Docket: T-2044-15
Citation:
2017 FC 23
Ottawa, Ontario, January 11, 2017
PRESENT: The
Honourable Madam Justice St-Louis
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BETWEEN:
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DE WOLF
MARITIME SAFETY B.V.
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Plaintiff
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and
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TRAFFIC-TECH INTERNATIONAL INC.
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Defendant (moving party)
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ORDER AND REASONS
I.
Introduction
[1]
These proceedings constitute the second step of the
Motion for the preliminary determination of questions of law Traffic-Tech
International Inc. [Traffic-Tech] presented under Section 22 of the Federal
Courts Act, RSC 1985, c F-7 and Rule 220(1)(a) of the Federal Courts
Rules, SOR/98-106 [Federal Courts Rules].
[2]
On August 17, 2016, Prothonotary Morneau,
deciding on the first stage as per Rule 220(2) of the Federal Courts Rules,
granted the Motion, and ordered that the two questions submitted by Traffic-Tech
be determined by the Court.
II.
Background
[3]
In December 2015, the plaintiff, De Wolf
Maritime Safety B.V. [De Wolf] introduced an Action against the defendant,
Traffic-Tech, and served and filed its initial Statement of Claim in personam,
which it amended in September 2016.
[4]
In brief, De Wolf claims Traffic-Tech failed to carry
its cargo under deck; that the loss is the result of Traffic-Tech’s failure to safely
carry, care for, discharge, store and deliver its cargo in good order and condition.
It further claims that Traffic-Tech breached its contract and obligations, was
grossly negligent, and important for these proceedings, that Traffic-tech is
not entitled to invoke any of the immunities or limitations provided for in the
Hague-Visby Rules, being Schedule 3 of the Marine Liability Act,
SC 2001, c 6 [Marine Liability Act].
[5]
De Wolf asks that Traffic-Tech be condemned
jointly and severally to pay to it the sum of €71,706.00 (or the Canadian
equivalent of $98,896.92 at the rate of 1.3792 on June 23, 2015) plus interest
and costs; and such other relief as the Court might deem appropriate in the
circumstances. This amount represents the value of the goods it shipped from
Vancouver to Rotterdam, goods that were lost overboard and therefore did not
arrive to the port of delivery.
[6]
In its Statement of Defence, Traffic-Tech argues
it can limit its liability towards De Wolf to an amount not exceeding 666.67
units of account per package or unit or 2 units of account per kilogramme of
gross weight of the goods lost or damaged, whichever is the higher, pursuant to
the bill of lading and the Hague-Visby Rules; that the damages claimed
are excessive and remote; and that De Wolf did not take any or adequate steps
to mitigate those damages.
III.
Facts
[7]
As per their Agreed Statement of Facts, the
parties agree that at all material time, De Wolf was the owner and consignee of
a shipment described as “One piece zodiac and Spare
Parts”, which was stuffed into a container (TCLU4132019/3269653), itself
loaded on board the vessel “Cap Jackson” in
Vancouver, Canada, for delivery in Rotterdam, Netherlands.
[8]
The container was carried under a bill of lading
bearing number 40020710, issued by Traffic-Tech on December 6, 2014. This bill
of lading did not declare that the container containing the shipment was to be
carried “on deck”, while the container was in
fact so carried.
[9]
The container was lost during the voyage, did
not arrive in Rotterdam, and the loss suffered by De Wolf amounts to €71,706.00
or CND $98,896.92 at the exchange rate of 1.3792 calculated on June 23, 2015.
[10]
At the hearing, the parties have also confirmed
that the nature and value of the goods had not been declared by the shipper
before shipment nor inserted in the bill of lading.
IV.
Questions of law
[11]
The two questions of law before the Court are :
1.
Does the undeclared on-deck carriage of the
cargo under the Traffic-Tech bill of lading prevent the defendant from relying
on the Hague-Visby Rules?
2.
In the negative, what are the limitations
applicable to the contract of carriage pursuant to the Hague-Visby Rules?
V.
Submissions of the parties
A.
Traffic-Tech (defendant and moving party)
(1)
The damaged goods are “goods” as defined in the Hague-Visby
Rules
[12]
Traffic-Tech first relies on the definition of “goods” contained in Article I(c) of the Hague-Visby
Rules to argue that they are applicable here. As said definition excludes “cargo which by the contract of carriage is stated as being
carried on deck and is so carried”, it follows that cargo which is not
stated as being carried on deck by the contract of carriage is not excluded.
