Union Carbide Corp. v. Fednav Ltd.
T-2403-81
Nadon J.
20/5/97
81 pp.
Action alleging breach of contract of carriage pursuant to which defendant agreeing to carry cargo to Far East or liability in tort-Defendant submitting not party to contract of carriage entered into by plaintiffs-Plaintiffs, except Union Carbide Corporation, consignees of shipments of synthetic resin carried from Montréal to Bangkok, Manila, on Hudson Bay-Union Carbide shipper-Consignees purchasing respective cargoes from Union Carbide on cif Bangkok, cif Manila terms-Union Carbide's commercial invoices to consignees dated January 1979-Cargo, synthetic resin, property of Union Carbide upon delivery to dock in Montréal-Hudson Bay nominated to carry cargo-Hudson Bay owned by Bona Maritime, under time charter to Federal Commerce pursuant to terms and conditions of New York Produce Exchange form-Cargo loaded by Federal Marine-Bills of lading signed by Federal Commerce "by authority of master as agent only"-Portion of cargo arriving damaged-Plaintiffs, except Plasko Trading and Union Carbide, commencing proceedings in New York-That action dismissed on ground of forum non conveniens on condition defendants not raise time bar defence in Canada-In 1981 proceedings commenced in Canada-Issues: (1) whether Union Carbide proper plaintiff; (2) whether Federal Commerce liable either in contract or in tort; (3) if liable, amount of compensation-Action dismissed-(1) Union Carbide not proper plaintiff; action time barred-Union Carbide fulfilling all obligations as cif vendor, no issue arising out of contracts of sale-Goods shipped, carried to destination, received by respective consignees-Because portion of goods arriving damaged, consignees filing claims against Federal Commerce, cargo insurers-Consignees indemnified by insurers pursuant to terms, conditions of policies taken out by Union Carbide to cover goods shipped-Cif vendor bearing all risks of loss until goods loaded on ship when risk shifting to purchaser-Risk of loss to cargo fell upon consignees from time cargo loaded on Hudson Bay in Montréal-As goods loaded in good order, condition, with exception of some sifting, damage to cargo occurring when risk of loss falling upon consignees-Although not initially parties to contracts evidenced by bills of lading, Bills of Lading Act, s. 2 vesting consignees with all rights of action in respect of cargo covered by bills of lading-As consignees at risk when loss, damage occurred, and as parties with contractual rights of action, Union Carbide not proper plaintiff-Union Carbide not plaintiff in New York actions-Only those plaintiffs in Canadian action who were also plaintiffs in New York actions could institute proceedings in Canada-Too late for Union Carbide to commence proceedings in April 1981-U.S. Federal Rules of Procedure requiring "real party in interest" prosecute action in its name-Consignees who have purchased cargo under cif terms cannot institute proceedings on behalf of shipper-Union Carbide not plaintiff in New York actions, prohibition not to raise time-bar not applying to Union Carbide-Since filed statement of claim on April 7, 1981, action time-barred having been commenced 2 years after delivery of cargo in Bangkok, Manila-No waiver arising either from New York Court's order of dismissal or from statement in statement of defence not intending to raise time-bar issue herein-No evidence Union Carbide waived any of its rights since, on evidence and upon true construction of contracts of sale Union Carbide having no legal interest in damaged goods-No evidence Union Carbide authorized institution of lawsuit in its name in New York-Plaintiffs arguing Union Carbide could recover damages as trustee for those plaintiffs not proving loss-Dunlop v. Lambert (1939), 7 E.R. 824 (Ct. Sess.) holding shipper could recover from carrier with whom had contract, substantial damages as trustee for real owner, even though shipper suffered no loss-Only applicable where no bill of lading issued, no other remedy available to person sustaining loss-As claims whose proof causing concern covered by Bills of Lading Act, rule in Dunlop v. Lambert cannot be invoked to assist plaintiff who has remedy, but refusing or unable to offer proper evidence to support claim-(2) Bill of lading providing contract evidenced by bill of lading between "merchant", owner of vessel named in bill of lading-Unless clear undertaking by time-charterer to carry shipper's goods, shipowner carrier-Federal Commerce not undertaking to carry goods to Bangkok, Manila in booking note contract, bills of lading-Pursuant to time charter-party, Federal Commerce under duty to load, stow, trim cargo-Following completion of loading, Federal Commerce issuing bills of lading by authority of master of Hudson Bay as