Evans Products Co. Ltd. v. Crest Warehousing Co. Ltd., [1980] 1 SCR 83

Supreme Court of Canada

Evans Products Co. Ltd. v. Crest Warehousing Co. Ltd., [1980] 1 S.C.R. 83

Date: 1979-07-18

Evans Products Company Limited (Plaintiff) Appellant;

and

Crest Warehousing Company Limited (Defendant) Respondent.

1979: February 27; 1979: July 18.

Present: Martland, Pigeon, Dickson, Estey and McIntyre JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA

Bailment—Plywood crates stored with warehouseman—Plywood damaged by fire—Liability for loss admitted by warehouseman—Quantum of damages—Provision in warehouse receipt for limitation of liability—Statutory obligation of warehouseman to take care not impaired—Warehouse Receipts Act, R.S.B.C. 1960, c. 404, ss. 3(4)(b), 14.

The appellant company stored with the respondent warehouseman 230 crates of plywood for which it agreed to pay a monthly storage charge. The storage contract was evidenced by three warehouse receipts covering 230 crates. Upon the reverse side of each receipt under the heading STANDARD CONTRACT TERMS AND CONDITIONS there appeared various provisions of which s. 11(f) stated, in part, that the “liability of the warehouseman arising from legal responsibility shall be limited to the actual value of the loss or damage of the stored goods and in no case shall the liability exceed $50.00 on any one package or stored unit unless the storer, at or prior to the time the goods are placed in storage had declared in writing a value in excess of $50.00 on such package or stored unit and has paid or agreed to pay a charge additional to the base storage rate to cover the excess valuation.” No declaration of higher value was made by the appellant at any time. The plywood was damaged by fire while in storage. Liability for the loss was admitted by the warehouseman and the only matter argued in this Court was the quantum of damages.

At trial and on the appeal, three issues were canvassed. The appellant argued that cl. 11(f) of the warehouse receipt was not a part of the contract of storage; that if it did apply it was void because of s. 3(4)(b) of the Warehouse Receipts Act, R.S.B.C. 1960, c. 404; and that the conduct of the respondent in storing the plywood in a dangerous manner amounted to a fundamental breach of the contract and thus enabled the appellant

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to sue for and recover actual loss without being bound by the limitation of liability. While the trial judge found for the respondent on the first issue, he considered that cl. 11(f) did impair the obligation of the warehouseman to use care contrary to s. 3 (4)(b) of the Warehouse Receipts Act and that the negligence of the respondent amounted to a fundamental breach of the contract. The value of the plywood prior to the fire was in excess of $100,000 and at trial damages were awarded in the sum of $83,791.34 with interest.

The Court of Appeal allowed the respondent’s appeal holding that cl. 11 (f) forming part of the storage contract did not impair the obligation of the warehouseman to exercise the standard of care required by the statute and that the negligence of the warehouseman, while certainly a breach of the contract entitling the appellant to damages, was not a fundamental breach which would deprive the respondent of the limitation of liability provided in cl. 11(f) The damages were accordingly reduced to $11,500 with interest.

In this Court, the appellant submitted that the Court of Appeal erred in holding that cl. 11(f) was applicable, and by failing to hold that the clause had no legal effect as it was in contravention of s. 3(4)(b) of the Warehouse Receipts Act. It was also argued that a provision such as cl. 11(f) of the receipt was contrary to s. 14 of the Act and would therefore be excluded by s. 3(4)(a).

Sections 3(4) and 14 of the Warehouse Receipts Act provide as follows: “3(4). A warehouseman may insert in a receipt issued by him any other term or condition that (a) is not contrary to any provision of this Act; and (b) does not impair his obligation to exercise such care and diligence in regard to the goods as a careful and vigilant owner of similar goods would exercise in the custody of them in similar circumstances. 14. A warehouseman is liable for loss of or injury to goods caused by his failure to exercise such care and diligence in regard to them as a careful and vigilant owner of similar goods would exercise in the custody of them in similar circumstances.”

