A-442-97
Jian Sheng Co. Ltd. (Plaintiff) (Appellant)
v.
Great Tempo S.A., Sinotrans Canada Inc., and the Owners and Others Interested in the Ship Trans Aspiration (Defendants) (Respondents)
Indexed as: Jian Sheng Co. v.Great Tempo S.A. (C.A.)
Court of Appeal, Pratte, Décary and Linden JJ.A." Vancouver, March 26; Ottawa, April 14, 1998.
Maritime law — Carriage of goods — Appeal from order allowing stay of proceedings — Statement of claim alleging cargo —carried and handled— by three defendants — Standard liner bill of lading jurisdiction clause providing for dispute resolution in country where carrier having principal place of business — Jurisdiction clause not void for uncertainty as matter of principle — Not ambiguous — Application question of fact — No precedent for saying lack of information as to names of parties, vessels, principal places of business resulting in uncertainty sufficient to invalidate bills of lading — Standard clause applied for ages in industry — If application giving rise to too much uncertainty, relief not to declare clause invalid, but for Court to exercise discretion not to enforce it — Onus on defendant to show jurisdiction clause applied — Must show (1) carrier; (2) where principal place of business is — Prothonotary erred in relying on Professor Tetley's joint venture of owners, charterers principle — Stringent test for principal place of business — Imposing on defendant obligation to come forward with as much information as possible, as such information within defendant's control, not generally available to plaintiff — Defendant herein saying nothing as to location of principal place of business, names of officers, where control over employees, business exercised — All necessary information defendant required to provide to Court, within its knowledge — Courts may make negative inferences where party failing to bring forward evidence within its knowledge necessary to resolution of dispute — To allow carrier to get away with so little evidence would make mockery of jurisdiction clause.
This was an appeal from an order allowing an appeal from the Prothonotary's denial of a stay of proceedings on the basis that the jurisdiction clause in the bill of lading on which the appellant had relied was void for uncertainty. The statement of claim related to the loss of a substantial portion of cargo carried pursuant to a contract of carriage evidenced by a bill of lading issued in Vancouver. According to the statement of claim, the shipment was "carried and handled" by three defendants: the carrier and owner of the ship, Great Tempo S.A. (the respondent), the charterers and operators of the ship, Sinotrans Canada Inc. (Sinotrans), and the ship. The statement of claim alleged that the respondent's principal office was in Hong Kong. The bill of lading was a standard liner bill of lading, approved by the Baltic and International Maritime Conference. It was signed by Sinotrans "As agents only for Carrier: Trans Aspiration". The jurisdiction clause provided that any disputes arising under the bill of lading would be decided in the country where the carrier has its principal place of business. The respondent moved for leave to file a conditional appearance to object to the Court's jurisdiction, and for a stay of all proceedings against it. An affidavit in support indicated that 100% of the respondent's business was conducted from Hong Kong. In denying the motion for a stay, the Prothonotary found that the failure to identify the carrier clearly was a fatal ambiguity. He referred with approval to the joint venture principle enunciated by Professor Tetley. On appeal, Tremblay-Lamer J. held that the Prothonotary had erred in relying on Professor Tetley's comments. She held that there was evidence upon which the Court could determine where the respondent's principal place of business was.
The issue was whether the jurisdiction clause was void for uncertainty as a matter of principle or in the circumstances herein.
Held, the appeal should be allowed.
This type of jurisdiction clause should not be declared invalid for uncertainty as a matter of principle. There was no ambiguity in the clause. It meant exactly what it said. Its application in each case is a question of fact. The identity of the carrier and the location of its principal place of business often do not appear expressly in bills of lading and are to be determined by the terms of the contract and the circumstances respectively. No case in Anglo-Canadian case law says authoritatively that this lack of information results in an uncertainty sufficient to invalidate bills of lading. It is a standard clause which has been applied for ages in the industry. If the application of the jurisdiction clause in certain circumstances gives rise to too much uncertainty, the relief is not to declare the clause invalid, but for the Court to exercise its discretion not to enforce it. While the appellant argued that the Court should adopt an approach more in conformity with the present international consensus as reflected in the Hamburg Rules, Article 21, the Hamburg Convention has not yet been signed by Canada or Great Britain. It has not been ratified by France, Germany and the U.S.A. Thus there is no consensus in the international community with regard to the jurisdiction provision found in the Hamburg Rules, and the Court was not prepared to pre-empt the will of the Government.
At this stage a defendant has the burden of convincing the Court that the jurisdiction clause applied. The burden of proof is two-fold: the defendant must show that it is the carrier. It must then show where its principal place of business is.
