Linton Construction Ltd. v. C.N.R., [1975] 2 SCR 678

Supreme Court of Canada

Linton Construction Ltd. v. C.N.R. [1975] 2 S.C.R. 678

Date: 1974-10-01

B.G. Linton Construction Ltd. (Plaintiff) Appellant;

and

Canadian National Railway Company (Defendant) Respondent.

1974: March 5; 1974: October 1.

Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE SUPREME COURT OF ALBERTA, APPELLATE DIVISION

Telegraphs—Telegraph message arriving late and in wrong form—Resulting damages—Usual telegram form with terms and conditions endorsed thereon not used—Exemption from liability provision applicable—General Orders 162, 49274, T-40 and M-1 of Board of Transport Commissioners—Railway Act, R.S.C. 1952, c. 234, s. 381A [en. 1966-67 (Can.), c. 69, s. 68].

Tenders called by the Department of Public Works for the construction of a bridge were required to be made either by letter in writing of a telegram delivered to the Department in Vancouver. Telex messages were unacceptable and tenders were to close whether by way of original bid or alteration thereof by 11.00 a.m. Vancouver time on April 10, 1969. The appellant, who had entered a bid, obtained a revised price for the steel on the evening of April 9th which enabled him to reduce his bid by $27,000 and, undoubtedly, if this bid had been received by the Department before 11:00 a.m. on April 10th, the contract would have been awarded to the appellant.

What in fact occurred was that the president of the appellant company dispatched a telegram at the respondent’s office in Fort Nelson, B.C., containing his revised bid with instructions that it should be sent to Vancouver on a rush basis. The telegram was made out on the appellant’s notepaper and the usual telegram form (on the reverse side of which were endorsed exemptions from liability) was not used. Owing to admitted negligence on the part of the respondent’s servants, the appellant’s message (which was sent and received in telex form) did not arrive until one hour after the close of tenders so that the contract was awarded elsewhere. An action for damages was then brought by the appellant. The respond-

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ent invoked the provisions of certain orders of the then Board of Railway Commissioners, enacted under the authority of what is now s. 322 of the Railway Act, R.S.C. 1970, c. R-2, as relieving it of all liability for the delay in transmission. The action was dismissed at trial, and, on appeal, the judgment of the trial judge was affirmed by the Appellate Division of the Supreme Court of Alberta. An appeal to this Court followed.

Held (Laskin C.J., Spence, Dickson and Beetz JJ. dissenting): The appeal should be dismissed.

Per Martland, Judson, Ritchie, Pigeon and de Grandpré JJ.: The words “the sender of the message on the face of this form and this Company” as they occur in Order 162 of the Board of Railway Commissioners designate the parties to an agreement which becomes binding upon any person who sends a message on a form upon the reverse side of which certain “terms and conditions” are printed, but these words of themselves cannot be described as either “terms” or “conditions” and it was clear from the wording of Order 49274 of the Board that it was not the “form” referred to in Order 162 which was given the force of law as part of the Railway Act upon due publication in the Canada Gazette, but rather the “terms and conditions” contained on the reverse side thereof, and these “terms and conditions” thus became a part of the law of Canada whether endorsed on the reverse side of the form used by the sender or not.

The present case was one of negligent performance of a contract and not one constituting a “fundamental breach of the contract” which no exemption clause could excuse. Although in cases of ambiguity an exemption clause is to be strictly construed against the party relying on it, it is nevertheless to be given full force and effect if the language in which it is drafted is sufficiently clear to leave no doubt as to its meaning.

Per Laskin C.J. and Spence, Dickson and Beetz JJ., dissenting: What the Board of Railway Commissioners did by Order 49274 was to prescribe conditions and those conditions were that the sender of a telegram and the telegraph company should agree in a certain manner. It is a proper inference that that agreement should be communicated to the sender by reference to the form setting out the terms and conditions. Order 49274 and in the same fashion Order T-40 of the Canadian Transport Board (in place of Order 162 of the Board of Railway Commissioners,

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now rescinded) should be interpreted to leave free of the limitation a sender who has attended the telegraph company’s office and who has not been notified and is unaware of any limitations on the ordinary common law rights he would have as against the telegraph company.

Furthermore, there was a complete failure to carry out the contract on the part of the respondent. The doctrine of fundamental breach, or a breach going to the root of the contract, would apply and therefore the respondent was unable to avail itself of the exempting provisions appearing in the Order of the Board and set out on the reverse side of the form, if the latter had been used.

[Jankelson v. Canadian National Telegraphs, [1931] 1 W.W.R. 337, distinguished; Karsales (Harrow) Ltd. v. Wallis, [1956] 2 All E.R. 866, referred to; Suisse Atlantique Société D’Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale, [1966] 2 All E.R. 61, applied]

APPEAL from a judgment of the Supreme Court of Alberta, Appellate Division[1], dismissing an appeal from a judgment of Lieberman J. Appeal dismissed, Laskin C.J. and Spence, Dickson and Beetz JJ. dissenting.

A.G. Macdonald, Q.C., and J.D. Jenkins, for the plaintiff, appellant.

C.J. Irwin, for the defendant, respondent.

Beetz J. concurred with the judgment delivered by

THE CHIEF JUSTICE (dissenting)—I agree with my brother Spence both in his reasons and in his conclusions, but I wish to add some observations of my own on a ground, one of those taken by my brother Spence, which in my view is of itself sufficient to establish the respondent’s liability. The comedy of errors of the respondent’s employees in handling a simple telegram message is admitted in the agreed statement of facts, but all of them are alleged to be of no consequence because of the exemptions from liability endorsed upon the usual telegram forms, pursuant to prescribed orders of the fed-

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eral regulatory agencies successively authorized to regulate telegram traffic.

In fact, the message which the appellant wished to send was not put on one of those forms when submitted to the respondent’s employee for transmission. Assuming this to be immaterial to the force of the exemption provisions, the respondent’s claim to exoneration fails because it did not send a telegram (which would be delivered as a sealed message) but sent an open telex message which was received in that form and could not therefore be accepted as a tender for a government construction job on which the appellant was bidding. This was so far a departure from what the respondent (through its employees) had undertaken to do as to disentitle it to rely on the exemption provisions.

Counsel for the respondent, in argument before this Court on this aspect of the case, conceded that his reliance on the exemption clause would take him to the point of denying any liability even if a sender’s message, written out on an authorized form, was deliberately destroyed or thrown aside by an employee of the respondent. The sending of the telex message in this case had, for the sender, the same effect as if it had been torn up or simply ignored. I repeat, for convenience here, the exemption clause upon which the respondent relies. It reads as follows:

It is agreed between the sender of the message on the face of this form and this Company that the said Company shall not be liable for damages arising from failure to transmit or deliver, or for any error in the transmission or delivery of any unrepeated telegram, whether happening from negligence of its servants or otherwise, or for delays from interruptions in the working of its lines, for errors in cypher or obscure messages, or for errors from illegible writing, beyond the amount received for sending the same.

