Federal Court of Appeal Decisions

Date: 20061222

Docket: A-116-06

Citation: 2006 FCA 426

 

Present:          NADON J.A.

 

BETWEEN:

CANADIAN PACIFIC RAILWAY COMPANY

Appellant

and

BOUTIQUE JACOB INC.

Respondent

 

 

 

 

 

 

 

Dealt with in writing without appearance of parties.

 

Order delivered at Ottawa, Ontario, on December 22, 2006.

 

 

 

REASONS FOR ORDER BY:                                                                                      NADON J.A.

 

 

 

Date: 20061222

Docket: A-116-06

Citation: 2006 FCA 426

 

Present:          NADON J.A.

 

BETWEEN:

CANADIAN PACIFIC RAILWAY COMPANY

Appellant

and

BOUTIQUE JACOB INC.

Respondent

 

 

REASONS FOR ORDER

NADON J.A.

 

[1]               Before me are four motions to intervene in the present appeal of a decision of de Montigny J. of the Federal Court, 2006 FC 217, February 20, 2006.

 

[2]               By his decision, the learned Judge maintained, in part, an action for damages commenced by Boutique Jacob Inc. (the “respondent”) against a number of defendants, namely, Pantainer Ltd., Panalpina Inc., Orient Overseas Container Line Ltd. (“OOCL”) and Canadian Pacific Railway (“CPR”). Specifically, the Judge granted judgment in favour of the respondent against the defendant CPR and awarded it the sum of $35,116.56 with interest, and he dismissed the action insofar as it was directed against the other defendants.

 

[3]               A brief examination of the facts and issues leading to the judgement of de Montigny J. will be helpful in understanding the basis upon which the motions to intervene are being made.

 

[4]               At issue before the Judge was the carriage by various modes of transport from Hong Kong to Montreal of a container of goods, namely, pieces of textile in cartons, destined for the respondent. As is usual in the transport of containerized cargo, a number of entities were involved in the carriage of the container, namely, an ocean carrier, OOCL, which carried it from Hong Kong to Vancouver, and a railway carrier, CPR, which carried it from Vancouver to Montreal.

 

[5]               On April 27, 2003, as a result of a train derailment which occurred near Sudbury, Ontario, part of the respondent’s cargo was damaged and part of it was lost.

 

[6]               It should be pointed out that at no time whatsoever did the respondent contract with either OOCL or CPR. Rather, the respondent retained the services of Panalpina Inc. which, in turn, retained the services of Pantainer Ltd. to carry the respondent’s cargo from Hong Kong to Montreal. Pantainer then proceeded to engage OOCL to carry the container from Hong Kong to Montreal. In turn, OOCL entered into a contract of carriage with CPR with respect to the carriage of the container from Vancouver to Montreal.

 

[7]               The issues before the Judge were, inter alia, whether the defendants, individually or collectively, were liable for the damages suffered by the respondent and, in the event of liability, whether the defendants could limit their liability either by law or by contract.

 

[8]               As I have already indicated, the Judge dismissed the respondent’s action against all of the defendants, except CPR. In so concluding, the Judge held that CPR was not entitled to limit its liability because it had not complied with the terms of section 137 of the Canada Transportation Act, S.C. 1996, c. C-10 (the “Act”), which provides as follows:

 

[9]               More particularly, the Judge held that CPR could not limit its liability because it had not entered into a “… written agreement signed by the shipper or by an association or other body representing shippers” to that effect.

 

[10]           It will be recalled that the services of CPR were retained by the ocean carrier, OOCL, and not by the owner of the goods, the respondent Boutique Jacob. In the Judge’s view, the written agreement between CPR and OOCL did not meet the requirements of sub-section 137(1), as “the shipper” was not OOCL, but the respondent.

