






Citation:



MDSI Mobile Data Solutions Inc. v.
  Federal Express Corp.



Date:
20030107









2003 BCCA 9



Docket:



CA029142









COURT OF APPEAL FOR
BRITISH COLUMBIA









BETWEEN:









MDSI MOBILE DATA SOLUTIONS INC.









RESPONDENT

(PLAINTIFF)









AND:









FEDERAL EXPRESS CORPORATION,

FEDERAL EXPRESS CANADA LTD. doing business as

FEDERAL EXPRESS and the said FEDERAL EXPRESS









APPELLANTS

(DEFENDANTS)















Before:



The
  Honourable Chief Justice Finch









The
  Honourable Madam Justice Newbury









The
  Honourable Mr. Justice Hall











G.B.
  Butler



Counsel for the Appellants





C.J.
  Giaschi



Counsel for the Respondent





Place
  and Date of Hearing:



Vancouver, British Columbia





November
        6, 2002





Place
  and Date of Judgment:



Vancouver, British Columbia





January
        7, 2003









Written Reasons by:

The
Honourable Madam Justice Newbury



Concurred in by:

The Honourable Chief Justice Finch



Dissenting Reasons by:

The Honourable Mr. Justice Hall (Page 20, para. 19)


Reasons for Judgment of the Honourable Madam Justice
  Newbury:





[1]

This appeal is about the
  construction and interaction of the "small print" terms incorporated
  into a standard form waybill used by the "FedEx" defendants in
Canada
,
  and two sections of the Warsaw Convention, an international treaty that
  provides for the liability of international carriers of persons and cargo.

In the court below, the summary trial judge
  ruled that Article 23 of the Convention precluded FedEx from relying on the
  contractual terms in order to limit its liability for damage to its customer's
  cargo. He ordered FedEx to pay the plaintiff the sum of $214,847, the "declared
  carriage value" inserted on the face of the waybill.

I am of the opinion that he reached the
  correct result, and that FedEx's appeal must be dismissed, but I would do so
  for different reasons than those of the trial judge.

Facts

[2]

On or about November
  16, 1998, the plaintiff MDSI Mobile Data Solutions Inc. ("MDSI")
  wished to ship certain valuable computer equipment to a customer in Atlanta,
Georgia
.

A few days beforehand, Ms. Hick, MDSI's
  import/export co-ordinator, contacted FedEx.

Evidently, she had a discussion with someone there about the weight,
  size and value of the two packages to be sent.

FedEx advised Ms. Hick that it would require a special form entitled "FedEx
  International Priority Customs Value Waiver Program Agreement for Canada" to
  be signed and returned by MDSI, in addition to the usual air waybill.

MDSI signed the Customs Waiver agreement on November
  12, 1998 and faxed it back to FedEx.

I will refer below to the terms of this Agreement.

[3]

On November 16, FedEx attended
  at MDSI's premises and picked up the two packages for shipment together with
  the air waybill, which described the cargo as a "FedEx International
  Priority Freight Package".

The face
  of the waybill contained boxes to be completed by the consignor.

Ms. Hicks provided the following information:

Number of packages  2

Total weight  750 kg.

Country of manufacture 
U.S.

Total Declared Value for Carriage  $214,847.51

Total Declared Value for Customs  $214,847.51





Above Ms. Hick's signature, the form stated:

By giving us your
  shipment, you agree to the conditions on the back of this Non-Negotiable Air
  Waybill.

Certain international treaties,
  including the Warsaw Convention, may apply to this shipment and limit our liability
  for damages, loss, or delay, as described in the Conditions of Contract.

At the very bottom of the form, the following statement also
  appeared:

Use of this Air Waybill constitutes your
  agreement to the conditions of the contract on the back of this Air
  Waybill.

The terms and conditions of
  service may vary from country to country.

Consult our local office for specific information.





[4]

The Conditions of Contract on
  the back of the form, which appeared in small print, included the following:

AGREEMENT TO TERMS.

By giving us your shipment, you agree,
  regardless of whether you sign the front of this Air Waybill for yourself and
  as agent for and on behalf of any other person having an interest in this
  shipment, to all terms on this NON-NEGOTIABLE Air Waybill, in any applicable
  tariff, and in our current Service Guide or Standard Conditions of Carriage,
  copies of which are available upon request.