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Two points arise for consideration on the facts of this case, taken in the light of the foregoing clause: first, whether as a matter of law or of construction the exemption clause applies to the admitted default of the respondent that occurred; and, second, if the answer is in the negative (as I think it must be), whether the situation is affected by the fact that the exemption clause in question is a promulgation of the federal regulatory agency empowered to prescribe it. I propose to deal with the second question first and, as a base, I point out that the clause aforesaid was promulgated in virtue of the authority vested in the Board of Transport Commissioners of Canada, as the regulatory agency was then called (it is now the Canadian Transport Commission), under s. 348 of the Railway Act, R.S.C. 1927, c. 170, which is now, with an immaterial change, s. 322 of the Railway Act, R.S.C. 1970, c. R-2. This last‑mentioned provision reads as follows:

322. (1) No contract, condition, by-law, regulation, declaration or notice made or given by the company, impairing, restricting or limiting its liability in respect of any traffic shall, except as hereinafter provided, relieve the company from such liability, unless the class of contract, condition, by-law, regulation, declaration or notice has been first authorized or approved by order or regulation of the Commission.

(2) The Commission may, in any case, or by regulation, determine the extent to which the liability of the company may be so impaired, restricted or limited.

(3) The Commission may by regulation prescribe the terms and conditions under which any traffic may be carried by the company.

I find nothing in s. 322 that in any way excludes the operation of judicial rules of construction or principles of law in the determination of the question whether the respondent herein may rely on the exemption clause. Section 322(3) (in the same words as its predecessor s. 348(3)) envisages that traffic will be car-

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ried, that telegrams will be transmitted; and, indeed, as a common carrier, the respondent is obliged in the course of its business to accept telegram messages for transmission to their intended recipients. It is to me a rather monstrous proposition, if it is seriously advanced, that Parliament in its legislation authorized total immunity from liability to be conferred upon a carrier which, under its cover, could decide when and if it would send a requested telegram.

I would not read the words in s. 322(1) “impairing, restricting or limiting its liability” as authorizing complete immunity of the kind I am considering, and, subject to what follows in these reasons, I do not regard any orders of the regulatory agency as giving carte blanche to a carrier to take or refuse or to ignore messages tendered for transmission. Their orders are no more immune from construction than are bilaterally bargained contract terms.

The main question then is what is the scope of the exculpatory provision relied on by the respondent. We have here a standard contract, a contract of adhesion from which the appellant is powerless to depart and which, at least so far as the particular exempting provision is concerned, is equally binding upon the respondent. I do not think that these circumstances provide any good reason to qualify the rule of strict construction which has ordinarily been applied to exculpatory provisions. This is one side of the equation which must be considered when an issue arises whether upon a breach of contract the offending party is none the less entitled to rely upon an exemption clause. The other side has to do with the character of the breach, whether it is a breach which would ordinarily give rise only to damages, or a breach which is a breach of a term entitling the innocent party to terminate or (assuming there is a difference here) whether it is a breach which is in essence a complete denial or departure from the contract. A decision on this phase of the matter is in truth non‑segregable from the exercise of determining

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the reach of the exculpatory provision. It has, however, spawned a line of cases in England under which a fundamental breach is, as a matter of law, a ground for excluding the application of exemption clauses: see, for example, Karsales (Harrow), Ltd. v. Wallis[2]. This emphasis on the character of the breach was negated by the House of Lords in Suisse Atlantique Société d’Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale[3], which emphasized rather the construction side of the equation.

The interaction of the foregoing two approaches makes it possible to say of an exculpatory clause, construed to cover the event which is relied upon to escape it, that it prevents that event from being a breach of contract. The ultimate situation that arises here is a complete negation of any obligation which the transaction may have appeared to contemplate, but that is a result which, in my view, can hardly be reached where the parties have not been trifling and did have reciprocal obligations in view. A fortiori, it is not a result which is open in this case where the terms of the transaction have been prescribed under statutory authorization. There must be a residue of obligation that is not cancelled out by concurrent exemption; otherwise, it is illusory to speak of a contract: cf. Treitel, Law of Contract, 3rd ed., 1970, pp. 188ff.

In the present case, the respondent through its employees undertook to send a telegram. None was sent, nor was there even an attempt to send one which was aborted by difficulties of one sort or another. The situation goes beyond mere negligence on the part of the respondent’s employees. There is, moreover, no ground in the agreed statement of facts upon which it might be urged that the appellant was content to have a message sent in any form or manner chosen by the respondent’s employees. It was of the

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highest importance to the appellant that a telegram be sent. In these circumstances, I find the exemption provision inapplicable, and hence I would allow the appeal as proposed by my brother Spence.

The judgment of Martland, Judson, Ritchie, Pigeon and de Grandpré JJ. was delivered by

RITCHIE J.—This is an appeal from a judgment of the Appellate Division of the Supreme Court of Alberta, Smith C.J.A. dissenting, which affirmed the judgment rendered at trial by Mr. Justice Lieberman and dismissed the appellant’s claim for damages resulting from the alleged negligence of the respondent in delaying the delivery of a telegram containing the appellant’s reduced tender for the construction of a bridge on the Alaska Highway.

The facts are not in dispute and have been made the subject of an agreed statement by the parties which discloses that the Department of Public Works had called for tenders on the construction of the bridge in question which were required to be made either by letter in writing or a telegram delivered to the Department in Vancouver. Telex messages were unacceptable and tenders were to close whether by way of original bid or alteration thereof by 11 o’clock Vancouver time on April 10, 1969. It further appears that the appellant, who had entered a bid, obtained a revised price for the steel on the evening of April 9th which enabled him to reduce his bid by $27,000 and there seems no doubt that if this bid had been received by the Department before 11:00 a.m. on April 10th, the contract would have been awarded to the appellant.

What in fact occurred was that Mr. Linton, the president of the appellant company, dispatched a telegram at the respondent’s office in Fort Nelson, B.C., containing his revised bid with instructions that it should be sent to Vancouver on a rush basis, and owing to admitted negligence on the part of the defendant’s servants, the message did not arrive until one hour

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after the close of tenders so that the contract was awarded elsewhere.

It is of significance that the appellant’s telegram was made out on his company’s notepaper and that the usual form ordinarily filled in by persons sending telegrams was not used.

The facts are fully set forth in the judgment of the Appellate Division, which is now reported[4], and I accordingly feel relieved of the necessity of recounting them in more detail.

The respondent invoked the provisions of certain orders of the Railway Commissioners for Canada as relieving it of all liability for the delay in transmission and it becomes necessary to consider the relevant orders. In the first place, Order No. 162 of March 30, 1916, which is reproduced at pp. 420 and 421 of 24 D.L.R. (3d), contained the following opening paragraphs:

IT IS ORDERED that the conditions of the telegraph forms used by telegraph companies subject to the jurisdiction of the Board on which messages to be transmitted are to be written, be, and they are hereby, approved as follows, namely:

It is agreed between the sender of the message on the face of this form and this Company that said Company shall not be liable for damages arising from failure to transmit or deliver, or for any error in the transmission or delivery of any unrepeated telegram, whether happening from negligence of its servants or otherwise, or for delays from interruptions in the working of its lines, for errors in cypher or obscure messages, or for errors from illegible writing, beyond the amount received for sending the same.

