Date: 19991221
Docket: T-98-98
BETWEEN:
Z.I. POMPEY INDUSTRIE
SOCIÉTÉ LYONNAISE DE MESSAGERIES NATIONALES
JOHN S. JAMES CO.
POLYFIBRON TECHNOLOGIES INC.
ELLEHAMMER PACKAGING INC.
ALL OTHERS HAVING AN INTEREST
IN THE CARGO LADEN ON BOARD
THE M.V. "CANMAR FORTUNE"
Plaintiffs
- and -
ECU-LINE N.V.
THE OWNERS AND CHARTERERS
OF THE VESSEL "CANMAR FORTUNE"
THE VESSEL "CANMAR FORTUNE"
Defendants
REASONS FOR ORDER AND ORDER
BLAIS J.
[1] This is motion dated September 29, 1999, on behalf of the Defendant ECU-LINE N.V., for an order pursuant to Rule 51 of the Federal Court Rules, 1998, and pursuant to section 50 of the Federal Court Act, R.S.C. 1985, c.F-7, to set aside the order of Prothonotary Hargrave made in Vancouver, British Columbia, on September 22, 1999, and for an order granting the Defendant"s motion for a stay of proceedings.
FACTS
[2] This suit relates to the carriage of two crates containing one Photomecha photoprocessor and four sub assemblies having a total weight of 2300 kilograms from Antwerp, Belgium, to Seattle, Washington.
[3] The cargo was carried pursuant to bill of lading No. SEA/67797/14 executed at Lyon, France, on January 23, 1997.
[4] On its face, the bill of lading provides as follows:
| The contract evidenced by or contained in this Bill of Lading is governed by the law of Belgium, and any claim of dispute arising hereunder or in connection herewith shall be determined by the courts in Antwerp and no other Courts. |
[5] The Plaintiffs are claiming loss in the amount of $60,761.74 in Canadian dollars by reason of alleged rough and improper handling of the Defendants.
[6] A statement of defence was filed on behalf of ECU-LINE N.V. on June 17, 1998 pursuant to the Federal Court Rules, denying the claim. The Defendant ECU-Line N.V. filed a motion for a stay, on November 17, 1998, raising the existence of a jurisdiction clause and pleading that this Court is either without jurisdiction or should decline jurisdiction over ECU-LINE N.V.
[7] When the Court contemplates the facts, it notes that the bill of lading indicates Antwerp as the port of loading and Seattle as the port of discharge. The carrier decided, for some reason that is not before the Court, to change the itinerary and go from Antwerp to Montreal by sea and transfer the cargo on rail from Montreal to Seattle. The Court is also informed that Société lyonnaise de messageries nationales "SLMN Shipping" sent a fax to John S. James requesting particulars concerning the discharged port. John S. James responded to SLMN Shipping"s query by stating that the cargo was to be routed through to Tacoma or Seattle and that all of the carriage was to be done on water considering that the consignment was delicate and could not travel by rail.
[8] The Defendant alleges that this note was never conveyed to it and that the deviation that occurred in the transportation of cargo was allowed by other clauses of the bill of lading and also by the Hague-Visby Rules.
[9] On September 22, 1999, Mr. John Hargrave, Prothonotary, rendered a decision in which a motion for a stay by the Defendant ECU-LINE N.V. in favour of litigation in Antwerp, was denied.
THE DEFENDANT"S ARGUMENTS
[10] The Defendant ECU-LINE N.V. suggests that the Prothonotary erred in concluding:
| a) That it was appropriate in the context of a stay application to embark on a determination whether there had been a breach by the Defendant of the bill of lading contract; |
| b) That there had been a deviation by the Defendant; |
| c) That any such deviation deprived the Defendant of the right to rely on any provisions contained in the bill of lading contract; |
| d) That the deviation clause (clause 12) found in the bill of lading contract did not allow for the form and manner of carriage undertaken in this case; |
| e) That it was irrelevant whether the Plaintiffs informed the Defendant about the alleged susceptibility of the subject cargo to rail handling; |
| f) That it was appropriate to assess whether there had been any breach of the bill of lading contract even though the learned Prothonotary noted that issue would be determined by some law other than Canadian law; and |
| g) That it was appropriate to refer to and rely on case law not raised by the Plaintiffs during the course of the hearing, thereby depriving the Defendant of an opportunity to consider and make submissions on such case law. |
| h) Alternatively, the learned Prothonotary exercised his discretion on a wrong principle or misapprehension of the facts, and consequently this Court should exercise any discretion de novo. |
| i) Alternatively, the decision of the learned Prothonotary raises a question vital to the final determination of the case, and consequently this Court should exercise any discretion de novo. |
[11] The Defendant suggests that the Prothonotary was right when he confirmed in his reasons that application of the test for a stay of proceedings found in The Eleftheria, [1969] 1 Lloyd"s 237, favoured the Defendant, but that the Prothonotary erred when he went on to say in paragraph 5 of his reasons:
| However, the matter does not end here, for the Plaintiffs present a persuasive case that the contract between the Plaintiffs and ECU-Line N.V. came to an end in Montreal and thus there is no jurisdiction clause to apply. |
[12] The Defendant suggests that the question whether there has been a breach by the Defendant of the bill of lading contract is a matter for the Trial Judge to assess and not for an interlocutory decision on a stay by the Prothonotary.