If there is a conflict between this Air Waybill and either the tariff,
  Service Guide or Standard Conditions then in effect, the tariff will control
  (the Service Guide or Standard Conditions have secondary priority). . . .



NOTICE CONCERNING LIMITATIONS OF LIABILITY



Air Carriage Notice.

If the carriage of your
  shipment by air involves an ultimate destination or stop in a country other
  than the country of departure, the Warsaw Convention, an international treaty
  relating to international carriage by air, may be applicable,
which treaty
  would then govern

and in most cases limit our liability for loss or

delay
  of or damage to your shipment
.

In
  the
U.S.
, the Warsaw Convention limits our liability to US$9.07 per pound
  (US$20.00 per kilogram), unless you declare a higher value per carriage as
  described below.

The interpretation of
  the Warsaw Convention's liability limits may vary in other countries. . . .

Limitation of Liability.

If not governed by the Warsaw Convention or
  the CMR as described above, our maximum liability for loss, damage or delay is
  limited by this Air Waybill to US$100 per shipment or US$9.07 per pound (US$20.00
  per kilo) (or equivalent local currency), whichever is greater, unless you
  declare a higher value for carriage as described below. . . .



Declared Value Limits.

The highest declared value we allow for a
  FedEx Letter/Envelope and FedEx Pak shipment is U.S. $100 or U.S. $9.07 per
  pound (U.S. $20.00 per kilo) (or equivalent local currency), whichever is
  greater.

For other shipments, the
  highest declared value for carriage will differ from country to country and may
  depend on the contents of the shipment.

Please check our Service Guide, our Standard Conditions of Carriage or
  applicable tariff for an explanation of the declared value limits.



. . .



LIABILITIES
  NOT ASSUMED.

IN ANY EVENT, WE WON'T BE

LIABLE FOR
  ANY DAMAGES, WHETHER DIRECT, INCIDENTAL,

SPECIAL OR CONSEQUENTIAL, IN
  EXCESS OF THE DECLARED

VALUE FOR CARRIAGE
(INCLUDING BUT NOT LIMITED
  TO LOSS OF INCOME OR PROFITS) WHETHER OR NOT WE HAD KNOWLEDGE THAT SUCH DAMAGES
  MIGHT BE INCURRED.

We won't be liable
  for your acts or omissions, including but not limited to incorrect declaration
  of cargo, improper or insufficient packing, securing, marking or addressing of
  the shipment, or for the acts or omissions of the recipient or anyone else with
  an interest in the shipment.



. . .



MANDATORY LAW
.

Insofar as any provision
  contained or referred to in this Air Waybill may be contrary to any applicable
  international treaty, law, government regulations, orders or requirements, such
  provision shall remain in effect as a part of our agreement to the extent that
  it is not overridden.

The invalidity or
  unenforceability of any provision shall not affect any other part of this Air
  Waybill.

[My
  underlining.]

[5]

It is also necessary to quote
  some of the terms contained in FedEx's Service Guide, specifically the following
  from Part 9, headed "Service Conditions":

The following pages contain the Service
  Conditions applicable to the transportation of any package, document, letter,
  pallet, container or other item by FedEx
®. . . .




If
  there is a conflict between the Service Conditions in this Guide and the terms
  and conditions on any FedEx waybill, manifest or other transit documentation,
  the Service Conditions in this Guide will control.

If there is a conflict between the Service
  Conditions and any applicable tariff, the applicable tariff will control.

This Guide supersedes all previous Service
  Guides and other prior written statements concerning the rates and conditions
  of FedEx service to which it applies. . . .

Except as otherwise provided above, any conflict or inconsistency
  between this Guide and other written or oral statements concerning the rates,
  features of service, products, and conditions applicable to FedEx service will
  be controlled by this Guide, as modified, amended or supplemented by FedEx from
  time to time.



* * *



Declared
  Value and Limits of Liability



(a)

"Declared
  value for carriage" is required by FedEx to help determine transport
  liabilities
, while "declared value for customs" is required by
  Customs officials for possible assessment of duties and taxes.

For greater certainty, the declared value
  for carriage of any shipment

represents our maximum liability in
  connection with a shipment
including, but not limited to, any loss, damage,
  delay, shortage, mis-delivery, non-delivery, misinformation or failure to
  provide information.

Exposure to, and
  risk

of, any loss in excess of the
  declared value for carriage is either assumed by the shipper or transferred by
  the shipper to an insurance carrier through the purchase of an insurance
  policy.

