Carriage of Goods by Sea
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 Sea
Part 5 of the Marine Liability Act (formerly the Carriage of Goods by Water Act) governs the carriage of goods by sea to or from Canada and within Canada. The Act implements the Hague-Visby Rules and provides for the possible future implementation of the Hamburg Rules. Pursuant to the Hague-Visby Rules the carrier of the cargo is liable for any loss of or damage to the cargo unless the loss or damage is caused by an excepted peril. The carrier is, however, entitled to limit liability to the greater of 666.67 SDRs per package (approximately C$1,200) or 2 SDRs per kilogram (approximately C$3.60). The time limit for bringing a suit against the carrier is one year from the date of discharge of the goods.
For an overview of Canadian Law of Carriage of Goods by Sea see the paper Canadian Law of Carriage of Goods by Sea: An Overview
For a list of the cargo regimes in force in various countries see A SURVEY OF THE CARGO BY SEA CONVENTIONS, prepared by George F. Chandler III of Hill, Rivkins & Hayden, Houston, Texas.
Statutes and Conventions
The database contains 66 case summaries relating to Carriage of Goods by Sea. 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.
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Freight - Set-off - Hague-Visby Rules - Limitation/Prescription - Exculpatory Clauses
Mediterranean Shipping company S.A. v. Sipco Inc., 2001 FCT 1046
The Plaintiff in this action claimed against the Defendant for ocean freight owing in respect of the carriage by sea of nine containers from Toronto to the Persian Gulf. The Defendant admitted non-payment of freight but alleged that it was entitled to a set-off and brought a counterclaim alleging breaches of the contract by the Plaintiff. Specifically, the Defendant alleged that seven of the containers were shipped together, that six of those seven containers arrived on time at the port of discharge, that the seventh container did not arrive until months after its scheduled arrival, and that as a consequence the clearance through customs of all of the containers was delayed. The issues in the case were the entitlement to set-off and whether the Plaintiff had been negligent in its handling of the containers. On the first issue the Trial Judge reviewed the Anglo-Canadian authorities and concluded that there could be no right of set-off against freight under a contract for the carriage of goods by sea unless the contract specifically provided otherwise. As the contract did not provide otherwise, there was no right of set-off. The Trial Judge next turned to the counterclaim. The first defence raised against the counter-claim was that the claim had not been brought within the one year time period fixed by the Hague-Visby Rules. The success of this argument depended upon whether the prescription period set by the Rules ran from the date of discharge or the date of actual or constructive delivery to the consignee. The Trial Judge held that the prescription period runs from delivery not discharge and that any clauses in a bill of lading declaring delivery takes place at discharge are null and void. The Trial Judge further held that delivery takes place on the day the last piece of cargo is delivered, the seventh container in the case at bar. Accordingly, the Judge held the counterclaim had been commenced within time. The Judge next considered various defences raised by the clauses in the bill of lading, namely: a scope of voyage clause which gave the carrier complete discretion as to the ports at which to call; a period of responsibility clause which provided the carrier was not liable for damages occurring in the period before loading or after discharge; and a clause providing that there could be no claims for failure of the carrier to meet arrival or departure dates. The Judge held that these various clauses were contrary to the Hague-Visby Rules and therefore null and void pursuant art. 3 r. 8 of the Rules. The Judge next considered the damages suffered as a consequence of the breach of contract by the Plaintiff but found that the Defendant had failed to prove any damages. In result, therefore, the claim for freight was allowed and the counterclaim was dismissed.
Hague-Visby Limitations - Turkish Law
Barzelex v. The "EBN Al Waleed", 2001 FCA 111
This was an appeal from the Federal Court Trial Division. The bill of lading contained a general paramount clause incorporating the Hague Rules as enacted in the country of shipment. The country of shipment was Turkey. However, Turkey had enacted the Hague Rules twice into its legislation. Initially, the Rules were enacted through ratification of the convention. This enactment gave a limitation of 100 pounds sterling gold value (approximately $12,500) per package or unit. Later the Rules were enacted as part of Turkey's Commercial Code. This enactment, as amended, gave a limitation of 100,000 Turkish Lire (approximately $2.31) per package or unit. At issue in the case was which of these limitations applied. The Plaintiff argued and led expert evidence that the enactment in the Commercial Code applied only to internal shipments. The Trial Judge found as a fact however that under Turkish law the Commercial Code applied to international shipments as well as internal shipments. The Plaintiff then argued that a $2.31 limitation per package or unit was unconscionable and should not be enforced. The Trial Judge held that it was the result of a contractual provision which the Plaintiff could have avoided by declaring a value for the goods. The Plaintiff appealed. The Federal Court of Appeal dismissed the appeal saying they were not satisfied the Trial Judge had erred and that on the evidence before him it was open to him to make the findings he did.
