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 37 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
Cargo - Multimodal - Leg - Ocean - Terminal - Germany
Iamgold Corporation v. Hapag-Lloyd Ag, 2019 FC 1514
Précis: The Federal Court found that a loss of cargo on the road leg of the carriage was subject to the limitation of liability applicable to road carriage under German law.
Summary not yet available.
Maritime Jurisdiction - Third-Party - Bill of Lading
Elroumi v. Shenzhen Top China Imp & Exp Co. Ltd., 2019 FCA 281
Précis: The Federal Court of Appeal affirmed that claims against road carriers were not claims under Canadian maritime law.
Facts: The appellant appealed the decision of the Federal Court which held that it lacked jurisdiction to hear claims against road and rail carriers which were other contracts of carriage not part of the bills of lading. The appellant also sought to add the ocean carrier CMA CGM as third party.
Decision: Appeal Dismissed
Held: The Court upheld the lower Court’s decision on the basis that claim did not satisfy the Supreme Court of Canada's tripartite test as set out in ITO-Int’l Terminal Operators v. Miida Electronics. Specifically, the Court held that the underlying action was not within the jurisdiction of the Federal Court because, “A claim against a local road transporter or an operator of a warehouse distant from an ocean port is not a claim under Canadian maritime law.” The road transporter, therefore, is bound by provincial law.
Through Bills of Lading - Federal Court Jurisdiction - Rail and Truck Carriers
Elroumi v. Shenzhen Top China Imp & Exp Co., Ltd China, 2018 FC 633
Précis: The Federal Court struck those parts of a statement of claim relating to road and rail carriers on the grounds that it lacked jurisdiction.
Facts: Plaintiffs purchased goods from two of the named Defendants and paid for shipments of the goods from China to Montreal. A sea-waybill was issued by the third party which indicated Hong Kong as the port of loading, Vancouver as the port of discharge and Montreal as the port of delivery. The Plaintiffs and/or the consignee hired Entrepot Canchi to pick the goods up at the train station. Once the goods cleared customs, the Plaintiffs were told the goods had been damaged and that Entrepot Canchi had to deliver the goods as the Plaintiffs were responsible for that part of the transaction. The Plaintiffs then issued a statement of claim 3 years after the shipment, naming the vendors/shippers, the insurer, the transport agent, the land storage and transport companies involved. The ocean carriers, both named on the bills of lading, were also named as Defendants. Entrepot Canchi launched a third party claim against the ocean carrier CMA CGM.
Decision: Motion granted. Plaintiffs' claim against Entrepot Canchi was struck out, and the third party claim against CMA CGM were also struck out.
Held: The jurisdiction of the Federal court could not extend to claims against rail and land carriers which were other contracts of carriage not part of the bills of lading. The bills of lading covered the liability of the ocean carriers, but not that of Entrepot Canchi, as the Plaintiffs and/or consignee entered into a contract with the provincial land carrier Entrepot Canchi which was independent of the bills of lading. The Superior Court of Quebec or the Court of Quebec has exclusive jurisdiction to hear the claim between the Plaintiff and Entrepot Canchi. As a consequence, the third party claim was struck as the original claim by the Plaintiff against Entrepot Canchi could not be heard by the court.
Direct Action Against Motor Carrier Insurer – Misrepresentation – Policy Not Void
C.H. Robinson Worldwide v. Northbridge Insurance, 2015 ONSC 232 2016 ONCA 364
Précis: The Ontario Court of Appeal overturned a trial judgement holding that a misrepresentation by an insured voided the policy of insurance and was a defence to a direct action pursuant to s. 132(1) of the Insurance Act of Ontario.
Facts: The appellant, a freight forwarder, retained the services of a motor carrier, KLM, to transport a shipment of food products. The contract between the freight forwarder and KLM provided that KLM would be liable for the value of any shipments tendered to it and also required KLM to maintain insurance coverage. KLM applied for and obtained coverage from the respondent insurer. The insurance application contained a question as to whether there were any contracts with shippers that stipulated higher limits of liability than were contained in the KLM’s standard bill of lading. KLM answered this question in the negative. During the course of transit, the truck was involved in an accident and the food products were destroyed. The freight forwarder commenced proceedings against KLM and provided the insurer with notice of the claim. Default judgment was subsequently obtained against KLM. The freight forwarder then brought this proceeding against the insurer pursuant to s. 132(1) of the Insurance Act of Ontario, which provides for direct action against insurers. The insurer defended arguing that the policy was void for misrepresentation.
