ITO-Int'l Terminal Operators v. Miida Electronics

ITO-Int'l Terminal Operators v. Miida Electronics
Collection
Supreme Court Judgments
Date
1986-06-26
Report
[1986] 1 SCR 752
Judges
Dickson, Robert George Brian; Beetz, Jean; Estey, Willard Zebedee; McIntyre, William Rogers; Chouinard, Julien; Lamer, Antonio; Wilson, Bertha
On appeal from
Federal Court of Appeal
Subjects
Courts
Maritime law
Decision Content
Supreme Court of Canada
ITO-Int'l Terminal Operators v. Miida Electronics, [1986] 1 S.C.R. 752
Date: 1986-06-26
ITO—International Terminal Operators Ltd. Appellant;
and
Miida Electronics Inc. Respondent;
and
Mitsui O.S.K. Lines Ltd. Respondent;
and between
Miida Electronics Inc. Appellant;
and
Mitsui O.S.K. Lines Ltd. Respondent;
and
ITO—International Terminal Operators Ltd. Respondent.
File Nos.: 16674,16680.
1984: October 2, 3; 1986: June 26.
Present: Dickson C.J. and Beetz, Estey, McIntyre, Chouinard, Lamer and Wilson JJ.
ON APPEAL FROM THE FEDERAL COURT OF APPEAL
Maritime law — Contract — Bill of lading — Exemption of liability clauses — Himalaya clause extending exemption from carrier to stevedore — Goods stolen after delivery to warehouse — Whether or not Himalaya clause effective in extending exemption.
Maritime law — Scope of maritime law — Port warehouse left unsecure and goods stolen — Whether maritime law including common law concept of negligence or whether Civil Code of Quebec incorporated into Canadian maritime law for cases arising in Quebec — Civil Code, arts. 1029, 1053.
Courts — Jurisdiction — Federal Court — Maritime law — Land — based tort with respect to recently unloaded goods — Short-term storage — Whether or not action within jurisdiction of Federal Court — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, ss. 2, 22(1), (2), 42—The Admiralty Act, 1934, 1934 (Can.), c. 31, s. 18(1), (2), (3) — The Admiralty Act, 1891, 1891 (Can.), c. 29, s. 4. Respondent Mitsui O.S.K. Lines Ltd. carried electronic calculators by sea from Japan to Montreal for respondent Miida Electronics Inc. Mitsui arranged for the goods, on arrival, to be picked up and stored at the port on a short term basis by ITO — International Terminal Operators, a stevedoring company and terminal operator. Many cartons of calculators were stolen from ITO's shed. The bill of lading contained a Himalaya clause by which the carrier Mitsui sought to extend limitation of liability to those it employed in performance of the contract of carriage. The contract between Mitsui and ITO expressly stated that the stevedoring company was to be an express beneficiary of all limitation of liability provisions in its bills of lading. The Federal Court Trial Division dismissed Miida's action against both Mitsui and ITO but the Court of Appeal allowed Miida's appeal against ITO and dismissed its appeal against Mitsui. Both Miida and ITO appealed to this Court. At issue were: (1) the general question of the jurisdiction of the Federal Court in Admiralty and the extent of Canadian maritime law; (2) the effect of the Himalaya clause in the bill of lading.
Held: The appeal by ITO — International Terminal Operators Ltd. against the judgment in favour of Miida Electronics Inc. should be allowed and the appeal by Miida Electronics Inc. against the dismissal of its action against Mitsui O.S.K. Lines Ltd. should be dismissed.
Per Dickson C.J. and Estey, McIntyre and Wilson JJ.: The Federal Court has jurisdiction to entertain the claims of Miida against both Mitsui and ITO.
Jurisdiction in the Federal Court depends on there being: (1) a statutory grant of jurisdiction by Parliament; (2) an existing body of federal law, essential to the disposition of the case, which nourishes the statutory grant of jurisdiction; and (3) law underlying the case falling within the scope of the term "a law of Canada" used in s. 101 of the Constitution Act, 1867 . The first requirement was met by s. 22(1) of the Federal Court Act . The second requirement was met in that Canadian maritime law is an existing federal body of law which was essential to the disposition of the case and which nourished the grant of jurisdiction to the Federal Court. The third requirement was met because Canadian maritime law and other laws dealing with navigation and shipping come within s. 91(10) of the Constitution Act, 1867 , thus confirming legislative competence.
