this newsletter in PDF
In this issue:
1. Firm and Industry News
2. Five Recent Updates - Commentary
a) Aboriginal Groups Must Follow Statutory
b) Certain Provisions Of Railway Safety Act in Force May 1, 2013
c) Court Challenge to Proposed Wind Generation Project Dismissed
d) Ontario Courts Cannot Validate Foreign Service of Claims Where
the Hague Convention Applies
e) Court Holds Sunlight is a Contaminant!
3. The Marine Liability Act Governs Contracts for the Carriage of Goods by Water - But Not Contracts
for the Charter of a Ship
4. Ontario Court of Appeal Enforces Insurance Policy 1 Year Contractual
5. The Duty of Care Owed by Public Carriers of Passengers
1. Firm and Industry News
- Fernandes Hearn LLP is pleased to announce
that the Firm has been listed for inclusion in Chambers and Partners
Global 2013 as one of the best "Shipping" Law Firms
- Rui Fernandes will be presenting on a panel
on "Law & Order: Police and Criminal Investigation in
the Boating and Small Vessel Sector" at the annual seminar
of the Canadian Maritime Law Association on June 7th, 2013 in
- Kim Stoll will be representing the firm
at The Toronto Transportation Club's Women in Transportation Conference
and Luncheon on June 11 2013.
- Gordon Hearn will be representing the Firm
at the Conference of Freight Counsel meetings to be held in Washington,
D.C. on June 16 and 17.
- Rui Fernandes will be presenting a paper
on "Constitutional Jurisprudence in Transportation Law -
Perspectives on Canadian Federalism and the Division of Powers"
at the Commons Institute Seminar on Supreme Court and Constitutional
Litigation in Toronto on June 27th, 2013.
- Gordon Hearn will be speaking at the 2013
T2 meeting of the Transported Asset Protection Association (Americas)
at Redmond, WA on July 11th on "Managing Risks in Intermodal
Contracts of Carriage".
2 (a). Aboriginal
Groups Must Follow Statutory Procedures
In May the Supreme Court of Canada released its decision
in Behn v. Moulton Contracting Ltd., 2013 SCC 26. The Court
affirmed that Aboriginal groups seeking to challenge the validity
of permits or authorizations granted to resource developers must
follow the legislatively mandated process to do so. An Aboriginal
group that chooses to forgo legal remedies will not be permitted
to (a) employ "self-help" remedies to challenge the permitted
undertaking; or (b) defend against the enforcement of those permits
in civil proceedings by challenging the validity of validly issued
authorizations based on a breach of the duty to consult and of treaty
rights. The Supreme Court concluded that allowing these actions
would bring the administration of justice into disrepute and amount
to a repudiation of the duty of mutual good faith underlying the
Crown's constitutional duty to consult First Nations.
The decision is significant to proponents of industrial
projects that trigger environmental assessments and Aboriginal consultation
obligations. It provides strong authority that Aboriginal groups
and other parties must advance their grievances in the appropriate
legal forum. When permits are issued and not formally challenged
through a legislatively mandated process, proponents that take steps
to act on those permits will be afforded a high degree of protection
against self-help remedies, such as blockades, or collateral attacks
on the validity of validly issued permits.
2(b). Certain Provisions Of Railway Safety Act
in Force May 1, 2013
On May 1, 2013, all provisions of An Act to amend
the Railway Safety Act and to make consequential amendments to the
Canada Transportation Act (the Act), other than sections 10,
12, 43 and 44, subsections 7(2), 11(2) and 14(2) to (5) of the Act
and paragraphs 41(2)(g) and 46(g) of the Railway Safety Act [as enacted by subsection 32(2) and section 35 of the Act], came
Intended to improve rail safety in Canada, the legislative
changes are designed to encourage rail companies to maintain a culture
of safety and will penalize rule breakers. Further, a new regulation-making
authority will increase the importance of environmental management
in the Railway Safety Act by requiring the railway industry to operate
in an environmentally responsible manner.
The Act received Royal Assent on May 17, 2012. The
sections coming into force make several changes to Canada's federal
rail safety regime, including:
a) strengthening the Department's enforcement powers
by introducing an administrative monetary penalty scheme, and increasing
existing judicial penalties;
b) reflecting the central importance of safety management
systems, and including provisions for an "accountable executive"
for safety, and, in the case of a railway company, an internal non-punitive
reporting system by railway employees;
c) clarifying the authority and responsibilities of
the Minister of Transport, Infrastructure and Communities in respect
of railway matters, including the responsibility for the development
and regulation of matters to which the RSA applies, the authority
to enter into coordination agreements with the Canadian Transportation
Agency and the authority to order a company to provide information
and documentation for the purposes of ensuring compliance;
d) expanding regulation-making authorities generally,
and including such areas as environmental protection, fire prevention
and control, fees and charges and administrative monetary penalties;
e) allowing for clarification of the rule-making process
by introducing the authority to make regulations setting out the
process for the formulation, revision and amendment of rules and
by permitting third parties to develop and submit rules on behalf
of a company.