Standing to Sue - Collisions - Insurance - Subrogation
Porto Seguro Companhia De Seguros Gerais v. The “Federal Danube” et al., 2001 CanLII 22115 (FC)
This was the re-trial of an action that had been previously dismissed by the Federal Court Trial Division in a judgment reported at  82 F.T.R. 127. That judgment was ultimately overturned by the Supreme Court of Canada and a new trial ordered on the grounds that the Trial Judge erred in refusing to hear three expert witnesses because assessors had been appointed by the court (see  3 S.C.R. 1278).
The Plaintiff was the cargo underwriter who had indemnified the cargo owners for damages suffered as a result of a collision in the St. Lawrence Seaway between the “Beograd” and the “Federal Danube”. The Plaintiff argued that the “Federal Danube” was wholly at fault for the collision and liable for the damage to the cargo in the principal amount of $4.4 million. There were two issues in the case; the standing of the Plaintiff to bring the action in its own name and the liability for the collision. On the first issue, the Defendant argued that under Canadian maritime law the Plaintiff ought to have commenced the action in the name of the cargo owners. The Court, however, held that the matter was governed either by the law of Brazil (where the insurance contract was made) or the law of Quebec and that in either case the insurers became subrogated to the rights of their insured upon payment and were entitled to bring the action in their own name. With respect to the second issue, the liability for the collision, the Court held that the “Beograd” was wholly at fault for the collision. The faults found against the “Beograd” included: navigating through the anchorage area rather than in the navigation channel; navigating at an unsafe speed; and, failing to keep out of the way of an anchored vessel. In reaching the conclusion that the “Beograd” was wholly at fault the Court noted that where a vessel underway strikes a vessel at anchor the underway vessel is prima facie at fault unless it is proven the accident could not have been avoided by the exercise of ordinary skill. In the result, the Plaintiff’s action was dismissed.
Summary Judgment - Misdelivery
Kanematsu GMBH v. Acadia Shipbrokers Limited et al., 2000 CanLII 15572
This was an appeal from a motion in which the Plaintiff was granted summary judgment against the Defendant charterers for having induced the ship owner to deliver up the cargo to a third party without proper presentation of the bill of lading. The Defendants argued that the case was not appropriate for summary judgment as the facts were too complex. The motions judge, however, held that the fundamental issue was whether the cargo had been delivered without the surrender of the original bill of lading. As this was admitted, summary judgment was granted. On appeal, the Federal Court of Appeal set aside the order for summary judgment. The Court of Appeal held that the Defendants were not the ship owner and therefore were not prima facie liable for delivery of the cargo without proper presentation of the bill of lading. The case against the Defendants was for inducing breach of contract by the shipowner. This required proof that: (1) the Defendants knew there was a contract; (2) they induced its breach; and, (3) damages were suffered as a consequence. The Court of Appeal held that there was a real doubt whether the Defendants had knowledge of a contract between the Plaintiff, as holder of the bill of lading, and the shipowner. Further, the Court of Appeal thought there was doubt about whether the Defendants intended to induce a breach of the contract. These were serious factual issues which required a trial on the merits.
Claim for Freight - Set-off - Jurisdiction - Warehousing
Pantainer Ltd. v. 996660 Ontario Ltd., 2000 CanLII 15080
This was a claim for freight charges owing. The Defendant alleged that it was entitled to a set-off for damage caused to cargo carried by the Defendant. The Court held the general rule was that freight is to be paid without deduction and that the Defendant accordingly had no right of set-off.
One of the issues in this case was whether the Defendant’s counterclaim against the Plaintiff for damage caused to cargo in a warehouse after the carriage by sea was within the jurisdiction of the Federal Court as coming under maritime law. The Court held that claims for warehousing and storage that arose out of contracts of the carriage of goods by sea are within the jurisdiction of the Court.
