Canada: Canadian Federal Court Of Appeal Decision That Will Impact Coasting Trade: Wells Fargo Et Al v. Mercury Launch & Tug Et Al

SIGNIFICANCE OF DECISION

This is the first appellate decision to interpret subsection 43(2) of Canada's Marine Liability Act, which makes the Hague-Visby Rules apply compulsorily to certain contracts of carriage by water between places in Canada. Alexander Holburn partner Doug Schmitt represented the successful plaintiffs, whose truck was damaged when it fell off the defendants' barge. The barge operator issued no bill of lading. A central issue was whether the Hague-Visby Rules apply to the plaintiffs' claim, making it time barred after one year. The Court held that Hague-Visby did not apply and the claim succeeded.

BASIS OF ORIGINAL RULING IN OUR CLIENTS' FAVOUR

Subsection 43(2) of the MLA reads:

The trial Judge held that under subsection 43(2) of the MLA the Hague-Visby Rules only apply if the contract is incorporated into or evidenced by a bill of lading or similar document of title; oral contracts not evidenced by such a document are not caught by subsection 43(2) of the MLA.

BASIS OF APPEAL RULING IN OUR CLIENTS' FAVOUR

On April 4th, 2013 the Federal Court of Appeal upheld the result of the trial Judge but for different reasons, and overruled the trial Judge's requirement that there must be a written document in order for MLA subsection 43(2) to invoke Hague-Visby.

The Court of Appeal held that Hague-Visby did not apply to the transport of the truck on the barge because the term "contracts for the carriage of goods" in subsection 43(2) of the MLA does not include a charter party. The Court of Appeal held that the contract was a charter party because it was for the use of the barge on an hourly basis (whether or not there is cargo on the barge); and, also, because the truck remained in the possession of the truck owner's driver and was never delivered to the barge owner as a bailee.

PRECEDENT SET BY DECISION - IMPLICATIONS FOR COASTING TRADE

The result of the appeal decision is a simple rule for Canadian coastal carriers and shippers: 

(a) If they want Hague-Visby to apply to a contract of carriage, no bill of lading or similar document of title, or any document at all, is necessary: Hague-Visby will apply by default. If the contract is a charter party, the contract should expressly incorporate Hague-Visby by reference.

(b) If they do not want Hague-Visby to apply, no bill of lading or similar document of title may be issued, and the contract should stipulate that Hague-Visby does not apply.

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