Held (Estey J. dissenting): The appeal should be dismissed.

Per Martland, Pigeon, Dickson and McIntyre JJ.: The suggestion was rejected that cl. 11(f), which does no more than establish by agreement the maximum amount of damage, is repugnant to s. 14 or otherwise contrary to any provision of the Warehouse Receipts Act.

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A contractual limitation of liability does not impair the obligation to take care declared in s. 14. That obligation is statutory and not subject to modification by private contract. Even if a limitation of liability did have the effect of inducing carelessness on the part of the warehouseman it would not impair the obligation. It might very well impair performance but the obligation remains untouched and in the event of loss whatever the consequential damage the responsibility of the warehouseman must depend upon whether or not he met the obligation fixed upon him in s. 14.

The combined effect of subs. (4) of s. 3 and s. 14 is merely to provide that the parties to a storage contract coming within the provisions of the Warehouse Receipts Act may not by private contract stipulate for some other and possibly lower standard of care thereby relieving the warehouseman of his statutory duty.

Per Estey J., dissenting: The appeal should be allowed and the judgment at trial restored. Section 11(f) of the contract is a contractual provision limiting the liability of the warehouseman to pay “for loss of or injury to goods caused by his failure to exercise such care and diligence in regard to them as a careful and vigilant owner of similar goods would exercise in the custody of them in similar circumstances”, and is therefore contrary to the provisions of s. 14 of the Warehouse Receipts Act. This in turn brings into play s. 3(4)(a) which by its operation excludes s. 11(f) from the contract. As a result, the contract between the parties contains no limitation of liability and the respondent-warehouseman is responsible for the actual loss of the appellant-customer.

The plain meaning of the word “loss” as it appears in s. 14 is actual loss and not a quantity calculated by formula agreed upon by the parties. The appellant’s submission that “any clause which purported to reduce, lessen, diminish or impair the standard of care and the resultant liability contained in s. 14 would be void pursuant to s. 3(4)(a)” should be accepted as sound in law except with the reference to the impairment of the standard of care which is not necessary to determine because of the combined effect of s. 3(4)(a) and s. 14.

APPEAL from a judgment of the Court of Appeal for British Columbia[1], allowing an appeal from a judgment of Verchere J. Appeal dismissed, Estey J. dissenting.

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David F. McEwen, for the plaintiff, appellant.

Harvey J. Grey, Q.C., for the defendant, respondent.

The judgment of Martland, Pigeon, Dickson and McIntyre JJ. was delivered by

MCINTYRE J.—This is an appeal from the Court of Appeal for British Columbia which allowed an appeal from the Supreme Court of that province and confirmed the validity of a clause in a storage contract which limited the liability of the warehouseman bailee of goods damaged by fire while in storage. Liability for the loss was admitted by the defendant, now respondent, and the only matter argued before us was the quantum of damages. The case was argued upon an agreed statement of facts the essentials of which may be briefly stated. The respondent is a warehouseman as defined in s. 2 of the Warehouse Receipts Act, R.S.B.C. 1960, c. 404. The appellant stored with the respondent 230 crates of plywood for which it agreed to pay a monthly storage charge. The storage contract was evidenced by three warehouse receipts covering 230 crates. Upon the reverse side of each receipt under the heading STANDARD CONTRACT TERMS AND CONDITIONS there appeared various provisions of which s. 11(f) reproduced below is in issue here:

(f) The liability of the warehouseman arising from legal responsibility shall be limited to the actual value of the loss or damage of the stored goods and in no case shall the liability exceed $50.00 on any one package or stored unit unless the storer, at or prior to the time the goods are placed in storage had declared in writing a value in excess of $50.00 on such package or stored unit and has paid or agreed to pay a charge additional to the base storage rate to cover the excess valuation. When the value has changed after such declaration it will be incumbent on the storer to declare the new value to obtain any revision of charges. In no event shall the valuation exceed value of the merchandise.