Costs of Discharge and Re-stowage
Canadian Forest Products Inc. v. Termar Navigation Co. Inc., 1997 CanLII 6323 2000 CanLII 15054
This was an appeal from a judgment of the Trial Division reported at  2 F.C. 328. The claim was by the carrier to recover the costs of discharging and re-stowing the Plaintiff's cargo after it shifted when the vessel encountered a large wave in rough seas. The Trial Judge held that the Plaintiff was not obliged to pay the discharge and re-stowing costs either under the terms of the bill of lading or on the basis of bailment, agency of necessity, quantum meruit or unjust enrichment. On appeal, the Court of Appeal merely indicated that they were in substantial agreement with the reasons of the Trial Judge and dismissed the appeal.
Breach of Transportation Agreement
Transport Navimex Canada Inc. v. Canada, 2000 CanLII 14979
In this matter the Defendant, Transport Canada, had invited the submission of bids to transport cargo to Greenland. The Plaintiff submitted a bid to carry the cargo on the "Glencoe" which was accepted by the Defendant. After acceptance, the Defendant increased the amount of cargo it
wished to transport and purported to terminate the agreement with the Plaintiff on the grounds that the "Glencoe" did not have the capacity to carry the increased cargo. The Plaintiff took the position throughout that the "Glencoe" was capable of carrying the increased cargo and brought this action for breach of contract claiming the costs of chartering the "Glencoe", expenses and lost profits. At trial, the Trial Judge held: (1) that the "Glencoe" was not capable of carrying the increased cargo; (2) that the Defendant had unlawfully and without justification terminated the contract with the Plaintiff; but (3) that the Plaintiff had not suffered any damages. The Plaintiff appealed the first and third findings. On appeal, the Federal Court of Appeal held that the first finding was one of fact based on the Trial Judge’s assessment of expert evidence and that the judge made no "palpable and overriding" or "specific and identifiable" error. Accordingly, this finding was affirmed. However, the third finding that the Plaintiff had suffered no damages was reversed. This finding was based on the fact that the Plaintiff had not personally chartered the "Glencoe". The Court of Appeal held that as the Defendant never questioned the fact that the Plaintiff had chartered the "Glencoe" the Plaintiff did not have a duty to prove this fact. Further, and in any event, the Court of Appeal held that the evidence established that the Plaintiff had chartered the "Glencoe", albeit through a related corporation. As a result, the Court of Appeal held that the Plaintiff was entitled to damages for the chartering of the "Glencoe" and for the lost profit calculated on the basis of the cargo the "Glencoe" could have carried.
Morlines Maritime Agency Ltd. v. IKO Industries Ltd., 1999 CanLII 9196
The issue in this case was whether the shipper was liable for the ocean carrier's freight charges when it had already paid the freight forwarder who went bankrupt without paying the carrier. The court relied upon the decision in C.P. Ships v Les Industries Lyons Corduroys Lte.,  1 F.C. 736, where it was held that the debtor/shipper must pay the creditor/carrier his freight charges unless the shipper establishes either:
1. that the carrier authorized the third party/forwarder to receive the money on his behalf, or,
2. that the carrier held the third party/forwarder out as being so authorized, or
3. that the carrier by his conduct or otherwise induced the shipper to come to that conclusion, or
4. that a custom of the trade exists to the effect that both carrier and shipper would expect payment to be made to the third party/forwarder.
The court held that the third and fourth branches of this test had been met. The court relied upon the fact that the carrier never dealt directly with the shipper and never advised the shipper that it expected payment from them. Even after the forwarder began to have financial difficulties the carrier never contacted the shipper. This was conduct, the court held, that induced the shipper to believe that the forwarder was authorized to receive payments on behalf of the carrier. With respect to the fourth branch of the test, the court was satisfied that both the carrier and shipper expected the shipper to make payment to the forwarder and the forwarder to make payment to the carrier.