"Canadian maritime law" is defined in s. 2 of the Federal Court Act as including law (1) that was administered by the Exchequer Court of Canada on its Admiralty side by virtue of the Admiralty Act or any other statute, or (2) that would have been so administered if that Court had unlimited jurisdiction on its Admiralty side in relation to maritime and admiralty matters. The term therefore includes all that body of law which was administered in England by the High Court on its Admiralty side in 1934 as such law may, from time to time, have been amended by Parliament and as it has developed through judicial precedent to date. The second part of the definition was adopted to ensure that Canadian maritime law would include unlimited jurisdiction in relation to maritime and admiralty matters. While the historical jurisdiction of the Admiralty courts might be significant in determining whether a particular matter was within the definition of Canadian maritime law, the definition of maritime and admiralty matters is not restricted to those claims fitting within the historical limits. Maritime and admiralty matters are to be interpreted within the modern context of shipping and commerce rather than being frozen as of 1934. In reality, the ambit of Canadian maritime law is limited only by the constitutional division of powers in the Constitution Act, 1867 .
The maritime nature of this case depends on (1) the proximity of the terminal operation to the sea, (2) the connection between terminal operator's activities and contract of carriage by sea, and (3) the fact that the storage at issue was short-term pending final delivery carried out by the terminal operator and within the area of the port.
Canadian maritime law as adopted in Canada historically and as finally brought into Canadian law by s. 2 of the Federal Court Act includes common law principles as they are applied in Admiralty matters—they are not an incidental application of provincial law. The common law principles of negligence and bailment are a part of Canadian maritime law as adopted from England.
Contractual provisions extending limitations of liability to third parties, known as Himalaya clauses, are recognized as a permissible feature of Canadian maritime law. Both Mitsui and ITO are entitled to the protection of the exclusion clauses in the bill of lading because the requirements for establishing the necessary link between the stevedore and the consignee to give the element of privity were met here.
Even though the exempting provision relieving ITO and Mitsui of liability in any capacity did not specifically mention negligence, the exemption clause, considered in the context of the whole contract, was wide enough to include the warehouseman's negligence as being within the reasonable contemplation of the parties.
Per Beetz, Chouinard and Lamer JJ.: The appeal of Miida Electronics Inc. against Mitsui O.S.K. Lines Ltd. should be dismissed for the reasons given by McIntyre J. and the appeal of ITO—International Terminal Operators Ltd. against Miida Electronics Inc. should be allowed for the reasons of Pratte J.A., dissenting, in the Federal Court of Appeal. The action of Miida against ITO was purely delictual. Such a tort or delict, committed in Montreal, falls within the jurisdiction of the civil courts of Quebec, and not that of the Federal Court.
Cases Cited
By McIntyre J.
Quebec North Shore Paper Co. v. Canadian Pacific Ltd., [1977] 2 S.C.R. 1054; McNamara Construction (Western) Ltd. v. The Queen, [1977] 2 S.C.R. 654; New Zealand Shipping Co. v. A. M. Satterthwaite & Co. (The "Eurymedon"), [1975] A.C. 154, applied; National Gypsum Co. v. Northern Sales Ltd., [1964] S.C.R. 144; Salmond and Spraggon (Australia) Pty. Ltd. v. Port Jackson Stevedoring Pty. Ltd. (The "New York Star"), [1980] 2 Lloyd's Rep. 317, reversing [1979] 1 Lloyd's Rep. 298; Alderslade v. Hendon Laundry, Ld., [1945] K.B. 189; Lamport & Holt Lines Ltd. v. Coubro & Scrutton (M.& I.) Ltd., (The "Raphael"), [1982] 2 Lloyd's Rep. 42, considered; Domestic Converters Corp. v. Arctic Steamship Line, [1984] 1 F.C. 211, 46 N.R. 195; The Queen v. Canadian Vickers Ltd., [1978] 2 F.C. 675, 77 D.L.R. (3d) 241; Tropwood A.G. v. Sivaco Wire & Nail Co., [1979] 2 S.C.R. 157; "Yuri Maru" (The), The "Woron", [1927] A.C. 906; MacMillan Bloedel Ltd. v. Canadian Stevedoring Co., [1969] 2 Ex. C.R. 375; Toronto Harbour Commissioners v. The "Robert C. Norton", [1964] Ex. C.R. 498; De Lovio v. Boit (1815), 2 Gall. 398; Reference re Industrial Relations and Disputes Act, [1955] S.C.R. 529; "Cuba" (The) v. McMillan (1896), 26 S.C.R. 651; "Winkfield" (The), [1902] P. 42; Wire Rope Industries of Canada (1966) Ltd. v. B.C. Marine Shipbuilders Ltd., [1981] 1 S.C.R. 363; Associated Metals and Minerals Corp. v. The "Evie W", [1978] 2 F.C. 710; Kellogg Co. v. Kellogg, [1941] S.C.R. 242; Midland Silicones Ltd. v. Scruttons Ltd., [1962] A.C. 446; Canadian General Electric Co. v. Pickford & Black Ltd, [1971] S.C.R. 41; Greenwood Shopping Plaza Ltd. v. Beattie, [1980] 2 S.C.R. 228; Canada Steamship Lines Ld. v. The King, [1952] A.C. 192; Gillespie Brothers & Co. v. Roy Bowles Transport Ltd., [1973] 1 All E.R. 193; Hollier v. Rambler Motors (AMC) Ltd., [1972] 1 All E.R. 399; Rutter v. Palmer, [1922] 2 K.B. 87; Smith v. South Wales Switchgear Ltd., [1978] 1 All E.R. 18, referred to.
