Solway v. Davis Moving & Storage Inc., 2002 CanLII 21736 (ON CA)

Solway et al. v. Davis Moving & Storage Inc. c.o.b. as Kennedy Moving Systems et al.

[Indexed as: Solway v. Davis Moving & Storage Inc.]

62 O.R. (3d) 522

[2002] O.J. No. 4760

Docket No. C37568

Court of Appeal for Ontario,

Carthy, Labrosse and Gillese JJ.A.

December 12, 2002

• Application for leave to appeal to the Supreme Court of Canada dismissed with costs May 29, 2003 (McLachlin C.J., Bastarache and Deschamps JJ.). S.C.C. File No. 29606. S.C.C. Bulletin, 2003, p. 887.

Contracts -- Exclusion clauses -- Limitation of liability -- Plaintiffs entering into contract with defendant to have their household goods removed from their house, stored briefly and delivered to their new home -- Plaintiffs particularly concerned about security -- Defendant representing that goods would be stored in locked trailer parked on [page523] defendant's lot -- Trailer parked unattended on public street overnight while lot was being snowploughed -- Trailer stolen -- Defendant not permitted to rely on clause in bill of lading limiting liability for loss to $0.60 per pound -- To permit reliance on limitation clause would be unconscionable in circumstances.

The plaintiffs entered into a contract with the defendant to have their household goods removed from their house, stored briefly and delivered to their new home. The plaintiffs were particularly concerned about security since their household goods included rare and valuable artifacts and antiques. The defendant represented that the trailer containing their goods would be locked and parked in their moving yard. The trailer was parked in the lot but had to be removed for one night while the lot was being snowploughed and was left, unattended, on a public street. While it was on the street, the trailer was stolen. The plaintiffs claimed for the replacement cost of their possessions. They also claimed income loss for their corporations as a result of the time spent on the fallout from the theft. The defendant admitted liability for the loss of the goods, but only to the extent of the terms of the bill of lading and Regulation 1088 passed pursuant to the Truck Transportation Act, R.S.O. 1990, c. T.22, which limited liability to $0.60 per pound, for a total of $7,089.60.

The trial judge found that the plaintiffs were never advised that their goods would be left in an unattended trailer on a public street, that the defendant had given false assurances that the goods would be secured, which had induced the plaintiffs to agree to the limitation clause, and that it would be unreasonable in the circumstances to enforce the limitation clause. The plaintiffs' action was allowed. The trial judge found that the corporations were not entitled to damages for breach of contract as there was no privity of contract between them and the defendant, but awarded the corporations damages per quod servitium amisit. The defendant appealed. The plaintiffs cross-appealed from the finding that the corporations were not entitled to damages for loss of income.

Held, the appeal should be allowed in part; the cross-appeal should be dismissed.

Per Labrosse J.A. (Gillese J.A. concurring): The plaintiffs' goods were highly valuable, both in monetary and sentimental terms, and they took special care to choose a moving company that would provide the security they felt was essential. They were never advised that their goods would be stored in a trailer left unattended on a public street, and they never agreed to such an arrangement. To limit their loss to $7,089.60 would be unconscionable. The trial judge was correct in holding that the defendant should not be permitted to rely on the limitation of liability clause.

A claim for per quod servitium amisit was not pleaded and there was no evidence that the plaintiffs spent any money replacing their services. Moreover, in light of the findings of the trial judge with respect to the corporations' claims for loss of income, there was no basis to award those damages.

Per Carthy J.A. (dissenting): The plaintiffs' loss was clearly covered by the statutory limitations of liability embodied in the contract, and the limitation clause should have been applied. The defendant was in the course of performing a common carriage and a misadventure occurred which, at most, could be found to be caused in part by their negligence. It was the manner of performance, not the failure to perform which was the subject of complaint. On their part, the plaintiffs recognized the burden of risk and sought out their own insurance, armed with knowledge of the goods' value that was essential to that task and not reasonably available to the defendant. The defendant knew how many [page524] pounds it was carrying and thus could readily cover itself with insurance to meet the statutory limit.

