Green Computer in Sweden AB v. Federal Express Corp., 2002 FCT 1015

Date: 20020927

Docket: T-452-00

Neutral citation: 2002 FCT 1015

BETWEEN:

                                               GREEN COMPUTER IN SWEDEN AB

                                                                                 and

                                                    POWER GROUP & ASSOCIATES

                                                                                                                                                        Plaintiffs

                                                                                 and

FEDERAL EXPRESS CORPORATION,

UNIVERSAL FDX AB,

FEDERAL EXPRESS CANADA LIMITED

and

ALL FEDERAL EXPRESS CORPORATION'S

AFFILIATED, ASSOCIATED AND

SUBSIDIARY COMPANIES

                                                                                                                                                    Defendants

                                                            REASONS FOR ORDER

RICHARD MORNEAU, ESQ., PROTHONOTARY:

[1]                 This is a simplified action brought by the Plaintiffs against the Defendants for damages due to loss of cargo.

[2]                 This action came for adjudication on the basis of a joint statement of facts, agreed documents and written representations of the parties.

Facts

[3]                 The relevant facts, as disclosed by the joint statement of the parties, are as follows:

1.             The Plaintiffs, having title in the cargo and interest to bring suit, are Green Computer In Sweden AB, seller and shipper, a body corporate having a place of business at Lannerstavagen 12, S-132 45, Saltsjo-Boo, Sweden; and Power Group & Associates, buyer and recipient, a body corporate having a place of business at 461 Alden Road, Unit 22, Markham, province of Ontario, Canada, L3R 3L4;

2.             The Defendants are Federal Express Corporation, a body corporate having a place of business in Memphis, State of Tennessee, U.S.A. 38194; Universal FDX AB, a body corporate having a place of business in Stockholm-Arlanda, Sweden; and Federal Express Canada Limited, a body corporate having a place of business at 5985 Explorer Drive, Mississauga, Province of Ontario, Canada, L4W 5K6 (hereinafter collectively known as "FedEx");

3.             Plaintiff Power Group purchased from Plaintiff Green Computer, on or before March 5, 1998, two hundred (200) Pentium II 233 integrated circuits (see document No. 2);

4.             The Plaintiffs, at all material times, had title and interest in a cargo consisting of the two hundred (200) pieces of Pentium II 233 integrated circuits (hereinafter "the cargo");

5.             The cargo was received for shipment on March 5, 1998, in Saltsjo-Boo, Sweden by Universal FDX AB who contracted with the Plaintiffs to carry the cargo from Sweden to Markham, Ontario, pursuant to FedEx International Air Waybill number 400-64110 4154 (see document No. 1);

6.             The cargo consisted of two packages, one containing fifty (50) pieces and the other one hundred and fifty (150) pieces (see document No. 8);

7.             Universal FDX AB acknowledged, on March 5, 1998, receipt of the cargo in good order and condition, said cargo consisting of two packages cumulatively weighing thirty-three (33) kilograms (see document No. 1);

8.             A Swedish customs declaration form also confirms that the cargo consisted of two packages (2 Krt. Integrerade Kretsar) (see document No. 3);

9.             Federal Express Corporation and Federal Express Canada Limited acted as successive carriers to Universal FDX AB as regards the cargo;

10.           The package containing fifty (50) pieces was delivered by FedEx to Power Group on March 10, 1998 (see document No. 5); however, the package containing one hundred and fifty (150) pieces of Pentium II 233 integrated circuits was not delivered to Power Group (hereinafter "the missing package");

11.           FedEx was unable to locate the missing package as per correspondence dated April 27, 1998 (see document No. 5);

12.           Further correspondence from FedEx, dated May 28, 1998, shows that it was unable to locate a hard copy of the proof of delivery as regards FedEx International Air Waybill number 400-64110 4154 under which the missing package was shipped (see document No. 7);

13.           FedEx was made aware of this loss by Plaintiffs in April of 1998 and was unable to trace the missing package;