This order was undoubtedly made in furtherance of the authority for which provision is made in s. 381A of the Railway Act, as enacted by 1966-67 (Can.), c. 69, s. 68, which was in force at all times relevant to this appeal and

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which is now s. 322 of the Railway Act, R.S.C. 1970, c. R-2. That section reads as follows:

381A. (1) No contract, condition, by-law, regulation, declaration or notice made or given by the company, impairing, restricting or limiting its liability in respect of any traffic shall, except as hereinafter provided, relieve the company from such liability, unless the class of contract, condition, by-law, regulation, declaration or notice has been first authorized or approved by order or regulation of the Commission.

(2) The Commission may, in any case, or by regulation, determine the extent to which the liability of the company may be so impaired, restricted or limited.

(3) The Commission may by regulation prescribe the terms and conditions under which any traffic may be carried by the company.

I agree with the view expressed by Allen J.A. in the reasons for judgment delivered on behalf of the majority of the Appellate Division that Order 162 was of the type contemplated in s. 381A (1).

As Mr. Justice Allen has pointed out, the case of Jankelson v. Canadian National Telegraphs was decided in 1931[5] and the effect of that case was to hold that a message conveyed to the company by telephone and written on one of its approved forms by its employee was not subject to the conditions approved under Order 162 because the sender of the message had no knowledge of the conditions and should therefore not be bound by them, and it was noted that Order 162 came under subs. (2) of what is now s. 381A and “does not prescribe the limitations but only determines what limitations the Company may make …”.

Following this decision, the Board of Railway Commissioners for Canada promulgated Order No. 49274 on December 2, 1932, the operative part of which reads as follows:

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IT IS ORDERED that the terms and conditions approved by the Board under its General Order No. 162, dated March 30th, 1916, be, and they are hereby prescribed as the terms and conditions upon which telegraph and cable messages shall be transmitted and dealt with by Telegraph and Cable Companies subject to the jurisdiction of the Board; and that the said General Order No. 162, including the said terms and conditions, and this Order, be published for three weeks in The Canada Gazette.

The italics are my own.

The last provision of this Order was obviously passed in order to conform with what was then s. 50 of the Railway Act R.S.C. 1927, c. 170 (now s. 62 of the National Transportation Act, R.S.C. 1970, c. N-17). This section provided that:

Any rule, regulation, order or decision of the Board, when published by the Board, or by leave of the Board, for three weeks in the Canada Gazette, and while the same remains in force, has the like effect as if enacted in this Act, and all courts shall take judicial notice thereof.

The provisions of this section had not been complied with in respect of Order 162 and it was not until the promulgation of Order 49274 that both Orders were duly published in the Canada Gazette with the effect that they thereafter had the force of law as if they had been enacted in the Railway Act itself. As to the latter Order, I agree with Mr. Justice Allen where, speaking on behalf of the majority of the Appellate Division, he said, at 24 D.L.R. (3d) 410, p. 427:

Order 49274 is obviously made under s-s (3) of said s. 381A in the exercise of the Board’s authority to prescribe the terms and conditions under which any traffic might be carried by the companies.

On February 1, 1965, a General Order was made by the Board of Transport Commissioners for Canada numbered T-40. The text of this Order makes no reference whatever to General

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Order 162 or Order 49274, and I agree with the Appellate Division that:

It is … obviously intended to be made under s-s. (3) of s. 381A because it purports to prescribe, not the form or terms of contracts to be used, but rather the “terms and conditions upon which telegraph and cable messages shall be transmitted and dealt with by telegraph and cable companies”.

(See 24 D.L.R. (3d) at p. 430.)

The terms and conditions prescribed by this Order are in the identical wording which was employed in Order 162, and while it may have been intended to rescind or supersede both the former Orders, it does not expressly do so and it is noteworthy that it has never been published in the Canada Gazette as provided by s. 50 of the Railway Act.

On February 5, 1965, General Order M-1 was promulgated by the Board of Transport Commissioners for Canada and this Order purported to constitute a “revision and consolidation of all the Board’s General Orders and circular letters issued since the Board’s inception up to the date of this Order”. This Order specifically rescinded Order 162 but adopted the terms and conditions contained in that Order. Like Order No. T-40, this Order was never published in the Canada Gazette.

In commenting on the situation created by reason of these various Orders, the learned trial judge observed, in part: (see p. 432 of 24 D.L.R. (3d)):

“In my view General Orders M-1 and T-40 did nothing more than substitute General Order T-40 for General Order 162 and the change effected to Order 49274 was simply a change whereby it (Order 49274) referred to General Order T-40 rather than to the rescinded General Order 162.”

And Mr. Justice Lieberman continued:

“However, Order 49274, which was properly promulgated and published, did prescribe the terms and

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conditions. I am of the opinion that it was not necessary to publish General Orders M-1 and T-40 in order to give the limitation of liability “the like effect as if enacted” in the Railway Act because Order 49274 was effective at all times material to this action.”

In the same connection, Mr. Justice Allen observed, in the course of his reasons for judgment (p. 432 of 24 D.L.R. (3d)):

Considering the wording of para. 4 of General Order M-1 and the fact that Order 49274 was not rescinded by Order M-1 I agree with the reasoning of the trial Judge in the passage from his judgment quoted above, and accordingly assume that Order 49274 remained in effect at relevant times in this case but that its reference to the terms and conditions prescribed or set out in General Order 162 must now be taken to refer to the terms and conditions set out in Order T-40 which are identical with those set out in Order 162.

The argument advanced on behalf of the appellant hinges on the construction to be placed upon the first paragraph of Order 162 and particularly upon the inclusion in Order 49274 and Order T-40 of the opening words of that paragraph which read:

It is agreed between the sender of the message on the face of this form and this Company that said Company shall not be liable for damages arising from failure to transmit or deliver, or for any error in the transmission or delivery of …

The italics are my own.

The appellant construes this language to mean that the terms and conditions in question can only be effective if they are set out in full on the reverse side of the form on which the message is to be transmitted and it is accordingly contended that where, as in this case, the message was written on the appellant’s own notepaper with nothing on the reverse side of it, the respondent cannot rely on any of the limitations of liability prescribed in Order 49274.

In my view the words “the sender of the message on the face of this form and this Company” as they occur in Order 162 designate the

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parties to an agreement which becomes binding upon any person who sends a message on a form upon the reverse side of which certain “terms and conditions” are printed, but these words of themselves cannot be described as either “terms” or “conditions” and it is clear from the wording of Order 49274 that it was not the “form” referred to in Order 162 which was given the force of law as part of the Railway Act upon due publication in the Canada Gazette, but rather the “terms and conditions” contained on the reverse side thereof, and these “terms and conditions” thus became a part of the law of Canada whether endorsed on the reverse side of the form used by the sender or not.

