[1993] 2 F.C. 553
T-940-89
Canastrand Industries Ltd. (Plaintiff)
v.
The Ship “Lara S” and Freight and her owners Armadaores Lara S.A., Lucky Star Shipping S.A., and Kimberly Navigation Company Limited carrying on business as Kimberly Line Byzantine Maritime Corp. and all others interested in the Ship “Lara S” and Kim-Sail Ltd. (Defendants)
Indexed as: Canastrand Industries Ltd. v. Lara S (The) (T.D.)
Trial Division, Reed J.—Toronto, November 2, 1992; Ottawa, February 11, 1993.
Maritime law — Carriage of goods — Contracts — Action for damage to cargo of baler twine loaded in Brazil to be discharged in Toronto and U.S.A. — Damage not caused by peril of sea, insufficient packaging or other cause — Plaintiff owner of cargo under bills of lading when latter arrived in Toronto — Prima facie case cargo not delivered in same apparent good order and condition as evidenced by bills of lading — Buyer of goods entitled to rely on clean bill of lading.
Conflict of laws — Contractual terms stipulating two different choice of law regimes — Contract evidenced by bill of lading to be construed and governed by American law — Bill of lading subject to American Carriage of Goods by Sea Act — Booking note and bills of lading representing in substance single contract — Choice of law provision found in carrier’s long form bill of lading should prevail — No operational distinction between defendants Kim-Sail and Kim-Nav — Both liable as carriers under bills of lading — Canadian and American authorities as to liability of shipowner reviewed — Canadian law applicable as appropriate foreign law not proved — Shipowner liable as carrier under Hague Rules.
Torts — Negligence — Whether carriers under bills of lading liable in tort for negligent stowage — English case law not followed — Canadian case law with respect to pure economic loss reviewed — Defendant responsible for foreseeable damage caused to plaintiff.
Practice — Pleadings — Amendments — Statement of claim amended without leave under R. 421(1) after expiry of one year limitation period — Curative amendments permitted under R. 421(1) after expiry of limitation period unless substituting or adding new party or creating new cause of action — Amendment adding Kim-Nav not substitution of new party after expiry of limitation period — No prejudice to Kim-Sail and Kim-Nav by amendments clarifying identity of defendants.
Damages — Compensatory — Compensation claimed for bales lightly damaged, severely damaged and for shortages — Arrived sound market value minus arrived damaged market value proper test — Compensation awarded for heavily damaged bales and shortages only, including sorting, handling and survey fees.
This was an action for damage caused to a cargo of baler twine carried by the defendant ship from Brazil to be discharged in Toronto and Milwaukee. The bills of lading, which were “clean” bills of lading, acknowledged receipt of the cargo in apparent good order and condition. The carrier’s long form bill of lading contained various clauses, namely the Clause Paramount, the Governing Law and the Superseding Clause. During the course of the voyage, on April 21-23, 1988, the vessel encountered heavy winds and seas, but the gale was not unusual and the weather was of a type one would expect on the voyage at that time of year. When the Lara S arrived at Toronto, some of the cargo was found to be severely damaged. The main issues were 1) the cause of the damage and specifically whether it arose as a result of insufficient packaging; 2) whether the defendants and which of them were “carriers” under the bills of lading; 3) whether the shipowner could be held liable in tort; 4) whether the defendants Kimberly Navigation Company Limited (Kim-Nav) and Kim-Sail Ltd. (Kim-Sail) had a valid defence based on expiry of the limitation period; 5) the value of the damage suffered by the plaintiff.
Held, the action should be allowed in part.
1) According to a general principle of proof with respect to marine cargo claims, the carrier is prima facie liable for loss or damage to cargo received in good order and out-turned short or in bad order. In the present case, the plaintiff has proved that it was the owner of the cargo when the latter arrived in Toronto and that said cargo was not delivered in the same apparent good order and condition as evidenced by the bills of lading. When a buyer of goods takes up a clean bill of lading, it is presumed, in the absence of evidence to the contrary, that reliance was placed on it. Once the plaintiff has proven a prima facie case of liability for loss or damage to cargo, the carrier can shift the burden of proof by establishing one of the exculpatory clauses referred to in argument, namely perils of the sea, insufficiency of packaging and any other cause. It was clear from the admission concerning the gale encountered by the Lara S during its voyage that a “peril of the sea” was not the cause of the damage to the cargo. The evidence established that the use of pallets was the usual and customary way of packaging this kind of cargo and that the latter was properly stowed in the normal way. The defendants have not proven that the damage was caused by insufficient packaging.
2) Contractual terms herein stipulated two different choice of law regimes. On the one hand, the carrier’s long form bill of lading stated that “the contract evidenced by this Bill of lading shall be construed and governed by U.S. law”; the short form bill of lading added that “This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States …”. On the other hand, the Conline booking note provided that the “Hague Rules … as enacted in the country of shipment” apply to the contract but when there is no such enactment in force in the country of shipment, the corresponding legislation of the country of destination shall apply. Thus, Canadian law would apply as the law of the country of destination since the Hague Rules have not been adopted by Brazil. In case of possible alternative interpretations of conflicting provisions, one must give priority to that which was adopted last. Since the Kim-Nav bills of lading were issued later than either the booking note or the charterparty, the choice of law provision found in its long form bill of lading should prevail. As to whether Kim-Sail, as the charterer under the United States law, could be held liable as a carrier, it had to be pointed out that there was no operational distinction between Kim-Sail and Kim-Nav. Both companies were very closely connected, having common officers, directors and shareholders. Kim-Sail was in fact the carrier and was merely using Kim-Nav’s bills of lading as a matter of convenience. Both were engaged in a joint venture or a partnership and were therefore liable as carriers under the bills of lading.
Under Canadian law, the shipowner would be liable as a carrier since the vessel was not under a demise charter and the bills of lading were signed on behalf of the master. Carriage of goods is a joint venture of owners and charterers who should therefore be held jointly and severally responsible as carriers. The master, who supervises the stowage of goods and is responsible for the conduct of the voyage, is jointly liable with his employer, the shipowner, and the charterer for damage arising out of inadequate stowage. The description of the applicable American law by the defendants’ expert with respect to the shipowner’s liability was neither balanced nor comprehensive. The appropriate foreign law had not been proved and Canadian law was therefore applicable. That being so, the shipowner was liable as a carrier under the Hague Rules.
3) The English cases cited by counsel for the defendants were at odds with the general principles of the law of negligence: one is responsible for damage caused to a plaintiff for whom it could reasonably be foreseen that damage would arise as a result of the negligent act. There was also a difference of opinion between Canadian and English courts with respect to claims involving pure economic loss. The Supreme Court of Canada indicated, in a recent decision, that the narrow English view is not the Canadian approach. In the case of recovery of pure economic loss, there must be a connection between the defendant’s conduct and the plaintiff’s loss which makes it just for the defendant to indemnify the plaintiff. On the basis of that principle, the plaintiff’s claim in negligence should be allowed since a defendant is expected to be responsible for foreseeable damage caused to a plaintiff.
4) An amendment made pursuant to Rule 421(1), after a limitation period has expired, cannot be successfully challenged unless the effect of the amendment is to substitute a new party. Mere curative amendments can be made pursuant to Rule 421(1) even after a limitation period has passed providing the effect is not to substitute or add a new party or create a new cause of action. The amendment adding Kim-Nav was not the substitution of a new party after the limitation period has expired, but merely a clarification of the identity of the defendant. There was no prejudice to Kim-Sail and Kim-Nav as a result of the amendments clarifying the identity of the defendants. The prescription provision of the Hague Rules did not prevent the identifying of Kim-Sail as a defendant in June, 1991, pursuant to Rules 424 and 425. It states that liability is discharged “unless suit is brought” within one year. The action was brought in time against “Kimberly Line”.
5) The loss involving lightly damaged bales of twine was not proven with sufficient certainty to entitle the plaintiff to an award of damages. But heavy damage had been caused to 3,429 bales and the sorting, handling and transportation charges, including the survey fees, were properly a matter for compensation. The arrived sound market value minus arrived damaged market value is the proper test to assess these damages. With respect to the shortages claimed as a result of non-delivery of bales, there was good reason to expect these shortages as a result of the damage which occurred in the hold of the ship. It is not appropriate to subtract a proportionate amount from the cargo damage claim on account of “usual” or “expected” damage. The general rule in carriage of goods cases is that interest is awarded from the date of the arrival of the goods. Whether interest is awarded, from what date and how compounded, if at all, is a matter for the trial judge. The awarding of compound interest is a matter within the discretion of the Court and is quite in keeping with ordinary commercial practice.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Carriage of Goods by Sea Act, 46 U.S.C. § 1300 (1988).
Federal Court Rules, C.R.C., c. 663, RR. 421(1), 422, 424, 425.
International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading and Protocol of Signature, Brussels, August 25, 1924 (“Hague Rules”), Art. 3, ss. 6.
Limitation Act, 1975 (U.K.), 1975, c. 54.
Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, Brussels, 25 August 1924 (Brussels, 23 February 1968) (“Visby Rules”).
United Kingdom Limitation Act, 1939 (U.K.), 2 & 3 Geo. 6, c. 21.
United Nations Convention on the Carriage of Goods by Sea, Hamburg, 31 March 1978 (“Hamburg Rules”).
CASES JUDICIALLY CONSIDERED
APPLIED:
Paterson SS Ltd. v. Aluminum Co. of Can., [1951] S.C.R. 852; [1952] 1 D.L.R. 241; Aris Steamship Co. Inc. v. Associated Metals & Minerals Corporation, [1980] 2 S.C.R. 322; (1980), 110 D.L.R. (3d) 1; 31 N.R. 584; affg [1978] F.C. 710 (C.A.); London Drugs Ltd. v. Kuehne & Nagle International Ltd., [1992] 3 S.C.R. 299; Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1990] 3 F.C. 114; (1990), 65 D.L.R. (4th) 321; 3 C.C.L.T. (2d) 229; 104 N.R. 321 (C.A.); Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021; Redpath Industries Ltd. v. Cisco (The), [1992] 3 F.C. 428 (T.D.).
NOT FOLLOWED:
Margarine Union G.m.b.H v. Cambay Prince Steamship Co. Ltd., [1969] 1 Q.B. 219; Leigh and Sillavan Ltd. v. Aliakmon Shipping Co. Ltd., [1986] A.C. 785 (H.L.).
DISTINGUISHED:
Yeramex Intern. v. S. S. Tendo (Two Cases), 595 F. 2d 943 (4th Cir. 1979); Wirth Limited v. The Atlantic Skou, [1974] 1 F.C. 39 (T.D.); Ladouceur v. Howarth, [1974] S.C.R. 1111; (1973), 41 D.L.R. (3d) 416; Leesona Corpn. v. Consolidated Textile Mills Ltd. et al., [1978] 2 S.C.R. 2; (1977), 82 D.L.R. (3d) 56; 35 C.P.R. (2d) 254; 18 N.R. 29; Aries Tanker Corporation v. Total Transport Ltd. (The Aries), [1977] 1 Lloyd’s Rep. 334 (H.L.); Jay Bola, The, [1992] 2 Lloyd’s Rep. 62 (Q.B.); Leni, The, [1992] 2 Lloyd’s Rep. 48 (Q.B.); Liff v. Peasly, [1980] 1 W.L.R. 781 (C.A.); Ketteman v. Hansel Properties Ltd., [1987] A.C. 189 (H.L.).
CONSIDERED:
Kruger Inc. v. Baltic Shipping Co. (1989), 57 D.L.R. (4th) 498 (F.C.A.); Cormorant-Bulk Carriers Inc. v. Canficorp (Overseas Projects) Ltd. (1984), 54 N.R. 66 (F.C.A.); Mahroos v. S/S Tatiana L., 1988 AMC 757 (S.D.N.Y. 1986); Dempsey Associates v. S.S. Sea Star, 461 F. 2d 1009 (2d Cir. 1972); Associated Metals & Minerals Corp. v. S.S. Portoria, 484 F. 2d 460 (5th Cir. 1973); Tube Products of India v. Steamship Rio Grande, 334 F. Supp. 1039 (S.D.N.Y. 1971); United Nations Children’s Fund v. S.S. Nordstren, 251 F. Supp. 833 (S.D.N.Y. 1965); Unisor Steel Corporation v. Dordrecht, 1981 AMC 2630, (S.D.N.Y. 1981); Poznan, The, 276 F. 418 (S.D.N.Y. 1921); Tubacex, Inc. v. M/V Capetan Georgis II, 1986 AMC 2283 (S.D.N.Y. 1986); Joo Seng Hong Kong Co., Ltd. v. S.S. Unibulkfir, 483 F. Supp. 43 (S.D.N.Y. 1979); Pacific Employers Ins. Co. v. M/V Gloria, 767 F. 2d 229 (5th Cir. 1985); Recovery Services International v. S/S Tatiana L., 1988 AMC 788 (S.D.N.Y. 1986); Buerger and another v. New York Life Assurance Co. (1927), 96 L.J.K.B. 930 (C.A.); Caltex Oil (Australia) Pty. Ltd. v. The Dredge “Willemstad” (1976), 136 C.L.R. 529 (Aust. H.C.); St. Lawrence Construction Limited v. Federal Commerce and Navigation Company Limited, [1985] 1 F.C. 767; (1985), 32 C.C.L.T. 19; 12 C.L.R. 42; 56 N.R. 174 (C.A.); Triangle Steel & Supply Co. v. Korean United Lines Inc. (1985), 63 B.C.L.R. 66; 32 C.C.L.T. 105 (S.C.); Canastrand Industries Ltd. et al. v. Ship Lara S et al. (1991), 48 F.T.R. 188 (F.C.T.D.).
REFERRED TO:
Silver v. Ocean Steamship Co., Ld., [1930] 1 K.B. 416 (C.A.); Bruck Mills Ltd. v. Black Sea Steamship Co., [1973] F.C. 387 (T.D.); Kerlew, The, 43 F. 2d 732 (New York 1924); Kirno Hill Corp. v. Holt, 618 F. 2d 982 (2d Cir. 1980); Donoghue v. Stevenson, [1932] A.C. 562 (H.L.); Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd., [1964] A.C. 465 (H.L.); Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.); Schiffahrt& Kohlen G.m.b.H. v. Chelsea Maritime Ltd., [1982] 1 Q.B. 481; Ismail v. The Golden Med, [1981] 2 F.C. 610 (T.D.); Canadian General Electric Co. Ltd. v. Pickford & Black Ltd., [1972] S.C.R. 52; (1971), 20 D.L.R. (3d) 432; Monk Corp. v. Island Fertilizers Ltd. (1989), 97 N.R. 384 (F.C.A.); Ontario Bus Industries Inc. v. Federal Calumet (The), [1992] 1 F.C. 245; (1991), 47 F.T.R. 149 (T.D.).
AUTHORS CITED
Carver, Thomas Gilbert. Carver’s Carriage by Sea, 13th ed. by Raoul Colinvaux. London: Stevens, 1982.
Friedman, G.H.L. Sale of Goods in Canada, 3rd ed. Toronto: Carswell, 1986.
Schoenbaum, Thomas J. Admiralty and Maritime Law. St. Paul, Minn.: West Publishing Co., 1987.
Scrutton on Charterparties and Bills of Lading, 17th ed. by W. L. McNair. London: Sweet & Maxwell, 1964.
Tetley, William. Marine Cargo Claims, 3rd ed. Montreal: Les Éditions Yvon Blais Inc., 1988.
ACTION for damage to a cargo of baler twine carried by sea. Action allowed in part.