[13]
The parties agree that the bill of lading bore
no indication that the shipment would be carried on deck. Hence, Traffic-Tech
submits, as the lost shipment was not stated by contract as being carried on
deck, it therefore was “goods”. Since the shipment
was in fact “goods”, the claim falls within the
scope of the Hague-Visby Rules. According to Traffic-Tech, this
interpretation allows more flexibility to the carrier whereas De Wolf’s
position runs against the commercial reality of container shipping, where about
30% of containers are stowed on deck.
(2)
The carrier’s liability is limited by the
provisions contained in the Hague-Visby Rules
[14]
Satisfied that the Hague-Visby Rules
apply, Traffic-Tech then turns to its Article IV(5)(a) to argue that neither
the carrier nor the ship shall “in any event” become
liable for any amount above the limitation provided for in the convention, and
to its Article IV bis, reproduced in annex, which states the limits
shall apply in any action against the carrier, be it found in tort or contract.
[15]
Traffic-Tech contends that the only exception to
limitation provided for in Article IV(5)(a) of the Hague-Visby Rules is
the one provided for in Article IV(5)(e) that pertains to damage resulting “from an act or omission of the carrier done with intent to
cause damage, or recklessly and with knowledge that damage would probably
result”.
[16]
In this regard, Traffic-Tech argues that Article
IV(5)(e) is not at play in these proceedings since De Wolf’s allegation of
gross negligence is not supported by allegation or proof that the damage was indeed
caused with intent or knowledge on the part of Traffic-Tech that the damage
would occur. Furthermore, it argues that in any event, Article IV(5)(e)
requires a higher threshold than gross negligence, and that no evidence
whatsoever has been put forward in these proceedings as the questions to be
addressed by the Court are strictly questions of law. It addresses the
allegation of bad faith raised by De Wolf in the same way, submitting that bad
faith cannot be presumed and that a simple omission on the bill of lading
cannot be inferred as bad faith. In other words, Traffic-Tech contends that the
goal of this hearing is to determine questions of law, and not to examine either
the intent or a particular state of mind of the parties.
[17]
Finally, Traffic-Tech submits that the Canadian courts
have not yet tested the question of whether the limitations of the Hague-Visby
Rules apply to undeclared on-deck carriage. However, it refers to a
decision of the England and Wales Court of Appeal whereby this question was
addressed in Daewoo Heavy Industries Ltd et al v Klipriver Shipping Ltd et
al, [2003] EWCA Civ 451 (The Kapitan Petko Voivoda) in the context
of the old Hague Rules, which provision is alleged to be analogous to Article
IV(5)(a) of the Hague-Visby Rules. This decision is said to be in
alignment with the new realities of modern commercial shipping industry, particularly
in respect to containerized shipping, for which the risks of on-deck carriage
are considerably diminished.
(3)
Conclusion
[18]
So, Traffic-Tech’s answer to the first question
is negative, in that the undeclared on-deck carriage of the cargo under the
Traffic-Tech bill of lading does not prevent it from relying on the Hague-Visby
Rules.
[19]
In regards to the second question, Traffic-Tech submits
that it can avail itself of the limitations of the Hague-Visby Rules, that
the amount must be calculated pursuant to its Article IV(5)(a), and that the
only exception to the “in any event” provision
is the one provided for in Article IV(5)(e) which is not at play here. The loss
claimed by De Wolf may thus not exceed 666.67 units of account per package or 2
units of account per kilogram of gross weight of the goods lost or damaged,
whichever is higher.
B.
De Wolf (plaintiff)
(1)
Failure to disclose the on-deck carriage precludes
Traffic-Tech from relying on any limitation of liability
[20]
In its memorandum, De Wolf addresses question 1
differently than the question determined by the Court. De Wolf particularly
questions if the undeclared on-deck carriage of
the cargo under the bill of lading prevents the defendant from relying on the
carrier’s limitations of liability provided for in the Hague-Visby Rules.