Liability of Terminal Operator - Limitation Clause - Himalaya Clause
Braber Equipment Ltd. v. Fraser Surrey Docks Ltd., 1999 BCCA 579
This case involved damage to a container of equipment admittedly caused by the negligence of the terminal operator. The terminal operator sought to limit its liability to $100.00 per package pursuant to a limitation clause contained in its tariff. The Court found, however, that the Plaintiff had no knowledge of the tariff and was not bound by it. The Plaintiff's freight forwarder was aware of the tariff but as the decision to unload the container at the Defendant's terminal was made by the carrier and not the freight forwarder this did not assist the Defendant. The terminal operator further sought to rely upon the Himalaya clause in the carrier's bill of lading. The Court noted that the appropriate test to be met is the four point test enunciated in Scruttons Ltd. v Midland Silicones Ltd.,  A.C. 446 (i.e.. 1. that the bill of lading makes it clear that the stevedore is intended to be protected; 2. that the bill of lading makes it clear the carrier is contracting as agent for the stevedore; 3. that the carrier has authority from the stevedore to do that; and, 4. that any difficulties about consideration are overcome). The Court held that the terminal had failed to satisfy the third requirement. In obiter, the Court noted that if the Defendant was entitled to rely upon the Himalaya clause in the bill of lading there would be two inconsistent limitation provisions; the per package limitation under the bill of lading of 666.67 SDR per package and the $100 per package limitation under the Defendant's tariff. Following the decision in Meeker Log and Timber v The "Sea Imp VIII" (1996) 21 B.C.L.R. (3d) 101, the Court noted that two inconsistent exclusion/limitation clauses rendered both clauses null and void. On appeal, the terminal sought to re-argue the case on the basis of sub-bailment principles. The Court of Appeal declined to allow it to do so on the grounds that the record was not sufficient and there would be prejudice to the plaintiff. In result, the appeal was dismissed.
Carriage By Sea - Burden of Proof - Identity of Carrier
Voest-Alpine Stahl Linz GmbH v. The "Federal St. Clair" et al., 1999 CanLII 8635 (FC)
This was an action for damage to 35 steel coils. The coils were manufactured in Austria and carried by barge to Antwerp where they were loaded on board the Defendant vessel and carried to Montreal. A pre-loading survey at Antwerp noted some minor rusting to the coils. The cargo was not surveyed at Montreal. It was carried from Montreal to the consignee's premises where it was put in storage. Approximately two months later, when the coils were unrolled for use, they were discovered to be in a rusted condition. They were then surveyed and the surveyor concluded that the damage was attributable to contact with water in the vessel's holds (although only one of five samples indicated salt water contamination). The Defendants argued that the Plaintiff had failed to prove the damage occurred while the cargo was in its possession. The court, however, held that the Plaintiff had proven on the balance of probabilities that the damage occurred during the voyage from Antwerp to Montreal. The court further held that the burden was therefore on the Defendants to show the damage was caused by an excepted peril and that they had exercised due diligence to make the vessel seaworthy. The Defendants failed to discharge this burden. A secondary issue in the case was whether the time charterer of the vessel was liable together with the vessel's owner. On this issue the court held that the usual role of the time charterer is to find space on a vessel. Once it has booked the space the carrier or the owner issues the bill of lading which becomes the contract of carriage. The court found no specific undertaking by the time charterer to carry the goods and therefore the case against it was dismissed.
Deck Cargo Exclusion Clauses
Canadian Pacific Forest Products Limited et al. v. The "Beltimber" et al.,  4 FC 320
This was an appeal from a decision of the Trial Division. The case involved the loss of a part cargo of lumber carried on deck from Canada to Europe. The bills of lading were claused "on deck at shipper's risk" and clause 8 of the bill of lading was a "liberty" clause which specifically allowed the carrier to stow goods on deck. It provided that: "Goods stowed on deck shall be at all times and in every respect at the risk of the shipper/consignees. The carrier shall in no circumstances whatsoever be under any liability for loss of or damage to deck cargo, howsoever the same may be caused...". The Plaintiff argued, inter alia, that this clause did not protect the carrier as it did not include an express reference to negligence. The trial judge agreed with the Plaintiff and further noted that the express references to negligence in the "Both to Blame" and "Transshipment" clauses of the bill of lading implied negligence was not excluded in clause 8. On appeal, the Federal Court of Appeal agreed with the Trial Judge that negligence was not excluded. The Federal Court of Appeal held that the liability of a carrier of goods by sea is not confined to acts of negligence. Such a carrier is liable for failing to deliver the goods safely and for breach of the implied warranty of seaworthiness as well as for negligence. Because of the existence of these other heads of liability, the failure to include an express reference to negligence in the exclusion clause was fatal. The Federal Court of Appeal expressly distinguished the case of Mackay v Scott Packing and Warehousing Co.,  2 F.C. 36 (C.A.) in which a similarly worded clause was held sufficient to exclude liability for negligence. In doing so, the court noted that the Defendants in the Mackay case were freight forwarders who did not have the common law liabilities of a carrier by sea.