14.           No declared value for carriage was indicated on the FedEx International Air Waybill number 400-64110 4154 (see document No. 1);

15.           It was admitted that the commercial value of the missing package was $50,338.88 (see document No. 9) and that it had a weight of 25 kg;

16.           If damages are awarded, they will be one of the following:

                 a)             If FedEx is not entitled to limit liability, $50,000 plus costs and interest at the legal rate of interest of five (5) percent compounded quarterly; and

                 b)             If FedEx is entitled to limit liability, $851 plus interest at the legal rate of interest of five (5) percent compounded quarterly with costs to be determined by the Court.

Analysis

[4]                 At the pre-trial conference, the issues to be determined at trial were stated to be as follows:

1.             Should Federal Express Corporation and Federal Express Canada be parties to the present proceedings?

2.             Have the present proceedings been appropriately brought in Canada?

3.             Does the fact that FedEx did not deliver the package containing one hundred and fifty (150) pieces of Pentium II 233 integrated circuits, coupled with the fact that FedEx was unable to trace the missing package, constitute a fundamental breach of the contract of carriage therefore denying FedEx's ability to avail itself of the terms and conditions provided for in the FedEx International Air Waybill (see document No. 1) and the Federal Express Conditions of Carriage (see document No. 10)?

4.             Is FedEx entitled to limit its liability in accordance with the Warsaw Convention (as amended by The Hague Protocol)?

5.             Is the FedEx International Air Waybill missing any particulars that would prevent FedEx from availing itself of the provision(s) of the Warsaw Convention (as amended by The Hague Protocol) allowing it to limit its responsibility?

6.             Is FedEx guilty of any willful misconduct preventing it from availing itself of the provision(s) of the Warsaw Convention (as amended by The Hague Protocol) allowing it to limit its responsibility?

7.             Are Plaintiffs barred, pursuant to Article 26 of the Warsaw Convention, from any action for having failed to send Defendants the appropriate notice within the prescribed time limit?

[5]                 The Defendants have withdrawn issues 1 and 2 above. As for the rest of the issues, I intend to address them in the following order: issue 7, issue 5, issue 6, issue 4 and issue 3 if necessary.

I.          Issue 7:      Are Plaintiffs barred, pursuant to Article 26 of the Warsaw Convention, from any action for having failed to send Defendants the appropriate notice within the prescribed time limit?

[6]                 Article 26 of the Warsaw Convention as amended by the Hague Convention (1955) (hereinafter the Warsaw Convention) reads as follows:

(1)      Receipt by the person entitled to delivery of baggage or cargo without complaint is prima facie evidence that the same has been delivered in good condition and in accordance with the document of carriage.

(2)      In the case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within seven days from the date of receipt in the case of baggage and fourteen days from the date of receipt in the case of cargo. In the case of delay the complaint must be made at the latest within twenty-one days from the date on which the baggage or cargo have been placed at his disposal.

(3)      Every complaint must be made in writing upon the document of carriage or by separate notice in writing dispatched within the times aforesaid.

(4)      Failing complaint within the times aforesaid, no action shall lie against the carrier, save in the case of fraud on his part.

  

[7]                 The convention does not provide any time restraint with respect to the filing of written complaints in the case of non-delivery or loss of cargo, which is the circumstance in the case at bar. Article 26 of the Warsaw Convention does not, therefore, in my view, apply to our situation.

[8]                 Therefore, the question with respect to issue 7 must be answered negatively.

II.        Issue 5:      Is the FedEx International Air Waybill missing any particulars that would prevent FedEx from availing itself of the provision(s) of the Warsaw Convention (as amended by The Hague Protocol) allowing it to limit its responsibility?

[9]                 Article 9 of the Warsaw Convention provides the following:

If, with the consent of the carrier, cargo is loaded on board the aircraft without an air waybill having been made out, or if the air waybill does not include the notice required by Article 8, paragraph (c), the carrier shall not be entitled to avail himself of the provisions of Article 22, paragraph (2).

