In this claim for loss of cargo en route from Canada to Europe, the
defendant forwarder Traffic-Tech International brought a motion for preliminary
determination of the question of applicability of the Hague-Visby Rules and
their damage limitation provisions.
The plaintiff engaged the defendant forwarder to arrange the carriage of
one piece of machinery plus spare parts weighing XXXX and with a commercial
value of €71,706.00 from British Colombia, Canada, to the Netherlands. The
cargo was in fact loaded onto the “Cap Jackson” under a Traffic-Tech bill of lading.
This BL did not indicate that the cargo was to be carried on deck, while the
container was in fact so carried.
The container was lost during the voyage, never arrived at Rotterdam,
and the plaintiff claimed for total loss. It was agreed that the commercial nature
and value of the goods had not been formally declared. The Hague-Visby Rules
are incorporated into the law of Canada by the Marine Liability Act.
Article I(c) of the Rules provides that goods “which by the contract of
carriage is stated as being carried on deck and is so carried” are excluded
Traffic-Tech argued that the goods were not stated by contract as being
carried on deck, and the actual carriage of the goods on deck is not sufficient
by itself to establish the exclusion, and that therefore Traffic-Tech was
entitled to limit its damages to 666.67 units of account per package or 2 units
of account per kg, whichever was greater, in accordance with Art IV(5)(a).
The shipper argued that additional measures are required to ensure safe
carriage of on-deck goods, and therefore the issuance of a clean bill of lading
without an on-deck notation implies the goods are to be carried under the deck.
Further, shipper argued that the exclusion must apply to goods carried on deck,
whether or not so declared on the bill of lading, because to require declaration
and actual carriage on deck would reward the carrier for failing in its
obligation to note on-deck carriage. Since the cargo should be excluded from
the Hague Visby limitations, Traffic Tech should not be permitted to limit its
liability under the convention but should be liable for damages under the
common law (e.g., unlimited).
The Court found that the “and” requirement of the Rules was clear, requiring
both that cargo be declared on deck and actually so carried in order to create
an exception to the rules.
While the Court considered certain US authorities that suggest that “unauthorized
on deck carriage” without declaration of on -deck carriage in the contract,
amounted to a fundamental breach that excluded reliance of the breaching party
on their limiting terms, it preferred the more recent view of the England and
Wales Court of Appeal in “The Kapitan Petko Voivoda”, which held that
undisclosed on-deck carriage is a normal breach of contract that does not
exclude the operation of the Hague-Visby Rules.
Further, the Court found the limitation on damages apply “in any event”,
or “in every case”, and in French “sont applicables à toute action
contre le transporteur…”, subject only to the exception at Art IV(4) for damage
caused with intent or recklessly. Without evidence of intent or recklessness,
the failure to note on-deck carriage was a mere breach of contract for which
Traffic-Tech could be liable but in respect of which it had every right to
limit its liability under the Hague-Visby Rules.
Accordingly, the court ordered that the defendant forwarder was entitled to limit its liability for loss or damage to cargo to 666.67 units of account per package or 2 units of account per kg, and ordered costs of the motion payable by the plaintiff.