Carriage of Goods by Road/Rail
Commentaries are intended as an introduction or overview of the topic. The commentaries for some topics are more detailed than others but none of them should be taken as a complete and full recitation of the law applicable to the topic.
Carriage of Goods by Road
The law applicable to carriage of goods by road depends on whether the carriage is intra-provincial (within a single province) or extra-provincial (between provinces or between a province and a foreign state).
Where the carriage is intra-provincial, the law of the province in which the carriage occurs applies and most provinces have legislation addressing the rights and obligations of the parties to a contract of carriage. Luckily, there is general, although not complete, uniformity between the various provincial statutes and regulations. For carriage within British Columbia, the governing regulation is Division 37 of the Motor Vehicle Act Regulations, BC Reg 26/58. (The section of the Motor Vehicle Act, RSBC 1996, c. 318, authorizing the making of these regulations is s.212.2(2)(g).)
In general, the provincial statutes require that the motor carrier issue a bill of lading in a more or less prescribed form that includes or incorporates by reference a number of required terms and conditions. These conditions generally: make the carrier liable for any loss or damage to the cargo;provide a limited number of defences to the carrier (Act of God, the Queen's or public enemies, riots, strikes or a defect or inherent vice in the goods); and, entitle the carrier to limit liability to $4.41 per kilogram ($2.00 per pound) unless the shipper declares a value for the cargo on the bill of lading. Notice of loss or damage must be given to the carrier within within 60 days after the delivery of the goods, or, in the case of failure to make delivery, within 9 months after the date of shipment of the goods. A final statement of the claim must be filed within 9 months after the date of shipment, together with a copy of the paid freight bill.
A frequent issue that arises, especially in the context of multi-modal carriage, is the carrier fails to issue a bill of lading. The result of such failure can disentitle the carrier to limit liability, if the applicable act requires the carrier to issue a bill of lading. (See for example, Valmet Paper Machinery Inc. v. Hapag-Lloyd AG, 2004 BCCA 518)
Where the carriage is extra-provincial, the Conditions of Carriage Regulations, SOR/2005-404 under the Federal Motor Vehicle Transport Act, RSC 1985, c 29 (3rd Supp) apply. Pursuant to these regulations "the conditions of carriage and limitations of liability that apply to transport by an extra-provincial truck undertaking are those set out in the laws of the province in which the transport originates, as amended from time to time, that are applicable to transport by a motor carrier undertaking within that province". In essence, for extra-provincial carriage, it is the law of the province of origin that applies. If there is no provincial law that applies, then the conditions of carriage and limitations of liability that apply are those agreed to by the parties.
Carriage of Goods by Rail
Rail carriage is governed by the Canada Transportation Act
and the Railway Traffic Liability Regulations, SOR/91-488
. Pursuant to s. 137 of the Canada Transportation Act a railway cannot not limit or restrict its liability except by means of a written agreement signed by the shipper or by an association or other body representing shippers. If there is no agreement, the railway's liability is limited or restricted to the extent provided in any terms and conditions that the Canadian Transportation Agency may have specified for the traffic; or as prescribe by regulation. (See Canadian Pacific Railway Company v. Canexus Chemicals Canada LP, 2015 FCA 283
for an in depth consideration of the effect of s. 137).
The Railway Traffic Liability Regulations specify that the railway is liable for any loss, damage or delay unless caused by: act of God; war or an insurrection; riot, strike or lock-out;
any defect in the goods; any act, negligence or omission of the shipper or owner of the goods;
an authority of law; or a quarantine. A notice of claim must be filed within the railway within 4 months. Although the regulations do not provide a limitation amount, most railways will limit their liability by contract.
Statutes and Regs
The database contains 35 case summaries relating to Carriage of Goods by Road/Rail. The summaries are sorted in reverse date order with 20 summaries per page. If there are more than 20 summaries, use the navigation links at the bottom of the page.
