Date: 19990922
Docket: T-98-98
BETWEEN:
Z.I. POMPEY INDUSTRIE, SOCIÉTÉ LYONNAISE
DE MESSAGERIES NATIONALES, JOHN S. JAMES CO.,
POLYFIBRON TECHNOLOGIES INC., ELLEHAMMER
PACKAGING INC., and ALL OTHERS HAVING AN INTEREST
IN THE CARGO LADEN ON BOARD THE M.V.
"CANMAR FORTUNE",
Plaintiffs,
- and -
ECU-LINE N.V., CANADA MARITIME LTD,
ANGLO-EASTERN SHIP MANAGEMENT LTD.,
THE OWNERS AND CHARTERERS OF THE VESSEL
"CANMAR FORTUNE" and THE VESSEL
"CANMAR FORTUNE",
Defendants.
REASONS FOR ORDER
MR. JOHN A. HARGRAVE,
PROTHONOTARY
[1] These reasons arise out of a motion for a stay of a claim for damage to a sophisticated photo-processor carried from Anvers, Belgium to Seattle, Washington. The stay sought is in favour of litigation in Antwerp. The Antwerp jurisdiction is based upon a clause on the face of a port-to-port bill of lading on an ECU-Line form issued 23 January 1997 at Lyon, France, by ECU-Line France, a division of the carrier ECU-Line N.V. of Antwerp. The Plaintiffs include the owner and the receiver of the photo-processor. The Plaintiffs" machine, packed in two crates, arrived at Seattle, Washington damaged to the amount of some $60,000.
ANALYSIS
Stay of Proceedings: "The Eleftheria"
[2] If the only issue were the exercise of discretion through the application of The Eleftheria, [1969] 1 Lloyd"s 237, as endorsed by this Court, for example in The Hoegh Merchant , [1982] 1 F.C. 248 (T.D.), The Seapearl (1982), 43 N.R. 517 (F.C.A.), and Mountainbell Co. Ltd. et al. v. W.T.C. Air Freight (H.K.) Ltd. et al. (1988), 20 F.T.R. 57 (T.D.), the balance is marginally in favour of issuing a stay in order to uphold the Antwerp jurisdiction clause. Specifically, the test from The Eleftheria is set out at page 242:
| The principles established by the authorities can, I think, be summarized as follows: (1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign Court, and the defendants apply for a stay, the English Court, assuming the claim to be otherwise within the jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (3) The burden of proving such strong cause is on the plaintiffs. (4) In exercising its discretion the Court should take into account all the circumstances of the particular case. (5) In particular, but without prejudice to (4), the following matters, where they arise, may be properly regarded: (a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the law of the English and foreign Courts. (b) Whether the law of the foreign Courts applies and, if so, whether it differs from English law in any material respects. (c) With what country either party is connected, and how closely. (d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages. (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign Court because they would (i) be deprived of security for that claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial. |
[3] In the present instance ECU-Line moved for the stay not with great speed, but within a reasonable time, bearing in mind three factors. First, some of the proceedings took place before or early in the implementation of the new Federal Court Rules, perhaps before practitioners grasped the full import of the short time frames in the Rules and the need to seek a stay as quickly as possible. Second, the Plaintiffs and ECU-Line tried to resolve the jurisdiction aspect before coming to the Court in the present motion. Third, ECU-Line"s defence specifically sets out the jurisdiction clause and pleads the right to a stay. These factors, particularly the fairly prompt notice that a stay would be applied for and the notice of the jurisdiction clause in the defence, take this case outside of Trans-Continental Textile Recycling Ltd. v. Flairius Enterprises S.A. et al. (1996), 106 F.T.R. 278, which was decided on the basis of attournment to jurisdiction resulting from the filing of a defence and then great delay before moving to seek a stay.
[4] As to the considerations in The Eleftheria, I accept that ECU-Line prefers to litigate in a familiar jurisdiction and does not bring up the Antwerp jurisdiction merely to seek procedural advantage. Other factors favouring the upholding of the jurisdiction clause include reasonable connections with Belgium, Belgian and French witnesses, that any time bar which might preclude the Plaintiffs from bringing their case in Antwerp has been waived, that no security has been posted and that enforcement of a Belgian judgment against the carrier, a Belgian company, should present no particular difficulties.
[5] I accept, from the Plaintiffs" point of view, that there will be Canadian and American witnesses, including from the American east-coast freight forwarder through whom the Plaintiff, Polyfibron Technologies Inc., arranged the carriage. Certainly the Tribunal of Commerce in Anvers, which would decide the case under the jurisdiction clause, conducts its proceedings in Flemish and decides cases on the basis of documents and statements, a procedure precluding witnesses and cross-examination. There may also be considerably more delay in most instances than in the Federal Court and all the more so in the case of an appeal. There are also some lesser factors which favour litigation in Vancouver. Taken as a whole these factors are substantial, but in this instance are just short of the strong case which, by The Eleftheria , the Plaintiffs must present in order to override the jurisdiction clause. However, the matter does not end here, for the Plaintiffs present a persuasive case that the contract between the Plaintiffs and ECU-Line N.V. came to an end in Montréal and thus there is no jurisdiction clause to apply.
