This matter involved the carriage of a cargo of alfalfa pellets from Thunder Bay to Montreal. During the discharge of the cargo in Montreal a fire broke out damaging the cargo and the carrying ship. The Plaintiffs claimed for the damage to the cargo and the Defendants counter-claimed for the damage to the ship. The Plaintiffs argued that the bills of lading, which were clean, created a prima facie presumption against the Defendants that the cargo was received in good order and condition. The trial Judge, however, held that during the loading the cargo was surrounded by a cloud of dust which made visual inspection difficult and that under these circumstances the presumption did not apply. The trial Judge then turned to the cause of the fire and reviewed the evidence of the various experts and witnesses. He concluded that the evidence overwhelmingly supported the conclusion that spontaneous combustion caused the fire. He next considered whether the alfalfa pellets were a “dangerous cargo” within the meaning of Article IV r. 6 of the Hague Rules. He noted that the word “dangerous” had to be given a broad meaning and concluded with little difficulty that the cargo was indeed dangerous since if not properly stored it could ignite. He further held that there was no evidence the Defendants consented to the shipment of the cargo with knowledge of its dangerous character. The Plaintiffs failed to advise the Defendants of its flammable nature and failed to provide any information to the Defendants with respect to the cargo. In their defence the Plaintiffs argued that pursuant to Art. IV r. 3 of the Hague Rules they could not be liable to the Defendants without proof of an act, fault or neglect. The trial Judge rejected this argument, holding that a shipper’s liability for damage caused by dangerous goods was strict both under Art. IV r. 6 and at common law. In result, the Plaintiffs’ action was dismissed and the Counterclaim was allowed. The Plaintiffs appealed.
At the Court of Appeal the Court first noted that the standard of review depended on the nature of the questions appealed from. The standard of review for pure questions of law is one of correctness. The standard for questions of fact is whether the trial judge made a palpable and overriding error i.e. “one that gives rise to a reasoned belief that the trial judge must have forgotten, ignored or misconceived the evidence in a way that affected his conclusion”. The standard for a mixed question of law and fact is that of “palpable and overriding error unless it is clear that the trial judge made some extricable error in principle with respect of the characterisation of the legal test or its application”. Applying these standards of review the Court of Appeal upheld the trial Judge and dismissed the appeal.