Please note that to facilitate easier browsing and indentification of a relevant case on small devices, we have truncated the summaries which requires you to click "more" to view a full summary. If you wish to view these summaries without truncation, click here
Carriage by Road – Limitation of Liability – Privity – Fundamental Breach – Unconscionability – Gross Negligence
Day & Ross Inc. v. Beaulieu, 2005 NBCA 25
This appeal from a judgment of the New Brunswick Court of Queen's Bench addresses many of the arguments usually advanced to defeat a carrier's right to limit liability pursuant to the Uniform Conditions of Carriage in force in most provinces. The case concerned the loss of a package valued at $1,350. The carrier accepted liability but relied on its limitation clause. At Small Claims Court it was held that the limitation clause did not apply to cases of gross negligence and that the failure of the carrier to sign the bill of lading rendered it unenforceable. At the Court of Queen's Bench it was held, first, that the failure to deliver the goods was a fundamental breach and, second, that there was no privity of contract between the carrier and consignee. The Court of Appeal held that in a contract for the carriage of goods the shipper enters into the contract for and on behalf of the consignee and therefore there is no lack of privity between the consignee and carrier. On the issue of fundamental breach the Court of Appeal held that fundamental breach is a matter of construction of a contract and that there was no ambiguity in the limitation provision that would prevent the carrier from relying on it. The Court of Appeal then considered whether such limitation clauses are “unfair, unconscionable or unreasonable” and concluded that they were not, in part, because they are mandated by the statutory framework. The Court of Appeal then considered the concept of gross negligence as a means of avoiding limitation clauses and concluded that this approach has been categorically rejected. Finally, the Court of Appeal considered the failure of the driver to sign the bill of lading and suggested that such an omission was so trivial it should not invalidate the contract. In result, therefore, the carrier was entitled to limit its liability.
Road Carriage – Limitation – Himalaya Clause – Failure to Issue Bill of Lading – Custom
Valmet Paper Machinery Inc. v. Hapag-Lloyd AG, 2004 BCCA 518
The Plaintiff was the shipper of a piece of heavy equipment from Helsinki to Port Alberni, British Columbia. The equipment was carried by sea from Helsinki to Vancouver and by truck from Vancouver to Port Alberni. Ten kilometres short of its destination the equipment fell off the truck and was a constructive total loss. The Defendant motor carrier admitted liability but claimed to be entitled to limit liability pursuant to the provisions of the Hapag-Lloyd bill of lading or, alternatively, pursuant to the terms of its own bill of lading and the provisions of the Motor Carrier Act or, in the further alternative, pursuant to custom. The trial Judge found that the Defendant could not rely upon the Hapag- Lloyd bill of lading as this was a “port to port” bill of lading which did not apply to the carriage beyond Vancouver. This finding was primarily based on a notation on the face of the bill of lading that the carriage was “pier to pier traffic”. (Although obiter dicta, the Judge considered an argument by the Defendant that it could rely upon a Himalaya clause in the Hapag-Lloyd bill of lading notwithstanding that it had failed to ratify the clause. The Defendant argued based on recent developments in the law of privity of contract that ratification of a Himalaya clause is no longer required. The Judge agreed.) The Judge then considered the effect of the Defendant’s own bill of lading and the provisions of the Motor Carrier Act. The Motor Carrier Act and Regulations expressly required the carrier to issue a bill of lading and to obtain the signature of the shipper at the time of pick up and further stipulated the information such a bill of lading should contain. The Judge found that the Defendant had not issued a bill of lading to the shipper at the commencement of the carriage and that the bill of lading that was later prepared during the course of carriage from Vancouver to Port Alberni did not comply with the requirements set out in the Motor Carrier Act. The Judge then considered the Defendant’s argument that it ought to be allowed to limit liability based on a custom in the industry that liability is limited to $4.40 per kilogram. The Judge found, however, that the custom was based on the legislation in the Motor Carrier Act and held that where the Act had not been complied with it would be inappropriate to circumvent the legislative requirements through the application of custom. The Judge did concede that in a case where both parties were aware that liability was to be limited the failure to issue a bill of lading would not prevent the court from enforcing the limitation. That was not the case here and, accordingly, the Judge held that the Defendant was not entitled to limit liability. On appeal, the British Columbia Court of Appeal held first that the ocean bill of lading created two regimes: the first covered the carriage by sea to Vancouver; the second covered the inland carriage from Vancouver. The Court of Appeal held that the “Multimodal Transport” clause of the bill of lading had the effect of authorizing Hapag-Lloyd to enter into a contract as agent for and on behalf of the Plaintiff for the onward carriage of the goods from Vancouver. The Court further held that the Himalaya clause in the bill of lading protected only sub-contractors of Hapag-Lloyd and was not effective in protecting carriers hired by Hapag-Lloyd as agent for the merchant, which was the case here. With respect to the issue of whether the Defendant could rely upon the limits of liability in the Motor Carrier Act and Regulations, the Court of Appeal noted that the Plaintiff was sophisticated and was aware that carriers inevitably limited their liability and for this reason elected to obtain insurance and not to declare a value for the goods. The Court of Appeal further noted that the custom or practice in this market was not to issue a bill of lading at the time the goods are picked up. Nevertheless, the Court held that such “usage is contrary to law, and an illegal usage, unless perhaps express consent is given to it, cannot avail”.