You should contact an insurance
  agent or broker if insurance coverage is desired.

We do not provide insurance coverage of any
  kind.



(b)

The
  declared value for carriage amount cannot exceed the declared value for customs
  amount.



. .
  .



(d)

Air
  Carriage Notice.

As used in this Guide, "Warsaw
  Convention" or "Convention" means the Convention for the
  Unification of Certain Rules relating to International Carriage by Air, signed
  at Warsaw, October 12, 1929, or that Convention as amended, whichever is
  applicable to the carriage or "carrier", including the air carrier
  issuing the waybill and all air carriers that carry the goods or perform any
  other service related to the carriage.

When the carriage involves an ultimate
  destination or stop in a country other than the country of departure, the
Warsaw Convention may
  be applicable.

The Convention governs and,
  in most cases, limits our liability in respect to loss of, damage to or delay
  or cargo.

In
Canada
, the Warsaw Convention
  limits our liability to the Canadian dollar equivalent of 250 French francs
  of 65.5
  milligrams gold of millesimal fineness 900 per kilogram, unless you declare
  a higher value for carriage as

described below
.

The interpretation of the Warsaw convention's
  liability limits may vary in other countries.

To the extent not in conflict with the rules relating to liability

for international carriage as established by the Convention, carriage and
  other services performed by us are subject to the provisions

of this
  Guide
and applicable tariffs as amended from time to time, which are
  incorporated in this Guide by reference.



. .
  .



(g)

Declared Value Limits.

All shipments containing items of
  extraordinary value are limited to a maximum declared value for carriage of
  CDN$500.

The maximum declared value we
  allow for customs and carriage per waybill for each FedEx
®
Letter and FedEx
® Pak shipment is CDN$100.

Except as otherwise noted above, the maximum declared value for an intra-Canada
  shipment is limited to CDN$50,000.

For
  international shipments, the maximum declared value for customs and carriage
  will differ from country to country and may depend on the contents of the
  shipment.

If you send more than one package on a
  waybill, the declared value for carriage of each package will be determined by
  dividing the total declared value for carriage by the number of packages in the
  shipment, unless you produce documentary evidence sufficient to support a
  different allocation.

In no event may
  the declared value of any individual package exceed the declared value of the shipment.



. . .



(j)

The maximum declared value for
customs
for
    a FedEx international shipment (other than a FedEx® Letter or FedEx®
Pak) is as
  follows:


CDN$50,000: . . . United
  States . . . .



(l)

Any effort to declare a
  value in excess of the maximum amounts allowed in this Guide is null

and
  void
and the acceptance for carriage of any shipment bearing a declared
  value in excess of the maximum amounts allowed does not constitute a waiver of
  any provision of this Guide as to such shipment.

Even if a higher value is declared our
  liability, if not governed by the Warsaw Convention, is limited to the amount
  of actual damages or CDN$100, which is less.

[
My underlining.]





[6]

It was evidently because of
  para. (j)
above
, which specified a "maximum
  declared value for customs" of $50,000, that FedEx required its customer
  to sign the Customs Waiver Agreement mentioned earlier.

The material terms of that agreement were as
  follows:

As of

11/10/98
("Commencement
  Date"), you agree to participate in FedEx's International Priority Customs
  Value Waiver Program (the "Program").

During your participation in the Program,
the maximum declared value
  for customs of any FedEx
®
International

Priority shipment

transported via FedEx from
Canada
to direct served locations in the
United States
will be increased to    $500,000   ,
subject to the provisions set forth below.

For greater certainty, this Program shall
  apply only to shipments transported via FedEx from
Canada
to
  direct served locations in the
United States
.



This Agreement shall
not affect the maximum
  declared value for carriage for International Priority

shipments.

That is, the maximum declared value for
  carriage for a FedEx® Letter, FedEx® Pak and items of extraordinary value are
  as set out in the FedEx Worldwide Service Guide, as amended from time to time
  by FedEx (the "Guide").

For
  all other FedEx International Priority shipments, although this

Agreement
  allows a maximum declared value for customs greater than that set out in the
  Guide, the maximum declared value for carriage for such shipments cannot exceed
  the declared value for customs amount for such shipments set out in the Guide.



Notwithstanding any provisions of this
  Agreement, the liability of FedEx with regard to any International Priority
  shipment shall be limited as set forth in the Guide. . . .



