CITATION: Liberty Line Linehaul Inc. v. Cangro Foods Inc., 2011 ONSC 7242
DIVISIONAL COURT FILE NO.: 591/09
DATE: 20111207
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N :
LIBERTY LINE LINEHAUL INC.
Plaintiff/Appellant
– and –
CANGRO FOODS INC.
Defendant/Respondent
John McNeil for the Plaintiff/Appellant
Michael D, Magonet, for the Defendant/Respondent
HEARD: October 5, 2011 at Toronto
MATLOW, J.:
[1] This appeal by the plaintiff, and cross-appeal by the defendant, from the judgment of a judge of the Toronto Small Claims Court dismissing this action are dismissed. Counsel may make written submissions by exchanging them and delivering them to me within one month.
[2] The determination of this appeal rests on whether or not the appellant is entitled to rely on section 2 of the Bills of Lading Act, R.S.C., 1985, c. B-5 9 “the Act”), to establish liability on the part of the defendant with whom it had no privity of contract. Section 2 reads as follows;
- Every consignee of goods named in a bill of lading, and every endorsee of a bill of lading to whom the property in the goods therein mentioned passes on or by reason the consignment or endorsement, has and is vested with all rights of action and is subject to all liabilities in respect of those goods as if the contract contained in the bill of lading had been made with himself.
[3] I am persuaded that, in the circumstances of this case, the appellant was not entitled to rely on this provision.
[4] The essential facts of the case at bar are not in dispute. The respondent, in the course of its business in Ontario, purchased canned fruit from a supplier in California. The agreement between the respondent and the supplier provided that it was the responsibility of the respondent to arrange and pay for the transportation of the fruit to its place of business in Ontario. Having no transportation department, the respondent engaged C. H. Robinson Worldwide (“Robinson”), whose business is to arrange transportation, to attend to all of the details involved in the transportation of the fruit.
[5] There are two transactions which are the subject of this appeal. Both are, for the purposes of this appeal, identical. Robinson, which had no equipment with which to transport the fruit, engaged Three Star Express (“Three Star”) to carry out the transportation. The relationship between Robinson and Three Star was governed by Robinson’s “Master Contract” which is the form of agreement used by Robinson when it engaged “authorized carriers” to transport goods for its clients. Three Star was one of Robinson’s “authorized carriers”
[6] Three Star, in turn, in contravention of its agreement with Robinson which prohibited aubcontracting, and without Robinson’s and the respondent’s knowledge, engaged Nortown Transportation ((“Nortown”), an unauthorized carrier, to perform the required transportation of the fruit. Nortown, in turn, also without authority and without Robinson’s and the respondent’s knowledge, engaged the appellant which ultimately transported the fruit to the respondent’s place of business. In these circumstances, it was the appellant which, in the language of the industry, had become the “performing carrier”.
[7] Throughout all of these related transactions, Three Star, Nortown and the appellant, by their conduct, including the preparation and use of misleading documentation, concealed the unauthorized subcontracting from Robinson and the respondent.
[8] It is evident that subcontracting was carried out at such successively diminishing prices that there would still be margins for Three Star and Nortown after payment of the agreed amount payable by Nortown to the appellant.
[9] After the successful delivery of the fruit to the respondent’s place of business, the respondent paid Robinson the amount that it owed to Robinson, Robinson paid Three Star and Three Star paid Nortown. This was in accordance with the agreement between the appellant and Nortown by which the appellant authorized Nortown to collect its share from Three Star. However, Norton failed to pay anything to the appellant and, despite its efforts to obtain payment from Nortown, the appellant remains unpaid.
[10] In my view, the appellant has, by participating as it did in the unauthorized subcontracting, disentitled itself from relying on section 2 of the Act. It looked only to Nortown for payment. The respondent, whose conduct was beyond reproach, was entitled to pay Robinson the amount that it owed, including what was to be paid by Robinson to Three Star. There was no good reason why the respondent should not have paid Robinson. Nor was there any reason for the respondent to think that it might have to pay someone else.
[11] The appellant must now accept the consequences which flow from the subcontracting. Its failure to obtain payment from Nortown cannot be attributed in any way to any fault on the part of the respondent or of Robinson and it would be manifestly unjust to require the respondent to make any further payment to the appellant.
[12] I agree with the judgment in appeal and consider it to be correct. The appellant has failed to persuade me that the judgment reflects any error of law.
[13] Having come to this conclusion, it is not necessary that I decide whether or not the trial judge was correct in stating, beginning at page 5 of his reasons for judgment that;
The purpose of the BLA is not to extend liability to a subcontractor of the original contracted carrier. Such an extension would be contrary to general contractual principles.
However, one must not lose sight of the fact that the purpose of section 2 of the Act was to create liability akin to contractual liability even in the absence of privity of contract.
[14] The respondent’s notice of cross-appeal asks, strangely, that “the judgment be affirmed and, alternatively, without prejudice to the forgoing, asks that the judgment be affirmed on the grounds set in the present appeal”. It is not necessary for a respondent who seeks to have a judgment in appeal upheld to cross-appeal. Nor is a cross-appeal required of a respondent who seeks to have a judgment upheld on grounds other than those relied on by the trial judge. Both of these can be sought within the scope of the original appeal. The cross-appeal is, therefore, dismissed.
Matlow, J.
Released: December 7, 2011.
CITATION: Liberty Line Linehaul Inc. v. Cangro Foods Inc., 2011 ONSC 7242
DIVISIONAL COURT FILE NO.: 591/09
DATE: 20111207
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N :
LIBERTY LINE LINEHAUL INC.
Plaintiff/Appellant
– and –
CANGRO FOODS INC.
Defendant/Respondent
REASONS FOR JUDGMENT
MATLOW J.
RELEASED: December 7, 2011