CORAM: MARCEAU J.A.
DESJARDINS J.A.
CHEVALIER D.J.A.
A-807-96
(T-1379-96)
BETWEEN:
FEDNAV INTERNATIONAL LTD.
Appellant
(Defendant)
- and -
SIDMAR N.V.,
LAMINOIR DE DUDELANGE S.A. c/o TRANSAF N.V.,
TRADEARBED INC.,
ALL OTHERS HAVING AN INTEREST IN THE CARGO
LADEN ON BOARD THE M.V. "FEDERAL MACKENZIE"
Respondents
(Plaintiffs)
- and -
FEDNAV LIMITED,
PROMINENT RICH LTD. c/o UNIVAN SHIP MANAGEMENT LTD.,
THE OWNERS AND CHARTERERS OF THE VESSEL
"FEDERAL MACKENZIE",
THE VESSEL "FEDERAL MACKENZIE"
Third Parties
A-808-96
(T-1378-96)
BETWEEN:
FEDNAV INTERNATIONAL LTD.
Appellant
(Defendant)
- and -
SIDMAR N.V.,
-and-
TRADEARBED INC.,
-and-
ALL OTHERS HAVING AN INTEREST IN THE CARGO
LADEN ON BOARD THE M.V. "FEDERAL MACKENZIE"
Respondents
(Plaintiffs)
- and -
FEDNAV LIMITED,
-and-
PROMINENT RICH LTD. c/o UNIVAN SHIP MANAGEMENT LTD.,
-and-
THE OWNERS AND CHARTERERS OF THE VESSEL
"FEDERAL MACKENZIE",
-and-
THE VESSEL "FEDERAL MACKENZIE"
Third Parties
A-809-96
(T-1260-96)
BETWEEN:
FEDNAV INTERNATIONAL LTD.
Appellant
(Defendant)
- and -
SIDMAR N.V.,
-and-
TRADEARBED INC.,
-and-
ALL OTHERS HAVING AN INTEREST IN THE CARGO
LADEN ON BOARD THE M.V. "HOLCK-LARSEN"
Respondents
(Plaintiffs)
- and -
FEDNAV LIMITED,
-and-
LARSEN & TOUBRO LTD.,
-and-
THE OWNERS AND CHARTERERS OF THE VESSEL
"HOLCK-LARSEN",
-and-
THE VESSEL "HOLCK-LARSEN"
Third Parties
REASONS FOR JUDGMENT
MARCEAU J.A.
This appeal is concerned with a decision of a motions judge in the Trial Division disposing of applications, made under Rule 432(1) for summary judgments1 in three related actions brought by shippers against a carrier for loss or damage to cargo carried by sea. A serious problem existed as to whether this Court and not the American Courts was the correct forum for these cargo claims, and the parties saw it to be in their common interest to have the issue settled immediately. The plaintiffs applied for Declarations that their actions had been properly and in due time brought before the Federal Court of Canada and the carrier, at the same time, applied for judgments dismissing the actions on the basis that, as brought in the Federal Court of Canada, they were time barred and prescribed. The motions judge, in an order applicable to the three actions, granted the shippers' motions and dismissed those of the carrier. The carrier appealed.
* * *
Once the facts are reviewed and put in their legal context, the issue will become clear and the contentions of the parties in respect to it will be easily appreciated.
The facts are basically the same in the three cases covered by the three actions. In each case, the carrier was contracted to transport cold rolled steel in coils from Antwerp, Belgium, to either Detroit or Chicago, U.S.A. The coils were stored on deck and when they were unloaded at the ports of discharge, they were found to have suffered various degrees of damage as a result. In each case, several bills of lading were involved but they all were on the same printed form. This form included a clause stipulating that any action arising out of the carriage of goods under the bills of lading must be brought in the Courts of Canada within one year of delivery of the goods at the port of discharge:
| 4. Jurisdiction Clause. |
| Any action by the merchant arising out of goods carried under this Bill of Lading shall be brought in the Court of Canada within one year after delivery of the goods at the port of discharge or the date when the goods should have been delivered at such port. |
| (emphasis added) |
In each case, the shippers sought an extension of time to file suit by written request of their Claims Manager. In each case, the authorized agent of the carrier agreed in a written suit time extension letter. But, in the letter, the time extensions were said to be made subject to conditions, among which was a condition that the actions be taken in the United States instead of Canada. The three letters were identical, except for the relevant dates, ship names and city names. They read as follows:
| Following your request of [February 16, 1996], we hereby extend your time within which to commence suit, in accordance with the stipulations of the captioned B/L, up to and including [June 4, 1996] on the following conditions: |
| 1. It is understood and agreed that the amount of any eventual suit shall not exceed the captioned amount, being the sum claimed by you, and it is further understood and agreed that any Writ issued in excess of the said amount shall be null and void ab initio; |
| 2. That you shall not be in a better position than if this extension had not been granted and that this extension shall not enlarge or create any rights under the said Bill of Lading; |
| 3. That this letter and extension are without prejudice to any immunities, defences, rights and limitations, statutory, contractual or otherwise; |
| 4. Actions, if any, are to be filed in Detroit. |
| (emphasis added) |
The evidence of the parties is that the shippers wanted the time extensions because the claims had not yet been paid by their cargo underwriters and the latter required the shippers to protect suit time until payments had been made under the cargo insurance policies. The carrier's evidence is that it wanted the suits to be filed at the discharge ports because that is where the bulk of the evidence was likely to be available and where claims could be made against parties involved in the handling and transportation of the goods between the time of discharge from the vessel and the time of transfer to the receivers.