2(c). Court Challenge to Proposed Wind Generation
In Wiggins v. WPD Canada Corporation 2013 ONSC
2350 the claimants brought a claim for damages and injunctive relief
against the proponent of a wind turbine project. The claim for $16.6
million against a prospective wind project was dismissed on a summary
The Court found that the project had yet to receive
its final renewal energy approval from the Ministry of the Environment
as required by s. 47.3 of the Environmental Protection Act,
R.S.O. 1990, c. E.19.
The Court stated that it would be inappropriate -
and also impossible - to decide the claims advanced by the plaintiffs
on a proposed project that could be subject to amendments in its
design plan under the regulatory process, which had not yet been
The plaintiffs had led evidence demonstrating that
nearby residents had already suffered a diminution in property values
and interference with the use and enjoyment of their properties.
However, the Court found that the plaintiffs had failed to show
that the diminution was caused by the defendants. Further, the Court
concluded that the plaintiffs' evidence relating to anticipated
adverse health effects once the turbines commenced operation was
too speculative to merit injunctive relief or a full trial before
an renewal energy approval was issued.
2(d). Ontario Courts Cannot Validate Foreign Service
of Claims Where the Hague Convention Applies
In the recent decision of Khan Resources Inc. v.
Atomredmetzoloto JSC, 2013 ONCA 189 the Ontario Court of Appeal
held that an Ontario court cannot dispense with or validate foreign
service when a contracting state refuses to facilitate service under
the Hague Convention on the Service Abroad of Judicial and Extrajudicial
Documents in Civil or Commercial Matters.
Khan Resources Inc. engaged in a joint venture to
develop a uranium mining property in Mongolia with Atomredmetzoloto
JSC. Khan Resources Inc. is an Ontario corporation and Atomredmetzoloto
JSC is a Russian corporation in which the Russian State Atomic Energy
Corporation has a controlling interest. In August 2010, an action
was commenced in Ontario against Atomredmetzoloto JSC by Khan Resources
Inc. seeking damages in the amount of $300 million.
Canada and Russia are contracting states to the Convention.
As such the Convention governed service of Khan Resources Inc.'s
statement of claim on Atomredmetzoloto JSC in Russia. In December
2010, the Russian Ministry of Justice informed Khan that pursuant
to article 13 of the Convention, it was refusing to serve Khan's
statement of claim on the basis that effecting service would infringe
its sovereignty or security.
The Court held that the Convention requires contracting
states to designate a central authority to serve foreign proceedings
and permits states to refuse to serve proceedings if they infringe
on sovereignty or security. As an Ontario court will not grant final
judgment against a defendant unless that defendant has been served,
a foreign state can prevent the plaintiff from seeking the assistance
of Ontario courts and require that plaintiff to start its action
in the foreign court. This decision, which underscores the risks
involved when litigating international business disputes, confirms
that rule 17.05(3) of the Rules of Civil Procedure - which incorporates
the Convention into Ontario law - is a complete code for service
on foreign defendants in contracting states. In short, plaintiffs
must comply with the Convention.
2(e). Court Holds Sunlight is a Contaminant!
The Environmental Protection Act, RSO 1990,
c. E.19 prohibits the discharge of a contaminant into the natural
environment if that discharge causes an adverse effect.
In a private prosecution brought by a nominal prosecutor,
an employee of "Ecojustice", an environmental advocacy
group, two corporations were charged with a number of regulatory
or public welfare offences related to the harming, injury or death
of birds. The offences at issue are set out in two provincial statutes
(the Ontario Society for the Prevention of Cruelty to Animals
Act and the Environmental Protection Act) and the federal
Species at Risk Act.
In Podolsky v. Cadillac Fairview Corp. 2013
ONCJ 65 (CanLII) the Court accepted the explanation of a scientific
expert that sunlight reflected from the windows of a building owned
by the defendants could be considered an "emission" of
"radiation" and thus would fall within the statutory definition
of a contaminant under the Environmental Protection Act. Therefore,
the Court found that the defendants had discharged a contaminant
- reflected light - that caused an adverse effect, namely the bird
The Court also accepted that the unintentional and
inadvertent bird collisions at the building were sufficient to ground
the defendants' liability for "killing" or "harming"
an endangered or threatened species, which is prohibited under section
32(1) of Species at Risk Act.