In shipowners' bills of lading, there is a presumption that the shipowner is the carrier. In charterers' bills of lading the presumption is that the demise charterer is the carrier. Any other can be the carrier only where those presumptions have been rebutted, and such rebuttal occurs only when there is evidence that such other has actually assumed the role of carrier under the contract of carriage with the shipper. The appellant suggested that there could be more than one carrier. It relied for this proposition on Canastrand Industries Ltd. v. Lara S (The), [1993] 2 F.C. 553 (T.D.), which approved of comments by Professor Tetley in Marine Cargo Claims to the effect that carriage of goods is a joint venture of owners and charterers and consequently they should be held jointly and severally liable as carriers. The concept of an implicit joint venture of owners and charterers was subsequently qualified by the Court of Appeal as an "American-influenced principle". The implicit joint venture concept is also incompatible with the gist of several decisions of the Supreme Court of Canada and of this Court. It was found "unsound" in Union Carbide where it was held that the carrier shall either be the owner or the charterer, but not both. There may be cases where a shipowner and a charterer actually decide to carry on a joint venture or form a partnership, but it would then be the joint venture or the partnership that assumes the role of carrier. While the Lara S was confirmed by this Court, the oral reasons of the Court did not address the issue of implicit joint venture and the issue was not raised as such in the appeal. The Lara S cannot be seen as an endorsement of Professor Tetley's comments.
The Prothonotary erred in relying on the joint venture principle. The motion should not have been denied on the sole basis that there was no proof of the identity of the carrier. The terms of the bill of lading do not lead to the conclusion that Sinotrans had assumed as principal the role of carrier. In signing as "agents only for Carrier: Trans Aspiration", Sinotrans left open the possibility that it was not acting as agent for the shipowner, but as agent for an unknown demise charterer. But the identity of carrier clause in the bill of lading indicates in unequivocal terms that the bill of lading is intended to be a shipowners' bill of lading and that the contract evidenced by the bill of lading is one between the cargo owner and the vessel owner. That clause establishes a rebuttable presumption that the shipowner is the carrier and, as against a consignee, the fact of using the words "agents for the ship", rather than "agents for the shipowner" is not enough to displace the presumption.
The principal place of business is where the company's real business is carried on. One has to consider the centre from which instructions are given, and from which control is exercised on behalf of the company over the employees of and the business of the company, and where control is exercised and the centre from which the company is managed without any further control except such control as every company or the directors of a company are liable to by the larger body which they represent, the shareholders of the company in general meeting. The test therefore is a demanding one. It imposes on the defendant an obligation to come forward with as much information as possible, even more so because such information is totally within its control and generally not available to the plaintiff.
The Motions Judge misconstrued the test for the principal place of business and failed to appreciate how stringent that test was. The respondent said nothing as to the location of the principal place of business, the names of the officers and where the control over the employees and the business was exercised. Yet all this was necessary information the respondent had to provide to the Court and which was within its knowledge. Courts may make negative inferences where a party fails to bring forward evidence within its knowledge which is necessary to the resolution of a dispute. To allow a carrier to get away with so little evidence, not even its own, would make a mockery of the jurisdiction clause.
The jurisdiction clause was not applicable as the respondent failed to establish that its principal place of business was in Hong Kong.
statutes and regulations judicially considered
Bills of Lading Act, R.S.C., 1985, c. B-5.
Carriage of Goods by Water Act, R.S.C, 1985, c. C-27, Schedule.
Carriage of Goods by Water Act, S.C. 1993, c. 21.
Federal Court Act, R.S.C., 1985, c. F-7, s. 50.
Hague-Visby Rules, being Schedule I to the Carriage of Goods by Water Act, S.C. 1993, c. 21.
United Nations Convention on the Carriage of Goods by Sea, 1978, Hamburg, 31 March 1978 ("Hamburg Rules"), Art. 21.
cases judicially considered
applied:
Rewia, The, [1991] 2 Lloyd's Rep. 325 (C.A.); Union Carbide Corp. et al v. Fednav Ltd. et al. (1997), 131 F.T.R. 241 (F.C.T.D.).
considered:
Canastrand Industries Ltd. v. Lara S (The), [1993] 2 F.C. 553; (1993), 60 F.T.R. 1; 16 C.C.L.T. (2d) 1 (T.D.); affd par sub nom. Canastrand Industries Ltd. v. Ship Lara S et al. (1994), 176 N.R. 31 (F.C.A.); Lantic Sugar Ltd. v. Blue Tower Trading Corp. et al. (1993), 163 N.R. 191 (F.C.A.).