It is not disputed that the telegram in question was an “unrepeated telegram” and it follows from the above that the respondent was relieved

… for damages arising from failure to transmit or deliver, or for any error in the transmission or delivery of any unrepeated telegram, whether happening from negligence of its servants or otherwise, or for delays from interruptions in the working of its lines…

For all these reasons, as well as for those set forth in the reasons for judgment of Mr. Justice Allen, I would dismiss this appeal with costs.

Since writing the above I have had the opportunity of reading the reasons for judgment prepared for delivery by the Chief Justice and Mr. Justice Spence, both of whom appear to take the view that the delay in delivering the “telegraph message” here in question and its ultimate delivery in telex form, which the company’s agent at Fort Nelson had been told was unacceptable to the addressee, constituted a “fundamental breach of the contract” which no exemption clause could excuse.

The Chief Justice, in referring to the exemption clause contained in the relevant Order of the Commission, observes:

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It is to me a rather monstrous proposition, if it is seriously advanced, that Parliament in its legislation authorized total immunity from liability to be conferred upon a carrier which, under its cover, could decide when and if it would send a requested telegram.

I think I should say that I am unable to construe the agreed statement of facts as affording any basis for advancing such a proposition and no such construction has in any way contributed to the conclusion which I have reached.

My understanding of the facts as disclosed by the statement is that the delay in the delivery of the message and the mistake in delivering it in telex form were due to negligence on the part of the respondent’s servants. A telegraph message was dispatched and through negligence it arrived an hour late and in the wrong form.

There is, in my view, a wide difference between negligent performance of a contract and fundamental breach. Cases such as Karsales (Harrow), Ltd. v. Wallis[6], where the defendant had agreed to purchase a car which was in excellent condition and was delivered one which was virtually a wreck, exemplify the kind of situation in which a breach going to the root of the contract may exclude reliance on an exemption clause. Under such circumstances it can be said that the contract has not been performed at all whereas the present case is one of negligent performance.

The case of Suisse Atlantique Société d’Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale[7] is one of many authorities indicating that although in cases of ambiguity an exemption clause is to be strictly construed against the party relying on it, it is nevertheless to be given full force and effect if the language in which it is drafted is sufficiently clear to leave no doubt as to its meaning.

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Clauses providing for exemption for negligence in the performance of a contract are not rare and the terms and conditions which Order 49274 of the Board of Transport Commissioners prescribes for the transmission of “telegraph messages” by telegraph companies appear to me to be unambiguous in this regard. By the first of these terms it is stipulated that

… the said Company shall not be liable for damages arising from failure to transmit or deliver, or for any error in the transmission or delivery of any unrepeated telegram, whether happening from negligence of its servants or otherwise …

It does not appear to me that this phraseology is capable of any other meaning than that one of the terms on which the company accepts “telegraph messages” is that it will not be responsible for damages arising from the negligence of its servants if the message is in the form of an “unrepeated telegram” as it was in this case. In my view if there were any doubt as to what was meant, it is resolved by reference to the provisions of the succeeding term of the conditions adopted by the Board’s Order. That term reads:

To guard against error, the Company will repeat back any telegram for an extra payment of one-half the regular rate; and, in that case, the Company shall be liable for damages suffered by the sender to an extent not exceeding $200.00, due to the negligence of the Company in the transmission or delivery of the telegram.

This must, in my view, mean that the company is not liable for damages due to negligence in the transmission of a telegram unless it is dispatched after the making of an extra payment of one-half of the regular rate, and the intention of the Board is made even more explicit by the next term of the conditions which provides that “correctness in the transmission and delivery of the message can be ensured by contract in writing …”.

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As I have indicated, in my opinion, the terms and conditions to which I have referred expressly exempt the defendant company from liability for any damages which the plaintiff may have suffered arising from error in the transmission and delivery of the telegraph message which Mr. Linton handed to the defendant’s employee at Fort Nelson on April 10, 1969.

Dickson and Beetz JJ. concurred with the judgment delivered by

SPENCE J. [dissenting]—This is an appeal from the Appellate Division of the Supreme Court of Alberta pronounced on February 21, 1972. By that judgment, the said Appellate Division dismissed without costs an appeal from the judgment of Lieberman J. pronounced on June 15, 1971, wherein the learned trial judge dismissed the action of the appellant with costs.

The action was tried without evidence and upon the basis of a very detailed agreed statement of facts. That statement of facts includes not only an outline of all of the circumstances surrounding the cause of action but of the relevant orders of the Board of Transport Commissioners and its predecessor Board. It is therefore appropriate to quote in full the agreed statement of facts which I take from the reasons for judgment of Allen J.A. in the Appellate Division:

1. The Plaintiff is a company in good standing incorporated under the laws of Canada and engaged in the construction industry in Alberta, British Columbia and elsewhere.

2. The Defendant operates, inter alia, a telegraph company and had at the material time its western Regional Head Offices at Edmonton, Alberta.

3. Beecher Gifford Linton was, at all material times, the President of the Plaintiff and acting within the scope of his authority.

4. The Department of Public Works of Canada had called for tenders on a project known as The Jackfish

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Creek Bridge at a place on the Alaska Highway. Tenders were required to be made and alterations thereto were required to be made under the instructions to bidders either by a letter in writing or a telegram delivered to the Department of Public Works in Vancouver and telex messages were unacceptable. The Plaintiff had delivered a tender with bid deposit in accordance with the instructions to bidders some four days before tenders were to close. Had the Plaintiff been the low bidder, it would have been awarded the contract for the project.

5. Tenders were to close at 11:00 a.m., Vancouver time, on April 10th, 1969.

6. On the evening of April 9th, 1969, the Plaintiff received a revised price for steel which was $27,000.00 lower than the amount calculated for steel in the Plaintiff’s tender.

7. As a result, Beecher G. Linton went to the telegraph office of the Defendant at Fort Nelson, British Columbia, at 9:30 a.m. on the morning tenders were to close which was 2½ hours before the closing time because of the time difference between Fort Nelson and Vancouver.

8. Mr. Linton handed the following message to an employee of the Defendant:

Supervisor of Tendering

Dept. of Public Works

Pacific Pallisades

747 Bute St.,

Vancouver 5, B.C.

Tender for: Project #95003, April 10/69 11 a.m. Jackfish Creek Bridge, Mile 278.2 Alaska Highway, B.C.

Please reduce our bid by Twenty-Seven Thousand Dollars ($27,000.00)

Revised lower bid due to new quotation on item number 12

B.G. Linton Construction Limited

The message was on the letterhead of the Plaintiff. Mr. Linton explained that because of Department of Public Works instructions to bidders the message could not be sent by telex and that a telegram would have to be delivered to the addressee before 11:00 a.m. Vancouver time. There was some discussion about the way the message was set up with the heading separated from the body of the message. Mr. Linton stated that the identification in the first paragraph following the address was also required under the instructions to bidders.

