T-4080-73
B. G. Equipment Co. Inc. (Plaintiff)
v.
Care Line Canada Ro/Ro Express and Cie Atlan-
tique Maritime, c/o Cie Générale Transatlantique
(Defendants)
Trial Division, Walsh J.—Montreal, November 7;
Ottawa, November 15, 1977.
Maritime law — Bill of lading — Applicability of the
Hague Rules — Shipment from Sweden to Montreal damaged
— No declaration made or indication given on bill of lading as
to value — Whether or not defendants waived rights to limit
liability on unit basis — Whether or not Canadian or Swedish
law applicable — Carriage of Goods by Water Act, R.S.C.
1970, c. C-15 — Hague Rules, Article IV, Rule 5.
Plaintiff's goods were damaged while being shipped from
Sweden to Montreal. The Hague Rules governed the contract
of carriage, and according to Swedish law were compulsorily
applicable. The value of the goods had neither been declared to
the defendants nor indicated on the bill of lading. Plaintiff
contends that clause 12 of the bill of lading, headed "The
Amount of Compensation" applies (arguing that the parties
waived the Hague Rules limitation), rather than clause 13
entitled "Special Provisions including Port to Port Shipments".
The issues to be determined are: (1) under the terms of the bill
of lading, have the defendants waived their right to limit
liability on a unit basis and (2) if not, should such limitation be
based on Swedish or Canadian law.
Held, the action is dismissed. The proceedings are properly
brought in Canada but it is the Hague Rules adopted by
Sweden which are applicable by clause 13(1)(b). There is no
basis for restricting the meaning of "notwithstanding" in clause
13 which clearly excludes the application of clause 12 when it
can be proved where the loss or damage occurred, in which
event either the merchant or the carrier can require that the
liability be determined by the provisions of the Hague Rules.
There is little merit in the argument that the word "liabilities"
as used in clause 13 means legal responsibility for damages and
excludes quantum which is dealt with in clause 12 alone.
Clause 13 in the bill of lading must be given full effect as
overriding clause 12 and incorporating the Hague Rules.
ACTION.
COUNSEL:
P. R. D. MacKell, Q.C., for plaintiff.
A. S. Hyndman, Q.C., for defendants.
SOLICITORS:
Martineau, Walker, Allison, Beaulieu,
MacKell & Clermont, Montreal, for plaintiff.
McMaster, Minnion, Patch, Hyndman,
Legge, Camp & Paterson, Montreal, for
defendants.
The following are the reasons for judgment
rendered in English by
WALSH J.: This action came on for hearing as a
stated case pursuant to Rule 475. The facts agreed
to, plaintiff's contentions, and issues to be
adjudicated upon are set out therein as follows:
1. At all material times the Plaintiff was the owner of the
goods, described in the Care Line Combined Transport Bill of
Lading dated at Copenhagen, Denmark, the 21st November,
1972 (attached as Exhibit No. 1), the said goods consisting in
one dismantled Kroll Climber shipped in four cases and 64
unpacked construction parts (the "goods").
2. At all material times the m.v. MONT LAURIER was owned by
the Defendant Cie Atlantique Maritime.
3. At all material times the Defendant Cie Générale Transat-
lantique was the "Carrier" of Plaintiff's goods within the
meaning of Part I, Clause 2 of the Bill of Lading, Exhibit
No. 1.
4. The goods originated from the F. B. Kroll A/S crane factory
in Copenhagen, Denmark, and were received by representatives
of the Defendant Care Line at Copenhagen in apparent good
order and condition, from whence they were carried by feeder-
ship to Gothenburg, Sweden, for loading on board the ocean
vessel MONT LAURIER for carriage to Montreal.
5. On November 22nd, 1972, the shipper, F. B. Kroll A/S, sent
the consignee, B. G. Equipment Co. Inc., an invoice (copy
attached as Exhibit No. 2) confirming the date of shipment and
the routing hereinabove described.
