Date: 20110309
Docket: T-1273-10
Citation: 2011
FC 280
Montréal, Quebec,
March 9, 2011
PRESENT: The Honourable Mr. Justice de Montigny
BETWEEN:
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LA FREIGHTLIFT PRIVATE
LIMITED
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Plaintiff
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and
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ENTREPOT DMS WAREHOUSE INC.
TEXWELL GROUP
and
AGO TRANSPORTATION INC.
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Defendants
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REASONS FOR ORDER AND ORDER
[1]
The
defendant, Entrepôt DMS Warehouse Inc. (DMS), appeals the decision of
Prothonotary Morneau dated January 25, 2011, in which the Prothonotary refused
DMS’s motion to strike the claim of the plaintiff LA Freightlift Private
Limited (LA Freightlift) and refused all other relief sought by DMS. For the
reasons that follow, I have come to the conclusion that this appeal must be
dismissed.
I. Facts
[2]
According
to the Re-Amended statement of claim filed on January 10, 2011, the plaintiff
was retained by its customer Printech Fashion (“Printech”) to arrange the
carriage of four containers of clothing from India to Texwell Group (“Texwell”), its
customer in Montréal. Texwell then appointed AGO Transportation Inc (“AGO”), an
international freight forwarder and customs broker, to act as its local agent
in a series of four shipments in March and April of 2008.
[3]
In total,
the cargo consisted of four containers of clothing with 2,504 packages
containing 180,288 pieces weighing 38,884 kg with an invoice value of USD
$477,732. Each of the four shipments were arranged under bills of lading naming
the plaintiff as the shipper and AGO as the consignee to ensure that the goods
would not be turned over to the importer Texwell until the purchase price for
the goods on the cargo had been paid.
[4]
The cargo
apparently arrived as expected in good order and condition in Montreal between April and June of
2008.
[5]
For
reasons unknown to the plaintiff, Texwell was unwilling or unable to complete
the financial arrangements for the purchase. Because the required payments were
not made, Texwell was not entitled to receive original copies of the bills of
lading, and did not take ownership of the cargo or have any right to obtain
delivery of same.
[6]
In June
and July 2008, the cargo remained in storage while Texwell tried to arrange
payment. In the meantime, in order to mitigate potential losses, the shipper
and owner of the goods (Printech) attempted to find other Canadian buyers for
the cargo. At some point during this time period, some or all of the defendants
arranged for the cargo to be stored at a warehouse belonging to the defendant
DMS. On or about August 5, 2008, all four containers of goods were reported
missing and presumed stolen from that warehouse.
[7]
The
plaintiff alleges that some or all of the defendants conspired to effect the
release of the goods in the full knowledge that the purchase price had not been
paid, that the original bills of lading had not been presented, and in spite of
the instructions of the owner of the goods through the plaintiff as their agent
and as the shipper named on the Bills of Lading. The plaintiff states that
those defendants knowingly arranged the illegal conversion of the goods to
Texwell or to another party unknown to the plaintiff. A written notice of claim
was issued to AGO and DMS in September 2008.
[8]
The
plaintiff also states that the owner of the cargo has brought a claim in the
Court of India against the plaintiff for the unlawful conversion of the cargo.
The plaintiff has denied liability and presented a “vigorous” defence before
that Indian Court.
[9]
All of the
defendants were served with the Amended Statement of Claim dated September 30,
2010, and with the Re-Amended Statement of Claim dated January 10, 2011. The
defendant Texwell has not responded and is in default under Rule 204. The
defendants DMS and AGO responded by filing motions to strike the plaintiff’s
action, pursuant to section 221.(1) of the Federal Courts Rules on
December 22 and December 16, 2010, respectively.
[10]
Both DMS
and AGO argue that the plaintiff’s action is premature, since it has not yet
suffered any loss and since no liability has been determined as of yet in the
Court of India. Indeed, DMS and AGO submit that the plaintiff has denied
liability with regards to Printech’s claim and, using the plaintiff’s own
words, has mounted “a vigorous defence” in the Indian lawsuit. Accordingly, it
is quite possible that Printech’s action there will be dismissed, in which case
LA Freightlift would have no right of action against the defendants in the
Canadian action before this Court. As such, DMS and AGO argue that the
plaintiff’s statement of claim should be struck because it is premature.
II. The impugned decision
[11]
The
Prothonotary dismissed the defendants’ motion to strike essentially on the
basis of the written submissions put forward by the plaintiff. The paragraphs
of the plaintiff’s submissions to which the Prothonotary explicitly referred
with approval read as follows:
9. The facts as alleged raise
not just a justiciable but a strong prima facie case against both
participating defendants. The Cargo was unlawfully converted without
presentation of the Bills of Lading. This unlawful conversion was carried out
while the Cargo was in possession of the defendant DMS, contrary to its
statutory duties as a warehouseman, and/or its contractual duties as a
warehouseman, and/or under its common law duties as bailee for reward, and/or
at admiralty or equity.
10. This unlawful conversion
was carried out with the direction or complicity of AGO transport, who is
listed as the consignee on the Bills of Lading and who knew that the cargo
ought not be delivered up without original Bills of Lading but arranged such
delivery contrary to their contractual obligations pursuant to the transport
documents, and/or contrary to their obligations as agent, and/or contrary to
admiralty and equity.