The Court then considered whether the defendants could
prove that they exercised sufficient due diligence and reasonable
care to establish a lack of fault. The Court accepted that the defendants
had exercised sufficient due diligence by complying with municipal
building and industry standards; implementing and maintaining a
policy to respond to nocturnal light pollution; cooperating with
environmental advocacy groups in bird-strike tagging programs; and
conducting test installations of window treatments designed to deter
bird strikes. The defendants were found not guilty of the charges.
3. The Marine Liability Act Governs Contracts for
the Carriage of Goods by Water - But Not Contracts for the Charter
of a Ship
We reported on the interesting case of Mercury
XII (Ship) v. MLT-3 in the June, 2012 edition of this Newsletter.
That report concerned the trial level decision in the Federal Court
of Canada. The case since went to the Federal Court of Appeal. The
disposition of the case, reported in reasons recently released (*1)
provides further insight into the application of the Marine Liability
Act (*2) to the carriage of goods on a ship. The matter concerned
more than a legalistic discussion - if the Marine Liability Act
applied to the facts of this case, the plaintiff's claim would be
time barred on account of being commenced too late.
Wells Cargo Equipment Financing Company ("Wells
Fargo") owned a 2001 Freightliner truck equipped with a flatbed
and fitted crane (the "Truck"). The Truck was leased to
C & C Machine Movers and Warehousing Inc. ("C & C").
C & C was hired by a customer to use the Truck for the carriage
of building materials to a site on Grambier Island near Vancouver.
The building site was on an island. C & C had to arrange for
the Truck with its cargo of construction materials to be conveyed
by ship to the island.
Pursuant to a long-standing business arrangement,
C & C engaged Mercury Launch and Tug Ltd. ("Mercury")
to provide a tug and barge for the movement of the Truck to the
island. On December 4, 2007 the Truck was loaded onto a barge (the
"MLT-3") on the mainland for transfer to the island. As
reported in our earlier article, fate intervened when the Truck
was being loaded back onto the MLT-3 for return to the mainland
at the end of the day: It was getting dark, with the tide lowering
considerably. The mooring lines connecting the MLT-3 to the shore
had been untied from the shore. As the Truck driver was backing
the Truck onto the barge-loading ramp, he could see in his rearview
mirror the tugboat captain directing him. When the rearmost axle
of the Truck was just off the barge ramp and onto the MLT-3, the
driver noted that the barge was starting to leave the shore. The
Truck driver applied the airbrakes in the hope that this would lock
the rear wheels to the deck of the MLT-3 and the front wheels to
the shore ramp, preventing further movement of the MLT-3 from the
shore. Unfortunately, this manoeuvre did not work. While applying
the airbrakes, the Truck driver heard the front bumper hitting the
shore rocks with the Truck then sinking with the cab filling with
water. Efforts to save the truck were unsuccessful and it sank in
55 feet of water.
At the Federal Court of Canada - Trial Division
Wells Fargo and C & C commenced an action against
the MLT-3 and the tug Mercury XII and their owners and the tug captain
for damages for the loss of the Truck and the items contained thereon.
At trial, the Court found that the plaintiffs' were entitled to
damages for 90% of their proven losses and associated expenses,
but were found 10% contributorily negligent on the basis that the
Truck driver ought not to have attempted to use the brakes to prevent
the further movement of the MLT-3 from shore. The judge had found
that the Mercury XII was negligent in its failure to secure its
mooring lines on shore to the MLT-3. With a lowering tide, a prudent
skipper would have taken steps to secure the barge. Despite this
lack of security, the tug captain nonetheless signaled the truck
driver to back the Truck onto the barge, which constituted negligent
At the trial, Mercury argued that the plaintiffs'
action was out of time. Section 43(1) of the Marine Liability
43(1) the Hague-Visby Rules have force of law in
Canada in respect of contracts for the carriage of goods by water
between different states as described in Article X of those Rules.
(2) the Hague-Visby Rules also apply in respect
of contracts for the carriage of goods by water from one place
in Canada to another place in Canada, either directly or by
way of a place outside of Canada, unless there is no bill of lading
and the contract stipulates that those rules do not apply.
Article III, paragraph 6 from the Hague-Visby Rules
the carrier and the ship shall in any event
be discharged from all liability whatsoever in respect of the
goods, unless a suit is brought within one year after their
delivery or of the date when they should have been delivered.
This period may, however, be extended if the parties so agree
after the cause of action has arisen".