Suit Time Extensions
Riva Stahl GmbH v. The "Bergen Sea" et al., 1999 CanLII 8093
This was an appeal from a decision of the Trial Division in which an application for summary judgment by the Defendants based on a time limitation defence was allowed. The case illustrates the dangers to Plaintiffs of suit time extensions. The Plaintiffs in the case obtained a suit time extension from the shipowner to June 13, 1995. This extension was conditional on the Plaintiffs obtaining a similar extension from charterers. The Plaintiffs did obtain a suit time extension from charterers but it was to a date of June 30, 1995. This extension was also conditional on the Plaintiffs obtaining a similar extension from owners. The Plaintiffs were unaware of, or failed to appreciate that, the extensions were not similar in that they expired on different days. The Plaintiffs issued a Statement of Claim on June 28, 1995, two days before the charterer's extension expired but after the owner's extension had expired. Both Defendants brought a summary judgment application to dismiss the action as being out of time. The Trial Division granted the application holding that there was no binding agreement to extend suit time to either June 13, 1995 or June 30, 1995, and further holding that the Defendants had not waived the time bar defence and were not estopped from raising it by reason of their continued negotiations with the Plaintiffs. The Court of Appeal agreed with the Trial Judge that there were no effective time extensions in place when the action was commenced and that there was no waiver or estoppel.
Fraudulent Misrepresentation - Conversion
Westwood Shipping Lines v. Geo International Inc. et al., 1999 CanLII 7652
This was an action for fraudulent misrepresentation against the General Manager of the corporate Defendant. The corporate Defendant was the "Notify Party" on order bills of lading. The corporate Defendant obtained delivery of the cargo from the Plaintiff without surrendering the original endorsed bills of lading and without paying the purchase price to the shipper/vendor. In an earlier summary judgment motion ( Reasons dated June 24, 1998) the Plaintiff obtained judgment against the corporate Defendant and its President for conversion. The Plaintiff now sought judgment against the General Manager. The evidence established that the General Manager convinced the Plaintiff to release the goods by advising they were urgently needed and by representing that the original bills of lading would be forwarded when received. The Plaintiff argued that the General Manager knew the bills of lading would never be forwarded or was wilfully blind. The court, however, was not convinced that the General Manager had acted fraudulently. The court noted that, at the time, the corporate Defendant was a going concern and was receiving fifty to sixty containers per year. The court found it difficult to believe that the General Manager knew the goods would not be paid for. In result, the action was dismissed.
Kodak v. Racine Terminal (Montreal) Ltd., 1999 CanLII 7750
This was an application for summary judgment by a cargo owner for damage to a shipment of paper. The cargo was damaged by the crane operator of the Defendant terminal during unloading. The only issue in the case was whether the terminal could rely upon a Himalaya clause contained in the bill of lading. Although there was no written contract between the terminal and the ocean carrier authorizing the ocean carrier to insert a Himalaya clause, the terminal sought to rely upon a contract with the predecessor of the current carrier, whose business the current carrier had acquired. This contract, however, contained a clause prohibiting assignment unless consented to in writing. Express written consent was never obtained. The court held that failure to obtain the prior written consent was fatal. The court further held that the clause requiring written consent was fatal to the Defendant's alternate argument that there had been a novation of the contract. In result, the terminal was not entitled to rely upon the Himalaya clause.