This was how the regulation was intended to work in facilitating carriage of goods, and it would be totally disruptive of its purposes if carriers were to be exposed to liability for undetermined amounts whenever, in the trial judge's words, it would be "unreasonable to enforce" the exemption, or some standardless variation on those words. Provisions similar to those in the Truck Transportation Act are found in each of the provinces and extend internationally in treaties such as the Warsaw Convention, 1929, applying in Canada to international carriage by air, and the Hague-Visby Rules in respect of international carriage by water. Thus, we have a legislative policy that has developed over many years, permeates all facets of the transportation of goods industry and is based upon a sensible business and commercial rationale. There was no policy basis for not applying the limitation provision against the plaintiffs. To the contrary, allowing their claim opened the door to every imaginable complaint of misfeasance and would undermine the entire structure built up under this longstanding policy.

The fulcrum of Labrosse J.A.'s argument appeared to be that the plaintiffs were induced to accept the limited liability by false assurances that their goods would be secure. Assurances that the goods will be kept secure are superfluous in a contract of bailment, as a carrier's obligation to keep its consignment secure is implicit in every contract of carriage of goods. Aside from being superfluous, there was nothing false about the assurances. The overnight storage on the street was not anticipated. Finally, there was no inducement because the limitation of liability was mandated by statute.

APPEAL and CROSS-APPEAL from a judgment of Himel J. (2001), 2001 ONSC 28079, 57 O.R. (3d) 205 (S.C.J.) in an action for damages for loss of goods and loss of income.

Hunter Engineering Co. v. Syncrude Canada Ltd., 1989 SCC 129, [1989] 1 S.C.R. 426, 35 B.C.L.R. (2d) 145, 57 D.L.R. (4th) 321, 92 N.R. 1, [1989] 3 W.W.R. 385 (sub nom. Syncrude Canada Ltd. v. Hunter Engineering Co.), consd Other cases referred to Beaufort Realties (1964) Inc. v. Chomedey Aluminium Co., 1980 SCC 47, [1980] 2 S.C.R. 718, 116 D.L.R. (3d) 193, 33 N.R. 460, 13 B.L.R. 119, 15 R.P.R. 62; Carleton Condominium Corp. No. 32 v. Camdev Corp., 1999 ONCA 2909, [1999] O.J. No. 3448 (Quicklaw) (C.A.); Fraser Jewellers (1982) Ltd. v. Dominion Electric Protection Co. (1997), 1997 ONCA 4452, 34 O.R. (3d) 1, 148 D.L.R. (4th) 496, 32 B.L.R. (2d) 1, 35 C.C.L.T. (2d) 298 (C.A.); Kordas v. Stokes Seeds Ltd. (1992), 1992 ONCA 7591, 11 O.R. (3d) 129, 96 D.L.R. (4th) 129, 9 B.L.R. (2d) 266 (C.A.) [Leave to appeal to S.C.C. refused [1993] 2 S.C.R. viii] Statutes referred to Courts of Justice Act, R.S.O. 1990, c. C.43, s. 128(1) Truck Transportation Act, R.S.O. 1990, c. T.22 Rules and regulations referred to R.R.O. 1990, Reg. 1088 ("Truck Transportation Act"), Schedule, condition 9 Treaties and convention referred to Convention for the Unification of Certain Rules Relating to International Carriage by Air, October 12, 1929 ("Warsaw Convention, 1929") The Hague-Visby Rules: The Hague Rules as Amended by the Brussels Protocol 1968 Authorities referred to McNeil, J.S., Q.C., Motor Carrier Cargo Claims, 3rd ed. (Toronto: Carswell, 1997) [page525]

David E. Fine and Robert B. Cohen, for respondents. Patrick J. Monaghan, for appellants.

LABROSSE J.A. (GILLESE J.A. concurring): --

Reasons for Judgment: Labrosse J.A.

1The appellant, Kennedy Moving Systems, appeals from the judgment of Himel J. which held that Kennedy Moving was not permitted to rely upon a limitation of liability clause contained in a bill of lading for the move and storage of the respondents' goods. The appellant also appeals the award of damages per quod servitium amisit in favour of Sparkplug Marketing & Communications Inc. and Pen Station Inc., two corporations owned by the individual plaintiffs/respondents. The respondents cross-appeal from the finding that Sparkplug Marketing and Pen Station were not entitled to damages for loss of income.