agents only-Booking note providing Federal Commerce's regular form bill of lading shall be used and that all terms, conditions, exceptions thereof shall form part of booking note contract-Clause on bill of lading (demise clause) providing contract evidenced by bill of lading between owner of cargo, owner of vessel on which goods to be carried-Clause further providing shipowner shall be only party liable for loss, damage to cargo or for any breach, non-performance of obligations arising out of contract of carriage-Also providing company, agent issuing bill of lading on behalf of master of vessel, not principal and such company, agent shall not be under any liability arising out of contract of carriage as carrier or bailee-Bill of lading constituting contract binding upon shipowners, not upon time charterers, unless undertaking on part of charterer will carry cargo-Where charterer liable on contract of carriage, shipowner not liable-Where charterer signing bill of lading on behalf of master, and so authorized, shipowner will be bound by bills of lading, but not charterer-Where charterer issuing, signing bills of lading on own behalf, bound by bills-"Carrier" defined in Hague Rules as including owner or charterer-Carrier shall be either owner or charterer, but not both-Charter-party also providing owners of Hudson Bay remaining responsible for navigation of vessel, acts of pilots, tugboats, insurance, crew, all other matters, same as when trading for own account-"All other matters" including cargo claims in matters for which shipowners, rather than charterers to remain responsible-Contract of carriage made with charterers-Bills of lading owner's bills of lading-Clearly providing contracts evidenced by them were contracts with owners of ship on which goods loaded-These are bills which Union Carbide provided to clients in fulfilment of contractual obligations-Federal Commerce not party to contracts evidenced by bills of lading, not "carrier" within Hague Rules-"Carrier" Bona Maritime-Bona Maritime bound by contracts evidenced by bills of lading-Federal Commerce not liable in contract, tort-Union Carbide, plaintiffs' expert aware of restriction with respect to height to which pallets could be stowed-Union Carbide not conveying information to Federal Commerce when booking note contract entered into although relevant in regard to type of ship nominated to carry cargo, in determining positioning of cargo in holds-Consequently when Federal Commerce preparing stowage plan, neither aware, nor could it have been aware, as not obvious proposed stowage unsafe, of height restriction-Evidence not establishing whether losses result of insufficient packaging or improper stowage-(3) Documents prepared to establish claim under insurance policies not admissible to prove quantum of claims-Real evidence as to arrived sound market value (A.S.M.V.), arrived damaged market value (A.D.M.V.) establishing amount of damage, but testimony required to establish losses actually suffered-A.S.M.V. less A.D.M.V. rule not relieving consignee of burden of mitigation-Plaintiffs must testify as to portion of damages suffered actually causing loss-Surveyors retained by insurers to ascertain losses payable under royalties only witnesses testifying with respect to losses suffered-Such testimonies to large extent hearsay evidence, irrelevant-Plaintiffs Glee Chemical Laboratories Inc., Jemiken Enterprises Corp., Producers Packaging Corp., Lafumar Marketing Corp., Sri Thep Thai Ltd. not adducing sufficient evidence to allow quantification of loss-Plaintiffs adducing sufficient evidence should be compensated on basis of cif invoice price plus 10% sales tax plus 30% duty plus 101% profit i.e. 157% of cif price-Any loss, damage occurring after discharge not carrier's responsibility-To extent action in tort, plaintiffs must demonstrate damages occurring after discharge resulting directly from defendant's negligence-Had plaintiffs been successful on liability, Union Carbide would have been allowed to recover loss resulting from shortage of 107 101 kilograms-As to Manila consignees, damages noted at time of discharge as evidenced by certificates of arrastre contractor, constituting prima facie evidence of damages caused to cargo while in care, custody of vessel-No evidence as to what happened between discharge of cargo from ship and at time of withdrawal from harbour-In view of condition when cargo came off ship, further damages inevitable-Those plaintiffs proving loss would have been allowed to recover damages noted on certificates of arrastre contractor plus 50% of difference between damage and damage noted at consignees' warehouses-International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading and Protocol of Signature, Brussels, August 25, 1924 (Hague Rules).