De Wolf stresses the fact that it was never notified that its containerized
shipment would be stowed on the deck of the vessel, and was only made aware of
this once it was alerted of its loss. It submits that the undeclared deck cargo
prevents Traffic-Tech from relying on the limitations of liability provided for
in the Hague-Visby Rules.
[21]
De Wolf exposes the special risks associated
with on-deck cargo, the additional measures that must be taken to protect and
insure the goods when they are so shipped, and the fact that deck carriage is,
as per Article III(2) of the Hague-Visby Rules, improper stowage.
Hence, De Wolf submits that when the place of stowage is not mentioned on a
bill of lading, i.e. a clean bill of lading, it is understood that the goods
are to be carried under deck. To carry them on deck without prior declaration
is thus improper.
[22]
More precisely, De Wolf first submits that the Hague-Visby
Rules apply, but that the limitation of liability does not. Indeed, De Wolf
submits, contrary to Traffic-Tech’s position, the latter’s failure to disclose
the on-deck carriage precludes it from relying on any limitation of liability.
Concluding otherwise would be to reward the carrier for failing to its
obligation to declare on-deck stowage, in breach of contract, and contrary to
the good faith requirement read into Article 1(c) of the Hague-Visby Rules.
[23]
De Wolf relies on professor William Tetley’s
assertion that the carrier cannot avail itself of the limitation if it has
omitted to declare the on-deck stowage, particularly so in light of the good
faith obligation now read into Canadian common law contract (Bhasin v Hrynew,
2014 CSS 71). De Wolf contends that Traffic-Tech should not benefit from the Hague-Visby
Rules as it acted in bad faith in stowing the goods on deck in breach of
the bill of lading. Indeed, according to De Wolf, had Traffic-Tech acted
in good faith, it would have indicated the on-deck stowage on the bill of
lading and, as such, would not have benefited from the Hague-Visby Rules.
[24]
Second, De Wolf submits that the words “in any event” of Article IV(5)(a) refer to the events
listed under Article IV(2), reproduced in annex. De Wolf hereby relies on professor
Tetley’s assertion that “those words should be
construed to mean that the package limitation applies where the carrier fails
to prove its right to total exoneration from liability under any of the
exception of art. 4(2)(a) to (q)” (William Tetley, Marine
Cargo Claims, 4th ed (Cowansville: Les Éditions Yvon Blais, 2008 at 1587).
[25]
De Wolf distinguishes the English caselaw relied
upon by Traffic-Tech, pointing out that Canadian Courts are not bound by
decisions of English Courts, that professor Tetley called the decision “unfortunate and flawed”, and that it was rendered
under the old Hague Rules. De Wolf contends that the Court cannot rely
on the case of The Kapitan Petko Voivoda as Article IV(5) of the Hague-Visby
Rules comprises an exception to the limitation of liability (Article
IV(5)(e)) that was not included in the old Hague Rules. It also
distinguishes the decision St-Siméon Navigation Inc v A Coutier &
Fils Limitée, [1974] S.C.R. 1176 [St-Siméon] where there was a liberty
clause, i.e. a liberty to stow on deck clause, and no violation of the contract
of carriage, as well as the decision Timberwest Forest Ltd v Gearbulk Pool
Ltd, 2001 BCSC 882 where the owner of the cargo was aware that his shipment
would either be carried on deck or under deck. However, in the case at hand, De
Wolf contends that, as there was no liberty clause in the bill of lading, it was
not aware that its shipment could be stowed on deck.
[26]
Thirdly, De Wolf contends that the stowage of
the goods on deck constitutes gross negligence.
(2)
Contract of carriage is governed by the common law
[27]
As the contract of carriage between the parties is
not subject to the limitations of the Hague-Visby Rules, De Wolf
argues that the case must thus be decided based on the Canadian common law
principles, as incorporated within Canadian maritime law, under which there are
no limitations of liability.
(3)
Conclusion
[28]
In conclusion, De Wolf answers question one in
the positive, in that the Hague-Visby Rules apply. However, the
undeclared on-deck carriage of the cargo prevents Traffic-Tech from relying on
the limitations of liability provided for in same Hague Visby Rules.
[29]
On question number 2, De Wolf submits that due
to bad faith or gross negligence, or because the words “in
any event” of Article IV(5)(a) refer to the events listed under Article
IV(2), Traffic-Tech cannot rely on the limitation of liability provided for in
the Hague-Visby Rules and, as common law applies, it is entitled to the
amount of its actual loss without limitation.