In each case, the actions in Canada were commenced more than one year after the cargo was delivered at the port of discharge, but they were each taken within the time specified in the written suit time extensions granted by Fednav
Now the legal context. It is now common ground between the parties that the Hague-Visby Rules which were in force in Belgium, the country of the port of loading, applied to the shipments in spite of the fact that there was a Paramount Clause in the bills of lading which purported to incorporate the U.S. Carriage of Goods by Sea Act (U.S. COGSA) or the unamended Hague Rules. It is so because, where the pre-requisites for the application of the Hague-Visby Rules exist, a Canadian Court must apply them regardless of whether the parties have attempted by contract to have their agreement subject to the law of a jurisdiction that does not recognize them. The relevant provisions of the Canadian Carriage of Goods by Water Act (Canadian COGWA), S.C. 1993, c. 21, and the Hague-Visby Rules (the "Rules") referred to therein should here be reproduced for convenience:
| Carriage of Goods by Water Act |
| 7. (1) The Hague-Visby Rules have the force of law in Canada. |
| (2) The Hague-Visby Rules apply in respect of contracts entered into after the coming into force of this Part and before the coming into force of Part II |
| (a) to which those Rules apply pursuant to Article X of those Rules; or |
| (b) that, subject to subsection (4), are for the carriage of goods by ship from one place in Canada to any other place in Canada, either directly or by way of a place outside Canada. |
| (3) For the purposes of this Part, the expression "Contracting State" in Article X of the Hague-Visby Rules includes Canada and any other state that, without being a Contracting State, gives the force of law to the rules embodied in the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, done at Brussels on August 25, 1924, as amended by the Protocol done at Brussels on February 23, 1968, regardless of whether that state gives the force of law to the Protocol done at Brussels done on December 21, 1979. |
| Hague-Visby Rules |
| Article III |
| Responsibilities and Liabilities |
| [...] |
| 6. Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, or, if the loss or damage be not apparent, within three days, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. |
| The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection. |
| Subject to paragraph 6bis the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered. This period may, however, be extended if the parties so agree after the cause of action has arisen. |
| In the case of any actual or apprehended loss or damage the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. |
| 6.bis An action for indemnity against a third person may be brought even after the expiration of the year provided for in the preceding paragraph if brought within the time allowed by the law of the Court seized of the case. However, the time allowed shall be not less than three months, commencing from the day when the person bringing such action for indemnity has settled the claim or has been served with process in the action against himself. [...] |
| 8. Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with goods arising from negligence, fault or failure in the duties and obligations provided in this Article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. |
| A benefit of insurance or similar clause shall be deemed to be a clause relieving the carrier from liability. |
| [...] |
| Article V |
| Surrender of Rights and Immunities, and Increase |
| of Responsibilities and Liabilities |
| A carrier shall be at liberty to surrender in whole or in part all or any of his rights and immunities or to increase any of his responsibilities and liabilities under the Rules contained in any of these Articles, provided such surrender or increase shall be embodied in the bill of lading issued to the shipper. |
| The provisions of these Rules shall not be applicable to charter-parties, but if bills of lading are issued in the case of a ship under a charter-party they shall comply with the terms of these Rules. Nothing in these Rules shall be held to prevent the insertion in a bill of lading of any lawful provision regarding general average. |
| [...] |
Article X
Application
The provisions of these Rules shall apply to every bill of lading relating to the carriage of goods between ports in two different States if:
| (a) the bill of lading is issued in a Contracting State, or |
| (b) the carriage is from a port in a Contracting State, or |
| (c) the contract contained in or evidenced by the bill of lading provides that these Rules or legislation of any State giving effect to them are to govern the contract, |
whatever may be the nationality of the ship, the carrier, the shipper, the consignee, or any other interested person.
Three features of these provisions should be specially noted. The Rules operate so that they cannot be modified by contract if the modification has the direct or indirect effect of reducing liability, which is the reason why the Paramount Clause in the bills of lading here could have no effect, as I just mentioned, the limit of liability under the U.S. COGSA being considerably lower than that imposed by the Hague-Visby Rules. The Rules expressly give parties to a contract authority to extend the time to file suit " which, as explained, is what was done here. The Rules indicate that a carrier can agree to surrender some or all of its rights and immunity in a bill of lading but make no such provision for the shipper.