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9. It was agreed that the message would be sent in the form submitted and it was sent out from the Fort Nelson office at 9:52 a.m.

10. The operator told Mr. Linton that the message would be delivered by telegram on time and in reliance thereon Mr. Linton did not call on one of the Plaintiff’s Vancouver employees to deliver a written change of tender which he could have done.

11. The message was accepted for sending without being placed on the usual telegram form ordinarily filled in by persons desiring to engage the Defendant to send telegrams. The usual form contains a limitation of liability in the following terms:

Terms and conditions upon which telegraph and cable messages shall be transmitted are prescribed by Order No. 49274, dated December 5th, 1932, of the Board of Transport Commissioners for Canada and published in The Canada Gazette.

It is agreed between the sender of the message on the face of this form and this Company that said Company shall not be liable for damages arising from failure to transmit or deliver, or for any error in the transmission or delivery of any unrepeated telegram, whether happening from negligence of its servants or otherwise, or for delays from interruptions in the working of its lines, for errors in cipher or obscure messages, or for errors from illegible writing, beyond the amount received for sending the same.

To guard against errors, the Company will repeat back any telegram for an extra payment of one-half the regular rate; and, in that case, the Company shall be liable for damages suffered by the sender to an extent not exceeding $200.00, due to the negligence of the Company in the transmission or delivery of the telegram.

Correctness in the transmission and delivery of messages can be insured by contract in writing, stating agreed amount of risk, and payment of premium thereon at the following rates, in addition to the usual charge for repeated messages, viz: one per cent for any distance not exceeding 1,000 miles, and two per cent for any greater distance.

[Page 697]

This Company shall not be liable for the act or omission of any other Company, but will endeavour to forward the telegram by any other Telegraph Company necessary to reaching its destination, but only as the agent of the sender and without liability therefor. The Company shall not be responsible for messages until the same are presented and accepted at one of its transmitting offices, if a message is sent to such office by one of the Company’s messengers, he acts for that purpose as the sender’s agent; if by telephone, the person receiving the message acts therein as agent of the sender, being authorized to assent to these conditions for the sender. This Company shall not be liable in any case for damages, unless the same be claimed, in writing, within sixty days after receipt of the telegram for transmission.

No employee of the Company shall vary the foregoing.

12. The employee of the Defendant agreed to send the message on a rush basis but did not mark the message with the symbol indicating a rush message which is “RX”.

13. The employee of the Defendant who sent the message miscounted the words. Consequently, when the message was received in Edmonton for transmission to Vancouver it was rejected. Such rejection acts as a check for the customer as well as for the Defendant, because, if the word count and words in the message received do not correspond, the customer’s message may have been transmitted incorrectly.

14. The Edmonton office of the Defendant sent by teletype an inquiry to Fort Nelson. The Fort Nelson operator corrected the count after notifying the Fort Nelson office of the Plaintiff and again giving an assurance to an employee of the Plaintiff that the message would be sent on a rush basis and would be delivered on time in the manner instructed.

15. There were further delays in the transmission of the message and in the result the message was not received by the addressee until one hour after the close of tenders and then it was a telex message and not a telegram. The Defendant got in touch with the Department of Public Works in an attempt to have the tender considered but the Department of Public Works refused.

[Page 698]

16. The tender from another contractor was accepted, but had the telegram been delivered on time, the Plaintiff would have been the low bidder.

17. Mr. Linton learned soon after the closing of tenders that the revised tender of the Plaintiff had not been received by the Department of Public Works and went immediately to the office of the Defendant in Fort Nelson and lodged his complaint and indicated that action would be taken. The Superintendent of the Defendant conducted a comprehensive investigation and prepared a full report delivered the following day criticizing the procedure adopted by the employees of the Defendant and indicated that the Plaintiff should not be charged for the message. Such charge would have been $3.81.

18. Had the telegram been delivered on time, the contract would have been awarded to the Plaintiff and the Plaintiff claims to have suffered a loss of $160,000.00 as a result of the failure of the Defendant to deliver the telegram on time.

19. It is agreed that unless the limitation of liability is effective in the circumstances, the Defendant is liable to the Plaintiff for such loss and damage as may be established by the Plaintiff on an assessment of damages or agreed upon between the parties.

20. The parties have agreed that the applicability of the limitation of liability shall first be submitted for determination as a question of law.

21. In the Fort Nelson office of the Defendant there were no notices of a limitation of liability posted nor was any mention thereof made to the Plaintiff’s employees.

22. Limitation of the liability of a Telegraph Company subject to the jurisdiction of the Canadian Transport Commission or either of its predecessors: The Board of Transport Commissioners of Canada and the Board of Railway Commissioners for Canada, has been one of the topics considered by those bodies through the years, and limitation of the liability of a Telegraph Company has been specifically dealt with in the following Order and General Orders:

(a) General Order of the Board of Railway Commissioners for Canada number 162 dated 30 March 1916 and found in Volume 6 of the Board of Railway Commissioners for Canada, Judgments, Orders, Regulations and Rulings at page 27, which General Order reads as follows:

[Page 699]

Thursday, the 30th day of March, A.D. 1916

SIR HENRY L. DRAYTON, K.C., Chief Commissioner.

D’ARCY SCOTT, Asst. Chief Commissioner. HON. W.B. NANTEL, Deputy Chief Commissioner.

S.J. MCLEAN, Commissioner.

A.S. GOODEVE, Commissioner.

IN THE MATTER OF the application of the Canadian Pacific Railway Company for approval of the conditions on its telegraph forms:

AND IN THE MATTER OF the Order of the Board No. 12745, dated January 9th, 1911, temporarily approving the forms of contract used by the Canadian Pacific Railway Company’s Telegraphs, the Great North Western Telegraph Company of Canada, the Canadian Northern Telegraphs Company, the North American Telegraph Company, the Western Union Telegraph Company, the Anglo-American Telegraph Company, the White Pass & Yukon Route, the Marconi Wireless Telegraph Company, and the Grand Trunk Telegraph Company, and other companies subject to the jurisdiction of the Board:

File No. 13622

UPON hearing the parties concerned at the sittings of the Board held in Ottawa on April 20th and November 15th, 1910, and considering what was submitted in writing (this matter having been allowed to remain in abeyance till the investigation into telegraph rates was concluded)—

IT IS ORDERED that the conditions of the telegraph forms used by telegraph companies subject to the jurisdiction of the Board on which messages to be transmitted are to be written, be, and they are hereby, approved as follows, namely:

“It is agreed between the sender of the message on the face of this form and this Company that said Company shall not be liable for damages arising from failure to transmit or deliver, or for any error in the transmission or delivery of any unrepeated telegram, whether happening from negligence of its servants or otherwise, or for delays from interruptions in the working of its lines, for errors in cypher or obscure messages, or for errors from illegible writing, beyond the amount received for sending the same.