VI.
Analysis
A.
Does the undeclared on-deck carriage of the
cargo under the Traffic-Tech bill of lading prevent the defendant from relying
on the Hague-Visby Rules?
[30]
For the reasons exposed hereinafter, the Court
sides with Traffic-Tech and answers the first question in the negative. Hence,
Traffic-Tech’s undeclared on-deck carriage of De Wolf’s goods does not prevent
it from relying on the Hague-Visby Rules.
[31]
This question of law is answered by examining the
relevant legislative provisions, the definition of “goods”
under the Hague-Visby Rules, and the Canadian and international caselaw.
(1)
Legislative provisions
[32]
The International Convention for the Unification of Certain
Rules of Law relating to Bills of Lading, better known as the Hague
Rules, was concluded at Brussels on August 25, 1924. It was amended in 1968
by the Protocol to Amend the International Convention for the Unification of
Certain Rules of Law Relating to Bills of Lading to become the Hague-Visby
Rules. The Hague Rules were incorporated in Canadian law through the
Water Carriage of Goods Act, SC 1936, c 49. Afterwards, the Hague-Visby
Rules came into force first through section 7 of the Carriage of Goods
by Water Act, SC 1993, c 21, and then through section 43 of the Marine
Liability Act, being inserted in its schedule 3. The Hague Rules and
the Hague-Visby Rules may herein collectively be referred as the Rules
except where reference to a specific convention is required.
[33]
The Hague-Visby Rules have force of law in Canada in
respect of contracts for the carriage of goods by water between different states,
as well as in respect of contracts for the carriage of goods by water from one
place in Canada to another place in Canada, unless there is no bill of lading
and the contract stipulates that those Rules do not apply (Marine Liability
Act, s 43). They enact the responsibilities, liabilities, rights and
immunities of the carrier in relation to the loading, handling, stowage,
carriage, custody, care and discharge of goods covered by a contract of
carriage by water (Hague-Visby Rules, Article II).
(2)
Definition of “goods” in Article 1(c) of the Hague-Visby Rules
[34]
Goods, wares or merchandise excluded by the definition of goods
are not subject to the Hague-Visby Rules, while to the contrary goods
that are included in the definition will be so subject. Article I(c) of the Hague-Visby
Rules, like Article I(c) of the Hague Rules, defines “goods” as including “goods, wares, merchandise and articles of
every kind whatsoever, except live animals and cargo which by the contract
of carriage is stated as being carried on deck and is so carried” (our emphasis).
[35]
As per the aforementioned definition, in order for cargo not to
be regarded as “goods”,
it must not only be carried on deck, but also be stated in the contract of
carriage as being so carried. The late professor William Tetley confirms that “neither the carrier nor the shipper may
benefit from or be subject to the Rules, provided that: a) the bill of lading
on its face states that the goods are carried on deck, and b) the cargo is in
fact carried on deck” (Tetley at 1569).
[36]
Therefore, the Hague-Visby Rules will apply to cargo
carried under deck while the bill of lading states that the cargo is carried on
deck, and vice versa (Julian Cooke et al, Voyage Charters, 4th ed
(London: Lloyd’s Shipping Law Library, 2014) at 1018).
[37]
In this case, it is undisputed that the bill of lading did not
mention on-deck carriage, and that the goods were carried on deck. As one of
the two conditions is not met, the cargo cannot be excluded from the definition
of “goods”, and it is
thus subject to the Hague-Visby Rules.
(3)
Caselaw
[38]
The caselaw confirms this interpretation. In Grace
Plastics Ltd v Bernd Wesch II (The), [1971] FC 273 [Grace Plastics],
the plaintiff purchased two reactors along with certain equipment and arranged
with a forwarder to ship them to Canada. The contract between the forwarder and
the shipping company detailed that the reactors would be carried on deck and
the rest of the shipment under deck but four parcels were in fact loaded on
deck together with the two reactors, with the forwarder's consent. The Court
applied the definition of “goods” in Article I
of the old Hague Rules to decide that the contract of carriage did not
contemplate the carriage of the three parcels on deck. Therefore, according to
the Court, those three parcel did not fall “within the
exception from the definition of “goods” in the Hague Rules even though the
forwarder's Hamburg agent did subsequently verbally acquiesce in their being so
carried” (Grace Plastics at para 14). On the contrary, as the
contract of carriage provided for the carriage of the two 70 ton reactors on
deck, and as they were so carried, the contract of carriage was not governed by
the Hague Rules in relation to those two reactors.
