Cami Automotive, Inc. v. Westwood Shipping Lines Inc.

Cami Automotive, Inc. v. Westwood Shipping Lines Inc.
Court (s) Database
Federal Court Decisions
Date
2009-06-24
Neutral citation
2009 FC 664
File numbers
T-1600-05
Decision Content
Cour fédérale
Federal Court
Date: 20090624
Docket: T-1600-05
Citation: 2009 FC 664
Ottawa
,
Ontario
, June 24, 2009
PRESENT: The Honourable Mr. Justice Blanchard
BETWEEN:
CAMI AUTOMOTIVE, INC. and
AISIN WORLD CORPORATION
OF
AMERICA
Plaintiffs
and
WESTWOOD SHIPPING LINES INC.,
AS BORGESTAD SHIPPING and
CANADIAN NATIONAL RAILWAY COMPANY
Defendants
AND BETWEEN:
WESTWOOD SHIPPING LINES INC.
Third Party Plaintiff
and
CANADIAN NATIONAL RAILWAY COMPANY
Third Party
REASONS FOR JUDGMENT AND JUDGMENT
OF THE PRELIMINARY ISSUES OF LIMITATIONS
ON THE DEFENDANTS’ LIABILITY AND THE
NATURE OF THE SHIPPING DOCUMENT AT ISSUE
I. Introduction
[1] By agreement between the parties, at this stage of the proceeding the Court is asked to address only specific preliminary issues regarding limitations of liability between the parties as set out below. I have determined that it is also necessary to consider the nature of the shipping document at issue.
[2] In the main action, the Plaintiffs (Cami Automotive, Inc. and Aisin World Corporation of America) claim damages, pre-judgment interest, costs, and such further and other relief as may be granted by this Court, against the Defendants (WSL Shipping Lines, Inc., Borgestad Shipping, and Canada National Railway) for damage to cargo (the Goods) resulting from the derailment of train cars while the cargo was being transported from Vancouver, British Columbia to Toronto, Ontario.
[3] Both Defendants WSL and Borgestad claim against the Defendant CN for indemnity from any judgments rendered against them, damages, pre and post judgment interest, costs and any other relief as may be granted by this Court.
[4] WSL also claims compensation for the damage to the containers in which the Goods were shipped.
[5] Finally, CN makes a third party claim against WSL arguing that if the Plaintiffs have sustained any damage in this matter, WSL must be liable for the loss. CN therefore seeks indemnity from any judgment rendered against it, pre and post judgment interest, costs, and such further relief as may be granted by this Court.
II. Facts
[6] The parties to this action submitted an agreed statement of facts. I reproduce below the agreed statement of facts as filed with the Court. The schedules referenced in the agreed statement of facts are included in the record but are not reproduced in annex to these reasons.
The Plaintiff, Cami Automotive, Inc. (Cami), is a company registered to do business in the
Province of
Ontario
with offices at
300 Ingersoll Street ,
Ingersoll ,
Ontario
. Cami is an independently incorporated joint venture between Suzuki Motor Corporation and General Motors of Canada Ltd. and manufactures automobiles at a plant located in
Ingersoll ,
Ontario ,
Canada
.
The Plaintiff, Aisin World Corporation of America (AWA), is a company registered to do business in the State of
Michigan
. It is in the business of selling parts and components manufactured by Aisin AW Co. Ltd. of
Japan
to automobile manufacturers including Cami.
The Defendant, WSL Shipping Lines Inc. (WSL), is a company registered to do business in the State of
Washington
, with offices at
840 South 333 rd Street
,
Federal Way ,
Washington
. WSL operates as an ocean carrier and multimodal transportation company and serves customers in approximately 10 ports in
Japan ,
Korea ,
China and
North America . WSL has a fixed-day, weekly sailing schedule from various ports and carries forest products, containerized and oversized cargo.
The Defendant, AS Borgestad Shipping (AS Borgestad), is a company or partnership registered to do business under the laws of Norway, and was at all material times the registered owner of the ship “WSL Anette” (the Ship), a container vessel of 28,805 gross tons registered at Nassau, Bahamas.
The Defendant, Canadian National Railway Company (CN) is a company incorporated under the laws of
Canada with a head office at 935 rue de la Gauchetiere,
Montréal ,
Quebec
, and with offices at
4000 Deltaport Way ,
Ladner ,
BC
. CN is a transcontinental railway providing freight services including the intermodal movement of containers.