Background and Facts

2The plaintiffs, Akler and Solway, entered into a contract with Kennedy Moving to have their household goods removed from their house, stored briefly, and delivered to their new house. While being stored in a trailer, the trailer was parked overnight, unattended on a public street overnight. The trailer with the plaintiffs' goods was stolen.

3The plaintiffs claimed for the replacement cost of their possessions. They also claimed income loss for their corporations as a result of the time spent on the fallout from the theft. The defendant, Kennedy Moving, admitted liability for the loss of the goods, but only to the extent of the terms of the bill of lading and Regulation 1088 passed pursuant to the Truck Transportation Act, R.S.O. 1990, c. T.22. The bill of lading and the Regulation would limit the claim to $0.60 per pound, for a total of $7,089.60.

4The trial judge found that the plaintiffs were aware of the limitation of liability clause when they entered into the transaction and that they had taken steps to obtain additional insurance coverage with their own insurer.

5The plaintiffs had initially contacted Kennedy Moving because they had been satisfied with its performance in an earlier move. Although they had obtained a quotation from a competitor, they opted to go with Kennedy Moving because of both their past experience and because it seemed so professional. Akler testified that Kennedy Moving's affiliation with Atlas Van Lines, which was a household name, gave them comfort and assurance. [page526]

6The plaintiffs testified that Kennedy Moving had represented that their goods would be secure during the move. Kennedy Moving would provide safekeeping of their goods by parking the trailer in the Kennedy Moving yard, removing the loading gear, locking the trailer, and locking the air brakes. Akler testified that she did not tell anyone at Kennedy Moving the value of her goods, but did emphasize the importance of certain items. It was clearly important to the plaintiffs that their goods be secure. The trial judge found that they were given assurances to that effect.

7There was good reason for the plaintiffs to be concerned with security. The household goods that were stolen included rare and valuable artifacts and antiques collected by the plaintiffs throughout their marriage while travelling in Canada, the United States, South America, Europe and Australia. The plaintiffs' 65-page list of the contents and particulars that were stolen included pieces of art, wedding photographs, antique furniture, needlepoints, carvings, recordings, compact discs and books.

8Mr. Peterson, a member of Kennedy Moving's sales staff, attended at the plaintiffs' house to provide corporate literature and review the contents of the house. Akler claimed that Peterson commented that they had many nice antiques and a lot of furniture. Peterson did not recall visiting with the plaintiffs in their home. The trial judge found that Peterson had a selective memory. Although she accepted his evidence as to general practices or procedures, she did not find his evidence reliable with respect to the specific recollection of events. Since Peterson did attend at the plaintiffs' home, he was likely aware that their possessions were not simply ordinary household goods.

9Although the trailer in which the plaintiffs' goods were stored was locked, its landing gear was put down and it was detached from the truck, the trailer was not stored on the Kennedy parking lot. Instead, the trailer was left on the street to enable snowploughing to be done on the lot. The trailer and its contents were stolen from that location.

10The trial judge found that the plaintiffs were never advised that their goods would be left in a trailer, parked unattended on a public street. The trial judge accepted that Akler was devastated when she learned of the theft of the goods. More specifically, Himel J. referred to the evidence of the plaintiff that "she was completely overwhelmed as virtually everything they owned was gone, including items of sentimental value. She said she felt violated.

11The trial judge found that Kennedy Moving had given false assurances that the goods would be secured that had induced the plaintiffs to agree to the limitation clause. [page527]

Analysis

12In considering whether or not Kennedy Moving should be permitted to invoke the limitation of liability clause, the trial judge relied on the decision of the Supreme Court of Canada in Hunter Engineering Co. v. Syncrude Canada Ltd., 1989 SCC 129, [1989] 1 S.C.R. 426, 57 D.L.R. (4th) 321.