At first instance (2015 ONSC 232) the motions Judge held that the contract between KLM and the freight forwarder expanded the liability of KLM beyond the $4.41 per kilogram maximum liability provided for under the Uniform Conditions of Carriage and ought to have been disclosed by KLM to the insurer. The failure to disclose rendered the insurance contract void. The freight forwarder appealed.
Decision: Appeal allowed and judgment is granted against the respondent insurer.
Held: An insurer has the onus of proving a material misrepresentation. This onus has not been met in this case. The question asked by the insurer was “Does the applicant have any contracts with shippers that stipulate limits of liability that are required to supercede the applicant’s standard Bill of Lading?”. This question references KLM’s standard bill of lading, not the Uniform Conditions of Carriage. KLM’s standard bill of lading, if one exists, is not part of the evidence and, accordingly, it cannot be said that answering the question in the negative was a misrepresentation.
Comment: Although not a maritime law matter, this case raises the possibility that provincial insurance statutes providing direct action against insurers might apply in maritime matters. Such was the holding in Langlois v. Great American Insurance Company, 2015 QCCS 791.
Truck Carriage - Limitation of Liability- Declaration of Value
National Refrigerator & Air Conditioning Canada Corp. v. Celadon Group Inc., 2016 ONCA 339
Précis: The providing of a copy of a commercial invoice to a carrier is not a declaration of value sufficient to oust the carrier's right to limit its liability.
Summary not available.
Rail Carriage - Right to Limit Liability - s. 137 Canada Transportation Act
Canadian Pacific Railway Company v. Canexus Chemicals Canada LP, 2015 FCA 283
Précis: The Federal Court of Appeal held that s. 137 of the Canada Transportation Act prohibits rail carriers from contracting out of liabilities using hold harmless and indemnity clauses.
Facts:The Canadian Transportation Agency was asked by a group of shippers for a ruling on whether Item 54 of a Tariff published by the Canadian Pacific Railway Company violated s. 137 of the Canada Transportation Act (the “CTA”). Item 54 contained a group of clauses dealing with liability and indemnity. The Agency rendered two decisions and ordered that portions of Item 54 were contrary to s. 137 of the CTA. Both parties appealed.
Decision: The appeal of Canadian Pacific is allowed. The cross-appeal is dismissed.
Held: Under s. 117 of the CTA, a railway may only charge the rates and apply the terms and conditions that have been set out in its published tariffs. Section 126 of the CTA allows the parties to deviate from the published tariffs if there is a “confidential contract” between them. Section 137 of the CTA provides that a railway company may only restrict or limit its liability pursuant to a written agreement signed by the shipper. Otherwise the company’s liability is limited or restricted only to the extent prescribed by the Agency in the Railway Traffic Liability Regulations which largely reproduce the common liabilities of a carrier. In this case Canadian Pacific published a tariff in relation to hazardous commodities. Item 54 of that tariff provided Canadian Pacific would not be liable in respect of such commodities, included a broadly worded indemnity in respect of third party claims arising from the carriage of such commodities and included a joint liability clause.
The Agency published two decisions which were contradictory. In the first, the Agency gave s. 137 of the CTA a broad interpretation that includes “any liability that is caused by, arising from, or associated in any way with the movement of traffic” and held that Item 54 was a limitation or restriction of liability not contained in a written agreement and therefore invalid. In the second decision the Agency restricted the scope of s. 137 by excluding liabilities of the railways to third parties and the reallocation of those liabilities between the railway and the shipper. The first decision is the correct interpretation of s. 137. Section 137 is not a codification of the common law but is a restriction on a railway company’s ability to limit its liability. Where a third party suffers damage by the railway’s negligence and seeks to recover that damage from the shipper, the shipper would have a claim against the railway under provincial contributory negligence law and any limitation of the railway’s liability to the shipper is be caught by the plain meaning of s. 137.