WSL was the charterer of the Ship pursuant to a charter agreement with AS Borgestad.
Since 1991 or 1992, WSL has provided ocean carriage and multimodal carriage services to Cami on an annual basis, carrying various containers for Cami from
Japan to
Canada via the
port of
Seattle ,
Washington ,
USA
.
Cami and WSL have historically entered into an annual service contract providing for carriage of containers from
Japan to
Toronto ,
Ontario , via the
port of
Seattle
, Washington (the Service Contract).
As was customary, Cami and WSL entered into individual Service Contracts for the 2004 and 2005 shipping years. Cami and WSL have been unable to locate copies of the signed Service Contracts for 2004 and 2005. Copies of the unsigned Service Contracts for 2004 and 2005 are collectively attached as Schedule “1”.
In this case, pursuant to its Service Contract with Cami, WSL issued a shipping document numbered WWSUAE123NGS4007 and dated December 2, 2004 at
Nagoya
Japan
(the WSL Shipping Document). It was understood by WSL and Cami that the terms of any agreement between them would include, inter alia, the applicable Service Contract and the particular WSL Shipping Document.
As was customary, upon shipment, an original two-sided WSL Shipping Document was provided by WSL, or its agents, to AWA or its agents. AWA retained the original of the WSL Shipping Document.
By the WSL Shipping Document, WSL acknowledged having received on board the Ship then lying at
Nagoya ,
Japan
, a cargo of 15 sealed containers with cargo as described on the WSL Shipping Document. As regards the present action, the cargo which is the subject matter of this action consists of automatic transmission assemblies (the Assemblies) and automatic transmission control modules (the Modules) carried on custom designed racks in five of the 15 containers (collectively, the Goods) as follows:
Container No.
Contents
TTNU1900026
Packages 20 P/T (152 U/T and 152 P/C) 15,705kg
TRLU2372215
Packages 20 P/T (152 U/T and 152 P/C) 15,705kg
TRIU3769835
Packages 20 P/T (152 U/T and 152 P/C) 15,705kg
TOLU3036890
Packages 20 P/T (152 U/T and 152 P/C) 15,705kg
IPXU2237809
Packages 20 P/T (152 U/T and 152 P/C) 15,705kg
As was customary with containerized cargo, the containers were delivered to WSL in
Japan
with seals intact, and, as was customary, WSL did not inspect the Goods. The Goods were carried on 19 custom designed racks each holding 8 Assemblies and one custom designed rack holding 152 Modules. Attached collectively as Schedule “3” are photographs of the Goods taken after the Derailment in the warehouse at CN yard
Concord ,
Ontario
, as follows:
(a) transmissions off the racks (Schedule 3A);
(b) transmissions on the racks (Schedule 3B); and
(c) empty racks (Schedule 3C).
The Plaintiffs Cami and AWA were, at all material times, purchasers and sellers respectively of the Goods on terms FOB [Free On Board]
Nagoya ,
Japan
. Attached as Schedule “4” is a copy of the sales invoice from AWA to Cami.
WSL and CN were parties to Confidential Transportation Agreement No. 009246 (the Confidential Contract) under which CN agreed to transport commodities, including the Goods, for WSL from its Vancouver Intermodal Terminal in Surrey, B.C., to its Brampton Intermodal Terminal in
Brampton ,
Ontario
. The Confidential Contract expired on April 30, 2005. Relevant excerpts from the Confidential Contract are attached as Schedule “5”.
As part of its obligation to carry the Goods from
Nagoya ,
Japan , to
Toronto ,
Ontario ,
Canada , WSL subcontracted carriage of the Goods from
Vancouver ,
British Columbia , to
Toronto ,
Ontario
, to CN. Truck transport of the Goods from the CN container yard in
Toronto to
Ingersoll ,
Ontario
was to be for Cami’s account.
Ocean carriage from the
port of
Nagoya ,
Japan to
Seattle ,
Washington
, took place in December 2004. On or about December 20, 2004, the Goods were carried by truck from
Seattle ,
Washington , to
Vancouver ,
British Columbia
, and delivered into the care, custody and control of CN at CN’s Vancouver Intermodal Terminal. The Goods departed CN’s Vancouver Intermodal Terminal on CN Train Q11251 30 on December 30, 2004.
CN created an electronic data interchange (EDI) waybill for each of the five containers, copies of which are attached as Schedule “6”.No hard copy documents were generated.