referred to:
El Amria, The, [1981] 2 Lloyd's Rep. 119 (C.A.); Eleftheria, The, [1969] 1 Lloyd's Rep. 237 (Adm.); Can-Am Produce and Trading Ltd. v. Ship Senator et al. (1996), 112 F.T.R. 255 (F.C.T.D.); Seapearl (The Ship M/V) v. Seven Seas Dry Cargo Shipping Corporation of Santiago, Chile, [1983] 2 F.C. 161; (1982), 139 D.L.R. (3d) 669; 43 N.R. 517 (C.A.); Atlantic Shipping and Trading Co. v. Dreyfus & Co., [1922] 2 A.C. 250 (H.L.); Spiliada, The, [1987] 1 Lloyd's Rep. 1 (H.L.); Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425; [1993] 1 C.T.C. 186; (1993), 93 DTC 5080; 149 N.R. 273 (C.A.); 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), 101 D.L.R. (3d) 1; 31 N.R. 584; Cormorant Bulk-Carriers Inc. v. Canficorp (Overseas Projects) Ltd. (1984), 54 N.R. 66 (F.C.A.); Carling O'Keefe Breweries of Canada Ltd. v. CN Marine Inc., [1990] 1 F.C. 483; (1989), 104 N.R. 66 (C.A.); Polzeath, The, [1916] P. 241 (C.A.); Ardennes (Owner of Cargo), The v. The Ardennes (Owners), [1950] 2 All E.R. 517 (K.B.D.); Leduc v. Ward (1888), 20 Q.B.D. 475 (C.A.); Berkshire, The, [1974] 1 Lloyd's Rep. 185 (Q.B. (Adm. Ct.)); Fiducie Prêt v. Canada Mortgage and Housing Corp. (1991), 136 N.R. 129 (F.C.A.).
authors cited
Tetley, William. Marine Cargo Claims, 3rd ed. Montréal: Éditions Yvon Blais, 1988.
Todd, Paul. Modern Bills of Lading, 2nd ed. Oxford: Blackwell Law, 1990.
APPEAL from an order allowing an appeal (Jian Sheng Co. v. Great Tempo S.A. et al. (1997), 132 F.T.R. 166 (F.C.T.D.)) from the Prothonotary's order denying a stay of proceedings (Jian Sheng Co. v. Great Tempo S.A. et al. (1997), 129 F.T.R. 55 (F.C.T.D.)) on the basis that the jurisdiction clause in the bill of lading on which the appellant had relied was void for uncertainty. Appeal allowed.
counsel:
Douglas G. Schmitt for plaintiff (appellant).
T. S. Hawkins for defendants (respondents).
solicitors:
McEwen, Schmitt & Co., Vancouver, for plaintiff (appellant).
Campney & Murphy, Vancouver, for defendants (respondents).
The following are the reasons for judgment rendered in English by
Décary J.A.: This is an appeal from the order of Tremblay-Lamer J. dated June 4, 1997 [(1997), 132 F.T.R. 166] in which she allowed an appeal by the respondent Great Tempo S.A. from the order of Prothonotary Hargrave, dated April 7, 1997 [(1997), 129 F.T.R. 55]. The Prothonotary had denied a stay of the proceedings on the basis that the jurisdiction clause in the bill of lading on which the appellant relied was void for uncertainty.
The issue before us, as argued by counsel for the appellant, is whether the jurisdiction clause in question is void for uncertainty as a matter of principle or, if not, whether it is void for uncertainty in the circumstances of this case.
The jurisdiction clause is found in a bill of lading issued in a standard form entitled "Liner Bill of Lading" in use by the respondent ship. That form is approved by the Baltic and International Maritime Conference and its Code name is "Conlinebill". It reads:
3. Jurisdiction
Any dispute arising under this Bill of Lading shall be decided in the country where the carrier has his principal place of business, and the law of such country shall apply except as provided elsewhere herein.
Voidness for uncertainty as a matter of principle
I wish at the outset to put to rest the submission that as a matter of principle this type of jurisdiction clause should be declared invalid for uncertainty.
There is no ambiguity in the clause. It means precisely what it says. Its application will of course, in each case, be a question of fact. Who is the carrier and what is his principal place of business are information which often do not appear expressly in bills of lading and are to be determined, with respect to the identity of the carrier, by the terms of the contract and with respect to the location of the principal place of business, by the circumstances of the case.
There are more often than not unnamed parties, unnamed vessels and unidentified principal places of business in bills of lading, but no case in Anglo-Canadian jurisprudence has been cited to us that says authoritatively that this lack of information results in an uncertainty such as to invalidate bills of lading.
We are dealing with standard clauses which have been applied for ages in the industry and by the courts (see The El Amria, [1981] 2 Lloyd's Rep. 119 (C.A.); The Rewia, [1991] 2 Lloyd's Rep. 325 (C.A.); The Eleftheria, [1969] 1 Lloyd's Rep. 237 (Adm.) and Can-Am Produce and Trading Ltd. v. Ship Senator et al. (1996), 112 F.T.R. 255 (F.C.T.D.)). Such is the law freely adhered to by the parties. It is too late in the day to question a practice that has acquired its letters patent of nobility in Anglo-Canadian law and usage. The following opinion of Lord Dunedin in Atlantic Shipping and Trading Co. v. Dreyfus & Co., [1922] 2 A.C. 250 (H.L.), at page 257 is particularly apposite in the circumstances:
. . . in these commercial cases it is, I think, of the highest importance that authority should not be disturbed, and if your Lordships find that a certain doctrine has been laid down in former cases and presumably acted on in the framing of other contracts you will not be disposed to alter that doctrine unless you think it is clearly wrong.