With respect to the interpretation of Item 54, it is to be noted that shippers are not subject to any limitation or restriction of liability by the mere publication of the tariff. Such limitations or restrictions must be contained in a signed agreement. Nevertheless, when properly interpreted, Item 54 does not contain prohibited limitations of liability. The broad limitation expressed in the opening words of Item 54 is subject to later exceptions that preserve the railway’s liability to shippers.
Goods Stolen in Transit - Limitation - Invoice Attached to Bill of Lading - Whether Declaration of Value Sufficient
A & A Trading Ltd. v. DIL’S Trucking Inc., 2015 ONSC 1887
Précis: A defendant carrier cannot limit liability where it is aware of the value of the goods, represented it had sufficient insurance and the bill of lading referred to an invoice containing the value of the goods.
The plaintiff hired the defendant to transport goods by truck from Toronto to Calgary. The goods were stolen while in transit and the plaintiff commenced this proceeding to recover the value of the goods. During discussions between the plaintiff and defendant, the plaintiff advised the defendant the goods had a value of between $250,000 and $263,000 and inquired whether the defendant had sufficient insurance. The defendant confirmed there was sufficient insurance.On the day of the shipment a bill of lading was filled out by the plaintiff to which was attached an invoice showing the value of the goods to be $263,000. The plaintiff's bill of lading was given to the defendant but the defendant also filled out its own bill of lading which referenced the invoice number. The defendant's bill of lading was signed by both parties.Neither bill of lading contained a declaration of the value of the goods. The main issue in the case was whether the defendant could limit its liability to $4.41 per kilogram as provided in the applicable Ontario regulations. The limitation amount would have been approximately $100,000.
Decision: The defendant is liable for the full value of the goods stolen.
Held: The contract of carriage is not limited to the contents of the bill of lading. The contract of carriage includes the oral representation by the defendant as to insurance as well as the bill of lading prepared by the plaintiff and the invoice that was attached to it. A declaration of value need not be set out in the space provided in a bill of lading. The intent is to provide the carrier with notice of the value of the goods. Given that the defendant's bill of lading contained a reference to the invoice which contained the value of the goods, there was a sufficient declaration of value on the face of the bill of lading and the defendant cannot limit its liability.
Road Carriage - Failure to Issue Complete Bill of Lading - Nor Right to Limit Liability
0813054 BC Ltd. v. Overland West Freight Lines Ltd., 2013 BCSC 2367
Summary not available.
Road Carriage - Personal Effects - $100 Limitation Upheld
Kuffuor v. Greyhound Courier Express Ltd., 2013 BCPC 341
Summary not available.
Right of Rail Carrier to Limit Liability - Application of Liability Limits to Cargo Owner
Mitsubishi Heavy Industries Ltd. v. Canadian National Railway Company,, 2012 BCSC 1415
Précis: The British Columbia Supreme Court held a rail carrier was entitled to limit its liability even though there was no contract between it and the plaintiff.
As a consequence of a train derailment cargo owned by the plaintiff was severely damaged. The cargo was being carried under a “Master Transportation Agreement” between the plaintiff and Fujitrans, a freight forwarder. The cargo originated in Japan and was carried by sea to Vancouver where it was discharged for further carriage to Ontario by rail. The defendant rail carrier alleged, pursuant to s. 137(1) of the Canada Transportation Act, S.C. 1996 c. 10 and an agreement between it and Casco, another forwarder, that it was entitled to limit its liability to $50,000.
Decision: The rail carrier was entitled to limit its liability.
Held: The right of the defendant rail carrier to limit its liability depends on it establishing the existence of a “confidential contract” under ss. 126 and 137 of the Canada Transportation Act that is a “written agreement signed by the shipper” and that contains a limitation of liability. The “shipper” within the meaning of the Canada Transportation Act in the circumstances of this case was Casco not the plaintiff. The requirement of a “signed” copy of the agreement does not necessarily require that an actual signed copy be produced. In this case, the existence of signed assignment of the agreement was sufficient. The plaintiff impliedly or expressly consented to and authorized the subcontracting by Fujitrans to Casco and by Casco to the rail carrier. Moreover, the plaintiff had express knowledge of the terms of the agreement between Casco and the rail carrier. Accordingly, the plaintiff is bound by the limitation even without any privity of contract between it and the rail carrier.