 

[11]           CPR also argued that it was entitled to benefit from the limitations and exemptions of liability found in the bills of lading issued both by OOCL and by Pantainer, and more particularly, that it could benefit from the so-called Himalaya clause found in these bills of lading. De Montigny J. concluded that by reason of section 137 of the Act, neither the Himalaya clause nor the principles of sub-bailment could be successfully invoked by CPR. At paragraph 50 of his Reasons, he explained his conclusion in the following terms:

50.     Alternatively, counsel for CPR has argued that her client could take advantage of the limitations and exemptions found in OOCL and Paintainer terms and conditions. It is true that clause 1 of the OOCL waybill and clause 3 of the Pantainer bill of lading explicitly provide that participating carriers shall be entitled to the same rights, exemptions from liability, defences and immunities to which each of these two carriers are entitled. But the application of these clauses to a railway carrier would defeat the purpose of s. 137 of the Canada Transportation Act. It would make no sense to protect the shipper by prescribing that a railway company cannot limit its liability except by written agreement signed by that shipper, if the railway company could nevertheless achieve the same result through the means of a Himalaya clause found upstream in the contract of another carrier. I recognize that such reasoning results in a less advantageous position for railway companies as opposed to other carriers. But this is true not only for the purpose of liability but also in many other respects, since other modes of transportation are not as heavily regulated as are railway companies.

 

 

[12]           On March 20, 2006, CPR filed a Notice of Appeal in this Court and on March 30, 2006, the respondent filed a cross-appeal. On June 15, 2006, Zim Integrated Shipping Services Ltd., A.P. Moller-Maersk A/S and Hapag-Lloyd Container Line GmbH filed a motion for leave to intervene in the appeal. On July 13, 2006, August 23, 2006 and September 11, 2006, similar motions were filed respectively by 13 protection and indemnity clubs (“P&I Clubs”), by Canadian National Railway Company (“CN”) and by Safmarine Container Line Ltd.

 

[13]           The proposed interveners seek to intervene in this appeal on the following questions:

1.        The interpretation of section 137 of the Act, including, inter alia, the definition of “shipper”, “association of” or “body representing shippers”.

2.        The right of a railway to invoke the Himalaya clause found in the ocean carrier’s bill of lading.

3.        The right of a railway to enforce the terms of confidential contracts that it has with an ocean carrier when sued by the owner of the damaged or lost cargo.

 

[14]           The motions to intervene are all made pursuant to Rule 109 of the Federal Courts Rules, which reads as follows:

 

[15]           Three of the motions are brought by a number of companies, all represented by the same attorneys, which I will hereinafter refer to as the ocean carriers. These proposed interveners, with the exception of the P&I Clubs, are, like the defendant OOCL in the proceedings below, engaged in the transportation of containerized cargo to Canada from various points around the world and from Canada to various points around the world. The other proposed interveners in this group, the P&I Clubs, are insurance mutuals which protect their member shipowners and operators against, inter alia, third-party liability for cargo damage. For the present purposes, it is sufficient to note that they insure about 90% of the world’s oceangoing tonnage and represent most, if not all, of the international ocean carriers of containerized cargo operating in Canada.

 

[16]           The other motion is brought by CN, a federally-regulated railway which operates a continuous railway system in Canada and in the United States.

 

[17]           The ocean carriers say that they meet the requirements for intervention and further say that their participation in the appeal will assist this Court in determining the factual and legal issues of the appeal for the following reasons:

·               The ocean carrier involved in the trial of this action, OOCL, is not a party to the appeal and hence the Court of Appeal will not have the benefit of the point of view of one of the vital links to multimodal transportation, i.e., the ocean carrier which issued a multimodal bill of lading;

·               An ocean carrier, such as OOCL, can be a shipper in the context of the rail movement of cargo as that term is understood in Section 137 of the Act, a point that CPR may not need to make or cannot make in its arguments on appeal;

·               An ocean carrier could, alternatively, be a “body representing shippers” as that term is understood in Section 137 of the Act, an argument that CPR may not need to make or cannot make in its arguments on appeal;

·               Himalaya clauses similar to the one contained in the OOCL bill of lading at issue are provisions which were developed by ocean carriers and are regularly found in all bills of lading of ocean carriers of containerized cargo. They have been developed to allow the ocean carrier’s sub-contractors such as railways to benefit from, inter alia, the same liability regime and limits of liability to which the ocean carriers benefit under the terms of their contracts of carriage with cargo owners. Ocean carriers are therefore in the best position to speak to the intent and application of such clauses.