6. The value of Plaintiff's goods was not declared to the
Defendants and was not indicated on the bill of lading.
7. The goods were received and stowed on board the MONT
LAURIER at Gothenburg, still in apparent good order and
condition.
8. During the crossing of the North Atlantic and, more partic
ularly, between the 8th and 14th December, 1972, the vessel
encountered gale and storm force winds reaching Force 11
(Beaufort Scale), with waves and swell 35 feet high, causing
her to roll and pitch heavily and to ship water overall.
9. During the period of heavy weather hereinabove described,
part of the cargo, including part of Plaintiff's cargo, shifted and
was damaged.
10. For the purposes of the present Stated Case the Plaintiff
admits that the Defendants exercised due diligence to make the
MONT LAURIER seaworthy and to secure that she was properly
manned, equipped and supplied, and to make the holds and
other parts of the ship in which Plaintiff's goods were carried
fit and safe for their reception, carriage and preservation.
11. For the purposes of the Stated Case the Defendants waive
any defence based upon perils, danger and accidents of the sea
or other navigable waters.
12. Following discharge of Plaintiff's goods at Montreal on or
about the 21st December, 1972, and at subsequent surveys, it
was ascertained that the cost of repairs to the said goods
totalled approximately $20,000, which said sum Plaintiff has
fixed for the purposes hereof at $17,000.
13. The contract of carriage was governed, insofar as concerns
the stage of transport involved in this action, by the Interna
tional Convention for the Unification of Certain Rules of Law
relating to Bills of Lading, 1924 (the "Hague Rules"), which,
according to Swedish Law No. 277 of June 5th, 1936, was
compulsorily applicable.
14. Article IV (5) of the Hague Rules provides, inter alia:
"Neither the carrier nor the ship shall in any event be or
become liable for any loss or damage to or in connection with
goods in an amount exceeding £100 per package or unit, or
the equivalent of that sum in other currency unless the
nature and value of such goods have been declared by the
shipper before shipment and inserted in the bill of lading."
15. Under Article 4 (5) of the aforesaid Swedish Law the
limitation per package or unit at all relevant times was Sw. Kr.
1800, which, in December 1972, was equivalent to Can.
$377.82.
16. Damage was sustained to 16 .packages or units of Plaintiff's
goods.
17. The Defendants contend that under Swedish Law and
under Clause 13 of Part III of the Bill of Lading (entitled
"Carrier's Liability") their total liability to Plaintiff with
respect to the 16 packages or units is limited to $6,045.12.
18. On July 27th, 1976, the Defendants tendered and paid into
this Honourable Court at Montreal the said sum of $6,045.12,
together with the sum of $1,084.00 representing interest at the
legal rate calculated from December 27th, 1972 to July 27th
1976, plus $100.00 costs, the said interest and costs being sauf
à parfaire.
19. The Plaintiff contends that:
(a) by virtue of the terms and conditions of the bill of lading
the Defendants have waived the benefit of limitation of
liability based upon the packages or units and thus are liable
to Plaintiff in the amount of $17,000.00; or, alternatively,
(b) if Defendants are entitled to limit liability on the basis of
the packages or units, such liability through the combined
effect of Clauses 5, 12 and 13 of the Bill of Lading should be
that prevailing under the Canadian Carriage of Goods by
Water Act, 1970 R.S. Chap. C-15, namely, $500.00 per
package or unit, in which event their liability to Plaintiff
would be in the amount of $8,000.00.
20. The issues to be adjudicated upon are:
(a) Under the terms of the bill of lading, have the Defend
ants waived their right to limit liability for loss or damage to
Plaintiffs goods on a per package or unit basis?
(b) If the Defendants have not so waived their right to limit
liability, should such limitation be based upon the Swedish
law and be at the rate of $377.82 per package or unit or
should it be based upon Canadian law and be at the rate of
$500.00 per package or unit?