[39]
In St-Siméon, the Court concluded that a provision that “goods stowed on deck shall be deemed to be
stated as so stowed, without any specific statement to this effect, is in
violation of the Rules” (St-Siméon
at 1179). Indeed, in St-Siméon, the carrier relied on a clause in the
bill of lading excluding liability for goods stowed on deck. The clause
provided that the goods “may be stowed
on or under the deck at the discretion of the carrier; and when they are stowed
on deck they shall, by virtue of this provision, be deemed to be declared as so
stowed, without any specific statement to this effect on the face of the bill
of lading. With respect to goods stowed on deck or stated on the face of the
bill of lading to be stowed, the carrier assumes no liability for any loss,
damage or delay […]”. This provision was deemed contrary to the then
Carriage of Goods by Water Act, RSC 1952, c 291 and to the Rules, and was
therefore null and void. Hence, in order to be excluded from the definition of
“goods”, cargo must be
stated in the contract of carriage as being carried on deck in addition to
being so carried.
[40]
Similarly, in a situation where, according to the bill of lading,
“some” cargo was to be
carried on deck, the Rules have been held to apply. This indication did not
sufficiently identify which parts of a cargo were carried on deck, and made it
impossible for the parties to assess their risks and responsibilities for the
future. Indeed, in Timberwest Forest Ltd v Gearbulk Pool Ltd, 2001 BCSC
882, it was to be determined whether the lumber shipped was considered as “goods” under
the Rules. If the lumber was “goods”,
the exclusion clauses would be void. On the bills of lading, the notation “Stowage: 86% OD 14% UD” was included. The Court applied a strict construction of the
definition of “goods” in the Hague-Visby Rules. The trial judge found that
the percentages included on the bills of lading were unreliable with respect to
each shipment and that the absence of identification of the specific packages
carried on deck and under deck made it impossible to determine the value of the
cargo carried on deck. The exclusion clauses included on the bills of lading
were held not to be valid or enforceable. This decision was confirmed by the
British Columbia Court of Appeal in Timberwest Forest Ltd v Gearbulk Pool
Ltd, 2003 BCCA 39 [Timberwest] at para 46:
In my view, the conclusions reached by the trial judge
reflect a construction of the definition of “goods” that accords with practical
affairs and business efficacy, in that certainty is necessary for the parties
to commercial transactions to assess their respective risks and determine the
appropriate price for their goods and services. It is not a construction that
creates a “more extensive restriction [on freedom of contract] than the language
used reasonably requires”, to quote McFarlane J.A. in H.B. Contracting Ltd. v.
Northland Shipping (1962) Co. Ltd. (1971), 24 D.L.R. (3d) 209 at 215 (B.C.C.A.).
[41]
In the cases mentioned
above, the exclusion included in the definition of “goods”
has been interpreted strictly. The strict application
of the two requirements of the Rules (contract of carriage stating cargo as
being carried on deck and cargo de facto carried on deck) benefited the
shippers when it rendered void the exclusion clauses at the expense of the
carriers.
[42]
Although
the situation at hand is different in that the bill of
lading contained no exclusion of liability clause, the conclusions reached
namely in St-Siméon and Timberwest, as well as in
Grace Plastics, should nonetheless prevail.
(4)
Conclusion
[43]
The containerized shipment of De Wolf does constitute
“goods” within the meaning of the Rules as, even
if it was carried on deck, it was not stated as being so carried on the
contract of carriage. The Court thus answers the first question in the
negative.
B.
In the negative, what are the limitations
applicable to the contract of carriage pursuant to the Hague-Visby Rules?
[44]
Having answered the first question in the negative, the Court
turns to the second question. For the reasons exposed hereinafter, the Court
finds that the limitation of liability provided for in Article IV(5)(a) of the Hague-Visby
Rules applies to the situation at hand.