[Page 700]

To guard against errors, the Company will repeat back any telegram for an extra payment of one-half the regular rate; and, in that case, the Company shall be liable for damages suffered by the sender to an extent not exceeding $200.00, due to the negligence of the Company in the transmission or delivery of the telegram.

Correctness in the transmission and delivery of messages can be insured by contract in writing, stating agreed amount of risk, and payment of premium thereon at the following rates, in addition to the usual charge for repeated messages, viz: one per cent for any distance not exceeding 1000 miles, and two per cent for any greater distance.

This Company shall not be liable for the act or omission of any other Company, but will endeavor to forward the telegram by any other Telegraph Company necessary to reaching its destination, but only as the agent of the sender and without liability therefor. The Company shall not be responsible for messages until the same are presented and accepted at one of its transmitting offices; if a message is sent to such office by one of the Company’s messengers, he acts for that purpose as the sender’s agent; if by telephone, the person receiving the message acts therein as agent of the sender, being authorized to assent to these conditions for the sender. This Company shall not be liable in any case for damages, unless the same be claimed, in writing, within sixty days after receipt of the telegram for transmission.

No employee of the Company shall vary the foregoing.”

(S’G’D.)                                          H.L. DRAYTON,

                                                        Chief Commissioner,

                                                        Board of Railway Commissioners for Canada.

BOARD OF RAILWAY COMMISSIONERS FOR CANADA.

Examined and certified as a true copy under Section 23 of “The Railway Act”.

(SGD) R.RICHARDSON,

Asst. Sec’y, and Registrar, B.R.C.

[Page 701]

OTTAWA, Feb. 15, 1929.

(b) Order of the Board of Railway Commissioners for Canada number 49274 dated 5 December 1932 and found in Volume 22 of the Board of Railway Commissioners for Canada, Judgments, Orders, Regulations and Rulings at page 251, which Order reads as follows:

Monday, the 5th day of December, A.D. 1932.

HON. C.P. FULLERTON, K.C., Chief Commissioner,

S.J. MCLEAN, Asst. Chief Commissioner.

F.A. LABELLE, Deputy Chief Commissioner.

HON. T. C. NORRIS, Commissioner.

IN THE MATTER OF the General Order of the Board No. 162, dated March 30th, 1916 approving the conditions on the telegraph forms used by telegraph companies subject to the jurisdiction of the Board on which messages to be transmitted are to be written:

J.A. STONEMAN, Commissioner.

G.A. STONE, Commissioner.                                                       File No. 13622

UPON the joint application of the Canadian Pacific and the Canadian National Railway Companies, and reading what is filed in support thereof—

IT IS ORDERED that the terms and conditions approved by the Board under its General Order No. 162, dated March 30th, 1916, be, and they are hereby, prescribed as the terms and conditions upon which telegraph and cable messages shall be transmitted and dealt with by Telegraph and Cable Companies subject to the jurisdiction of the Board; and that the said General Order No. 162, including the said terms and conditions, and this Order, be published for three weeks in The Canada Gazette.

Chief Commissioner,

Board of Railway Commissioners

for Canada

(c) General Order of the Board of Transport Commissioners for Canada number T‑40 dated 1 February 1965 and found in Part IV of the Revision and Consolidation of General Orders of the Board of Transport Commissioners for Canada, which General Order reads as follows:

[Page 702]

GENERAL ORDER NO. T-40

THE BOARD OF TRANSPORT COMMISSIONERS FOR CANADA

Telegraph and Cable

Messages, Terms and Conditions.

File No. 13622

IT IS HEREBY ORDERED AS FOLLOWS:

The following terms and conditions are prescribed as the terms and conditions upon which telegraph and cable messages shall be transmitted and dealt with by Telegraph and Cable Companies subject to the jurisdiction of the Board:

TERMS AND CONDITIONS

It is agreed between the sender of the message on the face of this form and this Company that the said Company shall not be liable for damages arising from failure to transmit or deliver, or for any error in the transmission or delivery of any unrepeated telegram, whether happening from negligence of its servants or otherwise, or for delays from interruptions in the working of its lines, for errors in cypher or obscure messages, or for errors from illegible writing, beyond the amount received for sending the same.

To guard against errors, the Company will repeat back any telegram for an extra payment of one-half the regular rate; and, in that case, the Company shall be liable for damages suffered by the sender to an extent not exceeding $200.00, due to the negligence of the Company in the transmission or delivery of the telegram.

Correctness in the transmission and delivery of messages can be insured by contract in writing, stating agreed amount of risk, and payment of premium thereon at the following rates, in addition to the usual charge for repeated messages, viz: one per cent for any great distance not exceeding 1000 miles, and two per cent for any greater distance.

This Company shall not be liable for the act or omission of any other Company, but will endeavour to forward the telegram by any other Telegraph Company necessary to reaching its destination, but only as the agent of the sender and without liability therefor. The Company shall

[Page 703]

not be responsible for messages until the same are presented and accepted at one of its transmitting offices; if a message is sent to such office by one of the Company’s messengers, he acts for that purpose as the sender’s agent; if by telephone, the person receiving the message acts therein as agent of the sender, being authorized to assent to these conditions for the sender. This Company shall not be liable in any case for damages, unless the same be claimed, in writing, within sixty days after receipt of the telegram for transmission.

No employee of the Company shall vary the foregoing.

(SGD)                                                   ROD. KERR,

                                                              Chief Commissioner,

                                            The Board of Transport Commissioners for Canada.

23. Mr. Linton said on his examination for discovery that he had no actual knowledge of the terms and conditions in the said Orders and the terms and conditions contained on the usual telegram form. That statement is deemed to be part of these agreed facts and is not disputed by the Defendant.

24. Order number 49274 and General Order number 162 were published in the Canada Gazette once on each of the following three dates: December 24, 1932; December 31, 1932; and January 7, 1933.

25. General Order T-40 has not been published in the Canada Gazette.

26. No actual payment of one-half the regular rate for repeating back the telegram was made or to be made in respect of the telegram in question.

27. No premium insuring correctness in the transmission and delivery of the message was paid or agreed to be paid in this case.

28. The questions posed for determination are whether there is a limitation of liability in respect of the Defendant in the circumstances outlined herein and, if so, the extent of any such limitation of liability.

29. The parties to this action have further agreed that costs of the action to date may be based upon the disposition of this point of law and that the amount of the charge for sending the telegram is deemed to have been tendered by the Defendant to the Plaintiff prior to the commencement of this action.

[Page 704]

The procedure of submitting the question of liability to the Court as a question of law was adopted so that upon the determination of that question if any liability were found to exist the amount thereof could be determined upon a reference failing the agreement between the parties.

General Order 162 as quoted above was enacted by the then Board of Railway Commissioners under the authority of s. 340 of the Railway Act of 1906. That Act has subsequently been replaced on several occasions but the same statutory provision continued up to the date of the trial of this action and then appeared as s. 381A of the Revised Statutes of Canada, 1952, c. 234. That section was made applicable to telegrams by s. 380(13) of the same statute. The section provides:

381A. (1) No contract, condition, by-law, regulation, declaration or notice made or given by the company, impairing, restricting or limiting its liability in respect of any traffic shall, except as hereinafter provided, relieve the company from such liability, unless the class of contract, condition, by-law, regulation, declaration or notice has been first authorized or approved by order or regulation of the Commission.