On or about January 2, 2005, during rail transit of the 15 containers including the Goods by CN from
Vancouver ,
British Columbia , to
Toronto ,
Ontario , there was a derailment of railway cars at or near
Longlac ,
Ontario
, resulting in physical damage to some or all of the Goods (hereinafter referred to as the Derailment).Attached as Schedule “7” are photographs of the derailment scene.
Terms of the Confidential Contract were not disclosed to AWA or to Cami at any time prior to the Derailment. However the Plaintiffs were aware that the contract of carriage with WSL would necessitate WSL subcontracting the carriage of the Goods from
Vancouver to
Toronto
to CN.
Attached as Schedule “8” is CN Freight Tariff CN007589-AZ.
By Order of the Court made March 5, 2008, it was ordered, inter alia, that: (1) all issues concerning any question as to damages shall be determined separately after trial on the remaining issues, if such issues need to be decided; and (2) the parties shall proceed to trial on the remaining issues (i.e., liability and any limitation of liability) with evidence adduced by way of Statement of Agreed Facts and Documents, affidavit evidence of witnesses, examination for discovery questions and answers, and affidavits of expert witnesses, without prejudice to any party’s right to seek leave to call a witness at trial.
[7] The trial of this action proceeded on February 24, 2009 and continued until February 26, 2009.
[8] By consent Order dated May 14, 2009, the March 5, 2008 bifurcation Order was amended as follows:
Pursuant to Rule 107 of the Federal Courts Rules, all issues pertaining to any limitations of liability available to the Defendants in relation to the claims by the Plaintiff shall be determined by trial separately from the issues of liability of the Defendants generally and the assessment of any damages. The determination of any available limitations of liability shall be on the assumption that the Defendants are liable to the Plaintiff but that assumption is without prejudice to any defences that the Defendants may later raise when, and if, the issues of liability generally and the assessment of any damages are tried.
As a result of the above amended Order, by consent, only issues relating to limitations of liability available to the Defendants will be addressed in these reasons.
III. Issues
[9] The parties to this action agree that the following questions are before the Court for determination:
(1) Can WSL limit its liability by the terms of the WSL Shipping Document and, if so, what is that limitation?
(2) Can CN limit its liability to the Plaintiffs by the terms of the Confidential Contract and, if so, what is that limitation?
(3) Can CN limit is liability to the Plaintiffs by the terms of the WSL Shipping Document and, if so, what is that limitation?
[10] Before turning to the above issues, it is useful to determine whether the WSL Shipping Document is a bill of lading or a waybill.
IV. Analysis
1) Is the WSL Shipping Document a bill of lading or a waybill?
Introduction
[11] Determination of the nature of the shipping document used will have an important bearing on the issues raised in this proceeding. To that end it is therefore useful to understand the distinction between the various shipping documents used in the industry, and particularly, for our purposes, the distinction between a bill of lading and a waybill.
[12] A bill of lading is defined as “a document used in international sales to process the delivery of goods by sea. It is widely employed in liner shipping and on chartered ships in some trades.” (Edgar Gold, Aldo Chircop & Hugh Kindred, Maritime Law (
Toronto
: Irwin Law, 2003), at 408.)
[13] The courts have generally accepted that a bill of lading serves three purposes: it is a receipt for the goods, it represents the contract of carriage and it is a document of title: see Canadian General Electric Co. v. Armateurs du St-Laurent Inc., [1977] 1 F.C. 215 at para. 14; The Rafaela S. [2005] 1 Lloyd’s Rep. 347 at para. 38 (The Rafaela S. (HL)).
[14] During the nineteenth and well into the twentieth century, a bill of lading was the main instrument used to process the carriage of goods by sea. Later in the twentieth century, however, the advantageous advances in cargo handling techniques achieved by the introduction of computers and containers have transformed the carriage of goods by liner ships. As a result of these changes, a variety of new transport documents have been developed and put increasingly into use in place of bills of lading. These new documents include straight bills of lading and waybills. Bills of lading, straight bills of lading, and waybills are now all commonly issued in connection with contracts for the carriage of goods. (Gold, Chircop & Kindred, Maritime Law (
Toronto
: Irwin Law, 2003), at 407).
[15] Straight bills of lading “are those which make the goods deliverable to an identified person as consignee and either contain no words importing transferability or contain words negativing transferability” (Carver on Bills of Lading, Sir Guenter Treitel & F.M.B. Reynolds, ed., 2nd ed, (London: Thomson-Sweet & Maxwell, 2005), at 1-007). Straight bills of lading remain, however, documents of title and as stated above, must be presented at the port of discharge in order to effect delivery (The Rafaela S. (HL), at para. 20).