Statutes and Regulations Cited
Admiralty Act, 1891, 1891 (Can.), c. 29, s. 4.
Admiralty Act, 1934, 1934 (Can.), c. 31, s. 18(1), (2), (3).
Bills of Lading Act, R.S.C. 1970, c. B-6, s. 2.
Civil Code, arts. 1029, 1053.
Colonial Courts of Admiralty Act, 1890 (Imp.), 53 & 54 Vict., c. 27.
Constitution Act, 1867, ss. 91 , 92 , 101 , 129 .
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, ss. 2, 22(1), (2), 31(2), 42.
Statute of Westminster, R.S.C. 1970, Appendix II, No. 26.
Authors Cited
Carver, Thomas Gilbert. Carver's Carriage By Sea, 2 vols., 13th ed. by Raoul Colinvaux, London, Stevens, 1982.
Castel, Jean-Gabriel. Canadian Conflict of Laws, 2nd ed., Toronto, Butterworths, 1986.
Clarke, Philip H. "The Reception of The Eurymedon Decision in Australia, Canada and New Zealand" (1980), 29 Int'I and Comp. L.Q. 132.
Dawson, Francis. "Himalaya Clauses, Consideration and Privity of Contract" (1975), 6 N.Z.U.L.R. 161.
Mayers, Edward Courtenay. Admiralty Law and Practice in Canada, Toronto, Carswells, 1916.
Tedeschi, Mark. "Consideration, Privity and Exemption Clauses; Port Jackson Stevedoring Pty. Ltd. v. Salmond and Spraggon (Australia) Pty. Ltd." (1981), 55 A.L.J. 876.
Tetley, William. Marine Cargo Claims, 2nd ed., Toronto, Butterworths, 1978.
Waddams, S. M., Comments (1977), 55 Can. Bar Rev., 327.
APPEAL from a judgment of the Federal Court of Appeal, [1982] 1 F.C. 406, allowing the appeal of Miida Electronics Inc., as against respondent ITO—International Terminal Operators Ltd. and dismissing its appeal, as against Mitsui O.S.K. Lines Ltd., from a judgment of Marceau J. dismissing its action against both defendants. Appeal by ITO—International Terminal Operators Ltd. against the judgment of Miida Electronics Inc. allowed; appeal by Miida Electronics Inc. against the dismissal of its action against Mitsui O.S.K. Lines Ltd. dismissed.
David Marler and J. Kenrick Sproule, for ITO—International Terminal Operators Ltd.
Marc Nadon, for Miida Electronics Inc.
Trevor Bishop and Robert Cypihot, for Mitsui O.S.K. Lines Ltd.
The judgment of Dickson C.J. and Estey, McIntyre and Wilson JJ. was delivered by
MCINTYRE J.—This appeal involves consideration of various issues concerning Canadian maritime law and the jurisdiction of the Federal Court of Canada to hear and determine a claim for damages for the negligence of a terminal operator in Montreal, and the question of how far an exoneration clause in a bill of lading can extend to benefit third parties, in other words, the validity of what has become known as the Himalaya clause in bills of lading.
The respondent, Mitsui O.S.K. Lines Ltd. (Mitsui), a marine carrier, agreed in a contract evidenced by a bill of lading to carry 250 cartons of electonic calculators from Japan to Montreal where the respondent, Miida Electronics Inc. (Miida), the other party to the contract and owner and consignee of the electronic calculators, could take delivery. The goods arrived in Montreal on September 10, 1973 and were picked up by the appellant, ITO—International Terminal Operators Ltd. (ITO), a cargo-handling or stevedoring company and terminal operator. ITO had agreed with Mitsui to unload and store the goods until delivery was made to Miida. On September 14, 1973, thieves broke into the terminal transit shed which was operated by ITO and where the goods were stored. One hundred and sixty-nine of the cartons were stolen.
