T-3785-75
Variety Textile Manufacturers Ltd. (Plaintiff)
v.
Owners and charterers of the vessel City of
Colombo, Ellerman Lines Ltd. and The Canadian
City Line (Defendants)
Trial Division, Walsh J.—Montreal, May 20;
Ottawa, June 25, 1976.
Customs and excise—Contract and tort Plaintiff claiming
$1,426.59 duty paid by it on 34 undelivered bales out of a
shipment of 50 belonging to plaintiff—Defendants denying
liability Customs Act, R.S.C. 1970, c. C-40, ss. 11, 13, 19,
20, 101, 112, 114.
Plaintiffs claim arises out of duty paid on 34 bales of
undelivered cotton. Canadian law requires payment of duty
prior to obtaining delivery of cargo, hence the payment before
the loss was ascertained. Defendants contend that payment of
the excess duty was unnecessary and that plaintiff could have
obtained a refund. Defendants further claim that the directives
issued by the Department of National Revenue in Memoran
dum D16-3 are unreasonable and in excess of the discretion
granted to the Minister by the Customs Act and Regulations.
Finally the defendants claim that the bill of lading limited the
carrier's liability to the shipper's net invoice cost and disburse
ments and therefore excluded duty and sales taxes.
Held, judgment in favour of plaintiff for $1,426.59 with
interest and costs.
(1) Memorandum D16-3 setting a 30-day limit for reporting
missing goods cannot be reconciled with section 112 of the
Customs Act fixing a 90-day limit and cannot be relied on by
the defendants for their failure to file a short-landing report
after the expiration of 30 days.
(2) Defendants have accepted responsibility for the loss of
the goods by settling the plaintiff's claim for their invoice value
and it was decided in Club Coffee Company Limited v. Moore-
McCormack Lines, Inc. that customs duty paid on undelivered
goods was an element of a plaintiffs damages resulting from
that non-delivery.
(3) The defendants cannot now claim that the value of the
missing goods should be based on market value since they
settled the plaintiffs claim for the loss of the goods on their
invoice value. The bill of lading merely provides for the calcula
tion of the value of goods as an element in the calculation of
damages for non-delivery and the right to recover duty is
another element and not affected thereby.
Club Coffee Company Limited v. Moore-McCormack
Lines, Inc. [1968] 2 Ex.C.R. 365, applied.
ACTION.
COUNSEL:
Marc de Man for plaintiff.
E. Baudry for defendants.
SOLICITORS:
Stikeman, Elliott, Tamaki, Mercier & Robb,
Montreal, for plaintiff.
Brisset, Bishop & Davidson, Montreal, for
defendants.
The following are the reasons for judgment
rendered in English by
WALSH J.: Defendants in the present proceed
ings made a counter-claim but at the opening of
the trial discontinued same. Plaintiff stated that its
claim was reduced to $1,426.59 from the amount
of $2,119 originally claimed because of the fact
that it had been ascertained that it did not pay
sales tax on the goods which were not delivered,
being itself licensed for sales tax purposes. It was
also agreed between the parties that there was no
issue as to which of the three defendants would be
held liable in the event of judgment being rendered
in favour of plaintiff. Defendants' counsel also
conceded that defendants had originally invoked
the limitation of liability under the Hague Rules
because of the existence of clause 1, the clause
paramount, in the bill of lading which would have
resulted in a limitation of £100 per package from
goods shipped from Pakistan which would have
been less than the value of the goods plus freight.
He had been unable to find an expert in Pakistani
law to testify however so is abandoning this con
tention and not claiming that the Hague Rules
apply. The law of the forum would then apply and
the Canadian Carriage of Goods by Water Act'
provides that Article VI of the Rules permitting
special conditions as to limitation of liability only
applies to shipments of goods from a port in
Canada. Article IV and V of the Rules provides a
$500 per package limitation which exceeds the
value of the goods. This coincides with clause 24 of
the bill of lading which "limits the claim to the
shipper's net invoice cost and disbursements or
$500.00 Canadian currency for package or unit
' R.S.C. 1970, c. C-15.
less all charges saved, whichever shall be least".
The question of limitation is therefore no longer an
issue in the present case.
