



COURT OF APPEAL FOR ONTARIO

CITATION: National Refrigerator & Air Conditioning Canada
    Corp. v. Celadon Group Inc., 2016 ONCA 339

DATE: 20160505

DOCKET: C60833

Sharpe, LaForme and van Rensburg JJ.A.

BETWEEN

National Refrigeration & Air Conditioning
    Canada Corp.

Plaintiff (Respondent)

and

Celadon
    Group Inc., Celadon Canada Inc. and Celadon Trucking
    Services Inc.

Defendants (Appellants)

Rui Fernandes and David Huard, for the appellants

Philip Cho, for the respondent

Heard: April 20, 2016

On appeal from the judgment of Justice Sandra Chapnik of
    the Superior Court of Justice, dated July 20, 2015.

By the Court:

[1]

National Refrigeration & Air Conditioning Canada Corp. is a
    manufacturer of commercial refrigeration products. In October and November
    2011, National hired Celadon Group Inc., Celadon Canada Inc., and Celadon Trucking
    Services Inc. (collectively Celadon) to transport two shipments of copper
    tubing from Mexico to Ontario. Both shipments were hijacked in Mexico and never
    recovered. National submitted a claim for loss and damage for US$122,228.46 and
    US$98,700.52 respectively. Celadon denied both claims relying on exclusion of
    liability clauses contained in Celadons Rules and Regulations and posted on Celadons
    website. National commenced an action to recover damages.

[2]

After a three-day trial, the trial judge found that Celadon could not
    rely on the exclusionary terms, not having notified National of those terms,
    and, that in any event, the exclusionary terms were unconscionable.  She also
    found that the value of the goods had been declared on the commercial invoice
    contained in the shipping documents and that those documents formed part of the
    contract of carriage. Consequently, Celadon could not rely on the statutory
    limitation of liability to $4.41 per kilogram pursuant to
Carriage of Goods
,
    O. Reg. 643/05 under the
Highway Traffic Act
, R.S.O. 1990, c. H.8.

[3]

The trial judge also found that independent of the carriage agreement,
    Celadon was liable in negligence. This was because Celadon had specific
    knowledge about the enhanced risk of hijacking in Mexico that gave rise to a
    duty to warn National of the increased danger.

(1)

Exclusion of liability

[4]

The central issue on appeal is whether the exclusion of liability clauses
    contained in Celadons Rules and Regulations posted on Celadons website apply
    to the shipments in question.

[5]

Celadon argues that the trial judge erred by rejecting Celadons
    submission that liability was excluded by standard term 490: For shipments out
    of Mexico, Celadons liability begins when our trailer is delivered to the Celadon
    facility in the U.S. Mexican cargo insurance is available from customs broker.
    Celadon also relies on term 115, a provision stating [c]arrier is not liable
    for loss or damage occurring in Mexico and liability for Mexican carrier is
    limited.

[6]

The trial judge found that the exclusionary terms did not form part of
    the carriage agreement because they were not brought to Nationals attention
    and further found that term 490 was ambiguous and did not apply in this case.

[7]

The applicability of the exclusionary terms is a question of mixed fact
    and law that attracts deference on appeal. We do not agree with Celadons
    contention that the trial judge erred by failing to take into account the
    entire factual matrix concerning the applicability of any limitation of
    liability.

[8]

We need only deal with the issue whether the exclusionary clauses were
    brought to Nationals attention so as to form part of the parties agreement.

[9]

As the trial judge noted, the parties had previously contracted for the
    shipment of goods and, on those occasions, National was provided with a Rate
    Notification Agreement (RNA) containing the same exclusion of liability term.
    However, those shipments involved transportation from Canada to Mexico, not
    from Mexico to Canada, and by the time of the October and November 2011 shipments,
    the RNA had changed and no longer contained the exclusion of liability clause.

[10]

Contrary to Celadons submission, the trial judge did take into account
    the e-mail sent by Celadon to National confirming the contract of carriage and
    stating Please note that these rates do not include fuel and are subject to
    current rules and accessorials. Nationals employee responsible for taking the
    arrangements testified that he was not provided with copies of the terms relied
    on by Celadon and that there was no discussion, either in writing or orally,
    about limiting liability when transporting goods from Mexico.

[11]

Relying on the decision of this court in
Trigg v. MI Movers
    International Transport Services Ltd.
(1991), 4 O.R. (3d) 562 (C.A.), at
    p. 565, leave to appeal  refused, [1992] 1 S.C.R. ix (S.C.C.), the trial judge found
    the following, at para. 55 of her reasons:

[T]he clauses in question were not brought to [Nationals]
    attention at the time that the agreement for shipment was reached with respect
    to the October or November shipments. [National] cannot be said to have
    assented to the inclusion of the exclusion of liability clause in the parties
    contract.