The trial judge found that the case was not time-barred
on the basis that Mercury did not issue a bill of lading for the
tow in question and that there was no expectation on the part of
any of the parties that a bill of lading would be issued. The judge
also based his decision on a ground that had not been argued by
counsel at the trial that the contract respecting the carriage was
oral and it appears that the judge determined that there was an
agreement that the Hague Visby Rules were not to apply. Accordingly,
both requirements of Section 43(2) being satisfied, the Hague-Visby
Rules did not apply and the plaintiff's case was therefore not out
Counsel for both sides agreed that the trial judge
was incorrect in suggesting that subsection 43(2) of the Marine
Liability Act limited the application of the Hague-Visby Rules
to written contracts. Counsel for Mercury argued that the
judge erred in stating that the Hague-Visby Rules did not apply
simply because no bill of lading had been issued. Counsel for Mercury
submitted that, properly interpreted, subsection 43(2) provides
that the Hague-Visby Rules applies to a contract for the carriage
of goods by water within Canada, unless there is no bill
of lading and the contract provides that the Hague-Visby
Rules do not apply. In the present case, since no bill of lading
had been issued, the first statutory condition was satisfied. However,
the second condition was not, as the contract between Mercury and
C&C did not expressly exclude the Hague-Visby Rules.
The Court of Appeal ruled that it was, however, unnecessary
to address the issue concerning the oral nature of the contract
and whether it in fact did or did not exclude the application of
the Hague-Visby Rules insofar as the time bar issue could be concluded
on another ground altogether, which is addressed below. (*3)
Counsel for the plaintiffs' first argument on the
appeal was that the Hague-Visby Rules do not apply given the prescribed
scope of routing where the Truck was to be carried and eventually
returned to the same point. (The Hague-Visby Rules apply "
the carriage of goods by water from one place in Canada to another
place in Canada, either directly or way of a place outside Canada").
In making this argument, counsel for the plaintiffs placed emphasis
on the word "another" in that phrase. The court
rejected this argument on the basis of being an overly formalistic
interpretation of the statute. There would be no purpose served
by excluding contracts for a "round trip" from the application
of the Hague-Visby Rules. There was simply no utility in distinguishing
what may have been a single contract for a round trip as opposed
to there having been two separate contracts for one-way voyages,
The Court, however, did agree with the second argument
raised by counsel for the plaintiff - that Mercury had failed to
establish that the Hague-Visby Rules apply in the first place to
the contract in question. The Court accepted the plaintiff's argument
that this matter concerned a charter of a tug and barge as
opposed to a contract for the carriage of goods for the purposes
of subsection 43(2). On this basis the plaintiffs' action was not
subject to the Hague-Visby Rules, including the one-year limitation.
A Contract for the Carriage of Goods or a Charterparty
The Court noted that the starting point for the analysis
of this issue is the decision of the Federal Court of Appeal in Canada Moon Shipping Co. Ltd. v. Companhia Siderurgica Paulista-Cosipa (*4). In that case Justice Gauthier held that the term "contract
for the carriage of goods by water" in section 46 does not
include a contract for the charter of a vessel.
Counsel for Mercury asserted in reply that the Canada
Moon Shipping case concerned section 46 of the Marine Liability
Act (as opposed to the present section 43), which permits a
claimant in certain circumstances to institute proceedings in a
court or arbitral tribunal in Canada despite a clause in the contract
stipulating that the adjudication of claims arising under the contract
shall be adjudicated in a place other than Canada. Counsel for Mercury
argued that the purpose of section 46 was to curb the commercial
power of carriers to dictate to shippers onerous arbitration clauses,
which is a power not possessed by charterers when entering into
a charter party. Accordingly, since this is not the mischief to
which subsection 43(2) was aimed, it should not be interpreted like
section 46 as excluding charter parties.
The Federal Court of Appeal disagreed. Citing the
presumption that Parliament intends to use statutory language consistently,
such that the same words in a statute should be intended to have
the same meaning, the Court noted that the use of the phrase "contracts
for carriage" in the close proximity of sections 43 and 46
to each other suggests that there should be harmony and consistency
in how the phrase "contracts of carriage" should be interpreted.
The court also cited Justice Gauthier's reasons for judgment in
the Canada Moon Shipping decision wherein she stated at paragraph
It is important to note that none of the international
regimes discussed above (including the Hague-Visby Rules) regulate
the rights and obligations to a charter-party. They all specifically
mention that the Rules will essentially only come into play when
a distinct contract for the carriage of goods exist or "springs
to life", for example through the endorsement of a bill of
lading between a carrier and a person who is not a party to a
Justice Gauthier was also quoted from paragraph 72
of her reasons:
The ordinary (more accurately, the dictionary meaning)
of "carriage of goods by water" could include charter
- parties because all such contracts are ultimately entered in
order to "convey goods" by water. That said, in the
context of legislation dealing with the rights and obligations
of common carriers and which implements international rules, I
am satisfied that this expression would not and should not be
understood to include charter-parties.