[16] Therefore, it is now understood that a bill of lading may be negotiable or non-negotiable depending on its terms. Both forms of a bill of lading require, however, that the carrier, or its agents, may only deliver the cargo to the holder of the bill (Timberwest Forest Corp. v. Pacific Link Ocean Services Corp., 2008 FC 801, at para. 13). In other words, whatever its form, a bill of lading must be presented at the port of discharge to ensure the delivery of the goods. This is because both a negotiable and non-negotiable bill of lading are documents of title (The Rafaela S, [2003] 2 Lloyd’s Rep. 113 (C.A.) (The Rafaela S (CA)) at 143, paras. 136-141, aff’d The Rafaela S. (HL) at paras. 20-21).
[17] A waybill, on the other hand, is distinguished from both bills of lading and straight bills of lading based on the fact that waybills are not documents of title. As such, they need not be presented to the carrier (The Rafaela S. (HL), at para. 46; Gold, Chircop & Kindred, at 414). A waybill remains, however, a receipt for goods and evidence of a contract of carriage.
[18] I will now turn to the positions of the parties with respect to the nature of the WSL Shipping Document at hand.
Position of the parties
[19] It is the position of the Plaintiffs that the WSL Shipping Document is a straight bill of lading. WSL is of the view that its Shipping Document is a waybill.
[20] The WSL Shipping Document is the best evidence of the contract between the parties. Its interpretation requires that its terms be considered in the context of the intentions of the parties as evidenced by the contract as a whole (BG Checo International Ltd. v. British Columbia Hydro & Power Authority, [1993] 1 S.C.R. 12 at 23-24).
[21] To that end we turn to the plain language of the terms of the contract. The jurisprudence teaches that we may consider the surrounding circumstances or commercial setting of the contract in determining the intention of the parties: see Canada Law Book Co. v. Boston Book Co. (1922), 64 S.C.R. 182, at 185.
Plain language of the WSL Shipping Document
[22] Captain Noel Asirvatham (Captain Asirvatham), the National Sales Manager Canada for the Defendant WSL, annexed to his affidavit a copy of the WSL Shipping Document as exhibit “A” and a copy of what he describes as a WSL bill of lading as exhibit “B”. Both exhibits are reproduced in the schedule to these reasons. Upon comparing the two documents, I observe the following:
On the top left hand side of exhibit “A” we find the term “waybill”. The term “original bill of lading” is found at the same location on exhibit “B”. I note that these terms appear where you would expect to find the title of the document.
On the top right hand side of both exhibits “A” and “B”, beneath the WSL logo, we find a box containing the printed term “Bill of Lading No.” which provides a space for the document number.
There is a stamp on exhibit “A” which reads:
Straight Bill of Lading
(Waybill)
Delivery will be made to the named consignee, or his authorized agent, on production of proof of identity at the port of discharge or delivery, whichever is applicable.
CARGO MAY NOT BE DIVERTED, RECLAIMED OR CONVEYED. Delivery of cargo may not be delayed except to satisfy carrier’s lien.
There is a stamp on exhibit “A” which reads: “Non-Negotiable Waybill”
There are terms attached to the shipping document in exhibit “A”. It is not disputed that there are identical terms attached to the WSL bill of lading, although not found in exhibit “B”.
At the very bottom of both exhibits “A” and “B” there is a space provided in which to indicate the number of documents signed. Exhibit “A” shows that only one (1) document was signed, whereas exhibit “B” shows that three (3) are to be signed.
[23] Consideration of the differences between the two documents will assist in determining the nature of the WSL Shipping Document.
[24] The fact that we find the term “waybill” on the WSL Shipping Document where one would expect to see the title of the document is indicative of a waybill. This is especially persuasive in the circumstances given that the term “original bill of lading” is found at the same location on the document purported to be an example of a WSL bill of lading, as evidenced in exhibit “B” of Captain Asirvatham’s affidavit.
[25] There is printed on both documents the term “Bill of Lading No.”. This may be indicative of a bill of lading. However, as stated above, the documents also contain terms that are stamped on their face. It is well established that printed terms are subordinate to stamped terms. Metalfer v. Pan Ocean [1998] 2 Lloyd’s Rep. 632 at 636-637; John D. McCamus, The Law of Contracts (
Toronto
: Irwin Law, 2005), at 726-727). Here, for the following reasons, both stamped terms suggest that the impugned shipping document is a waybill. Therefore, this printed term is of little assistance in determining the issue.