Road Carriage – Limitation – Failure to issue Bill of Lading
Byers v. United Parcel Service Canada Ltd., 2004 SKPC 66
In this case the Defendant courier sought to limit its liability pursuant to the uniform conditions of carriage passed under the Motor Carrier Act of Saskatchewan. The Court held, however, that the courier was not entitled to rely upon the limits when it had failed to issue a bill of lading as required by the statute.
Road Carriage – Limitation of Liability – Novation
Phoenix Bio-Tech Corp. v. Day & Ross Inc., 2003 CanLII 11031
This case concerned carriage of a package from Mississauga to Orillia, Ontario. The package contained goods that were required to be maintained at a temperature of between 2 and 8 degrees Celsius. The package was picked up on 7 August 2001 and a bill of lading was issued by the carrier and acknowledged by the shipper. The shipper, who was an experienced and knowledgeable shipper, did not declare a value in the bill of lading and did not give the carrier any special instructions either verbally or in the space provided on the bill of lading. When the package was not delivered over the next two days the shipper called the carrier and was told by the carrier that the package would be delivered the next day, Friday, 10 August 2001. The carrier attempted to deliver the package at 5:00 pm on 10 August but the consignee's office was closed. The carrier kept the package over the weekend and, on the instructions of the shipper, returned the package to the shipper the following Monday. At first instance the Small Claims Judge held that there had been a novation of the original contract of carriage and that as a consequence the carrier was not entitled to rely upon the limitation of liability contained in its bill of lading and the Truck Transportation Act of Ontario. On appeal, the appeal Judge held that as a matter of law there could be no novation of a written contract of carriage except by another instrument in writing. In the result, the carrier was entitled to rely upon the $2.00 per pound limitation.
Road Carriage – Water Damage – Insufficient Packaging
Trident Freight Logistics Ltd. v. Meyer’s Sheet Metal Ltd., 2003 BCCA 342
This was a counterclaim for water damage to a cargo of 19 pallets of galvanized sheet metal carried from Calgary to Nanaimo. The cargo was loaded onto a flat bed trailer in Calgary by employees of the shipper who placed tarpaulins over the pallets. The decision to use a flat bed trailer was made by the shipper because of the size of the various pallets. It was common ground that the usual method of conveyance was by a closed van. Upon delivery of the cargo at Nanaimo, it was received “clean and dry” without any exceptions. Under these circumstances, the trial Judge held that there was no liability on the part of the carrier. In fact, the trial Judge found that there was an implied agreement that the cargo owner assumed the risk of damage given that it chose to use a flat bed trailer and its employees loaded the cargo. On appeal, the British Columbia Court of Appeal held that the trial Judge erred in finding that there was an implied agreement that the cargo would be carried at the owner's risk. The Court of Appeal referred to the applicable statute and regulations which required the carrier to issue a bill of lading in the prescribed form and further noted that the bill of lading issued did not contain any “special agreement” or any agreement limiting the carrier's liability, both of which were required to be set out in the bill of lading. In view of the contents of the bill of lading and the statutory conditions the appeal was allowed and the Plaintiff was awarded damages.
Road Carriage – Limitation of Liability – Failure to issue Bill of Lading
Paine Machine Tool Inc. v. Can-am West Carriers Inc., 2003 BCCA 50
Two high precision machine tools carried by the Defendant were damaged when they struck an overpass. In answer to the Plaintiff's claim for damages, the Defendant argued that its liability was limited to $4.41 per kilogram pursuant to the Uniform Conditions of Carriage in Part 7 of the Regulations under the Motor Vehicle Act of British Columbia. At first instance, the trial Judge held that the Defendant was not entitled to avail itself of the limitation provisions since the bill of lading did not substantially comply with the requirements of s.9.21 of the Regulations and was never sent to the Plaintiff and, therefore, was never “issued”. Further, the trial Judge held the bill of lading failed to reflect the prior course of dealings between the parties. The Court found as a fact that the carrier had previously advised the Plaintiff that insurance up to a value of $500,000 was included in freight rates. On Appeal by the Defendant, the British Columbia Court of Appeal held the Motor Vehicle Act Regulations should be strictly complied with by the carrier “unless it is proved that the parties agreed to other terms for their contract, either expressly, by course of dealings or industry practice”. Non-compliance with the Regulations in this case was not excused because, inter alia, the evidence of the prior course of dealings was conflicting. The Court of Appeal further noted that the obligation “on the carrier is to clearly establish the liabilities and obligations of the parties prior to shipment. It would be inappropriate for the appellant to be allowed to rely on the benefits of the conditions contained in the Regulations when it failed to comply with the obligations they impose.” In the result, the appeal was dismissed. (Note: The comments in this case regarding industry practice should be compared with those in Valmet Paper Machinery Inc. v Hapag-Lloyd AG, 2004 BCCA 518.)