13In Fraser Jewellers (1982) Ltd. v. Dominion Electric Protection Co. (1997), 1997 ONCA 4452, 34 O.R. (3d) 1, 148 D.L.R. (4th) 496 (C.A.) at p. 8 O.R., this court reviewed the decision in Hunter Engineering and noted that, in that case, the Supreme Court of Canada was unanimous in holding that, while limitation of liability provisions, prima facie, were enforceable according to their true meaning, a court was empowered in limited circumstances to grant relief against provisions of this nature. The Supreme Court of Canada, however, was evenly divided on the question of the test to be used to determine when or in what circumstances the power to grant relief should be exercised.

14In Hunter Engineering, Chief Justice Dickson, writing for himself and La Forest J., rejected the doctrine of fundamental breach and the uncertainty that was related thereto. As an alternative, he adopted a more direct approach to dealing with potentially unfair contracts. He stated, at p. 462 S.C.R., p. 342 D.L.R.:

Only where the contract is unconscionable, as might arise from situations of unequal bargaining power between the parties, should the courts interfere with agreements the parties have freely concluded. The courts do not blindly enforce harsh or unconscionable bargains . . . Explicitly addressing concerns of unconscionability and inequality of bargaining power allow the courts to focus expressly on the real grounds for refusing to give force to a contractual term said to have been agreed to by the parties.

(Emphasis added)

15By way of contrast, Wilson J., writing for herself and L'Heureux-Dubé J., adopted an approach first accepted by the Ontario Court of Appeal and then by the Supreme Court of Canada in Beaufort Realties (1964) Inc. v. Chomedey Aluminium Co. Ltd., 1980 SCC 47, [1980] 2 S.C.R. 718, 116 D.L.R. (3d) 193. In explaining this approach at p. 510 S.C.R., p. 376 D.L.R., Madam Justice Wilson was of the view that courts need "to determine whether in the context of the particular breach which had occurred it was fair and reasonable to enforce the clause in favour of the party who had committed the breach" (emphasis in original).

16McIntyre J., the other member of the court, did not address this issue.

17Robins J.A., speaking for this court, reconciled these two approaches in Fraser Jewellers, at p. 10 O.R., as follows:

[W]hether the breach is fundamental or not, an exclusionary clause of this kind, in my opinion, should, prima facie, be enforced according to its true [page528] meaning. Relief should be granted only if the clause, seen in the light of the agreement, can be said, on Dickson C.J.C.'s test, to be "unconscionable" or, on Wilson J.'s test, to be "unfair or unreasonable". The difference in practice between these alternatives, as Professor Waddams has observed, "is unlikely to be large": Waddams, The Law of Contract, 3rd ed. (1993), at p. 323.

See also Carleton Condominium Corp. No. 32 v. Camdev Corp., 1999 ONCA 2909, [1999] O.J. No. 3448 (Quicklaw) (C.A.).

18In this case, the plaintiffs' goods were highly valuable, both in monetary and sentimental terms. As such, they took special care to choose a moving company that would provide the security they felt was essential. Based on their past experience with Kennedy Moving, its apparent professionalism, and its affiliation with Atlas Van Lines, the plaintiffs made what they thought was an informed decision to opt for Kennedy Moving.

19Despite Kennedy Moving's assurances to the contrary, the plaintiffs' goods were not, however, kept in secure conditions. The trailer containing their goods was left overnight on the street with no surveillance. As the trial judge noted, Kennedy Moving should have anticipated that a theft might occur if the trailer was left unattended overnight on a public street. The plaintiffs were never advised that their goods would be stored in these conditions, and they certainly never agreed to such an arrangement.

20In deciding not to enforce the limitation clause, the trial judge appears to have equated the words, "unconscionable" and "unreasonable" as these terms were discussed in Hunter Engineering. In our view, on the facts as found by the trial judge, to limit the loss of the plaintiffs to $7,089.60 would, in the words of Dickson C.J.C. be "unconscionable", or in the words of Wilson J. be "unfair or unreasonable". This is one of those cases where relief should be granted.

21The conclusion of the trial judge is amply supported by the evidence. It also accords with principles of contract law. We see no basis to interfere.