Plaintiff's claim in the present proceedings
arises out of the customs duties paid by it on 34
bales which were not delivered. A shipment of 50
bales belonging to plaintiff was shipped on the
City of Colombo for carriage from Pakistan to
Montreal, as evidenced by bill of lading dated
May 29, 1974. Plaintiff alleges that they were
received on board in good order and condition,
which is acknowledged by defendants, but that
they failed to deliver 34 of these bales to plaintiff
in Montreal. Payment of duty and sales tax is a
requirement of Canadian law according to plaintiff
prior to obtaining delivery of the cargo so this had
to be paid before the loss was ascertained. Plaintiff
alleges the liability of defendants for this amount
in contract and tort.
Defendants admit that the 34 bales were not
available for delivery in Montreal but invoke
clause 2 of the bill of lading exempting them from
liability for any loss before loading or after dis
charge. They contend that they exercised due dili
gence in the care of the goods, that the duty was
paid unduly as the goods were never imported into
Canada, and that any loss suffered by plaintiff as a
result of payment of the duty arose not from
failure on the part of defendants to fulfil their
obligations under the contract of carriage but from
plaintiff's failure to recover the money from the
Minister of National Revenue as they allege plain
tiff was entitled to do. They also plead that the
directives issued by the Department of National
Revenue, Memorandum D16-3 dated December
23, 1963, setting out the evidence considered
necessary to satisfy the Minister that goods have
not been imported into Canada are abusive, unrea
sonable, and in excess of the discretion granted by
the Customs Act 2 and the Regulations to the
Minister of National Revenue, in that they have
the practical effect of preventing recovery of duty
and sales tax paid by an importer on short deliv
ered goods even though merchandise is in fact
missing upon arrival of the carrying vessel in
Canada.
They contend that even if the merchandise was
imported into Canada, which is denied, then the
shortages ascertained at the time of delivery took
place after discharge from the vessel when the
goods were no longer in the actual custody of the
carrier and defendants are therefore exempt from
liability by virtue of the terms of the bill of lading.
They contend further that they have already paid
plaintiff the sum of $9,883 representing the invoice
value (c.i.f.) of the said 34 bales and that if
plaintiff is entitled in principle to claim for duty
and sales tax, which is denied, then the said duty
and sales tax are to be excluded from whatever
damages are recoverable under the contract of
carriage by virtue of clause 24 of the bill of lading
referred to above limiting the carrier's liability to
the shipper's net invoice cost and disbursements.
Mr. Fred Avery, the Traffic Manager of plain
tiff testified that the shipment in question involved
a purchase of 60,000 yards of bleached sheeting in
50 bales which would have 1,200 yards in each
bale of a c.i.f. value of $14,535. From the weight
given in the invoice it appears that each bale would
weigh approximately 300 pounds. A form of the
invoice approved by the Canadian Customs and
issued by the Superintendent of the Measurement
Department of Overseas Investors Chambers of
Commerce and Industry at Karachi indicates that
according to documents produced before him the
declaration made by the shippers, Khairpur Tex
tile Mills Ltd. of Khairpur, West Pakistan,
appeared to be correct. A letter from Forbes
Campbell & Co. Ltd., ship's agents in Karachi,
dated June 1, 1974, indicates that the shipment of
50 bales in question was made on board the S.S.
City of Colombo which sailed from Karachi on
May 31st, 1974. In due course plaintiff received
2 R.S.C. 1970, c. C-40.
from McLean Kennedy Limited, agents for
defendants, an arrival notice relating to the said
cargo indicating the date of arrival of the ship as
approximately July 14, 1974. This form requested
plaintiff to pass customs entry and take delivery
without delay. On July 19th plaintiff's customs
broker, United Customs Brokers Limited com
pleted the necessary form from the documents on
hand and paid duties amounting to $2,483.10.
There is a notation on the form "subject to final
determination". This is known as a B-3 form, the
bill of lading not having yet reached plaintiff's
bank. About a month later the documentation was
received from the bank and sent to the customs
broker who then completed a B-2 form on Septem-
ber 27 amending the original entry as to the
valuation of the goods for duty purposes which
resulted in a refund claim in the amount of
$408.70, which refund was made in due course.
