Date: 20080307
Docket: T-822-07
Citation: 2008
FC 319
Ottawa, Ontario, March 7, 2008
PRESENT: The Honourable Mr. Justice Hugessen
BETWEEN:
LOCHER
EVERS INTERNATIONAL
Plaintiff
and
CANADA
GARLIC DISTRIBUTION INC.
Defendant
REASONS FOR ORDER AND ORDER
I. Introduction
[1]
This is a motion for summary judgment
brought by the plaintiff, Locher Evers International (LEI) to recover amounts
claimed from the defendant, Canada Garlic Distribution Inc. being the sum of
$3,154.09 plus an amount sufficient to purchase $212,503.00 USD in respect of
freight for the carriage of produce from China to Toronto. The defendant
does not dispute the amount claimed but asserts first, that damage to cargos
attributed to alleged breaches of contract by the plaintiffs gives it a right
to set-off against the claim and, second, that the agreement reached between
the parties contains a clause ousting the jurisdiction of the Federal Court to adjudicate this claim.
II. Facts
[2]
Canada Garlic imports
fresh vegetables to Canada from China via cargo ships. LEI is a company that
arranges the import of goods via cargo ships. The parties entered into an
agreement on January 8, 2002, which was based on a credit facility agreement.
The credit agreement is a single page document. The relevant terms read as
follows:
CREDIT TERMS
Agreement:
[…]
All invoices shall be payable to LEI
within ___ days from the date of invoice. Interest, calculated daily, is
charged and payable on all overdue invoices, reckoned from the due date of each
invoice, at an annual rate equal to the commercial prime lending rate at the
Canadian Imperial Bank of Commerce, plus 2 per cent per annum, for any given
day.
[…]
“Customer” will be bound by the Standard
Trading Conditions (“Conditions”) (as amended or revised from time to time) of
the Canadian International Freight Forwarders’ Association Inc. and the
Canadian Society of Customs Brokers which amendments or revisions LEI will,
upon request, send to the “Customer”.
[…]
“Customer” acknowledges having received a
copy of said “Conditions” and “Contract Terms” on or before the date of this
application.
The
Courts of the Province of Ontario shall have jurisdiction over any action brought to recover
amounts owing to LEI under this Agreement or upon invoices rendered by LEI for
services performed for its “Customer”.
[3]
The defendant has
imported 635 full containers of vegetable products with the importing
assistance of the plaintiff since January 2002. Between May and July 2006 five
containers of snow peas and sugar snaps arrived in Canada which were said to have been spoiled after being
transported by Evergreen Marine Corporation. The total damages claimed by the
defendant for the plaintiff's failure to deliver the vegetables in good
condition amount to $222,585.15 CAD. The defendant alleges that the vegetables
were damaged due to a malfunctioning of the temperature controlled
refrigeration container and began to decompose during transit.
[4]
The defendant paid
for the freight and associated charges on these five damaged containers and continued
to do business with the plaintiff. Forty-nine invoices were issued to the
defendant by the plaintiff between November 15, 2006 and March 19, 2007 for
subsequent shipments, unrelated to the damaged cargo. The total amounts of
these charges is $212,503.00 USD and $3,154.09 CAD respectively and the defendant
has not paid these invoices, claiming that no satisfactory resolution had been
reached for the five damaged containers and thus, it was entitled to set-off.
[5]
The defendant claims
that prior to this litigation, the specific CIFFA terms were never brought to
its attention despite the fact that they were included in the credit agreement.
At paragraph 17 of the CIFFA conditions we find the following:
“The
Customer shall pay to the Company in cash, or as otherwise agreed, all sums
immediately when due without reduction or deferment on account of any claim,
counterclaim or set off.”
[6]
Each of the plaintiff’s
bills of lading issued to the defendant contains the following text:
The
goods covered by this Multimodal/Through Transport Bill of Lading have been
received by the pre-carrier or by the ocean carrier named hereon as the case
may be in apparent good order and condition except as noted and will be
shipped, carried, forwarded, stored, handled, and delivered subject to the
terms and conditions of the shipping lines, airlines, land carriers,
organizations or firms who have a part in the receiving, shipping, carrying,
forwarding, storing, handling and delivering of the under-mentioned goods. It
is agreed that LOCHER EVERS INTERNATION (LEI) and/or their appointed agents are
only the agent of the shipper or consignee and are not carriers or principals
to any contract of carriage. The current version of the terms and conditions of
the Canadian International Freight Forwarders’ Association (CIFFA) are
incorporated by reference herein and shall apply and govern the
responsibilities of LEI as agent in issuing or arranging for the issue of this
Bill of Lading. To assist the holder of this bill of lading, the terms and
conditions applicable to the actions of LEI as agent have been set out on the
reverse side of this document. The CIFFA standard trading conditions can also
be viewed at www.ciffa.com, including the French version. Despite the title of
this document as “Multimodal Transport Document”, these conditions also apply
if only a single mode of transport is used.
III. Analysis
[7]
This and higher Courts have repeatedly held that a claim for
ocean freight such as the one here asserted falls squarely within the grant of
jurisdiction found in section 22 of the Federal Courts Act. R.S.C.,
1985, c. F-7. (See e.g. ITO—Int’l Terminal Operators v. Miida Electronics,
[1986] 1 S.C.R. 752; Ordon Estate v. Grail, [1998] 3 S.C.R. 437).
[8]
Section 22 reads in
relevant part:
|
Navigation and shipping
22. (1) The Federal Court has concurrent original
jurisdiction, between subject and subject as well as Navigation and shipping
22. (1) The Federal Court has concurrent original
jurisdiction, between subject and subject as well as otherwise, in all cases
in which a claim for relief is made or a remedy is sought under or by virtue
of Canadian maritime law or any other law of Canada relating to any matter
coming within the class of subject of navigation and shipping, except to the
extent that jurisdiction has been otherwise specially assigned.