Corporate Claims

22With respect to the corporate plaintiffs, the trial judge noted the lack of privity of contract between the corporations and Kennedy Moving. She concluded that the requirement of sufficient proximity was not met and the corporations were not entitled to damages arising out of the breach of contract of Kennedy Moving. We see no error on the part of the trial judge in this respect.

23However, the trial judge did award compensation to replace the services of the individual plaintiffs in the amount of $8,000 for Sparkplug and $2,500 for Pen Station. A claim for per quod servitium amisit was not pleaded and there was no evidence that the plaintiffs spent any money replacing their services. [page529] Moreover, in light of the findings of the trial judge with respect to the claims of the corporations for loss of income, there was no basis to award these damages.

Disposition

24The appeal is allowed in accordance with these reasons and paras. 6 and 7 of the judgment dated December 19, 2001 are set aside. Paragraph 9 is varied to provide prejudgment interest in accordance with s. 128(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43.

25In all other respects, the appeal is dismissed. The cross-appeal is also dismissed. Although success of the appeal and cross-appeal is divided, the disposition of the appeal largely favours the respondents. The costs to the respondents are fixed at $13,000.

Dissenting Reasons: Carthy J.A.

26CARTHY J.A. (dissenting): -- I agree with my brother Labrosse J.A. as to his disposition of the claims on behalf of the corporations, but respectfully disagree with his conclusion that the individual respondents should recover damages on the basis of fundamental breach of contract.

27The trial judge found that the homeowners were intelligent and sophisticated business people, that they knew of the limitation of liability provision in the contract, and that they arranged their own insurance (said now to be insufficient) to protect against loss during the move. The household goods were to be held for three days in a trailer to be locked down on an unfenced lot adjacent to the mover's warehouse. The trailer was moved to the street in front of the premises over one night to permit snow removal [on] the lot. It was appropriately locked down, but somehow thieves managed to haul it away and the contents were never found. In almost 30 years in the family business of household moving, the personnel of the appellant had never experienced or heard of such a theft.

28In my view that description is of a loss which is clearly covered by the statutory limitations of liability embodied in the contract with the appellants and should have limited the liability to $7,089.60.

Analysis

29The trial judge analyzed a long series of authorities including Hunter Engineering Co. v. Syncrude Canada Ltd., 1989 SCC 129, [1989] 1 S.C.R. 426, 57 D.L.R. (4th) 321 and concluded with these findings [at paras. 95-100]:

. . . I am satisfied on a balance of probabilities that the parties agreed that the plaintiffs' goods would be placed in a trailer for the two week period. I find that trailer storage was a term of the contract.

As to the type of security, even on the defence evidence, it is agreed that Kennedy was to provide safekeeping of the plaintiffs' belongings by parking [page530] the trailer in the parking lot, removing the landing gear, and locking the trailer. The plaintiffs relied upon that term of the agreement when it entered into the contract with the defendant.

The trailer storage facilities of Kennedy involved parking the trailer in its yard with the landing gear down, the air brakes locked and the trailer locked. There were no fences, no cameras and no monitoring.

It was always intended, and the plaintiffs were never told otherwise that their belongings would be stored on a trailer parked on the Kennedy premises. When they moved the trailer to the street, Kennedy did not provide any surveillance. The area was quiet and deserted at night. The trailer could have been watched or at least, moved back to the parking lot as soon as the ploughing was complete rather than left overnight on the street. Steps could have been taken to exercise care in protecting the property that was in their possession.

In cases where loss results because of the acts of a third party, the issue is which party should bear the loss? The plaintiffs argue that they entered the contract with Kennedy because they were assured of security of their belongings.

In my view, it is the defendants who should bear those losses which were attributable to the breach of the contract between the parties they cannot rely on a limitation of liability clause where it would be unreasonable to enforce it in the circumstances.

30Before going further, I would be critical of these reasons, if on no other account, for reliance on evidence that the consignors were given assurance of security of their belongings. That assurance must be implicit in every contract for carriage of goods and cannot weaken a limitation of liability clause that contemplates claims where security breaks down and a loss occurs. I would also point out in passing that there is no reason to conclude that the trial judge meant "unconscionable" when she said "unreasonable".

