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May 2008
In this issue:
1. Firm News
2. CIFFA Terms Upheld
3. Dependants Under Marine Liability Act Reviewed
4. Occupiers Duties in Cross Country Ski Injury
5. Freight Monies in Trust
1. Firm News
- Rui Fernandes will be presenting a paper on "Road
and Rail Carriage" on June 9th, 2008 in Vancouver at the
Canadian Maritime Law Association's Seminar Day on "Carriage
of Goods and Passengers in the 21st Century"
- Gordon Hearn was elected to the executive
of the Transportation Lawyers Association at its annual meeting
on May 9, 2008 at Fort Lauderdale, Florida. Gordon will act as
Secretary - Treasurer for the upcoming year. The Transportation
Lawyers Association is an organization of more than 1,000 lawyers
from the United States, Canada, Mexico and Europe representing
providers and users of transportation and logistics services in
all modes of the transportation industry.
- Rui Fernandes' three volume loose-leaf supplemented
text "Transportation Law" published by Aerospark Press
is updated three times per year with new releases. Release 2008-1
is now available. For more information visit the Aerospark Press
website at http://www.aerosparkpress.com/pages/3/index.htm
- Tentative Fernandes Hearn Seminar Schedule
- Keep an eye on our website for location and registration information
- June 19th, 2008 - Personal Injury Claims
- November 6th, 2008 - Insurance and Commercial Litigation Strategies
- January 16th, 2009 - Maritime and Transportation Conference
Program for June 19th, 2008 - Personal Injury
Claims
Lunch: Starts at 12:30 with program starting at
1:30 p.m.
Cost is $20.00 per person including CD
Location: Royal & Sun Alliance Lecture Theatre
RSVP: azar@fernandeshearn.com
or call 416-203-9548
1. Personal Injury Introduction
2. Assumption of Risks and Waivers
3. Social Host Liability
4. Coffee break
5. Investigations, Surveillance, Defense Medicals
6. Damages and Costs
7. Caps, Time Bars, Limitations in Transport Mode
2. CIFFA Terms Upheld
Case Comment on: Locher Evers International v.
Canada Garlic Distribution Inc, 2008 FC 319
A freight forwarder was successful in bringing a summary
judgment for freight owed to it by an importer of garlic. The forwarder
relied upon paragraph 17 of the CIFFA (Canadian International Freight
Forwarders Association) standard terms and conditions which states:
"The Customer shall pay to the Company in cash,
or as otherwise agreed, all sums immediately when due without
reduction or deferment on account of any claim, counterclaim or
set off."
The importer's defense that the CIFFA terms and conditions
were not brought to its attention and that it could set off for
damages to the cargo failed. The court upheld the credit agreement
which the importer signed and which stated:
"Customer" will be bound by the Standard
Trading Conditions ("Conditions") (as amended or revised
from time to time) of the Canadian International Freight Forwarders'
Association Inc. and the Canadian Society of Customs Brokers which
amendments or revisions LEI will, upon request, send to the "Customer".
"Customer" acknowledges having received a copy of said
"Conditions" and "Contract Terms" on or before
the date of this application.
The court found that the CIFFA terms applied and that
the forwarder was not a carrier but an agent of the importer. Justice
Hugessen of the Federal Court found that:
There are constant and consistent references to
the CIFFA terms and conditions in virtually all the documents
emanating from the plaintiff to the defendant, notably in the
Credit Agreement and on the bills of lading mentioned above. I
am persuaded that the former took reasonable steps to draw those
terms and conditions to the defendant's attention. I find that
the CIFFA terms form part of the contractual arrangements between
them.
…In particular I find that the CIFFA terms and conditions
exclude any claim to set-off for alleged claims for damage to
cargo and when read with the face page of the bills of lading
issued in respect of the disputed shipments, make it plain that
LEI was acting as agent for the defendant in concluding the contracts
of carriage and as agent for the carrier in acknowledging receipt
of the goods in apparent good order and condition. LEI was not
the actual carrier, the latter being clearly identified in the
bills of lading. The evidence is virtually all to be found in
contemporary documents and there are no questions of credibility
in this case. I find that there is no genuine issue for trial
and the defense to the claim must fail.
