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.