Canada: Transportation Case Law Updates

First presented at an MB Transportation Seminar

This paper contains an update to three areas of transportation law with three recent cases from the Ontario Superior Court of Justice and the Ontario Court of Appeal across three diverse issues that can impact a wide array of parties.

The first case is Baroch v. Canada Cartage1 which dealt with a class action dispute relating to unpaid overtime. The second case is A&A Trading Ltd. v. Dil's Trucking Inc.2 which dealt with issues relating to bills of lading, undeclared values and contracts of carriage. The third case is Fernandes v. Araujo3, which provides an update into the Ontario Court of Appeal's ongoing development of vicarious liability and motor vehicles in Ontario.

Baroch v. Canada Cartage

January 31, 2015 saw the release of a class action certification involving the transportation industry. Continuing the trend of class actions seeking unpaid overtime,4 the Ontario Superior Court of Justice certified a $100 million class action lawsuit for unpaid overtime against the defendant, Canada Cartage.

As a national trucking company, Canada Cartage is subject to the federal Canada Labour Code, and including the Motor Vehicle Operators Hours of Work Regulations.5 Those regulations specify how many hours certain groups of employees must work before being entitled to overtime pay:

  • For non-drivers: over 40 hours
  • For city drivers: over 45 hours
  • For highway drivers: over 60 hours

The statement of claim alleges Canada Cartage only paid overtime if the 60 hour threshold was exceeded, regardless of the type of employee, and that this policy was contrary to the regulations.

Class certification decisions often turn on whether the claims of the proposed class raise sufficiently "common issues" to allow the action to proceed as a class action, pursuant to the Class Proceedings Act 6. Some past "overtime" class action attempts have failed to be certified when courts found that the claims would require specific assessments of individual entitlements to overtime (see McCracken v. CNR7 and Brown v. CIBC8).

However, in Baroch, class plaintiff counsel avoided past pitfalls presented by the commonality requirement by defining the class to include only those who were entitled to receive overtime compensation. Determining who was entitled was not the triable issue. Rather, the pleadings focused on the "systemic policies or practices that allegedly amount to breaches of the employment agreements".9

Keep in mind that none of the claim's allegations against Canada Cartage have been proven. The certification decision means only that the claim may continue as a class action. Canada Cartage is defending this class action and the certification decision will be appealed.

For the time being, the certification represents a stark warning to corporations about overtime pay policies, and a particular caution to those operating pursuant to the Motor Vehicle Operators Hours of Work Regulations.

A&A Trading Ltd. v. Dil's Trucking Inc.

The decision of Justice Bielby in A&A Trading Ltd. clarified the law in Ontario as it relates to undeclared value, bills of lading and contracts of carriage.

Here, the plaintiff was an importer and exporter who had contracted with the defendant for the consignment of goods. Unfortunately, in the process of the consignment, the goods were stolen while in transit and in the defendant's possession.

The plaintiff indicated that, prior to the shipment; they contacted the defendant in order to obtain a quote for a consignment of goods from Toronto to Calgary. The defendant was informed by the plaintiff, at this time, the approximate value of the goods that would be shipped. The plaintiff also made inquiries of the defendant regarding whether they held sufficient insurance, which the defendant confirmed that they did. Based on these communications, the plaintiff hired the defendant to ship the goods.

The plaintiff completed his own standard bill of lading and, instead of declaring the value of the goods to be shipped, attached a copy of an invoice and packing slip which reflected the value of the goods to be consigned. The plaintiff provided the defendant with the bill of lading and the attached invoice and packing slip. The defendant completed its own bill of lading and provided a reference on it to the invoice and the packing slip that was provided to them by the plaintiff.

Determining whether or not the actual value was declared "on the face of the contract of carriage" was important in this case due to the fact that if the actual value was not declared, the plaintiff's claim would be limited to $100,000. Due to the fact the value of the goods stolen was $263,000 this would represent a significant loss that the plaintiff would have to accept.

The issues then that the court had to determine were as follows:

  1. What constituted the contract of carriage; and,

  2. Whether the plaintiff declared the value of the consignment on the face of the contract of carriage.

In determining what constituted the contract of carriage, the oral representations provided by the plaintiff to the defendant were examined. In doing so, reference was made to the decision of Fleet Express Lines Ltd. v. Continental Can Co.10 where it was held that the real contract in that situation was the oral contract. The bills of lading represented nothing more than "receipts that contained information identifying the parties and the goods."11

In this case, the plaintiff argued that the oral representations provided by the defendant influenced the hiring of the defendant and, therefore, formed part of the contract of carriage. The plaintiff further argued that the defendant's specific reference to the invoice outlining the value of the consignment on their bill of lading meant it formed part of the contract of carriage.

The court agreed with the plaintiff's arguments and found that the oral representations, the documents appended to the bill of lading completed by the plaintiff and the defendant's version of the bill of lading which referenced the appended documents were to be incorporated into the contract of carriage. In coming to this decision, the court also looked to the evidence offered by the defendant in that they always included a reference in their bill of lading to documentation provided to them by customers.