[26] The stamp found on exhibit “A” which states “Non-Negotiable Waybill” in my view requires no elaboration. It is indicative of a waybill.
[27] The other stamp found on exhibit “A”, reproduced above at item 3 in para. 22, includes in part the words “Straight Bill of Lading (Waybill)”. As explained above, it is understood that waybills are not straight bills of lading. Due to the apparent confusion of terms, these words are of little assistance in determining the true nature of the shipping document.
[28] This other stamp on exhibit “A” also indicates that delivery is to be made to the named consignee “on production of proof of identity at the port of discharge”. There is no requirement that the WSL Shipping Document be presented at the port of discharge. It is settled jurisprudence that a straight bill of lading must be presented at the port of discharge. As stated earlier, this characteristic of a straight bill of lading distinguishes it from a waybill which is not a document of title. It follows, therefore, that the stamp found on exhibit “A”, dispensing with the requirement to produce the shipping document at the port of discharge, suggests that the document is a waybill.
[29] Next, Captain Asirvatham, well aware of the ongoing practice relating to the preparation and use of the WSL Shipping Document between the parties, attests that WSL only uses two forms of shipping documents: waybills or bills of lading, with identical terms. Since the terms on both documents are identical, they cannot be used to differentiate between the two forms of shipping documents used by WSL. In my view, these terms will be applicable to the shipping document whether it is found to be a bill of lading or a waybill notwithstanding that the terms refer to a bill of lading.
[30] Finally, the evidence indicates that bills of lading, which are documents of title, are usually issued in triplicate so that a copy is available for production at the port of discharge. In this case, only one copy of the WSL Shipping Document was issued. This is consistent with the fact that the document is not a document of title. This factor is a further indication that the shipping document in question is a waybill.
[31] To summarize, on its face, the WSL Shipping Document is entitled “waybill”, both stamps suggest that the WSL Shipping Document is a waybill, and the terms attached to the shipping document cannot be used to differentiate between a waybill and a bill of lading. Further, only one copy of the WSL Shipping Document was issued, and its presentation was not required for delivery of the Goods. In my view, the above findings indicate that the shipping document is a waybill and not a bill of lading. I now turn to consider whether the intention of the parties is supportive of such a conclusion.
The Intent of the Parties
[32] There is little evidence in this case concerning the intention of the parties regarding the WSL Shipping Document. We do know that Cami and WSL have been doing business together since 1991 or 1992, and have customarily entered into annual service contracts. Captain Asirvatham’s undisputed testimony is that, due this longstanding relationship, WSL and Cami deal on a “waybill” basis in order to simplify the transportation of commodities for both parties. The Plaintiffs have adduced no evidence on this point. Captain Asirvatham explains that, a “waybill basis” means that, in contrast to a “bill of lading”, the document is not meant to be negotiable and the tendering of the document is not necessary to effect delivery of the cargo.
[33] Dispensing with the negotiability and title aspects of the bill of lading is indicative of a desire to employ the use of a less onerous shipping document. This has become commonplace in modern cargo transportation, as mentioned earlier in these reasons, through the use of waybills.
[34] Given that the Plaintiff Cami and WSL have been doing business since 1991 or 1992, and have customarily entered into annual service contracts involving the shipment of containerized goods, given the movement towards the use of simplified shipping documents in the industry, and given Captain Asirvatham’s uncontradicted evidence, I am left to conclude that the parties intended the use of a more efficient and expedited shipping process which, in the circumstances, involves the use of a waybill.
[35] Based on the above analysis, I therefore find that the parties intended to contract on a waybill basis.This is consistent with the language of the waybill.I therefore find that the WSL Shipping Document at issue is indeed a waybill.
2) Can WSL limit its liability by the terms of the WSL Shipping Document (waybill) and, if so, what is that limitation?
[36] As previously stated, WSL entered into a contract of carriage with Cami evidenced by the waybill and its attached terms. WSL also entered into a Confidential Contract with CN to provide for the inland carriage of goods to destination.
[37] The Plaintiffs claim that WSL’s liability should be determined by the Confidential Contract WSL negotiated with CN. WSL, on the other hand, submits that its liability to the Plaintiffs is governed by the terms of the waybill.