In the agreed statement of facts, the following appears:

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11. There was no discussion or correspondence between the Plaintiff and the Defendant prior to the issuing of the said warehouse receipts as to the terms or conditions of the storage, except as described in paragraphs 3 and 4 herein. The Plaintiff, however, was accustomed to storing crates of plywood in warehouses operated by warehousemen as defined in Section 2 of the said Warehouse Receipts Act and in the case of each storage the Plaintiff was issued a warehouse receipt by the particular warehouse containing clauses limiting the liability of the warehousemen arising from legal responsibility to a certain sum per package or stored unit and the Plaintiff knew that the normal limitation was $50.00 per stored unit or package. The Plaintiff contemplated that warehouse receipts covering the storage of the said 230 crates of plywood would be issued which would contain limitations on the liability of the Defendant and particularly a limit with respect to each package or stored unit based on a maximum value of each package.

12. The Plaintiff did not at or prior to the time the goods (230 crates of plywood) were placed in storage declare in writing a value in excess of $50.00 on each package or stored unit of plywood (230 crates) and has not paid or agreed to pay a charge additional to the base storage rate to cover the excess valuation.

The trial judge found, and in this he was supported by the Court of Appeal, that cl. 11(f) formed part of the storage contract. I am in agreement with that finding.

Certain provisions of the Warehouse Receipts Act of British Columbia, R.S.B.C. 1960, c. 404, are of importance here, particularly ss. 3 and 14 which are reproduced hereunder:

3. (1) A receipt shall contain the following particulars:

(a) The location of the warehouse or other place where the goods are stored;

(b) The name of the person by whom or on whose behalf the goods are deposited;

(c) The date of issue of the receipt;

(d) A statement either

(i) that the goods received will be delivered to the person by whom or on whose behalf the goods are deposited, or to another named person; or

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(ii) that the goods will be delivered to bearer or to the order of a named person;

(e) The rate of storage charges;

(f) A description of the goods or of the packages containing them;

(g) The signature of the warehouseman or his authorized agent; and

(h) A statement of the amount of any advance made and of any liability incurred for which the warehouseman claims a lien.

(2) Where a warehouseman omits from a negotiable receipt any of the particulars set forth in subsection (1) he shall be liable for damage caused by the omission.

(3) No receipt shall by reason of the omission of any of the particulars set forth in subsection (1) be deemed not to be a warehouse receipt.

(4) A warehouseman may insert in a receipt issued by him any other term or condition that

(a) is not contrary to any provision of this Act; and

(b) does not impair his obligation to exercise such care and diligence in regard to the goods as a careful and vigilant owner of similar goods would exercise in the custody of them in similar circumstances.

…

14. A warehouseman is liable for loss of or injury to goods caused by his failure to exercise such care and diligence in regard to them as a careful and vigilant owner of similar goods would exercise in the custody of them in similar circumstances.

The 230 crates of plywood were received by the respondent and stored in its warehouse. Some of the bundles were stored less than a foot from the heating coil of an electric radiant heater on one wall of the building. The warehouse had no sprinkler system and no night watchman. On the night of June 14, 1974, a fire broke out in the plywood while the warehouse was locked and unattended. The fire department on arrival found the switches controlling the radiant heaters were turned on and the heaters were glowing red hot and the plywood adjacent to the heaters was burning. It was conceded that the switches were negligently turned on by employees of the respondent.