If the application of the jurisdiction clause in certain circumstances gives rise to too much uncertainty, the relief is not to declare the clause invalid but for the court to exercise its discretion not to enforce it.
Counsel for the appellant has suggested at the hearing that the Court should as a matter of policy adopt an approach which, in his view, would be more in conformity with the present international consensus in regard to jurisdiction clauses. Such consensus, he says, is reflected in Article 21 of the Hamburg Rules set out in the United Nations Convention on the Carriage of Goods by Sea, 1978. That Article reads:
Article 21
Jurisdiction
1. In judicial proceedings relating to carriage of goods under this Convention the plaintiff, at his option, may institute an action in a court which, according to the law of the State where the court is situated, is competent and within the jurisdiction of which is situated one of the following places :
(a) the principal place of business or, in the absence thereof, the habitual residence of the defendant; or
(b) the place where the contract was made provided that the defendant has there a place of business, branch or agency through which the contract was made; or
(c) the port of loading or the port of discharge; or
(d) any additional place designated for that purpose in the contract of carriage by sea.
The Hamburg Convention has not been signed yet by Canada or by Great Britain nor ratified by such maritime powers as France, Germany and the United States of America. Furthermore, the Carriage of Goods by Water Act which, with the exception of section 8, came into force on May 6, 1993 (S.C. 1993, c. 21), replaces the Rules relating to bills of lading set out in the Schedule to the Carriage of Goods by Water Act, (R.S.C., 1985, c. C-27) with the Hague-Visby Rules [being Schedule I of the Carriage of Goods by Water Act, S.C. 1993, c. 21] and, at a later date, should the Minister of Transport so decide, with the Hamburg Rules (section 8). It is therefore doubtful that there exists a consensus at the present time in the international community with regard to the jurisdiction provision found in the Hamburg Rules and this Court is not in any event prepared to pre-empt the will of the Government and of the Parliament of Canada.
I have therefore reached the conclusion that the jurisdiction clause at issue is not invalid for uncertainty and that we should apply it as being the law of the parties, the law of the trade, the law of the land and the law of Anglo-Canadian courts.
Voidness for uncertainty in the circumstances
Where, in admiralty matters before this Court, a defendant applies for a stay pursuant to section 50 of the Federal Court Act [R.S.C., 1985, c. F-7] on the basis of a jurisdiction clause found in a bill of lading, the defendant has the burden of persuading the Court that the conditions of application of the clause have been met. Once the Court is satisfied that the clause applies, the burden of proof then shifts to the plaintiff to show sufficiently strong reasons to support the conclusion that it would not be reasonable or just in the circumstances to keep the plaintiff to the terms of the contract (see Seapearl (The Ship M/V) v. Seven Seas Dry Cargo Shipping Corporation of Santiago, Chile, [1983] 2 F.C. 161 (C.A.), at page 177, Pratte J.A.; see, also, The Spiliada, [1987] 1 Lloyd's Rep. 1 (H.L.), at page 10 and The El Amria). These "strong reasons" have been summarized in the often-quoted reasons of Brandon J. (as he then was) in The —Eleftheria—, at page 242, but I need not repeat them here because the appellant has not challenged the finding by the Motions Judge that Hong Kong would be in the circumstances an appropriate jurisdiction. The appellant's case rests solely on whether or not the Motions Judge erred in finding that Great Tempo S.A. has established that the conditions for the application of the jurisdiction clause have been met.
General observations
It will be helpful to start my analysis by making six general observations the respective relevance of which will appear as I move along.
(a) The standard of review
In reviewing a discretionary decision of a motions judge upon an application to stay proceedings on the basis of a jurisdiction clause, a court of appeal must uphold the decision unless it was arrived at on a wrong basis or was plainly a wrong decision (see Seapearl, at page 176, Pratte J.A.). A similar standard of review is to be applied by a motions judge in an appeal from a prothonotary's order of this kind (see Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.), at page 454). This Court may therefore interfere only if the Motions Judge had no grounds to interfere with the Prothonotary's decision or, in the event such grounds existed, if her own decision was arrived at on a wrong basis or was plainly a wrong decision.
(b) The relevant evidence
As this appeal is concerned with an interlocutory application, I must, like the Motions Judge and like the Prothonotary, take the facts from the affidavit evidence filed on behalf of the parties (see The Spiliada, at page 4, Lord Goff of Chieveley).
(c) The burden of proof
The burden of proof which rests on a defendant at this first stage of the process is to convince the Court in no uncertain terms that the jurisdiction clause applies. This is not a routine task. It is the defendant who seeks to prevent the plaintiff from proceeding in an otherwise appropriate forum and as much as the Court is expected to honour the intention of the parties to defer to another jurisdiction absent strong reasons not to do so, the Court needs equally to be satisfied before it so defers that the clause applies in the circumstances.