The procedure is for the customs broker to give
the customs clearance forms to Shulman Cartage
pursuant to plaintiff's instructions and they then
take delivery of the goods as soon as they are
ready. The delivery form of Shulman Cartage
dated August 19, 1974, indicates that they have
taken delivery of 16 bales and that 34 are short. It
appears that they took delivery of 13 bales on
August 9 and three more on August 16. It became
apparent that no other bales of this shipment were
in the shed. On August 26 a missing cargo report
was made by plaintiff to the National Harbours
Board and on August 28 a claim for the 34 missing
bales was made to McLean Kennedy Limited as
agents for defendants. This settlement was eventu
ally made on August 18, 1975, when plaintiff
confirmed to McLean Kennedy Limited that it
accepted the amount of $9,883 as settlement of the
c.i.f. value of its loss but that this did not include
the duty and tax portion of same. The present
claim of $1,426.59 for duty on the 34 bales not
delivered, based on the corrected amount of total
duties payable for the entire shipment of
$2,074.40, remains unsettled. *
The witness testified further that he did not
consider it necessary to make any claim from
Customs authorities as they would not have settled
in any event without proof of the short landing and
that by virtue of Customs regulations it is the
carrier that has to make the claim within thirty
days.
A witness, David Western, who was at the time
Superintendent of Marine Operations for the Cus
toms Department testified that the ship's agent,
McLean Kennedy, submitted what is known as an
A 6 manifest being the vessel's report of the City
of Colombo scheduled to arrive at Montreal July
13, 1974, from Durban, South Africa, which
indicated that the ship carried inter alia the 50
bales of bleached sheeting consigned to plaintiff.
The customs stamp on same indicates that the
duties were eventually paid and the cargo cleared.
He testified that in practice the importer has 30
days to clear the merchandise from a sufferance
warehouse. The import of the goods is considered
to have been completed however when the vessel
enters Canadian territorial limits and thereafter
unless the goods were never on board, that is to say
they were unloaded elsewhere, lost at sea, or unless
they were subsequently exported, there can be no
refund of duties. He testified that the shortage
report is usually completed by the shipping com
pany or its agent; this is known as an A 6' form.
If this is not filed within 30 days it is too late to
make a refund claim and a shortage report in itself
does not give right to a claim which requires
additional proof. This interpretation results from a
memorandum, D16-3 dated December 24, 1963,
issued by the Department of National Revenue,
Customs and Excise, entitled "Short-Landed and
Damage Certificates Ex-Ship" which reads in part
as follows:
* Exhibit P-13 shows the amount of duty as $1,410.59, the
discrepancy not being explained.
Effective 1st January 1964, the following requirements will
govern the issuance of short-landed certificates in respect of
shipments arriving by vessel.
1. Checking of cargo is the responsibility of the steamship
company and any discrepancies between the inward report or
manifest and the actual check of cargo are to be reported to
Customs on form A 6 1 / 2 within thirty days of the date of the
original inward report. Where a shortage of one or more
packages or units is revealed, and refund of duty and taxes is
involved, a short-landed certificate to cover each shipment is to
be presented with the form A 6 1 / 2 amending the inward reports.
2. Where one or more packages or units are checked short but
are shown on the ship's manifest and relative bills of lading,
these documents will be regarded as prima facie evidence that
the missing packages were laden on board in the country of
export. Short-landed certificates will be approved only for
legitimate shortages of whole packages on presentation of
suitable documentation, authenticated or signed by responsible
persons overseas, as supporting evidence of shortage at point of
lading, or Customs documentation confirming that the goods
were landed at a foreign port, or extracts from the ship's log
confirming loss at sea.
Section 112 of the Customs Act reads as follows,
however:
112. (1) No refund of duty paid shall be allowed because of
any alleged inferiority, or deficiency in quantity of goods
imported and entered, and that have passed into the custody of
the importer under permit of the collector, that might have the
effect of reducing the quantity or value of such goods for duty,
unless the same has been reported to the collector within ninety
days of the date of entry or delivery or landing, and the goods
have been examined by the collector or by an appraiser or other
proper officer, and the proper rate or amount of reduction
certified by him after such examination; and if the collector or
proper officer reports that the goods in question cannot be
identified as those named in the invoice and entry in question,
no refund of the duty or any part thereof shall be allowed.
and it is difficult to reconcile the validity of the
memorandum fixing a - thirty-day limit within
which to make the report, with the ninety-day
limit set out in section 112 of the Act. 3
In due course McLean Kennedy filed an
"Inward, Over, Short and Damaged Report" for
the voyage of the City of Colombo arriving in
Montreal on July 15, 1974, which shows very
extensive short-landed cargo including plaintiff's.