Except as otherwise provided
  herein, each shipment made under this Agreement is subject to the terms and
  conditions of the Guide in effect at the time of shipment, which terms and
  conditions are incorporated by reference to this Agreement.

FedEx reserves the right to
  modify the Guide at anytime without notice.

[My underlining.]





[7]

For purposes of this narrative,
  I also reproduce below Articles 22(2) and 23 of the Warsaw Convention:

Article 22




(2)

In the carriage of registered baggage and of
  cargo, the liability of the carrier is limited to a sum of 250 francs per
  kilogram, unless the consignor has made, at the time when the package was
  handed over to the carrier, a special declaration of the value at delivery and
  has paid a supplementary sum if the case so requires.

In that case the carrier will be liable to
  pay a sum not exceeding the declared sum, unless he proves that that sum is
  greater than the actual value to the consignor at delivery.

. . .



Article 23




Any
  provision tending to relieve the carrier of liability or to fix a lower limit
  than that which is laid down in this Convention shall be null and void, but the
  nullity of any such provision does not involve the nullity of the whole
  contract, which shall remain subject to the provisions of the Convention.





[8]

According to the discovery
  evidence of a cargo claims specialist employed by FedEx, after picking up MDSI's
  packages on November 16, 1998 FedEx placed them on a flight which left
  Vancouver, stopped briefly in Spokane, Washington and then went on to its
  destination in Memphis.

It was processed
  through Customs and then flown on a second aircraft to Atlanta, where it
  arrived on November 18.

There, a FedEx
  employee noted that one of the packages had sustained "major damage to
  side of unit.

Outside box not damaged."

Although it is unclear from the discovery
  excerpts contained in the appeal record, it appears that MDSI was eventually
  notified and gave formal notice of its intention to "hold FedEx responsible."

[9]

FedEx took the position that
  its liability was limited either to $11,427 (the Canadian currency equivalent
  of 250 francs per kilogram, specified by Article 22(2) of the Warsaw Convention);
  $50,000, the figure appearing in para. (j)
of
the
  Guide quoted above; or $214,847 (Cdn.), the declared value of the equipment as
  stated on the face of the waybill.

MDSI
  on the other hand took the position that the carrier's liability was not so
  limited and sought to recover the full amount of its loss, which was $214,847
  in
U.S.
currency.

(As noted by the
  trial judge, MDSI had neglected to specify
U.S.
currency when inserting the declared value of the cargo on the face of the
  waybill.)

Alternatively, MDSI seeks the
  $214,847 in Canadian funds.

The Trial Judgment

[10]

The question posed for summary
  determination by the court below was whether and to what extent FedEx's
  liability was limited.

The trial judge
  approached the question on the basis that it raised three sub-issues  the
  effect of the "declared value" stated on the waybill and its
  interaction with the contractual terms, quoted above, relied on by FedEx to
  limit its liability; whether Article 8 of the Warsaw Convention had been
  complied with; and whether in the absence of evidence as to how the damage to MDSI's
  cargo had occurred, an inference should be drawn that the damage was caused by "wilful
  misconduct" on FedEx's part.

On the
  latter two questions, the trial judge concluded that the waybill had been
  properly completed for purposes of Articles 8 and 9 of the Convention and that
  there was no basis for an inference of wilful misconduct on the part of FedEx.

He also held that the insertion of "$214,857.51"
  in the box headed "Total Declared Value for Carriage" constituted a "special
  declaration of value" for purpose of the Convention.

No appeal is taken from these conclusions.

[11]

After reciting counsels'
  respective arguments, the trial judge concluded that it was not necessary to
  address the operation and interaction of the various contractual terms quoted
  above, since:

. . .
I consider the quoted provisions of the Guide offend Article 23 of the
  Convention because their effect is to relieve FedEx of the liability prescribed
  by Article 22(2), namely the liability to pay a sum not exceeding the declared
  sum when a special declaration is made.

In my view, the provisions of the Guide on which FedEx relies do not
  serve to relieve it of liability for the declared value: $214,847.

[para. 10]





In the result, he granted MDSI judgment against the defendants for
  that amount in Canadian currency.

(See (2001) 95 B.C.L.R. (3d) 360.)

On Appeal

[12]

On appeal, Mr. Butler for FedEx
  argues that the waybill conditions are clear and unambiguous and should be
  determinative as between these two sophisticated parties.