(2) The Commission may, in any case, or by regulation, determine the extent to which the liability of the company may be so impaired, restricted or limited.

(3) The Commission may by regulation prescribe the terms and conditions under which any traffic may be carried by the company.

Another General Order of the Board of Transport Commissioners should be referred to, that is order M-1 which came into force on February 1, 1965. The purpose of that order was to consolidate the previous existing Orders of the Board, to rescind those which were no longer applicable, and to refer to others which remained in force although not consolidated. The Order need not be quoted in full. It is sufficient to say that it has been found in the Courts below that it resulted in General Order 162 being rescinded and General Order 49274

[Page 705]

being continued in effect with the reference therein to General Order 162 (now rescinded) being amended to read Order T-40. I am of the opinion that there is no issue involved in this course of determination as Order 49274 makes exactly the same provision with reference to Order T-40 as was made originally by General Order 162.

A matter of some importance, however, is the provision of the Railway Act as to the publication of these various orders. That provision appeared at the time of the trial of this action in s. 51 of the Railway Act, R.S.C. 1952, c. 234, and reads as follows:

51. Any rule, regulation, order or decision of the Board when published by the Board, or by leave of the Board, for three weeks in the Canada Gazette, and while the same remains in force, has the like effect as if enacted in this Act and all Courts shall take judicial notice thereof.

Although a like provision was in effect in March of 1916 when General Order 162 of the Board of Railway Commissioners was enacted, there was no publication in the Canada Gazette of that order.

In this situation, the circumstances which gave rise to the decision of the Appellate Division of the Supreme Court of Alberta in Jankelson v. Canadian National Telegraphs[8] arose. There, Jankelson had telephoned to the telegraph office in Calgary and had dictated a short telegram. The telephone message was received by an employee of the Canadian National Telegraphs and was written by him on the usual form used by such company in such case. The telegram was dispatched from Calgary but was lost in Montreal and a duplicate message was only delivered five days after the original had been dispatched. The form upon which the employee of the telegraph company copied the message was a form containing exactly the provisions of General Order 162 which I have quoted above. There, as here, the action was

[Page 706]

tried on an agreed statement of facts and it was part of that agreement that the conditions which appeared on such form were not communicated to the plaintiff and the plaintiff had no knowledge of them. Clarke J.A. said at p. 341:

It will be noticed that the Board has alternative powers, one under subsec. 2 of sec. 348 to determine the extent to which the liability of the company may be limited, leaving it to the company to make such limitation in its contracts if it so desires; or under subsec. 3 to itself prescribe the terms and conditions; and sec. 50 gives the order of the Board the like effect as if enacted in the Act, if published in the Canada Gazette for three weeks.

And at p. 342:

I think the order in question in this action comes under subsec. 2 and does not prescribe the limitations but only determines what limitations the company may make so that the case comes within the authority of the Wilkinson case, supra, and is distinguishable from the Sherlock case, supra.

There is the further distinction that there was no publication of Order 162 in question herein in accordance with sec. 50.

Whether or not this publication is essential to the validity of an order made under subsec. 2 need not be determined in this action for, assuming it to be fully effective, it has not the effect of making a statutory contract between the parties but only of authorizing such a contract to be made by the parties.

It should be noted that by the date of the decision in Jankelson v. C.N. Telegraphs, there had already been heard the case of Wilkinson v. Canadian Express Co.[9] and the case of Sherlock

[Page 707]

v. The Grand Trunk Railway Company[10] (affirmed in this Court[11]), and that the learned justice on appeal refers to both of those decisions.

Shortly more than a year later, the Board of Railway Commissioners for Canada enacted Order 49274 on the December 5, 1932, and that Order has been considered in the Courts below as being an order made under subs. (3) of what is now s. 381A of the Railway Act. Smith C.J.A., in his dissenting reasons in the present case in the Appellate Division, put the problem succinctly when he said:

The question appears to me to be, did the Board by enacting Order 49274 provide that the liability provision set out in Order 162 apply to the transmission of telegrams, irrespective of whether the form referred to in Order 162 was used or not used, or did it remain essential for that form to be brought to the attention of the sender and used for the writing out of the telegram in order to make the limitation provision applicable to the individual telegram being transmitted?

It is important, in coming to a decision on this vital point, to consider what were the exact operative words of Order 49274. To repeat them, they are as follows:

IT IS ORDERED that the terms and conditions approved by the Board under its General Order No. 162, dated March 30th, 1916, be, and they are hereby, prescribed as the terms and conditions upon which telegraph and cable messages shall be transmitted and dealt with by Telegraph and Cable companies subject to the jurisdiction of the Board; and that the said General Order No. 162, including the said terms and conditions, and this Order, be published for three weeks in The Canada Gazette.

[Page 708]

The terms and conditions as approved by the Board under its General Order 162 which were prescribed by Order 49274 commence with the words: “It is ordered that the conditions of the telegraph forms used by telegraph companies subject to the jurisdiction of the Board be and they are hereby approved as follows”. And then the first paragraph commences with the words “It is agreed between the sender of the message on the face of this form and this company …”. Surely, therefore, what the Board did by Order 49274 was to prescribe conditions and those conditions were that the sender of the telegram and the company should agree in a certain manner and that it is a proper inference that that agreement should be communicated to the sender by reference to the form setting out the terms and conditions. It must be understood that the problem facing the Court in Jankelson was not the problem in the present case. There, the sender had simply telephoned in his message and the message then was placed by a clerk upon the usual telegraph form which form recited the terms and conditions of the then General Order 162. The Appellate Division in Jankelson held only that the provisions of General Order 162 which provided that the telephone employee should be the agent of the sender for the purpose of consenting to the conditions and they, not having been communicated to the sender and, in addition, the order not having been gazetted, could not apply as against the sender.

As counsel for the appellant points out, it was sufficient to cure the situation in Jankelson to prescribe the exact conditions which were set out in General Order 162. Upon such prescription then what occurred in Jankelson would have been exactly covered by the order and the sender who had telephoned in the message would be bound by the conditions as the receiver, the receiving clerk, was authorized to consent on his behalf to such conditions. On the other hand, there had been no need to alter the

[Page 709]

situation of the sender who attended personally at the office of the telegraph company and who, therefore, could be properly informed of the most important, indeed almost total, restriction of liability wrought by the terms and conditions which would have to appear on the form which he would use. So, in the present case, Mr. Linton upon attending the office with the form of telegraph typed out could have been requested to put that message on the company’s own form or it simply could have been affixed to such form and had pointed out to him that the form required the limitations set out in the terms and conditions set out on the reverse thereof.