(1)
Legislative provisions
[45]
Article IV(2) of the Hague-Visby Rules provides complete
exoneration to the carrier and the ship for loss or damage arising or resulting
from the circumstances listed in this article, such as acts of war or of public
enemies, among others.
[46]
Article IV(5)(a) on the other hand provides a limitation of
liability to the carrier and the ship “in
any event”, while Article IV(5)(e) provides that neither the
carrier nor the ship shall be entitled to the benefit of this limitation of
liability if “the damage resulted from
an act or omission of the carrier done with intent to cause damage, or
recklessly and with knowledge that damage would probably result”.
[47]
It is worth reproducing Article IV(5)(a):
Unless the
nature and value of [the] goods have been declared by the shipper before
shipment and inserted in the bill of lading, neither the carrier nor the ship
shall in any event be or become liable for any loss or damage to or in
connection with the goods in an amount exceeding 666.67 units of account per
package or unit or 2 units of account per kilogramme of gross weight of the
goods lost or damaged, whichever is the higher (emphasis added).
(2)
Doctrine and caselaw
[48]
The late professor Tetley considered the unauthorized on-deck
carriage to be a breach of contract of such magnitude that it should cause the
carrier to lose the benefit of the exoneration or limitation of liabilities
provided for in Article IV of the Hague-Visby Rules. He considered that
when the goods are carried on deck without any indication to that effect, “the carrier may not invoke the limitation
in the contract or of the Hague Rules which might benefit him, because there
has been a fundamental breach of the contract” (Tetley at 1581). Professor Tetley namely referred to the St-Siméon
case where the Supreme Court wrote:
The principle underlying the legislation in question, and the
purpose of the Rules annexed thereto, is to prevent shipowners from reducing
their liability below the standard contemplated therein. It must be said,
therefore, that without the required statement an exclusion of liability for
cargo stowed on deck is void, as held by Pilcher J. in Svenska Traktor v.
Maritime Agencies [[1953] 2 All E.R. 570], and Jackett C.J. in Grace Plastics
Ltd. v. The "Bernd Wesch II" [[1971] F.C. 273].
[49]
Professor Tetley also referred to American caselaw such as Searoad
Shipping Co v EI DuPont de Nemours, 361 F2d 833 (5th Cir 1966) [Searoad]
where the carrier was found liable for a loss that occurred while the goods
were stowed on deck despite issuing a clean bill of lading: “There being no legal justification for this
on-deck stowage of cargo shipped pursuant to an under-deck clean bill of
lading, this stowage amounted to a deviation casting the shipowner for the loss
which was directly and causally related to the deck stowage” (Searoad at para 16). He also referred to Encyclopaedia
Britannica v Hong Kong Producer, 422 F2d 7 (2d Cir 1969) where the fact
that a container was carried on deck without indication on the bill of lading
was considered as a deviation depriving the carrier of the $500 per package
limitation of the Carriage of Goods by Sea Act of the United States.
[50]
The England and Wales Court of Appeal, in The Kapitan
Petko Voivoda, held a different opinion. It rather concluded that unauthorized
on-deck carriage constitutes a breach of contract with no special added
characteristics, and considered the applicability of exception and limitation
clauses to be a question of construction of the contract. It concluded that unauthorized
on-deck carriage does not exclude the operation of the Hague Rules nor,
more particularly, the limitation of liability provided for in Article IV(5). Moreover,
the Court determined that stowing on deck in breach of contract could not be
assimilated to deviation from the contractual voyage or storing goods in a
warehouse other than that originally agreed, and that the duty of the Court in
such a case “is merely to construe the
contract which the parties have made” (at para 15). The words “in any event” of Article IV(5)(a) are interpreted as “in
every case” (at para 16), leading the court to decide that even when a
carrier carried cargo on deck in breach of a contract governed by the old Hague
Rules, it could “take advantage of Article IV rule
5 to limit his liability for loss or damage to that cargo” (at para 1).
[51]
It is worth noting that The Kapitan Petko Voivoda decision
was rendered under the old Hague Rules. As stated by Simon Baughen in
Shipping Law, 3rd ed (London UK: Cavendish Publishing Ltd, 2004) at 143, “[a] potential drawback of the latter
decision is that, under the Hague Rules, a carrier will still be entitled to
limit in circumstances in which, under the Hague-Visby Rules, it would have
lost the right to limit by virtue of Art IV(5)(e)”.