Damages - Limitation - Interest - Costs
MacKay v. Scott Packing & Warehousing Co., 1999 CanLII 7401
This was a reference to determine the damages of the Plaintiff based upon a limitation of liability clause contained in the contract of carriage. The limitation clause limited the defendant's liability to 10 pounds sterling per cubic foot of the cubic capacity of the item lost or damaged or, at the Defendant's option, to the cost of repair or replacement. The Plaintiff argued that as the Defendant did not measure the cubic capacity of the articles upon shipment that it should not be entitled to limit its liability. The court disagreed. The Defendant sought to have its liability in respect of some items limited by the repair or replacement option. The court, however, held that the Defendant had not exercised the repair or replacement option and was therefore not entitled to limit its liability on this basis. The court awarded the Plaintiff pre-judgment interest compounded semi-annually. With respect to costs, the court awarded the Plaintiff its costs up to the time of the Defendant's settlement offer. Thereafter, the Defendant was awarded costs.
Mis-delivery - Conversion
Westwood Shipping Lines v. Geo International Inc., 1998 CanLII 7984
This was an application for summary judgement by the Plaintiff carrier against the Defendant for conversion. The Defendant was the "Notify Party" on order bills of lading. The Defendant obtained delivery of the cargo without surrendering the original endorsed bills of lading and without paying the purchase price to the shipper/vendor. The Plaintiff maintained that the cargo was delivered only after the Defendant fraudulently misrepresented that the original bills of lading had been surrendered by the shipper. The Defendant denied any such representation had been made. The Court found it unnecessary to determine whether a fraudulent misrepresentation had been made. The Court held that the Defendant's actions in taking the goods without having paid for them amounted to conversion.
Stay of Proceedings - Jurisdiction Clauses - Carriage of Goods - Identity of Carrier
Jian Sheng Co. Ltd. v. Great Tempo S.A., 1998 CanLII 9059 (FCA)
This is an important case on the issue of the identity of the carrier under a bill of lading although the case arose in the context of a motion for a stay of proceedings under a jurisdiction clause. The Federal Court of Appeal held that where the bill of lading is signed for or on behalf of the Master it is a shipowner's bill and the shipowner is prima facie the carrier. The Court expressly rejected the notion that both the charterer and owner could be a carrier. See the full summary on the Arbitration/Jurisdiction Clauses page.
Summary Trial- Liability of Freight Forwarder
Canusa Systems Ltd. v. The "Canmar Ambassador", 1998 CanLII 7449
This was a motion by the Plaintiff for summary judgment against the Defendant freight forwarder for damage caused to a cargo of heat shrunk tubing. The Defendant admitted that it had arranged the shipment of the goods and that the goods were damaged but argued that as freight forwarder it was not responsible for the damage. However, it had issued a "Combined Transport Bill of Lading" which provided it "shall be liable for loss of or damage to the goods occurring between the time when he takes the goods into his charge and the time of delivery". The "Combined Transport Bill of Lading" further provided for exceptions from this liability but the onus of proving such exceptions was on the freight forwarder. The forwarder had not proven any such exceptions. The Court granted summary judgment with a reference to determine the damages.
Liability of Forwarding Agents
Brereton v. KLC Freight Services Ltd., No. 485/95 (Ont. Ct. Gen. Div.)
This was an appeal of a judgement rendered by the Ontario Small Claims Court. The action involved a shipment of personal effects from Toronto to Trinidad. Sixteen pieces were delivered by the Plaintiff to the Defendant for carriage but only fifteen pieces were ultimately delivered. The contract between the Plaintiff and Defendant specified that the Defendant was not a carrier but was only a forwarding agent responsible for the selection of third party carriers. At trial, the Small Claims Court held that the Defendant was liable for the non-delivery on the basis of res ipsa loquitor. On appeal, the Ontario Court General Division held that the Defendant was not a carrier but was merely a forwarding agent and, as such, was not liable absent proof of negligence. As there was no evidence of negligence on the part of the Defendant, the appeal was allowed and the action dismissed.
Recovery of Freight
American President Lines Ltd. v. Pannill Veneer Co. Ltd., 1997 CanLII 5500
This was an action by an ocean carrier to recover freight charges. The Defendant shipper had retained a freight forwarder who made the carriage arrangements with the Plaintiff. The Plaintiff invoiced the freight forwarder who in turn invoiced the Defendant. The Defendant paid the freight forwarder but the forwarder became insolvent and did not pay the Plaintiff. The Court held that it was never intended that the Defendant would pay the Plaintiff and accordingly dismissed the action.