Court File and Parties
COURT FILE NO.: DC-08-031 DATE: 20090408
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Railink Canada Ltd. c.o.b. The Southern Ontario Railway
Mr. Kenneth R. Peel, for the Plaintiff (Respondent)
Plaintiff (Respondent)
- and -
Federal Marine Terminals a Division of FedMar Limited
Mr. David G. Colford, for the Defendant (Appellant)
Defendant (Appellant)
HEARD: October 22, 2008
Reasons for Judgment
MILANETTI J.
[1] This is an appeal of the Small Claims Court decision of Deputy Judge Mongeon, dated March 20, 2008 finding the defendant, Federal Marine Terminals a Division of FedMar Limited (whom the trial judge referred to as FedMar and which terminology I will adopt) liable to the plaintiff Railink Canada Ltd., c.o.b. The Southern Ontario Railway (which the trial judge referred to as SOR, and I too will adopt) and awarded $5,471. plus interest and costs.
[2] The case involves a concept common in the transport law sector called, “demurrage”. In short, demurrage is a charge levied when it takes longer than anticipated to load or unload goods in transit.
BACKGROUND
[3] I cannot state the factual background better or more succinctly than the trial judge at paragraphs 2 through 11 of his judgment. Those factual findings from his judgment are as follows:
The plaintiff, Southern Ontario Railways (hereinafter SOR) runs a ‘short track railway in the City of Hamilton (and another line in Nanticoke which is not relevant to this case.)
SOR owns various rail lines in the City of Hamilton which connect to the much larger lines of both Canadian Pacific and Canadian National.
SOR provides services of marshalling of rail cars on its track picking up and delivering rail cars from spur lines serving many different types of persons in the Hamilton area in turn delivering and picking up rail cars from the longer lines.
One of the spur lines runs onto the premises of the Defendant, Federal Marine (hereinafter FedMar). FedMar is located in premises on Pier 14 in Hamilton Harbour leased from the Hamilton Port Authority.
FedMar’s business, as described on its web site (Exhibit 9) is cargo management. They run a stevedoring business with special expertise in various types of goods including steel products and various dry and liquid bulk commodities.
FedMar moves goods between various means of transport including truck, rail and water and provides warehousing services as required.
A typical transaction which would bring SOR and FedMar together would be as follows:
a. An end customer would ship steel by rail from some originating point within North America to be delivered to FedMar’s Hamilton terminal.
b. The end customer would contract separately with a man rail line such as Canadian National for this shipping.
c. Through a standing contract between the main rail line and SOR, the freight would be handed off to SOR for delivery to FedMar’s premises.
d. SOR would provide FedMar with an electronic advice that the ship- ment will be ready for delivery to FedMar’s spur line after a specific time.
e. FedMar decides when it would like the rail car bearing the shipment to be placed on its spur line. FedMar then instructs SOR accordingly on be half of a stated end customer. Even though the instructions are stated to be on behalf of the end customer, I find that FedMar makes its own decisions as to the scheduling of car deliveries.
f. FedMar keeps the rail car until such time as it decides it not longer needs it. FedMar instructs SOR by email when the car can be removed.
Rail cars can be kept on the FedMar premises for different periods of time. The marshalling of rail cars is also affected by the fact that with only one spur line, in order to remove a car that was placed ahead of others, the unloading of those others would need to be completed before all can be removed.
There is no direct express contract between SOR and FedMar. As noted above, SOR has a contract with a main line railway company who in turns contracts with the end customer, FedMar, has a contract with the end customer for the provision of its services.
[4] Further, I understand that SOR issued Tariff’s setting out such as the demurrage fees (made Exhibits 3 and 5 at trial), and that FedMar conceded that they received those before any dispute arose between the parties.
[5] I understand that the Switching Tariff sets out the demurrage plan; the monetary penalty that is levied when railcar equipment is not used in an efficient manner.
[6] Under the demurrage provisions of the Tariff, there is a provision for a free day in the case of an empty car going in for loading, and two free days for a railcar going in for unloading. After this “free time”, demurrage charges begin to accrue with the purpose of acting as an incentive for asset utilization to move railcars along and have them returned to free up the equipment up for other customers.
[7] The Tariff also defines the terms consignor and consignee (as the party in whose name cars are ordered or the party who furnished forwarding instructions; and the party to whom the shipment is consigned or, the party entitled to received the shipment respectively), and mandates that demurrage charges would be assessed against the source of the delay, who will be responsible for payment.