[10]            The notice so provided for by paragraph (c) of Article 8 of the Warsaw Convention is the following:

[...] if the carriage involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention may be applicable and that the Convention governs and in most cases limits the liability of carriers in respect of loss of or damage to cargo

[11]            The back of the FedEx International Air Waybill (the bill) (see documents No. 1 or 11) provides the following:

Air Carriage Notice:If the carriage of your shipment by air involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention, an international treaty relating to international carriage by air, may be applicable, which treaty would then govern and in most cases limit our liability for loss or delay of or damages to your shipment.

[12]            Except for minor differences, the substantive content of the notice under the bill is analogous to the content of paragraph 8(c) of the Warsaw Convention.

[13]            Consequently, the question in issue 5 must be answered negatively.

III.       Issue 6:      Is FedEx guilty of any willful misconduct preventing it from availing itself of the provision(s) of the Warsaw Convention (as amended by The Hague Protocol) allowing it to limit its responsibility?

[14]            Article 25 of the Warsaw Convention provides for the following:

The limits of liability specified in Article 22 shall not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result; provided that, in the case of such act or omission of a servant or agent, it is also proved that he was acting within the scope of his employment.

[15]            Reference has been made to the decision of Pafco, compagnie d'assurance ltée v. Federal Express Canada Ltée, J.E. 97-886 (C.Q.), in which the following is stated, at p. 11:

À moins de preuve prépondérante du dol, qui implique une machination active, ou d'une faute lourde, qui présuppose "négligence grossière" (article 1474 précité), la limite de responsabilité prévue à l'article 22 de la Convention de Varsovie s'appliquera.

[16]            The Court's attention was also directed to PINEAU, J., Le contrat de transport, Les Éditions Thémis, 1986 (at p. 320), where it is stated that willful misconduct (intention dolosive) is required to trigger the application of Article 25 of the Warsaw Convention.

[17]            I am of the view that no theft has been proven, the tracking system of the Defendants has not been put into question and the Defendants are not accused of any wrongdoing except for having lost the shipment in transit and being unable to offer an explanation. From my point of view, this does not constitute willful misconduct or gross negligence that would preclude the application of the Warsaw Convention.

[18]            Consequently, the question in issue 6 must be answered negatively.

IV.       Issue 4:      Is FedEx entitled to limit its liability in accordance with the Warsaw Convention (as amended by The Hague Protocol)?

[19]            The Plaintiffs submit that the Warsaw Convention is inapplicable given that no evidence has been adduced by Plaintiffs under Article 18 of the Convention to the effect that the loss occurred during the execution of the carriage by air.

[20]            Article 18 of the Warsaw Convention states that:

(1)      The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered baggage or any cargo, if the occurrence which caused the damage so sustained took place during the carriage by air.

(2)      The carriage by air within the meaning of the preceding paragraph comprises the period during which the baggage or cargo is in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever.

(3)      The period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome. If, however, such carriage takes place in the performance of a contract for carriage by air, for the purpose of loading, delivery or transhipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air.

[21]            I am satisfied under the circumstances of this case that the carriage at issue took place in the performance of a contract for carriage by air. Therefore, in accordance with paragraph 18(3) mentioned above, there exists here a presumption that the loss occurred "during the carriage by air".

[22]            I am also satisfied that the Plaintiffs have not rebut in evidence this presumption.

[23]            Plaintiffs further argue that the Defendants cannot avail themselves of the provisions of the Warsaw Convention in light of the fact that the loss remains unexplained which, according to them, necessarily implies that the cargo was stolen by one or more of the Defendants' employees.

[24]            As already indicated at paragraph [14], supra, Article 25 of the Warsaw Convention provides the following:

The limits of liability specified in Article 22 shall not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result; provided that, in the case of such act or omission of a servant or agent, it is also proved that he was acting within the scope of his employment.

