Docket: A-278-14
Citation: 2015 FCA 78
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CORAM:
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NOËL C.J.
GAUTHIER J.A.
SCOTT J.A.
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BETWEEN:
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PÊCHERIES GUY LAFLAMME INC. AND GUY LAFLAMME
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Appellants
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and
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CAPITAINES PROPRIÉTAIRES DE LA GASPÉSIE (A.C.P.G.) INC.
and
PAULIN COTTON
and
AXA ASSURANCES INC.
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Respondents
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REASONS FOR JUDGMENT
GAUTHIER J.A.
[1]
Pêcheries Guy Laflamme Inc. [Pêcheries] and Guy
Laflamme (together, the appellants) have filed an appeal from the decision of
Harrington J. of the Federal Court [the judge] stating that the exclusion of
liability clause in a contract entitled [translation]
“Boat Handling” covered negligence. At the same time, the judge also dismissed
their counterclaim against Capitaines Propriétaires de la Gaspésie (A.C.P.G.)
Inc. [A.C.P.G.] and AXA Assurances Inc. (A.C.P.G.’s insurer) for the damage caused
to fishing boat Myrana I while she was in the possession of A.C.P.G.
[2]
A.C.P.G. has operated a marina and a dry dock in
Rivière-au-Renard since 1984. When the Myrana I was launched on May 19,
2008, the boat fell into the water and was damaged, by both the fall and
contact with the cable of the portal crane used to move the vessel.
[3]
The appellants submit that the judge made a
number of errors in his interpretation of the exclusion of liability clause.
They submit, first, that the clause could not cover negligence with respect to
the circumstances of this case and that the judge failed to provide adequate
reasons in support of his conclusion. Second, if this clause did in fact
exclude negligence, it was necessarily a harsh and unconscionable clause, and
the judge should have refused to apply it. According to the appellants, it is
inconceivable that A.C.P.G. could do whatever it liked with its boat without
being held liable, and the judge should have applied the doctrine of
fundamental breach.
[4]
Lastly, the appellants submit that the judge
erred in his assessment of the evidence and that he could not infer that
Pêcheries was bound by the terms of the contract and that it should have known
what it provided for.
[5]
Contractual interpretation is a question of
mixed fact and law (Sattva Capital Corp. v. Creston Moly Corp., 2014
SCC 53, [2014] S.C.J. No. 53 [Sattva] at paragraphs 49 and 50). The same
is true of the issue whether, in the matter at bar, the exclusion of liability clause
was harsh and unconscionable. Normally, the appellants, therefore, had the
burden of establishing that the judge made a palpable and overriding error
(Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235). The
same standard applies to the assessment of the evidence and the inferences the judge
drew.
[6]
To avoid any deference to the judge, the
appellants submit that he committed errors in law, namely,
i.
by failing to apply the three criteria of the
strict test set out in Canada Steamship Lines Ltd v The King, [1952]
UKPC 1, [1952] AC 192 [Canada SS];
ii.
by failing to apply the contra
proferentem rule against A.C.P.G.; and
iii.
by failing to apply the doctrine of fundamental
breach.
[7]
At the hearing, counsel for the appellants
placed particular emphasis on the application of the third criteria of the Canada
SS test since, in his opinion, this error was critical for the purposes of
the appeal.
[8]
Indeed, according to the appellants, if the judge
had applied the third criterion, namely, whether the clause could cover risks
other than negligence, he could only have concluded that the clause did not
cover negligence.
[9]
As indicated by the Supreme Court of Canada in paragraph 54
of Sattva, even though it may be possible to identify an extricable
question of law from within what was initially characterized as a question of
mixed fact and law, the Court should be cautious in identifying extricable
questions of law in disputes over contractual interpretation. I must therefore
carefully examine the issues raised by the appellants to inquire as to whether
they should really be treated as separate issues.
[10]
In my opinion, the judge did not err with
respect to the questions of law that can be identified in his reasoning as a
whole. As I will discuss below, he examined the meaning of the words in their
context and with respect to the purpose of the agreement and the nature of the
relationship created by the agreement (Sattva, at paragraph 48).
[11]
He did not have to apply the contra proferentem rule because, in his
opinion, the clause was not ambiguous (see paragraph 25 of the reasons
published under citation 2014 FC 456).
[12]
The contract entitled [translation] “Boat Handling” used for A.C.P.G.’s towage,
storage and launching services is subject to Canadian maritime law (paragraphs 10
and 11 of the reasons). After determining the law applicable, the judge
examined the nature of the contract and found that A.C.P.G. was acting as
bailee (under maritime law) and that it had a duty of reasonable care
(paragraph 24 of the reasons). That conclusion is not at issue before us. I
note, moreover, that it was on the basis of bailment that the judge imposed on
A.C.P.G. the burden of establishing that the accident was not caused by its
negligence.
[13]
It is in this context that the judge examined
the plain meaning of the clause reproduced below:
[translation]
I, undersigned, Guy
Laflamme, residing at Rivière-au-Renard, owner of the vessel V/M Myrana I,
registration number ________, declare that I take responsibility for any risk
resulting from the towage, docking, wintering and/or launching of this vessel
and I release the Owner of this slip dock and its Operator, Paulin Cotton, of
any civil liability resulting from these associated operations or handling.
[Emphasis added]
. . .