[12]

In our view, that finding was not tainted by legal error and was
    clearly supported by the record. We see no basis for appellate intervention.

(2)

Notice following the first shipment

[13]

Celadon submits that National had sufficient notice of the exclusionary
    clause following the first shipment in October 2011 because of Celadons
    response to Nationals claim for the value of the goods lost on that shipment.

[14]

We disagree.

[15]

Celadons employees rejection of the claim was equivocal at best: I
    have not thoroughly reviewed the contract but would guess that Celadon has no
    liability if this was stolen in Mexico. I certainly will double check that and
    advise. National was not advised that its claim was rejected prior to the
    November 2011 shipment.

[16]

We see no reason to interfere with the trial judges conclusion that
    this response was insufficient to bring the exclusionary clause to the
    attention of National for the purpose of the second shipment. Moreover, the
    fact that Celadons representative himself was uncertain about the status of
    the claim supports the trial judges finding on the first issue, namely, that
    the documents relied on by Celadon failed to bring to National's attention the
    exclusion of liability clause.

(3)

Statutory limitation of liability

[17]

Celadon submits that, in the alternative, even if the exclusion of
    liability clause does not apply, liability is limited by s. 9 of Schedule 1 of
    Ontario Regulation 643/05 because the contract is governed by Ontario law.
    Section 9 provides that carrier liability is limited to $4.41 per kilogram
    unless s. 10 is satisfied. Section 10 provides the following:

If the consignor has declared a value of the goods on the face
    of the contract of carriage, the amount of any loss or damage for which the
    carrier is liable shall not exceed the declared value.

[18]

There was no declared value on the bill of lading. The trial judge found
    that as a copy of the commercial invoice issued by the Mexican consignor to
    National was provided to the carrier, s. 10 was satisfied.

[19]

In our view, the trial judge erred in law in so finding.

[20]

The terms of s. 10 are clear. The consignee must declare the value of
    the goods on the face of the contract of carriage. Section 4(1) of the
    regulation specifies what a contract of carriage must contain and that
    specification includes (i) a space to show the declared valuation of the
    shipment, if any.

[21]

The bill of lading used for these shipments met the specifications of s.
    4 and included a space to show the declared value of the shipment. That space
    was not completed for these shipments. The invoice issued to National by the
    consignor had nothing to do with the contract of carriage and providing a copy
    of the invoice to the carrier was not declaring the value of the goods on the
    face of the contract of carriage within the meaning of the regulation. Moreover,
    Nationals employee responsible for making the shipping arrangements testified
    that it was not Nationals practice to declare the value of the shipment.

[22]

We conclude, accordingly, that the trial judge erred by failing to limit
    Nationals claim to the value permitted by the regulation, namely, $110,830.

(4)

Unconscionability

[23]

As we have concluded that the trial judge did not err in holding that
    the exclusion of liability clause did not apply, it is not necessary for us to
    deal with her finding of unconscionability. Our silence, however, should not be
    taken as agreeing with that finding.

(5)

Tort

[24]

Given our conclusion with respect to the statutory limitation of
    liability for the contract of carriage, it is, however, necessary for us to
    consider the trial judges alternative theory of liability. Namely, that Celadon
    was liable in tort for failing to warn National of the increased risk of
    shipping goods from Mexico and for failing to ensure that instruction operated
    in a safe and effective manner.

[25]

We agree with Celadon that the trial judge erred in law by holding that Celadon
    could be liable in tort in the circumstances of this case.

[26]

Any failure or neglect on the part of Celadon with regard to the
    shipments arose directly out of the duties associated with performance of the
    contract of carriage and did not give rise to an independent duty in tort: see
M.A.N.
     B & W Diesel v. Kingsway Transports Ltd.
(1997), 33 O.R. (3d) 355
    (C.A.), at pp. 360-61;
Central Trust Co. v. Rafuse
, [1986] 2 S.C.R.
    147, at p. 205.

Disposition

[27]

Accordingly, we would allow the appeal in part and reduce the amount of
    the judgment in favour of National to $110,830. If the parties are unable to
    agree as to costs, they may make brief written submissions.

Released: May 5, 2016



Robert J. Sharpe
    J.A.

H.S.
    LaForme J.A.

K. van Rensburg J.A.


