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 67 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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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.
Proper Parties - Identity of Carrier - Proof of Damages
Union Carbide Corporation v. Fednav Limited, 1997 CanLII 6062
This was a claim for damage to a cargo of synthetic resin shipped from Montreal to Bangkok and Manila on board the ship "Hudson Bay". The Plaintiffs were the shipper of the cargo and the consignees. The consignees purchased the cargo on cif Bangkok and cif Manila terms. The "Hudson Bay" was under time charter pursuant to a New York Produce Exchange Form time charter agreement. The bills of lading were signed by the charterer "by authority of master as agents only". The issues in the case were: whether the shipper was a proper Plaintiff, whether the charterer was liable in contract as a "carrier", whether the charterer was liable in tort for negligent stowage, and whether the Plaintiffs had properly proven their damages. On the first issue the Court held that the shipper was not a proper Plaintiff. The Court held that under the cif terms the risk of loss passed to the buyer upon shipment and further that pursuant to the Bills of Lading Act all rights of action in respect of the cargo were vested in the consignees. The Court also held that the rule in Dunlop v Lambert (1939) 7 ER 824, (which allows the shipper to recover substantial damages as trustee for the true owner of the goods) had no application because the claims were covered by the Bills of Lading Act.
On the second issue, the Court held that there could be only one carrier and, where the bills of lading are signed for or on behalf of the Master, that the carrier is the shipowner unless there is an express undertaking on the part of the charterer to carry the goods. The Court found that there was no such express undertaking notwithstanding that the charterer had described itself as the carrier in the booking note. In reaching this conclusion the Court refused to follow Canastrand Industries Ltd. v. The "Lara S",  2 FC 553, (affirmed by the Court of Appeal 176 N.R. 31), wherein Madame Justice Reed held that both shipowner and charterer should be jointly liable.
The Plaintiffs further argued that the charterer was liable in tort for negligently stowing the pallets more than three tiers in height. The Court found that the charterer was not aware of any restrictions in the height to which the pallets could be stowed and that it was not obvious they should be restricted to three levels. The Court further held that the charterer could not be liable for the negligence of the stevedores.
Finally, on the question of quantum, the Court held that evidence of the settlement of the Plaintiffs' cargo insurance claim was neither relevant to the question of, nor admissible to prove, the Plaintiffs' damages. The Court held that the Plaintiffs must testify as to the actual losses suffered by them and that it was not sufficient to simply rely on generic evidence of arrived sound market value and arrived damaged market value.
Excessive Freight Charges
Me Thierry Van Dooselaere v. Unispeed Group Inc. and SGS Supervision Services, 1997 CanLII 4764
This was an action by the Plaintiff shipper against the carrier and surveyors for excessive freight charges. The Plaintiff negotiated a freight rate for 1486 metric tonnes of creosoted poles. During the course of loading the poles it was discovered that the cargo occupied more space than anticipated and the carrier demanded additional freight which the Plaintiff was forced to pay. The Plaintiff subsequently retained a surveyor to measure the cargo. The surveyor did so and the Plaintiff paid on the basis of the survey. Upon delivery the cargo was again surveyed by two independent surveys both of whom agreed that the original survey significantly overstated the amount of cargo. The Court held that the carrier and the surveyor were jointly and severally liable for the excessive freight charges the Plaintiff was forced to pay.
Liability of Terminal Operator
Bethlehem Resources Corporation v. Vancouver Wharves, 1997 CanLII 539
This was a motion for summary judgment brought by the Plaintiff against the Defendant, a terminal operator, for shortages to ore concentrate shipped through the Defendant's facility. The relationship between the parties was governed by an agreement which specifically provided that the terminal would only be liable for "proven negligence". The Court held that normal shrinkage might have accounted for the shortages and further held that the Plaintiff had not proven an act of negligence to support the claim.
Breach of Booking Note
Alcan Aluminum Ltd. v. Unican International S.A. et.al., (June 17, 1996) No. T-1217-90 (F.C.T.D.)
