Kodak v. Racine Terminal ( Montreal ) Ltd.
T-1989-93
Tremblay-Lamer J.
9/3/99
14 pp.
Application for summary judgment-Defendant terminal operator in Montréal-Plaintiff owner of cargo of photographic paper damaged during unloading-Defendant admitting negligence, seeking to limit liability by claiming protection of Himalaya clause-Plaintiffs, shipping company (Orient Overseas Container Lines (UK) Ltd (OOCL (UK))), parties to bill of lading-Bill of lading containing clause limiting OOCL (UK)'s liability to $500 per package ($15,500)-Also containing Himalaya clause purporting to extend limitation of liability to terminal operators-Neither written contract nor agency agreement between OOCL (UK), defendant authorizing OOCL (UK) to insert Himalaya clause into bill of lading-1981 contract between Manchester Liners Limited (MLL), defendant specifically granting MLL authority to insert Himalaya clauses into bills of lading on behalf of defendant-OOCL (UK) taking over operations of MLL, continuing business relationship with defendant-Plaintiff submitting OOCL (UK) not having proper authority to insert Himalaya clause into bill of lading, not meeting third criterion set out in Scruttons Ltd. v. Midland Silicones Ltd., [1962] A.C. 446 (H.L.) for Himalaya clause to be effective: carrier having authority from stevedore to contract as agent for stevedore-Defendant submitting since OOCL (UK) continuing business practices of MLL without any major modifications to contract between MLL, defendant, terms of 1981 contract should still apply-(1) OOCL (UK) not party to 1981 agreement between MLL, defendant-Defendant's failure to provide prior written consent of assignment of contract, when expressly required by terms of contract, defeating claim requisite authority assigned-OOCL (UK), MLL separate legal entities, carrying on business independently-Only way for OOCL (UK) to become party to 1981 contract between MLL, defendant through written assignment-(2) Defendant submitting although parties not permitted to assign contract, implied novation whereby first contract terminated, new contract formed between OOCL (UK), defendant based on same terms-Irving Oil Ltd. v. Canada (1984), 52 N.R. 120 (F.C.A.) holding where clause prohibiting assignment without prior written consent, novation must be in writing-Section IX of 1981 agreement prohibiting assignment, transfer of agreement in whole, part-Thus in absence of prior written consent, Section IX rendering anyone other than MLL incapable of acting as agent for defendant-Following Irving Oil, for novation to be valid, Section IX of 1981 agreement requiring it to be in writing-No genuine issue for trial-Parties not bound by terms of 1981 agreement, meaning OOCL (UK) not having authority to insert Himalaya clause into bill of lading-Motion granted with respect to defendant's ability to plead limitation of liability based on Himalaya clause.