[38] In my view, this question is resolved by reference to the terms of the Confidential Contract. Term 5 of the Confidential Contract is entitled “Liability and Claims” and reads as follows:
Except as otherwise provided in any schedule to this contract, the liability of CN for any alleged loss, damage or delay to the Commodity shall be identical to the standards applicable to a Canadian rail common carrier, as specified in Railway Traffic Liability Regulations, SOR/91-488.
[39] Clearly, it is only CN’s liability which is contemplated in this contract. Since WSL has not otherwise agreed with Cami to limit its liability in accordance with the terms of the Confidential Contract, WSL’s liability to the Plaintiffs is not limited by the Confidential Contract. I therefore reject the Plaintiffs’ argument. I now turn to the terms of the waybill.
What is the limitation?
[40] Clause 8 of the waybill provides that “the ocean carrier’s responsibility with respect to the goods shall in all cases, including where the goods are lost or damaged while in the custody of the inland carrier, be governed by COGSA or the Hague Rules, whichever is applicable, as provided in Clause 2 herein.”“Ocean Carrier” is defined in Clause 1 of the waybill as follows:
“Ocean Carrier” shall mean Westwood Shipping Lines, the owners, the operator, demised charterer, and also any time charterer or person to the extent bound by this bill of lading who performs the ocean transportation of the cargo described on the face of the bill of lading.
In the instant case there is no dispute that WSL is the Ocean Carrier for the purposes of the waybill. Liability issues between Cami and WSL are therefore governed by clause 8 of the waybill.
[41] Pursuant to Clause 8 of the waybill, WSL’s liability is governed by COGSA or the Hague Rules, whichever is applicable, as provided in Clause 2 of the waybill. Clause 2 is a Clause Paramount which essentially sets out by which regulatory regime the parties agreed to be bound. It reads as follows:
This bill of lading shall have effect subject to all of the provisions of the United States Carriage of Goods by Sea Act, approved April 16, 1936 (“COGSA”). If, however, the Hague Rules or the Hague-Visby Rules (collectively “the Hague Rules”) are made compulsorily applicable to this bill of lading in the country where a dispute hereunder is adjudicated, then this bill of lading shall have effect subject to the Hague Rules. Nothing herein shall be deemed a surrender by the Ocean Carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under COGSA or the Hague Rules, whichever applicable. The provisions of COGSA or the Hague Rules whichever applicable apply to GOODS stowed on deck, and shall govern before the GOODS are loaded on and after they are discharged from the vessel and throughout CARRIAGE of GOODS by the OCEAN CARRIER and the INLAND CARRIER, if the CARRIAGE includes through transportation, and until the GOODS are delivered. The OCEAN CARRIER shall also have the benefit of all other statutes of the
United States
or any other country which may be applicable and which grant the OCEAN CARRIER exemption from or limitation of liability. [Emphasis added.]
[42] Since COGSA applies only if the Hague-Visby Rules are not compulsorily applicable to this waybill in Canada, the first step in determining which regime governs the transportation under this waybill is to examine whether or not the Hague-Visby Rules are compulsorily applicable.
[43] Section 43 of the Marine Liability Act (2001, c.6) is the statutory provision giving the Hague-Visby Rules force of law in Canada in respect of contracts for the carriage of goods by water between different states. These states are enumerated in Article X of the Hague-Visby Rules. It is undisputed that both
Canada and
Japan
are contracting states for the purposes of Article X. (Affidavit of Shuji Yamaguchi, signed January 29, 2009).
[44] The Hague-Visby Rules only apply to “contract[s] for carriage”.This term is defined in article 1 of the Hague-Visby Rules as those contracts covered by “a bill of lading or any similar document of title”. Since the Shipping Document at issue is not a bill of lading, in order for the Hague-Visby Rules to compulsorily apply, the waybill must be a “similar document of title”.As mentioned above, it is clear, that waybills, by definition, are not documents of title.
[45] Since the impugned shipping document is not a bill of lading or similar document of title the Hague-Visby Rules do not compulsorily apply. It follows therefore, pursuant to Clause 2 of the waybill, that the applicable regulatory regime in this instance is COGSA.