21. Should the Court conclude that the Defendants have
waived their right to limit liability on a per package or unit
basis, judgment should issue in favour of Plaintiff for
$17,000.00 plus interest at the legal rate and costs, the amount
of Defendants' aforesaid tender and deposit to be paid out of
Court to Plaintiffs in partial satisfaction of such judgment.
22. Should the Court conclude that the Defendants are entitled
to limit liability on the basis of the number of packages or units
and in accordance with the Hague Rules as enacted in Sweden,
Defendants' tender and deposit should be declared valid and
judgment should issue in favour of Plaintiff in the amount of
$6,045.12 plus interest in the amount of $1,084.00 and costs in
the amount of $100.00, all costs subsequent to July 27th, 1976,
being in favour of Defendants.
23. Should the Court conclude that the Defendants are entitled
to limit liability on the basis of the number of packages or units
but in accordance with the Canadian Carriage of Goods by
Water Act, judgment should issue in favour of Plaintiff for
$8,000.00 plus interest at the legal rate from December 27th,
1972, and costs, the amount of Defendants' aforesaid tender
and deposit to be paid out of Court to Plaintiffs in partial
satisfaction of such judgment.
The sections of the bill of lading which have
some bearing on the determination of the issue are
as follows:
12. The Amount of Compensation.
(1) When the Carrier is liable for compensation in respect of
loss of or damage to the goods, such compensation shall be
calculated by reference to the value of such goods at the
place and time they are delivered to the Merchant in accord
ance with the contract or should have been so delivered.
(2) The value of the goods shall be fixed according to the
commodity exchange price or, if there be no such price,
according to the current market price or, if there be no
commodity exchange price or current market price, by refer
ence to the normal value of goods of the same kind and
quality.
(3) Compensation shall not, however, exceed Can. $2 per
kilo of gross weight of the goods lost or damaged.
(4) Higher compensation may be claimed only when, with
the consent of the Carrier, the value for the goods declared
by the Consignor which exceeds the limits laid down in this
clause has been stated in this B/L. In that case the amount
of the declared value shall be substituted for that limit.
13. Special Provisions including Port to Port Shipments.
(1) Notwithstanding anything provided for in clauses 11-12
of this B/L, if it can be proved where the loss or damage
occurred the Carrier and/or the Merchant shall, as to the
liability of the Carrier, be entitled to require such liability to
be determined by the provisions contained in any internation
al convention or national law, which provisions
a) cannot be departed from by private contract to the
detriment of the Claimant, and
b) would have applied if the Merchant had made a sepa
rate and direct contract with the Carrier in respect of the
particular stage of transport where the loss or damage
occurred and received as evidence thereof any particular
document which must be issued if such international con
vention or national law shall apply.
(2) Insofar as the Hague Rules contained in the Internation
al Convention for the Unification of Certain Rules relating
to Bills of Lading dated 25th August, 1924, do not apply to
carriage by sea by virtue of the foregoing provisions of the
clause, the liability of the Carrier in respect of any carriage
by sea shall be determined by that Convention. The Hague
Rules shall also determine the liability of the Carrier in
respect of coastwise carriage and of carriage by inland
waterways as if such carriage were carriage by sea. Further
more, they shall apply to all goods carried on deck subject to
clause 8.
(3) Wherever reference is made to the Hague Rules in the
present clause such reference shall in Canada be construed as
a reference to the Canadian Water Carriage of Goods Act
1936.
5. Law and Jurisdiction.
Disputes arising under this B/L shall be determined at the
option of the Claimant by the courts, and subject to Clause 13
of the B/L in accordance with the law at
(a) the place where the Carrier has his habitual residence or
his principal place of business or the branch or agency
through which the contract or combined transport was made,
or
(b) the place where the goods were taken in charge by the
Carrier or the place designated for delivery.
No proceedings may be brought before other courts unless the
Parties expressly agree on both the choice of another court or
arbitration tribunal and the law to be then applicable.