In the ordinary course of events two security guards, employees of a security service employed by ITO, made rounds of ITO's sheds every two hours after 5:30 p.m. Due to the fact that one of the guards had been delayed at another shed on that occasion, no security check was made at the shed where the goods were stored until 10:30 p.m. The arrival of the guard interrupted the thieves. They fled and have not been apprehended. A padlock, which normally locked the door by securing the two sections of a chain to a ring in the wall, had not been attached. As a result, several feet of slack chain had been left. This fact would in all probability have been discovered if the 7:30 p.m. inspection by the security guard had taken place. The thieves had gained access to the shed by cutting a hole in the wall and pulling the slack, unsecured chain, which operated the door, permitting entry.
The bill of lading contained limitation of liability clauses in clause 8 and clause 18 and as well a Himalaya clause in clause 4, by which the carrier, Mitsui, sought to extend limitation of liability to those it employed in the performance of the contract of carriage. The clauses are set out hereunder.
4. It is expressly agreed between the parties hereto that the master, officers, crew members, contractors, stevedores, longshoremen, agents, representatives, employees or others used, engaged or employed by the carrier in the performance of this contract, shall each be the beneficiaries of and shall be entitled to the same, but no further exemptions and immunities from and limitations of liability which the carrier has under this bill of lading whether printed, written, stamped thereon or incorporated by reference. The master, officers, crew members and the other persons referred to heretofore shall to the extent provided be or be deemed to be parties to the contract in or evidenced by this bill of lading and the carrier is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all such persons.
8. The carrier shall not be liable in any capacity whatsoever for any delay, non-delivery, misdelivery or loss of or damage to or in connection with the goods occurring before loading and/or after discharge, whether awaiting shipment landed or stored or put into craft, barge, lighter or otherwise belonging to the carrier or not or pending transhipment at any stage of the whole transportation. "Loading" provided in this bill of lading shall commence with the hooking on of the vessel's tackle or, if not using the vessel's tackle, with the receipt of goods on deck or hold or, in the case of bulk liquids in the vessel's tank. "Discharging" herein provided shall be completed when the goods are freed from the vessel's tackle or taken from deck or hold, or the vessel's tank.
18. The goods may be discharged from the vessel without notice of arrival or discharge, as soon as the vessel is ready to do so and continuously Sundays and holidays included, at all such hours by day or by night as the carrier may determine, no matter what the state of the weather or custom of the port may be. Irrespective of any agreements for the direct delivery of the goods from vessel's tackle or hold to the person entitled to them, the carrier is hereby authorized by the shipper, consignee, and/or person entitled to the goods to discharge the goods onto a wharf, quay and into lighters, barges, craft or warehouse selected by the carrier. If the carrier makes a special agreement to deliver the goods at a specified dock or wharf, it is mutually agreed that such agreement shall be construed to mean that the carrier is to make such delivery only if, in the sole judgment of the carrier, the vessel can safely under her own power, proceed to, lie at, and return from the said dock or wharf, always afloat at any time of tide and only if such dock or wharf is available for the vessel to discharge immediately and that otherwise the goods shall be discharged at any other place in accordance with the preceding provisions of this Article, whereupon carrier's responsibility shall cease. In any case the carrier's responsibility shall cease at the time when the goods are discharged from the vessel and in any case all risks and expenses (including expenses for landing, lighterage, storage, cartage, port charges, etc.) incurred by delivery otherwise than from the vessel's side shall be borne by shipper and/or consignee notwithstanding any custom of the port to the contrary. The goods shall be considered to be delivered to the consignee at his own risk and expense in every respect when taken into the custody of customs or other authorities. If the goods be unclaimed within a reasonable time, they may, at carrier's discretion and subject to carrier's lien, be sold, abandoned or dealt with otherwise, solely at the risk and expense of shipper and/or consignee. The carrier shall not be required to give any notice of disposition of the goods under this Article. Optional delivery shall be only granted when arranged prior to the loading of the goods and so expressly provided herein. Shipper and/or consignee desiring to avail themselves of the option so expressed must give notice in writing to the carrier at the first port of the vessel's call named in the option at least 48 hours prior to the vessel's arrival there, otherwise the goods shall be landed at any of the optional ports at carrier's option and the carrier's responsibility shall then cease.
The stevedoring contract between Mitsui and ITO contained the following provisions as clause 2 and clause 7.