Carriage of Goods - Intermodal - Rail Carriage - Himalaya Clause - Applicable Limitation - Meaning of Package - Meaning of Bill of Lading - Sub-Bailment - Hague-Visby Rules
Cami Automotive, Inc v. Westwood Shipping Lines Inc, 2009 FC 664 2012 FCA 16
Précis: The Federal Court of Appeal upheld a decision of the Federal Court holding that a rail carrier could choose the limitation that was the most beneficial to it.
The plaintiffs sued the defendants for damage to cargo carried under a through bill of lading. The cargo was damaged as a result of a train derailment. The defendants were the charterer of the carrying vessel, the owner of the carrying vessel and the rail carrier. The plaintiff and the charterer conducted business under annual service contracts for the carriage of containers from Japan to Toronto pursuant to which a “Shipping Document” was issued when containers were loaded for carriage. The charterer and the rail carrier conducted business under a “Confidential Contract”. The issues for determination were the entitlement of the charterer and rail carrier to limit their liability under the terms of the various contracts. At trial (2009 FC 664) the trial Judge dealt first with the limitation of the charterer and considered whether the “Shipping Document” was a bill of lading or a waybill. The trial Judge held that it was a waybill noting that it was titled “Waybill” , it contained a stamp indicating delivery would be made to the named consignee (without production of the original) and only one copy was issued (bills of lading are usually issued in triplicate). As the “Shipping Document” was determined to be a waybill and not a bill of lading, the trial Judge further held that the Hague-Visby Rules were not compulsorily applicable. However, the Waybill incorporated the terms of COGSA which contains a US$500 per package limitation and this limitation was held to be applicable to the charterer. A secondary issue relevant to the charterer’s limitation was the definition of a “package”. The trial Judge held in the circumstances that each pallet was a package and that the total limitation amount was US$50,000. The trial Judge then turned to the limitation of the rail carrier and considered first whether the rail carrier could limit its liability under the “Confidential Contract” even though the plaintiff was not a party to that contract. The trial Judge applied the doctrine of sub-bailment and held that the plaintiff was bound by the terms of the “Confidential Contract”. There was, however, an issue as to the proper interpretation of the “Confidential Contract” and, specifically, whether the rail carrier’s limitation was contained in a tariff or in the Railway Traffic Liability Regulations. The trial Judge found that the tariff had not been properly incorporated into the “Confidential Contract” and, accordingly, held that liability was to be determined in accordance with the Regulations. The trial Judge next considered whether the rail carrier could rely upon the limitation provisions in the “Shipping Document” and, applying the Himalaya clause in the “Shipping Document”, held that it was entitled to do so. The trial Judge further noted that the rail carrier was free to choose the limitation most beneficial to it. The plaintiff appealed.
Decision: Appeal Dismissed.
Held: In very short reasons (2012 FCA 16) the Federal Court of Appeal dismissed the appeal saying merely that it had not been persuaded the trial Judge had made any errors warranting intervention.
Road Carriage - Dangerous Goods
Ridsdale Transport Ltd. v. Transwest Air, 2009 SKQB 380
This case involved the carriage of a drum clearly marked as containing dangerous goods along with other food cargoes. Upon arrival at the destination it was discovered that the contents of the drum had leaked contaminating the food cargoes. The carrier sought indemnification from the shipper and relied, inter alia, on the shipper’s implied warranty that goods were safe for carriage. However, the trial Judge held that the carriage of dangerous goods was governed by the express provisions of the bill of lading and the uniform conditions of carriage. Because the shipper had fully disclosed the contents of the drum to the carrier prior to carriage, the trial Judge held that the shipper was not liable.
Carriage of Goods - Liability for Freight
Cargo Dynamics Logistics Inc. v. Apex Micro Manufacturing Corp., 2009 BCSC 832
This was an action for freight owing in respect of a number of shipments. The defendant was the consignee of the shipments and alleged that it was not liable for the freight as the plaintiff/carrier had contracted with the shipper. The evidence established, however, that the carriage arrangements were made between the plaintiff and defendant, and that the plaintiff was never advised that the defendant purported to act as agent only. In result, the defendant was liable for the freight.