In para. 19 of the agreed statement of facts it was agreed that “unless the limitation of liability is effective in the circumstances, the Defendant is liable to the Plaintiff for such loss and damage as may be established by the Plaintiff on an assessment of damages or agreed upon between the parties”. The respondent, therefore, has agreed that the limitations and conditions do deprive the plaintiff of remedies which would be its at common law. Allen J.A., in giving reasons for the majority in the Appellate Division, said:

Obviously the intent of Order 49274 was that the Board itself would prescribe the terms and conditions of what might be termed a statutory contract…

In interpreting that contract, the well-established rule as to the interpretation of contracts cutting down common law rights must be considered.

Byles J. said in R. v. Morris[12], at p. 95:

… to construe a statute in conformity with the common law, rather than against it, except where or so far as the statute is plainly intended to alter the course of the common law.

This was a sound rule.

Coleridge J., in The Queen v. Benjamin

[Page 710]

Scott[13], at p. 133, said:

How, then, upon general principles are we to proceed in a seeming conflict between the common law and these provisions of the statute? Not, I apprehend, by assuming at once that there is a real conflict, and sacrificing the common law, but by carefully examining whether the two may not be reconciled, and full effect be given to both.

In National Assistance Board v. Wilkinson[14], Devlin J. said at p. 661:

It is a well-established principle of construction that a statute is not to be taken as effecting a fundamental alteration in the general law unless it uses words that point unmistakably to that conclusion.

In the present case, if the words of Order 49274 were given the broad interpretation which the Courts below have given to them, there would be a very material derogation of the appellant’s common law rights. The words do not require such an interpretation and, in fact, may be considered to be quite ambiguous. The evil which the order was intended to cure was not one which affects the appellant’s situation but rather the position of a person who telephones in to the telegraph office a message; and as I have said it was sufficient to constitute the receiving clerk as the agent of that sender who had used the telephone in order to place upon him the limitations of the order. On the other hand, it was not so necessary to have those limitations apply to a person who attended the office unless that person was notified by use of the form, or even by the words of the receiving clerk, that the sending of the telegram entailed this very serious limitation on the liabilities of the telegraph company.

I am, therefore, of the opinion that Order 49274 of the Board of Railway Commissioners and in the same fashion Order T-40 of the Canadian Transport Board should be interpreted to leave free of the limitation a sender who has

[Page 711]

attended the telegraph company’s office and who has not been notified and is unaware of any limitations on the ordinary common law rights he would have as against the telegraph company.

I am also concerned with the application of a further doctrine in contract law. This subject was referred to by the Chief Justice during the argument but neither counsel chose to develop it. I quote from Cheshire and Fifoot, Law of Contract, 6th ed., at p. 116:

In a number of cases, now extending over many years, judges have ruled from time to time that no exempting clause, however wide, may protect a party who has broken the basic duties created by the very nature and character of the contract. A variety of language has been used to describe this over-riding consideration. The words “fundamental term” are, perhaps, most often on judicial lips. But this phrase, in so far as it suggests that the courts are only adding a further term to those already expressed or implied in the contract, is misleading. The essential assumption is that the party at fault has done more than break a term of the contract, however important this may be: he has failed to satisfy the very purpose for which the contract was designed and he may no longer rely on one of its component parts.

One of the outstanding examples of such a case is Karsales (Harrow), Ltd. v. Wallis[15], a decision of the English Court of Appeal. There, Denning L.J. said at pp. 940-1:

Notwithstanding earlier cases which might suggest the contrary, it is now settled that exempting clauses of this kind, no matter how widely they are expressed, only avail the party when he is carrying out his contract in its essential respects. He is not allowed to use them as a cover for misconduct or indifference or to enable him to turn a blind eye to his obligations. They do not avail him when he is guilty of a breach which goes to the root of the contract. The thing to do is to look at the contract apart from the exempting clauses and see what are the terms,

[Page 712]

express or implied, which impose an obligation on the party. If he has been guilty of a breach of those obligations in a respect which goes to the very root of the contract, he cannot rely on the exempting clauses….The principle is sometimes said to be that the party cannot rely on an exempting clause when he delivers something “different in kind” from that contracted for, or has broken a “fundamental term” or a “fundamental contractual obligation” but these are, I think, all comprehended by the general principle that a breach which goes to the root of the contract disentitles the party from relying on the exempting clause.

A similar view was adopted by the Appellate Division of the Supreme Court of Alberta in Canadian-Dominion Leasing Corporation Ltd. v. Suburban Superdrug Ltd.[16], and the British Columbia Supreme Court in Lightburn v. Belmont Sales Ltd. et al.[17], and as well by the Court of Appeal for Ontario in R.G. McLean Ltd. v. Canadian Vickers Ltd.[18] It is true that those are cases in which an exemption clause in a contract is construed and the result where the Courts refuse to apply such exemption clause. What we are concerned with here is an exemption which, it is alleged, was granted by an order of the then Board of Railway Commissioners. As I have pointed out, however, that exemption was, in the view of Allen J. A., granted by the insertion of a statutory clause in a contract and, therefore, it is an exemption clause in a contract despite the fact that it originated in an order of the Board.

Upon the agreed statement of facts in the present case, the appellant, through its president, Mr. Linton, had attended the office of the respondent and there informed the clerk of the necessity of having this telegram delivered at the addressee’s place of business not later than 11:00 a.m. on the day on which it was being

[Page 713]

sent and that such a course was possible because of the hour’s variation in time between Fort Nelson and Vancouver. The defendant agreed to send the message on a rush basis and the defendant through its employee undertook to deliver that message by telegram not later than 11:00 a.m. on that day. Despite that agreement made in full knowledge of all the circumstances by the representative of the telegraph company, the message was not marked “Rush”. Although it was sent from the Fort Nelson office immediately, it was delayed for some time in the Alberta office because the clerk had miscounted the words. When the clerk being called upon by the Alberta office made a proper count of the words, he again assured Mr. Linton that the message would be delivered on time in the manner instructed. When the message finally arrived at the office of the addressee, it was not within that time but over an hour later. In addition, it was not on an ordinary telegraph form but was on a telex form, although the receiving clerk had been warned that a telex would not be accepted by the addressee.

Under these circumstances, I am of the opinion that there was a complete failure to carry out the contract on the part of the respondent. The doctrine of fundamental breach, or a breach going to the root of the contract, would be more accurate, would apply and therefore the respondent is unable to avail itself of the exempting provisions appearing in the Order of the Board and set out on the reverse side of the form, if the latter had been used. For this reason also, I would allow the appeal.

In the result, the appeal should be allowed and the case should be returned to the Supreme Court of Alberta so that the damages may be assessed failing the agreement of the parties. The appellant is entitled to its costs throughout.

Appeal dismissed with costs, LASKIN C.J. and SPENCE, DICKSON and BEETZ JJ. dissenting.

[Page 714]

Solicitors for the plaintiff, appellant: Macdonald, Spitz, Buchanan & Lavallee, Edmonton.

Solicitor for the defendant, respondent: Clare J. Irwin, Edmonton.