The burden of proof is two-fold. The defendant must show that he is the carrier. He must then show where his principal place of business is. The evidence to be provided by the defendant must be convincing. If the Court at the end of the day is left with some doubt as to the identity of the carrier or as to the location of the carrier's principal place of business, it ought not go to the second step of the process and it ought deny the stay forthwith.
(d) The identity of the carrier
In shipowners' bills of lading, there is a presumption that the shipowner is the carrier. In charterers' bills of lading, on the other hand, the presumption is that the demise charterer is the carrier. Any other can be the carrier only where the above presumptions have been rebutted, and such rebuttal occurs only when there is evidence that such other has actually assumed the role of carrier under the contract of carriage with the shipper (see Paterson SS Ltd. v. Aluminum Co. of Can., [1951] S.C.R. 852, at page 854, Rand J.; Aris Steamship Co. Inc. v. Associated Metals & Minerals Corporation, [1980] 2 S.C.R. 322, at page 328 ff, Ritchie J.; Cormorant Bulk-Carriers Inc. v. Canficorp (Overseas Projects) Ltd. (1984), 54 N.R. 66 (F.C.A), at page 76, Stone J.A.; Carling O'Keefe Breweries of Canada Ltd. v. CN Marine Inc., [1990] 1 F.C. 483 (C.A.), at page 501, Stone J.A.; Union Carbide Corp. et al. v. Fednav Ltd. et al. (1997), 131 F.T.R. 241 (F.C.T.D.), at page 254 ff, Nadon J. and The Rewia at page 333).
Counsel for the appellant has suggested that there could be more than one carrier in the present case, one being the shipowner, the other being an alleged demise charterer or an alleged time charterer who would have assumed the role of carrier. He relies for this proposition on the decision of Reed J. in Canastrand Industries Ltd. v. Lara S (The), [1993] 2 F.C. 553 (T.D.), which was confirmed orally by this Court ((1994), 176 N.R. 31 (F.C.A.)). Reed J. had relied on comments by Professor Tetley in Marine Cargo Claims, 3rd ed. (Montréal: Yvon Blais, 1988) at page 242, to the effect that:
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.
Professor Tetley's concept of an implicit joint venture of owners and charterers was qualified by this Court as an "American-influenced principle" (Lantic Sugar Ltd. v. Blue Tower Trading Corp. et al. (1993), 163 N.R. 191 (F.C.A.), at page 194, MacGuigan J.A.) and referred to as a "suggestion" by Stone J.A. in Carling O'Keefe , in a footnote, at page 501.
The implicit joint venture concept is in my respectful view incompatible with the gist of the decisions of the Supreme Court in Paterson SS and in Aris Steamship and of the decisions of this Court in Cormorant and in Carling O'Keefe. The concept has been found "unsound" by Nadon J. in Union Carbide , at page 264 and I entirely agree with his reasons for reaching that conclusion. The law, in my view, is clearly stated by Nadon J., at pages 264-265:
The position taken by the learned authors appears to be that in circumstances where the charterer will be liable on the contract of carriage, the shipowner will not. I agree with this point of view. A charterer will issue and sign a bill of lading either on his own behalf or on behalf on the master. Where he signs on behalf of the master, and is so authorized, the shipowner will be bound by the issuance of the bills of lading but not the charterer. Where the charterer issues and signs bills of lading on his own behalf, he shall be bound by those bills. Consequently, in most cases, the word "or" in article 1(a) of the Hague Rules will mean exactly that. The carrier shall either be the owner or the charterer, but not both. I need not discuss a situation where a charterer issues and signs a bill of lading on behalf of the master and on his own behalf. That is certainly not the situation in the present case.
There may be cases where a shipowner and a charterer actually decide to carry on a joint venture or form a partnership, but it would then be the joint venture or the partnership that assumes the role of carrier.
I appreciate that the Lara S was confirmed by this Court, but the oral reasons of the Court did not address the issue of implicit joint venture and a careful perusal of the voluminous factums filed by counsel has persuaded me that the issue had not been raised as such in the appeal. The Lara S cannot, therefore, be seen as an endorsement of Professor Tetley's comments.
(e) The location of principal place of business
The question of the location of the principal place of business has been clearly answered in the recent decision of the English Court of Appeal, in The Rewia. The following comments by Lord Justice Leggatt, at page 334, are particularly relevant:
The principal place of business is not necessarily the place where most of the business is carried out. . . . The plaintiffs maintain that the third defendants' business was really carried out in Hong Kong, and that the Judge was therefore right to conclude that that was where their principal place of business was. Rightly, in my judgment, the third defendants underscore the fact that the shareholders, directors and mortgagee banks were German; that the meetings of directors took place in Hamburg; that charters, including the relevant time charter of Jan. 8, 1988, had to be authorised specifically from Germany; that everything about the relevant charter was German except the fact that it was into the Hong Kong branch of a German bank that hire was to be paid; that by German law profits had to be repatriated to Germany; and that, as appears from the entries in the Lloyd's registers, the third defendants' brokers, C. F. Ahrenkiel of Hamburg, played an important role in their affairs. True it is that the day-to-day management of the vessel was conducted by Turbata under the management agreement, but the third defendants point out that the managers were always answerable, and subject, to the control and direction of the German officers of the company.