* * *
With this review of the facts and the legislative context in mind, the respective contentions of the parties should easily be anticipated. The plaintiffs, in effect, say that the change of forum conditions in the extension of time agreements are null and void by application of the Hague-Visby Rules. They add, alternatively, that even if these clauses were not so null and void, the carrier, in view of the circumstances in which they were imposed, would be estopped from relying on them. The carrier, for its part, disputes that the extension of time agreements fall within the purview of the Hague-Visby Rules and contends that there is no reason why it would be estopped from relying on them.
Two preliminary remarks are here in order. There is no question that the time extension agreements are in themselves valid agreements even if obviously the shippers' representative did not fully appreciate the effect of some of their terms. None of the parties had any interest and, indeed, any basis for voiding the agreements, both having entered into them aware of their contents and terms, if not of all their consequences. Also, and more to the point, there is no suggestion that the enforceability of the change of forum clause was at the root of the acceptance by the carrier to extend time. In other words, there is no evidence that the carrier would not have agreed to the time extensions "but for" the inclusion of the change of forum condition. Time extensions were and are regularly granted by the carrier as a matter of its normal business practice and the record indicates that, in all the years of transactions between these two parties, few if any such requests were ever refused. The letters themselves suggest that there were other considerations more important to the carrier than the change of forum " namely the three conditions listed before the change of forum clause. Accordingly, it cannot be said that the clause was so fundamental to the agreement that the whole should be struck down if the part cannot stand. I now come to the merits of the parties' contention.
It is now common ground between counsel that the Hague-Visby Rules would apply and dictate to purely disregard the change of forum condition, if the extension of time agreements must be seen as being part of the contract of carriage. Counsel for the carrier had initially thought of making the point that the Rules were strictly concerned with the bills of lading (Article X), but he was prepared to concede that COGWA speaks of the contract which may be more than the bill of lading. He asserted, however, that the scope of the contract of carriage of goods by sea has necessarily to be restricted to agreements reached with respect to the carriage itself, which means that it covers agreements entered into before the goods are shipped. Once the goods have arrived at the port of destination, any new agreement between the parties will not affect the carriage of the goods, but will obviously have only to do with the cause of action that may have arisen, a completely new legal situation. Counsel cited in support of his submissions some U.S. cases which, indeed, appear to have considered suit time extension agreements as separate from the contracts of carriage by sea to which they related, adding that, as a matter of fact, there was no policy rationale for seeking to extend the protection of the Rules to agreements entered into at that time since, once the cause of action has arisen, the shipper can no longer be said to be at the mercy of the carrier.
This position does not appear to me correct. In my view, the right of action for damage to its goods that a shipper may have against a carrier is embodied into the contract of carriage itself, and its eventual exercise remains a direct effect of the contract " its object being the enforcement through the shippers' equivalent indemnity in damages of the contractual obligations assumed by the carrier. It is, in a sense, the continuation of the contract. On the other hand, the suit time limitation of one year is imposed by the Rules (Article III, Rule 6). It is binding on the parties and, if it can be circumvented, it is only because the same provision that fixes the term authorizes the parties to extend it. It seems to me that the very extension of time is thereby made part of the Rules applicable to the contract as an amendment to it and, therefore, becoming retroactively part of the contract itself. The provision of the U.S. COGSA establishing suit time does not contain a similar proviso, and on that basis alone I think the U.S. authorities relied on by counsel may be disregarded.
So my conclusion is the same as that of the learned trial judge: the choice of forum conditions in the time extension agreements are null and void and must be totally disregarded without affecting the rest of the document. The provisions of the bills of lading establishing Canada as the correct forum still apply, but the suit time limitation of one year has been validly extended.
The appeal, in my view, should be dismissed.
"Louis Marceau"
J.A.
"I concur.
Alice Desjardins, J.A."
"I agree.
François Chevalier, D.J."
CORAM: MARCEAU J.A.
DESJARDINS J.A.
CHEVALIER D.J.A.
A-807-96
(T-1379-96)
BETWEEN:
FEDNAV INTERNATIONAL LTD.
Appellant
(Defendant)
- and -
SIDMAR N.V.,
LAMINOIR DE DUDELANGE S.A. c/o TRANSAF N.V.,
TRADEARBED INC.,
ALL OTHERS HAVING AN INTEREST IN THE CARGO
LADEN ON BOARD THE M.V. "FEDERAL MACKENZIE"
Respondents
(Plaintiffs)
- and -
FEDNAV LIMITED,
PROMINENT RICH LTD. c/o UNIVAN SHIP MANAGEMENT LTD.