[46] Professor William Tetley, in his treaties entitled Marine Cargo Claims, 4 Ed, (Quebec: Thompson Carswell, 2008) vol. 2 at 2304, informs us that countries such as the U.K., South Africa, New Zealand, Singapore, Australia, and the Nordic countries, have all passed legislation which enables the Hague-Visby Rules (or adaptations thereof) to apply to sea waybills. Clearly then, those jurisdictions did not consider that the Hague-Visby Rules applied to sea waybills on their own accord. No such legislation providing for the application of the Hague-Visby Rules to sea waybills has been passed in
Canada
.
[47] COGSA contains a specific limitation of liability formula. This is found at subsection 4(5) which reads:
Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight 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 conclusive on the carrier.
[48] The parties have also agreed on a valuation of the Goods in Clause 14 of the waybill which is very similar to the language of COGSA itself.Clause 14 states:
It is agreed and understood that the meaning of the word “package” includes containers, vans, trailers, pallets and unitized cargos and all pieces, articles or things of any description whatsoever except goods shipped in bulk.
In the event of any loss or damage to goods exceeding in actual value $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight units, the value of the GOODS shall be deemed to be $500 per package or per customary freight unit as the case may be, and OCEAN CARRIER’S liability, if any, shall be determined on the basis of a value of $500 per package or per customary freight unit unless the nature of the GOODS and a higher value shall be declared by the MERCHANT in writing before shipment and inserted herein and extra charges paid. Charges for excess value declarations shall apply as per OCEAN CARRIER’S tariff. In the event of a higher value being declared by the MERCHANT in writing and inserted herein and extra freight being paid thereon if required, the OCEAN CARRIER’S liability, if any, for loss or damage to or in connection with the goods shall be determined on the basis of such declared value and pro rata of such declared value in the case of partial loss or damage, provided such declared value does not exceed the actual value of the GOODS.
[49] The parties have agreed, therefore, that in the event of damage to goods exceeding in actual value $500 per package lawful money of the United States, the packages will be deemed to have a value of $500 lawful money of the United States.This is consistent with the limitation of liability provisions set out in COGSA.
[50] Determining the total amount of WSL’s liability will rest, therefore, on what is meant by a “package”.This term is not defined in COGSA, and clause 14, cited above, does nothing more than state that essentially anything can be a package except goods carried in bulk. Clearly the Goods are not bulk.
[51] The Plaintiffs contend that “package” is to be defined as the individual Assemblies and Modules. Both CN and WSL contend that “package” should be defined as a pallet.
[52] Both Canadian and American jurisprudence teach that the interpretation of the term “package” must be done in accordance with the intention of the parties (J.A. Johnston Co. v. Tindefjell (The), [1973] F.C. 1003, at para. 10). Evidence of this intent is found in the contractual agreement between the parties as set forth in the shipping document as well as the surrounding circumstances (International Factory Sales Service Ltd. v. Alexandr Serafimovich (The), [1976] 1 F.C. 35, at para 28, aff’d Consumers Distributing Co. v. Dart Containerline Co. [1979] F.C.J. No. 1113; Tindefjell, at para. 10; Binladen BSB Landscaping v. M.V. Nedlloyd Rotterdam, 759 F. 2d 1006, at 1012). It is well accepted in the
U.S.
jurisprudence that a “package”, under COGSA, must refer to the result of some preparation for transportation “which facilitates handling but which does not necessarily conceal or completely enclose the goods” (Binladen, at 1012). See also Royal Ins. Co. of America v. Orient Overseas Container Line Ltd., 408 F. Supp. 2d.415 (
Dist. Ct.
, 2005) rev’d on other grounds 525 F. 3d. 409 (Sixth Circuit C.A., 2008). Evidence of packaging and preparation for transport are also important factors in determining what constitutes a package in Canadian jurisprudence (Dart Containerline Co., at para. 25; Serafimovich, at para. 37).
[53] Given the similarity between the American and Canadian approaches in interpreting the term “package” under COGSA and
the Hague
Rules respectively, my analysis will be informed by jurisprudence of both jurisdictions. Whether a “package” is defined as a pallet or as individual Assemblies and Modules will depend on the intention of the parties as evidenced by the language of the waybill and the surrounding circumstances, including preparation for transportation.
[54] On the face of the waybill, it is unclear whether anything is written under the column “NO. OF PACKAGES”, however, at the lower portion of the waybill and across this column, we find written “(15) containers only”.No party to this proceeding argues that a container is a package. Therefore, nothing can be concluded from the information in this column.