3 As a matter of fact section 112 of the Act, until amended
by S.C. 1968-69, c. 18, s. 6 had a 30-day limit. It would appear
that memorandum DI6-3 was not subsequently amended to
coincide with this change.
The Customs authorities received a copy of the
advice note advising of the arrival of the cargo
which is sent to the consignee also. When the bill
of lading entry is received in duplicate, one copy is
sent back to the terminal operator after the duties
have been paid to establish this and the other copy
is kept by the Customs Department for their
records. In connection with this voyage Mr. West
ern testified that they had received one A 6 1 / 2 form
filed for bill of lading No. 59 relating to 196 bales
of rubber. He pointed out that these forms cannot
be signed by the importer as they in effect amend
the ship's manifest which amendment can only be
made by the shipping agent. The form itself pro
vides for signature by the Master, purser or agent.
The witness testified however that if the goods had
no been imported and an A 6' form entered in
the proper time a refund claim might still have
been made.
Mr. Fred Anderson, a cargo controller with the
National Harbours Board Police for 18 years,
testified that he is familiar with the A 6 1 / 2 reports,
the practical fact of the issue being to remove the
onus from the terminal operators to the ship
owners. There were many reports of missing cargo
on this voyage of the City of Colombo, 273 pieces
in all being missing all having been shipped from
Karachi. It was never ascertained where the loss
occurred. The bales in question were heavy how
ever and too large to have been taken after unload
ing in his view, and there was double fencing
around the shed in 1974. He stated that the steve
dores do not tally the goods as cargo is unloaded
but merely issue a damage report for apparent
damage. It is his opinion that the cargo in question
was never loaded on board the ship, although this
is merely a presumption as it has never been
possible to establish this.
Mr. Anton Schein, Claims Manager for
McLean Kennedy for 12 years, testified that there
is no way of determining whether the 34 bales
which were short were unloaded or not. Investiga-
tion was made later at Toronto and Hamilton
where the ship was finally unloaded to ascertain
whether the cargo had been carried to there but
this proved fruitless. He stated that it is impossible
to issue A 6 1 / 2 forms until they become aware of
the shortage and if 30 days have elapsed it is then
too late to file them. Very frequently the delivery
takes at least this long. He stated that the arrival
notice is sent on the basis of a ship's manifest
which reported the 50 bales on board. With
respect to the fact that the claim was made to
McLean Kennedy on August 28 but only answered
by them on October 3, he denied that the earlier
letter of August 28 had ever been received, stating
that the first he had heard of the claim was a
further letter from plaintiff on September 30.
Telexes were sent to all the ports at which the
vessel had called en route and no trace could be
found of such a quantity of merchandise. Correct
tallies were not available in Durban. He admitted
that one A 6' form dated September 12, 1974,
was accepted by the Customs Department
although this was two months after the ship
arrived. This relates to the bales of rubber. He
does not know why there was no A 6'h issued for
the present shipment but normally he considers
that there is no use filing them after the 30 days
have expired. During the course of their investiga
tion it was found out that an entire barge had been
discharged from the side of the vessel at Karachi
at the time of loading on orders from the police
who apparently were looking for contraband. The
ship's manifest was supposed to have been amend
ed to deal with any cargo so unloaded but in his
view he doubts if it was.