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At trial and on the appeal, three issues were canvassed. The appellants argues that cl. 11(f) of the warehouse receipt was not a part of the contract of storage; that if it did apply it was void because of s. 3(4)(b) of the Warehouse Receipts Act; and that the conduct of the respondent in storing the plywood in a dangerous manner amounted to a fundamental breach of the contract and thus enabled the appellant to sue for and recover actual loss without being bound by the limitation of liability. While the trial judge found for the respondent on the first issue, he considered that cl. 11(f) did impair the obligation of the warehouseman to use care contrary to s. 3(4)(b) of the Warehouse Receipts Act and that the negligence of the respondent amounted to a fundamental breach of the contract. The value of the plywood prior to the fire was agreed to be in excess of $100,000 and at trial the plaintiff was awarded, after an allowance of some $25,000 recovered for salvage and certain other additional amounts for cartage and storage costs, the sum of $83,791.34 with interest at 8 ¾ per cent per annum from June 14, 1974.

The Court of Appeal allowed the respondent’s appeal holding that cl. 11 (f) forming part of the storage contract did not impair the obligation of the warehouseman to exercise the standard of care required by the statute and that the negligence of the warehouseman, while certainly a breach of the contract entitling the appellant to damages, was not a fundamental breach which would deprive the respondent of the limitation of liability provided in cl. 11(f). The damages were accordingly reduced to $11,500 with interest under the Prejudgment Interest Act of $1,100.

In the appellant’s factum filed in this Court only one point was raised. It was set out in these words:

It is respectfully submitted that the Court of Appeal for British Columbia erred in holding that clause 11(f) of the warehouse receipts purporting to limit the liability of the Respondent for loss to $50.00 per package was applicable, and by failing to hold that the clause had no legal effect as it was in contravention of Section 3(4)(b) of the Warehouse Receipts Act, R.S.B.C. 1960, Chapter 404.

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In later paragraphs the factum raised the argument that a provision such as cl. 11(f) of the receipt was contrary to s. 14 of the Act and would therefore be excluded by s. 3(4)(a). In my opinion, this argument cannot be given effect. I agree on this point with the finding of the trial judge who considered that a limitation of liability such as that imposed by cl. 11(f) was not contrary to s. 14. In his reasons he said:

In its turn, s. 14 imposes on the warehouseman liability for “loss of or injury to goods” without reference to their actual value or to any limitation of liability to a stated sum unless the storer has agreed to pay a higher than basic charge. In my view, however, there is no apparent difference between the “actual value of the loss or damage to the stored goods” (see clause 11(f)) and “loss of or injury to goods” (see s. 14); and insofar as the limitation of liability to the actual value of the goods and presumably, therefore, the negation of extended liability for some such thing as loss of use, for example, are concerned, it seems to me that the clause merely states emphatically what is implied by the words of the section. Further, it is to be noted that the section does not expressly or by implication prohibit the warehouseman and the storer from agreeing in advance on the highest value to be placed on the goods if they should become a total loss. Such an agreement (and, in my view, that clause fixing the value of each package at a maximum of $50.00 in the absence of a declaration to the contrary is such an agreement) cannot therefore be looked upon as contrary to any of the provisions of the Act.

As I have said, I accept his reasoning and reject the suggestion that cl. 11(f), which does no more than establish by agreement the maximum amount of damage, is repugnant to s. 14 or otherwise contrary to any provision of the Act.

I now turn to the principal submission raised in the appellant’s factum and stated above. Dealing with the first part of this proposition, I have no difficulty in concluding, as did both the trial and appeal Courts, that cl. 11(f) formed a part of the contract and that no declaration of higher value had been made by the appellant at any time. In the face of paras. 11 and 12 of the statement of facts agreed upon by the parties, I find it impossible to

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reach any other conclusion. On this point, I am in full agreement with McFarlane J.A. who said for the Court of Appeal:

I am, however, of the opinion that, as I have indicated, the question whether the warehouse receipts form part of the contract is in this case a question of fact to be determined on the material before us. I have no hesitation in inferring from those facts to which I have adverted briefly that assessing the intention of the parties on the basis of that evidence the contents of the warehouse receipts do form part of the contract.

The second branch of the argument which asserted that cl. 11(f) had no legal effect because it contravened s. 3 (4)(b) of the Warehouse Receipts Act must also, in my view, fail. It is my opinion that the limitation of liability provided for and agreed upon in cl. 11(f) of the receipt did not impair the duty to exercise care.

