COURT OF APPEAL FOR ONTARIO

CITATION: National Refrigerator & Air Conditioning Canada Corp. v. Celadon Group Inc., 2016 ONCA 339

DATE: 20160505

DOCKET: C60833

Sharpe, LaForme and van Rensburg JJ.A.

BETWEEN

National Refrigeration & Air Conditioning Canada Corp.

Plaintiff (Respondent)

and

Celadon Group Inc., Celadon Canada Inc. and Celadon Trucking Services Inc.

Defendants (Appellants)

Rui Fernandes and David Huard, for the appellants

Philip Cho, for the respondent

Heard: April 20, 2016

On appeal from the judgment of Justice Sandra Chapnik of the Superior Court of Justice, dated July 20, 2015.

By the Court:

[1] National Refrigeration & Air Conditioning Canada Corp. is a manufacturer of commercial refrigeration products. In October and November 2011, National hired Celadon Group Inc., Celadon Canada Inc., and Celadon Trucking Services Inc. (collectively “Celadon”) to transport two shipments of copper tubing from Mexico to Ontario. Both shipments were hijacked in Mexico and never recovered. National submitted a claim for loss and damage for US$122,228.46 and US$98,700.52 respectively. Celadon denied both claims relying on exclusion of liability clauses contained in Celadon’s Rules and Regulations and posted on Celadon’s website. National commenced an action to recover damages.

[2] After a three-day trial, the trial judge found that Celadon could not rely on the exclusionary terms, not having notified National of those terms, and, that in any event, the exclusionary terms were unconscionable. She also found that the value of the goods had been declared on the commercial invoice contained in the shipping documents and that those documents formed part of the contract of carriage. Consequently, Celadon could not rely on the statutory limitation of liability to $4.41 per kilogram pursuant to Carriage of Goods, O. Reg. 643/05 under the Highway Traffic Act, R.S.O. 1990, c. H.8.

[3] The trial judge also found that independent of the carriage agreement, Celadon was liable in negligence. This was because Celadon had specific knowledge about the enhanced risk of hijacking in Mexico that gave rise to a duty to warn National of the increased danger.

(1) Exclusion of liability

[4] The central issue on appeal is whether the exclusion of liability clauses contained in Celadon’s Rules and Regulations posted on Celadon’s website apply to the shipments in question.

[5] Celadon argues that the trial judge erred by rejecting Celadon’s submission that liability was excluded by standard term 490: “For shipments out of Mexico, Celadon’s liability begins when our trailer is delivered to the Celadon facility in the U.S. Mexican cargo insurance is available from customs broker.” Celadon also relies on term 115, a provision stating “[c]arrier is not liable for loss or damage occurring in Mexico and liability for Mexican carrier is limited.”

[6] The trial judge found that the exclusionary terms did not form part of the carriage agreement because they were not brought to National’s attention and further found that term 490 was ambiguous and did not apply in this case.

[7] The applicability of the exclusionary terms is a question of mixed fact and law that attracts deference on appeal. We do not agree with Celadon’s contention that the trial judge erred by failing to take into account the entire factual matrix concerning the applicability of any limitation of liability.

[8] We need only deal with the issue whether the exclusionary clauses were brought to National’s attention so as to form part of the parties’ agreement.

[9] As the trial judge noted, the parties had previously contracted for the shipment of goods and, on those occasions, National was provided with a Rate Notification Agreement (“RNA”) containing the same exclusion of liability term. However, those shipments involved transportation from Canada to Mexico, not from Mexico to Canada, and by the time of the October and November 2011 shipments, the RNA had changed and no longer contained the exclusion of liability clause.

[10] Contrary to Celadon’s submission, the trial judge did take into account the e-mail sent by Celadon to National confirming the contract of carriage and stating “Please note that these rates do not include fuel and are subject to current rules and accessorials.” National’s employee responsible for taking the arrangements testified that he was not provided with copies of the terms relied on by Celadon and that there was no discussion, either in writing or orally, about limiting liability when transporting goods from Mexico.

[11] Relying on the decision of this court in Trigg v. MI Movers International Transport Services Ltd. (1991), 1991 CanLII 7363 (ON CA), 4 O.R. (3d) 562 (C.A.), at p. 565, leave to appeal refused, [1992] 1 S.C.R. ix (S.C.C.), the trial judge found the following, at para. 55 of her reasons:

[T]he clauses in question were not brought to [National’s] attention at the time that the agreement for shipment was reached with respect to the October or November shipments. [National] cannot be said to have assented to the inclusion of the exclusion of liability clause in the parties’ contract.