Captain Donald Brown, the Master of the City
of Colombo on the trip in question, testified that
the ship was at anchor at Karachi and loading
from lighters. After they had started loading in
No. 1 hold the Customs Officer there said they
thought there was contraband and discharged
goods again to the lighter which departed for
shore. The lighter would carry about 100 tons of
cargo. Loading was completed three days later,
and the tally sheets and loading reports were
received from the ship's agents and stevedores
which were the same firm. The Chief Officer
asked if the receipts had been adjusted to allow for
the cargo taken off and was answered in the
affirmative. Both he and the Chief Officer had
some misgivings as they felt that the cargo which
the manifest indicated they should have on board
was not using as much space as they thought it
should. Further cargo was loaded at Mombasa and
Durban and at Durban some of the cargo was
unloaded and reloaded in order to change the
stability. This included some bales. The unloading
in Montreal took 9 days with no work being done
on a Sunday. The bill of lading was issued for 50
bales and the mate's receipt indicated it was on
board so the cargo was manifested accordingly. He
was unable to see any alterations on the tally
sheets, The tally sheet indicating the cargo to be
on board was signed by McLean Kennedy who
were aware of the Chief Officer's speculation that
the goods might never have been loaded at
Karachi.
This is all the proof which is available respecting
the cargo loss but it appears on the balance of
probabilities that it is quite likely that the cargo
was not on board. Whether the Customs authori
ties would have accepted such a conclusion when
the documents indicated otherwise even had the
claim been made in time is a matter of speculation.
Section 101 of the Act provided, as it read at
that time, that the importation of any goods if
made by sea "shall be deemed to have been com
pleted from the time such goods were brought
within the limits of Canada, meaning when the
waters are not international, within three miles of
the coasts or shores of Canada . ..". Section 11
provides that on arrival of the vessel in Canada the
Master shall go without delay to the custom-house
and make a report in writing to the collector giving
a full description of the goods on board and to
whom consigned, and section 13 provides that he
shall, at the time of making his report, if required
by the officer, produce the bills of lading of the
cargo, or true copies thereof. Section 19 requires
the importer within three days after the arrival of
the importing vessel to make due entry inwards of
the goods and land them and section 20 requires
that at that time he shall deliver to the collector an
invoice of the goods showing the description, quan
tity and value and a bill of entry in the appointed
form which must state the quantity and value of
the goods.
The witnesses conceded that due to the manner
in which the goods are habitually piled in the shed
after unloading, and without any check being
made on unloading to see if the quantities corre
spond with the ship's manifest, it is not unusual for
more than 30 days to expire before a definite
shortage in quantity can be determined. In the
present case the ship arrived on July 15 and it was
not until August 19 that Shulman Cartage finally
indicated that 34 bales were short and not until
August 26 that a Missing Cargo Report was made
to the National Harbours Board. On August 28
the claim for the 34 missing bales was made in
writing to McLean Kennedy Ltd., agents for
defendants and while the witness Schein testified
that he was unaware of this claim letter ever
having been received, I find it difficult to believe
that the first knowledge McLean Kennedy had of
the shortage was when they received a further
letter from plaintiff on September 30. Surely the
searches made by Shulman Cartage for the miss
ing bales must have come to the attention of some
of the employees of McLean Kennedy.
From these facts I cannot conclude that plaintiff
failed to act with proper diligence as it is clear that
in accordance with Customs procedures the Short
Landing Report Form should have been made by
McLean Kennedy Ltd. as agents for the carrier
and not directly by plaintiff itself. It is not suffi
cient justification for their failure to do so to
contend that it would have been futile as the
30-day limit provided in Memorandum D16-3 for
filing the Short Report A 6 1 / 2 had already expired.
I have already concluded that the proper limit is
the 90-day period set out in section 112 of the Act
rather than the 30-day period in the Memorandum
and in any event McLean Kennedy themselves did
file one A 6 1 / 2 form in connection with another bill
of lading relating to bales of rubber missing from
the vessel as late as September 12 and this form
was not rejected by the Customs authorities. There
is therefore no reason why a similar form should
not have been filed with respect to the missing
bales from the cargo consigned to plaintiff, and the
explanations given for their failure to do so are not
acceptable.
Moreover, section 114 of the Act provides that,
subject to section 112 "no refund of a payment or
overpayment of duty or taxes, arising otherwise
than by reason of an erroneous tariff classification
or an erroneous appraisal of value, shall be made
unless an application therefor is made within two
years of the date of payment or overpayment".
Even now, therefore, it is not too late for such a
claim to be made, and, in accordance with section
114 this would have to be done by plaintiff, (or
perhaps by defendants by way of recursory action)
but the problem arises from the apparent impossi
bility of establishing that the goods were never
landed in Canada, despite the likelihood of this
being so.