·               Ocean carriers are in the best position to make the argument regarding the application of the rules on sub-bailment because CPR, in the present case, does not have to reply on this argument as it is arguably protected by the indemnity provisions found in its tariff. In any event, it is likely that the limits of liability incorporated in the rail contract between OOCL and CPR may have exceeded the value of the Plaintiff’s claim, hence CPR’s lack of interest to press the issue of the application of the principles of sub-bailment.

 

[18]           With respect to its proposed intervention, CN says that its presence in the appeal will be of assistance to this Court in that:

·               CN proposes to argue that the definition of shipper involves the control and not necessarily the ownership of goods;

·               CN is the only Canadian railway with a full North American network and proposes to demonstrate the legal impact of the Trial decision on goods moving through Canada en route from and to international points;

·               CN proposes to argue that Himalaya clauses should receive an interpretation harmonized with the interpretation given by the United States Supreme Court considering that a significant portion of containerized traffic destined to the United States enters that country through CN’s network;

·               CN is in the best position to assist the Federal Court of Appeal with respect to the issues raised in this appeal and in the appeal before the Quebec Court of Appeal of the Quebec Superior Court’s decision in Sumitomo Marine and Fire Insurance Co. Ltd. v. CN, [2004] J.Q. 11243 in connection with the interpretation of section 137.

 

[19]           In Canadian Union of Public Employees (Airline Division) v. Canadian Airlines International Ltd., 2000 F.C.J. No. 220, this Court, at paragraph 8 of the Reasons of Noël J.A., enumerated the following factors as those which ought to be considered in deciding whether a motion to intervene should be allowed:

8     It is fair to assume that in order to grant the intervention the motions Judge would have considered the following factors which were advanced by both the appellants and PSAC as being relevant to her decision:

1) Is the proposed intervener directly affected by the outcome?

2) Does there exist a justiciable issue and a veritable public interest?

3) Is there an apparent lack of any other reasonable or efficient means to submit the question of the Court?

4) Is the position of the proposed intervener adequately defended by one of the parties to the case?

5) Are the interests of justice better served by the intervention of the proposed third party?

6) Can the Court hear and decide the cause on its merits without the proposed intervener?

 

 

[20]           In addition, Noël J.A. indicated that the Court had to have regard to Rule 109(2), which required a proposed intervener to indicate how its participation would assist the Court in determining the factual or legal issues raised by the proceedings.

 

[21]           It must also be said that for leave to intervene to be granted, it is not necessary that all of the factors be met by a proposed intervener (see: Rothmans Benson and Hedges Inc. v. Canada, [1990] 1 F.C. 84 (TD); affirmed [1990] 1 F.C. 90 (CA)) and that, in the end, the Court has the inherent authority to allow intervention on terms and conditions which are appropriate in the circumstances (see: Canada (Director of Investigations and Research) v. Air Canada, [1989] 2 F.C. 88 (CA); affirmed [1989] 1 S.C.R. 236; also Fishing Vessel Owners Association of B.C. v. Canada, [1985] 57 N.R. 376 (CA) at 381).

 

[22]           I now turn to the ocean carriers’ motions to intervene.

 

[23]           The ocean carriers say that the decision to be rendered by this Court in the appeal will have a significant impact on the multi-modal transportation industry, as the factual matrix represents a typical multi-modal transportation case and that the contractual documents in evidence are common across the industry. They say that de Montigny J.’s decision and that of the Quebec Superior Court in Sumitomo Marine and Fire Insurance Co. Ltd. v. Canadian National Railway Co., [2004] J.Q. 11243, are the only two interpretations of section 137 of the Act. They further say that most ocean carriers of containerized cargo offer to their clients multi-modal transportation services in Canada, that they have contracts with either CN or CPR with respect to the inland portion of the transportation services which they provide, and that such contracts consistently incorporate tariffs which provide for, inter alia, limitations of liability in favour of the railway for damage to cargo as well as an obligation of the part of the ocean carrier to indemnify the railway in the event that the latter is held liable to third parties in excess of such limits of liability.