Section 3 of the Warehouse Receipts Act, R.S.B.C. 1960, c. 404, deals with the contents of the warehouse receipt. Subsection (1) lists the matters which must be included. Subsections (2) and (3) need not concern us here. It is upon the effect of subs. (4) that the argument in this case turns. Subsection (4) permits the inclusion in a warehouse receipt of any term or condition not contrary to any provision of the Act and which does not impair the obligation established in s. 14 of the Act to exercise such care and diligence in regard to the goods in storage as a careful and vigilant owner of similar goods would exercise in the custody of them in similar circumstances.

It was contended that the limitation of liability for loss would engender carelessness on the part of the warehouseman. This, it was said, would impair the obligation to exercise care because the result of a failure to do so would be less injurious to the warehouseman. Reference was made in argument to various American authorities dealing with the American Constitutional Prohibition in Article 10 against the passing by states of laws impairing the obligation of contracts. It was sought by analogy to apply these cases to the situation which confronts us in the case at bar but, in my opinion, they have no application to our problem which concerns a statutory obligation to take care rather than a

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constitutional prohibition against impairing contractual obligations.

American authorities construing similar statutory provisions have generally but not always considered that a clause limiting liability in the event of loss did not by itself impair the obligation to take care. This may be of some interest because s. 3 of the British Columbia Warehouse Receipts Act derives from American sources. The American Uniform Warehouse Receipts Act, the text of which may be found in Williston on Contracts, rev. ed., vol. 4, 1936, and which was adopted as law in several states, provides in s. 3 at p. 2926:

Section 3.—[FORM OF RECEIPTS. WHAT TERMS MAY BE INSERTED.] A warehouseman may insert in a receipt, issued by him, any other terms and conditions, provided that such terms and conditions shall not—

(a) Be contrary to the provisions of this act,

(b) In any way impair his obligation to exercise that degree of care in the safekeeping of the goods entrusted to him which a reasonably careful man would exercise in regard to similar goods of his own.

At p. 2927, the author said:

There is a conflict of authority as to whether subdivision (b), above, prohibits a warehouseman from limiting his liability for damage to, or loss of, the goods to a specified sum unless a higher value is declared and an increased charge paid. The better view supports such a limitation if the requisites for the formation of a contract are satisfied.

The American Uniform Act was replaced by the Uniform Commercial Code in 1952 and amended in 1958. The text of art. 7-204 (2) dealing with this question is to be found in vol. 2A, Uniform Commercial Code, (ULA), Master Edition, p. 353, in these terms:

7-204 Duty of Care; Contractual Limitation of Warehouseman’s Liability

…

(2) Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount

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of liability in case of loss or damage, and setting forth a specific liability per article or item, or value per unit of weight, beyond which the warehouseman shall not be liable; provided, however, that such liability may on written request of the bailor at the time of signing such storage agreement or within a reasonable time after receipt of the warehouse receipt be increased on part or all of the goods thereunder, in which event increased rates may be charged based on such increased valuation, but that no such increase shall be permitted contrary to a lawful limitation of liability contained in the warehouseman’s tariff, if any. No such limitation is effective with respect to the warehouseman’s liability for conversion to his own use.

…

This section has also been accepted as law in many states. It is evident, as noted at p. 354 of the above-cited text, that it was intended to resolve the problem by legislation.

There is a paucity of Canadian authority but, in my view, it is not necessary to approach the question in the manner adopted in the American courts. It is clear, in my opinion, that a contractual limitation of liability does not impair the obligation to take care declared in s. 14 of the Act. That obligation is statutory and not subject to modification by private contract. Even if a limitation of liability did have the effect of inducing carelessness on the part of the warehouseman it would not impair the obligation. It might very well impair performance but the obligation remains untouched and in the event of loss whatever the consequential damage the responsibility of the warehouseman must depend upon whether or not he met the obligation fixed upon him in s. 14.