In this matter the Plaintiff claimed damages against the owner and time charterer of the "CarryBulk" for breach of a booking note contract. Due to engine problems the vessel did not have sufficient power to make its way through the ice to the agreed port of loading and the time charterer ordered the ship to another port where it loaded other cargo. The Plaintiff then made alternate, and very costly, arrangements to have other vessels carry its cargo. The time charterer also claimed damages from the Plaintiff arguing that it was the Plaintiff that breached the booking note contract by shipping its cargo on these other vessels. The Court held that the time charterer and not the Plaintiff was in breach of the booking note contract. The Court found the conduct of the time charterer was anticipatory breach and the Plaintiff was justified in making alternate arrangements to ship the cargo. The time charterer argued, in the alternative, that the substitution clause gave it a defence to the Plaintiff's claim but the Court held the substitution clause could offer no defence where the named vessel had already begun to perform under the agreement. The time charterer was therefore held liable. The owner, however, was not found liable as the Court held the booking note was signed by the charterer on its own behalf and not as agent on behalf of the owner. Although successful on the issue of liability, the Plaintiff was not completely successful on the matter of damages. Most of the damages claimed were disallowed on the basis that time was not of the essence and the Plaintiff could have waited and chartered another ship at a later date at a much more reasonable price. The Plaintiff's claim for compound interest was also disallowed. The trial Judge held that compound interest should only be awarded where the Plaintiff demonstrates that his or her loss cannot be fairly compensated without an award of compound interest.
Interest and Costs
Alcan Aluminum Ltd. v. Unican International S.A., (September 25, 1996) No. T-1217-90 (F.C.T.D.)
In this matter the Plaintiff had been awarded damages against the Defendant ship owner for breach of a time charter. The parties could, however, not agree on issues of interest and costs and the case was referred back to the Court . The Court held that the Plaintiff was only entitled to pre-judgment interest at the legal rate of 5%. The Plaintiff was not entitled to pre-judgment interest at the prevailing commercial rates since it led no evidence on the point. The Plaintiff was, however, allowed to rely on Provincial legislation with respect to post-judgment interest and, pursuant to the applicable Provincial legislation, the Plaintiff obtained more than the legal rate. On the question of costs, the Defendant argued that two offers to settle it made should be taken into account in its favour. The Court, however, agreed with the Plaintiff that the offers could not be taken into account because the first was not a firm offer of settlement but only an offer by counsel to "recommend" a settlement and, the second was conditional.
Onus of Proof - Clean Bills of Lading
Wirth Limited et.al. v. The "Federal Danube", No.T-1701-90
This case concerned damage to a cargo of steel rails carried from Antwerp to Montreal. The carrier acknowledged receipt of the cargo at Antwerp in apparent good order and condition except for some slight rusting. Upon discharge at Montreal the cargo was noted as being in substantially the same condition except one rail was damaged. The cargo was then carried by Rail to Winnipeg. Upon delivery to the consignee at Winnipeg it was noted that approximately 10% of the rails had been damaged by scratches to their base. The scratches were slightly rusted by salt water mist indicating the damage occurred prior to arrival at Montreal. The Plaintiff argued that the carrier was liable as having received the cargo in good order and condition and delivered it in bad condition. The Court, however, stated that the clean bills of lading were not a statement that the cargo was in perfect condition when it arrived at Antwerp. The clean bills of lading meant only that upon a reasonable and practical examination of the cargo, no damage was visible. The Court noted that, except for one rail, the cargo was delivered at Montreal in the same condition as received at Antwerp, i.e.. with no visible damage. It was therefore held that the carrier was only liable for damage to one rail.
Limitation Clause - Interpretation
Mackay v. Scott Packing and Warehousing Co.,  2 FC 36
The Plaintiff in this case had entered into a contract with the Defendant moving company for the carriage of his personal possessions to England. A large number of articles became lost or damaged during transit. The Defendant accepted liability but argued that it was entitled to rely upon a limitation clause in its contract with the Plaintiff. The Plaintiff argued the limitation clause did not extend to cover the negligence of the Defendant and, in any event, it would be unconscionable or unreasonable to allow the Defendant to rely on the clause. Both the Trial Judge and the Court of Appeal rejected the Plaintiff's argument. The clause in question limited the Defendant's liability for any loss or damage " howsoever caused" . The Court of Appeal held that the phrase " howsoever caused" was wide enough to encompass negligence. The Court of Appeal further held that there was no unconscionability or inequality of bargaining power and it would not be unreasonable to enforce the clause.
Liability of Freight Forwarder
Bertex Fashions Inc. v. Cargonaut Canada Inc., No. T-651-93, (F.C.T.D.)
The issue in this case was the liability of a freight forwarder for damage to cargo shipped under a through bill of lading issued by the forwarder. The forwarder argued that it acted only as agent for the Plaintiff and was therefore not liable. The Court held, however, that the forwarder was liable as a carrier. The factors leading to this conclusion were the forwarder undertook to carry the goods, the forwarder charged the Plaintiff a lump sum as freight not as commission, and the Plaintiff was totally uninformed and unaware of the identity of the actual carriers.