COUSNEL:
Christopher J. Giaschi for plaintiff.
Richard L. Desgagnés for defendants.
SOLICITORS:
McEwen, Schmitt & Co., Vancouver, for plaintiff.
Ogilvy Renault, Montréal, for defendants.
The following are the reasons for judgment rendered in English by
Reed J.: The plaintiff sues for damage caused to a cargo of 22,880 bales of twine carried on board the ship Lara S. The main issues raised by the facts in this case are: (1) the cause of the damage and specifically whether it arose as a result of insufficient packaging; (2) whether the defendants and which of the defendants are “carriers” under the bills of lading; (3) whether the shipowner can be held liable in tort; (4) whether the defendants Kimberly Navigation Company Limited (“Kim-Nav”) and Kim-Sail Ltd. (“Kim-Sail”) have a valid defence based on expiry of the limitation period; (5) the value of the damage suffered by the plaintiff.
GENERAL FACTS
a) Plaintiff — Bills of Lading
The plaintiff purchased a quantity of baler twine from Fibrasa-Fiaçäo, Brasileira de Sisal S.A. (Fibrasa”, the shipper). The terms of the sale were C&F 180 days, payable by two bank drafts. The twine was loaded onto the Lara S in Cabedelo, Brazil along with similar consignments of twine destined for other purchasers. The loading of the twine occurred from April 2, 1988 to April 12, 1988. The Lara S was destined to discharge some of the twine in Toronto and the rest in Milwaukee. Since the twine destined for the plaintiff was to be discharged in Toronto, it was loaded towards the end of the loading period. That is from April 8 to April 12, 1988.
The consignment destined for the plaintiff was covered by bills of lading numbered 1 through 6 and dated April 11, 1988. These were issued “to order of shipper, blank endorsed”. The plaintiff was listed as the person to whom notice should be given of the arrival of the cargo. The bills of lading acknowledged receipt of the cargo in apparent good order and condition. They were “clean” bills of lading. The name KIMBERLY LINE in large bold letters is printed at the top of the face of the bills of lading. They are signed at the bottom:
KIMBERLY LINE
AG ULTRAMAR EXPORT LTDA.—
By signature illegible ; Agent
For the Master
On the reverse side of the bills of lading the name Kimberly Navigation Company Limited, Nassau, Bahamas (Kim-Nav) is printed together with a notification that the Kersten shipping Agency, Inc. (“Kersten Shipping”), 71 Broadway, New York, is KimNav’s general agent. On the reverse side of the bills of lading its is also stated that the terms and conditions of the carrier’s long form bill of lading are deemed to be incorporated therein:
1. It is agreed that the receipt, custody, carriage, delivery and trans-shipping of the goods are subject to the terms appearing on and back hereof and also to the terms contained in the carrier’s regular long form bill of lading, used in the service, including any clauses presently being stamped or endorsed thereon which shall be deemed to be incorporated in this bill of lading, which shall govern the relations, whatsoever they may be, between shipper, consignee, carrier and ship in every contingency, wheresoever and whensoever occurring and whether the carrir [sic] be acting as such or as beilee [sic], and also, in the event of, or during deviation, or of conversion of the goods. The terms of this bill of lading shall not be deemed waived by carrier. Copies of the carrier’s regular long form bill of lading and clauses presently being stamped or endorsed thereon are available from the carrier on request and may be inspected at any of its offices or its agents offices.
2. This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of The United States, approved April 16, 1936 and to the terms of the aforesaid long form bill of lading.
The long form bill of lading contains the following clauses:
1 (Clause paramount) This Bill of Lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States of America approved April 14, 1936, Title 46 of the United States Code and all statutes supplemental and amendatory thereof and of the like statutes of other countries in so far as they may be applicable, which shall be deemed to be incorporated herein and the ship and/or carrier shall be entitled to all the rights and immunities set forth in said acts.
The Provisions of said acts shall (but only to the extent that there may be any liability at all on the part of the carrier, and except as may otherwise specifically be provided herein) govern the reciprocal relationship of the ship and/or carrier on the one hand, and the shipper, consignee and/or owner of the goods, on the other hand, before the goods are loaded on, and after they are discharged from the ship and throughout the entire time during which the goods are in actual custody of the carrier. The carrier shall not be liable in any capacity whatsoever for any delay, non-delivery or mis-delivery, or loss of or damage to the goods occurring while the goods are not in the actual custody of the carrier.
The ship and/or carrier be entitled to the full benefit of, and right to all limitations of, or exemptions from, liability authorized by any provisions of Section 4381-4386, 4389 of the revised statutes of the United States and amendments thereto and of any other provisions of the laws of United States or of any other country whose laws shall apply.
The Bill of Lading shall not be deemed to be or give rise to a personal contract of the carrier.
Nothing herein contained shall be construed to be a surrender of any of the rights or immunities or an increase of any of the responsibilities or liabilities of the ship and/or carrier under said acts to any extent, such term shall be void to that extent but no further.
If the ship is not owned by or chartered by demise to this company (as may be the case notwithstanding anything that appears to the contrary) this Bill of Landing shall take effect only as a contract with the owner or demise charterer, as the case may be, as principal, made through the agency of this company which acts as agent only and shall be under no personal liability whatsoever in respect thereof. If, however, it shall be adjudged that any other than the owner or demise charterer is carrier and/or bailee of the goods, all limitations of and exonerations from liability provided by law, or by the terms hereof, shall be available to such other.
35. (Governing Law) Unless otherwise herein expressly provided, the contract evidenced by this Bill of Landing shall be construed and governed by U.S. Law.
37. (Superseding Clause) All agreements or freight engagements for the shipment of the goods are superseded by this Bill of Lading and all its terms and conditions, whether written, typed, stamped or printed, are accepted and agreed by the shipper or holder hereof to be binding as fully as if signed by the shipper or holder, any local customs or privileges to the contrary notwithstanding. [Underlining added.]
The original short form bills of lading were apparently lost. The second original bills of lading numbers 2 to 6 were introduced in evidence. These were taken from the plaintiff’s files. Photocopies of the original bills of the lading numbered 2 to 6 are also in evidence. Both the photocopies of the originals and the second originals show that the bills of lading were endorsed by Fibrasa.
On April 11, 1988, Fibrasa sent a fax message to the plaintiff informing it of the quantities and type of twine being shipped so that the plaintiff could arrange for insurance on the cargo. On April 12, 1988, the Lara S sailed from Cabedelo, Brazil. It arrived in Toronto on April 29, 1988. Prior to the arrival of the ship, the co-owners of the plaintiff company, Judith and Camron Hoyle, attended at their bank, inspected the original bills of lading which had been sent to the bank. They signed bank drafts for the payment of the cargo covered by those bills of lading. The original bills of lading were then sent to the plaintiff’s customs broker who cleared the cargo through customs and surrendered the bills of lading to Kimberly Line’s port agents in Toronto, Redburn Inc. The agreed statement of facts identifies Redburn Inc. as the port agent of the defendant Kim-Sail. The plaintiff too delivery of the cargo after it had cleared customs.
b) Voyage—Cargo Damage
During the course of the voyage the Lara S encountered heavy winds and seas. This occurred on April 21-23. 1988. The vessel changed course to avoid damage to the cargo. The gale encountered was not unusual. It is agreed by the parties that the weather was a type which one would expect on the voyage in question at that time of year. On April23, the holds of the Lara S were checked and it was discovered that some of the cargo had shifted and been damaged. The master advised Kersten Shipping of the damaged. The Toronto Harbour Commissioners, by letter dated May 2, 1988, advised Kim-Sail’s port agents (Redburn Inc.) that a quantity of the cargo had been received in a damage condition. An employee of the Toronto Harbour Commission notified the plaintiff of the damage. A joint survey of the damage to the plaintiff’s cargo and that belonging to others was conducted on May 3, 1988 and subsequent thereto.
c) Arrangements for shipping
Arrangements for the shipment of the cargo of the baler twine had been made in the following manner. Agencia Ultramar Exp. Ltda. (“Agencia Ultramar”), an agent in Brazil, telephoned Mr. Gardner of Kersten Shipping and advised him that there was a cargo baler twine available to be shipped. This was not the first cargo of baler twine for which shipping arrangements had been made by these parties. Kersten Shipping had been acting as agent for shipments of baler twine by shippers from Brazil for seven or eight years. Mr. Sondheim’s evidence is that Agencia Ultramar was the general agent for the defendant Kim-Sail.
On March 11, 1988, Mr. Gardner, in his capacity as an employee of Kersten Shipping, issued a liner booking note for the cargo. This document named “Kimberly Line” as the carrier. The vessel was listed as “TBN” (to be named). The booking note was issued as a “CONLINEBOOKING” on the standard form used for such purposes. As I understand it, a Conline booking note consists of the terms drafted and approved by the Baltic and International Maritime Conference. In the box on the booking note designated “signature (carrier)” was typed “For and on behalf of owners by KERSTEN SHIPPING AGENCY, INC. by authority as Brokers only”. This liner booking note on its face states:
It is hereby agreed that this Contract shall be performed subject to the terms contained on Page 1 and 2 hereof which shall prevail over any previous arrangements and which shall in turn be superseded (except as to deadfreight and demurrage) by the terms of the Bill of Lading, the terms of which (in fill or in extract) are found on the reverse side hereof.
On the reverse the following clauses are found:
FULL TERMS OF THE CARRIER’S BILL OF LADING FORM
1. Definition.
Wherever the term “Merchant” is used in this Bill of Lading, it shall be deemed to include the Shipper, the Receiver, the Consignee, the Holder of the Bill of Lading and the Owner of the cargo.
2. General Paramount Clause.
The Hague Rules contained in the International Convention for the Unification of certain rules relating to Bill of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply, but in respect of shipments to which no such enactments are compulsorily applicable, the terms of the said Convention shall apply.
Trades where Hague-Visby Rules apply.
In trades where the International Brussels Convention 1924 as amended by the Protocol signed at Brussel on February 23rd 1968—The Hague-Visby Rules—apply compulsorily, the provisions of the respective legislation shall be considered incorporated in this Bill of Landing. The Carrier takes all reservations possible under such applicable legislation, relating to the period before loading and after discharging and while the goods are in the charge of another Carrier, and to deck cargo and live animals.
…
17. Identity of Carrier.
The Contract evidenced by this Bill of Lading is between the Merchant and the Owner of the vessel named herein (or substitute) and it is therefore agreed that said Shipowner only shall be liable for any damage or loss due to any breach or non-performance of any obligation arising out of the contract of carriage, whether or not relating to the vessel’s seaworthiness. If, despite the foregoing, it is adjudged that any other is the Carrier and/or bailee of the goods shipped hereunder, all limitations of, and exonerations from, liability provided for by law or by this Bill of Lading shall be available to such other.
It is further understood and agreed that as the Line, Company or Agents who has executed this Bill of Lading for and on behalf of the Master is not a principal in the transaction, said Line, Company or Agent shall not be under any liability arising out of the contract of carriage, nor as Carrier nor bailee of the goods.
On March 17, 1988, the defendant Kim-Sail entered into a time charter with Armadaores Lara S.A., the owners of the Lara S, for the charter of that vessel. This provided for delivery of the Lara S to the charterers at Cabedelo, Brazil for “One time Charter Trip via safe port(s) … in/out of geographical rotation via Brazil and Great Lakes.” Among the terms of the time charter are the following:
Vessel to be placed at the disposal of the Charterers … Acceptance of delivery by Charterers is not to constitute any waiver of Owners’ obligations hereunder …
7. That the whole reach of the Vessel’s Hold, Decks if deck cargo loaded, same to be Charterers’ risk and expense and usual places of loading (not more than she can reasonably stow and carry) also accommodations for Supercargo, if carried, shall be at the Charterers’ disposal, reserving only proper and sufficient space for Ship’s officers, crew, tackle, apparel, furniture, provisions, stores and fuel.
8. That the Captain shall prosecute his voyages with the utmost dispatch and shall render all customary assistance with ship’s crew and boats. The Captain (although appointed by the Owners), shall be under the orders and directions of the Charterers as regards employments and agency; and Charterers are to load, stow and trim discharge and tally and, if necessary lash and secure the cargo at their expense under the supervision of the Captain. Who is to sign Bills of Lading for cargo as presented, in conformity with Mate’s or Tally Clerk’s receipts.
9. That if the Charterers shall have reason to be dissatisfied with the conduct of the Captain, Officers or Engineers, the Owners shall on receiving particulars of the complaint, investigate the same, and, if necessary, make a change to the appointments.
10. That the Charters shall have permission to appoint a Supercargo, who shall accompany the vessel and see that voyages are prosecuted with the utmost dispatch. He is to be furnished with free accommodation and same fare as provided for Captain’s table, Charterers paying at the rate of $7.50 per day. Owners to victual Pilots and Customs Officers, and also, when authorized by Charterers of their Agent, to victual Tally Clerks, Stevedore’s Foreman etc. Charterers paying at $4.00 per meal, for all such victualling.
…
24. It is also mutually agreed that this Charter is subject to all the terms and provisions of and all the exemptions from liability contained in the Act of Congress of the United States approved on the 13th day of February, 1893, and entitled “An Act relating to Navigation of Vessels, etc.,” in respect of all cargo shipped under this charter to or from the United States of America.
26. Nothing herein stated is to be construed as demise of the vessel to the Time Charterers. The owners to remain responsible for the navigation of the vessel, acts to remain tugboats, insurance, crew, and all other matters, same as when trading for their own account.
Rider clauses which were added include:
35. …
(b) Any Bills of Lading issued pursuant to this Charter Party shall contain the New Jason Clause, New Both-to-Blame Collision Clause, US Clause Paramount, Canadian Clause Paramount and elsewhere the Chamber of Shipping Voyage Charter Clause Paramount 1958 as attached.
…
50. Charters Bill of Lading respectively charter Party Bill of Lading [sic] to be used as required by Charterers and Charterers or their representatives have authority to sign to sign [sic] Bill of Lading for and on Master’s behalf in conformity with Mate’s and/or Tally Clerk’s receipts.
The respective U.S.A. Clause paramount and the Canadian clause paramount as well as the others mentioned in clause 35 were appended:
U.S.A. CLAUSE PARAMOUNT
This Bill of Lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States approved April 16, 1936, which shall be deemed to be incorporated herein, and nothing thein contained shall be deemed a surrender by the carrier of any of its rights or immunities or any increase of any of its responsibilities or liabilities under said Act. If any term of this Bill of Lading be repugnant to said Act to any extent such term shall be void to that extent, but not further.
CANADIAN CLAUSE PARAMOUNT
This Bill of Lading, so far as it relates to the carriage of goods by water, shall have effect, subject to the provisions of the Water Carriage of Goods Act, 1936, enacted by the Parliament of the Dominion of Canada, which shall be deemed to be incorporated herein and nothing contained shall be deemed a surrender by the carrier or any of its rights or immunities or an increase of any of its responsibilities or liabilities under the said Act. If any terms of this Bill of Lading are repugnant to the said Act to any extent, such terms shall be void to that extent but not further.
The charterparty was signed “for and on behalf of Charterers by KERSTEN SHIPPING AGENCY, INC. by authority, as Brokers only.”
On March 23, 1988, Kersten Shipping telexed instructions to the master of the Lara S on behalf of Kim-Sail. This telex informed the master that about 7153 metric tons of baler twine had been booked for his vessel and:
— CARGO TO BE CARRIED UNDER CONLINE BOOKING LINER BOOKING NOTE DATED WHITE PLAINS, NY 3/11/88 WITH THE FOLLOWING SHIPPERS:
CISAL — CIA. INDUSTRIAL DO SISAL,
FIBRASA — FIACAO BRASILEIRA DE SISAL S.A.,
COSIBRA — COMPANHIA SISAL DO BRAZIL,
BRASCORDA — BRAZIL CORDAS S.A.