He urges us to adopt the following line of
  reasoning:

1.

The
  front of the waybill referred the consignor to the conditions of contract on
  the reverse side, and the terms headed "Agreement to Terms" incorporated
  and gave priority to the terms contained in the Service Guide.

2.

As
  stated at para
.(
a) of the Guide, the declared value
  for carriage represented FedEx's maximum liability in connection with the
  shipment.

3.

Under
para. (j)
of
the Guide, the
  maximum declared value for customs of international shipments going to the
U.S.
was
  $50,000 (Cdn.), and under para. (b), the declared value for carriage could not
  exceed the declared value for customs purposes.

4.

In
  the Customs Waiver Agreement, FedEx permitted the maximum declared value of
    the package for customs purposes to be increased to $500,000 "subject to" the
    other provisions of that agreement.

Although
  para. 2 thereof stated that the agreement did not affect the maximum declared
  value for carriage for International Priority
shipments,
it
  also specified that the maximum declared value for carriage could not exceed
  the "declared value for customs amount" set forth in the Guide.

Mr. Butler equates this with the $50,000
  referred to in para. (j)
of
the Guide.

5.

Since
  the maximum declared value for carriage purposes was unaffected by the Customs
  Waiver Agreement, the $50,000 maximum specified in para. (j)
of
the Guide represented the limit of its liability.

6.

The
  prohibition in Article 23 of the Convention was not engaged because the
  reference to an attempt to fix a lower limit than that specified, denoted the "floor" of
  250 francs per kilogram specified in Article 22(2).

The $50,000 limit was higher than that floor,
  consistent with what Mr. Butler contends is the purpose behind Article 23,
  i.e., to permit shippers and their customers to negotiate limits of liability
between
that floor and the actual value. FedEx's policy is to fix its maximum liability
  at $50,000 unless the customer pays a special fee (none was asked for in this
  case) or the shipment comes within one of the other specific provisions of the
  Guide.

[13]

It is steps 4 and 5 of this
  reasoning that I believe are flawed.

Although little is "clear" from all the terms before us, it
  does seem clear that para. (j)
of
the Guide speaks to
  declared values for
customs
purposes.

According to para. (b), the carriage value could not exceed the declared
  value for customs purposes.

That
  provision was not infringed in this case  the customs value and the declared
  carriage value were the same.

The
  Customs Waiver Agreement was said not to "affect the maximum declared
  value for carriage".

This was
  followed by what purported to be an explanatory statement, that for most FedEx
  International shipments, the declared value for carriage could not exceed "the
  declared value for customs amount set out in the Guide." If it was
  intended that this statement would indeed limit the declared value for carriage
  to something less than the amount inserted by the consignor, this was a most
  obscure and unclear way of saying so, and it was inconsistent with the opening
  sentence of the clause. I think the better explanation of the two provisions,
  which must be read harmoniously if possible, is simply that notwithstanding
  the fact that a larger amount than usual was being allowed for customs purposes,
  para. (b)
of
the Guide was still applicable  i.e.,
  the declared value for carriage was not to exceed the customs value stated on
  the waybill.

In this case it did not.

In any event, the Guide did not specify the "declared
  value for customs amount."

The
  waybill did, and it was $214,847 in this case.

[14]

The
    Customs Waiver Agreement also stated that FedEx's liability with respect
    to any International Priority
  Shipment "shall be limited as set forth in the Guide".

The Guide stated in para. (d)
that
where the carriage involved a destination or stop in
  another country, the Warsaw Convention "may be" applicable.

There is no doubt that the Convention was
  applicable in this case. The Guide went on to say that:

The Convention
  governs and, in most cases, limits our liability in respect to loss of, damage
  to or delay of cargo.

In
Canada
,
  the Warsaw Convention limits our liability to the Canadian dollar equivalent of
  250 French francs of 65.5 milligrams gold of millesimal finess 900 per
  kilogram,
unless you declare a higher value for carriage as described below
.

[My underlining.]

Nowhere did the Guide specify a maximum value for carriage that
  would be permitted for the kind of shipment with which we are concerned.

Para
.(
f) dealt with
  cases not governed by the Warsaw Convention and para.(g) dealt with shipments
  of "extraordinary value", which term was described in para. (k)
to
refer to artwork and other valuables not relevant here.