31My major disagreement with the trial judge's reasons is with her application of the reasons in Hunter. It is generally considered that there is little room remaining for setting aside an exemption provision on the basis of fundamental breach following Hunter. See per Finlayson J.A. Kordas v. Stokes Seeds Ltd. (1992), 1992 ONCA 7591, 11 O.R. (3d) 129, 96 D.L.R. (4th) 129 (C.A.), leave to appeal to S.C.C. refused [1993] 2 S.C.R. viii, at p. 135 O.R. Yet here we find what I would consider a minor transgression in the performance of the contract justifying just that.

32Hunter is the seminal decision of the Supreme Court on the subject of exemption or exception provisions faced by claims of fundamental breach, albeit that a five-person court divided itself on this subject between reasons delivered by Dickson C.J.C. and Wilson J. with one judge supporting each, and McIntyre J. expressing no view on the issue of fundamental breach.

33Hunter involved the sale of gear boxes which were serviceable for some time and then broke down due to design defects [page531] after the contracted warranty period. The contract excluded statutory warranties and the purchaser sought to avoid that exclusion by asserting fundamental breach.

34Both Dickson C.J.C. and Wilson J. reviewed and recognized the uncertainties and complexities that have resulted from seeking to use such an undefinable instrument as fundamental breach to relieve against unfairness.

35The Chief Justice summarized his view in these words at p. 455 S.C.R., p. 337 D.L.R.:

I am inclined to adopt the course charted by the House of Lords in Photo Production Ltd. v. Securicor Transport Ltd., [1980] A.C. 827, and to treat fundamental breach as a matter of contract construction. I do not favour, as suggested by Wilson J., requiring the court to assess the reasonableness of enforcing the contract terms after the court has already determined the meaning of the contract based on ordinary principles of contract interpretation. In my view, the courts should not disturb the bargain the parties have struck, and I am inclined to replace the doctrine of fundamental breach with a rule that holds the parties to the terms of their agreement, provided the agreement is not unconscionable.

And at p. 462 S.C.R., pp. 341-42 D.L.R.:

In light of the unnecessary complexities the doctrine of fundamental breach has created, the resulting uncertainty in the law, and the unrefined nature of the doctrine as a tool for averting unfairness, I am much inclined to lay the doctrine of fundamental breach to rest, and where necessary and appropriate, to deal explicitly with unconscionability. In my view, there is much to be gained by addressing directly the protection of the weak from over-reaching by the strong, rather than relying on the artificial legal doctrine of "fundamental breach". There is little value in cloaking the inquiry behind a construction that takes on its own idiosyncratic traits, sometimes at odds with concerns of fairness. This is precisely what has happened with the doctrine of fundamental breach. It is preferable to interpret the terms of the contract, in an attempt to determine exactly what the parties agreed. If on its true construction the contract excludes liability for the kind of breach that occurred, the party in breach will generally be saved from liability. Only where the contract is unconscionable, as might arise from situations of unequal bargaining power between the parties, should the courts interfere with agreements the parties have freely concluded.

36Wilson J.'s view is more complex in appearance. She states at pp. 510-11 S.C.R., p. 377 D.L.R.:

Exclusion clauses do not automatically lose their validity in the event of a fundamental breach by virtue of some hard and fast rule of law. They should be given their natural and true construction so that the meaning and effect of the exclusion clause the parties agreed to at the time the contract was entered into is fully understood and appreciated. But, in my view, the court must still decide, having ascertained the parties' intention at the time the contract was made, whether or not to give effect to it in the context of subsequent events such as a fundamental breach committed by the party seeking its enforcement through the courts. Whether the courts address this narrowly in terms of fairness as between the parties (and I believe this has been [page532] a source of confusion, the parties being, in the absence of inequality of bargaining power, the best judges of what is fair as between themselves) or on the broader policy basis of the need for the courts (apart from the interests of the parties) to balance conflicting values inherent in our contract law (the approach which I prefer), I believe the result will be the same since the question essentially is: in the circumstances that have happened should the court lend its aid to A to hold B to this clause?