This legal conclusion is consistent with commercial
reality. Charter-parties are contracts between commercial entities
dealing directly with each other, whose execution and enforcement
are the private concern of the contracting parties. There is no
policy reason why such actors should not be held to their bargains.
To reiterate, considering the general purpose of
part V and the mischief that section 46 was meant to cure (that
is, boilerplate jurisdiction and arbitration clauses dictated
by carriers to the detriment of Canadian importers or exporters
could become parties to such contracts), and the different commercial
reality that lead to the conclusion of charter-parties, the Judge's
conclusion that the charter-party under review was not covered
by subsection 46(1) is correct.
On the basis of the foregoing the Federal Court of
Appeal determined that as a matter of statutory interpretation that
the contract for the carriage of goods in section 43 likewise does
not include a charter-party.
The evidence on the Court record indicated that the
parties essentially considered the arrangements to be that of a
charter-party, that is, a contract for the hire of a Tug and the
Barge rather than a contract for the carriage of goods. In this
regard the Court noted that the contract called for the use of the
tug and barge on an hourly basis. The use of the barge was to be
paid for whether or not there was "cargo on the barge"
according to the terms of the contract, and finally the invoice
rendered for the use of the barge indicated an amount owing based
on an hourly rate taken for the voyage, including the time for the
offloading and standby. A final indication that the contract was
not one for the carriage of goods, at least as far as the Truck
was concerned, was the trial judge's finding of fact that at all
material times the Truck was in the possession and control of the
Truck driver, as opposed to being in the control and possession
of the tug and barge, as would be the situation under a contract
for the carriage of goods where as a matter of law the carrier is
considered an 'insurer' over the goods taken into its possession.
Mercury was accordingly unable to establish the application
of the Marine Liability Act and the one year time bar defence
on account of the fact that the contract in question being for a
charter of a ship and not for the carriage of goods rather did not
invoke Hague-Visby Rules. Accordingly the plaintiff was permitted
to recover damages for its claim.
*1 2013 FCA 96 (CanLII)
* S.C. 2001, c.6
*3 Interestingly, the Court of Appeal issued an admonishment that
"when a judge is minded to take the unusual step of deciding
a case on a basis that was not argued by counsel, the judge should
normally advise the parties accordingly, and invite them to make
submissions on the issue before rendering judgment" [at para.
*4 2012 FCA 284 (CanLII)
4. Ontario Court of Appeal Enforces Insurance Policy
1 Year Contractual Limitation Period
On May 8, 2013, the Ontario Court of Appeal in Boyce
v. The Cooperators General Insurance Company 2013 ONCA 298 ("Boyce")
held that clearly worded clauses containing a one year limitation
period as typically found in property or multi-peril policies will
successfully trump the two year limitation period under the Limitations
Act, 2002 in matters not concerning personal, household or family
This is the first time that a court has held that
there is legislative intent to allow the shortening of statutory
limitation periods via contract, specifically business agreements,
thus clarifying when such provisions will be enforced. In this case,
the contract was a first party multi peril insurance policy.
This matter was an appeal from a decision of Quigley,
J. upon hearing of a summary judgment motion as brought by the defendant
insurer. The insurer argued that the insured had brought his action
outside of the one-year limitation period provided in both the allegedly
applicable Statutory Conditions and the contractual provisions of
the associated multi peril policy at issue.
The plaintiffs operated a clothing business called
the Portside Boutique, which premises was discovered to have a foul
odour. The stench caused the business to close down for some weeks,
cleaning costs were incurred and much of the inventory could not
be salvaged. The plaintiffs had a multi-peril policy (the "policy")
with the defendant insurers. The insurer concluded that a skunk
had caused of the loss (a peril not covered by the policy) whereas
the plaintiffs concluded that their property had been vandalized
(a covered peril).
The policy contained the following provision, which
essentially tracked the statutory wording in S. 148 of the Insurance
Act, which outlined Statutory Conditions for fire policies under
the Insurance Act (*1):
The Statutory Conditions apply to the peril of fire and as modified
or supplemented by forms or endorsements attached apply as Policy
Conditions to all other perils insured by this policy.