He concluded that the clause covered
negligence on the part of A.C.P.G., be it in contract or in tort (paragraphs 25 to
29 of the reasons).
[14]
When a party has no civil liability in the
absence of negligence, as is the case here, the phrase “civil liability” is
clearly synonymous with negligence. There was therefore no ambiguity that permitted
the application of the contra proferentem rule. This means that the clause is as clear as if the word “negligence”
appeared in it.
[15]
In any event, in Sattva and in Tercon
Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC
4, [2010] 1 S.C.R. 69, the Supreme Court of Canada confirmed that a
contract must be interpreted as a whole, in the light of the circumstances and
the commercial context. Consequently, the three-prong approach set out in Canada
SS is a guide rather than a decisive test requiring a pre-determined result
when the interpretation concerns a clause that excludes or limits liability.
[16]
I note that in ITO - International
Terminal Operators Ltd. v. Miida Electronics Inc., [1986] 1 S.C.R.
752, the Supreme Court of Canada had to determine, among other things, whether
ITO, as a party to the contract of carriage of goods subject to Canadian
maritime law, could benefit from the exclusion of liability included on the
bill of lading. Clauses 8 and 18 of the bill of lading stated that the carrier
(and ITO as subcontractor) would not be liable for any loss occurring after
discharge and that all risks and expenses for storage would be borne by the
shipper and/or consignee (last paragraph of page 791). After concluding that
these terms were wide enough to cover negligence (criteria 1 and 2 of Canada
SS), the Supreme Court of Canada addressed, very briefly, the third Canada
SS criteria, at page 800 of its reasons.
[17]
It stated that the remaining question, whether
there is any other possible head of liability upon which the exemption clause
could operate, had to be answered in the negative, for the following reason:
The only liability
which could be imposed on the bailee [“dépositaire” in French] would be based
on negligence.
[18]
Before this Court, counsel for the appellants
put little emphasis on the doctrine of fundamental breach since it is clear, as
claimed by the respondents, that the Supreme Court of Canada rejected this
doctrine in Tercon (paragraphs 62 and 82).
[19]
As for the assessment of the evidence and the
judge’s conclusion that Pêcheries was bound by the terms of the contract, the
appellants did not discharge their burden of establishing a palpable and
overriding error.
[20]
While it is true that some passages from the
reasons could have been clearer and some observations seem inappropriate, the
fact remains that the judge’s conclusion in this respect is properly supported
by the evidence.
[21]
The judge made the following observations to
reach this conclusion:
−
The contract was short (one page, three
paragraphs), very legible, and bearing the title [translation] “Boat Owner’s
Responsibilities”, written in capital letters, in bold type
(paragraph 18 of the reasons);
−
The May 19 contract was signed by Guy
Laflamme as the representative of Pêcheries (paragraph 20 of the reasons
and Appeal Book, page 146);
−
The contract was nothing new because it had been
used for the appellants’ vessels for over 20 years, and, every time,
Pêcheries received a copy by mail in addition to the copy given to the
signatory (paragraphs 14, 21 and 37 of the reasons); and
−
At least 36 contracts were found in Pêcheries
files, including 16 signed by Guy Laflamme himself (paragraph 40 of
the reasons).
[22]
In the circumstances of this case, I agree with
the judge that Pêcheries was bound by the terms of the document signed by Guy
Laflamme on its behalf (paragraph 48 of the reasons).
[23]
Finally, the judge concluded that the clause was
neither abusive nor draconian. In his opinion, such risk-allocation clauses are
classic in the modern business world.
[24]
The clause was used by the former owners,
including Quebec’s Ministère de l’Agriculture, before A.C.G.P. acquired the
facility in question.
[25]
That Guy Laflamme, who is a member shareholder
of A.C.P.G., considers the people who are part of A.C.P.G. to be his friends,
if not his family, does not take away from the fact that this was a commercial
transaction for both parties. Allocating the risks makes it possible to avoid
disputes and the great expenses these entail. Indeed, had it not been for the
error identified thereafter (paragraph 28), all the parties agree that the
present proceeding would not have taken place.
[26]
The appellants add that A.C.P.G. should have
explicitly advised them that, given the exclusion, they had to insure their
boat. This argument is hard to follow since the Myrana I had actually
been insured for many years and since, as the appellants confirmed before us,
on May 19, Guy Laflamme believed that the Myrana I was insured.
[27]
The judge dealt with another argument of the
appellants, one he did not accept, namely, that the parties did not intend to
allocate the risks because A.C.P.G. maintained liability insurance with AXA Assurances
Inc. The judge noted that Pêcheries had its own hull and machinery insurance
(property insurance) and that it was not until after the accident that it
noticed that this policy had been cancelled because it had failed to pay it.
The draconian nature of such a clause cannot depend on such extrinsic
circumstances.
[28]
The appellants seem to be criticizing the judge for
not repeating their many arguments word for word. This does not mean that he
ignored them; he simply did not give them the weight afforded to them by the
appellants.
[29]
I conclude therefore that the appellants did not
establish that the judge committed a palpable and overriding error justifying
this Court’s intervention.
[30]
I would therefore dismiss the appeal with costs.
“Johanne Gauthier”
“I agree.
Marc Noël J.A.”
“I agree.
A.F. Scott J.A.”
Certified true translation
François Brunet, Revisor
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