…
— KIM-SAIL’S REPRESENTATIVE, MR. R. NEISE, WILL TRAVEL TO CABEDELO AND ASSIST WITH LOADING. PLEASE EXTEND TO HIM EVERY COURTESY.
d) Relationship of Kersten Shipping and the Defendants Kim-Nav and Kim-Sail
Kim-Sail, Kim-Nav and Kersten Shipping have common shareholders, directors, officers and employees. Kim-Sail which was incorporated in the Grand Cayman Islands has four directors: H. Sondheim, T. Kersten, P. Gardner and O. L. Tanton. Its officers are H. Sondheim, T. Kersten and P. Gardner. In answer to enquiries made on discovery, the plaintiff was informed that Kim-Nav, which was incorporated in the Bahamas, had five directors: H. Sondheim, T. Kersten, P. Gardner, M. Faxon, B. Gardner. Its three officers were H. Sondheim, T. Kersten and P. Gardner. At trial, Mr. Sondheim indicated that this information was incorrect and that P. Gardner did not have an interest in Kim-Nav but that his wife B. Gardner was a director, officer and shareholder of that company. H. Sondheim, T. Kersten and P. Gardner are all both directors and officers of Kersten Shipping. Kim-Sail has three shareholders. Kim-Nav has perhaps six to ten. It is sufficient to note that H. Sondheim, T. Kersten and the Gardners control all three companies (Kim-Sail, Kim-Nav and Kersten Shipping) and are the major shareholders of all three companies.
Kersten Shipping is the managing agent for Kim-Sail and Kim-Nav. All three companies operate out of the same offices. In response to enquiries as to why Kim-Sail chartered the Lara S but Kim-Nav’s bills of lading were used, Mr. Sondheim explained that there was an oral agreement between Kim-Sail and Kim-Nav whereby Kim-Sail chartered vessels and Kim-Nav booked the cargo and then turned that cargo over to Kim-Sail and was paid a commission. He also gave evidence that Kim-Nav allowed Kim-Sail to use its bills of lading in the present case because Kim-Nav had filed a tariff (information concerning rates charged, commodities carried, etc.) with the United States Federal Maritime Commission. Kim-Sail had not done so. Since a major part of the cargo in question was destined for discharge in Milwaukee, the carrier was required to comply with the United States law and it was necessary to have filed a tariff with the Federal Maritime Commission before the cargo could be discharged in the United States.
On examination for discovery, Mr. Sondheim indicated that generally the percentage of cargo booked by Kim-Nav which Kim-Sail carried was 90 - 95%. In answer to undertakings, after consulting with others, he indicated that the percentage was 80 - 85%. On cross-examination he indicated that Kim-Nav had perhaps booked cargo with another carrier once or twice. On re-examination he indicated that in giving that answer he had been thinking of recent times rather than, for example, the 1967 - 1971 period. Mr. Sondheim’s evidence, which I accept, was that “Kimberly Line” is a trade name used by both Kim-Sail and Kim-Nav. It is also used by some other Kimberly companies although he was somewhat uncertain as to the status of some of these and whether some had been discontinued as a result of becoming inactive. Kim-Nav itself is no longer in business. Kimberly Navigation Company Limited, another Kimberly company having the same name as Kim-Nav but incorporated in the Grand Cayman Islands is now carrying on Kim-Nav’s business. Kimberly Navigation Company Limited (Grand Cayman) was incorporated in 1974.
e) Amendments to Pleadings
On April 28, 1989, almost a year after the cargo in question was delivered, a statement of claim was issued in this action which named Kimberly Line as a defendant. Paragraph 3 of that statement of claim stated:
The Defendant, Kimberley [sic] Line, whose address is presently unknown to the plaintiffs was at all material times to this action the charterer of the motor vessel “Lara S”.
On July 14, 1989, the statement of claim was amended to name “Kimberly Navigation Company Limited, carrying on business as Kimberly Line” as a defendant. This was done in reliance on Rule 421(1) of the Federal Court Rules [C.R.C., c. 663] without a Court order and before the statement of claim was served.
On June 14, 1991, Mr. Justice MacKay issued an order adding Kim-Sail as a defendant. It is useful to quote from the reasons he gave [(1991), 48 F.T.R. 188, at pages 190-191]:
1. At the time action was initiated in April 1989, the plaintiffs did not know, and could not reasonably know, of the existence or the involvement of Kim-Sail Ltd. All documents then in their possession indicated that Kimberly Line, or Kimberly Navigation Company Limited, in whose names bills of lading had been issued was responsible, with shipowners, for carriage of the goods. When they learned of the existence of Kim-Sail Ltd. and its status as time charterer, in August-September, 1990, the limitation period, if it applies, had already expired.
2. The circumstances of this case at this stage, are that essential facts upon which pleading defendants rely by their statement of defence have not been set out and they have now been ordered to provide further and better particulars. The terms of the long form bill of lading under which the goods were carried, have yet to be made clear to the plaintiffs. In these circumstances there is no clear evidence at this stage that the prescription period under the Hague Rules, referred to by defendants, is clearly applicable. If it should prove to be applicable, Kim-Sail Ltd. may be expected to plead it in defence but at this stage the possibility of that defence ought not to be a bar to the joining of the charterer as defendant.
3. Joining Kim-Sail Ltd. will not prejudice their position either by taking the company by surprise, because of its close interrelations with the defendant Kimberly Navigation Company Limited, nor in barring any defence Kim-Sail may have.
4. Joining Kim-Sail Ltd. does not imply any new cause of action, rather it may facilitate assignment of ultimate responsibility, or joint and several responsibility for the damage should the plaintiffs succeed in establishing the cause of action initiated by their claim as filed in April 1989.
5. At this stage as time charterers Kim-Sail would appear to have responsibilities as common carriers of the goods. Those responsibilities may be affected or defined and clarified by evidence, including clear copy of the long form bill of lading.
6. Admittedly, there has been delay on the part of the plaintiffs in seeking to join Kim-Sail Ltd. by motion dated about three years after the delivery of the goods, and nine months after the status of Kim-Sail Ltd. as charterer was brought to the plaintiffs attention. That delay may ultimately be a matter for consideration in assessing costs as between the parties if it can be shown to have added to expenses. Yet it does not otherwise prejudice the position of Kim-Sail Ltd. in a way that would preclude adding the company as a defendant at this stage.
f) Packaging of the Cargo
The twine was stowed on spools. The length of twine on each spool varied depending upon the thickness of the twine. The spools of twine were packaged in pairs in plasticized paper bags, thus comprising bales. The wrapped bales were then stacked on a wooden platform (pallet). The bales were stacked forty or fifty to a pallet depending upon size. They were strapped together with plastic strapping and the unit was covered with plastic shrink-wrap. They were secured on the outside of the plastic to the pallet by rope strapping. This allowed the “palletized” unit to be lifted by a fork lift truck. The wooden platforms (pallets) were designed to be used for one voyage only. They were not reusable. The evidence established that this was the usual and customary way of packaging this kind of cargo. During loading of the cargo five of the pallets being shipped by Fibrasa and seven being sent by another shipper broke apart and had to be repalletized.
The master of the Lara S had never before carried a cargo of baler twine although he had extensive experience carrying various kinds of palletized cargo. At the beginning of the loading of the Lara S in Cabedelo, he noticed some of the palletized units on the dock and expressed concern about the strength of the wooden base and the stability of the unit. He gave evidence that he had pulled the plastic strapping and found it to be slack. The cargo which the captain physically inspected was not the plaintiff’s cargo.
Under the terms of the charterparty, the charterers had the responsibility to load, lash and secure the cargo, at their expense, under the supervision of the captain. This occurred; the charterers hired the stevedores who did the loading. The captain and his officers supervised the loading of the vessel and the captain eventually marked on each mate’s receipt pertaining to the plaintiff’s cargo:
Quality of content unknown. Attention is drawn to the packing of these goods which in the opinion of the carrier is insufficient. All the carrier rights and immunities in the event of loss of or damage to the goods arising by reason of the nature of quality of that packing and of quality of the content. Charterers /vessel not responsible for damages to the cargo due to loose strapping and undersized wooden materials of pallets.
He wrote similar remarks on the mate’s receipts for all the other consignments of twine which were loaded, except for 9 bills of lading (670 palletized units). Approximately 8,000 palletized units were loaded.
Authority to sign the bills of lading was given by the master to Agencia Ultramar. The master was directed by Kim-Sail’s representative, Mr. Neise, to choose that agency as the delegated authority to sign the bills of lading. That authorization states:
This is to advise that AGENCIA ULTRAMAR EXP. LTDA., JOAO PRESSOA/PARAIBA-BRAZIL—Mr. F. REIS LISBOA NETO is authorised to sign the Bills of Lading on behalf of the Master of MV “LARA S” GREEK FLAG for Cargo Loaded in the port of CABEDELO to TORONTO/MILWAUKEE.
All Bills of Lading are to be signed in accordance with terms conditions and exceptions of the covering agreement between owners and charterers and the Mate’s Receipts with exclusions and exceptions noted. [Underlining added.]
As has been noted, the bills of lading which were signed by Agencia Ultramar did not contain the notations which had been included on the mate’s receipts. Clean bills of lading were issued.
PLAINTIFF’S PRIMA FACIE CASE
The applicable law with respect to the plaintiff’s right to sue the carrier is set out, for example, in Tetley, Marine Cargo Claims, 3rd ed., at pages 133-134:
Three general principles of proof run as unbroken threads through Hague and Hague/Visby Rules jurisprudence. The principles are not always apparent but nevertheless are present in every cargo claim where the claimant has properly made his claim and the carrier has properly defended himself.…
1) First Principle of Proof
It is the first principle of proof of a marine cargo claim that the carrier is prima facie liable for loss or damage to cargo received in good order and out-turned short or in bad order.
The carrier having received the goods in good order under a clean bill of lading and having received bad order receipts on delivery is prima facie liable for the loss or damage. Prima facie (at first sight) means that the proof is rebuttable so that the carrier has the burden of making proof sufficient to overturn claimant’s prima facie case. [Footnotes omitted.]
I was also referred to the Federal Court of Appeal decision in Kruger Inc. v. Baltic Shipping Co. (1989), 57 D.L.R. (4th) 498, at page 502:
… the trial judge, drawing particularly from the decisions of the Supreme Court of Canada in Charles Goodfellow Lumber Sales Ltd. v. Verreault (1970), 17 D.L.R. (3d) 56, [1971] S.C.R. 522, and Federal Commerce & Navigation Co. Ltd. v. Eisenerz G.m.b.H. (1972), 31 D.L.R. (3d) 209, [1974] S.C.R. 1225, [1975] 1 Lloyd’s Rep. 105 sub nom. The “Oak Hill”, employed the following steps with respect to the burden of proof [[1988] 1 F.C. 262 at p. 267]:
(1) Initially, the cargo owners need only establish their interest in the cargo, that it was not delivered in the same apparent good order and condition as received on board and the value of cargo lost or damaged. If the carrier offers no defence, the plaintiffs will obtain judgment.
In the present case the plaintiff has proved that it is the owner of the cargo and that the cargo was not delivered in the same apparent good order and condition as evidenced by the bills of lading.
Counsel for the defendants argues that the plaintiff has not proven that it was the owner of the cargo when the cargo was delivered in Toronto. He argues that this follows because the plaintiff has not proven that Fibrasa endorsed the bills of lading before the cargo arrived in Toronto. As has been noted, the original bills of lading which were remitted to Kim-Sail’s port agent have not been found. The copies of the bills of lading and the second originals show that they were in fact endorsed by Fibrasa. Counsel for the defendants speculates that they were not endorsed until sometime after delivery of the cargo in Toronto. Counsel for plaintiff speculates that they were endorsed in Brazil before they were sent to the plaintiff’s bank to trigger payment by the plaintiff.
While it is true that the plaintiff cannot prove exactly when the endorsement occurred, I am persuaded from the evidence respecting the surrounding circumstances that this occurred before the cargo arrived in Toronto. The plaintiff was provided, before the arrival of the cargo, with second originals which had been endorsed. Mr. and Mrs. Hoyle attended at their bank before the arrival of the cargo, inspected the originals and paid for it by bank drafts. The originals were then sent to the plaintiff’s customs agents to facilitate clearance of the cargo through customs. I conclude that on the balance of probabilities the plaintiff was the owner of the cargo under the bills of lading when the cargo arrived in Toronto.
Counsel for the defendants argues that the plaintiff may not rely on the estoppel created by the clean bills of lading because there is no evidence that the plaintiff relied upon them. In my view, the law seems clear that when a buyer of goods takes up a clean bill of lading it is presumed, in the absence of evidence to the contrary, that reliance was placed on it. (See Silver v. Ocean Steamship Co., Ld., [1930] 1 K.B. 416 (C.A.), at pages 428 and 441.) In addition, Judith Hoyle gave evidence that when she checked the bills of lading before signing the bank drafts, one of the things she looked for, was to see if there was any-thing wrong with the twine.
CAUSE OF THE DAMAGE
Setting aside for the moment questions as to the value of the loss and the identity of the carrier or carriers, it is useful to consider, next, the burden which devolves upon the carrier once the plaintiff has proven a prima facie case. The quote from the Federal Court of Appeal decision in Kruger Inc., set out above, can be continued [at page 502]:
(2) The carrier can then shift the burden of proof back to the plaintiffs by establishing that the loss or damage is attributable to one of the excepted perils set out in Article IV of the Hague Rules.
(3) Thereafter the cargo owners must establish the carrier’s negligence or both that the ship was unseaworthy and that the loss was caused by that unseaworthiness.
In Tetley’s Marine Cargo Claims, it is stated at page 143:
2) What the Carrier must Prove:
The carrier must then prove all three of the following:
a) The cause of the loss.
b) Due diligence to make the vessel seaworthy at the beginning of the voyage, in respect of the loss.
c) One of the following exculpatory clauses:
i) Error in navigation and management of the ship.
ii) Fire.
iii) Perils of the Sea and similar exceptions, being Acts of God; Acts of War; Acts of Public Enemies; Restraint of Princes; Quarantine; Strikes; Riots; Saving Life.
iv) Act or omission of the shipper.
v) Inherent vice.
vi) Insufficiency of packing.
vii) Latent defects.
viii) Any other cause. [Footnotes omitted.]
The exculpatory clauses which were referred to in argument are: (iii) perils of the sea; (vi) insufficiency of packaging and (viii) any other cause. As is clear from the admission concerning the gale encountered by the Lara S during its voyage, there is no serious argument that a “peril of the sea” was the cause of the damage to the cargo.[1]
In so far as insufficient packaging is concerned, counsel for the defendants argues that this was the cause of the damage. He argues that I should so conclude in part based on the evidence of Mr. Gardner who stated that insufficiency of packaging had been raised with respect to other cargos of similarly packaged baler twine. Counsel argues that the evidence of the master also supports the conclusion that insufficient packaging was the cause of the damage. The master stated that the cargo was stowed in the normal way and had been properly secured. In addition, counsel for the defendants invites me to rely on the evidence of the plaintiff’s expert who agreed with certain principles of proper packaging which were put to him on cross-examination, e.g., that a packaged unit should form a solid block. Counsel asks me to conclude that the packaging was the cause of the damage from looking at photographs of the damaged cargo.