Deviation or Fundamental Breach
[6] The Plaintiffs say that the actual mode of carriage, which was not port-to-port by sea, Antwerp to Seattle, but Antwerp to Montreal and then onward by rail to Seattle, was a deviation or a fundamental breach precluding ECU-Line N.V. from relying on the terms and conditions set out in the bill of lading. Expanding upon this argument, the contract of carriage, of which the bill of lading is evidence, was terminated when the container containing the Plaintiffs" equipment was discharged at the port of Montreal, with ECU-Line thereafter assuming the liabilities and responsibilities of a common carriage or bailee for reward for that portion of the transportation from Montreal to Seattle. The Montreal to Seattle carriage would thus not be subject to the jurisdiction clause in the bill of lading.
[7] I am a little wary of the doctrine of fundamental breach. On occasion it is a useful doctrine by which to do justice. But in some jurisdictions it has fallen at least into disfavour. However, I am prepared to accept Mr. Tetley"s view, in his Third Edition of Marine Cargo Claims , Blais International Shipping Publications, Montreal (1988), that a serious breach of a contract of carriage, the result of a willful act, may bring into question exclusion or limitation clauses in a contract (page 99) a point which I will touch on again shortly. In passing I note that there is a deviation clause in the bill of lading and that this is a complicating but not a factor fatal to the Plaintiffs" argument. However before looking at the facts upon which to found the Plaintiffs" argument there is a preliminary point raised by ECU-Line.
[8] ECU-Line submits I ought not to deal with fundamental breach or deviation, for those are factual issues to be determined on the merits by the trial judge. The answer to this is not complex. An interim injunction, obtained on an interlocutory application, which requires a testing of the waters by looking at the strength of the case, the harm being caused and the balance of convenience, is analogous to denial of a stay of the basis of a strong case that the jurisdiction clause is just not applicable. The interim injunction does not handicap the trial judge, nor should the denial of a stay on the basis that the jurisdiction clause is in all likelihood not available. Any prejudice to ECU-Line in having to litigate in Canada can be compensated by costs.
[9] The facts on which the fundamental breach or deviation argument is based begin with the nature of the Plaintiffs" photo-processing equipment. It was apparently very susceptible to damage by bumps and jolts: the equipment was too delicate to travel by rail. For this reason the carriage from France to Seattle was to be by carriers other than rail carriers. Indeed, when the Plaintiff arranged carriage through the American east-coast freight forwarder, John S. James, water carriage was the governing factor. John S. James made this clear to the French freight forwarder, S.L.M.N. Shipping, by fax on 10 January 1997:
| Please route through to Tacoma port or Seattle, Wash. and fax documents all water, this is delicate equipment and can not travel by rail. |
[10] S.L.M.N. Shipping confirmed the booking arrangement by fax on 13 December 1997, which sets out the loading port as Antwerp and the discharge port as Seattle, Washington and confirms that:
| As asked by Marta Taylor [of John S. James], cargo will be shipped on [sic] Seattle by ocean (emphasis on original fax) |
The loading port of Antwerp and the discharge port of Seattle were confirmed by S.L.M.N. Shipping"s booking memorandum of 16 January 1997. The ECU-Line port-to-port bill of lading makes it quite clear that the port of discharge is Seattle. The blank on the face of the bill of lading which might be used to indicate a place of delivery by an onward carrier is left empty. This is certainly confirmation of carriage by sea.
[11] It would appear that by the time the Plaintiffs realized that ECU-Line had decided to discharge the cargo at Montreal with onward carriage by unspecified inland means, it was too late in the day to do anything which might have prevented the rail carriage which the Plaintiffs had gone to great lengths to avoid. I now turn to some applicable law.
[12] Mr. Tetley in the Third Edition of Marine Cargo Claims (supra) leads into this area in Chapter 5, a chapter dealing with fundamental breach, quasi-deviation and rupture of the contract, as follows:
| When a contract of carriage by sea is breached or not fulfilled, the defaulting carrier must recompense the shipper or consignee for the damages suffered according to the terms of the contract, and the applicable common law or civil law, or the applicable international convention -- the Hague, Visby or Hamburg Rules or the Multimodal Convention. |
| When however the breach is so serious, usually the result of a fraudulent or wilful act, the courts have questioned whether the carrier may rely on the terms of the contract or the law, and in particular, whether the carrier may rely on the exclusion or limitation clauses in the contract and the law because he has seemingly placed himself outside of the contract and the law. Such a breach has been called a fundamental breach in Commonwealth common law jurisdictions, a material deviation or quasi-deviation in America, and rupture of the contract in civil law jurisdictions. |
| The problem is complicated in carriage of goods by sea cases because of the long established principle of geographical deviation and because the international conventions on carriage of goods have legislated in part on fundamental breach. Nor does fundamental breach fit conveniently into the traditional principles of either the common or the civil law. (Page 99) |
[13] The clause paramount of the reverse of the bill of lading, establishing the applicable law, is rather convoluted. However, had the contract been properly carried out, Antwerp to Seattle, Washington, the American Carriage of Goods By Sea Act would probably have applied. However, I do not believe the result of the present breach or deviation would be any different if either civil law or common law were applied. The American Carriage of Goods by Sea Act is, for the most part, Hague Rules, with some particular American provisions which are understandable in that the United States is primarily user of foreign tonnage in international commerce. Mr. Tetley points out a page 109 of Marine Cargo Claims (supra) that there is a presumption that an unreasonable deviation constitutes an infringement of both the Hague Rules and of the contract under the bill of lading and that there are various results of this including loss of limitations and exclusions under the contract. Thus, in effect, the carrier becomes and insurer (Tetley, ibid, page 112).