The Hague Rules are embodied in the Canadian
Carriage of Goods by Water Act' as a schedule
thereto but by section 2 of the Act they have effect
in connection with carriage of goods by water only
from any port in Canada to any other port whether
in or outside Canada. By section 4 every bill of
lading issued in Canada that is evidence of any
contract to which the Rules apply must contain an
express statement that it is to have effect subject
to the Rules. The present shipment was by virtue
of a bill of lading made in Copenhagen, Denmark,
calling for shipment by a feeder ship to Gothen-
burg, Sweden, and then to Montreal on the S.S.
Mont Laurier owned by defendant Cie Atlantique
Maritime, from whence the merchandise would be
sent by truck to the consignees in Rochester, New
York. It was therefore a through bill of lading but
there is no dispute that the damage occurred
during the port to port shipment between Gothen-
burg and Montreal. Defendants contend that since
this is a standard form of through bill of lading
used by defendants this accounts for some of the
involved wording, and in particular the higher
limitation of compensation based on weight in
clause 12 thereof, primarily intended for the other
stages of transport rather than the ocean carriage,
and furthermore that since the same bill of lading
is used for eastbound as well as westbound ship
ments that is the reason for the reference to the
Canadian Carriage of Goods by Water Act in
clause 13(3) as this would be a requirement of
section 4 of that statute. While all this may very
well be so and explain the motivation for the
wording of certain clauses in the bill of lading, it
cannot alter the fact that the bill of lading must be
interpreted on the basis of its wording, and that
this was not a shipment subject to the Canadian
Carriage of Goods by Water Act. The proceedings
are properly brought in Canada by virtue of clause
5 of the bill of lading which gives the claimant
three options, one of which is the place designated
for delivery. The fact that clause 13(3) states
wherever reference is made to the Hague Rules
such reference shall "in Canada" be construed as a
reference to The Water Carriage of Goods Act,
1936 of Canada does not in my view make the
Canadian limitation in Article IV, Rule 5 of the
Hague Rules in an amount not exceeding $500 per
package or unit applicable, since the Act itself
' R.S.C. 1970, c. C-15.
makes it clear that these Rules only apply to
outbound shipments.
Plaintiff's principal contention is that clause 12
of the bill of lading applies, the parties having
waived the Hague Rules limitation. In support of
this argument it was pointed out that clause 12 is
headed "The Amount of Compensation" and
clause 13 is entitled "Special Provisions including
Port to Port Shipments". It was during the port to
port shipment that the damage occurred. Plaintiff
contends that a limited interpretation should be
given to the words "Notwithstanding anything
provided for in clauses 11-12", stating that all this
means is that clause 13 prevails if there is a
conflict with clause 12 but that there is no conflict
since clause 12 provides a greater rather than a
lower limitation of liability, which is permissible
under the Hague Rules. Article IV, Rule 5 of the
Hague Rules reads as follows:
Neither the carrier nor the ship shall in any event be or
become liable for any loss or damage to or in connection with
goods in an amount exceeding 100 pounds sterling per package
or unit, or the equivalent of that sum in other currency unless
the nature and value of such goods have been declared by the
shipper before shipment and inserted in the bill of lading.
This declaration if embodied in the bill of lading shall be
prima facie evidence, but shall not be binding or conclusive on
the carrier.
By agreement between the carrier, master or agent of the
carrier and the shipper another maximum amount than that
mentioned in this paragraph may be fixed, provided that such
maximum shall not be less than the figure above named.
Neither the carrier nor the ship shall be responsible in any
event for loss or damage to, or in connection with, goods if the
nature or value thereof has been knowingly misstated by the
shipper in the bill of lading.