Every action or proceeding against the insurer for recovery of
any claim under or by virtue of this contract is absolutely
barred unless commenced within one year* next after the loss or
* Two years in province of Manitoba and Yukon Territory
The damage had occurred more than one year before
the statement of claim was issued but less than two years.
The Decision upon Summary Judgment Motion
Quigley J. found that the two-year limitation period
found in s. 4 of the Limitations Act 2002 applied. His Honour found
that the wording in the policy was misleading and was not specific
The motions judge described four factors that were
required in any agreement seeking to limit a statutory protection:
(1) specific reference to the statutory limitation
(2) clear and unequivocal language that the parties were intending
to vary the statutory protection;
(3) a provision clearly alerting the insured that they were foregoing
a statutory right to a longer limitation period; and
(4) signature on the agreement by the person foregoing such right
to statutory protection to ensure understanding of such agreement.
Quigley J. went on to hold that the policy was not
a "business agreement" as required under the Limitations
Act 2002, which states:
22. (1) A limitation period under this Act applies
despite any agreement to vary or exclude it, subject only to the
exceptions in subsections (2) to (6).
(5) The following exceptions apply only in respect
of business agreements:
1. A limitation period under this Act, other than
one established by section 15, may be varied or excluded by
an agreement made on or after October 19, 2006.
(6) In this section,
"business agreement" means an agreement
made by parties none of whom is a consumer as defined in the Consumer
Protection Act, 2002; ("accord commercial")
The Consumer Protection Act 2002, S.O. 2002,
defines "consumer" as:
"Consumer" means an individual acting
for personal, family or household purposes and does not include
a person who is acting for business purposes.
The motions judge held that the policy was a "peace
of mind" contract and because insurance contracts were not
covered by the Consumer Protection Act, they could not be
"business agreements" under S. 22(5) of the Limitations
Act 2002. Only if the policy was a business agreement could
the statutory limitation period be successfully overridden.
The Court found that the one-year limitation period
to commence an action against the defendant insurer in this first
party loss situation was unenforceable. The statutory two-year limitation
period applied and the plaintiffs' claim was therefore not time-barred.
The defendant insurers appealed.
The Ontario Court of Appeal Reverses
On appeal from the motion court judge's ruling, the
Ontario Court of Appeal reversed and provided commentary and guidance
regarding attempts to contract out of statutory limitation periods.
The Court of Appeal found that the contractual provision
in question provided "for a one year limitation on claims in
clear and unambiguous language" (*2). The Court quoted Cronk
J.A. in International Movie Conversions v. ITT Hartford Canada (2002) 57 O.R. 3d 652 (C.A.), "Indeed, in my view, it is difficult
to conceive how it could have been made more explicit." Such
clear language was key.
Further, the Court found that there was no requirement
in the Limitations Act 2002 that an agreement must fulfill the enumerated
four factors (noted above) before such agreement would successfully
override a statutory limitation period. In fact, the only requirement
was that the subject contract be a "business agreement"
pursuant to S. 22(5) and there was no language at all which imposed
the requirements laid out by the motions judge.
Lastly, the policy was a "business agreement"
despite being a "peace of mind" contract, which definition
did not include agreements made by "consumers". The only
role that the Consumer Protection Act 2002 played was to
supply the definition. Therefore, as consumers were those individuals
acting "for personal, family or household purposes", the
policy in this case was a "business agreement" as the
policy insured a business. Therefore, the limitation period could
be altered from the statutory provision.
The Court of Appeal allowed the appeal and reversed
the decision of the motions judge. The plaintiffs' claim was time
In its reasons, the Court of Appeal provided guidance
in this area and stated (*4):
A court faced with a contractual term that purports
to shorten a statutory limitation period must consider whether
that provision in "clear language" describes a limitation
period, identifies the scope of the application of that limitation
period, and excludes the operation of other limitation periods.
A term in a contract which meets those requirements will be sufficient
for s. 22 purposes, assuming, of course, it meets any of the other
requirements specifically identified in s. 22.
Therefore, policies containing such "clear language"
ought to be able to require a shortened limitation period. As this
case provides, however, such policies must also be considered "business
agreements" to successfully do so. Insurers with policies containing
shorter than statutory limitation periods and involving consumers
acting for personal, family or household purposes should note that
they may not be able to enforce such provisions.
Insurers, whose policies will be considered "business
agreements" and who will be seeking to rely on a shorter than
statutory limitation period clause, should review the clarity of
their policy wording as it is the key to successful enforcement.(*5)
Kim E. Stoll
(*1) Upon the summary judgment motion, the insurers had argued that
Section 148 applied. The motions judge found that the multi-peril
policy at issue could not be classified as a fire policy and the
statutory conditions did not apply. On appeal, the insurer argued
the contractual provision that mirrored the wording applied. This
argument was ultimately successful.