[25]            In this case, no proof of a theft has been made.

[26]            The inferences drawn by the Plaintiffs as to a theft should be dismissed as did the Supreme Court of British Columbia in the decision of MDSI Mobile Data Solutions Inc. v. Federal Express Corporation, October 10, 2001, Docket No. C994805 (unreported - this decision was appealed by FedEx but on other grounds), where the following is stated, at p. 9:

Article 25 [of the Warsaw Convention] precludes a carrier from availing itself of the protections of the Convention if its liability for the loss is caused by willful misconduct. MDSI contends that, in the absence of evidence being tendered by FedEx as to how the loss occurred, an inference should be drawn to the effect that it was the result of willful misconduct. In my view, there is no basis on which to draw such an inference.

  

[27]            I agree with the Defendants when they suggest that the Plaintiffs wrongly infer that because there is no proof that the cargo was stolen by a third party, or that the cargo was delivered incorrectly elsewhere, or that the cargo is still in Defendants' possession (in their warehouse where untraceable goods are stored), the only remaining possibility is that the cargo was stolen by one or more of Defendants' employees. With respect, all of the above-mentioned four (4) eventualities remain possibilities and not only the last one.

[28]            Defendants are therefore entitled to limit their liability pursuant to Article 22 of the Warsaw Convention.

[29]            Considering my conclusion under issue 4, I do not have to review and analyse whether issue 3, to wit, whether the Defendants have committed a fundamental breach of the contract of carriage therefore denying the Defendants' ability to avail themselves of the terms and conditions provided for in the FedEx International Air Waybill and the Federal Express Conditions of Carriage.

[30]            For the above reasons, I am of the view that FedEx is entitled to limit its liability under the Warsaw Convention.

[31]            Consequently, the Plaintiffs are entitled to $851 plus interest at the legal rate of five (5) percent compounded quarterly. No costs are awarded to either party.

[32]            An Order shall issue accordingly.

  

Richard Morneau    

Prothonotary

Montreal, Quebec

September 27, 2002

  

                    FEDERAL COURT OF CANADA

                                  TRIAL DIVISION

   

Date : 20020927

Docket : T-452-00

Between :

GREEN COMPUTER IN SWEDEN AB

and

POWER GROUP & ASSOCIATES

                                   Plaintiffs

AND

FEDERAL EXPRESS CORPORATION,

UNIVERSAL FDX AB,

FEDERAL EXPRESS CANADA LIMITED

and

ALL FEDERAL EXPRESS CORPORATION'S AFFILIATED, ASSOCIATED AND SUBSIDIARY COMPANIES

                                   Defendants

                                                                                                 

                REASONS FOR ORDER

                                                                                                    

                          FEDERAL COURT OF CANADA

                    COUNSEL AND SOLICITORS OF RECORD

COURT NO.:

STYLE OF CAUSE:

T-452-00

GREEN COMPUTER IN SWEDEN AB and

POWER GROUP & ASSOCIATES

                                  Plaintiffs

AND

FEDERAL EXPRESS CORPORATION,

UNIVERSAL FDX AB,

FEDERAL EXPRESS CANADA LIMITED

and

ALL FEDERAL EXPRESS CORPORATION'S AFFILIATED, ASSOCIATED AND SUBSIDIARY COMPANIES

                                  Defendants

WRITTEN MOTION EXAMINED WITHOUT PERSONAL APPEARANCE OF THE PARTIES IN MONTREAL

REASONS FOR ORDER BY:Richard Morneau, Esq., Prothonotary

DATE OF REASONS FOR ORDER:September 27, 2002

WRITTEN OBSERVATIONS:

Mr. J. Kenrick Sproule		for the Plaintiffs

Mr. Nicolas Plourde		for the Defendants

SOLICITORS OF RECORD:

The Law Offices of J. Kenrick Sproule Montreal, Quebec		for the Plaintiffs

Heenan Blaikie Montreal, Quebec

for the Defendants