Defendants have accepted responsibility for the
loss of the goods by settling plaintiff's claim for
the invoice value of same but deny that under the
contract of carriage they are liable to refund the
customs duty paid on the said missing cargo. I
have already referred to clause 24 of the bill of
lading which "limits the claim to the shipper's net
invoice cost and disbursements ..." less all charges
saved. I would be inclined to give a broad interpre
tation to the word "disbursements" so as to
include the customs duties paid in the present case
and not recovered, unlike the sales tax which
plaintiff, itself being a sales tax agent, never paid
on the goods which it did not receive.
The leading case on the question is that of Club
Coffee Company Limited v. Moore-McCormack
Lines, Inc. 4 in which Thurlow J. [as he then was]
held that the customs duty paid on coffee which
was not delivered was an element of plaintiff's
damages resulting from the non-delivery of the
4 [1968] 2 Ex.C.R. 365.
coffee. Clause 13 of the bill of lading in that case
however had somewhat different words reading:
Whenever less than $500 per package or other freight unit,
the value of the goods in the calculation and adjustment of
claims shall, to avoid uncertainties and difficulties in fixing
value be deemed to be the invoice value, plus freight and
insurance if paid, whether any other value be higher or lower.
Commenting on this Mr. Justice Thurlow stated at
pages 374-5:
The clause and the particular sentence as well are undoubt
edly concerned with the question of the damages, to be paid in
cases where goods are lost or damaged, but the sentence in
question, which the defendants invoke, in my opinion, does not
purport to prescribe the measure of damages where goods have
been lost. The word "damages" does not even appear in the
sentence. What the sentence appears to me to be intended to do
is to provide for the calculation of the value of the lost goods as
an element of their owner's damages for their loss by reference
to their invoice value (plus the freight and insurance if, but only
if, paid) and to substitute the result in the place of the result of
a calculation based on the market value of the goods at the port
of discharge, and the words "whether any other value be higher
or lower" appear to me to refer to such market value, which
might have increased or declined during the voyage and be
higher or lower than the invoice value plus freight and insur
ance by the time the goods were due at the port of discharge, or
to any other method of calculating the value of the goods as an
element of their owner's damages.
The reference to "the value of the goods in the calculation
and adjustment of claims" is, however, I think, to be read
having regard to what the shipowner was obliged by his con
tract to do, that is to say, carry the goods to the port of
discharge and deliver them there, leaving the payment of
customs duty, if any, to their owner. So read, the word "value"
in the expression which I have quoted from Clause 13 refers to
value which would have had to be taken into account as an
element of damages for non-delivery if the goods had been lost
at sea or had been destined for a place where no duty was
imposed on their owner, and it would cover the same element of
damages for failure to deliver in the present case. The clause
does not appear to me to touch the question of the right of the
plaintiff to have the amount of duty for which it has in the
meantime become liable included as well in the calculation of
its damages for the failure of the defendants to deliver the
goods at Montreal.
Earlier in the said judgment at page 368 he refers
to defendants being well aware that no claim by an
importer for a refund of duty paid on cargo would
be allowed save on production by the ship owner
within 30 days of an amended declaration stating
that the lost goods which had been shown on the
ship's report inwards as being aboard were not in
fact imported into Canada, and a short-landing
certificate supported by documents establishing
either that the goods had never been loaded on the
ship or that they had been discharged before the
ship reached the Canadian port or had been lost at
sea. He goes on to state that even though the goods
were reported by the Master of the ship and
entered by plaintiff as having been imported plain
tiff would not have been liable for duty in respect
of them if they were not actually imported and
would have been entitled to a refund on satisfying
the Minister that the missing goods had not in fact
been imported into Canada. He states [at page
369] "At the same time it is also apparent that the
plaintiff, whose goods were not delivered, could
have no means of satisfying the Minister of the
material fact unless the defendants could provide
evidence of it. This, however, they did not do and I
think the inference is plain that they did not do so
because they were not able to substantiate the
fact". That is precisely the situation in the present
case.
Referring at page 370 with approval to the
statement of Lord Esher M.R. in Rodocanachi v.