(*2) at para.12.
(*3) The time to file a leave to appeal application had not yet
expired at time of writing.
(*4) at para 20.
(*5) A liability policy may face different considerations regarding
any attempts to shorten limitation periods. Such cases will likely
focus on other aspects including when the limitation period actually
5. The Duty of Care Owed by Public Carriers of
William Falconer suffered injury to his ankle when
he stepped off a city bus in Kamloops, British Columbia on January
29, 2008. Mr. Falconer had taken the bus and been dropped off at
the location in question several times before. What was different
in this case was the fact that the bus stopped one bus length further
away from where it usually stopped. While there was a curb at the
prescribed and usual stopping spot in the area of the rear exit
door, there was no such curb where the bus came to stop on the day
in question - there was simply a 'driveway / grade level' surface:
a further distance to step down from the bus from the norm. It being
winter, the area where Mr. Falconer disembarked was covered with
snow and some ice. While attempting to exit through the rear doors
of the bus, Mr. Falconer slipped and fell causing injury to his
Mr. Falconer brought a claim for damages. The matter
proceeded to a trial for determination as to whether the defendant
B.C. Transit Corporation was negligent (having employed the operator
of the bus) and if the plaintiff was contributorily negligent.
The decision of Falconer v. B.C. Transit Corporation (*1) in the British Columbia Supreme Court provides a concise summary
of the nature and scope of liability of a public carrier of passengers.
On the day of the accident the weather conditions
were described as "pretty wintery". When the bus approached
Mr. Falconer's destination, he rang the bell to indicate his desire
to get off the bus. As mentioned the bus driver stopped the bus
approximately one bus length from the bus stop sign. The plaintiff
admitted that he saw that there was snow and ice in the area that
he was to disembark, and that the surface appeared "uneven".
The trial judge regarded the plaintiff as a credible and forthright
witness, admitting that snow and ice on sidewalks and roads are
not unexpected in Kamloops for the time of year in question, and
that he saw "mostly snow
and it looked like ice was
shining through in the area where he was to step off of the bus".
The plaintiff testified that however the road surface was four or
five inches lower than the 'customary' exit location. The plaintiff
still decided to disembark the bus through the rear door, because
"it looked safe enough for me".
After extensive review and consideration of the evidence
at trial the judge made various findings of fact, notably that there
were indeed winter conditions present to a certain extent obvious
to Mr. Falconer before he left the bus, and that due to the "lack
of curb", Mr. Falconer had greater distance to step down from
the bus then if the bus had been brought to a halt right at the
bus stop. The judge also found that the bus driver did not issue
any form of warning to the passengers before exiting the bus at
this particular stop location and that Mr. Falconer's injury occurred
when his right ankle "snapped" shortly after he placed
it on the icy surface directly outside the rear exit of the bus.
A further finding of fact made by the judge, which, all things equal,
could not have helped the transit company defendant, was the fact
that the bus driver drove away from the bus stop without checking
the right side of his bus to see if the area was clear: in effect,
the bus driver had no idea that the accident had occurred and he
did not check to see what was happening on the right hand side of
the bus before departing. As submitted in argument by plaintiff's
counsel: "There could have been a child running alongside
the bus looking for a stray ball and this would not have been noticed
by the bus driver". While not relevant for the purposes
of the incident itself, one notes that things will not go well for
the bus company when this type of observation is made by the judge
in the course of issuing reasons for judgment
The Applicable Legal Principles
The findings of fact being set forth above, the judge
then had to determine whether the transit commission was negligent
through the conduct of its driver or for that matter whether Mr.
Falconer was "contributorily negligent".
Citing case law (*2), the judge noted that:
The standard of care owed to a plaintiff passenger
by a defendant bus driver is the conduct or behaviour that would
be expected of a reasonably prudent bus driver in the circumstances.
This is an objective test that takes into consideration both the
experience of the average bus driver and anything the defendant
driver knew or should have known.
It is well settled on the authorities that the standard
of care imposed on a public carrier is a high one. However the
principle to be derived from the authorities is that the standard
to applied to the bus driver is not one of perfection nor is a
defendant bus driver affectively to be an insurer for every fall
or mishap that occurs on a bus.