[8] As I understand it, there is no issue of the SOR tariff terms and demurrage policy, no dispute of the calculation of the SOR demurrage charges as detailed in the plaintiff’s claim of $5471. before interest, no dispute as to the actual days that the railcars were on FedMar’s premises, nor as to how if otherwise applicable, the demurrage charge would be made.
[9] As the learned trial judge states, the facts are not really in dispute. Rather, the legal effect of them is.
DISCUSSION
[10] I read with interest the factum and case law provided me. Moreover, I read and re-read the decision of the deputy judge numerous times, most particularly in the context of the factual sequence before him with a view to the legal principles argued before me. My job, of course, is to ascertain if a palpable and overriding error was made. I am not to retry the case.
[11] The Trial Judge relied on the reasoning of the Supreme Court of Canada in Northwest Elevators Association v. Canadian Pacific Railway Co. (1959), SCR 239. In that decision, Justice Rand succinctly described the concept of demurrage as:
Delay in loading or unloading of freight violates the implied understanding when equipment is placed at the disposal of the shipper or consignee that no more than reasonable time shall be taken for either purpose…That a railway is to supply expensive equipment in order to furnish, gratis, a storage means for shippers and consignees, reveals on its mere statement, its own absurdity.
[12] The appellant relies most profoundly a decision from the B.C. Supreme Court entitled Canadian National Railway Company v. Neptune Bulk Terminals (Canada) Ltd. [2006] BCSC 1073; a case with which I agree with Judge Mongeon is quite distinguishable on its facts.
[13] In Neptune, the party held responsible for the demurrage fees had no control whatsoever over the timing or the delay. They were in no way responsible for that delay. In the case before me, and the deputy judge, it is clear that all of the delay was the direct result of the actions, inactions and timing of FedMar. (I further note that FedMar has paid demurrage charges in the past). As such, in my view, the learned trial judge rightly found them responsible for demurrage; the charges attributable to their delay.
[14] It is apparent to me that a distinct business relationship exists between SOR and FedMar whether borne out by a precise paper contract or not. It is clear that SOR is mandated to deliver the goods to FedMar on a timetable dictated by FedMar. So too, FedMar controls when the cars are to be returned post unloading. FedMar is the entity who controls this sequence pursuant to “An implied understanding” (as Rand J. puts it in North-West) between SOR and FedMar. I further note that Rand J. references “equipment placed at the disposal of shipper or consignee”.
[15] It is argued by the appellant that the trial judge erred in deciding FedMar was a shipper. The learned trial judge based his decision on a plain reading of s.6 of the Canadian Transportation Act which defines shipper as, “A person who sends or receives goods by means of a carrier or intends to do so.” This is a logical interpretation in my view. Moreover, it accords with the basic definition of shipper in Black’s Law Dictionary 8th edition. That volume defines a shipper as:
One who ships goods to another.
One who contracts with a carrier for the transportation of cargo. As legal term of art, the shipper may not be the person who owns the cargo, but an agent or independent contractor.
[16] As well, FedMar is described on each of the waybills as a consignee (a document which I understand FedMar claim to have no knowledge of).
[17] The trial judge found that FedMar was the party who decided when the car would be delivered for unloading and when it would be returned; a fact not strenuously denied before me. It makes logical sense that they are the only party who realistically should bear the responsibility to “ensure that no more than a reasonable time should be taken for either purpose”. I am further assured of the correctness of such approach given the evidence of FedMar at trial that they might make the business decision to “eat” such charges, or pass them onto their customer depending on the circumstances of the delay.
[18] Whether there is a paper contract or not, there is clearly a common understanding between these two parties. SOR was required and mandated to deliver the goods to FedMar at their request. FedMar alone controls the timing of receipt and return of the cars. This may also be seen as a relationship of convenience.
[19] I found no palpable or overriding error in the reasoning or approach taken by the learned trial judge. His decision was logical, succinct, and legally supportable. He made factual findings and applied the law to them accurately. The appeal should be dismissed for the reasons set out by the trial judge.
[20] If the parties are unable to agree on costs as to entitlement and quantum, written submissions of no longer than two pages are to be exchanged and filed with this court within ten days of the release of this judgment.
Released: April 08, 2009 ___________________________
Madam Justice J.A. Milanetti
COURT FILE NO.: DC-08-031
DATE: 20090408
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Railink Canada Ltd. c.o.b. The Southern Ontario Railway
Mr. Kenneth R. Peel, for the Plaintiff (Respondent)
- and –
Federal Marine Terminals a Division of FedMar Limited
Mr. David G. Colford, for the Defendant (Appellant)
REASONS FOR JUDGMENT
The Honourable Madam Justice J.A. Milanetti
Released: April 08, 2009