[15]

I do not read the Guide as
  imposing a limit of $50,000 or any other limitation on the shipper's liability.

To the contrary, the various references to
  the Warsaw Convention and to the ability of the shipper to declare a "higher
  value" (i.e., higher than 250 francs per kilogram) indicate that by
  declaring a higher value for carriage on the front of the waybill, it was open
  to the consignor to hold FedEx liable for that amount and not to be held to
  the minimum 250 francs per kilogram stated in the Convention.

It clearly contemplates that the consignor
  may make a special declaration of value at the time of delivering the goods
  to the carrier, in which case the carrier's liability would be in an amount "not
  exceeding the declared sum, unless he proves that the sum is greater than the
  actual value to the consignor at delivery."

[16]

As for para. (l)
of
the Guide, for the reasons set forth above, I find that
  no amount in excess of the "maximum amount allowed in this Guide"
was
specified.

The declaration of value was
  allowed by the Guide, and in any event, an exception was made in various places
  in the Guide, including paras. (d)
and
(e), for
  contracts governed by the Warsaw Convention.

[17]

In light of my conclusion on
  this point, it is unnecessary for me to reach a definite conclusion as to
  whether the trial judge was correct in ruling that the contractual terms stated
  in the Guide offend Article 23 of the Warsaw Convention and that the Convention
  had the effect of rendering such terms null and void.

I tend to agree with Mr. Justice Hall,
  however, that the reference in Article 23 to a "lower limit than that
  which is laid down in this Convention" refers to the 'floor' amount of 250
  francs per kilogram and that the general intention of Article 22(2) is to
  permit the parties to agree on an amount above that floor and below the "ceiling" of
  the declared value amount stated on the waybill.

If that is what FedEx sought to do in this
  case, but it did not do so effectively or clearly, in my respectful view.

[18]

Accordingly, I conclude that
  the terms and conditions contained in the Guide did not limit FedEx's liability
  to an amount lower than the declared Value for carriage stated by MDSI on the
  face of the waybill. I would therefore dismiss the appeal, with thanks to
  counsel for their helpful and thorough submissions.







The Honourable
Madam Justice Newbury







I
  AGREE:

The Honourable
Chief Justice Finch






Reasons for Judgment of the Honourable Mr. Justice Hall:





[19]

I have had the advantage of
  reading in draft the Reasons of Newbury J.A.

In her Reasons, she has narrated the circumstances of this case.

She concludes that the appeal ought to be
  dismissed but I have come to a different conclusion and would allow the appeal.

[20]

Article 23 of the Warsaw
  Convention, incorporated into the law of
Canada
by
  the
Carriage
  of Air Act
, R.S.C. 1985, c. 26 as amended, reads as follows:

Any provision tending to relieve the carrier of
  liability or to fix a lower limit than that which is laid down in this
  Convention shall be null and void, but the nullity of any such provision does
  not involve the nullity of the whole contract, which shall remain subject to
  the provisions of the Convention.





[21]

Since this was a contract for
  international air carriage, it is common ground that the Warsaw Convention,
  ("the Convention"), is applicable.

The scheme of the Convention is that under Article 18(1), the carrier
  is, subject to the very difficult exception stipulated in Article 20, liable
  for damage to or the destruction of cargo transported by air.

Under the provisions of Article 22(2), the
  carrier is entitled to limit its liability for damages to goods to a value
  equivalent to 250 francs per kilogram.

This ability to limit liability is subject to certain exceptions, one
  being the situation where a special declaration of value is made at the time of
  delivery of the goods.

In the case at
  bar, if the 250 franc limit were to be found applicable, the liability of the
  defendant would have been for a sum slightly in excess of $11,000.00.

Although at trial the defendant had argued
  for such a conclusion on the quantum of damages, it sensibly abandoned that
  line of argument on appeal.

The issue on
  this appeal is whether it may limit its liability for damages to the sum of
  $50,000.00, the amount set out in its Service Guide as the amount applicable to
  Canadian and
United States
shipments of
  goods.

[22]

The learned trial judge
  expressed his conclusion on liability for damages thus:

FedEx says that, while it accepted the server
  for shipment with a "Total Declared Value for Carriage" stated on
  the waybill of $214,847, it is now able to limit its liability to $11,427 because
  there was no valid declaration or to [sic] $50,000 if any declaration can be
  said to have been made.



No authority is cited where a provision of this
  kind in any waybill has been considered.

