, assistant managing
director of Zyh Yin, I am satisfied that it paid A Plus the freight which it
owed on the C.I.F. shipments.
[18]
Nevertheless,
A Plus instructed Baltrans, which was then holding an original set of A Plus
bills of lading, not to release them and not to arrange for delivery of the
cargo.
[19]
As
a result, in July 2007, H. Paulin issued a statement of claim against the defendants
and moved for an order forcing the delivery to it of the 29 containers in
question. The action against A Plus has two facets. H. Paulin claims
damages estimated at $1,100,000 relating to double invoicing, overcharging and
improper charges over the approximately three years they had done business. In
addition, as against A Plus and the other defendants it is alleged that A Plus
had engaged the services of the Scanwell Corporations or Baltrans to facilitate
the movement, that freight had been paid and that all defendants should be enjoined
to deliver up the 29 containers, which were not subject to lien.
[20]
The
Court ordered H. Paulin to post security in favour of the defendants as their
possessory lien interests may appear, and they in turn were ordered to release
the containers. However, it turns out that none of the containers was in the
actual physical possession of the defendants, but rather were with OOCL or
C.P.R. The latter two were given leave to intervene and were given priority
over a portion of the security which had been posted. Thereafter the containers
were released.
[21]
Scanwell
(by convention the two Scanwell corporations have been treated as one), OOCL
and C.P.R. all asserted possessory liens. A Plus, as aforesaid, never appeared.
There is an important distinction to be drawn between the claims of Scanwell on
the one hand, and the claims of OOCL and C.P.R. on the other. Scanwell was
claiming a possessory lien for freight, OOCL and C.P.R. were not. OOCL was
claiming a possessory lien for demurrage on its containers and C.P.R. a
possessory lien for storage charges at its various container yards since the
cargo had not been picked up in a timely manner. As matters transpired it
is not necessary to decide if any of them had a possessory lien. Certainly they
all had some control over the release of the cargo. C.P.R. needed OOCL’s
consent, who needed Scanwell’s, who needed Baltrans’, who needed A Plus’!
[22]
The
parties agreed to proceed in stages. The first claims intended to be resolved
were those of OOCL and C.P.R. However, they ultimately discontinued their
proceedings, and a portion of the security was returned to H. Paulin. Although
they appear to have renounced such possessory liens or rights in rem
they may have had against the cargo, they do not appear to have renounced such
personal claims as they may have. They have both sent invoices to Scanwell,
which it refuses to pay.
[23]
Baltrans,
which was holding the original A Plus bills of lading, interpleaded and
surrendered the bills into Court. It in turn claimed over against Scanwell.
However, during the course of the proceedings, H. Paulin discontinued its
action against Baltrans and so the latter’s indemnity proceedings likewise fell
by the wayside.
[24]
Although
originally asserting a possessory lien, Scanwell decided not to pursue that
route and simply cross-claimed against H. Paulin for unpaid freight. The
balance of the security was released.
[25]
This
leaves us with H. Paulin’s claim against A Plus and Scanwell, and Scanwell’s
against H. Paulin. The claim as against Scanwell is limited to incidental
matters required in order to get delivery of the cargo. The parties agreed to
leave H. Paulin’s claim in abeyance and to first proceed on Scanwell’s
counterclaim. Thus, the only issues presently before me are whether
H. Paulin is indebted to Scanwell for freight, and whether it should be
required to indemnify it if it is successfully pursued by C.P.R. or OOCL.
[26]
The
parties decided not to call witnesses. The evidence consisted of the affidavits
filed at the outset of the proceedings, the transcript of the examinations for
discovery, answers to undertakings, agreed documents and notices to admit.
Issues
[27]
This
case deals with the bill of lading, a venerable document with centuries of use
in the transportation of goods. Depending on its language, it either serves as
a representation by the carrier that the cargo has been received for shipment
or has been actually laden on board a named ship. Secondly, even though usually
issued after the contract of affreightment has been made, it often serves as evidence
of the terms and conditions thereof (The “Ardennes” (1950), 84 Ll. L.R.
340, Saint John Shipbuilding & Dry Dock Co. v. Kingsland Maritime Corp.