With respect to the evidence of Mr. Gardner, I did not find him a credible witness. I would not rely on his evidence. In any event, even if concern had been expressed with respect to the packaging of earlier cargo that is not reason to conclude that the cargo in question suffered from a similar vice. Indeed, the allegedly earlier complaint of defects may have been remedied.
The master gave evidence that the cargo was properly stowed in the normal way. Mr. Gaudette, an expert in assessing cargo damage, gave evidence that in his opinion the damage to the cargo had been caused by a shift of stow. He reached this conclusion because of the nature of the damage and because he had been informed that the damage had occurred mainly in two holds. He gave evidence that in his view: the packaging appeared satisfactory; it was similar for all consignments carried on the vessel; if packaging had been the cause of the damage, the damage should have occurred more uniformly throughout the vessel; in a proper stow even pallets insufficiently packaged would not have resulted in the damage he saw.
Mr. Desroches was in charge of the stevedores who unloaded the cargo. He gave evidence that the severe damage was localized, mainly in between deck holds 1 and 2. As has been noted, the packaging was similar for all consignments carried on the vessel. The assertion that if the damage had been caused by the packaging one would have expected damage to have occurred more generally throughout the cargo is a persuasive one.
In addition, counsel for the plaintiff invites me to draw an adverse inference from the fact that two surveyors, Mr. Luther and Mr. Digby, were not called by the defendants. Both these gentlemen were involved in surveys of the cargo damage shortly after the discharge of the cargo. The survey done by Mr. Luther was done on behalf of the owners of the vessel. That done by Mr. Digby was a joint survey, with Mr. Gaudette acting for the plaintiff’s insurers and Mr. Digby acting for the Kimberly Line’s insurers.
I agree that it is proper to draw an adverse inference from the failure to call Mr. Luther and Mr. Digby. In addition, I accept Mr. Gaudette’s opinion evidence as to the cause of the damage to the cargo. I conclude that the defendants have not proven that the damage was caused by insufficient packaging.
With respect to the argument that the damage may have been caused by “any other cause”, this was not seriously pursued.
Counsel for the plaintiff argued that even if much of the packaging had been insufficient, the master of the Lara S was negligent in loading over 7,000 palletized units (almost the whole cargo) when he considered them to be insufficiently packaged. The decision in Bruck Mills Ltd. v. Black Sea Steamship Co., [1973] F.C. 387 (T.D.), is cited for the proposition that loading and stowing a cargo which is thought to be insufficiently packaged, without taking any special precautions in the stowage, is an act of negligence. It was argued that this would prevent the carriers from relying on the insufficiency of packaging exemption and furthermore constitutes in itself bad stowage.[2] Given the conclusion I have reached with respect to the defendants’ failure to prove that insufficient packaging was the cause of the damage, it is not necessary to decide whether the stowing of almost a whole cargo which is thought to be insufficiently packaged is an act of negligence. I note that there was no evidence that it was the improper packaging of cargo belonging to others which caused the damage to the plaintiff’s cargo.
CARRIER/CARRIERS
a) Choice of Law
It is trite law that the law which governs a contract is that of the forum having the most substantial connection with the contract. It is also trite law that the parties may choose which law will govern a contract by expressly so stipulating. The difficulty in this case is that contractual terms stipulate two different choice of law regimes.
It is obvious from the clauses of the various documents set out above that the Kim-Nav long form bill of lading expressly states that “the contract evidenced by this Bill of lading shall be construed and governed by U.S. law.” That provision is incorporated into the short form bill of lading by the express provisions thereof. In addition, the short form bill of lading states “This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States …” (Underlining added.)
The terms of the bill of lading which form part of the Conline booking note, however, provide: the “Hague Rules … as enacted in the country of shipment” apply to the contract but when there is no such enactment in force in the country of shipment, “the corresponding legislation of the country of destination shall apply.” There is no evidence that the Hague Rules [International Convention for the Unification of certain Rules of Law Relating to Bills of Lading and Protocol of Signature, Brussels, August 25, 1924] have been adopted by Brazil. Thus, under the Conline booking note, Canadian law as the law of the country of destination would apply.
Counsel for the plaintiff argues that the terms of the long form Kim-Nav bills of lading are only part of the contract of carriage. The terms in the booking note, it is argued, are equally applicable. He referred to the Federal Court of Appeal decision in Cormorant-Bulk Carriers Inc. v. Canficorp (Overseas Projects) Ltd. (1984), 54 N.R. 66, where it was said at pages 73-75:
Counsel for the appellant takes the position that the bill of lading alone constituted the contract of carriage. He argues that the booking note was not part of the contract but was, rather, a separate service contract under which the respondent agreed merely to find space on board the vessel for carriage of the goods to destination. Accordingly, he says, as the respondent was not privy to the contract of carriage, it gave no consideration whatsoever for the covenant of indemnity. These assertions require consideration in light of the circumstances discussed above.
…
The expression “contract of carriage” is not defined as the contract contained in a bill of lading but rather as the contract “covered by” a bill of lading. This is consistent with the provisions of section 4 of the Act [Carriage of Goods by Water Act, R.S.C. 1970, c. C-15] itself, which provides that a bill of lading that is subject to the Rules “contains or is evidence of” that contract. This suggests that the bill of lading may be viewed as containing only prima facie evidence of the terms of the contract of carriage. That, it seems to me, is consistent with the views expressed by Lord Goddard, C.J., in The Ardennes, ([1951] 1 K.B. 55. And see also Grace Plastics Ltd. v. The “BERND WESCH II”, [1971] F.C. 273, at p. 278.), where he said (at pp. 59-60):
“It is, I think, well settled that a bill of lading is not in itself the contract between the ship-owner and the shipper of goods though it has been said to be excellent evidence of its terms: Sewell v. Burdick (1884), 10 App. Cas. 74, at p. 105, per Lord Bramwell; Crooks & Co. v. Allan (1879), 5 Q.B.D. 38. The contract has come into existence before the bill of lading is signed; the latter signed by one party only, and handed to him by the shipper usually after the goods have been put on board.”
Counsel for the appellant sought to distinguish that case on the ground that it was concerned with a claim for loss caused by deviation of a vessel from her voyage contrary to an oral promise made before the bill of lading was issued. The bill of lading contained liberty to deviate. I do not think that factual difference is sufficient to take this case out of the principle discussed by Lord Goddard. In my view, in the circumstances of this case, we should look to both documents for assistance in identifying the contract of carriage and the parties to it. So to do would be in harmony with the approach taken by Lynskey, J., in Hiram Walker & Sons Ltd. v. Dover Navigation Company Ltd., and Another (1949), 83 Lloyd’s 84, where he said (at p. 90):
…
In my view, the booking note and the bill of lading represented in substance a single contract ….
In addition, the charterparty specifically states in clause 35 that any bills of lading issued pursuant to the charterparty shall contain both a “U.S. clause paramount” and a “Canadian clause paramount”. This would seem to indicate that in so far as goods being carried to the United States and Canada are concerned that the U.S. clause paramount or the Canadian clause paramount should be incorporated respectively into the relevant bills of lading.
Counsel for the plaintiff argues that since the confusion over the applicable choice of law arises as a result of the defendants Kim-Sail and Kim-Nav issuing a multiplicity of documents, the difficulty of interpretation should be interpreted against them and in favour of the plaintiff. Consequently he argues that Canadian law should apply.
There are three possible alternative interpretations of the conflicting provisions: (1) the terms of the Kim-Nav long form bill of lading prevail; (2) the terms of the Conline booking note buttressed by the provisions of the charterparty prevail; (3) the various express provisions being contradictory, they should all be ignored and the proper law determined by the ordinary rule which requires the application of the law of the jurisdiction having the most substantial connection with the contract.
I accept that the booking note and the bills of lading “represent in substance a single contract.” I am not convinced, however, that the specific term of the booking note even when buttressed by the terms of the charterparty should prevail. I think I must give effect to the “superseding clause” numbered 37, found in the Kim-Nav long form bill of lading: “all agreements … for the shipment of the goods are superseded by this Bill of Lading”. I think it is significant, when interpreting conflicting written provisions, in a case such as the present, to give priority to that which was adopted last. The Kim-Nav bills of lading were issued later in time than either the booking note or the charterparty. In addition, it is these bills of lading which were actually issued and on which the plaintiff’s claim is based. Thus, in my view, the choice of law provision found in the Kim-Nav long form bill of lading should prevail.
Counsel for the plaintiff argues that effect should not be given to the clause in the long form bill of lading because a choice of law stipulation is too important a term to be buried in the long form. At page 229 of Professor Tetley’s text on Marine Cargo Claims, it is noted that there are limitations on the ability of carriers to rely on the terms of a long form bill of lading when they are incorporated by reference into a short form bill of lading which is the document actually issued. That text questions whether special clauses which are found only in the long form, such as an arbitration clause or a jurisdiction clause, would be effective. It is suggested that ineffectiveness would arise as a result of insufficient notice having been given of the existence of such a provision. Counsel for the plaintiff argues that the choice of law provision in the long form bill of lading is of this nature.
I cannot accept that argument. Notice that United States law is to apply is not found merely in the long form. One of the terms of the short form bill of lading expressly states that that bill of lading “shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, approved April 16, 1936”. I take this to include the jurisprudence which has developed in the United States with respect to the interpretation of that Act. Thus, I think the short form bills of lading gave notice that United States law was to apply and its incorporation as a contractual term was not dependent solely on the long form bill of lading.
The general principles respecting the application of foreign law, of course, require that it be proven in the same manner as any fact and that when there is no such proof, foreign law will be deemed to be the same as domestic law. In addition, expert evidence on foreign law, like any opinion evidence, is only useful if the factual assumptions on which it is based coincide with the conclusions of fact found by the court in the case to which the opinion relates. The defendants adduced expert evidence concerning two aspects of United States law. One relates to the liability of Kim-Sail. The other relates to the liability of the owners of the Lara S.
b) Kim-Nav and Kim-Sail
Mr. DeOrchis was called as an expert witness with respect to the United States law. He gave evidence that Kim-Sail as the charterer, under United States law, would not be held liable as a COGSA (Carriage of Goods by Sea Act) [46 U.S.C. 1300 (1988)] carrier. Mr. DeOrchis’ opinion was based on the assumption that Kim-Sail was the charterer of the Lara S and that Kim-Nav, not Kim-Sail, issued the bills of lading. Mr. DeOrchis referred to the decisions in Associated Metals & Minerals Corp. v. S.S. Portoria, 484 F. 2d 460 (5th Cir. 1973) and Kirno Hill Corp. v. Holt, 618 F. 2d 982 (2d Cir. 1980). He stated that the “burden would be on the plaintiff to prove that the alleged COGSA carrier, Kim-Sail, was a party to the bill of lading contract with the plaintiff.” He stated that the fact that Kim-Sail and Kim-Nav were closely owned and operated would make no difference since they were separate legal entities. He stated that the burden would be on the plaintiff to “pierce the corporate veil” and show that the two companies were in fact one.
Mr. DeOrchis’ opinion with respect to the liability of Kim-Sail is only valid if the conclusion to be drawn from the facts is that Kim-Sail had no responsibility as a carrier with respect to the issuing of the bills of lading. It is clear from the evidence that that conclusion is not correct. There is evidence that Agencia Ultramar was Kim-Sail’s general agent in Brazil and that that agency obtains cargo on a brokerage basis and solicits it for Kimberly Line. The master was instructed by Kim-Sail’s supercargo, Mr. Neise, to delegate authority to sign the bills of lading to Agencia Ultramar. There is no evidence that Agencia Ultramar was acting on behalf of Kim-Nav when it signed the bills of lading. The evidence indicates that Kim-Nav “allowed” Kim-Sail to use its bills of lading, in this case, as a matter of convenience between the two companies. The fact that Kim-Nav’s name is on the reverse side of the bills of lading is almost incidental. When Agencia Ultramar signed the bills of lading for Kimberly Line it is more likely that it was signing on behalf of Kim-Sail rather than Kim-Nav.
There is evidence that Redburn Inc. is Kim-Sail’s port agent in Toronto. The telex sent to the captain of the Lara S on March 23, 1988, indicated that Kim-Sail was the carrier. Kim-Sail was the charterer of the Lara S and carried out responsibilities of a “carrier”. It was Kim-Sail’s supercargo, Mr. Neise, who was in attendance during the loading and shipment of the cargo. The arrangement whereby Kim-Nav allegedly books the cargo and turns it over to Kim-Sail is an oral one. There is no evidence of a sub-charter signed by Kim-Sail in favour of Kim-Nav.
There is no real operational distinction between Kim-Sail and Kim-Nav. The two companies and Kersten Shipping are very closely connected. They have common officers, directors and shareholders. The same shareholders control both companies. All of the business of the two Kimberly companies is done by Kersten Shipping and in fact largely by Mr. Gardner. Although the two companies may be separate legal entities, as far as outsiders are concerned, they are in fact indistinguishable from one another.
The conclusion that arises from these facts is that Kim-Sail was in fact the carrier and was merely using Kim-Nav’s bills of lading as a matter of convenience. At most, Kim-Nav’s involvement should be characterized as that of acting in a joint venture arrangement or partnership with Kim-Sail. In my view, the signing of the bills of lading by Agencia Ultramar for the Kimberly Line if not done on behalf of Kim-Sail alone, was done on the joint behalf of Kim-Sail and Kim-Nav. Thus, despite the fact that there is no express reference to Kim-Sail in the bills of lading, the plaintiff has proven that Kim-Sail was in fact a contracting party. The fact situation does not fit the assumptions upon which Mr. DeOrchis based his opinion. This is not a situation where a “lifting of the corporate veil” is necessary. This is a situation, which at the very least, saw Kim-Sail and Kim-Nav engaged in a joint venture or a partnership. In my view, they are therefore both liable as carriers under the bills of lading.
c) Vessel Owners
(i) under Canadian law
If Canadian law applies, it seems clear that since the Lara S was not under a demise charter and the bills of lading were signed on behalf of the master that the shipowner would be liable as a carrier: Paterson SS Ltd. v. Aluminum Co. of Can., [1951] S.C.R. 852; Aris Steamship Co. Inc. v. Associated Metals & Minerals Corporation, [1980] 2 S.C.R. 322 (C.A.). In the Aris decision, the following is said at page 325:
The plaintiff’s action is one for damages allegedly resulting from delays in the shipment and delivery of a cargo of pig iron carried aboard the vessel Evie W, a ship owned by Aris which had entered into a time charter with Worldwide, the last paragraph of which reads as follows:
26. Nothing herein stated is to be construed as a demise of the vessel to the Time Charterers. The owners to remain responsible for the navigation of the vessel, Acts of Pilots and tugboats, insurance, crew, and all other matters, same as when trading for their own account.
It is thus clear that no part of the ownership of the vessel was transferred to Worldwide under this contract. As is usual in the case of such a time charter, the arrangement was that the ship was available to Worldwide which was responsible for obtaining cargo to fill the hull as circumstances and convenience dictated; the master and crew were provided by the owner Aris, and bills of lading covering cargo to be shipped were executed by the Master on the owner’s behalf. Clause 8 of the charter defines the role of the Master as follows:
8. That the Captain shall prosecute his voyages with the utmost despatch, and shall render all customary assistance with ship’s crew and boats. The Captain (although appointed by the Owners) shall be under the orders and directions of the Charterers as regards employment and agency; and Charterers are to load, stow, trim and discharge the cargo at their expense under the supervision of the Captain, who is to sign Bills of Lading for cargo as presented, in conformity with Mate’s or Tally Clerk’s receipts. Without prejudice to this Charter Party. [Underlining added.]