Maritime jurisdiction
(2) Without limiting the generality of subsection
(1), for greater certainty, the Federal Court has jurisdiction with respect
to all of the following:
[…]
( e) any claim for damage sustained by, or for loss
of, a ship including, without restricting the generality of the foregoing,
damage to or loss of the cargo or equipment of, or any property in or on or
being loaded on or off, a ship;
( f) any claim arising out of an agreement relating
to the carriage of goods on a ship under a through bill of lading, or in
respect of which a through bill of lading is intended to be issued, for loss
or damage to goods occurring at any time or place during transit;
[…]
( i) any claim arising out
of any agreement relating to the carriage of goods in or on a ship or to the
use or hire of a ship whether by charter party or otherwise;
|
Navigation et marine marchande
22. (1) La Cour fédérale a compétence
concurrente, en première instance, dans les cas — opposant notamment des
administrés — où une demande de réparation ou un recours est présenté en
vertu du droit maritime canadien ou d'une loi fédérale concernant la
navigation ou la marine marchande, sauf attribution expresse contraire de
cette compétence.
Compétence maritime
(2) Il demeure entendu que, sans
préjudice de la port»e générale du paragraphe (1), elle a compétence dans les
cas suivants :
[…]
e) une demande d’indemnisation pour
l’avarie ou la perte d’un navire, notamment de sa cargaison ou de son équipement
ou de tout bien á son bord ou en cours de transbordement;
f) une demande d’indemnisation, fondée
sur une convention relative au transport par navire de marchandises couvertes
par un connaissement direct ou devant en faire l’objet, pour la perte ou
l’avarie de marchandises en cours de route;
[…]
i) une demande
fondée sur une convention relative au transport de marchandises à bord d’un
navire, à l’usage ou au louage d’un navire, notamment par charte-partie;
|
[9]
In the case at bar,
the jurisdiction clause relied on by defendant does not purport to oust the
jurisdiction of the Federal Court. Whether or not the word shall is viewed as
mandatory, the clause does not defeat the statutory grant of jurisdiction
quoted above at paragraphs 22(2)(e) and (f).
[10]
Furthermore, it is
also my view that the defendant has failed to raise the question of
jurisdiction timely. It should have done so by preliminary motion to strike the
pleadings of the plaintiff. Instead, the defendant has simply pleaded over. I
would refer to my decision in Dene
Tsaa First Nation v. Canada
[2001] F.C.J. No. 1177 at paragraphs 3 and 4 where I said:
3 In my view, the great weight of the
case law in this Court is to the effect that a motion which is based on the
subparagraphs of Rule 221 other than subparagraph a) must be brought before the
defendant has pleaded over, or if brought after that time the plea itself must
have contained a reservation with regard to the impugned paragraphs. I
am satisfied to cite only one case in support of that proposition and that is
the decision of the Court of Appeal in Proctor & Gamble Co. v. Nabisco
Brands Ltd. [(1985) 62 N.R. 364 at 366]
4
There is a reason for the rule, namely that where a motion to strike is based
on paragraph a), that is to say that the statement of claim or the impugned
paragraphs do not disclose a reasonable cause of action, the motion goes to the
very heart of the action itself and it is appropriate that the Court should be
able to deal with matters of that sort at any stage with perhaps only cost
consequences flowing if the person making the motion does so on a late basis.
However, where the motion is based on paragraphs b) to f) of the Rule, it is
essentially a technical pleading matter and the policy of the Court is, and has
for many years, been that parties should be encouraged to put those matters
behind them at an early stage. If a party wishes to take issue on a technical
basis with another party's pleading, that must be done as soon as possible in
the proceedings, otherwise the party must hold his or her peace.
[11]
Further, I note that
the defendant's reliance on the jurisdiction clause in the credit agreement is
inconsistent with its attempt to avoid the application of the other clauses in
the same agreement. Ms. Qiu who was in charge of logistics for the defendant,
in her affidavit, deposes to the effect that the CIFFA terms and conditions
were not brought to her attention. This is incompatible with the statement in
the credit agreement, quoted above, that a copy of those terms and conditions
was provided to Canada Garlic.
[12]
There are constant
and consistent references to the CIFFA terms and conditions in virtually all
the documents emanating from the plaintiff to the defendant, notably in the Credit
Agreement and on the bills of lading mentioned above. I am persuaded that the
former took reasonable steps to draw those terms and conditions to the
defendant's attention. I find that the CIFFA terms form part of the contractual
arrangements between them.
[13]
In particular I find
that the CIFFA terms and conditions exclude any claim to set-off for alleged
claims for damage to cargo and when read with the face page of the bills of
lading issued in respect of the disputed shipments, make it plain that LEI was
acting as agent for the defendant in concluding the contracts of carriage and
as agent for the carrier in acknowledging receipt of the goods in apparent good
order and condition. LEI was not the actual carrier, the latter being clearly
identified in the bills of lading. The evidence is virtually all to be found in
contemporary documents and there are no questions of credibility in this case.
I find that there is no genuine issue for trial and the defense to the claim
must fail.
[14]
The motion for
summary judgment will be granted and the plaintiff shall have judgment in the
amounts claimed together with its costs to be assessed. If the parties
cannot agree on the calculation of the amounts due a reference may be
requested.
ORDER
THIS COURT ORDERS that
1.
The
plaintiff’s motion for summary judgment be granted.
2.
The
plaintiff shall have judgment in the amounts claimed together with its costs to
be assessed.
“James
K. Hugessen”
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