(1981) 126 D.L.R. (3d) 332 (F.C.A.)). However, in this case the bills only
partially fulfill that role because the freight owing by H. Paulin had not yet
been paid. Finally, they may be negotiable in the sense that title to the cargo
identified therein may in certain circumstances be transferred by delivery or
endorsement thereof.
[28]
Bills
of lading are often modified by such words as “negotiable, non-negotiable,
order and straight”. They were the subject of considerable discussion in the
House of Lords’ decision in J.I. MacWilliam Company Inc. v. The
Mediterranean Shipping Company S.A. (The “Rafaela S”) [2005] UKHL 11,
[2005] 1 Lloyd’s L.R. 347, and very recently by Mr. Justice Blanchard of this
Court in Cami Automotive, Inc. et al v. Westwood Shipping Lines Inc. (The “WSL
Anette”) 2009 FC 664. The issues in those cases were quite different
from the case at bar. In the Rafaela S, the issue was whether the
Hague-Visby rules were compulsorily applicable to sea carriage covered by a
straight bill of lading. In the WSL Anette the issue was whether the
covering document was a bill of lading or a waybill. Nevertheless, these cases,
as well as the cases and authors cited therein, serve as excellent background
to the issues in this case.
[29]
The
first issue is the meaning of the term “freight prepaid” on bills of lading and
similar receipts. Scanwell submits that if, as in this case, the freight has
not been paid, the statement at most serves as a renunciation of the right to
retain possession of the cargo or to arrest it in an action in rem. As
regards both the shipper and the consignee, the statement has no bearing on
personal liability.
[30]
I
agree that as between the carrier and shipper the statement does not preclude
an action for freight. However, in the circumstances of this case, the
statement limits Scanwell’s recourse to an in personam claim against A
Plus. The statement precludes Scanwell from asserting any possessory lien or
claim in rem against the cargo or in personam against the
ultimate receiver, H. Paulin.
[31]
The
next issue to resolve is the relationship among H. Paulin, A Plus and Scanwell.
If, unbeknownst to Scanwell, H. Paulin was A Plus’ undisclosed principal,
then Scanwell indeed has a claim against H. Paulin as shipper. However, I am
satisfied that A Plus acted as a principal for its own account. In the
circumstances, A Plus was the only party from whom Scanwell could seek
recourse.
[32]
In
the alternative, Scanwell alleges it is entitled to recover in whole or in part
on a quantum meruit basis. I hold to the contrary.
[33]
Scanwell
paid freight to OOCL. In virtue of the Himalaya clause in the OOCL bill of
lading and the common law as reflected in such statutes as the (Ontario) Mercantile
Law Amendment Act, it submits it is entitled to recover from H. Paulin the
amount it paid OOCL. However, in my opinion neither the OOCL bill of lading nor
the common law aids Scanwell.
[34]
Finally,
Scanwell asserts an equitable social justice theory. Since the freight was only
a relatively small portion of the value of the cargo to H. Paulin, as landed in
Canada, but on the other hand represented all, or substantially all, of
Scanwell’s involvement, even if H. Paulin were an innocent party, which it is
not, better that the loss fall upon it. I find this argument singularly without
merit, and dismiss it out of hand. Scanwell chose to deal with A Plus on
credit. It chose to issue “freight prepaid” documents, all with the hope of
profit. That was its decision and its risk. It must live with the
consequences.
Discussion
[35]
The
particulars to be inserted in the A Plus bills of lading were furnished by H.
Paulin. H. Paulin was aware that A Plus was not a carrier in its own
right. It dealt with and paid A Plus to the exclusion of all others.
Although it was aware that A Plus was going “in its own name to procure the
performance of the entire transport”, it was not even aware of the existence of
Scanwell until this particular dispute arose.
[36]
As
between the two, as aforesaid, A Plus was an NVOCC, not a freight forwarder or
forwarding agent.
[37]
The
original traditional role of a freight forwarder is well-known. As stated by
Mr. Justice Rowlatt in Jones v. European & General Express Company, Ltd.,
(1920) 25 Com. Cas. 296 at p. 298 and approved by the English Court of Appeal
in Marston Excelsior Ltd. v. Arbuckle, Smith & Co. Ltd.,
[1971] 2 Lloyd’s L.R. 306 and Gillespie Bros. & Co. Ltd. v. Roy Bowles
Transport Ltd., [1973] 1 Lloyd’s L.R. 10:
It must be clearly understood that a
forwarding agent is not a carrier; he does not obtain the possession of the
goods; he does not undertake the delivery of them at the other end unless
prevented by some excepted cause of loss or something which affords an excuse.