The clauses 8 and 26 which were under discussion in the Aris decision are identical to clauses 8 and 26 of the charterparty which pertain in this case. The Court in the Aris decision continued at pages 328-329:
The trial Judge adopted the view that there was no contractual relationship between Aris and the plaintiff relating to the delivery of the cargo and that the bills of lading were signed by the captain as agent for the charterer. Like Chief Justice Jackett, and for the reasons which he states, I cannot subscribe to this proposition and, on the other hand, incline to the view that both the captain and the charterer were acting as agents for the owner in fulfilling the terms of the contract evidenced by the bill of lading.
I adopt the following passage from the reasons for judgment of Chief Justice Jackett as containing an accurate assessment of the relationship of the parties [Associated Metals & Minerals Corp. v. The Evie W, [1978] 2 F.C. 710 at pages 717-718:
I turn to the substantive question involved in the appeal, which as I understand it is whether, on the facts of this case, the learned Trial Judge erred in holding that the appellant’s contract of carriage was not a contract with the respondent as the owner and operator of the vessel whose servant, the Master of the vessel, in accordance with the complicated arrangements that governed the entering into of contracts with shippers for carriage of goods on the vessel, signed the bills of lading in respect of the carriage of the appellant’s goods. I have not been able to identify any respect in which the facts in this case differ from the facts that were under consideration by the Supreme Court of Canada in Paterson Steamships Ltd. v. Aluminum Co. of Canada Ltd., [1951] S.C.R. 852 in such a way as to avoid the same conclusion in this case as was reached by the Supreme Court of Canada in that case. In the absence of some relevant difference, I am of the view that the learned Trial Judge erred in not holding that the appellant’s contract of carriage was with the respondent.
The charter party considered in the Paterson case was indeed virtually identical with that which is at issue here and after reciting certain of its provisions, Mr. Justice Rand went on to say at p. 854:
Under such a charter, and in the absence of an undertaking on the part of the charterer, the owner remains the carrier for the shipper, and in issuing bills of lading the captain acts as his agent. [Underlining added.]
Professor Tetley in his text Marine Cargo Claims, 3rd ed., 1988 at pages 233-245, discusses who is a carrier under the Hague or Hague/Visby Rules [Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, Brussels, 25 August 1924 (Brussels, 23 February 1968)].[3] He states at pages 235-236:
Traditionally the carrier was the person who contracted with the shipper to carry the goods. One must now ask, if the carrier must also have contracted with the shipper under the Hague or Hague/Visby Rules? The answer is that the person who issues the bill of lading contracts both on his own behalf and on behalf of the other persons who have responsibilities under the Hague Rules. In other words, the contracting carrier contracts in a dual capacity—as principal and as agent. Thus the charterer who issues the bill of lading also contracts for any other charterer and for the shipowner who have responsibilities under the Rules.
…
The bill of lading is usually signed by the master or on his behalf, and such a bill of lading normally binds the owner of the vessel for whom the master acts. The only exception appears to be the case where the master is employed directly by a demise charterer.
When a time or voyage charterer signs as agent for the master, the owner is still bound, because the master is the employee or, in effect, préposé or agent of the owner. This seems to be true even when the name of the charterer appears in the heading of the bill of lading, as was held by the Supreme Court of Canada in Paterson SS. Ltd. v. Aluminum Co. This was also the position taken by Brandon J. in The Berkshire and the Supreme Court of Canada in The Evie W.
In both the Paterson SS. Ltd. and The Berkshire cases, and probably in The Evie W, the owner knew of the charterer’s practice of issuing master’s bills of lading on the charterer’s bill of lading forms. And, in effect, this is the usual practice in most world shipping, so that cases of the owner not being apprised are rare. [Footnotes omitted, underlining added.]
At page 242:
Usually, suit is valid against both the owner and the charterer. In The Quarrington Court, it was held that a bill of lading issued by a charterer on its own form, and signed by the charterer’s agent for the master in accordance with the master’s written authority, bound both the vessel owner and the charterer. Other decisions have held the charterer responsible in contract and the shipowner in tort.
Carriage of goods is effectively a joint venture of owners and charterers (except in the case of a bareboat charter) and, consequently, they should be held jointly and severally responsible as carriers. [Footnotes omitted, underlining added.]
The logic of holding both the shipowner and the charterer liable as carriers seems entirely reasonable under a charter such as that which exists in this case. The master will have knowledge of the vessel and any peculiarities which must be taken into account when stowing goods thereon. He supervises that stowage. He has responsibility for the conduct of the voyage and presumably also has knowledge of the type of weather conditions it would be usual to encounter. In such a case it seems entirely appropriate to find the master and therefore, his employer, the shipowner jointly liable with the charterer for damage arising out of inadequate stowage.
ii) evidence of United States law
Mr. DeOrchis gave evidence that under United States law, the charter of a vessel was considered to be a contract between the charterer and the vessel owner, and the contract for the carriage of goods was between the shipper and the carrier. He asserted that these are two separate and independent contracts. Mr. DeOrchis rhetorically asked why should the shipowner be liable for damage to the cargo—his profit comes from the rental contract of the ship, not from the contract for the carriage of the cargo. Mr. DeOrchis gave evidence that a shipowner would not be liable under United States law, in a case such as the present, unless the plaintiff could prove that when the master signed the bills of lading he did so on behalf of the shipowner. In coming to his opinion, Mr. DeOrchis referred to Yeramex Intern. v. S. S. Tendo (Two Cases), 595 F. 2d 943 (4th Cir. 1979); Mahroos S/S Tatiana L., 1988 AMC 757 (S.D.N.Y. 1986); Dempsey Associates v. S. S. Sea Star, 461 F. 2d 1009 (2d Cir 1972); Associated Metals & Minerals Corp. v. S. S. Portoria, 484 F. 2d 460 (5th Cir. 1973); Tube Products of India v. Steamship Rio Grande, 334 F. Supp. 1039 (S.D.N.Y. 1971); United Nations Children’s Fund v. S. S. Nordstern, 251 F. Supp. 833 (S.D.N.Y. 1965); Unisor Steel Corporation v. M.V. Dordrecht, 1981 AMC 2630 (S.D.N.Y. 1981); Poznan, The, 276 F. 418 (S.D.N.Y. 1921) and Scrutton on Charterparties and Bills of Lading, 17th ed. 1964 at page 51. Mr. DeOrchis gave evidence that on the basis of the facts of this case, as he understood them, when the applicable United States law was applied, the shipowner would not be found to be liable as a COGSA carrier.
The evidence given by Mr. DeOrchis with respect to the liability of the shipowner will be assessed from two perspectives: his assertions respecting the state of United States law and his opinion as to the conclusions which result from the applications of those principles of law to the facts of the present case.[4]
On cross-examination Mr. DeOrchis agreed that there were two schools of thought in the United States, one that coincided with his own and another which considered it appropriate to treat as many of those who were connected with the carriage of the cargo, as possible, responsible as carriers. He agreed that an accurate statement of the applicable United States law is found in Tubacex, Inc. v. M/V Capetan Georgis II, 1986 AMC 2283 (S.D.N.Y. 1986), at page 2284:
Generally, when a bill of lading is signed by the charterer or its agent “for the master” with the authority of the shipowner, the shipowner is bound by the bill of lading and the shipowner falls within the provisions of COGSA. Pacific Employers Ins. Co. v. M/V Gloria, 767 F. 2d 229 (5 Cir. 1985).
Mr. DeOrchis agreed that the description in the text by T. Y. Schoenbaum, Admiralty and Maritime Law (1987), at page 311 was accurate:
Some courts look to principles of agency law—including implied and apparent authority”to determine whether the bill was signed on behalf of the owner or charterer. Relevant factors include the type of charter, who signed the bill of lading, whose form was used, and under whose authority the bill of lading was issued. [Footnotes omitted.]
He disagreed, however, with the assertion:
The technicalities of agency law are not always strictly followed, however, and the modern trend is to confer carrier status on all parties—both owner and charterers—who participate in the carriage transaction.
He stated that this description related to the Hamburg Rules [United Nations Convention on the Carriage of Goods by Sea, 1978 Hamburg, 31 March 1978] which, so far, no significant maritime nation had signed. The Schoenbaum text does not reference its statement to those Rules and indeed the immediately preceding sentence carries a footnote reference to the decision in Joo Seng Hong Kong Co., Ltd. v. S.S. Unibulkfir, 483 F. Supp. 43 (S.D.N.Y. 1979), at pages 46-47:
Despite the difficulty of distilling consistent principles from the existing case law, two things can be said with some certainty. The first is that more than one party is frequently held liable to a cargo interest under a COGSA bill of lading. See, e.g., Gans S. S. Line v. Wilhelmsen, 275 F. 254 (2d Cir.), cert. denied, Barber & Co. v. Wilhelmsen, 257 U.S. 655, 42 S.CT. 97, 66 L.Ed. 419 (1921) (owner, time charterer and voyage charterer); Aljassim v. S. S. South Star, 323 F.Supp. 918 (S.D.N.Y.1971) (owner and time charterer). Obviously then, there can be more than one COGSA carrier of a given shipment. Second, the courts have not hesitated to impose liability on charterers or owners who are non-signatories to a bill of lading and who cannot in any real sense of the word be said to have issued the bill. In doing so, the courts typically look for some evidence tying the party to the bill involved.
…
Although decisions such as these seek to justify the imposition of COGSA carrier liability by finding specific evidence of a “contract of carriage” between the charterer or owner and the cargo interest involved, there is strong statutory support for treating, except in exceptional situations, all owners and charterers involved in the carriage of the goods at issue as COGSA carriers who are potentially liable to cargo interests under the bill of lading. As indicated above, the statutory language of COGSA itself supports a broad definition of the term “carrier”. The statute seems to have been deliberately drawn so as not to limit the term to a party to the bill of lading or contract of carriage. 46 U.S.C. 1301(a). The liability section in particular appears broad enough to include any number of different parties involved in the shipment and handling of the goods. See 46 U.S.C. 1302. A charterer of a vessel certainly seems to be encompassed within the statutory term, and it would also seem to fit squarely within the common usage of the term “carrier”.
The practical result of treating all charterers and owners as carriers would be consistent with COGSA’s purpose of alleviating the Congressionally perceived imbalance of bargaining power between carriers and cargo interests. See e. g., Standard Electrica, S.A. v. Hamburg Sudamerikanische, 375 F.2d 943 (2d Cir.) cert. denied, 389 U.S. 831, 88 S.Ct. 97, 19 L.Ed.2d 89 (1957). Such an approach would enable cargo plaintiffs to bring suit under COGSA against all those most closely involved with the “loading, handling, stowage”, etc. of goods transported by sea; it would also eliminate initial skirmishing between the parties over the identity of the COGSA carrier or carriers and facilitate more consistent judicial decision making. Finally, a broad definition of “carrier” under COGSA will not automatically impose liability upon charterers or owners. As earlier opinions have recognized, see, e. g., Gans S. S. Line v. Wilhelmsen, supra, the determination of which parties are COGSA carriers goes largely to the question of who can be sued on the bill of lading by the cargo interests; the ultimate question of liability and the allocation of loss among those found to be carriers is a separate question which turns on individual determinations as to the roles played and the actions taken by the various party defendants. [Underlining added, footnote omitted.]
The Schoenbaum text, at pages 311-312, after discussing the case of a demise charter, continues:
In the more frequent case of a time or voyage charter party where the owner retains possession and control of the vessel, the shipowner, as a general rule, will be the COGSA carrier. Where the facts show that the bill of lading was issued on the charterer’s authority, however, the charterer may be the carrier, and the shipowner may be relieved from personal liability.
In many cases, the lines of authority are not clear, as when a bill of lading is signed by the charterer “for the master.” In order to determine who is the carrier, the court must examine the authority of the charterer to sign on behalf of the master and the master’s authority to bind the shipowner. A contract of carriage with an owner may be entered into either directly between the parties, or by virtue of a charterer’s authority to bind the owner by signing bills “for the master.” Generally, when the charterer or his agent signs “for the master,” the shipowner is bound as a COGSA carrier. If it is shown, however, that the signature “for the master” was without the authority of the shipowner, the latter is not personally bound and does not become a COGSA carrier by virtue of the charterer’s signature. [Footnotes omitted.]
After discussing the Joo Seng decision, the Schoenbaum text continues, at page 313:
This latter view [treating all owners and charterers involved as carriers potentially liable] is manifestly correct. The identification of the carrier issue comes up primarily as a threshold problem of who can be sued on the bill of lading by cargo interests. Agency principles are inappropriate to resolve the matter at this stage. The tangle of relationships between the parties is unclear, and the bill of lading was no doubt issued without significant negotiations between the shipper and any other party. The doctrine that all parties involved in the carriage of the goods are COGSA carriers eliminates the initial skirmishing over the identity of the carrier issue and brings all relevant parties before the court where the ultimate allocation of responsibility for the loss can be ascertained. [Footnotes omitted.]
I turn next to the cases relied upon by Mr. DeOrchis for his opinion and to those to which he was referred on cross-examination. It is useful in assessing Mr. DeOrchis’ opinion to keep in mind the specific terms of the charterparty here in issue. They are set out again, below, for convenience:
8. That the Captain shall prosecute his voyages with the utmost despatch and shall render all customary assistance with ship’s crew and boats. The Captain (although appointed by the Owners), shall be under the orders and directions of the Charterers as regards employment and agency; and Charterers are to load, stow and trim, discharge and tally and, if necessary lash and secure the cargo at their expense under the supervision of the Captain, who is to sign Bills of Lading for cargo as presented, in conformity with Mate’s or Tally Clerk’s receipts.
…
26. Nothing herein stated is to be construed as a demise of the vessel to the Time Charterers. The owners to remain responsible for the navigation of the vessel, acts of pilots and tugboats, insurance, crew, and all other matters, same as when trading for their own account.
…
50. Charterers Bill of Lading respectively Charter Party Bill of Lading [sic] to be used as required by Charterers and Charterers or their representatives have authority to sign [sic] Bill of Lading for and on Master’s behalf in conformity with Mate’s and/or Tally Clerk’s receipts. [Underlining added.]
Clauses 8 and 26 are part of the printed form charterparty, with some minor typed interlineations. Clause 50 is a typed clause specifically added to the standard form contract.
In the United States’ jurisprudence relied upon by Mr. DeOrchis, in coming to his opinion, some decisions deal with charters which have a clause similar to clause 8 set out above. It is not clear whether they also have a clause comparable to clause 26 and none would appear to have a clause similar to clause 50. In addition, some of the decisions are clearly distinguishable.
In the Poznan decision the owner was held not to be liable as a carrier under the bills of lading, even though the master had in fact signed a few of them, because the printed clause in the charterparty which provided that the master should sign the bills of lading had been struck out. The owners of the ship however were held to be liable in tort.
In both the Nordstern and the Rio Grande cases, the master did not in fact sign the bills of lading although the charterparty provided that the captain should sign them “as presented.” The charters in issue in those two cases were on New York Produce Exchange forms, having a clause 8 similar to that which exists in the present case. In the Rio Grande case the charterer signed the bills of lading “for the master” but the charterer had not been authorized by the owner to do so.
The decision in the Sea Star seems primarily concerned with the apportionment of damage between the owner and charterer rather than with the issue of the owner’s liability vis à vis the cargo owner. The terms of the charter in Portoria are not clearly set out although there was a voyage sub-charterer and there was no evidence that the owner had given the voyage sub-charterer authority to sign bills of lading; they had been signed “as per authority of the Master.” The Yeramex decision is very clearly distinguishable from the present case. Mr. DeOrchis was counsel in that case.
