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.