All that he does is to act as agent for the owner of the goods to make
arrangements with the people who do carry—steamships, railways, and so on—and
to make arrangements so far as they are necessary for the intermediate steps
between the ship and the rail, the Customs or anything else…
[38]
However,
there are no fixed rules setting out the respective rights and obligations of
the shipper and the freight forwarder. In Morlines Maritime Agency Ltd. v.
IKO Industries Ltd., [1999] 180 F.T.R. 12, Mr. Justice Lutfy, as he
then was, referred to the third edition of Marine Cargo Claims in which
Professor Tetley pointed out that nowadays many the freight forwarder also:
… has acted as principal contractor
arranging the carriage in his own name. His fee payable by the shipper is a
straight freight charge. He then arranges to pay lower freight rates to
the carrier and obtains his profit from the difference between the two. Very
often the freight forwarder consolidates the cargoes of a number of clients
into a single container, resulting in savings which benefit the freight
forwarder and the clients. On these occasions the freight forwarder’s
responsibility to the shipper is often that of a carrier.
[39]
That
is exactly the relationship between the H. Paulin and A Plus in this case.
[40]
It
now becomes necessary to analyse the relationship between A Plus on the one
hand and Scanwell on the other. During the more than two years they did
business together, Scanwell never made enquiries as to who might be behind A
Plus. It only dealt with A Plus, not with A Plus’ customers. It billed A Plus,
and to the extent it was paid, was only paid by A Plus. It showed A Plus as the
shipper on its cargo receipts. It did not show Zyh Yin Entreprise Co. Ltd.,
Super Cheng Industrial Co. Ltd., Da Yang Entreprise Co. Ltd. or H. Paulin as
shipper; and never had any dealings with them.
[41]
Although
the documents issued by Scanwell were entitled “forwarder’s cargo receipt” it
goes on to provide that “the Carriage by the carrier—shall be subject to
the—regular form Bill of Lading—used at the time by such carrier—”. Yet,
Scanwell signed “as carrier”. Whether an NVOCC or forwarder, it in fact had
control of the cargo.
[42]
As
with the case of a bailee being unable to question the title of the bailor,
Scanwell could not look behind A Plus. It dealt with A Plus as a principal. It
knew perfectly well by choosing to issue a freight prepaid bill of lading it
chose to look to A Plus, as opposed to the cargo, or the consignee, for payment.
(Admitted in the discovery of Scanwell).
[43]
By
the same token, not that it matters, Scanwell dealt with OOCL as principal. If
by no other means, Scanwell’s consent was necessary before delivery of the
containers could be effected to H. Paulin, as it was both shipper and consignee
on the OOCL bills.
Meaning of “freight
prepaid”
[44]
There
have been a number of decisions of this Court, and provincial courts, as to the
meaning of this term. Cases in this Court have been limited to carriage by sea.
Care should be taken in analysing judgments from other courts as considerable
reference has been made to customary practices, particularly in the trucking
industry.
[45]
In
Chastine Maersk (The) v. Trans-Mar Trading Co. Ltd., [1974] F.C.J. No. 1003
(QL), Mr. Justice Mahoney, as he then was, held:
The notation “Freight Prepaid” means only
that the carrier must look to the shipper and not to the consignee for payment
of the freight and is obliged, in the absence of other considerations, to
deliver up the cargo to the consignee without regard to whether, in fact, it
has been paid the freight.”