[14] I earlier touched on the need to intend the deviation. Here there was a clear intention, a deviation for the carrier"s own benefit and thus an unreasonable deviation. The Supreme Court of New South Wales pointed out in Thiess Bros. Ltd. v. Australian Steamship Ltd. [1955] 1 Lloyd"s 459 that a voluntary geographic deviation abrogates the contract.
[15] Counsel for the Plaintiff refers to Captain v. Far-Eastern Steamship Co. [1979] 1 Lloyd"s 595, a decision of the B.C. Supreme Court. There the carriage was to be below-deck from India to Vancouver. However, rather than direct carriage the shipowner discharged at Singapore, left the cargo in the rain where it was damaged and then trans-shipped to Vancouver. In Captain the Hague Rules were held to be suspended while the goods were on the dock in Singapore, by reason of a fundamental breach. Assuming that Captain applied in the present instance a contract, in the port-to-port bill of lading issued by ECU-Line, would have come to an end at Montreal. Indeed, it might even follow that the Commercial Tribunal in Antwerp would find itself without jurisdiction.
CONCLUSION
[16] ECU-Line says it did not know the photo-processing equipment was susceptible to damage if carried by rail. Now it is fairly common knowledge that rail carriage, can be and perhaps usually is accompanied by vibration, bumps and jolts. This is particularly the case during shunting and that rough carriage during shunting can be exacerbated where, in the case of some rail yards, shunting is accomplished by rolling cars down a slope. Yet this susceptibility to damage is irrelevant in the case of a deviation, for only the intent to deviate is at issue. Here the deviation put in place by ECU-Line was clearly voluntary.
[17] From the Plaintiffs" point of view they wanted, for a good and valid reason, carriage by sea. ECU-Line initially cooperated by issuing a port-to-port bill of lading for transportation from Anvers, Belgium to Seattle, Washington.
[18] The outcome might be different if ECU-Line had issued a through bill of lading or made it clear, by filling in the blanks on the face of its own bill of lading, that there would be some form of onward carriage. Indeed, clause 12 of the bill of lading, the deviation clause, might have allowed ECU-Line to trans-ship via water. However these steps ECU-Line did not take. ECU-Line can thus scarcely complain if the result is a bar to relying upon any exculpatory or jurisdictional clauses, or other provisions by reason of the contract evidence by the bill of lading coming to an end at Montreal. Here I will touch briefly on the deviation clause in the bill of lading, clause 12. The clause is broad: giving it a broad but not unreasonable interpretation it allows any reasonable means of transportation. Indeed, the Hague Rules allow reasonable geographics deviation. As Tetley (supra) points out:
| From Art. 4 we learn that a "reasonable deviation shall not be deemed to be an infringement of this Convention or the contract of carriage". Conversely, we must presume that an unreasonable deviation does constitute an infringement of both the Convention and the contract. (Page 109) |
and in the event of an unreasonable deviation, such as that in the present instance, the carrier loses, among other things, the protection of the contract (Tetley, loc. cit.)
[19] There being no contract at about the end of January 1997, when the Plaintiffs" cargo was discharged at Montreal, there is not any jurisdiction clause upon which ECU-Line can rely. The motion for a stay, in favour of litigation in Antwerp, is denied.
(Sgd.) "John A. Hargrave"
Prothonotary
September 22, 1999
Vancouver, British Columbia
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS ON THE RECORD
COURT FILE NO.: T-98-98
STYLE OF CAUSE: Z.I. Pompey Industrie, et al.
v.
ECU-LINE N.V., et al.
PLACE OF HEARING: VANCOUVER, B.C.
DATE OF HEARING: December 7, 1998
| REASONS FOR ORDER OF MR. JOHN A. HARGRAVE, PROTHONOTARY |
DATED: September 22, 1999
APPEARANCES:
| Mr. Jean Francois Bilodeau for the Plaintiffs |
| Mr. Peter Swanson for the Defendants |
SOLICITORS OF RECORD:
Sproule, Castonguay
| Montreal, PQ for the Plaintiffs |
Campney & Murphy
| Vancouver, BC for the Defendants |
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