The combined effect of subs. (4) of s. 3 and s. 14 is, in my opinion, merely to provide that the parties to a storage contract coming within the provisions of the Warehouse Receipts Act may not by private contract stipulate for some other and possibly lower standard of care thereby relieving the warehouseman of his statutory duty. I agree

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with the approach of McFarlane J.A. in the Court of Appeal when he said:

I look at the language of the statute itself, and I point out that it does not speak of impairing the liability or responsibility to pay damages for the failure to exercise care and diligence. It speaks of impairing the obligation to exercise care and the degree of care is set out in the statute. In my opinion, what this statute says is that a provision which impairs the obligation may not be included in a receipt. Now it is said that a clause limiting liability for breach may be such that it would incline the warehouseman to act carelessly and not take the care required by the statute with respect to the goods. It is said it follows from that that the obligation is thereby impaired. I do not agree. I think the impairment spoken of here is an impairment of the degree and nature of the care and diligence referred to in the section, and I am firmly of the opinion that a clause limiting the liability of a warehouseman to fifty dollars per package in the case of this plywood is not one which impairs that obligation.

I would dismiss the appeal with costs.

The following are the reasons delivered by

ESTEY J. (dissenting)—I have had the opportunity of reading the reasons of McIntyre J. but with the greatest respect I reach a different result on the interpretation of the applicable statutory provisions. The issue here relates only to damages, the respondent-defendant admitting its liability for the loss or damage to the appellant-plaintiffs goods. The damages actually suffered by the appellant amounted to $83,791.34 and the amount of damages owing in the event the limitation of liability provisions in the contract apply amount to $11,500. The accuracy of these amounts is not the subject of any difference between the parties. There is also no disagreement as to the contractual terms excepting only the application of a condition on the back of the receipt form, s. 11(f). All the Courts below have found that as a matter of fact this provision is a term of the contract between the parties and subject to its effect in law, I respectfully agree.

The question as to whether the warehouseman may limit his liability in damages, as s. 11(f) of

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the contractual conditions purports to do, must be answered by the interpretation of s. 3(4) and s. 14 of the Warehouse Receipts Act, R.S.B.C. 1960, c. 404, which provide as follows:

3(4). A warehouseman may insert in a receipt issued by him any other term or condition that

(a) is not contrary to any provision of this Act; and

(b) does not impair his obligation to exercise such care and diligence in regard to the goods as a careful and vigilant owner of similar goods would exercise in the custody of them in similar circumstances.

14. A warehouseman is liable for loss of or injury to goods caused by his failure to exercise such care and diligence in regard to them as a careful and vigilant owner of similar goods would exercise in the custody of them in similar circumstances.

Much of the argument in this Court centered on the meaning of s. 3(4)(b) and in particular whether condition 11(f) of the contract in law was an impairment of the respondent’s ‘obligations’ and hence contrary to s. 3(4)(b). The Court of Appeal, differing with the view taken by the learned trial judge, found that s. 3(4)(b) was not offended by the limitation clause in the contract. By stating that s. 3(4)(b) “does not speak of impairing the liability or responsibility to pay damages for the failure to exercise care and diligence” (McFarlane J.A., speaking for the Court of Appeal), the Court of Appeal appears to have concluded that s. 11(f) did in fact and in law do so. The learned Justice of Appeal went on to state:

It speaks of impairing the obligation to exercise care and the degree of care is set out in the statute. In my opinion, what this statute says is that a provision which impairs the obligation may not be included in a receipt ….I think the impairment spoken of here is an impairment of the degree and nature of the care and diligence referred to in the section, and I am firmly of the opinion that a clause limiting the liability of a warehouseman to $50.00 per package in the case of this plywood is not one which impairs that obligation.