2 Labour. The Contractor will provide labour to load and discharge the vessels of the Company in accordance with prevailing Labour Agreement(s) and labour as provided will be contingent upon labour available to the Contractor under the aforementioned Labour Agreement (s). In the event that receiving, delivery, checking and/or watching services are required, it is expressly agreed that the Contractor will arrange for such services as Agent only for the Company and on the express condition that the Contractor, its Agents and employees shall thereby incur no liability whatsoever for misdelivery, pilferage, theft or mysterious disappearance of cargo, and the Company agrees to indemnify the Contractor in the event it be called upon to pay any sums as a result thereof.
7 Responsibility for Damage or Loss. It is expressly understood and agreed that the Contractor's responsibility for damage or loss shall be strictly limited to damage to the vessel and its equipment and physical damage to cargo or loss of cargo overside through negligence of the Contractor or its employees. When such damage occurs to the vessel or its equipment or where such loss or damage occurs to cargo by reason of such negligence, the vessel's officers or other representatives shall call this to the attention of the Contractor at the time of accident. The Company agrees to indemnify the Contractor in the event it is called upon to pay any sums for damage or loss other than as aforesaid.
It is further expressly understood and agreed that the Company will include the Contractor as an express beneficiary, to the extent of the services to be performed hereunder, of all rights, immunities and limitation of liability provisions of all contracts of affreightment as evidenced by its standard bills of lading and/or passengers' tickets, issued by the Company during the effective period of this agreement. Whenever the customary rights, immunities and/or liability limitations are waived or omitted by the Company, as in the case of ad valorem cargo, the Company agrees to include the Contractor as an assured party under its insurance protection and ensure that it is indemnified against any resultant increase in liability.
At the opening of the trial before Marceau J., the parties made a series of admissions which were reduced to writing and filed with the court. The document containing the admissions is reproduced here from the judgment of Marceau J.:
The parties, through their undersigned attorneys, hereby admit the following facts:
1. THAT Plaintiff Miida Electronics, Inc. ("Miida") was, at all material times herein, the owner of a cargo of 260 [sic] cartons of electronic desk calculators ("the cargo"), each carton containing 2 sets of electronic desk calculators;
2. THAT Plaintiff Miida is entitled to sue under the contract of carriage;
3. THAT Defendant Mitsui O.S.K. Lines Ltd's ("Mitsui's") Bill of Lading No. KBMR-0007, dated Kobe, Japan, July 31, 1973, is produced by consent as Plaintiff Miida's Exhibit P-1;
4. THAT the terms and conditions of Bill of Lading No. KBMR-0007 (Exhibit P-1) constitute the contract of carriage under which Plaintiff Miida's cargo was carried;
5. THAT defendant Mitsui was the carrier of the cargo and issued Bill of Lading No. KBMR-0007 (Exhibit P-1) and is bound by the terms and conditions thereof;
6.THAT Plaintiff Miida is bound by the terms and conditions of Bill of Lading No. KBMR-0007 (Exhibit P-1);
7.THAT Defendant ITO—International Terminal Operators Ltd ("ITO") was the stevedore and provider of terminal services who discharged Defendant Mitsui's vessel, the BUENOS AIRES MARU, at Montreal, pursuant to a contract entered into by it with Defendant Mitsui, it being agreed by all parties that ITO and Logistec Corporation Limited are to be considered by the Court as one and the same and synonymous from all points of view; 8. THAT the production of the contract between Defendants ITO and Mitsui is admitted;
9. THAT Defendant ITO was the lessee of Sheds 49, 50, 51 and 52 of the Port of Montreal;
10. THAT Defendant ITO admits that 250 cartons of electronic desk calculators, each containing 2 sets thereof, were loaded at Kobe on board the BUENOS AIRES MARU, but does not admit that the same quantity was discharged from the BUENOS AIRES MARU at Montreal;
11. THAT 169 sets of electronic desk calculators (84.5 cartons) were not delivered to Plaintiff Miida;
12. THAT Plaintiff Miida has suffered a loss of $26,656.37, which is admitted by the Defendants;
13. THAT in the event of a judgment being rendered in favour of Plaintiff Miida, the Defendants admit that Plaintiff Miida will be entitled to receive $26,656.37, with interest at a rate of 8% from September 14, 1973.
Proceedings
Miida commenced proceedings in the Federal Court Trial Division against both ITO and Mitsui to recover its loss. In paragraph 12 of the statement of claim it was alleged:
12. THAT Defendants are jointly and severally responsible for the loss and damage claimed in breach of contract and in delict and in tort for their fault, negligence, want of care and lack of skill and of their employees, servants, agents, préposés, and independent contractors, including the Master, the crew, the stevedores and the terminal operators whilst in the exercise of the work for which they were employed and during the care of the cargo its checking, loading, handling, stowage, carriage, custody and discharge.