 

[24]           Hence, the ocean carriers point out that the direct consequence of de Montigny J.’s interpretation of section 137 of the Act is that failing written agreements between railways and cargo owners, the railways will be facing unlimited liability and, consequently, will seek to pursue indemnity rights against the ocean carriers in order to recover any amount paid in excess of the limits stipulated in the contracts between them and the ocean carriers.

 

[25]           The ocean carriers therefore submit that they will ultimately be paying the amount of damages to which the railways have been condemned, to the extent that these amounts exceed the railways’ limits of liability.

 

[26]           In my view, leave ought to be granted to the ocean carriers. I am satisfied that the position which the ocean carriers seek to assert will not be adequately defended by CPR and that their participation will undoubtedly assist this Court in determining the legal issues raised by the appeal. An important, if not crucial, consideration in my decision to grant leave to the ocean carriers is that OOCL, the ocean carrier which carried the respondents’ container from Hong Kong to Vancouver and which sub-contracted the Vancouver to Montreal portion of the carriage to CPR, is not a party in the appeal.

 

[27]           As a result, it is my view that the interests of justice will be better served by allowing the ocean carriers to intervene.

 

[28]           For these reasons, I will grant leave to the ocean carriers to intervene in the appeal and costs shall be spoken to. In so concluding, I am obviously not casting any aspersions on CPR and its attorneys. My point is simply that the ocean carriers will be bringing a different perspective to the issues which are before the Court.

 

[29]           I now turn to CN’s motion.

 

[30]           I have not been convinced that leave to intervene ought to be granted to CN. In my view, CN’s position and the arguments which it seeks to make in the appeal are identical to the position and the arguments that will be put forward by CPR. I have no reason to believe, and CN has offered none, that CPR will not adequately defend the position which it seeks to advance. As a result, this Court can hear and decide the appeal on its merits without the participation of CN. In the end, I do not believe that the interests of justice will be better served by allowing CN to intervene in this appeal.

 

[31]           As a result, CN’s motion will be dismissed. Costs shall be spoken to.

 

 

FEDERAL COURT OF APPEAL

 

NAMES OF COUNSEL AND SOLICITORS OF RECORD

 

DOCKET:                                                                              A-116-06

 

STYLE OF CAUSE:                                                               CPR v. BOUTIQUE JACOB INC.

 

MOTION DEALT WITH IN WRITING WITHOUT APPEARANCE OF PARTIES

 

REASONS FOR ORDER BY:                                               NADON J.A.

 

DATED:                                                                                  December 22, 2006

 

WRITTEN REPRESENTATIONS BY:

 

Sandra Sahyouni	For the Respondent
Jean-Marie Fontaine                 L. Michel Huart	For the Proposed Interveners Zim Integrated Shipping Services Ltd., A.P. Moller-Maersk A/S, Hapag-Lloyd Container Line GmbH, Safmarine Container Lines N.V., American Steamship Owners Mutual Protection and Indemnity Association Inc. et al.   For the Proposed Intervener Canadian National Railway Company.

 

SOLICITORS OF RECORD:

 

The Law Offices of J. Kendrick Sproule	For the Respondent
Borden Ladner Gervais LLP Montreal, QC             Langlois Gaudreau O’Connor LLP Montreal, QC	For the Proposed Interveners Zim Integrated Shipping Services Ltd., A.P. Moller-Maersk A/S, Hapag-Lloyd Container Line GmbH, Safmarine Container Lines N.V., American Steamship Owners Mutual Protection and Indemnity Association Inc. et al.   For the Proposed Intervener Canadian National Railway Company.