Quite apart from any question of the contractual validity of the
  position FedEx takes
, I consider the quoted provisions of the Guide offend
  Article 23 of the Convention because their effect is to relieve FedEx of the
  liability prescribed by Article 22(2), namely the liability to pay a sum not
  exceeding the declared sum when a special declaration is made.

In my view, the provisions of the Guide on
  which FedEx relies do not serve to relieve it of liability for the declared
  value: $214,847.

(
emphasis
added)





[23]

As appears from the emphasized
  portion, the learned trial judge did not make any finding concerning the
  validity of the contractual provisions relied upon by the appellant in this
  Court seeking to limit its liability for damages to $50,000.00.

The trial judge felt he was only required to
  consider the provisions of Article 23 of the Convention to decide the case

The relevant portion reads as follows:

Any provision tending to relieve the carrier of
  liability
or
to fix a lower limit than that which is laid down in this
  Convention shall be null and void....



(
emphasis
added)





[24]

In my view, the quoted
  provision deals with two distinct situations or subject matters.

One subject matter is the issue of "liability" for
  damages generally.

A carrier is rarely permitted to escape
any
liability for
  damages.

The other subject matter
  concerns an attempt that might be made by a carrier to set a limitation on its
  responsibility for damages at a lower limit than that provided for by the terms
  of the Convention.

Under the provisions
  of Article 23, carriers are prevented from achieving either of these
  objectives.

[25]

An example of an attempt by a
  carrier, (in the end unsuccessful), to entirely avoid liability is demonstrated
  by what occurred in the case of
Connaught Laboratories Ltd. v. Air Canada
(1978), 94 D.L.R. (3d) 586 (Ont. H.C.).

In that case, Air
Canada
had sought to avoid liability for damages arising out of damage occasioned in
  transit to international cargo by seeking to rely upon the following clause
  found in the contract between shipper and carrier:

The carrier shall not be liable for loss,
  damage, deterioration, destruction, theft, pilferage, delay or default or
  misdelivery, or non-delivery not caused by the actual negligence of the
  carrier, not occurring on its own line or in its own service, or for any act,
  default, negligence, failure or omission of any other transportation
  organization.





[26]

Because the damage to goods had
  occurred while another airline was carrying the cargo for a portion of the
  transit, the defendant carrier, Air Canada, sought to argue on the basis of
  that portion of the exculpation clause "not occurring on its own
  line," that it should be relieved of any liability for damage to the
  cargo.

This was found to be
  impermissible because the terminology in the contract was out of accord with
  the requirements of the governing Convention.

Robins J. observed as follows at p. 589:

That limitation on liability does not conform
with
the conditions of international carriage established in
The Warsaw Convention
and may not be
  invoked by Air
Canada
as a defence to Connaught's action.





[27]

If an analogous situation had
  existed in the case at bar, I would agree with the conclusion reached by the
  learned trial judge.

However, I do not
  consider that the relevant provisions in the Service Guide limiting recovery by
  a plaintiff to the sum of $50,000.00 are inconsistent with the terms of the
  Convention in the way inconsistency was found in the
Air Canada
case,
supra
.

If for instance, the appellant carrier here were seeking to limit its
  liability to the sum of $1,000.00, that would be "a lower limit than that
  which is laid down in this Convention," namely, the sum of approximately
  $11,000, based on the standard of 250 francs per kilogram set forth in Article
  22(2) of the Convention.

On the basis of
  the reasoning found in the
Air Canada
case,
supra
, any such attempt would be bound
  to fail because of the provisions found in Article 23 of the Convention.

Such an attempt would be out of accord with
  the statutory requirements.

That is
not however what FedEx seeks to do here when it argues that the
  maximum sum it ought to be found liable for on account of damages to cargo
  damaged in transit should not exceed $50,000.00
.

[28]

So long as a contract between
  shipper and carrier does not evade or conflict with the terms of the
  Convention, I consider that parties to a contract for carriage ought to be able
  to set the terms upon which they are prepared to agree.

In my judgment, they did so in this case and
  the agreement that they stipulated is within the required parameters of the
  Convention.

Where I part company with
  the reasoning of the learned trial judge is that I do not agree that provisions
  limiting the maximum liability for damages to the sum of $50,000 should be
  found to be contrary to Article 23 of the Convention, "because their
  effect is to relieve FedEx of the
liability
prescribed by Article
  22(2)".