The action was dismissed against both defendants, ITO and Mitsui, on January 5, 1979. Miida appealed against both judgments to the Federal Court of Appeal (Pratte, Le Dain and Lalande JJ.) and on May 22, 1981 its appeal against the dismissal of its action against ITO was allowed (Pratte J. dissenting), and its appeal against Mitsui dismissed (Le Dain J. dissenting). The result of this disposition was to leave Mitsui free of any claim and to place all liability on ITO. From this decision Miida has now appealed to this Court against the dismissal of its claim against Mitsui and ITO has appealed against the judgment in favour of Miida. Leave was granted pursuant to s. 31(2) of the Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10.
Reasons in the Courts Below
In dismissing Miida's claim against Mitsui, Marceau J. [[1979] 2 F.C. 283] found that the loss of the goods had occurred after they had been unloaded from the ship at Montreal. Since he was of the opinion that liability against Mitsui could be found only on the basis of the contract of carriage, he concluded that Mitsui was fully protected by the exclusion clause. He said, in respect of Mitsui [at pp. 291-92]:
Defendant Mitsui is therefore correct. Since no gross negligence in choosing the cargo handling firm used or in any other doings on its part has been alleged against it, and since the loss has been proved to have occurred after the vessel was unloaded, defendant Mitsui is fully protected by the limitation of liability clause in the contract under which it is being sued. The action brought against it therefore cannot succeed.
As to the claim against ITO, Marceau J. held that the Federal Court had jurisdiction to hear the case because cargo-handling was sufficiently closely linked to the contract of carriage of goods by sea. He considered as well that Quebec law would apply because the delict or quasi-delict alleged by and relied upon by the plaintiff Miida was committed in Quebec by one domiciled in Quebec. He concluded on the facts before him that ITO could not be liable to Miida on a purely delictual basis independently of contract and that ITO could not avail itself of the contractual exoneration clauses in the bill of lading because it was not a party to it. He observed, however, that ITO had agreed to perform its services under a contract of services entered into with the carrier, and this contract limited its liability to the extent provided in the carriage contract. He concluded that Miida, the shipper/owner, knew that a stevedore would be involved during the unloading process, and though it was not a party to the stevedoring contract Miida knew that it was to obtain benefit from it and had agreed to that proposition in advance. Miida was therefore bound by the limitation of liability provisions in the service contract and ITO was entitled to rely upon them. He concluded his judgment on this issue by saying, at p. 302:
I therefore find that defendant ITO cannot be held liable for the loss on the sole ground of delict because it committed no fault that could be regarded as a delict; and that on any grounds other than delict it was protected by the limitation of liability clause provided in its contract with Mitsui, which plaintiff agreed to when it accepted the Himalaya clause in the contract of carriage.
In the Court of Appeal, the majority on this issue, Le Dain J. and Lalande D.J., allowed Miida's appeal against ITO. Le Dain J., for the majority, was of the view that, because of the close, practical relationship of the terminal operation to the performance of the contract of carriage, the Miida claim was a maritime matter within the definition of Canadian maritime law in s. 2 of the Federal Court Act . On this point, he expressed the view that the had been wrong in Domestic Converters Corp. v. Arctic Steamship Line, [1984] 1 F.C. 211, 46 N.R. 195 (C.A.) He considered that good policy required that the common law of bailment provided a more coherent and certain basis in cases involving the duties and liabilities of terminal operators than did the civil law of delictual liability. ITO was a sub-bailee for reward. Its duty was to take reasonable care in safeguarding the cargo owner's goods and to this end it was required to provide an adequate security system. It failed in this duty. ITO was, however, entitled to invoke the provisions of the Himalaya clause in the bill of lading. The stevedoring contract to which it was a party provided that the owner was to include it as a beneficiary of the limitation of liability provisions in the contract of carriage. The Himalaya clause could exclude liability for after-discharge loss (clauses 8 and 18), but those clauses did not have the effect of excluding liability for negligence. It did not therefore relieve ITO of liability. He would have allowed Miida's appeal against the dismissal of its action against Mitsui. He was of the view that clauses 8 and 18 of the bill of lading would not relieve the carrier of the obligation to deliver the cargo and care for it pending delivery, and it could not relieve itself by delegating the performance of its obligation to ITO, as its agent.