[13] The Defendant suggests that it was premature for the Prothonotary to get to the conclusion that an unreasonable deviation occurred resulting in a fundamental breach of contract, again, this is all for the Trial Judge to decide and the Prothonotary erred in law in assessing the merits of the cause in denying the stay application.
[14] The Defendant submits that the deviation clause is not extraordinary in the trade. The Defendant referred to clause 12 of the bill of lading which states:
| 12. Methods and Routes of Transportation |
| (1) The carrier may at any time and without notice to the merchant: use any means of transport or storage whatsoever; load or carry the goods on any vessel whether named on the front hereof or not; transfer the goods from one conveyance to another including trans-shipping or carrying the same on another vessel than that named on the front hereof or by any other means of transport whatsoever; at any place unpack or remove goods which have been stuffed in or on a container and forward the same in any manner whatsoever, proceed at any speed and by any route in his discretion (whether or not the nearest or most or customary or advertised route) and proceed to or stay at any place whatsoever once or more often and in any order .... |
[15] The Defendant also suggests that reasonable deviation is provided for in the Hague and Hague-Visby Rules, pursuant to Article IV (4) of Schedule I of the Carriage of Goods by Water Act.
[16] The Defendant suggests that at no time was it advised of the special request concerning a complete sea transportation of the cargo. The request for a complete sea carriage of cargo was known to the Plaintiffs" freight forwarders but was not passed on to the carrier itself.
[17] The Defendant suggests that the Prothonotary erred in concluding that US law applied or that a US Court would accept the case.
[18] The Defendant suggests that pursuant to the doctrine of separability, in any event, the jurisdiction clause standing as a separate contract would and should be enforced whether or not the surrounding contract fails.
THE PLAINTIFFS" ARGUMENTS
[19] The Plaintiffs suggest that to succeed in its motion, the Defendant has to demonstrate that the Prothonotary was clearly wrong, in the sense that he exercised his discretion based upon a wrong principle or misapprehension of the facts or, that questions vital to a final issue were raised, as established in Canada v. Aqua-Gem Investment Ltd., [1993] 2 F.C. 425 (C.A.). Unless the decision was clearly wrong, discretionary orders of Prothonotaries are not to be disturbed on appeal.
[20] The Plaintiffs also suggest that the order of Prothonotary Hargrave did not raise questions vital to the final issue of the case.
[21] The Plaintiffs suggest that it was appropriate for the Prothonotary in the context of the stay application to embark on a determination whether there had been a breach by the Defendant of the bill of lading contract.
[22] The Plaintiffs suggest that based on the case The Eleftheria and the criteria established by this case, the Court should take into account all the circumstances of the particular case in exercising its discretion. Therefore, the Prothonotary correctly relied on all the facts at issue to exercise his discretion in his decision on the stay of proceedings.
[23] The Plaintiffs suggest that the unreasonable deviation by the carrier resulted in a fundamental breach of contract. The Plaintiffs based their argument on the fact that the bill of lading provided that the cargo was supposed to be transported by sea from Antwerp to Seattle. The fact that a carrier offloaded the cargo in Montreal and completed the transportation through rail from Montreal to Seattle constitutes an unreasonable deviation by the carrier and a fundamental breach of contract.
[24] The Plaintiffs suggest that the case law on doctrine of separability regarding arbitration clauses are not applicable to jurisdiction clauses.