37She would leave room to relieve on grounds arising out of the breach of the contract on policy grounds "to balance conflicting values in our contract law".

38Wilson J. found there had been no fundamental breach of the contract. The vendor delivered a product of poor design, but it was the product the buyer intended to purchase. She states at p. 500 S.C.R., p. 369 D.L.R.:

It seems to me that this exceptional remedy should be available only in circumstances where the foundation of the contract has been undermined, where the very thing bargained for has not been provided.

39Even if she had found a fundamental breach she would have enforced the exemption. The following excerpt gives some suggestions as to what she meant by "policy grounds to balance conflicting values" (pp. 517-18 S.C.R., pp. 381-82 D.L.R.):

Turning to the case at bar, it seems to me that, even if the breach of contract was a fundamental one, there would be nothing unfair or unreasonable (and even less so unconscionable, if this is a stricter test) in giving effect to the exclusion clause. The contract was made between two companies in the commercial marketplace who are of roughly equal bargaining power. Both are familiar and experienced with this type of contract.

There is no evidence to suggest that Allis-Chalmers who seeks to rely on the exclusion clause was guilty of any sharp or unfair dealing. It supplied what was bargained for (even although it had defects) and its contractual relationship with Syncrude, which included not only the gears but the entire conveyer system, continued on after the supply of the gears. It cannot be said, in Lord Diplock's words, that Syncrude was "deprived of substantially the whole benefit" of the contract. This is not a case in which the vendor or supplier was seeking to repudiate almost entirely the burdens of the transaction and invoking the assistance of the courts to enforce its benefits. There is no abuse of freedom of contract here.

40It isn't necessary to my reasoning to choose between these two approaches. If it were, I would favour that of Dickson C.J.C. There is no need for an undefined discretion in the enforceability of exclusion clauses. Contracting parties, insurers, business persons and litigants are all better served by the certainty of standards. And it must be kept in mind that this debate is not about fundamental breach as it may excuse continuing performance under a contract. As pointed out by Dickson C.J.C. at p. 463 S.C.R., p. 342 D.L.R., [page533] that is a distinct subject from the use of fundamental breach to defeat an exclusion clause.

41Turning to the facts of this case, Dickson C.J.C. would not take a moment to conclude that there was no unconscionability in the terms of this contract. The liability clause was imposed by statute, and in this case upon knowledgeable and sophisticated persons. Wilson J. would have looked as well at the outcome, but surely would have concluded that all policy concerns pointed to enforcement of a provision born in legislation which itself was driven by policy.

Legislative Policy

42That legislation is the Truck Transportation Act, R.S.O. 1990, c. T.22. Regulation 1088 thereunder sets forth a lengthy schedule of conditions that are deemed to be a part of every contract for the carriage for compensation of household goods. One condition imposes absolute liability on the carrier for loss or damage to goods accepted for carriage, with some noted exceptions that have no present relevance.

43Condition 9 reads in part:

9. Valuation

Subject to Article 10, the amount of any loss or damage for which the carrier is liable, whether or not the loss or damage results from negligence of the carrier or the carrier's employees or agents, shall be the lesser of, . . . [60 cents a pound]

44The policy concerns addressed by this legislation are longstanding and widespread. For at least 200 years, a carrier of goods has been absolutely liable at common law for their safekeeping. The policy for this sweeping liability is summarized by John McNeil, Q.C. in his text Motor Carrier Cargo Claims, 3rd ed. (Toronto: Carswell, 1997) at p. 3 in these terms:

[T]he cargo owner's separation from his cargo involves relinquishment of any opportunity to protect it; the carrier's exclusive possession gives the carrier exclusive access to all evidentiary considerations in the event of a loss; the ability of the owner to prove a cause of action based on fault would be completely illusory; and imposing liability without fault on the carrier would encourage his diligence and care in the safeguard of the cargo.