A significant factor in the Yeramex case [at page 947], and one referred to in the Schoenbaum text, is that a term of the charterparty under consideration expressly provided:
57. Charterers shall indemnify Owners from all consequences arising out of Master or agents signing Bills of Lading in accordance with Charterers’ instructions, or from complying with any orders or directions of Charterers in connection therewith. Owners are not to be responsible for shortage, mixture … Charterers to be responsible for securing all cargo within container, and for loss or damage to vessel, containers or cargo, if due to stowage or discharge in negligent fashion or contrary to terms of this Charter-Party.
The Court held that there was therefore no authority for the charterer to bind the owners of the vessel. Mr. DeOrchis refused to acknowledge that that clause played a crucial role in the Yeramex decision. One has to admit that the logic of relying upon an indemnity clause to absolve the shipowner from responsibility vis à vis the carrier seems questionable—an indemnity clause in favour of the owners would seem to indicate that the owners had responsibility which needed to be indemnified. Nevertheless, it is clear that the clause played a significant role in the Court’s decision.
Mr. DeOrchis also relied, in giving his evidence, on the decision in Mahroos v. S/S Tatiana L., 1988 AMC 757 (S.D.N.Y. 1986). He cited this decision as standing for the proposition that, in general, a ship owner is not personally liable for a bill of lading issued by a charterer when the bill of lading does not indicate the name of the owner and when it is not signed by or for the master. He did not refer in giving his written opinion to the decisions in Tubacex, Inc. v. M/V Capetan Georgis II (cited above), Joo Seng Hong Kong Co., Ltd. (cited above), Pacific Employers Ins. Co. v. M/V Gloria, 767 F. 2d 229 (5th Cir. 1985) or that in Recovery Services International v. S/S Tatiana L., 1988 AMC 788 (S.D.N.Y. 1986). These omissions cast doubt on the comprehensiveness of that opinion. In the Tubacex decision, the shipowner cited the decisions in Yeramex, Sea Star and Nordstern. The Court refused to strike out the action against the shipowner. The Court held that those decisions stood only for the proposition that the owner is not liable where the charterer lacked authority to sign for the master. In the Joo Seng decision, at page 46, the Court referred to the strong statutory support found in COGSA for treating, except in exceptional circumstances, both the owner and the charterer liable as carriers vis à vis the cargo interest. The Court referred in a footnote to the decision in Yeramex and described it as being one of those exceptional circumstances:
Such a situation might arise, for example, where, in a charter party, one party expressly assumes exclusive carrier status, and the charter party is incorporated by reference in the bill of lading. See e.g. Yeramex International v. S. S. Tendo, 595 F. 2d 943, 945 (4th Cir. 1979).
In the Gloria, the bills of lading were signed by authority of the master by the charterers’ agent under a charterparty which had terms similar to those pertaining in this case. Clause 8 in the two charters are essentially identical. In addition, a rider clause was held to be pertinent [at page 237]:
Rider 37. If required by Charterers and/or their Agents, Master to authorize Charterers or their Agents to sign Bills of Lading on his behalf in accordance with mates and/or tally clerks receipt without prejudice to this Charter Party.
The decision in that case found the owner to be liable as a COGSA carrier. Mr. DeOrchis agreed with the decision in the Gloria but was of the view that rider clause 37 in that case was not the same as clause 50 of the charter in issue in this case:
50. Charterers Bill of Lading respectively Charter Party Bill of Lading [sic] to be used as required by Charterers and Charterers or their representatives have authority to sign to sign [sic] Bill of Lading for and on Master’s behalf in conformity with Mate’s and/or Tally Clerk’s receipts.
It is not immediately obvious to me that clause 50, in substance, is different from clause 37.
Relevant portions of the text of the Gloria decision state [at pages 237-238]:
The captain of the GLORIA testified by deposition that he “gave Rogers Terminal an undertaking that they should sign the bills of lading.” Appellants presented no conflicting evidence. This case is therefore unlike those cited by appellants in which there was no evidence that the master authorized the charterer or its agent to sign on his behalf. See Demsey & Associates v. S.S. SEA STAR, 461 F.2d 1009, 1012-15 (2d Cir. 1972); Thyssen Steel Corp. v. S.S. ADONIS, 364 F.Supp. 1332, 1335 (S.D.N.Y.1973); United Nations Children’s Fund v. S/S NORDSTERN, 251 F. Supp. 833, 838 (S.D.N.Y.1965).
… The charter party between Aquarius [the shipowner] and TMM [the charterer] contained the following provisions:
8. [T]he Captain shall prosecute his voyages with the utmost despatch, and shall render all customary assistance with ship’s crew and boats. The Captain (although appointed by the Owners), shall be under the orders and directions of the Charterers [TMM] as regards employment and agency; and Charterers are to load, stow, and trim and discharge the cargo at their expense under the supervision of the Captain, who is to sign Bills of Lading for cargo as presented, in conformity with Mate’s or Tally Clerk’s receipts.
Rider 37. If required by Charterers and/or their Agents, Master to authorize Charterers or their Agents to sign Bills of Lading on his behalf in accordance with mates and/or tally clerk’s receipt without prejudice to this Charter Party.
We hold that Rider 37 to the charter party empowered the master to authorize TMM’s agent to sign the bills of lading and thereby bind Aquarius. The case cited by appellants, Yeramex International v. S.S. TENDO, 595 F.2d 943 (4th Cir.1979), is distinguishable. In Yeramex the charter party between the vessel owner and the time charterer contained a provision identical to clause 8 above. It also contained a provision that stated, in part: “Charterers shall indemnify Owners from all consequences arising out of Master or agents signing Bills of Lading in accordance with Charterers’ instructions, or from complying with any orders or directions of Charterers in connection therewith.” Id. at 947. The court in Yeramex found that under the provisions of the charter party the charterer assumed exclusive responsibility for handling of cargo and for issuance of bills of lading….
…
… The Aquarius/TMM charter party did not contain a provision requiring TMM to indemnify Aquarius from all consequences arising out of the master or agents signing bills of lading. Moreover, Rider 37 to the charter party contains an express authorization that was not present in the Yeramex charter party. The district court’s findings that TMM was authorized to bind Aquarius to the terms of the bills of lading and that Aquarius is a COGSA carrier are not clearly erroneous. [Underlining added.]
As noted, Mr. DeOrchis did not refer to this decision in coming to his opinion. He also did not refer to Recovery Services International v. S/S Tatiana L., 1988 AMC 788 (S.D.N.Y. 1986), at page 791:
The rule is clear that if a vessel’s master signs a bill of lading, the vessel’s owner will be subject to in personam liability to the consignee of the cargo. The owner will also be personally liable if the owner or the master authorizes a time charterer to sign bills of lading and the time charterer signs in a representative capacity.
This decision deals, as well, with an identity of carrier clause which purports to designate the vessel owner as the only carrier and to relieve the charterer from responsibility arising from that status. As between cargo owner and charterer such a clause has been held to be invalid [at page 792]:
The basic rationale for these decisions is that the time charterer is the party that drafts the bill of lading, and it cannot unilaterally transfer its liability to the owner.
The Court in the Recovery Services case, however, suggested that as between the shipowner and the cargo interest, the clause may have some vitality [at pages 792-793]:
… this case presents a different situation because the shipper, and not the time charterer, is attempting to rely on the clause. Since the shipper was not responsible for the inclusion of the “Identity of Carrier” clause in the bill of lading. I see no reason why it cannot rely on it. Defendants have not cited, and the Court has not found, a single case invalidating such a clause under the circumstances presented here.
The carrier’s bill of lading which forms part of the Conline booking note in this case contains a comparable identity of carrier clause (see, supra, page 7). Mr. DeOrchis stated that the Recovery Services case was not relevant because it was an interlocutory (summary judgment) decision and the judge was trying to encourage the parties to settle. I do not accept these distinctions as carrying the weight Mr. DeOrchis asserts. Mr. DeOrchis himself, in reaching his opinion, relied on interlocutory or summary judgment cases.
Counsel for the plaintiff asked Mr. DeOrchis questions about United States law with respect to identity of carrier clauses. Counsel for the defendants objected to this line of questioning, arguing that it was outside the scope of the opinion which Mr. DeOrchis had been asked by the defendants to give. He argued that the plaintiff should have adduced expert opinion evidence of its own if such evidence was required. I allowed the questions to be asked but reserved on their admissibility. On reflection, I think they are proper questions to put to this witness. I do not think a party should be allowed to selectively put in evidence those parts of foreign law which favours its case but ignore that which does not.
In summary, then, I am not persuaded that Mr. DeOrchis’ description of the applicable United States law has been either balanced or comprehensive. There is, in addition, the difficulty with Mr. DeOrchis’ opinion which was referred to earlier. That opinion is based on the assumption that the person who signed the bills of lading was a stranger to the charterparty. Thus it was assumed that that person was exercising no authority arising from the charter when doing so. The question upon which Mr. DeOrchis was asked to give his opinion reads as follows:
A. In light of the limited authority given by the Owners to the Charterers through both the charterparty and the Master’s Letter of Authority, would the Owners be deemed carrier under the U.S. COGSA and thus liable for the plaintiff’s alleged damage, given the fact that i) the bills of lading were issued clean without mentioning the remarks made by the Master in the mate’s receipts and, also, ii) bills of lading were issued by Kimberly Navigation Company Limited (“Kimberly Navigation”) and not the Charterer, Kim-Sail, Ltd. (“Kim-Sail”)?
His concluding opinion reads:
In this case, the LARA S, the possibility of the Owner’s liability is even more far fetched, as the bills of lading were not issued by the Charterer, Kim-Sail, nor were they signed on behalf of the Charterer. The bills of lading were in fact issued on a form of Kimberly Navigation and signed for Kimberly Navigation, a complete stranger to the governing charterparty signed by the vessel owner. The Master gave no authority whatsoever to Kimberly Navigation. The charterparty specifically provided that bills of lading were to be issued by Charterers (Clause 50). Only Charterers were authorized to sign bills of lading, and then only in conformity with the Mate’s receipts. (Clause 50). The Owner’s name is not mentioned anywhere in the Kimberly Navigation bill of lading.
As noted, this opinion is based on assumed facts which do not coincide with the conclusions of fact which actually pertain. In the first place, the charterer, Kim-Sail, was a contracting party to the bills of lading. Secondly, Kim-Nav as a result of its joint venture arrangement or partnership with Kim-Sail was not a complete stranger to the charterparty signed by the vessel owner. Also, when the master gave authority to Agencia Ultramar, Kim-Sail’s general agent, to sign the bills of lading, he was operating under a charterparty which did not provide that only the charterer had authority to sign the bills of lading. Clause 50 does not contain the exclusivity which Mr. DeOrchis reads into it. Lastly, since the damage in question has not been shown to have arisen as a result of insufficient packaging, the failure to mark the exceptions, which were contained in the mate’s receipts, on the bills of lading is not relevant in assessing liability. Even if it were, I do not understand the law to allow a principal to set up a defence of lack of authority when damage arises out of a failure of the principal’s agent to act in conformity with the authority granted in a case such as the present. In the eyes of the third party cargo interest the agent clearly had ostensible authority.
(iii) conclusion
Counsel for the plaintiff submits that the Court is entitled to examine the case law admitted as evidence during the examination and cross-examination of Mr. DeOrchis, and to form its own conclusion on the foreign law as opposed to merely assessing the reliability of Mr. DeOrchis’ evidence. Reference was made to the decision in Buerger and another v. New York Life Assurance Co. (1927), 96 L.J.K.B. 930 (C.A.). At page 941 of that decision, the Court of Appeal expressed the opinion that where there is conflicting evidence on United States law the court will more readily scrutinize the statutes and jurisprudence to form its own conclusion since the court is familiar with both the language and the jurisprudence. Counsel argues that this Court ought not to hesitate to form its own conclusion as to the effect of the relevant United States law, particularly, where the statute being interpreted is an adoption by the United States of an International Convention (the Hague Rules). He argues that such a situation is dramatically different, for example, from a case where the Court is being asked to apply Russian law.
There is no doubt that it is easier to test the reliability of an opinion given with respect to foreign law when that law is in a language which one understands and relates to a system of law with which one is familiar. At the same time, I am not convinced that I am entitled to reach an independent conclusion respecting the content of foreign law and to apply that law as I interpret it to the facts of the case. I am not prepared to accept Mr. DeOrchis’ opinion. I do not however have before me conflicting opinions on foreign law from two experts. Thus there are not two opinions from which I can choose. Consequently, since in my view, I do not accept the opinion on foreign law which has been put forward, I consider the appropriate foreign law not to have been proved and I will apply Canadian law.
As noted above, I think there is no doubt that under Canadian law the shipowner is liable, in a case such as the present, as a carrier under the Hague Rules. I find it useful to quote extensively from the reasons in the Supreme Court’s decision in Paterson at pages 853-855:
The usual provisions of such a charter were stipulated. The owner was to be paid a specified sum monthly; the captain was to prosecute the voyages with despatch: although appointed by the owner, he was to be under the orders and direction of the charterers as regards employment and agency; and the latter were to load, stow and trim the cargo at their expense under the supervision of the captain who was to sign bills of lading for cargo as presented in conformity with notes or tally clerk’s receipts. The owner was to pay for all provisions and the wages of captain and crew; and maintain the vessel in her class and efficiency. By clause 26 nothing in the charter was to be construed as a demise of the vessel and the owner was to remain responsible for the navigation of the vessel, insurance, crew and all other matters, the same as when trading for its own account.
Under such a charter, and in the absence of an undertaking on the part of the charterer, the owner remains the carrier for the shipper, and in issuing bills of lading the captain acts as his agent.…
It is, I think, too late in the day to call in question the relation of the time charterer or his or the ship’s agent towards cargo. The charterer has purchased the benefit of the carrying space of the ship; he is the only person interested in furnishing cargo; and the captain is bound to sign the bills of lading as presented, assuming them not to be in conflict with the terms of the charter party. The practical necessities involved in that situation were long ago appreciated by the courts and the authority of the charterer to sign for the captain confirmed.
For the purpose of committing cargo to carriage, the captain, the charterer and the ship’s agent are all agents of the owner, acting in the name of the captain and where the charterer has the authority, as here, to sign for the captain, that he may appoint and act by an agent would seem to me to be unquestionable.…
…
In Kuntsford v. Filmanns, both the Court of Appeal and the House of Lords affirmed the holding of Channel J., that under the clause obligating the captain to sign bills of lading as presented, the charterer could sign for him as representing the owner. It was pointed out that the question of the person undertaking the carriage of the goods for the shipper was one of fact: but that in the normal practice under a time charter, that undertaking was by the captain for the owner. The same view was taken by the Court of Appeal in Limerick v. Coker. Here, the charterers had their own steamship line and used one of their own bill of lading forms; but they had signed them on behalf of the captain.
In Urleston v. Weir, the charterers had signed the bills of lading and contended that they were the parties to the contract; but the court held against them. A similar ruling was made in SS. Iristo, Middleton v. Ocean Dom. S.S. Co. In Baumwall v. Furness, the remarks of Lord Herschell at pp. 17 and 18 are to the same effect.
Finally, in Larrinaja v. The King, Lord Wright, at pp. 254-5, deals with the words “employment and agency” which appear in the present charterparty, and which he treats as referring to the ship: “‘Employment’ means employment of the ship to carry out the purposes for which the charterers wish to use her”; “‘Agency’ deals with another aspect of the ship’s affairs. The shipowner is entitled in the ordinary course to decide to what firm or person in each port the ship in the course of the charterparty is to be consigned as agent. The selection is here left to the charterers. This is an important matter, because of the multifarious duties and responsibilities which may fall to be discharged according to the mercantile law by the ship’s agents.”
