CTLA Feature Articles and Case Notes
You Say it Best, When You Say Nothing at All…
Application of statutory limitations of liability in the face of silence by shippers and carriers for carriage of goods within Canada Eric Machum and Luke Hunter*
Introduction What happens when the parties to a contract for the carriage of goods don’t stipulate any liability terms and something goes wrong? Statutory liability provisions ride to the rescue (sometimes). In this article we examine such terms and conditions, primarily in the marine and road transport context. The terms of rail carriage in Canada have in the past been subject to considerable regulatory supervision but are now largely a matter of freedom of contract. Air cargo, while subject to standard terms for international transport, is also a matter for freedom of contract in the domestic context. The default conditions for carriage of goods by water in Canada are the HagueVisby Rules [Rules] as incorporated into law by the Marine Liability Act, S.C. 2001, c. 6 [MLA]. In general, the Rules will apply unless the parties specifically turn their minds to excluding them, though there are potential applicability questions such as whether the contract in question is for the “carriage of goods” as that term has been judicially interpreted, or similarly whether particular cargo will be considered “goods” under the definitions contained in the Rules themselves. Some *Metcalf & Company (Halifax, NS)
of these questions will be explored below. For road carriage, all Provinces except Newfoundland & Labrador have legislated uniform conditions of carriage. The conditions themselves are very similar across the provinces – e.g., regarding the $2.00/ lb limit of liability, but there are legislative variations with respect to how the conditions of carriage apply or are incorporated into the contract of carriage, and around bill of lading issuing requirements. In accordance with the federal Conditions of Carriage Regulations, SOR/2005-404, extra-provincial trucking is subject to the conditions of carriage and limitations of liability set out in the laws of the province in which the transport originates. As will be seen, courts have wrestled with deciding whether to allow carriers to rely on the limitation of liability provisions in the uniform conditions in the absence of a bill of lading or other evidence about the carriage contract’s terms. The courts in different provinces have at times gone in different directions on the applicability of the limitation of liability. This is largely based (ostensibly) on a nuanced reading of the different legislative language used, but it is clear too that different judges have simply brought different approaches and values to this problem. In response, some provinces, including Ontario, have legislated to try to settle the debate, but the issue likely remains live in other jurisdictions.
Marine For carriage of goods by water the Hague-Visby Rules apply in accordance with subsections 43(1) and (2) of the MLA
which state as follows: 43 (1) The Hague-Visby Rules have the force of law in Canada in respect of contracts for the carriage of goods by water between different states as described in Article X of those Rules. (2) The Hague-Visby Rules also apply in respect of contracts for the carriage of goods by water from one place in Canada to another place in Canada, either directly or by way of a place outside Canada, unless there is no bill of lading and the contract stipulates that those Rules do not apply. Applying the Rules by default to Canadian domestic shipping provides the obvious benefit of a uniform set of conditions for all water transport and also takes advantage of the balance struck between cargo and ship owning interests in the original negotiation of the Rules. Furthermore, given the widespread use of the Rules around the world, there is a large body of case law to which Canadian courts can turn when faced with cargo claims. The basic bargain is that the carrier cannot completely excuse itself from all liability for loss or damage to “goods”, but in exchange it can limit its liability to a predictable measure, in the case of the Rules “666.67 units of account per package or unit or 2 units of account per
56 Transportation Lawyers Association • Canadian Transport Lawyers Association • October 2021, Vol. 23, No. 2