With respect to whether or not the value of the goods was declared on the face of the contract of carriage, the plaintiff argued that the defendant knew of the value of the consignment through the oral communications and the inclusion of the invoice. The plaintiff argued that these two elements satisfied the legislative intent behind the requirement of the shipper to declare the value of goods on the face of the contract of carriage, which was to provide notice to the carrier of the value of the goods that were being shipped to allow them to assess the risk.12

The defendant argued that the onus was solely on the plaintiff to declare the value of the consignment. They argued that to arrive at an alternative conclusion would undermine the predictability that the legislation intended to exist in transactions between shippers and carriers.13

The court held that, on the face of the contract of carriage, reference was made to the invoice supplied to the defendant by the plaintiff reflecting the value of the goods being shipped. When the plaintiff signed the bills of lading prepared by themselves and the defendant, the plaintiff was thereby adopting the contents of the contract of carriage and the declarations contained therein. Given that the invoice was already found to form part of the contract of carriage, the value of the goods was properly set out on the face of the contract.

Therefore, the plaintiff was entitled to recover the true value of the goods in the amount of $263,500.

Fernandes v. Araujo

The Ontario Court of Appeal waded into the issue of vicarious liability and the use of motor vehicles once more in the case of Fernandes v. Araujo. Here, the Court was tasked with accepting its past decision in Finlayson v. GMAC Leaseco Ltd.14 or its decision in Newman and Newman v. Terdik.15

In Finlayson, it was held that the vicarious liability of an owner rests on possession rather than operation of the vehicle. Therefore, if the owner of a vehicle consented to the possession of the vehicle, that owner would be held to be vicariously liable even if the vehicle was operated in a way prohibited by the owner. Conversely, in Newman, vicarious liability rested on operation rather than possession of the vehicle. The Court in Fernandes held that the principles in Newman were overruled and would proceed on the principles espoused in Finlayson.

In this case, the plaintiff sustained serious injuries as a passenger on an ATV that was driven by the defendant, Araujo. The ATV was owned by an additional defendant, Carlos Almeida. Mr. Almeida was using the ATV to transport tools but later returned it to the garage and told Ms. Araujo and the plaintiff to try it out. Mr. Almeida also allegedly informed Ms. Araujo to not leave the farm property.

Ms. Araujo defied Mr. Almeida's wishes and left the farm property during which she and the plaintiff were involved in a single-vehicle rollover accident.

At the first instance hearing of this matter, it was held that Mr. Almeida never expressly prohibited the defendant from taking the ATV off the farm property. For this reason, Ms. Araujo was found to be in possession of the vehicle with Mr. Almeida's consent at the time of the accident. The key issue on this appeal was then whether or not the parties consented to leaving the farm property.

Citing the principles in Myers-Gordon (Litigation Guardian of) v. Martin16 the defendants argued that consent turns on the subjective belief of the party in possession of the vehicle. Ms. Araujo testified during her discovery that Mr. Almeida did not provide her with permission to leave the farm property. Based on this admission, the defendants argued that Ms. Araujo knew she did not have consent to be in possession of the ATV beyond the property limits.

The Court held that they could not accept these arguments. First, the Court found that if they were to accept this argument, the factual findings of the motion judge would be challenged. This was due to the fact that the motion judge refused to make an inference that Ms. Araujo knew she was forbidden to travel on the highway.17

Furthermore, if consent were to be based on the subjective belief of the party in possession of the vehicle, this would be inconsistent with the language and purpose of section 192(2) of the Highway Traffic Act.18 To base consent on the subjective belief of the party in possession of the vehicle would allow anyone with actual possession of the vehicle to fix the owner with liability even where the owner had not actually consented to that person having possession of the vehicle.19 Rather, the Court held that the purpose of this section is to critique the actions of the owner who is charged as opposed to the party in possession of the owner's vehicle.

The Court admitted there may indeed be a subjective component of the test for consent, but the nature of the test for consent is not subjective in nature. Careful consideration must be given to the entirety of the evidence. In matters where vicarious liability in the context of motor vehicle accidents arises, efforts must be made to examine whether the parties involved subjectively believed that consent had been granted to be in possession of the vehicle.20

Footnotes

1. 2015 ONSC 40 (Ont. S.C.J.) [Baroch].

2. 2015 ONSC 1887 (Ont. S.C.J.)[A&A].

3. 2015 ONCA 571 (Ont. C.A.) [Fernandes].

4. See e.g. McCracken v. CNR, 2012 ONCA 445; Brown v. CIBC, 2014 ONCA 677; Fresco v. CIBC, 2012 ONCA 444; and Fulawka v. Bank of Nova Scotia, 2012 ONCA 443.

5. CRC, c. 990.

6. RSC 1985, c. L-2.

7. McCracken, supra note 4.

8. Brown, supra note 4.

9. Baroch, supra note 1 at para 12.

10. [1969] 2 OR 97.

11. A&A, supra note 2 at para 28.

12. Ibid at para 49. See also Anticosti Shipping Co. v. St. Amand [1959] SCR 372 at para 8, Sept Iles Express Inc. v. Tremblay [1964] Ex CR 213 at para 13.

13. A&A, supra note 2 at para 53.

14. 2007 ONCA 557 (Ont. C.A.).

15. [1953] OR 1 (CA) (Ont. C.A.).

16. 2013 ONSC 5441 (Ont. S.C.J.).

17. Fernandes, supra note 3 at para 24.

18. RSO 1990, c H.8.

19. Fernandes, supra note 3 at para 25.

20. Ibid at para 28.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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