That Sproston’s Limited were authorized by the charterers to act as they did in signing the bills of lading is not seriously to be questioned. The argument against their authority is really that neither the owner nor the captain had anything to do with their appointment; but that contention overlooks the point that the owner has authorized the charterers to sign and that they in turn can do so by agents. [Footnotes omitted, underlining added.]
I conclude that the shipowner, Armadaores Lara S.A., is a carrier under the bills of lading.
SHIPOWNERS — LIABILITY IN TORT?
Counsel for the plaintiff argues that even if the shipowners are not liable as carriers under the bills of lading, they would still be liable in tort for the negligent stowage.
With respect to any potential claim in negligence, counsel for the defendants argues that the plaintiff’s inability to prove that the bills of lading were endorsed before April 23, 1988, defeats any such claim. The decisions in Margarine Union G.m.b.H. v. Cambay Prince Steamship Co. Ltd., [1969] 1 Q.B. 219 (the Wear Breeze) and Leigh and Sillavan Ltd. v. Aliakmon Shipping Co. Ltd., [1986] A.C. 785 (H.L.) were cited.
The conclusion in those cases is certainly at odds with what I understand to be the general principles of the law relating to negligence: one is responsible for damage caused to a plaintiff for whom it could reasonably be foreseen that damage would arise as a result of the negligent act. In the case of a negligent stowage of cargo, there can hardly be a closer connection than to the cargo owner, whether it be the owner at the time of the loading of the vessel, or the owner when the vessel arrives at its destination.
A careful reading of the Wear Breeze decision discloses that the Court, in coming to its conclusion, relied upon a line of cases all of which were decided before Donoghue v. Stevenson, [1932] A.C. 562 (H.L.) and Hedley Byrne & Co. Ltd. v. Heller& Partners Ltd., [1964] A.C. 465 (H.L.). Secondly, the Court accepted the characterization of the loss in question as being, what has come to be called, pure economic loss. I am not convinced that the loss should be characterized in this way. The loss for which compensation is claimed arose from direct physical damage caused to goods.
In the more recent Aliakmon decision, the earlier decision in Wear Breeze was upheld on the ground that there was a general principle of law that in order to claim for damage or loss to property the plaintiff must have legal ownership or possessory title to the property at the time when the loss or damage occurs. Prospective ownership was not enough. I notice that the following comments were made with respect to this reasoning, (albeit with respect to economic loss) by the High Court of Australia, in Caltex Oil (Australia) Pty. Ltd. v. The Dredge “Willemstad” (1976), 136 C.L.R. 529, at pages 568-569:
No doubt to discard the element of physical injury to person or property as a prerequisite to the recovery of damages in negligence means that its effect of tending to ensure that compensable damage is restricted to that which is immediately consequential upon the tortious act also disappears; there then looms the spectre, described by Cardozo C.J. in Ultramares Corporation v. Touche (81) as that of “liability in an indeterminate amount for an indeterminate time to an indeterminate class”. However to counter this spectre by rejecting all recovery for economic loss unless accompanied by and directly consequential upon such physical injury is Draconic; it operates to confer upon such physical injury a special status unexplained either by logic or by common experience. No reason exists for according to it such special status other than its character of tending to ensure a reassuringly proximate nexus between tortious act and recoverable damage; to this alone does it owe such merit as it may have as a necessary element in the recovery of damages in negligence.
In addition to the arbitrary nature of such a rule it also possesses the unattractive quality of being quite unresponsive to the grossness of the wrongdoer’s want of care in its exclusion of non-consequential economic loss.…
A feature of the suggested exclusory rule is the importance placed upon the existence in the plaintiff of some proprietary or possessory interest in property which suffers physical injury; such an interest will suffice to make recoverable any consequential economic loss, but without it economic loss which is in all other respects identical will not be recoverable. In the light of the origin, in the action on the case, of the tort of negligence, an origin in the context of which notions of the infringement of proprietary or possessory interests in property were by no means always essential to the cause of action, damage suffered being the gist of liability, it is curious that in this field of the tort of negligence an interest in property should be thought always to be a condition precedent to the right to recover for economic loss. No doubt risk and property are usually coincidental but, where they are not, a denial of recovery of the risk bearer’s economic loss consequential upon injury to a chattel the property in which is in another, and the consequence that such economic loss must go uncompensated for simply because of this division of risk and property, seems neither just nor expedient. [Footnote omitted.]
The House of Lords in reaching its decision in Aliakmon referred to the decision in Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.). The Court referred to the two-step analysis set out in Anns: does a sufficient relationship of proximity or neighbourhood exist to found a duty of care, and, despite a positive conclusion in that regard, are there considerations which lead to a conclusion that a limitation should be put on the scope of the duty owed. While the Court stated that this two-step process was not a method of analysis that was necessarily to be adopted in the case of a factual situation in which the existence of a duty of care had repeatedly been held not to exist, the Court relied very heavily, in denying the plaintiff’s claim, on the fact that it is the usual commercial practice for a shipowner to accept goods for carriage with the reasonable expectation that whoever becomes owner of them is covered by the contract in the bill of lading which will be governed by the Hague Rules. Thus, as a policy matter it was decided that the earlier decision in Wear Breeze should be upheld. This is not entirely satisfactory reasoning since, if, for example, the property in the cargo had not passed during the voyage, and the shipper had remained at all times the owner of the cargo, there is no reason that he could not sue in tort despite any limitations in the Hague Rules.[5]
The decision in Aliakmon decides who can sue in tort (the owner of the property at the time the cause of action arose) but gives as a reason, a policy which should preclude any action in tort. The issue faced by the Court in both the Aliakmon and Wear Breeze decisions was not whether the shipowner could be sued in tort, but who could do the suing. A discussion of suits in tort or delict is found in Tetley’s text on Marine Cargo Claims at pages 208-211. See also footnote 1 on page 149 and pages 229-231 of that text.
It is yet to be seen whether the Federal Court of Appeal and the Supreme Court of Canada will follow the United Kingdom jurisprudence. I find it useful to refer to some of the Canadian jurisprudence which has dealt with claims involving pure economic loss. Professor Fridman in his text Sale of Goods in Canada, 3rd ed., at page 443 states that:
… there is a difference of opinion between the courts in Canada and those in England on the question of whether the buyer without either title or possession can sue in negligence a carrier of the goods through whose negligence the goods may have been damaged.
And at page 444:
The Canadian attitude would seem to be that liability for economic loss should be imposed more widely than it is in England, an attitude that has been expressed in other contexts. In Canada, therefore, the scope of a third party’s liability to a non-owner, who is in the process of acquiring title to goods which he is buying would appear to be much wider than in England.
In St. Lawrence Construction Limited v. Federal Commerce and Navigation Company Limited, [1985] 1 F.C. 767, at page 786, the Federal Court of Appeal cited with approval the case of Schiffahrt& Kohlen G.m.b.H. v. Chelsea Maritime Ltd., [1982] 1 Q.B. 481, which was said to stand for the proposition that:
… a buyer of goods has been held to have a good cause of action in tort against a carrier notwithstanding that he did not own the goods at the time of the loss.
Further, in Triangle Steel & Supply Co. v. Korean United Lines Inc. (1985), 63 B.C.L.R. 66, Mr. Justice Murray of the British Columbia Supreme Court expressly refused to follow the decisions in The Wear Breeze and that of the English Court of Appeal in the Aliakmon.
The recent decision of the Supreme Court of Canada in London Drugs Ltd. v. Kuehne & Nagle International Ltd., [1992] 3 S.C.R. 299, also indicates that the narrow English view is not the Canadian approach. At page 408, Mr. Justice Iacobucci, who wrote the majority judgment states:
Our law of negligence has long since moved away from a category approach when dealing with duties of care. It is now well established that the question of whether a duty of care arises will depend on the circumstances of each particular case, not on pre-determined categories and blanket rules as to who is, and who is not, under a duty to exercise reasonable care.
In Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1990] 3 F.C. 114, the Federal Court of Appeal dealt with a case which involved a collision between a barge and a railway bridge. The plaintiffs were not the owners of the bridge, but rather users, who incurred higher costs as a result of having to re-route their trains until repairs to the bridge could be completed. Mr. Justice MacGuigan, with whom Mr. Justice Heald concurred, wrote at page 147:
The “uncertain voice” of the English authorities to which Lord Bridge referred in D. & F. Estates is, I believe, now amply manifest, but I think it is nevertheless possible to hazard certain general conclusions. First, there is in England a strong preference for upholding the exclusionary rule, particularly in cases such as these involving products liability where a claim in tort can be seen as an end-run around limitations on contractual liability (Lord Brandon in Junior Books and Leigh and Sillavan, Lord Bridge in D.& F. Estates). Second, there is nevertheless a recognition that there are, at the very least, exceptional cases in which the rule does not apply. Junior Books has not been overruled, and the result in Caltex has not been disapproved of. The rule cannot therefore be regarded as absolute. Third, in these exceptional cases where liability is allowed there will be found factors of unusual proximity or propinquity somewhat analogous to those which under the first of Lord Wilberforce’s propositions establish the basic criterion of duty itself (Hedley Byrne, Caltex, Junior Books).
He continued, at pages 162-163:
What the courts insist upon for liability, again and again from Hedley Byrne on, is that there must be a special relationship or sufficient proximity between the plaintiff and the defendant: … I think it is thus latent in the cases that a principle of sufficient proximity is required, in addition to the general principle of reasonable foresight, for liability to arise in the case of pure economic loss.
This decision was appealed to the Supreme Court of Canada, [1992] 1 S.C.R. 1021. In delivering her reasons, Madame Justice McLachlin, discussed the approach which should be used in the case of recovery of pure economic loss. At page 1150, she stated:
The foregoing suggests that the incremental approach to the problem of determining the limits for the recovery of pure economic loss which was adopted by this Court in Kamloops should be confirmed. Where new categories of claim arise, the court should consider the matter first from the doctrinal point of view of duty and proximity, as well as the pragmatic perspective of the purposes served and the dangers associated with the extension sought.
In discussing the concept of proximity she noted, at page 1152:
The matter may be put thus: before the law will impose liability there must be a connection between the defendant’s conduct and the plaintiff’s loss which makes it just for the defendant to indemnify the plaintiff. In contract, the contractual relationship provides this link. In trust, it is the fiduciary obligation which establishes the necessary connection. In tort, the equivalent notion is proximity. Proximity may consist of various forms of closeness—physical, circumstantial, causal or assumed—which serve to identify the categories of cases in which liability lies.
Viewed thus, the concept of proximity may be seen as an umbrella, covering a number of disparate circumstances in which the relationship between the parties is so close that it is just and reasonable to permit recovery in tort. The complexity and diversity of the circumstances in which tort liability may arise defy identification of a single criterion capable of serving as the universal hallmark of liability. The meaning of “proximity” is to be found rather in viewing the circumstances in which it has been found to exist and determining whether the case at issue is similar enough to justify a similar finding.
In the absence of either a Federal Court of Appeal decision or a Supreme Court of Canada decision declaring otherwise, I would apply the above reasoning to the present case and allow the plaintiff’s claim in negligence. A rule which hinges a right to sue on whether or not a plaintiff in a case such as the present can prove whether property in the goods passed before or after the cause of action arose is not an attractive one. It may be that that claim should be subject to limitations and defences comparable to those set out in the Hague Rules. A defendant is expected to be responsible for foreseeable damage caused to a plaintiff. I see no reason why a plaintiff, such as a holder of a bill of lading, should not as against a shipowner, similarly, be restricted to recovering on the basis of “expected liability”. As a matter of fact, no greater amount of damages is being claimed, in this case, against the shipowner in tort than could be recovered under the bills of lading. As has been noted, I have not been persuaded that an action in negligence does not lie.
LIMITATION PERIOD DEFENCES
As has been noted, the statement of claim originally named “Kimberly Line” as the defendant and indicated that its address was unknown. After the expiry of the one-year limitation period but before the statement of claim was served, this was amended to read “Kimberly Navigation Company Limited carrying on business as Kimberly Line”. That amendment was made pursuant to Rule 421(1) of the Federal Court Rules without obtaining leave of the Court. Rule 421(1) states:
Rule 421. (1) A party may, without leave, amend any of his pleadings at any time before any other party has pleaded thereto.
Counsel for the defendants argues that the amendment should have been sought under Rules 424 and 425:
Rule 424. Where an application to the Court for leave to make an amendment mentioned in Rule 425, 426 or 427 is made after any relevant period of limitation current at the date of commencement of the action has expired, the Court may, nevertheless, grant such leave in the circumstances mentioned in that Rule if it seems just to do so.
Rule 425. An amendment to correct the name of a party may be allowed under Rule 424, notwithstanding that it is alleged that the effect of the amendment will be to substitute a new party, if the Court is satisfied that the mistake sought to be corrected was a genuine mistake and was not misleading or such as to cause any reasonable doubt as to the identity of the party intending to sue, or, as the case may be, intended to be sued.
Counsel’s argument in this regard is based on the decision in Wirth Limited v. The Atlantic Skou, [1974] 1 F.C. 39 (T.D.). I am not sure that that decision helps the defendants. It merely states that where a party is properly identified in the body of the statement of claim, a typographical error can be amended, without leave, pursuant to Rule 421(1) and that Rule 425 has no application. This leaves open for consideration the situation when a limitation period has intervened but a new party is not being added. Rule 425 is somewhat difficult to interpret because it refers to a situation in which “it is alleged” that the effect of the amendment will be to substitute a new party. Certainly, the plaintiff was not and is not alleging that a new party was being substituted. Therefore from its point of view, relying on Rule 421(1) was the appropriate way to proceed.
In my view, in circumstances such as the present, an amendment made pursuant to Rule 421(1), after a limitation period has expired, cannot be successfully challenged unless the effect of the amendment is to in fact substitute a new party. I see no reason why mere curative amendments, as they are sometimes called, cannot be made pursuant to Rule 421(1) even after a limitation period has passed providing the effect is not to substitute or add a new party or create a new cause of action. Rule 422 is available to allow an affected party to apply to the Court within two weeks of service to challenge the amendment and even where this is not done, an affected party can, at a later date, raise the validity of the amendment, see Ismail v. The Golden Med, [1981] 2 F.C. 610 (T.D.).
The name “Kimberly Line” was used as a business style of cause. The bills of lading carried that name on their face; they were signed under that name. The liner booking note was issued under that name. This is not a case where the change of the defendant’s name from “Kimberly Line” to “Kimberly Navigation Company Limited carrying on business as Kimberly Line” is the substitution of one party for another. It is not a case similar to Ladouceur v. Howarth, [1974] S.C.R. 1111, or Leesona Corpn. v. Consolidated Textile Mills Ltd. et al., [1978] 2 S.C.R. 2. In those cases, there were two different legal persons and one was named instead of the other. The amendment identifying Kim-Nav as the defendant was merely a clarification of the identity of the defendant. I could not conclude that the amendment adding Kim-Nav was the substitution of a new party after the limitation period had expired.