Rui Fernandes
3. Dependants under Marine Liability Act Reviewed
The recent decision of the Federal Court of Canada
in Wilcox v. Miss Megan (Ship), 2008 FC 506 is interesting in that
it looks at dependants' claims under the Marine Liability Act,
2001, c. 6.
On Saturday, May 8, 2004, John Wilcox was lawfully
working on board the fishing vessel Miss Megan when it foundered,
took on water and capsized or partially sank. The deceased drowned;
he was 63 years old at the time of his death.
On April 29, 2005, Patsy Ann Wilcox filed a statement
of claim against Gary Ross Hanley, the owner of the Miss Megan alleging
the wrongful death of her husband pursuant to the Marine Liability
Act, 2001 c.6. The plaintiff made claims for loss of financial
support and loss of valuable services on behalf of herself and her
disabled daughter, Tina Wilcox. The plaintiff also sought damages
for loss of guidance, care and companionship on behalf of herself,
the couple's three adult children, and the deceased's brother and
sister.
The defendants filed a statement of defense dated
May 26, 2005 whereby they admitted liability for the death of the
deceased, but disputed the entitlement to certain damages. By order
dated April 11, 2006, the plaintiffs were granted summary judgment
with costs and the matter was referred for an assessment of the
quantum of damages owed to the plaintiff. On October 2, 2007, Prothonotary
Lafrenière rendered his report allocating and quantified
the damage awards.
On October 30, 2007, the applicants filed a notice
of motion to appeal the report pursuant to Rule 163(1) of the Federal
Court Rules, above.
This decision is the appeal of Prothonotary Lafrenière's
report in the decision Patsy Ann Wilcox v. "Miss Megan"
et al., above.
Prothonotary Lafrenière's report addressed
the following three issues: (1) the eligibility of the deceased's
siblings to seek damages, (2) pecuniary losses suffered by the deceased's
widow and disabled daughter, and (3) damages for care, guidance
and companionship. Issues (1) and (2) are discussed below.
A. Eligibility of the deceased's siblings to seek
damages
With regards to the question of eligibility, Prothonotary
Lafrenière reviewed sections 6 and 4 of the Act which grant
the opportunity to recover damages and limit eligibility to recover,
respectively. A question arose at trial as to whether the deceased's
siblings qualified under subsection 4(c) of the Act to claim damages.
The Marine Liability Act provides:
4. In this Part, "dependant", in
relation to an injured or deceased person, means an individual
who was one of the following in relation to the injured or deceased
person at the time the cause of action arose, in the case of an
injured person, or at the time of death, in the case of a deceased
person:
(a) a son, daughter, stepson, stepdaughter,
grandson, granddaughter, adopted son or daughter, or an individual
for whom the injured or deceased person stood in the place of
a parent;
(b) a spouse, or an individual who was cohabiting
with the injured or deceased person in a conjugal relationship
having so cohabited for a period of at least one year; or
(c) a brother, sister, father, mother, grandfather,
grandmother, stepfather, stepmother, adoptive father or mother,
or an individual who stood in the place of a parent.
The applicants argued that the words "brother,
sister" must be read as qualified by "an individual who
stood in the place of a parent. In other words a brother or sister
were only eligible if they stood in the place of a parent to the
deceased.
Prothonotary Lafrenière stated at paragraph
10 of his report that words contained in a statute are to be given
their ordinary meaning and that other principles of statutory interpretation
"only come into play where the words sought to be defined are
ambiguous.
Prothonotary Lafrenière found at paragraph
12:
There is simply no ambiguity in paragraph
4(c). Persons who stood in the place of a parent are a separate
class of individuals set out in paragraph 4(c) of the Act who
might qualify as a dependant. This interpretation is consistent
with the French version of the provision which refers to "toute
autre personnne", that is, any other individual who does
not fit within the class of family members listed.
Consequently, the deceased's siblings were entitled
to claim damages as dependents pursuant to the Act.