Lalande D.J. held in favour of the Federal Court's jurisdiction to entertain Miida's action against ITO as an action "connected with" navigation and shipping, pursuant to s. 4 of The Admiralty Act, 1891, 1891 (Can.), c. 29. ITO had contracted with Mitsui to perform terminal services that included "watching and guarding" services and had been negligent in its performance. That fault was actionable by a damaged person under art. 1053 of the Civil Code. He did not consider that the Himalaya clause or clause 7 of the stevedoring contract had any relevance to the issues because they had nothing to do with the after-discharge negligence which was the cause of the damage suffered here. These clauses, he said, gave ITO the benefit of the rights afforded by the Hague Rules to which the bill of lading was subject. There was nothing in the Hague Rules that exonerated the carrier from liability for after-discharge negligence. He agreed that Miida's appeal against ITO should be allowed and that its appeal against Mitsui should be dismissed.
Pratte J.A. was of the opinion that clauses 8 and 18 of the bill of lading excluded Mitsui from liability for after-discharge loss which occurred without fault or negligence on its part. He agreed that the appeal against Mitsui should be dismissed. He would have dismissed the appeal against ITO as well. The failure on ITO's part to do more than it actually did to preserve the goods would not be a fault under art. 1053 of the Civil Code. Even if the common law of bailment were the appropriate law, the claim against ITO would fail because, in his view, ITO was entitled to the protection of the Himalaya clause in the bill of lading. The more fundamental reason why Miida's claim against ITO could not succeed, however, was that given the decision of the Federal Court of Appeal in Domestic Converters Corp. v. Arctic Steamship Line, supra, a claim in delict and tort did not fall within the court's jurisdiction.
Issues
1. The general question of jurisdiction of the Federal Court in admiralty. This will involve a consideration of the extent of Canadian maritime law.
2. The effect of the Himalaya clause in the bill of lading.
Jurisdiction of the Federal Court
The question of the Federal Court's jurisdiction arises in this case in the context of Miida's claim against ITO, a claim involving the negligence of a stevedore-terminal operator in the post-discharge storage of the consignee's goods. The general extent of the jurisdiction of the Federal Court has been the subject of much judicial consideration in recent years. In Quebec North Shore Paper Co. v. Canadian Pacific Ltd., [1977] 2 S.C.R. 1054, and in McNamara Construction (Western) Ltd. v. The Queen, [1977] 2 S.C.R. 654, the essential requirements to support a finding of jurisdiction in the Federal Court were established. They are:
1. There must be a statutory grant of jurisdiction by the federal Parliament.
2. There must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction.
3. The law on which the case is based must be "a law of Canada" as the phrase is used in s. 101 of the Constitution Act, 1867 . The subject of admiralty and marine jurisdiction was canvassed in the Federal Court Trial Division by Thurlow A.C.J. (as he then was) in The Queen v. Canadian Vickers Ltd., [1978] 2 F.C. 675, 77 D.L.R. (3d) 241. He traced the history of the development of the admiralty jurisdiction of the Exchequer Court. I do not consider it necessary to cover the same ground as did Thurlow A.C.J. because the subject was again dealt with in this Court in Tropwood A.G. v. Sivaco Wire & Nail Co., [1979] 2 S.C.R. 157, and the jurisdiction of the Federal Court in this connection was authoritatively stated.
The Tropwood case concerned the question of whether there was operative law under which the Federal Court could properly entertain an action in both contract and tort for damage to inbound cargo. The case is well known and does not require detailed treatment here. It is sufficient to observe that Laskin C.J. (for the Court), noted that the Federal Court of Canada is given jurisdiction to adjudicate on questions of admiralty law by virtue of s. 22 of the Federal Court Act . Later, after noting the historical review by Thurlow A.C.J. in The Queen v. Canadian Vickers Ltd., supra, he said, at pp. 161-62:
For present purposes, it is enough to look at the Canadian statutes enacted following the British Colonial Courts of Admiralty Act, 1890, and following the abrogation of limitations on federal legislative power by the Statute of Westminster, 1931. These Canadian statutes are (1) The Admiralty Act, 1891 (Can.), c. 29; (2) The Admiralty Act, 1934 (Can.), c. 31; and the Federal Court Act , enacted in 1970, with effect from June 1, 1971.
After a discussion of the effect of The Admiralty Act, 1891, in introducing a body of admiralty law as part of the law of Canada, he went on to say, at pp. 162-63:
For my part, I do not think it matters here whether the Act of 1934 failed to incorporate or recognize a body of admiralty law. I leave that question open, although I would be inclined to find that s. 18 of the Act of 1934 was an adequate source of authority to apply a body of admiralty law. Since the present case is admittedly governed by the Federal Court Act , it is that Act to which we must look to determine whether the jurisdiction now reposed in the Federal Court to try what I may compendiously call admiralty matters relates to a body of law, which can be attributed to federal competence, upon which the jurisdiction can operate.