The amount of liability
  FedEx was prepared to accept, ($50,000.00), is for a sum greater than the
  minimum amount specified in the Convention.

Thus, I see no breach of the Convention by FedEx.

I would therefore, on this issue, reach a
  different conclusion from that reached by the trial judge.

[29]

Turning to the question of
  whether the language used by FedEx is effective to limit its liability for
  cargo damage to the sum of $50,000.00, I conclude it is effective.

Unlike my colleague, I do not consider that
  there is any particular lack of clarity in the wording found on the waybill or
  in the provisions contained in the Service Guide.

The provisions in the Guide are made
  applicable to the contract of carriage by the conditions of the contract set
  out on the rear portion of the waybill.

On the rear portion of the waybill there is found the following language:

Declared Value Limits.

The highest declared value we allow for a
  FedEx Letter/Envelope and FedEx Pak shipment is U.S. $100 or U.S. $9.07 per
  pound (U.S. $20.00 per kilo) (or equivalent local currency), whichever is
  greater.

For other shipments, the
  highest declared value for carriage will differ from country to country and may
  depend on the contents of the shipment.

Please check our Service Guide, our Standard Conditions of Carriage or
  applicable tariff for an explanation of the declared value limits.





[30]

In her reasons, my colleague
  has set forth the relevant terms of a Customs Waiver Agreement made between the
  parties.

As I see it, the purpose of
  that Waiver Agreement was to facilitate the transport of goods from
Canada
to
  the
United States
by providing for a higher maximum declaration of value for customs
  purposes to accommodate the transportation of higher valued cargo.

I note specifically that the Waiver Agreement
  contains this provision:

Notwithstanding any provisions of this
  agreement, the liability of FedEx with regard to any international priority
  shipment shall be limited as set forth in the guide.





[31]

In my view, that language
  should clearly afford notice to a shipper that the carrier seeks to limit its
  exposure to liability for damages to cargo in the manner set forth in the Service
  Guide.

[32]

This was a contract for the air
  carriage of goods from
Canada
to a
U.S.
destination.

By the
  provisions of paragraph (b) found in the Service Guide under the heading "Declared Value and Limits of Liability," it is stipulated that the
  declared value for carriage amount cannot exceed the declared value for
  customs, a sum stipulated by paragraph (j) in this same section to be "CDN
  $50,000".

That provision, in my
  view, is the reason why the Waiver Agreement became necessary.

However, as I noted above, that Agreement
  specifically provides that it shall not effect any change in "the
  liability of FedEx with regard to any international priority shipment (which)
  shall be limited as set forth in the guide".

By paragraph (a) under this heading "For
  greater certainty, the declared value for carriage of any shipment represents
  our maximum liability in connection with a shipment".

[33]

As I interpret the provisions
  of the Service Guide, there is
a congruence
between
  the declared value for carriage amount and declared value for customs amount

see para. (b), quoted
supra.

The maximum declared value for customs is set
  at CDN $50,000.00, (para. (j), and thus the maximum declared value for
  carriage, which I take from the language employed to be CDN $50,000.00, represents
  the maximum liability that FedEx should be found liable for in this case.

My reading of the combined terminology of the
  waybill and the Service Guide leads me to conclude that the appellant should be
  found liable only for that portion of the financial loss occasioned by the
  destruction of the cargo.

[34]

Generally speaking, it would be
  preferable for a disputed issue of this sort, namely, the validity of the
  limitation of liability provisions, to be resolved in the trial court.

However, I can certainly understand why the
  trial judge elected not to resolve the issue, since he did not consider it
  necessary to do so for the purposes of his decision.

In the circumstances extant here, it seems to
  me it would not be useful to remit the issue to the trial court.

We are not dealing here with an issue such as
  credibility but rather with the interpretation of the provisions of a
  contract.

In my view, it would simply
  impose an added cost burden on the parties to remit the issue in such
  circumstances.

I believe this court can
  appropriately address and resolve the sort of issue presented for decision
  here.

[35]

I would allow this appeal and
  direct that the sum recoverable in damages by the plaintiff respondent be
  varied from $214,847 to $50,000.00.

Having regard to the issues argued at trial, I would not interfere with
  the disposition of costs at trial.

I
  would order that the defendant should be entitled to recover its taxable costs
  of the appeal.









The Honourable M
r. Justice Hall