In so far as the amendment adding Kim-Sail is concerned, as has been noted, this occurred long after the statement of claim had been served and therefore was made pursuant to Rules 424 and 425. It is argued that Rules 424 and 425 cannot be used to effect that amendment. This follows, it is said, because the applicable prescription provision under the Hague Rules is one which extinguishes the defendant’s liability—it does not merely suspend a plaintiff’s right of action. The relevant portion of that prescription clause states [article 3, paragraph 6]:
In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered;
This provision was interpreted by the House of Lords in Aries Tanker Corporation v. Total Transport Ltd. (The Aries), [1977] 1 Lloyd’s Rep. 334. It was noted that the provision was not merely a bar to a plaintiff’s remedy but was an extinguishment of the claim. Similar decisions are found in Jay Bola, The, [1992] 2 Lloyd’s Rep. 62 (Q.B.) and Leni, The, [1992] 2 Lloyds Rep. 48 (Q.B.). In addition, counsel refers to the decisions in Liff v. Peasley, [1980] 1 W.L.R. 781 (C.A.) and Ketteman v. Hansel Properties Ltd., [1987] A.C. 189 (H.L.). Both those decisions relate to the joinder of a party after a limitation period has expired. They deal with what is called “the relation back theory”. This theory treats an additional defendant who has been added to an action as having been a party to the action from the date of the commencement of the action: the joinder is related back to that date. These decisions, of course, dealt with the United Kingdom Limitation Act, 1939 [(U.K.), 2 & 3 Geo. 6, c. 21] as amended by the Limitation Act 1975 [(U.K.), 1975, c. 54] and with their interaction with the Rules of the Supreme Court. The relation back theory was disavowed. It was noted that it was particularly inappropriate when a limitation period had expired because it deprived a defendant of a defence which would otherwise be available.
I must comment on what I consider one rather strange aspect of this case. I was referred to the United States version of the prescription provision of the Hague Rules (COGSA) as being applicable. (I do not understand that version to differ from the “Canadian” version or the “United Kingdom” version.) At the same time, I was referred to United Kingdom jurisprudence on the interpretation of that provision and not to any United States’ case law.
In any event, I first of all note that there was no prejudice to Kim-Sail and Kim-Nav as a result of the amendments clarifying the identity of the defendants. Both Kim-Sail and Kim-Nav were aware of the damage to the cargo before the ship arrived in Toronto. The master of the ship advised Kersten Shipping of the damage by telex dated April 24, 1988. The defendants appointed a surveyor to assess the damage after the ship arrived. (That surveyor was not called as a witness.) Mr. Sondheim admitted that he would in all likelihood have received the letter from the Toronto Harbour Commission dated May 2, 1988 advising of the damage: Redburn Inc. were good agents. Judith Hoyle testified that she had notified Redburn Inc. of the plaintiff’s claim by letters dated May 30, 1988 and November 8, 1988. There is every reason to believe that Redburn Inc. would have passed that information on to its principals.
Secondly, Mr. Sondheim testified that had he been shown the original statement of claim which named Kimberly Line as the defendant, he would have read this as being a reference to Kim-Sail because the statement of claim made reference to the charterer of the vessel. He was also shown the amended statement of claim and testified that it appeared to be against Kimberly Navigation only. On cross-examination, however, he admitted that the reference to the charterer in the amended statement of claim indicated Kim-Sail was the intended defendant.
The only jurisprudence to which I have been referred respecting the prescription provision of the Hague Rules are the three cases noted above (The Aries, The Jay Bola and The Leni). None of these deal with a fact situation similar to that in issue here. In my view, the prescription provision does not prevent the identifying of Kim-Sail as a defendant in June, 1991, pursuant to Federal Court Rules 424 and 425. As has been noted, this is not a case where separate and additional or substitute parties were being added. The amendments have constituted a process of clarifying the identity of the defendants denoted by the rubric “Kimberly Line” in the context of their relationship with the plaintiff, a process which was necessitated by the defendants’ own confused way of doing business. It would be unjust and unfair to allow the defendants to rely on a state of affairs which they themselves created to avoid suit. The relevant Hague provision states that liability is discharged “unless suit is brought” within one year [Article 3, paragraph 6]. It was brought within that time against “Kimberly Line”. In the circumstances of this case, I think this supports the initiation of a claim against both Kim-Nav and Kim-Sail within the required time period.
One last consideration respecting the identity of the defendants needs to be addressed. It came to counsel for the defendants’ attention shortly before trial that there were two companies named Kimberly Navigation Company Limited: one had been incorporated in the Bahamas; the other had been incorporated in the Grand Cayman Islands. The defendants therefore filed on October 27, 1992, an amended statement of defence stating that there was no contract between the plaintiff and Kimberly Navigation Company Limited (Grand Cayman) and that the bills of lading were issued by the Bahamian company. It is the address of the Bahamian company which is on the back of the Kimberly Line bill of lading. As has been noted, the Bahamian company is no longer in business. That business is now conducted by the Grand Cayman company. At trial, counsel for the plaintiff argued it did not matter that he had not brought suit against the Grand Cayman company, by specific amendment to the statement of claim, and that he was nevertheless entitled to judgment against that company.
Because time estimates for the duration of the trial were considerably shorter than the time actually required, counsel for the plaintiff was allowed to submit his reply arguments in writing. In doing so, counsel for the defendants argued that counsel for the plaintiff went beyond what is proper reply evidence in a number of areas. I agree with that characterization on one issue only: whether the relationship between the two Kim-Nav companies was one which justifies lifting the corporate veil. In his main argument counsel for the plaintiff did not address that issue. Counsel for the plaintiff agreed that it would be appropriate to receive reply argument from counsel for the defendants with respect to that argument. I have considered those arguments. I do not understand the relevance of the fact that a mistake was made with respect to the proper address of Kim-Nav, by Mr. Sondheim on his examination for discovery, and that the plaintiff was led into error as a result of that information. I do not remember sufficient evidence being adduced which would allow me to apply the doctrine which allows a lifting of the corporate veil.
VALUE OF THE DAMAGE
The plaintiff claims compensation for bales which were lightly damaged, for bales which were severely damaged and for shortages (i.e., bales which were not delivered).
After the cargo arrived, the bales were sorted into two categories, lightly damaged and heavily damaged. The plaintiff was advised by its insurer to send out the lightly damaged bales to its customers and to wait for complaints and objections to come in. On receipt of such complaints, it was anticipated that the plaintiff would find it necessary to reduce the price being charged to its customers by twenty per cent. Light damage consisted, for example, in staining and tearing to the packaging which would make the bales of twine less attractive to an ultimate purchaser. The plaintiff was advised to keep a record of the rebates which were actually given. The plaintiff produced no such records. The plaintiff in proving the loss to it, arising as a result of the lightly damaged bales, relied on Mr. Gaudette’s report which listed 6,141 bales as having been lightly damaged and on the fact that Mr. Digby, the defendants’ surveyor, had not objected to the original estimates respecting the quantity damaged and the percentage loss to be applied thereto. Mr. Gaudette’s listing of 6,141 bales resulted from figures he was given by the plaintiff but for which the plaintiff has no concrete evidence. With respect to the loss allegedly suffered, as a result of light damage to the bales, I am not persuaded that that loss has been proven with sufficient certainty to entitle the plaintiff to an award in that regard.
With respect to heavily damaged bales, these were moved by the plaintiff (together with some which were ultimately found to be only lightly damaged) from the Harbour Commission warehouse to the Intercontinental warehouse. The move occurred to enable the plaintiff to more expeditiously determine which bales were in fact lightly damaged and which were heavily damaged. Counsel for the defendants questions whether all the damaged bales which were moved to Intercontinental and counted for purposes of this case came from the Lara S. He suggests that some of these may have come from other and earlier shipments. He also notes the incompleteness of the inter-warehouse receipt documentation. I accept Judith Hoyle’s evidence with respect to the number of bales which were heavily damaged. She gave evidence that she personally counted the heavily damaged bales. Mr. Gaudette stated that he had not personally counted the bales but had seen the repalletized units in the Intercontinental warehouse and had counted the pallets. He had been surprised that there were not a greater number. I accept that the plaintiff incurred losses as a result of heavy damage having been caused to 3,429 bales and that the sorting, handling and transportation charges which are claimed, including the survey fees are properly a matter for compensation.
It is agreed that the arrived sound market value of the goods was $20 per bale. The 3,429 heavily damaged goods were put out for salvage sale. The highest of the few responses which came in, offered less than $13,000 for the bales. The plaintiff bought the bales from its insurer for $5 per bale. The plaintiff claims $15 per bale as compensation (the arrived sound market value of the goods minus their arrived damaged market value).
The bales were shipped by the plaintiff to Alberta. Of the 3,429 bales, 2,100 were sent, a year or two later, to a dealer by the plaintiff and sold at approximately $12 a bale. Of these, approximately 300 bales were returned to the plaintiff because they were totally unusable. Of the remaining 1329 bales, the plaintiff sold many of these itself at approximately $8 per bale. These sales took place a year or two after their arrival in Toronto, at a time when the price of twine had increased. The plaintiff paid approximately $2 a bale to ship the goods to Alberta as well as paying, initially, approximately five cents a bale per month for storage. This subsequently increased to approximately seven cents a bale per month.
Counsel for the defendants argues that damages should be assessed by reference to what the cargo was sold for, by the plaintiff, on the open market and not by reference to “arrived sound market value minus arrived damaged market value”. This issue was addressed by Mr. Justice Rouleau in Redpath Industries Ltd. v. Cisco (The), [1992] 3 F.C. 428 (T.D.). For reasons similar to those given by Mr. Justice Rouleau, I accept that the arrived sound market value minus arrived damaged market value is the proper test.
Counsel for the defendants argues that the plaintiff was remiss in not accepting an offer to repackage the twine at $1.46 a bale. It is said that in rejecting that offer, the plaintiff thereby failed to mitigate its damages. I accept Judith Hoyle’s explanation that accepting that offer was not practical because the bales had to be sorted by hand by someone who knew what was heavily damaged and what was not. It was also not economical because warehouse handling charges and transportation charges would have to be added to the repackaging fee.
With respect to the shortages claimed, as a result of non-delivery, counsel for the defendants argues that the shortages have not been proven with sufficient certainty. He argues that some of the shortages may have occurred after delivery in the Toronto Harbour Commission warehouse or in the course of transit between warehouses. The damage which occurred in the hold of the ship resulted in pallets toppling over and the bales falling off. Bales were loose in the hold. Thus the stevedores had to hand unload some bales and to repalletize others. Since much of the packaging was torn and in some cases non-existent, bales belonging to different consignees were mixed together. Some bales were left loose in the warehouse because it was impossible to determine to whom they belonged. I am satisfied that there was good reason to expect shortages as a result of the damage which occurred in the hold of the ship and this was in fact the cause of the shortages claimed by the plaintiff. I accept Judith Hoyle’s evidence that she calculated the shortages by inventory count and I accept her count as accurate. I note, in addition, that Mr. Gaudette gave evidence that a bale of binder twine is not the kind of product which is subject to pilfering. I accept that a shortage of 261 bales occurred and that $20 a bale is the appropriate amount to be awarded on that account.
Counsel for the defendants notes that Mr. Desroches gave evidence that it is usual with respect to most palletized cargo to find that on arrival one or two pallets out of a hundred have toppled over. I am invited then to subtract a proportionate amount from the cargo damage claim on account of what might be called “usual” or “expected” damage. I do not accept that it is appropriate to do so. I am not convinced that this usual or expected damage is other than light damage. I am not persuaded therefore that any amount on that basis should be subtracted from compensation payable to the plaintiff.
The plaintiff claims interest at the rate of 11%, the agreed average prime, on the direct loss arising as a result of heavily damaged bales and shortages, from May 1, 1988 and on the remaining loss (that claimed on account of sortation and handling costs and survey fees) from May 1, 1989, all compounded semi-annually.
The general rule in carriage of goods cases is that interest is awarded from the date of the arrival of the goods; see Canadian General Electric Co. Ltd. v. Pickford & Black Ltd., [1972] S.C.R. 52. Whether interest is awarded, from what date and how compounded, if at all, is a matter for the trial judge; see Monk Corp. v. Island Fertilizers Ltd. (1989), 97 N.R. 384 (F.C.A.) and Ontario Bus Industries Inc. v. Federal Calumet (The), [1992] 1 F.C. 245 (T.D.).
Counsel for the defendants argues that interest should not run until after August 1990, which is said to be the first date on which the defendants had notice of the quantification of the plaintiff’s claim. In addition, it is argued that compound interest is only awarded in exceptional circumstances. I do not agree that these are applicable principles in maritime cases. Interest is paid from the date damage occurs or as from the date of the arrival of the cargo. The awarding of compound interest is a matter within the discretion of the Court and is quite in keeping with ordinary commercial practice. In my view, it is appropriate that interest be calculated in that manner in this case.
CONCLUSION
A judgment will issue finding the defendants jointly and severally liable to pay the plaintiff damages based on the following calculations:
| 3,429 bales x $15 per bale |
$51,435.00 |
| 261 bales x $20 per bale |
5,220.00 |
| $56,655.00 |
|
| Sortation and handling costs |
$ 4,343.82 |
| Survey fees |
2,512.50 |
| $ 6,856.32 |
Interest at 11% compounded semi-annually shall be paid from May 1, 1988 on $56,655 and at 11% compounded semi-annually from May 1, 1989 on $6,856.32.
Judgment with respect to costs is reserved at counsels’ request pending argument thereon.
[1] Whether or not a storm is a peril depends on the intensity of the storm and the weather conditions which could normally be expected in that geographic area, at that time of year … a peril of the sea may be defined as some catastrophic force or event that would not be expected in the area of the voyage, at that time of year and could not be reasonably guarded against. Tetley, Marine Cargo Claims, 3rd ed., at pp. 431-432.
[2] The decisions in Silver v. Ocean Steamship Co., Ld., [1930] 1 K.B. 416 (C.A.) and Kerlew, The, 43 F. 2d 732 (New York 1924) were also cited.
[3] See also Carver’s Carriage by Sea, vol. 1, 13th ed., 1982, at p. 704.
[4] It is interesting to note that the following passage is found among the materials cited to me by counsel from Tetley’s Marine Cargo Claims, 3rd ed., 1988, at pp. 236-237:
In The Sea Star, clean-on-board “master’s” bills of lading were issued by the charterer against a letter of indemnity without authority from the owner. It was held by the Second Circuit that there was no claim by cargo in personam against the vessel owner, but that there was a claim in rem against the vessel once the cargo had been loaded on board. The same result was reached by the Fifth Circuit in Assoc. Metals & Minerals Corp. v. S. S. Portoria where an action was taken in rem against the ship and in personam against the vessel owners. The Court held that the action in rem failed because the writ in rem had not been served and there had been no waiver of attachment and the ship had not been arrested. The action in personam against the vessel owner also failed because the latter was not shown to be a party to the bill of lading contract. Since the vessel owner had not in fact authorized the voyage charterer to sign bills of lading on his behalf, there was no contract between the vessel owner and cargo interests. The in personam suit was therefore dismissed. U.S. Courts seem to have difficulty with the concept that the shipowner who undertakes responsibilities under the Hague Rules is an actual carrier and cannot escape from that responsibility because of the imperative nature of art. 3(8). [Footnotes omitted.]
This reference is not being cited as part of the evidence respecting the proof of foreign law but merely as an interesting commentary by a Canadian author.
[5] This is no longer true under the Visby Rules. Article III of that protocol adds the following (Art. 4 bis) to the Hague Convention:
1. The defences and limits of liability provided for in this Convention shall apply in any action against the carrier in respect of loss or damage to goods covered by a contract of carriage whether the action be founded in contract or in tort. Similarly, if the plaintiff had been able to prove endorsement and delivery of the bills of lading before April 23, 1988, the plaintiff’s action in tort would stand.