[25] The Plaintiffs submit that the Prothonotary did not err in law, first, in considering the breach of contract committed by the Defendant in exercising its discretion conferred by Rule 51 of the Federal Court Rules, and second, in concluding that the Defendant committed a fundamental breach or deviation that ended the contract upon discharge of the cargo in Montreal. Thereafter, the Defendant is to be considered as bailee or carrier for reward.
ANALYSIS
[26] The first element that should be addressed is whether it was appropriate in the context of a stay application to embark on a determination whether there had been a breach by the Defendant of the bill of lading contract. Particularly whether the Prothonatary had the jurisdiction to consider the argument that the bill of lading contract came to an end in Montreal and therefore the jurisdiction clause could not apply anymore.
[27] The Eleftheria decision provides at page 242:
| The principles established by the authorities can, I think, be summarized as follows: (1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign Court, and the defendants apply for a stay, the English Court, assuming the claim to be otherwise within the jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (3) The burden of proving such strong cause is on the plaintiffs. (4) In exercising its discretion the Court should take into account all the circumstances of the particular case. (5) In particular, but without prejudice to (4), the following matters, where they arise, may be properly regarded: (a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts. (b) Whether the law of the foreign Court applies and, if so, whether it differs from English law in any material respects. (c) With what country either party is connected, and how closely. (d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages. (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign Court because they would (i) be deprived of security for that claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial. |
[28] The Prothonotary concluded:
| Taken as a whole these factors are substantial, but in this instance are just short of the strong case which, by The Eleftheria, the Plaintiffs must present in order to override the jurisdiction clause. However, the matter does not end here, for the Plaintiffs present a persuasive case that the contract between the Plaintiffs and ECU-Line N.V. came to an end in Montréal and thus there is no jurisdiction clause to apply.1 |
[29] The Prothonotary addressed the argument expressed by the Defendant that he should not deal with the question of fundamental breach or deviation:
| ECU-Line submits I ought not to deal with fundamental breach or deviation, for those are factual issues to be determined on the merits by the trial judge. The answer to this is not complex. An interim injunction, obtained on an interlocutory application, which requires a testing of the waters by looking at the strength of the case, the harm being caused and the balance of convenience, is analogous to denial of a stay of the basis of a strong case that the jurisdiction clause is just not applicable. The interim injunction does not handicap the trial judge, nor should the denial of a stay on the basis that the jurisdiction clause is in all likelihood not available. Any prejudice to ECU-Line in having to litigate in Canada can be compensated by costs.2 |
[30] The Prothonotary in rendering his decision decided that the bill of lading contract that is the basis of the whole case, ended in Montreal and that the jurisdiction clause does not apply anymore.
[31] The second criteria in the Eleftheria case says precisely that the discretion should be exercised by granting a stay unless strong cause for not doing so is shown. The third criteria specifies that the burden of proving "such strong cause in on the Plaintiffs". In determining whether the Plaintiffs had demonstrated a strong cause, the Prothonotary had to take into account all the circumstances of the case, which he has done. He was not limited in doing so, to the matters listed in the fifth criteria.
[32] The decision to stay a proceeding is a question of facts of each case and the Prothonotary had the discretion to render the decision he had, based on the facts before the Court after addressing the criteria established by The Eleftheria case.
[33] Will it be possible for the Defendant to raise again its arguments regarding the existence of the bill of lading contract and the jurisdiction clause also and demonstrate to the Court that the carrier was entitled to do what he has done pursuant to the existing law and to the existing contract? In my view, the Trial Judge will have the chance to assess the parties" actions pursuant to the existing bill of lading contract. The Trial Judge remains with the power to decide upon the validity of the contract and on the fact of whether the Defendant became or not a common carrier after discharge of the cargo in Montreal.
CONCLUSION
[34] In my view, the Prothonotary Hargrave did not err in law in considering the breach of contract by the Defendant in exercising its discretion conferred by the Federal Court Rules.
[35] In my view, the Prothonotary did not err in law in doing the assessment he did.
[36] For these reasons, the motion for an order to set aside the order of Prothonotary Hargrave, made in Vancouver, British Columbia, on September 22, 1999, and for an order granting the Defendant"s motion for a stay of proceedings is dismissed with costs.
Pierre Blais
Judge
OTTAWA, ONTARIO
December 21, 1999
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