[52]
This situation was also examined in Canada in Grace
Plastics where the same interpretation prevailed and
where Article IV(5)(a) was applied literally. As discussed above, in that case,
four parcels were loaded on deck although they were supposed to be stowed under
deck. Some of the parcels were damaged, as the result of a failure to make the
ship seaworthy (Article III(1) of the Rules). The Court decided that the
plaintiff could “take judgement in respect of each of
these items for the amount of actual loss or $500”, hereby referring to Article
IV(5) of the old Hague Rules (Grace Plastics at para 48). In reaching
its decision, the Court also referred to Falconbridge Nick Mines Ltd v Chimo
Shipping Ltd, [1969] 2 Ex CR 261 at para 66:
The situation, then, if the Rules applied to
the tractor and generating set until they were lost, appears to me to be this:
If the loss resulted from unseaworthiness of the barge caused by want of due
diligence on the part of the carrier to make the barge seaworthy, the
exceptions from immunity in Article IV, Rule 2, are of no avail to the carrier,
but the limitation of liability in Rule 5, where the words "in any
event" are used, applies.
[53]
If we stick to “the
ordinary meaning to be given to the terms of the treaty in their context and in
the light of its object and purpose” (Vienna
Convention on the Law of Treaties, Can TS 1980 No 37, art 31(1); see also J.D.
Irving Ltd v Siemens Canada Ltd, 2016 FC 287 at para 32), hereby
constructing the words as the England and Wales Court of Appeal did, it appears
clear that the words “in any event” used in Article IV(5)(a) mean “in every case” and encompass
the case at bar. This can also be inferred from the French wording “en aucun cas responsable”, which
can be translated as “in no way
responsible”. Neither the wording of Article IV(5)(a)
nor the context of the article suggest that “in any
event” refers to the events listed under Article IV(2). Hence, the only exception to the limitation rule set out in
Article IV(5)(a) is the one provided by Article IV(5)(e), discussed further
below.
[54]
De Wolf submits that bad faith should bar a carrier from the
benefits of the Hague-Visby Rules. However, there is no evidence before
the Court that Traffic-Tech actually acted in bad faith as no evidence is to be
tendered in these proceedings. Hence, it is not for this Court to assess
whether Traffic-Tech acted in bad faith or not.
[55]
Finally, on the issue of fundamental breach, the Supreme Court of
Canada made it clear that “the time has
come to lay this doctrine to rest” (Tercon
Contractors Ltd v British Columbia (Transportation and Highways), 2010 SCC
4 at para 62). The Court notes that Professor Tetley associated the
unauthorized on-deck stowage to a fundamental breach of contract in its Marine
Cargo Claims book, published in 2008, hence two years before the
aforementioned decision of the Supreme Court of Canada was rendered. Interpreting
the words “in any event” as “in every case” is thus compatible with the exclusion of the doctrine of
fundamental breach in Canadian law.
[56]
De Wolf argues that Traffic-Tech cannot invoke
the benefit of the limitations of liability contained in Article IV(5)(a),
hereby relying on Article IV(5)(e) of the Hague-Visby Rules.
Traffic-Tech submits that this exception is not at play as, while De Wolf
alleges that the damage was caused by Traffic-Tech’s negligence, “the proceedings contain no allegation or proof of the damage
having been caused with the intent or knowledge on the part of the Defendant
that the damages would occur” (Defendant’s Memorandum of Fact and Law at
para 23).
[57]
The Court sides with Traffic-Tech as, once
again, it is not for the Court to decide if Article IV(5)(e) applies in these
proceedings as this would require an assessment of the facts.
(3)
Conclusion
[58]
Traffic-Tech may invoke the limitation of
liability provided for at Article IV(5)(a) of the Hague-Visby Rules,
despite the unauthorised on-deck carriage. Hence the limitations applicable to
the contract of carriage pursuant to the Hague-Visby Rules shall
not exceed “666.67 units of account
per package or unit or 2 units of account per kilogram of gross weight of the
goods lost or damaged, whichever is the higher” pursuant
to Article IV(5)(a).
[59]
Whether the exception provided at Article IV(5)(e) applies or not
is not for this Court to examine or decide.
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