B. Damages for Loss of Care, Guidance and Companionship
With regards to the damages claimed for loss of care,
guidance and companionship, Prothonotary Lafrenière noted
that paragraph 6(3)(a) of the Act provides for the recovery of these
damages, but the Act fails to provide guidance on quantifying the
amounts. Prothonotary Lafrenière discussed two approaches
taken in various jurisdictions, but in the end found that the legislative
provisions in the Province of Ontario bore the closest resemblance
to section 6 of the Act in both form and effect. Prothonotary Lafrenière
discussed the Supreme Court's decision in Augustus v. Gosset, 1996
CanLII 173 (S.C.C.), [1996] 3 S.C.R. 268, stating at paragraph 90:
[…] the Supreme Court signalled its acceptance
of the approach taken by the Ontario Courts for a full assessment
of the evidence on a case-by-case basis, and has rejected a conventional
award approach in jurisdictions where there does not exist an
amount stipulated by statute. Various factors should be considered,
including the circumstances of the death, the ages of the deceased
and the dependant, the nature and quality of the relationship
between the deceased and the dependant, the dependant's personality
and ability to manage the emotional consequences of the death,
and the effect of the death on the dependant's life.
The appeal was dismissed.
Rui M. Fernandes
4. Occupiers Duties
Owner of Recreational Parkland Found
Liable for Injuries Sustained
by Cross-Country Skier:
Know Your "Occupier's Duties" -
Schneider et al v. St. Clair Region Conservation Authority et
al (2008) 89 O.R. (3d) (Ont. Sup. Ct.)
This case should concern any insurer, owner or manager
of lands advertised and promoted for recreational use by members
of the public. The approach taken by the court in this case can
apply equally to marinas, outdoor parks or recreational facilities.
The Facts
The St. Clair Region Conservation Authority ("St.
Clair") owns a 67-acre conservation area in southwestern Ontario.
This is known as "Coldstream Park". Coldstream Park is
available on a year round basis to residents for recreational activities.
A river works its way through the park, and many years ago a concrete
wall had been constructed related to a dam facility. This wall is
located 10 feet from the shore and about 4 feet of water, rising
some 6 inches above water level. The structure is 15 feet long with
a thickness of 1 foot. It has not been in use for many years and
remains only for visual effect purposes.
St. Clair developed the property for use by the general
public for recreational purposes. It contains a trail system, a
wooden boardwalk marked by signs and maps and other facilities including
soccer fields and playground equipment. Activities during the summer
include daycare, soccer leagues and camping and in the winter the
park is used for hockey, hiking, tobogganing and skating. The park
is also used for cross-country skiing, both on and off the trails
and on the ice surface of the river.
The Accident
January 30, 2005 was a sunny and clear day. The plaintiff,
Angela Jo-Anne Schneider, decided to go on a cross-country ski outing
with her family at the Coldstream Park. The snow in the park was
sufficient for cross-country skiing purposes and the aforementioned
concrete wall was covered with snow - there being more than 6 inches
worth of snowfall. The family skied in single file with the plaintiff
leading. Various ski tracks and footprints were followed along the
boardwalk and then, when reaching a berm located along the shoreline
the plaintiff left the trail and followed existing "herring
bone" ski marks in the snow leading to the top of the berm.
The plaintiff then skied down the berm to the ice surface on the
river, and during this process she struck her right ski on an unknown
and unexpected object below the snow on the ice, being the concrete
wall. Although the plaintiff had frequented the area on many occasions
and lived nearby, she had never seen this concrete structure before.
It was located in a part of the river that she would not normally
visit. There was no signage to indicate or warn of the presence
of this structure.
The plaintiff sustained a compound fracture of three
bones in her right ankle. She underwent an operation under general
anesthesia the following day and was involved in an extended period
of rehabilitation and recovery, involving significant pain and limitations
on her employment functioning.
The Lawsuit
The plaintiff (and her husband, who claimed Family
Law Act damages) sued St. Clair (as well as the Township in
which the property was situate), as occupiers, on the basis that
they breached their duty to care to her by failing to visually or
otherwise identify or mark as a hazard the presence of the concrete
wall of which she was not aware.