Day v. Toronto Transportation Commission (*3) is the seminal case dealing with the liability of public
carriers. The plaintiff, a passenger in a streetcar owned by the
defendant, was standing and picking up a parcel in preparation
to disembark, and was thrown to the floor and injured by a sudden
application of the emergency brake. The articulation of the standard
of care was indicated as follows:
Although the carrier of passengers is not an insurer,
yet if an accident occurs and a passenger is injured, there
is a heavy burden on the defendant carrier to establish that
he had used all due, proper and reasonable care and skill to
avoid or prevent injury to the passenger. The care required
is a very high degree.
Every person who contracts for conveyance of others,
is bound to use the utmost care and skill, and if, through any
erroneous judgment on his part, any mischief is occasioned,
he must answer for the consequences.
The principles articled in Day have been
interpreted by the courts as endorsing the following analytical
approach. Once a passenger and a public carrier has been injured
in an accident a prima facie case of negligence is raised
and it is for the public carrier to establish that the passenger's
injuries were occasioned without negligence on the part of the
defendant or that it resulted from a cause for which the carrier
was not responsible.
Essentially, the Court accepted for the purposes of
the liability analysis that whether it is a case of a shifting burden
of proof (as is the Day principle cited above) for a public
carrier to show that it was not negligent, or whether it was simply
a matter of strong inference to be drawn by the Court from the evidence
towards a finding that the defendant was to blame, either way it
remains for the defendant carrier to lead evidence suggesting that
it was not negligent.
As explained by the trial judge, once the plaintiff
establishes the circumstances of what happened, there is policy
rationale for the shifting of the burden of proof for the defendant
to show it exercised all due, proper and reasonable care and skill
to prevent an accident or injury, or for the court to place itself
in a position to draw inferences of negligence in favour of the
plaintiff. First, passengers in a public carrier are entitled to
expect that they will be carried to their destinations in safety
and thus, the standard care for public carriers is high. Secondly,
the driver of the conveyance is the person who knows whether the
vehicle has been driven in a safe, proper and prudent manner. The
passenger cannot be expected to know what happened. For example,
in the Day case, the passenger was still proceeding down
the aisle and could have no knowledge of why the bus, having left
the stop, suddenly jerked to stop. Third, a shifting of the burden
will encourage public carriers to adopt proper reporting procedures
so that facts are ascertainable after an accident occurs. If the
party with "knowledge" were not called on to answer, the
incentive to keep proper records from which the truth can be ascertained
disappears. Even worse, there might be an incentive not to keep
The court also noted that part of a public carrier's
duty is to provide passengers with a reasonably safe place to disembark(*4).
The Parties Positions and Disposition
The plaintiff argued at trial that he established
a "prima facie" case of negligence against the
defendant. He was dropped off at a driveway, not the curb, on the
edge on an uneven surface. Essentially, he was "led to a trap".
The defendant transit company asserted in turn that no prima
facie case of negligence had been established. Specifically,
nothing done or not done by the defendant caused or contributed
to the plaintiffs fall. As such, the defendant asserted that it
had no obligation to explain what happened, and that this was simply
an unfortunate accident and pointed to the wintery conditions in
the area where the plaintiff was stepping off of the bus as the
The judge found that a prima facie case of
negligence had been established by the plaintiff. Although Mr. Falconer
might not be able to say what caused him to fall, the court found
that it was the lower level, icy surface upon which he stepped off
of the bus due to where the bus driver chose to stop the bus.
The issue then turned as to whether the defendant
had presented evidence negating the prima facie case of negligence
had been established. The court found that the defendant had failed
to do so, leading no evidence as to why the bus stopped where it
did and in failing to lead evidence by which the court could conclude
that the location where the rear doors opened was "reasonably
safe to debark". Further, the defendant led no evidence as
to whether a warning to passengers was not required or unnecessary
in the circumstances. Noting that the bus driver left the scene
without noting or being aware of the incident having taken place
(as mentioned, we knew that this would not 'help' the defendant)
this indicated to the court a "general lack of care and inattention"
on the part of the bus driver as far as his responsibilities to
the passengers where concerned.
Finding the defendant negligent, the Court addressed
whether the plaintiff was contributorily negligent. The court noted
that by the plaintiff's own evidence he did see some "ice shining
through the snow" in the area where he was to leave the bus.
In the Court's view this should have "prompted him to debark
using the utmost caution. In the alternative, he should have exited
from the front of the bus if it was more appropriate to do so".
The court proceeded to find that the bus driver's degree of fault
was higher than that of the plaintiff, and accordingly fixed liability
at 75% against the defendant transit company and 25% against the
*1 2013 BCSC 715 (CanLII)
*2 Prempeh v. Boisvert 2012 BCSC 304 (CanLII)
*3  S.C.R. 433
*4 Grand Trunk Pacific Coast Steamship Co. v. Simpson 63
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