Milburn (1886) 18 Q.B.D. 67, in which he said at
page 76:
I think that the rule as to measure of damages in a case of
this kind must be this: the measure is the difference between
the position of a plaintiff if the goods had been safely delivered
and his position if the goods are lost.
he says [at page 370]:
So expressed the measure of damages appears to me to coincide
with the principle of restitutio in integrum and to be broad
enough to include the whole of the owner's loss including,
where the goods have reached Canada and he has thus become
liable for customs duty on them, the amount of such duty.
Later on the same page he states:
It is I think of some importance as well to remember that what
the owner is entitled to recover in respect of the shipowner's
failure to deliver his goods is damages, and that the value of the
lost goods is but an element to be taken into account in
assessing such damages. In my opinion such damages also
include customs duty which the owner has paid or become
liable to pay on the undelivered goods.
It is true that at page 371 he concludes that from
the evidence before him the missing coffee must be
taken to have been imported into Canada which is
not the conclusion which I have reached on the
evidence in the present case, but I do not see how
this conclusion would lessen the liability of the
present defendants, the only difference being that
in the present case there might have been a some
what better possibility of obtaining a refund of
duties, which, however, has not taken place due to
the inertia of defendants' agents in not at least
filing a short landing report form, and also because
of defendants' inability to establish that the goods
were not in fact landed in Canada.
Referring to the case of Town of Weston v. The
"Riverton" 5 which held that duties like any other
overcharge made to plaintiff for handling and
discharging the cargo give a claim to reimburse
ment against the person to whom the overpayment
was made and not against the ship, Mr. Justice
Thurlow finds that on the facts before Maclennan
L.J.A. in that case he had concluded that the
missing cargo had not been imported into Canada
and therefore concludes that duty was not in fact
payable, and for this reason he distinguishes that
judgment.
I do not think that the difference in wording
between clause 13 of the bill of lading with which
Mr. Justice Thurlow was dealing in the Club
Coffee case and the wording of clause 24 in the
present bill of lading is sufficient to lead to a
different interpretation. In clause 13 the value of
the goods for the purpose of calculation of claim
was fixed at invoice value plus freight and insur
ance thereby excluding the necessity of looking
into market value. In the present case the words
used are "net invoice cost and disbursements" and
I would have thought that the word "disburse-
ments" covers more than freight and insurance
and thus is broader than the words used in clause
13 of the Club Coffee case. The conclusion in that
case that customs duties could nevertheless be
claimed as an element of damages over and above
5 [1924] 2 Ex.C.R. 65.
the amount established as the value of the goods is
equally valid here.
A further argument was raised by defendants
that clause 24 should not be applied and that the
value of the missing goods should be based on
market value with respect to which no proof had
been made. In support of this counsel referred to
the cases of Nabob Foods Limited v. The "Cape
Corso" 6 and Steamship Kendall Fish, Etc. v.
Lykes Bros. Steamship Company, Inc.' both of
which were discussed at page 373 of the judgment
in the Club Coffee case. Headnote no. 2 gives a
brief summary of Mr. Justice Thurlow's conclu
sions on this point. It reads as follows:
2. Whiles. 3(8) of the United States Carriage of Goods by Sea
Act would if it applied render void the clause in the bill of
lading as to valuation of goods, that statute applies only to
contracts of carriage to or from United States ports and so did
not apply here following the substitution of bills of lading; but
in any event that clause in the bill of lading merely provides for
the calculation of the value of goods as an element in the
calculation of damages for non-delivery, and the right to recov
er the customs duty paid thereon as another element of such
damages is not affected thereby.
In the present case defendants have already
settled plaintiff's claim for the value of the cargo
lost on the basis of the invoice value without
apparently raising any question as to market value.
The only question now before me is whether they
should also have added the amount of customs
duty paid by plaintiff for the missing cargo.
I fully agree with the conclusion set out in
headnote no. 2 of the Club Coffee case that in any
event the clause in the bill of lading merely pro
vides for the calculation of the value of goods as an
element in the calculation of damages for non-
delivery, and the right to recover the customs duty
paid thereon as another element of damages is not
affected thereby.
I therefore conclude that plaintiff's action
against defendants for damages must be main
tained and render judgment in favour of plaintiff
for $1,426.59 with interest and costs.
6 [1954] Ex.C.R. 335.
[1967] A.M.C. 327.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.