The Township denied that it was an occupier of the
lake within the park where the accident occurred. (Ultimately, the
Township prevailed in this argument: during the summer months it
carried on certain functions in the area but during the winter months
it had no involvement with the park whatsoever. It was ultimately
found to be not liable because it was not an "occupier"
at the time of the loss). The remaining defendant, St. Clair, argued
that while it was an occupier that its duty of care was restricted
to the following standard as set forth in the Occupiers Liability
Act, R.S.O. 1990, c. O.2, which provides:
Risks Willingly Assumed
4(1) The duty of care provided for in subsection
3(1) [see below] does not apply in respect of risks willingly
assumed by the person who enters onto the premises, but in that
case the occupier owes a duty to the person to not create a danger
with a deliberate intent of doing harm or damage to the person
or his or her property and to not act with reckless disregard
of the presence of the person or his or her property.
The defendant argued that the above section of the
Act governed, and that the plaintiff was deemed to have willingly
assumed the risks associated with her cross-country ski activities
and that accordingly, they did not owe a duty to her other than
to simply not deliberately create a danger or to recklessly create
a danger.
The court disagreed, ruling that instead the general
duty of care was in fact owed by St. Clair to the plaintiff as follows:
Occupiers Duty
3(1) An occupier of premises owes a duty to
take such care as in all of the circumstances of the case is reasonable
to see that persons entering on the premises, and the property
brought on the premises by those persons are reasonably safe while
on the premises.
The court did not accept the defendant's argument
that it was not reasonable or practical to have marked the concrete
wall with signage to alert the users of the park, particularly skaters
and cross-country skiers, of its presence in the ice. The court
reasoned that while the lesser standard at section 4 above might
well apply in case of "rural premises", or "vacant"
or "undeveloped" properties, that on a common sense basis
the parkland in question, while expansive at 67 acres, did not meet
any of those specific types of non-usage of land (which, by virtue
of other parts of the Occupiers Liability legislation, limit
the duty of care owed to that set forth at section 4 above). The
court noted that the park had been used for recreational purposes
and was advertised, promoted and encouraged by the defendants for
use by the public. Further, the evidence was clear that cross-country
skiing was an expected use of the park. The court found on the evidence
that St. Clair had installed the concrete wall, and thereby knew
of its location, design and appearance and the like and further
that the wall had not been in use for more than 15 years and that
it no longer served any purpose or utility. The court also found
that St. Clair should have known that the concrete wall, barely
visible above the water surface, would likely be covered by a blanket
of snow in the winter and thus either partially or entirely hidden
from view and also that the defendant should have known that the
park, including the river, was regularly used by skaters and cross-country
skiers during the winter months.
The court found that on the day of the accident the
concrete wall was hidden beneath the snow surface and, as such,
had become a trap, although not intentionally or deliberately set.
The court found that any users of the park could easily have been
alerted of its presence with adequate signage erected at minimal
cost.
The court ruled that an occupier of lands may not
have a duty to clear lands of any natural objects, being part of
the natural or expected terrain of the park, however that once a
non-natural object, such as a concrete wall, was constructed and
introduced to the lands, that the occupier had a duty to keep this
object from interfering with the normal and promoted use of the
park. The court held that an occupier is not expected to guard against
the contingency of every possible accident, but was to fulfill its
duty of care obligation under section 3 produced above by exercising
reasonable care against dangers that were sufficiently and normally
reasonable.
Accordingly, St. Clair was found 80% liable for not
posting adequate warnings or signage. The court found the plaintiff
contributorily negligent for 20% of her injuries simply on the basis
that cross-country skiing does have possible inherent dangerous
consequences and therefore there was a modest degree of assumption
of risk.
Conclusion
The duty of care set forth by the Occupiers Liability
Act is of course fact specific and can only be assessed on a
case-by-case basis. The above commentary by the judge about the
obligation for an occupier to ensure that non-natural objects on
the premises do not interfere with the normal and promoted use of
the park spells out very clearly a due diligence exercise for all
occupiers of lands upon which members of the public are to be invited.
Gordon Hearn
5. Freight Monies in Trust
In the Matter of the Bankruptcy
of Norame Inc.:
The Ontario Court of Appeal Again Weighs in on the Protection of
Freight Monies due to Carriers as Being Trust Funds
[2008] O.J. No. 1580
In a judgment released at the end of April, the Ontario
Court of Appeal ruled once again on a dispute between an unpaid
carrier and secured interests of a load broker who became insolvent
before the payment of freight monies [collected by the broker] earmarked
for the carrier. This case involved a priority dispute for freight
monies as between an unpaid carrier and the trustee having in mind
the interest of secured creditors.