[12] In our view, that finding was not tainted by legal error and was clearly supported by the record. We see no basis for appellate intervention.

(2) Notice following the first shipment

[13] Celadon submits that National had sufficient notice of the exclusionary clause following the first shipment in October 2011 because of Celadon’s response to National’s claim for the value of the goods lost on that shipment.

[14] We disagree.

[15] Celadon’s employee’s rejection of the claim was equivocal at best: “I have not thoroughly reviewed the contract but would guess that Celadon has no liability if this was stolen in Mexico. I certainly will double check that and advise.” National was not advised that its claim was rejected prior to the November 2011 shipment.

[16] We see no reason to interfere with the trial judge’s conclusion that this response was insufficient to bring the exclusionary clause to the attention of National for the purpose of the second shipment. Moreover, the fact that Celadon’s representative himself was uncertain about the status of the claim supports the trial judge’s finding on the first issue, namely, that the documents relied on by Celadon failed to bring to National's attention the exclusion of liability clause.

(3) Statutory limitation of liability

[17] Celadon submits that, in the alternative, even if the exclusion of liability clause does not apply, liability is limited by s. 9 of Schedule 1 of Ontario Regulation 643/05 because the contract is governed by Ontario law. Section 9 provides that carrier liability is limited to $4.41 per kilogram unless s. 10 is satisfied. Section 10 provides the following:

If the consignor has declared a value of the goods on the face of the contract of carriage, the amount of any loss or damage for which the carrier is liable shall not exceed the declared value.

[18] There was no declared value on the bill of lading. The trial judge found that as a copy of the commercial invoice issued by the Mexican consignor to National was provided to the carrier, s. 10 was satisfied.

[19] In our view, the trial judge erred in law in so finding.

[20] The terms of s. 10 are clear. The consignee must declare the value of the goods on the face of the contract of carriage. Section 4(1) of the regulation specifies what a contract of carriage must contain and that specification includes “(i) a space to show the declared valuation of the shipment, if any”.

[21] The bill of lading used for these shipments met the specifications of s. 4 and included a space to show the declared value of the shipment. That space was not completed for these shipments. The invoice issued to National by the consignor had nothing to do with the contract of carriage and providing a copy of the invoice to the carrier was not declaring the value of the goods on the face of the contract of carriage within the meaning of the regulation. Moreover, National’s employee responsible for making the shipping arrangements testified that it was not National’s practice to declare the value of the shipment.

[22] We conclude, accordingly, that the trial judge erred by failing to limit National’s claim to the value permitted by the regulation, namely, $110,830.

(4) Unconscionability

[23] As we have concluded that the trial judge did not err in holding that the exclusion of liability clause did not apply, it is not necessary for us to deal with her finding of unconscionability. Our silence, however, should not be taken as agreeing with that finding.

(5) Tort

[24] Given our conclusion with respect to the statutory limitation of liability for the contract of carriage, it is, however, necessary for us to consider the trial judge’s alternative theory of liability. Namely, that Celadon was liable in tort for failing to warn National of the increased risk of shipping goods from Mexico and for failing to ensure that instruction operated in a safe and effective manner.

[25] We agree with Celadon that the trial judge erred in law by holding that Celadon could be liable in tort in the circumstances of this case.

[26] Any failure or neglect on the part of Celadon with regard to the shipments arose directly out of the duties associated with performance of the contract of carriage and did not give rise to an independent duty in tort: see M.A.N. – B & W Diesel v. Kingsway Transports Ltd. (1997), 1997 CanLII 823 (ON CA), 33 O.R. (3d) 355 (C.A.), at pp. 360-61; Central Trust Co. v. Rafuse, 1986 CanLII 29 (SCC), [1986] 2 S.C.R. 147, at p. 205.

Disposition

[27] Accordingly, we would allow the appeal in part and reduce the amount of the judgment in favour of National to $110,830. If the parties are unable to agree as to costs, they may make brief written submissions.

Released: May 5, 2016

“Robert J. Sharpe J.A.”

“H.S. LaForme J.A.”

“K. van Rensburg J.A.”