He then referred to the definition of Canadian maritime law in s. 2 of the Federal Court Act , which is set out hereunder:
2. …
"Canadian maritime law" means the law that was administered by the Exchequer Court of Canada on its Admiralty side by virtue of the Admiralty Act or any other statute, or that would have been so administered if that Court had had, on its Admiralty side, unlimited jurisdiction in relation to maritime and admiralty matters, as that law has been altered by this or any other Act of the Parliament of Canada.
and said, at p. 163:
This definition of Canadian maritime law in s. 2 refers to the law that was administered by the Exchequer Court "by virtue of the Admiralty Act or any other statute". The reference to the Admiralty Act is undoubtedly to the Act of 1934, but the Admiralty Act of 1891, although it was repealed, may certainly be considered as "any other statute" by virtue of which law was administered by the Exchequer Court on its admiralty side. If therefore there was a deficient incorporation of admiralty law by the Act of 1934, the same cannot be said of the Act of 1891.
(Emphasis in the original.)
He went on to find that the claim in question was within the scope of admiralty law as it was incorporated into the law of Canada in 1891.
In deciding whether the jurisdictional requirements are met in the case at bar, it seems clear that s. 22(1) of the Federal Court Act , set out hereunder, satisfies the first requirement in giving jurisdiction to the Federal Court:
22. (1) The Trial Division has concurrent original jurisdiction as well between subject and subject as otherwise, in all cases in which a claim of relief is made or a remedy is sought under or by virtue of Canadian maritime law or any other law of Canada relating to any matter coming within the class of subject of navigation and shipping, except to the extent that jurisdiction has been otherwise specially assigned.
To decide if the second requirement is met, it must be determined whether Canadian maritime law or any other law of Canada relating to any matter coming within the class or subject of navigation and shipping is essential to the disposition of the case and nourishes the statutory grant of jurisdiction. On this point, no "other law of Canada" was referred to as being essential to the disposition of the case or as nourishing the statutory claim of jurisdiction of the Federal Court.
Canadian maritime law, as defined in s. 2 of the Federal Court Act , can be separated into two categories. It is the law that:
(1) was administered by the Exchequer Court of Canada on its Admiralty side by virtue of the Admiralty Act or any other statute; or
(2) would have been so administered if that court had had on its Admiralty side unlimited jurisdiction in relation to maritime and admiralty matters.
Category 1 includes all English maritime law as it existed in 1891, as administered by the High Court on its Admiralty side (see Tropwood, supra.). In 1927, it was held in the Judicial Committee of the Privy Council in "Yuri Maru" (The) The "Woron", [1927] A.C. 906, that the Exchequer Court's jurisdiction did not include statutory expansions of the admiralty jurisdiction of the High Court of England arising after the passing of the Colonial Courts of Admiralty Act, 1890. In 1931, however, the Statute of Westminster enlarged the legislative power of the Federal Parliament to enact legislation repugnant to Imperial enactments. In 1934, The Admiralty Act was enacted by the federal Parliament in the exercise of its widened legislative powers to replace The Admiralty Act, 1891. Section 18 of the Act of 1934 defined the jurisdiction of the Exchequer Court in part, as follows: 18. (1) The jurisdiction of the Court on its Admiralty side shall extend to and be exercised in respect of all navigable waters, tidal and non-tidal, whether naturally navigable or artificially made so, and although such waters be within the body of a county or other judicial district, and, generally, such jurisdiction shall, subject to the provisions of this Act, be over the like places, persons, matters and things as the Admiralty jurisdiction now possessed by the High Court of Justice in England, whether existing by virtue of any statute or otherwise, and be exercised by the Court in like manner and to as full an extent as by such High Court.
(2) Without restricting the generality of subsection one of this section, and subject to the provisions of subsection three thereof, section twenty-two of the Supreme Court of Judicature (Consolidation) Act, 1925, of the Parliament of the United Kingdom of Great Britain and Northern Ireland, which is Schedule A to this Act, shall, in so far as it can, apply to and be applied by the Court, mutatis mutandis, as if that section of that Act had been by this Act re-enacted, with the word "Canada" substituted for the word "England", the words "Governor in Council" substituted for "His Majesty in Council", the words "Canada Shipping Act " (with the proper references to years of enactmen