[55] Also on the face of the waybill, in the column entitled “DESCRIPTION OF PACKAGES AND GOODS,” we find included the words: “15 containers (300 pallets <2,280U/T&2,280P/C>)”.The evidence indicates that each container contained 20 custom designed pallets, 19 of which held eight Assemblies and one which held 152 Modules. It follows that the above entry found on the face of the waybill indicates the following cargo: 15 containers containing in total 300 custom designed pallets which hold in total 2,280 Transmissions and 2,280 Modules.
[56] On the second page of the waybill we find the “container summary sheet”.Here all 15 containers are listed, and a series of columns serves to describe each one. Under the column entitled “Packages”, for each container it is written “20 P/T (152 U/T&152P/C)” which, as stated above, means 20 pallets containing 152 Assemblies and 152 Modules. In my view, a plain reading of this form indicates that it is the pallet that is considered to be the package. This is consistent with information contained in the column describing “packages” on the face of the waybill.This interpretation is also consistent with the Australian jurisprudence.In El Greco (
Australia
) Pty. Ltd. and Another v. Mediterranean Shipping Co. S.A., [2004] 2 Lloyd’s Rep. 537 (Fed. C. Aust.), the Federal Court of
Australia
found at para. 287 that under the Hague Rules, “[i]f the bill identifies X packages each containing Y pieces or items of cargo then there will be X packages not Y unites enumerated.”
[57] The evidence reveals that it is customary for WSL to use specially designed custom pallets provided to it by the Plaintiffs. The Plaintiff AWA fabricates the racks or pallets in accordance with the Plaintiff Cami’s specifications and is also the owner of the pallets. Clearly then, the decision to use pallets is the Plaintiff’s. This factor has led American courts to find that the pallet is not merely used by the carrier to secure the Goods in place, but rather that the pallet is used by the shipper to prepare the goods for shipment, and is thus a “package” (Standard Electrica, S. A. v.
Hamburg Sudamerikanische Dampfschifffahrts-Gesellschaft, 375 F.2d 943, at 946 (2d
Cir. N.Y. 1967)).
[58] The evidence also reveals that the transmissions are put onto the racks without being individually covered. Rather, a plastic cover was placed over the pallet holding eight transmissions. Christine Michelle Osborne, a witness for the Plaintiff Cami, attests that the logical purpose of the plastic cover is to protect the Goods from water damage or debris, a common purpose in packaging.She also attests that that packaging of the Goods, in this case, meant the placing of the Goods on the custom made pallets.
[59] Given this description of the Goods by Christine Michele Osborne, I do not accept that the individual Assemblies or Modules are packages. As the jurisprudence teaches, a plain language meaning of “package” must connote some form of preparation for shipment or protection during handling. The Assemblies and Modules, in this case were never intended to be shipped individually or outside of a pallet. Indeed the evidence of Ms. Osborne suggests that packaging involved the placement of the transmissions on the pallets. While the Plaintiff’s U.S. law expert, Mr. Russell Williams, Esq., cites cases for the proposition that pieces of cargo within a pallet were packages, these cases involve pieces which are themselves individually wrapped and referred to as cartons, pails, or the like. The circumstances here are different, the transmissions and modules are not individually wrapped, they are simply placed and secured on the pallet and then the pallet is covered in plastic as a single unit.
[60] The Assemblies and Modules at issue here are not individually prepared for transportation. The evidence clearly points to the placement of the units on the pallets as the method adopted to prepare the goods for transportation. This supports the contention that a pallet constitutes the “package” for the purposes of the waybill.
[61] I find therefore, based on the intention of the parties as evidenced by the language of the waybill, the method by which the Goods were prepared for transportation, the purpose of the pallets and the lack of individual wrapping for the Assemblies and Modules, that a “package” for the purposes of the waybill is defined as a pallet.
[62] WSL’s liability pursuant to section 4(5) of COGSA is limited to a maximum of $500 per package which in the circumstances is a pallet. The value of a pallet will be determined in accordance with Clause 14 of the waybill. As stated above, Clause 14 provides that in the event of loss or damage to goods which exceed in value $500 per package lawful money of the
United States , the value of that package is deemed to be $500 lawful money of the
United States
. It follows, in the circumstances, that loss or damage to a pallet will be deemed to be $500 lawful money of the
United States , if the value of that pallet exceeds $500 lawful money of the
United States
.
[63] I note as well that, at all times prior to the shipment, it was open to Cami to declare the value of the cargo and seek greater coverage. This, of course, would likely have meant a higher premium and increased transportation costs. By acting as it did, Cami made a business decision. It balanced the increased costs