45Eventually it was found that commercial realities required a limit to that liability. The carrier has no means of knowing the value of the goods and, even if it did, the cost of insurance for the most valuable of goods in a cargo would impose prohibitive charges on the consignor of lesser valued goods. Thus statutes or regulations emerged maintaining the concept of absolute liability but limiting that liability to a declared value or, more often, to a value measured by weight. In this fashion the consignor can either insure the goods or bear the risk of their loss or damage, knowing the value of such goods. The carrier also bears some risk, which will act [page534] as an incentive to act prudently, while knowing that the extent of liability is tied to the weight of the goods being transported.

46Provisions similar to those under our Truck Transportation Act are found in each of the provinces and extend internationally in treaties such as the Warsaw Convention, 1929, applying in Canada to international carriage by air, and the Hague-Visby Rules in respect of international carriage by water.

47Thus we have a legislative policy that has developed over many years, permeates all facets of the transportation of goods industry and is based upon a sensible business and commercial rationale. I see no policy basis for not applying the limitation provision against the respondents in the present case. To the contrary, allowing the respondents' claim opens the door to every imaginable complaint of misfeasance and would undermine the entire structure built up under this longstanding policy.

48In Fraser Jewellers (1982) Ltd. v. Dominion Electric Protection Co. (1997), 1997 ONCA 4452, 34 O.R. (3d) 1, 148 D.L.R. (4th) 496 (C.A.), this court dismissed a claim by a householder for losses suffered in a robbery allegedly because an alarm company failed to respond to a signal. The contract contained an exclusion clause and the court was not persuaded that there were any features of the relationship between the parties or the contract to justify avoiding the exemption. The case does not involve a statutory provision, but the policy issue I have been discussing is aptly expressed by Robins J.A. at p. 12 O.R.:

Having regard to the potential value of property kept on a customer's premises, and the many ways in which a loss may be incurred, the rationale underlying this type of limitation clause is apparent and makes sound commercial sense. ADT is not an insurer and its monitoring fee bears no relationship to the area of risk and the extent of exposure ordinarily taken into account in the determination of insurance policy premiums. Limiting liability in this situation is manifestly reasonable. The clause, in effect, allocates risk in a certain fashion and alerts the customer to the need to make its own insurance arrangements. ADT has no control over the value of its customer's inventory and can hardly be expected, in exchange for a relatively modest annual fee, to insure a jeweller against negligent acts on the part of its employees up to the value of the entire jewellery stock whatever that value, from time to time, may be.

49The incident that gave rise to the present litigation fits precisely within the policy and the wording of condition 9 of the regulation. The appellants were in the course of performing a common carriage and a misadventure occurred which, at most, could be found to be caused in part by their negligence. It was the manner of performance, not the failure to perform which was the subject of complaint. On their part, the householders recognized the burden of risk and sought out their own insurance, armed [page535] with knowledge of the goods' value that was essential to that task and not reasonably available to the moving company. The movers did know how many pounds they were carrying and thus could readily cover themselves with insurance to meet the statutory limit. In my view, this was how the regulation was intended to work in facilitating carriage of goods and it would be totally disruptive of its purpose if carriers are to be exposed to liability for undetermined amounts whenever, in the trial judge's words, "it would be unreasonable to enforce [the exemption]" or some standardless variation on those words.

50In direct response to the reasons of Labrosse J.A., I do not agree that the standard of care is affected by the fact that the cargo was not "ordinary household goods". Movers should treat all belongings alike. If the goods were of special value then the consignors should have purchased a corresponding amount of insurance.

51The fulcrum of Labrosse J.A.'s argument seems to be that the respondents were induced to accept the limited liability by false assurances that their goods would be secure. I made the point earlier that assurances that the goods would be kept secure are superfluous in a contract of bailment. That is so because a carrier's obligation to keep their consignment secure is implicit in every contract of carriage of goods. The assurances did not need to be made explicit. Aside from being superfluous, there was nothing false about the assurances. The overnight storage on the street was not anticipated. It was, at the highest, a negligent performance of the duty to keep the goods secure. Finally, there was no inducement because the limitation of liability was mandated by statute.

Disposition

52I would therefore allow the appeal and dismiss the action, subject to the claim for $7,089.60, with costs of the appeal to the appellant. I would want to hear submissions as to the costs of the trial.