THE OWNERS AND CHARTERERS OF THE VESSEL
"FEDERAL MACKENZIE",
THE VESSEL "FEDERAL MACKENZIE"
Third Parties
A-808-96
(T-1378-96)
BETWEEN:
FEDNAV INTERNATIONAL LTD.
Appellant
(Defendant)
- and -
SIDMAR N.V.,
-and-
TRADEARBED INC.,
-and-
ALL OTHERS HAVING AN INTEREST IN THE CARGO
LADEN ON BOARD THE M.V. "FEDERAL MACKENZIE"
Respondents
(Plaintiffs)
- and -
FEDNAV LIMITED,
-and-
PROMINENT RICH LTD. c/o UNIVAN SHIP MANAGEMENT LTD.,
-and-
THE OWNERS AND CHARTERERS OF THE VESSEL
"FEDERAL MACKENZIE",
-and-
THE VESSEL "FEDERAL MACKENZIE"
Third Parties
A-809-96
(T-1260-96)
BETWEEN:
FEDNAV INTERNATIONAL LTD.
Appellant
(Defendant)
- and -
SIDMAR N.V.,
-and-
TRADEARBED INC.,
-and-
ALL OTHERS HAVING AN INTEREST IN THE CARGO
LADEN ON BOARD THE M.V. "HOLCK-LARSEN"
Respondents
(Plaintiffs)
- and -
FEDNAV LIMITED,
-and-
LARSEN & TOUBRO LTD.,
-and-
THE OWNERS AND CHARTERERS OF THE VESSEL
"HOLCK-LARSEN",
-and-
THE VESSEL "HOLCK-LARSEN"
Third Parties
Heard at Montreal, Quebec, on Tuesday, January 28, 1997.
Judgment rendered at Ottawa, Ontario, on Tuesday, February 25, 1997.
REASONS FOR JUDGMENT BY: MARCEAU J.A.
CONCURRED IN BY: DESJARDINS J.A.
CHEVALIER D.J.A.
IN THE FEDERAL COURT OF APPEAL
A-807-96 (T-1379-96)
BETWEEN:
FEDNAV INTERNATIONAL LTD.
Appellant (Defendant)
- and -
SIDMAR N.V.,
LAMINOIR DE DUDELANGE S.A. c/o TRANSAF N.V.,
TRADEARBED INC.,
ALL OTHERS HAVING AN INTEREST IN THE CARGO
LADEN ON BOARD THE M.V. "FEDERAL MACKENZIE"
Respondents (Plaintiffs)
- and -
FEDNAV LIMITED,
PROMINENT RICH LTD. c/o UNIVAN SHIP MANAGEMENT LTD.
THE OWNERS AND CHARTERERS OF THE VESSEL "FEDERAL MACKENZIE",
THE VESSEL "FEDERAL MACKENZIE"
Third Parties
A-808-96 (T-1378-96)
BETWEEN:
FEDNAV INTERNATIONAL LTD.
Appellant (Defendant)
- and -
SIDMAR N.V.,
-and- TRADEARBED INC.,
-and- ALL OTHERS HAVING AN INTEREST IN THE CARGO
LADEN ON BOARD THE M.V. "FEDERAL MACKENZIE"
Respondents (Plaintiffs)
- and -
FEDNAV LIMITED, -and-
PROMINENT RICH LTD. c/o UNIVAN SHIP MANAGEMENT LTD.,
-and- THE OWNERS AND CHARTERERS OF THE VESSEL "FEDERAL MACKENZIE",
-and-THE VESSEL "FEDERAL MACKENZIE"
Third Parties
A-809-96 (T-1260-96)
BETWEEN:
FEDNAV INTERNATIONAL LTD.
Appellant (Defendant)
- and -
SIDMAR N.V.,
-and- TRADEARBED INC.,
-and- ALL OTHERS HAVING AN INTEREST IN THE CARGO
LADEN ON BOARD THE M.V. "HOLCK-LARSEN"
Respondents (Plaintiffs)
- and -
FEDNAV LIMITED,
-and- LARSEN & TOUBRO LTD.,
-and- THE OWNERS AND CHARTERERS OF THE VESSEL "HOLCK-LARSEN",
-and- THE VESSEL "HOLCK-LARSEN"
Third Parties
REASONS FOR JUDGMENT
__________________
1 This Rule reads as follows:
432.1 (1) A plaintiff may, after the defendant has filed a defence, or earlier with leave of the Court, and at any time prior to the fixing of the time and date for trial, make a motion to a judge, with supporting affidavit material or other evidence, for summary judgment on all or part of the claim in the statement of claim.
(2) A defendant may, after filing and serving a defence and at any time prior to the fixing of the time and date for trial, make a motion to a judge, with supporting affidavit material or other evidence, for summary judgment dismissing all or part of the claim in the statement of claim.