[46]
The
case most widely cited is C.P. Ships v. Les Industries Lyon Corduroys Ltée,
[1983] 1 FC 736. In that case the defendant was identified on the
bill of lading as shipper. The bill of lading which was issued bore the
notation “freight prepaid”. The defendant had hired Ketra Overseas Transport
Canada Ltd. to arrange shipment and apparently was under the belief that it was
an agent of C.P. Ships for the purposes of receiving payment of freight. Ketra
billed the defendant, was paid, but then went into bankruptcy without paying
C.P. Ships. C.P. Ships was entitled to recover. Mr. Justice Addy stated:
Where a debtor, instead of paying his
creditor, chooses to pay a third party, he does so at his peril. Where the
money is not turned over to the creditor, the onus is then on the debtor to
establish either:
(1)
that the
creditor actually authorized the third party to receive the money on his
behalf, or
(2)
that the
creditor held the third party out as being so authorized, or
(3)
that the
creditor by his conduct or otherwise induced the debtor to come to that
conclusion, or
(4)
that a
custom of the trade exists to the effect that in that particular trade and in
those particular circumstances, both the creditor and the debtor normally would
expect the payment to be made to the third party.
[47]
Ever
since, Mr. Justice Addy’s commentary has been treated as if it were a piece of
legislation. The Courts have used it as the cornerstone of the necessary
factual analysis. (Mondel Transport Inc. v. Afram Lines Ltd., [1990] 3
F.C. 684; American President Lines, Ltd. v. Pannill Veneer Co. (1997),
36 B.L.R. (2d) 1 and Mediterranean Shipping Co. S.A. v. BPB Westroc Inc.,
2003 FC 942, 238 F.T.R. 135).
[48]
While
I agree entirely with Mr. Justice Addy’s analysis, I do not think he intended
that his words be taken au pied de la lettre. He was setting out a
practical application of the law of agency. During the hearing I equated the
movement of freight money to a shuttlecock. Did the movement of money from H.
Paulin to A Plus remain on the cargo side of the badminton net, or was A Plus
on the carrier’s side? I have found that A Plus was a carrier and so H. Paulin
effected payment.
[49]
Scanwell
would have been in a completely different position had it issued a freight
collect document, or at the very least had not noted that freight had been
prepaid. H. Paulin knew that A Plus was not a performing carrier, but would, in
its own name, contract with others. Even if not personally liable, H. Paulin
would not have been entitled to delivery as Scanwell would have been entitled
to insist upon payment. Knowing, and agreeing, that A Plus intended to
subcontract or sub-bail it would have been bound by a “freight collect”
notation on the Scanwell documents (Morris v. C.W. Martin & Sons Ltd.,
[1966] 1 Q.B. 716, [1965] 2 Lloyd’s Rep. 63 and K.H. Enterprise (The) v.
Pioneer Container (The), [1994] 2 A.C. 324, [1994] 1 Lloyd’s L.R. 593).
[50]
Scanwell
relies strongly on two decisions of the Quebec Court of Appeal: 2318-1654 Québec
inc. c. Swiss Bank Corp. (Canada), J.E.
2000-1475 and SGT 2000 inc. c. Molson Breweries of Canada Ltd., 2007
QCCA 1364, J.E. 2007-2013.
[51]
In
Swiss Bank, a Quebec paper manufacturer sold to various
American customers. The bills of lading stated that the freight had been
prepaid. The trucker had not in fact been paid. The shipper became bankrupt.
Swiss Bank was a secured creditor in virtue of an assignment of book debts.
It took the position that it was entitled to the full amount of the sales
invoices assigned to it, including the unpaid freight. At first instance
([1996] Q.J. No. 3606 (QL)), the trial judge heard expert evidence to the
effect that the term prepaid does not mean that the freight has actually been
paid. It simply denotes an undertaking by the shipper to pay the freight, as
transport is usually arranged on credit terms.
[52]
He
went on to hold that the shipments were covered by the federal Bills of
Lading Act. Section 2 provides:
|
2. Every
consignee of goods named in a bill of lading, and every endorsee of a bill of
lading to whom the property in the goods therein mentioned passes on or by
reason of the consignment or endorsement, has and is vested with all rights
of action and is subject to all liabilities in respect of those goods as if
the contract contained in the bill of lading had been made with himself.
|
2.
Tout consignataire de marchandises, nommé dans un connaissement, et tout
endossataire d’un connaissement qui devient propriétaire de la marchandise y
mentionnée par suite ou en vertu de la consignation ou de l’endossement,
entrent en possession et sont saisis des mêmes droits d’action et assujettis
aux mêmes obligations à l’égard de cette marchandise que si les conventions
contenues dans le connaissement avaient été arrêtées avec ce consignataire ou
cet endossataire.
|
[53]
He
concluded that the consignees were liable, together with the shipper, for the
payment of the freight charges and that those charges could have been withheld
by the consignees and paid by them directly to the trucking company. He held
that those amounts were not a receivable of the bankrupt but rather that it was
collecting same on behalf of the transport company.