Carriage by Road – Limitation of Liability – Notice – Agreement to Insure
Shooters Production Services Inc. v. Arnold Bros. Transport Ltd., 2003 BCSC 92
This was an action for damage to a trailer transported by the Defendant from Ontario to British Columbia. The Defendant carrier argued that it was not liable because it had been agreed that the Plaintiff would provide insurance and because a final statement of claim was not issued within 9 months. Moreover, the Defendant argued that it was entitled to limit its liability to $2.00 per pound pursuant to the terms of its bill of lading and the provisions of the Regulations under the Motor Vehicle Act of British Columbia (which essentially enact the Uniform Conditions of Carriage). The Court held that the agreement that the Plaintiff would insure was not an agreement exculpating the Defendant from liability in the event it was negligent. Further, the Court held that the requirement that a final statement of claim be filed in 9 months was not a limitation period but a notice provision and that it had been substantially complied with. Finally, the Court held that the failure of the Defendant to issue a bill of lading at the time of shipment disentitled the Defendant from relying upon the limitation provisions in the bill of lading and the Regulations.
Road Carriage - Damage to Cargo - Agreement to Insure
Wenner v. Willow Creek Carriers Inc., 2002 SKCA 113
This case concerned damage to two grain dryers carried from Nebraska to Saskatchewan. The damage occurred when the dryers struck an overpass. The Defendant carrier argued that it was entitled to limit its liability to $2.00 per pound pursuant to the provisions of the Motor Carrier Act and the Regulations. However, both at trial and on appeal it was found that there was an agreement that the Defendant would insure the cargo for its full value and that the Defendant had not done so. It was held that the limitation provisions of the Motor Carrier Act and Regulations did not apply to such a breach.
Road Carriage - Convenient Forum
SC International Enterprises Inc. v. Consolidated Freightways Corp., 2002 BCSC 767
This case concerned shortage to a cargo shipped from Mexico to New Jersey. The shortage was discovered during the course of carriage at Laredo, Texas. The issue in this motion was whether British Columbia was an appropriate jurisdiction. The motions Judge held that British Columbia had jurisdiction to hear the dispute based on the facts that the Plaintiff resided in British Columbia, the invoicing and payment for the shipment occurred in British Columbia and the damages were suffered in British Columbia. However, the Judge held that either Mexico or Texas would be a more convenient forum since the witnesses would be in those locations, the loss occurred in one of those locations and it might be necessary to prove the law of one of those locations. Accordingly, the Judge held that the case should be heard in either Mexico or Texas if the Defendants agreed. Absent an agreement, the British Columbia Supreme Court would assume jurisdiction.
Alberta Garment Manufacturing Co. v. Purolator Courier Ltd., 2000 ABPC 36
The Plaintiff had delivered goods to the Defendant for carriage. On the face of the bill of lading the Plaintiff inserted a clause requiring the Defendant to obtain a certified cheque before effecting delivery. The Defendant did not do so and the Plaintiff was never paid for the goods. The Defendant relied upon a term in the bill of lading that limited its liability for failure to obtain a cheque to the freight charges. The Plaintiff argued that the Defendant was not entitled to limit its liability as the bill of lading was not signed by the Defendant as required by the Alberta regulations governing bills of lading. The Court held that under the applicable Alberta legislation if no bill of lading is issued or if the bill of lading does not comply with the regulations the Defendant is only entitled to rely upon the statutory limitation of $2 per pound. However, as that limitation applies only to loss of or damage to the goods it was of no assistance to the Defendant. In the result, the Defendant was not entitled to limit its liability. (Note: It is debatable whether a carrier who fails to issue a bill of lading or who issues a bill of lading not in compliance with the regulations may nonetheless rely upon the statutory limitation of $2 per pound. See, for example, Arnold Bros. Transport Ltd. v Western Greenhouse Growers Cooperative, (1992), 69 BCLR (2d) 108 and Corcoran v Ehrlick Transport, (1984), 46 OR (2d) 225, which are to the contrary.)