11. This honourable Court has
jurisdiction to hear this claim based on s.22(2) of the Federal Courts Act
as it arises out of an agreement relating to the carriage of goods under a bill
of lading.
12. Although the plaintiff is
not the owner of the Cargo, the plaintiff has standing to bring this claim in
law, contract, and admiralty by virtue of being named as shipper on the
relevant Bills of Lading. Further and in the alternative, the plaintiff brings
this case in its capacity as agent for its customer, the exporter and cargo
owner Printech Fashions. Both of these form prima facie legitimate bases for
the Claim and present justiciable issues to be tried.
13. Further, it is trite law
that a plaintiff may properly bring a claim for an indemnity, and the plaintiff
has plead that it faces a claim in India that arises out of the primary
liability of the defendants or some of them and for which claim it seeks to
hold the defendants liable as the principal tortfeasors. This forms a
legitimate basis for a Claim and presents a justiciable issue to be tried.
14. The plaintiff had pled the
facts required to sustain its claim for an indemnity in the Statement of Claim
of 5 August 2010 and in the Amended Statement of Claim that was served
on the defendants in November 2010. While the Re-Amended Statement of
Claim includes a new reference to an indemnity in the prayer for relief at
paragraph 1, and was served and filed subsequent to the bringing of the present
motions, this addition acts to clarify the facts already pled and does not
purport to add a new cause of action.
[12]
It must be
pointed out that DMS is the only defendant bringing this appeal against the
Prothonotary’s decision. Moreover, counsel for the defendant DMS made it clear
at the hearing that his client is only challenging the Prothonotary’s decision
as it pertains to the dismissal of its motion to strike the plaintiff’s claim.
Therefore, the defendant is not challenging the Prothonotary’s other rulings;
that is, the defendant is not appealing the Prothonotary’s decisions to accept
the affidavit sworn by counsel for the plaintiff, to reject DMS’ right to
reserve a right of cross-examination, and to accept that the Re-Amended
Statement of Claim was validly issued and served.
III. Issue
[13]
The only
issue in this case is whether the Prothonotary erred in dismissing the motion
of the defendant to strike the plaintiff’s Statement of Claim.
IV. Analysis
[14]
The
standard of review to be applied on appeal of the decisions made by
prothonotaries is well established. The Federal Court of Appeal stated the
following in Merck & Co. Inc. v Apotex Inc., 2003 FCA 488, at
paragraph 19:
Discretionary orders of
Prothonotaries ought not to be disturbed on appeal to a judge unless: a) the
questions in the motion are vital to the final issue of the case, or b) the
orders are clearly wrong, in the sense that the exercise of discretion by the
prothonotary was based upon a wrong principle or upon a misapprehension of the
facts.
[15]
I do not
think it can be disputed that a motion to strike pleadings raises a question
that is vital to the final issue of the case. Accordingly, this Court may
exercise its discretion de novo in reviewing the order made by the
Prothonotary in the exercise of his discretion.
[16]
It is also
trite law that on a motion to strike pleadings, all facts alleged must be taken
as established and presumed to be true. The claim should be read generously and
denied only where it is plain and obvious it cannot succeed. As the Supreme
Court stated in Hunt v Carey Canada Inc., [1990] 2 S.C.R. 959, at p. 980:
(…) assuming that the facts as
stated in the statement of claim can be proved, is it "plain and
obvious" that the plaintiff's statement of claim discloses no reasonable
cause of action? As in England, if there is a chance that
the plaintiff might succeed, then the plaintiff should not be "driven from
the judgment seat". Neither the length and complexity of the issues, the
novelty of the cause of action, nor the potential for the defendant to present
a strong defence should prevent the plaintiff from proceeding with his or her
case.
See also: Daniels v Canada (Minister of Indian Affairs
and Northern Development),
[2002] 4 FC 550, at paras 3 and 15.
[17]
I agree
with the plaintiff that DMS has failed to meet this high threshold, and that
the Prothonotary did not err in determining that there was a justiciable issue
to be tried. Whether or not the plaintiff is successful in its defence to the
action taken against it in India by Printech, its Statement of
Claim in this Court does not rest exclusively on the indemnity for any amounts
that the Indian court may require the plaintiff to pay to Printech. The
plaintiff’s action also rests on its claim that the defendants, or some of
them, illegally arranged the delivery of the cargo without the original Bills
of Lading, contrary to their contractual obligations pursuant to the transport
documents, and/or contrary to their obligations as agent, and/or contrary to
admiralty and equity. That claim is therefore not premature and may proceed
irrespective of what may happen in India
as between Printech and the plaintiff.
[18]
Counsel
for the plaintiff has asked for costs in this motion, arguing that it was
doomed to fail and that it has caused delay and expense in completing the
pleadings. I have not been persuaded, however, that the motion to strike
brought by the defendant justifies this Court to exercise its discretion to
award costs forthwith and in any event of the cause. As a result, costs shall
be in the cause.
ORDER
THIS COURT ORDERS that this appeal is dismissed,
with costs in the cause.
"Yves
de Montigny"
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