[54]
The
Court of Appeal dismissed the appeal, again relying on section 2 of the Bills
of Lading Act. By taking up the bills of lading the consignees became subject
to the same liabilities as the shipper, including the obligation to pay
freight.
[55]
No
mention whatsoever was made of the jurisprudence emanating from this Court.
[56]
The
Quebec Court of Appeal simply followed itself in Molson Breweries, again
without mentioning the decisions of this Court.
[57]
These
cases can be distinguished if for no other reason than H. Paulin did not become
owner of the cargo in virtue of the bills of lading which were not negotiable
and apparently were never in the shippers’ hands. There appears to be a
presumption, at least in trucking cases, that the contract is made between the
owner of the goods and the carrier. It follows that the consignee is liable for
freight (Palmer, Bailment (2nd ed) 1991 at pp. 1015, 1016).
There is no such presumption in carriage by sea. Moreover, with respect, I am
unable to follow them.
[58]
The
entire contract as between the shipper and the carrier was not contained in the
bills of lading. The overall contract included an obligation of the shipper to
pay freight. Even if property passed in virtue of the bills of lading, the
consignees’ liability is under the Act “as if the contract contained in the
bill of lading had been made with himself” [emphasis added]. That contract
clearly stated that freight had been prepaid.
[59]
The
freight prepaid notation was a representation by the carrier, just as much as
is a statement as to the apparent good order and condition of the cargo, or
that the cargo has in fact been shipped on board. A deliberate
misrepresentation by the issuance of a clean bill of lading when the cargo is
obviously damaged is a conspiracy between the shipper and the carrier. It is a
fraudulent representation made by the carrier with the intention that it be
relied upon.
[60]
The
freight prepaid notation is not a representation as between the shipper and the
carrier, but vis-à-vis others, to use the words of Lord Justice Morris in Brown,
Jenkinson & Co. Ltd. v. Percy Dalton (London), Ltd., [1957] 2 Lloyd’s
Rep.1 at page 7:
A shipowner clearly intends that the bill
of lading he issues should be relied upon. He intends that it should be relied
upon by those into whose hands it properly comes: consignees, bankers and indorsees
must be within his contemplation.
[61]
I
turn now to quantum meruit serves as a non-contractual basis to value
services rendered. It often is advanced as an equitable remedy to provide
restitution for unjust enrichment. It has no application in this case. H.
Paulin was not unjustly enriched, it paid the freight. Scanwell provided
contractual services to A Plus on credit. The risk of non-payment fell upon it,
not H. Paulin.
[62]
Scanwell
takes the position that it was liable with others, including H. Paulin, to pay
freight to OOCL. Having paid it is entitled to recover in accordance with
Section 2 of the (Ontario) Mercantile Law Amendment Act. As I
understand it that act is not being cited in its own right but rather as a
reflection and codification of the common law which forms part of English Admiralty
Law, and hence Canadian Maritime Law. This argument fails as Scanwell, and
Scanwell alone, was personally liable to OOCL. The OOCL bills of lading provide
that anyone who becomes a holder of the bill, whether by transfer or
endorsement or by presenting same to obtain delivery, becomes a party to a
contract of carriage with OOCL. H. Paulin did none of these things.
[63]
Scanwell
has tried valiantly to escape its own language. Although Humpty Dumpty may say
“when I use a word it means just what I choose it to mean – neither more nor
less”, Scanwell may not. It is bound to H. Paulin for what it said, that
freight was prepaid. It is not for me to say whether Scanwell is liable to OOCL
and C.P.R. However, I can say for the reasons given that, even if so, it is not
entitled to indemnity from H. Paulin.
JUDGMENT
THIS COURT ORDERS AND
ADJUDGES that the counterclaim of
Scanwell Logistics (Toronto) Inc. and Scanwell Logistics (Taiwan) Ltd.
against the Plaintiff H. Paulin & Co. Ltd. is dismissed with costs.
“Sean
Harrington”
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