Norame Inc. carried on business as a load broker,
arranging the transportation of goods for various shipper clients.
One such shipper client was Dimplex North America.
Norame Inc. engaged a carrier, Vitran Corporation,
as a carrier to ship goods for Dimplex North America. At some point
in time, before Vitran Corporation was paid freight monies owing
to it, Norame Inc. filed a voluntary assignment into bankruptcy.
Prior to this, Norame Inc. had co-mingled or mixed the monies received
from various shipper customers, being freight charges intended for
carriers, with its own funds, rather than segregating those funds
as was the requirement under the then existing Load Brokers Regulation
(Ontario Regulation 556/92). Then, as at present (albeit under a
different current legislation) intermediaries receiving monies from
shippers or consignees of goods intended to be paid to carriers
for freight charges were obliged to hold them in a separate trust
account.
As mentioned, Norame Inc. failed to do so. Such monies
not being maintained as a proper "trust", in accordance
with common law requirements, the Ontario Court of Appeal earlier
ruled that any such co-mingled monies became part of the estate
of the bankrupt to then fall under the usual priority distribution
rules under bankruptcy law (see GMAC Commercial Credit Corp.
- Canada v. TTC Logistics Inc. (2005) 74 O.R. (3d) 382) wherein
a secured creditor, (ie. GMAC, in the case just mentioned), wins
the priority dispute.
The question in the present case concerned what was
to be done as concerns monies received after the filing in
bankruptcy. In this particular case, after the bankruptcy of Norame
Inc., the trustee brought an application for advice and directions
to the court. An order was issued that all monies owed by shippers
in respect of carriage services be paid to the trustee to be held
in a separate account, pending further orders of the court. Eventually,
the court ruled that those funds, which the trustee had received
and segregated, satisfied the conditions for a trust and accordingly
had to be paid to Vitran Corporation. The trustee was unable to
concede that this carrier had priority to the funds. The carrier
argued that it was entitled to the funds pursuant to Section 67(1)(a)
of the Bankruptcy and Insolvency Act which provides that
a bankrupt's property is available for distribution to creditors
however such does not include "property held by the bankrupt
in trust for any other person".
It should be recalled that Section 15 of the then
existing Load Brokers Regulation provides that every load
broker "shall hold in trust for the benefit of the carriers
to whom the load broker is liable all of the money that the load
broker receives in respect of the carriage of goods". The
trustee maintained that it held the funds for distribution to Norame
Inc.'s creditors pursuant to the Bankruptcy and Insolvency Act.
Citing the GMAC Commercial Credit Corp. - Canada v. TTC Logistics
precedent, the court ruled that it had been concluded that any statutory
deemed trust created by Section 15 of the provincial Load Brokers
Regulation would not be a trust for the purposes of Section
67(1)(a) of the Bankruptcy and Insolvency Act, and thereby
excluded from distribution to creditors, unless it otherwise
conformed with the three common law trust principals of certainties
of intention object and subject matter - specifically, that the
funds be segregated.
The GMAC case was analogous to some degree,
as in that case an interim receiver was appointed to assume the
business of the load broker who failed in that case (TTC Logistics).
The GMAC Commercial Credit case culminated in a finding that
the interim receiver was bound by the s. 15 Regulation trust obligation
with regard to carrier freight charges that it collected after the
receivership's commencement and that it was required to segregate
those funds in trust.
In this case, the trustee in bankruptcy attempted
to argue that it was not subject to the same rules as it did not
"step into the shoes of Norame Inc." as the bankrupt to
continue its business - as the receiver did in the GMAC Commercial
Credit Corp. case. However, the court held that there was no
difference between a receiver carrying on the business of a company
with a trustee in bankruptcy for the purposes of such a priority
dispute and that a trustee in bankruptcy, upon receiving funds that
were to be segregated and held in a separate trust account, would
continue to hold those funds in accordance with the provincial regulation
(Section 15) for the benefit of the unpaid carrier as beneficiary.
In conclusion, the court ruled in favour of the unpaid
carrier with this priority dispute in holding that a load broker's
creditors were not entitled to monies paid to the trustee in bankruptcy
in respect of a carrier's shipping services where those funds had
been segregated into a separate trust account.
Gordon Hearn
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