I find it unnecessry to deal with the effect of subs. (b) of s. 3(4). Section 11(f) of the contract is, in my view, a contractual provision limiting the liability of the warehouseman to pay “for loss of or

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injury to goods caused by his failure to exercise such care and diligence in regard to them as a careful and vigilant owner of similar goods would exercise in the custody of them in similar circumstance”, and is therefore contrary to the provisions of s. 14 set out above. This in turn brings into play s. 3(4)(a) which by its operation excludes s. 11(f) from the contract. As a result, the contract between the parties contains no limitation of liability and the respondent‑warehouseman is responsible for the actual loss of the appellant-customer.

The plain meaning of the word “loss” as it appears in s. 14 is actual loss and not a quantity calculated by formula agreed upon between the parties.

The appellant in its factum states:

…that any clause which purported to reduce, lessen, diminish or impair the standard of care and the resultant liability contained in Section 14 would be void pursuant to Section 3(4)(a)….

I accept this submission as sound in law except with the reference to the impairment of the standard of care which, as I have said, is not necessary to determine because of the combined effect of s. 3(4)(a)and s. 14.

The action taken in the United States in reviewing the legislation with reference to warehousemen’s liability is in itself revealing of the true underlying problem arising from the old uniform statute. The courts of the United States adopted a variety of approaches to the construction of the Uniform Warehouse Receipts Act as it existed prior to the early 1950s. Some courts found the limitation clause in the storage contract enforceable, others came to the opposite result. An illus-

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tration of the latter is found in England v. Lyon Fireproof Storage Co.[2] where a Court of Appeal in California concluded that where the warehouseman was aware that the value of the goods in fact exceeded the contract limit, the limitation clause could not be invoked against the bailor. The trend of authority in the United States however appears to be to the contrary.

Prior to 1952, the Uniform Warehouse Receipts Act, in effect in many states as well as the federal territories, contained provisions either identical to or essentially the same as s. 3(4)(a) and (b) and s. 14 of the British Columbia statute. The majority of the decisions, as I have said, appear to conclude that a contract term limiting the amount of damages in the event of negligence by the warehouseman was valid notwithstanding the provision of the Act comparable to the British Columbia statute s. 3(4)(b). The response to the uncertainty created by these conflicting decisions was the Uniform Commercial Code Revision commencing in 1952 (which was legislated in various states and federal territories in the late 1950s and early 1960s) which, however, does not amend s. 3(4)(b) but rather adds to s. 14 a right to limit by contract the liability of the warehouseman for loss resulting from his negligence. The clause added to our s. 14 reads:

(2) Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage, and setting forth a specific liability per article or item, or value per unit of weight, beyond which the warehouseman shall not be liable; provided, however, that such liability may on written request of the bailor at the time of signing such storage agreement or within a reasonable time after receipt of the warehouse receipt be increased on part or all of the goods thereunder, in which event increased rates may be charged based on such increased valuation, but that no such increase shall be permitted contrary to a lawful limitation of liability contained in the warehouseman’s tariff, if any. No such limitation is effective with respect to the warehouseman’s liability for conversion to his own use.

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Thus the inexorable interrelationship between s. 14, which establishes an unqualified liability in the warehouseman for “loss of or injury to goods” caused by the bailee’s failure to exercise care and diligence, and s. 3(4)(a), which prohibits the inclusion in the storage contract of a term “contrary to any provision of the Act,” is made subject to contractual variation by the parties. Thereby the result sought by the respondent here is brought about, but not by way of an enabling in variation of the prohibition contained in s. 3(4)(b), but by a softening of the stricture in s. 3(4)(a) by including in s. 14 a power to vary liability for loss by contract.

I therefore would allow the appeal, set aside the judgment of the Court of Appeal and restore the judgment at trial, with costs to the appellant throughout.

Appeal dismissed with costs, ESTEY J. dissenting.

Solicitors for the plaintiff, appellant: Ray, Wolfe & Co., Vancouver.

Solicitors for the defendant, respondent: Harper, Grey & Co., Vancouver.