In Palmer v. Caledonian Railway Co., [1892] 1 Q.B. 823 Lord Esher said:
I should have thought without any authority that the principal office of the company must be the place at which the business of the company is controlled and managed . . . in the sense that it is independently controlled or managed . . .
A similar approach was adopted by Lord Loreburn, L.C. in De Beers Consolidated Mines Ltd. v. Howe, [1906] A.C. 455 when at p. 458 he accepted the principle that a company resides for purposes of income tax where its real business is carried on, adding:
I regard that as the true rule, and the real business is carried on where the central management and control actually abides.
So also in Daimler Co. v. Continental Tyre and Rubber Co. (Great Britain), [1916] 2 A.C. 307 Lord Atkinson at p. 319 indicated that a test of residence was the"
. . . place where the real business centre from which the governing and directing minds of the company operated, regulating and controlling its important affairs.
Leggatt L.J. went on to quote with approval the test applied by Lord Justice Swinfen Eady in The Polzeath, [1916] P. 241 (C.A.), at page 245:
. . . in considering what is the principal place of business of the company, one has to consider the centre from which instructions are given, and from which control is exercised on behalf of the company over the employees of and the business of the company, and where control is exercised, and the centre from which the company is managed without any further control except such control as every company or the directors of a company are liable to by the larger body which they represent, the shareholders of the company in general meeting. [Emphasis added.]
The test, therefore, is a demanding one. It imposes on the defendant an obligation to come forward with as much information as possible, even more so because such information is totally within his control and generally not available to the plaintiff.
(f) The booking note and the contract of carriage
It is trite law that as between the carrier and the shipper, the bill of lading is not in itself the contract, but is excellent evidence of its terms. That is so even if the shipper is not usually a party to the preparation of the bill of lading, does not even sign it and only receives it from the hands of the master of the vessel after the goods have been put on board (see The Ardennes (Owner of Cargo) v. The Ardennes (Owners), [1950] 2 All E.R. 517 (K.B.D.), at pages 519-520). Evidence is therefore admissible to complete, vary or explain the terms of the bill of lading, such as evidence of the conduct of the parties (see The Ardennes) and of the booking note (see Cormorant).
As between the carrier and the consignee or endorsee of a bill of lading, the Bills of Lading Act (R.S.C., 1985, c. B-5) makes it the contract and as a general rule no evidence is admissible to contradict or vary its terms (see The Ardennes, at page 520; Leduc v. Ward (1888), 20 Q.B.D. 475 (C.A.)). Where plaintiffs were consignees who could only have title as assignees of the bills of lading, and not by way of an assignment of an oral booking note, it was found that in order to determine the question whether the bills of lading were owners' bills rather than charterers' bills, the Court could derive no assistance from a factual enquiry into the circumstances in which the booking note was made (see The Rewia, at page 333).
The circumstances of this case
I turn now to the circumstances of this case. The statement of claim relates to the loss of a substantial portion of cargo of lumber carried from Nanaimo, British Columbia, to Taiwan on board the ship Trans Aspiration (the ship) pursuant to a contract of carriage evidenced by a bill of lading issued in Vancouver. The plaintiff (the appellant), a vendor and importer of lumber whose principal office is located in Taiwan, was the consignee of the shipment. According to the statement of claim, the shipment was "carried and handled" by three defendants: the carrier and owner of the ship, Great Tempo S.A. (the respondent), the charterers and operators of the ship, Sinotrans Canada Inc. (Sinotrans) and the ship.
The respondent is described as follows in paragraph 2 of the statement of claim:
2. The Defendant, Great Tempo S.A. is a corporation carrying on business as a common carrier of goods by sea. Its principal office is located at c/o Wah Tung Shipping Agency Co. Ltd . . . , Hong Kong. At all times material to this action it was the owner of the defendant vessel "Trans Aspiration".
The defendant Sinotrans is described in paragraph 3 of the statement of claim as being at all material times "the charterers and operators" of the ship.
The bill of lading at issue is a standard liner bill of lading. The consignee is identified as "To the order of: Taipei Business Bank" and the address of notification is that of the appellant. The named vessel is the Trans Aspiration . The ports of loading and discharge are respectively "Nanaimo, B.C." and "Taichung Port, Taiwan". The document is signed as follows (A.B., at page 59):
IN WITNESS whereof the Master of the said Vessel has signed [three] original Bills of Lading . . .