Boutchev v. D.H.L. International Ltd., 2000 ABPC 1
The issue in this small claims matter was whether the Defendant courier could rely upon terms in its waybill limiting its liability. The Court found that the terms on the waybill had not been properly brought to the attention of the Plaintiff and that the totality of the terms and conditions were "neither plain nor unambiguous" and were "quite simply legal gobbledygook". In result, the Plaintiff was awarded judgment.
Motor Carriage - Limitation - Liability of Subcontractor
Haldane Products Inc. v. United Parcel Service Canada Ltd., 1999 No. 23258 (Ont. S.C.).
Although not a sea carriage matter, this case is nevertheless of interest. The Plaintiff entered into a contract with UPS for the carriage of cargo to Vancouver. The contract was governed by UPS's service conditions which were provided to the Plaintiff in advance. These conditions provided that the liability of UPS was limited to $100 for loss of or damage to cargo unless a higher value was declared. No value was declared for the shipment. UPS subcontracted the carriage to the second Defendant. During the course of the carriage the trailer caught fire and the Plaintiff's goods were lost. The court held that UPS was entitled to rely upon the limitation provision in its service conditions. The subcontractor, however, was held not be entitled to the benefit of the limitation clause. The court noted the decision of the Supreme Court of Canada in London Drugs Ltd. v Kuehne & Nagel International Ltd., (1992) 97 D.L.R. (4th) 261, and held that it would be implicit that employees of UPS would perform the obligations of UPS under the contract. The court reasoned that "if it is implicit that UPS would act through its employees, it follows that participation by subcontractors was implicitly excluded". In result, the subcontractor was not entitled to limit its damages.
Road Carriage - Limitation
North American Van Lines v. Rosenau Transport Ltd., 1998 ABPC 149
This was an action for damage to a cargo of photocopiers. The Court held that the damage was caused by the negligence of the Defendant in failing to properly secure the photocopiers for transit. The defence was that there was an agreement between the parties that the Defendant would not be liable for any damage. The evidence was that the Defendant had verbally advised the Plaintiff prior to the shipment that the Defendant would accept no liability for the shipment. This agreement was evidence by a term in the bill of lading stating "Uncrated - no claim to carrier". Notwithstanding this, the Court found that the Plaintiff had not signed or initialed the term "no claim to carrier" and that the clause was in conflict with the maximum liability provision of the bill of lading. The Court further held that even if the exclusion applied it would cover only the risks incidental to transportation and would not relieve the Defendant from liability for its negligence. In result, the Plaintiff was given judgment for limitation amount of $2.00 per pound.
Rail Carriage - Contribution
Canadian National Railway v. Southern Railway of British Columbia, 1998 CanLII 3867
Both the Plaintiff and Defendant in this matter were rail carriers. They had entered into an agreement with Johnson & Johnson for the carriage of goods from Quebec to British Columbia. Some of the goods were destroyed by fire. The Plaintiff paid Johnson & Johnson the full amount of its loss. Subsequently, pursuant to an agreement the matter was referred to arbitration. In the arbitration it was held that the Defendant was fully responsible for the loss. The Plaintiff then brought this action for reimbursement. The Defendant argued, inter alia that the claim of the Plaintiff was time barred and that the Plaintiff had paid Johnson & Johnson more than the limitation amount to which Johnson & Johnson was entitled. With respect to the time bar issue, the Defendant argued that the claim was for property damage and that the applicable limitation under the Limitation Act of British Columbia was two years. The Court held that, although a claim by Johnson & Johnson might be for property damage, the claim by the Plaintiff was for breach of contract (i.e.. the agreement to refer to matter to arbitration and abide by the results thereof) and was therefore subject to a six year limitation period. On the issue of the limitation amount the Defendant relied on the fact that Johnson & Johnson prepared a bill of lading that stated liability was limited to $2.00 per pound. The Court found, however, that the original agreement between the parties was that the carriers would be liable for the value of the goods and that the bill of lading was nothing more than a record of the goods. It was not signed by the parties and did not have the effect of varying the original agreement.
Jurisdiction over motor carriers
Matsuura Machiner Corporation et.al. v. Melburn Truck Lines Ltd, 1997 CanLII 4905
These three appeals concerned the jurisdiction of the Court over a road carrier in a through transit situation. Specifically, the Court considered whether s. 22(2)f (which grants the Court jurisdiction over claims "arising out of an agreement relating to the carriage of goods on a ship under a through bill of lading") supported jurisdiction against the road carrier. The Court of Appeal held that this section did not allow an action against a road carrier who was not a party to the through bill of lading.