Plaintiff therefore contends that since the Rules
permit an increased maximum limitation of liabili
ty and this is what clause 12 does, this clause
prevails. There are two objections to this line of
reasoning. In the first place while the nature of the
goods was declared by the shipper and inserted in
the bill of lading the value of them does not
appear. The bill of lading contains the words "In
transit to U.S.A. for consignees' account and risk",
and while no value of the goods was declared
freight charges would be based on the through
carriage. If clause 12 stands alone it would appear
that the $2 per kilo limitation in subclause 3 would
prevail in the absence of a declaration of value to
bring a still higher limitation into play by virtue of
subclause 4. However the $2 per kilo limitation,
even though agreed to and perhaps used as a basis
for freight charges would itself appear to be a
derogation from Article IV, Rule 5 of the Hague
Rules which do not permit any derogation from
the limitation unless the nature and value of the
goods have been declared.
Furthermore, there is no basis for restricting the
meaning of "notwithstanding" in clause 13 which
in my view clearly excludes the application of
clause 12 when it can be proven where the loss or
damage occurred, in which event either the mer
chant or the carrier can require that the liability
be determined by the provisions of the Hague
Rules. I believe that clause 13(1)(b) applies and
that the bill of lading was one made with the
carrier in respect of the particular stage of trans
port where the loss or damage occurred. While the
bill of lading also covered other stages of carriage
and in this sense was not a separate direct contract
with the carrier it does specify "Pier to Pier Basis"
and it is not disputed that it was during this
portion of the carriage that the damage occurred.
Plaintiff has a further argument in connection
with its contention that clause 13 does not apply.
This is based on the words "as to the liability of
the Carrier", plaintiff contending that liability
merely means legal responsibility for the damages
and does not include the quantum thereof, which is
dealt with in clause 12 headed "The Amount of
Compensation". This contention is based on the
fact that the Hague Rules not only limit the
amount which can be claimed per package but also
set out the obligations of a carrier. Article II of the
Rules states that the carrier "shall be subject to
the responsibilities and liabilities and entitled to
the rights and immunities hereinafter set forth".
Article IV moreover, in addition to setting out
various conditions in which the carrier shall not be
liable includes Rule 5 (supra) stating that it shall
not in any event be liable for loss or damage
exceeding £100 sterling per package or unit. A
further example of the use of the word "liability"
in shipping law can be found in the Canada Ship
ping Act, R.S.C. 1970, c. S-9, sections 647 and
following which are headed Limitation of Liability
in reference to the amount which can be claimed
in certain circumstances. I therefore find little
merit in the argument that the word "liabilities"
as used in clause 13 excludes quantum which is
dealt with by clause 12 alone.
For the above reasons I find that clause 13 in
the bill of lading must be given full effect as
overriding clause 12 and incorporating the Hague
Rules, with the result that plaintiff's first conten
tion that defendants have waived their right to
limitation of liability on a per package or unit
basis cannot be sustained and the claim for
$17,000 cannot succeed.
As indicated above I also find that although the
proceedings are brought in Canada it is not the
limitation of liability in the Hague Rules adopted
in Canada by the Canadian Carriage of Goods by
Water Act which apply to this inbound shipment
but rather the Hague Rules adopted in Sweden by
Swedish law No. 277 on June 5, 1936, which are
applicable by clause 13(1)(b) as an "international
convention or national law" of Sweden. The par
ties agree this would result in a limitation of 1800
Swedish Kr. per package or unit, which in Decem-
ber 1972 was equivalent to $377.82 Canadian.
Since damage was sustained to 16 packages or
units the proper amount of the claim is $6,045.12
together with $1,084 interest at the legal rate from
December 27, 1972 to July 27, 1976, as set out in
paragraph 18 of the stated case. Defendants
having tendered this amount into Court on July
27, 1976, plus the sum of $100 taxable costs
judgment is rendered in favour of plaintiff for this
amount and an order will be issued to pay the total
of $7,229.12 with accrued interest out of Court to
plaintiff. Defendants are entitled to their costs
subsequent to July 27, 1976 on the contestation of
these proceedings.
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.