[Signature]
Capt. Kemp Wah-Foo
Sinotrans Canada Inc.
As agents only for Carrier: Trans Aspiration
In addition to the jurisdiction clause (clause 3, already referred to in paragraph 3), the bill of lading contains the following clauses:
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.
. . .
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 the bailee of the goods shipped hereunder, all limitations of and exoneration 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 Agents shall not be under any liability arising out of the contract of carriage nor as Carrier nor bailee of the goods. [A.B., at pp. 35-36.]
Upon being served with the statement of claim, the respondent Great Tempo S.A. made a motion seeking leave to file a conditional appearance for the purpose of objecting to the jurisdiction of the Court and asking for a stay of all proceedings against it pursuant to section 50 of the Federal Court Act. Various affidavits were filed in evidence, only one of which is relevant to this appeal. It is that of Samson Lok (A.B., at pages 24-29), the Deputy Manager of Insurance and Claims with the firm of Wah Tung Shipping Agency Co. Ltd. who states as follows:
2. Great Tempo, S.A. is the registered owner of the M.V. "TRANS ASPIRATION" and Wah Tung Shipping Agency Co. Ltd. is the manager of Great Tempo S.A.
3. 100% of the business of Great Tempo S.A. is conducted from Hongkong, although Great Tempo, S.A. is registered as a Panamanian company.
. . .
14. Under the Contract of Carriage evidenced by the Bill of Lading, the carrier is the ship owner and Hongkong is the carrier's principal place of business.
Other affidavit evidence pertains to an alleged booking note to which the appellant was not a party; as this evidence was ignored by the Prothonotary and by the Motions Judge, and rightly so for reasons already explained, it need not be recited here.
In denying the motion for a stay, Mr. Hargrave [at page 60] found a fatal ambiguity in the jurisdiction clause in that the carrier had not been clearly identified. The appellant, in his view,
. . . might equally conclude it ought to sue: (1) Sinotrans (Canada) Ltd., who says it is an agent, but who does not disclose its principal and whom the shipper understood to be the carrier, in Vancouver; or (2) Sinotrans (Bermuda) Ltd., in Bermuda; or (3) Great Tempo S.A., in its place of incorporation, Panama; or (4) Great Tempo S.A., where its Board sits, in some unknown jurisdiction. On the basis of the "Rewia", the plaintiff could conclude it probably ought not to sue Great Tempo S.A. in Hong Kong, merely on the basis that Wah Tung Shipping Agency Co. Ltd., who have only just now surfaced, is the manager of the "Trans Aspiration".
The matter was then appealed to Tremblay-Lamer J. who allowed the appeal and ordered a stay. She found that the Prothonotary had erred in relying on Professor Tetley's comments and that on the face of the bill of lading Sinotrans, be it Sinotrans Canada Inc. or Sinotrans (Bermuda) Ltd., could not be the carrier. She then addressed the issue of the principal place of business as follows [at pages 173-174]:
The plaintiff, on the other hand, stresses that the defendant has led no evidence regarding the principal place of business of Great Tempo S.A. There is no evidence as to the identity and address of the directors and/or officers of Great Tempo S.A. Nor is there any evidence concerning the location of the bank accounts or other assets of Great Tempo S.A.
Despite very able argument of counsel for the plaintiff on that point, I am of the view that there is evidence upon which this court can determine where Great Tempo S.A. has its principal place of business. I first refer to the affidavit of Mr. Samson Lok, wherein he deposed that, at paragraphs 3 and 14:
3. 100% of the business of Great Tempo S.A. is conducted from Hongkong, although Great Tempo S.A. is registered as a Panamanian company.
14. Under the Contract of Carriage evidenced by the Bill of Lading, the carrier is the ship owner and Hongkong is the carrier's principal place of business.
Need I add that this was no surprise to the plaintiff. Indeed, in the second paragraph of its statement of claim, the plaintiff expressly recognized that Great Tempo S.A. has its principal place of business in Hong Kong. The relevant paragraph reads:
2. The defendant, Great Tempo S.A. is a corporation carrying on business as a common carrier of goods by sea. Its principal office is located at c/o Wah Tung Shipping Agency Co. Ltd., Rooms 2101-2105, 21st Floor, China Resources Building, 26 Harbour Road, Wan Chai, Hong Kong. At all times material to this action it was the owner of the defendant vessel "Trans Aspiration".
To hold otherwise would result in allowing the plaintiff to impugn the substance of the allegations of its statement of claim which I am not prepared to do. I find further support for my finding in the fact that Mr. Samson Lok's evidence on this question stands uncontradicted.
(a) The identity of the carrier
I agree with the Motions Judge that the Prothonotary erred in relying on Professor Tetley's joint venture principle: Nadon J.'s reasons in Union Carbide, which I have examined earlier on and which the Prothonotary had no opportunity to consult as they were written subsequent to his decision, have persuasively explained why that principle does not apply in our law.