Carriage of Household Goods - Limitation of Liability - Aggravated Damages
Wepruk v. Great Canadian Van Lines Ltd, 2009 BCPC 0183
The main issues in this action were whether the defendant carrier could rely on the special conditions of carriage on the reverse of its bill of lading. The Court held that the conditions on the bill of lading did not apply as the bill of lading was delivered after the contract had been breached. The Court awarded general damages, aggravated damages for mental distress and punitive damages.
Rail Carriage - Demurrage
Railink v. Fedmar Limited, 2009 CanLII 15893
This was an appeal from a Small Claims Court decision finding the defendant “FedMar” liable to the plaintiff, “SOR”, for demurrage charges on railcars at FedMar’s premises. Although there was no direct contract between SOR and FedMar, SOR had issued tariffs to FedMar setting out the demurrage fees prior to the dispute. The trial Judge’s decision was upheld on the basis that the delay and demurrage was the direct result of FedMar’s actions, inactions and delay.
Carriage of Household Goods - Limitation of Liability
Franklin v. U Haul Co. (Canada) Ltd., 2009 SKPC 9
This was a claim for water damage to goods transported in a rental truck. There was heavy rain during the transportation and, upon arrival at the destination, the plaintiff kept the rental truck parked outside in heavy rain for an additional 2 days prior to unloading. On inspection of the truck, it was discovered that the rear door was not sitting “flat at the corners” and required cleaning to remedy. The defendant relied on a term of the rental contract which stated “…I understand that the equipment rented is water resistant and not water proof” as well as signs posted inside the rental truck to the same effect. The Court held that the defendant could not rely on the term of the rental contract given the problems with the door. However, the Court only apportioned 20% of the liability to the defendant on the basis that it was not responsible for the plaintiffs delaying the unloading for 2 days and thereby exacerbating the scope of the damage incurred.
Rail Carriage - Damage - Applicable Tariff - Limitation
Alstom Canada Inc. v. Canadian National Railway Company, 2008 FC 1311
The Plaintiffs claimed in excess of $1.8 million for shock and impact damage caused to a transformer during rail carriage from Halifax to Manitoba. The Defendant rail carrier brought this application for summary judgment to limit its liability to $50,000 pursuant to a term in its tariff. However, the Defendant had two tariffs, one of which contained a limitation clause and the other of which did not. Moreover, the one which contained the limitation clause was only given to the Plaintiff after the loss. In the circumstances, the Court was not able to determine which of the two tariffs applied and dismissed the application for summary judgment.
Road Carriage - Fundamental Breach - Limitation of Liability
Exalta Transport Corp. v. C & A Industries Inc., 2008 ABQB 637
This matter involved the failure of a road carrier to notify the shipper of the unsuccessful delivery of cargo. Pursuant to the applicable Alberta statute, the uniform conditions of carriage applied regardless of whether a proper bill of lading was issued. The issue was whether the statutory limitation applied in these circumstances. The statutory limitation provisions refer only to compensation arising out of “any loss or damage to” the cargo. On a thorough reading of the statute, the Court interpreted these provisions to not include a failure to notify on non-delivery and held that the carrier was unable to limit its liability.
Multi-modal - Bailment on Terms - Himalaya Clause - Rail Carriage - s.137 Canadian Transportation Act
Boutique Jacob Inc. v. Pantainer Ltd., 2008 FCA 85
This was an action by the Plaintiff for damage to cargo caused during a train derailment. The Plaintiff had contracted with the first Defendant, Pantainer, for the carriage of its cargo from Hong Kong to Montreal. Pantainer then sub-contracted the entire carriage to OOCL. OOCL in turn contracted with Canadian Pacific for the carriage of the cargo by rail from Vancouver to Montreal and it was during this portion of the carriage that the damage occurred. The carriage documents were an express bill of lading issued by Pantainer and an electronic waybill issued by OOCL which referred to OOCL's standard terms that were available on the OOCL website. At issue in the case was the liability of each of the Defendants and which bill of lading exclusions or limitations they were entitled to rely upon. With respect to the liability of Pantainer, the trial Judge held that it would have been liable as a contracting carrier but it was entitled to rely upon a clause in its bill of lading that excluded its liability for loss or damage that could not be avoided by the exercise of due diligence. With respect to OOCL, the Judge held that it was liable as a sub-bailee on terms and that the terms were those referred to in the OOCL electronic waybill. The Judge further held that these terms exonerated OOCL from liability for loss or damage that could not be avoided by the exercise of due diligence. The trial Judge also held that OOCL was entitled to rely upon the similar exemption in the Pantainer bill of lading via the Himalaya clause in that bill of lading. With respect to the liability of Canadian Pacific, the Judge referred to s. 137 of the Canadian Transportation Act, which prohibits a railway from restricting or limiting liability except by written agreement signed by the “shipper”. The trial Judge held that “shipper” in s.137 meant the plaintiff and not OOCL. As a consequence, this provision precluded Canadian Pacific from relying upon the Himalaya and limitation clauses in either the Pantainer or OOCL bills of lading. The trial Judge further held that Canadian Pacific could not rely upon any limitation clause in its published tariff as this had been displaced by a limitation provision in the confidential rate agreement between OOCL and Canadian Pacific. In result, Canadian Pacific was held liable for the Plaintiff's damages calculated at the discounted selling price of the goods.
On appeal, the main issue was the trial Judge’s interpretation of s. 137 of the Canada Transportation Act. The Court of Appeal overturned the trial Judge on the issue of the interpretation of s.137. Specifically, the Court of Appeal held that the term “shipper” meant OOCL, the entity that contracted with Canadian Pacific, and not the Plaintiff. Accordingly, there was a written agreement between Canadian Pacific and the “shipper” and the prohibition in s. 137 did not apply. The Court of Appeal next considered the applicable limitation amount. The Court noted that the agreement between OOCL and Canadian Pacific was subject to Canadian Pacific’s tariff which limited liability, inter alia, to “an amount equal to the liability of the steamship company”. The Court of Appeal held that this provision entitled Canadian Pacific to limit its liability to the amount prescribed by the OOCL bill of lading which was $2 per kilogram. The Court of Appeal disagreed with the trial Judge concerning the inconsistency of the limitation provision in the confidential agreement and tariff. The Court of Appeal held that the provisions were not inconsistent. Finally, the Court of Appeal held that the Himalaya clauses in either the Pantainer or OOCL bills of lading entitled Canadian Pacific to rely upon the limitation clauses in either bill of lading.
Multi-modal - Theft - Limitation of Liability - Himalaya Clause
Alcoa, Inc. v. CP Ships (UK) Ltd., 2007 ONCA 686
The Plaintiff contracted with the first Defendant for the carriage of a cargo of aluminum from Massena, New York to Italy. The first Defendant had an arrangement with the second Defendant for the performance of the inland portion of the carriage from Massena to Montreal. It was intended that the first Defendant would then complete the carriage by sea from Montreal. However, during the course of the inland transit the container was stolen when left unattended by the truck driver. The main issue in the case was whether the Defendants were entitled to limit their liability for the loss pursuant to the terms of the first Defendant's standard bill of lading. The Plaintiff argued that a document entitled Straight Form Bill of Lading had been issued when the cargo was picked up by the second Defendant and that this bill of lading, which contained no limitation clauses, governed. The trial Judge held, however, that this bill of lading was a mere acknowledgement of receipt. The trial Judge noted that on four prior occasions the Plaintiff had shipped goods with the first Defendant and that on each occasion the Defendant had issued its standard form bill of lading. Based on this prior practice, the trial Judge held it was this bill of lading which governed even though it had not been issued at the time of the loss. The trial Judge next considered the Himalaya clause and the multi-modal clause in the bill of lading and concluded that they applied to the benefit of both Defendants. Finally, the trial Judge considered and rejected an argument that there had been a fundamental breach by the Defendants, noting that there was nothing deliberate about the conduct of the Defendants that would warrant denying them the protection of the limitation clause. In result, the Plaintiff was awarded $4,000 being the limitation amount in the bill of lading.
On appeal, the Ontario Court of Appeal held that the trial Judge had applied the wrong limitation provision. Specifically, the bill of lading provided various limits depending on where the transport occurred. The trial Judge applied the limitation for “Multi-Modal Transport outside the United States where COGSA is not contractually applicable”. The Court of Appeal said the appropriate clause was the one dealing with multi-modal transport in Europe or within a state other than the United States. This provision gave a higher limit of $65,000.