While I appreciate the Prothonotary's concern as to the identity of the carrier and would have preferred the respondent to come forward at least with a declaration that it was indeed the carrier, I would not have been prepared to deny the motion on the sole basis that there was no proof of the identity of the carrier. The terms of the bill of lading cannot in my view lead one to conclude that Sinotrans Canada Inc. had assumed as principal the role of carrier and the possibility that Sinotrans (Bermuda) Ltd. might have been a demise charterer is at best speculation at this stage. It is true that in signing as "agents only for Carrier: Trans Aspiration", Sinotrans Canada Inc. left open the possibility that it was not acting as agent for the shipowner, but as agent for an unknown demise charterer. But in view of the identity of carrier clause (also referred to as a demise clause) in the bill of lading, one could be hard pressed to conclude that as against the appellant consignee, the bill of lading could be anything but an owners' bill of lading. This clause indicates in unequivocal terms that the bill of lading is intended to be a shipowners' bill of lading and that the contract evidenced by the bill of lading is one between the owner of the cargo and the owner of the vessel (see The Berkshire , [1974] 1 Lloyd's Rep. 185 (Q.B.) (Adm. Ct.)), at page 188, Brandon J. and Union Carbide, at page 261, Nadon J.). That clause in effect establishes a rebuttable presumption that the shipowner is the carrier (see P. Todd, Modern Bills of Lading, 2nd ed. (Oxford: Blackwell Law, 1990), at page 96 ff) and I am not convinced that, as against a consignee, the fact of using the words "agents for the ship" rather than the words "agents for the shipowner" is enough to displace the presumption.
In view of the conclusion I have reached with respect to the principal place of business issue, however, I need not make a definite finding as to the identity of the carrier in the circumstances of this case.
(b) The location of the principal place of business
On the question of the principal place of business of the respondent, I have reached the conclusion that the Motions Judge misconstrued the test set out in The Rewia and failed to appreciate how stringent that test was.
The only evidence before the Court is that "100% of the business of Great Tempo S.A. is conducted from Hong Kong". The Motions Judge also considered as evidence paragraph 14 of Mr. Lok's affidavit, to the effect that "under the Contract of Carriage evidenced by the Bill of Lading . . . Hong Kong is the carrier's principal place of business", but that paragraph is nothing but a personal"and questionable"interpretation of the terms of the bill of lading which, of course, in no way binds this Court.
The respondent did not file any affidavit bearing the signature of its officers, nor even of its employees. It did not tell the Court personally that its manager was Wah Tung Shipping Agency Ltd; rather, it is an employee of that alleged manager who testified to that effect. It did not itself state where its principal place of business was; rather, it is the same employee of the alleged manager who testified that "100% of the business of Great Tempo S.A. is conducted from Hong Kong". Nothing was said on many indicia , for example the location of the principal place of business, the names of the officers and where the control over the employees and the business was exercised. Yet all this was necessary information the respondent had to provide to the Court and which was within its knowledge. It is a well-established principle that courts may make negative inferences where a party fails to bring forward evidence within its knowledge which is necessary to the resolution of a dispute (see Fiducie Prêt v. Canada Mortgage and Housing Corp. (1991), 136 N.R. 129 (F.C.A.), at page 142 and footnote 23).
Here, the Court simply does not know anything about "the centre from which instructions are given, and from which control is exercised on behalf of the company over the employees of and the business of the company, and where control is exercised, and the centre from which the company is managed without any further control", to use the words of Lord Justice Swinfen Eady in The Polzeath quoted by Lord Justice Leggatt in The Rewia, at page 334. To allow a carrier to get away with so little evidence, not even its own, would make a mockery of the jurisdiction clause.
The Motions Judge found comfort in some of the allegations of the appellant in the statement of claim. I disagree. First, the appellant did not allege that "the principal place of business" of the respondent was in Hong Kong. It stated, rather, that "the principal office" was located "at c/o Wah Tung Shipping Agency, . . . Hong Kong" (my emphasis). Second, and more importantly, the location of the principal place of business of a defendant is a mixed question of fact and law to be decided by the courts on the whole of the evidence. An honest mistake caused by representations originating from the defendant can most certainly not be invoked to prevent a plaintiff from challenging a motion to stay nor to enable a defendant to succeed on the motion without adducing convincing evidence of its own. Furthermore, what the appellant was clearly referring to in its statement of claim was the respondent's official address, for purposes of service, which address is not necessarily that of respondent's principal place of business.
The respondent Great Tempo S.A. having failed to establish that its principal place of business was in Hong Kong, the jurisdiction clause could simply not be found to be applicable.
The appeal should therefore be allowed, the decision of the Motions Judge set aside, the order of the Prothonotary restored and the application by Great Tempo S.A. for a stay of the proceedings denied, with costs in the cause throughout.
Pratte J.A.: I agree.
Linden J.A.: I agree.