Calgary Core-Mark International Inc. v. Direct Integrated Transportation Ulc, 2024 ABKB 637

The Plaintiff and the Defendant entered into a transport agreement, under which the Defendant was responsible for transporting the Plaintiff’s goods between its depots in Calgary and Edmonton.

On November 22, 2021 a trailer full of stock belonging to the Plaintiff was stolen while in the care of the Defendant. Notably, the trailer contained a significant quantity of tobacco and cigarettes, the wholesale replacement cost of which was claimed at $534,451.78.

The Plaintiff claimed for the full wholesale replacement cost of the shipment. The Defendant relied on the statutory $2/lb. cap, a contractual $2/lb. liability cap, and the lack of signature on the bill of lading, and sought to limit the claim to $38,894.00 for shipment, which weighed 19,477lbs.

The Plaintiff applied for summary judgment in the sum of $534,451.78.

The relationship between the Plaintiff and Defendant was governed by two agreements: a Transportation Services Agreement (the “TSA”), along with, by the time of the theft, six amendments; and secondly, the Rate Agreement, which was for “additional services” but on the face of it, were the same services as those provided under the TSA, charged at the same $/km rate. 

It was unclear which agreement applied to the specific services provided on the night of the theft, as there was no direct evidence to confirm this. The Plaintiff argued that the TSA was in effect, while the Defendant maintained that the Rate Agreement was applicable.

The Covenant to Insure

The TSA contained an insurance clause requiring the Defendant to arrange insurance. The commercial general liability and the automobile liability clauses both required the Defendant to name the Plaintiff as an additional insured. The motor cargo liability clause (which applied to this loss) did not require the Defendant to name the Plaintiff as an additional insured. 

The Rate Agreement also contained a covenant to insure, requiring the Defendant to arrange Motor Service Provider’s Cargo Insurance, in an amount not less than $250,000 per vehicle, and to name the Plaintiff as an additional insured. 

In his decision, Applications Judge Farrington concluded that the TSA was likely the governing agreement at the time of the theft, though he deemed it unnecessary to definitively decide this issue. He also agreed that the TSA’s insurance provision did not require the Defendant to add the Plaintiff as an additional insured under the motor cargo insurance policy. Therefore, there was no breach of the covenant to insure.

Liability Limitations

There was no liability cap in the TSA, whereas the Rate Agreement contained a clause limiting the Defendant’s liability in the event of loss to $2/lb., ($4.41/kg). The Defendant relied on the stated liability limit of $2/lb. in respect of the theft, and additionally/alternatively, it relied on the limits set out in the Bill of Lading and Conditions of Carriage Regulation, Alta Reg 313/2002 (the “Regulation”).

Having decided the TSA was the effective agreement on the night of the theft, AJ Farrington held the liability limit of $2.00/lb. contained within the Regulation applied, in particular Section 5(1), and Schedule 3, which together state:

5(1) Every agreement for the transportation of goods to which section 3 applies is deemed to include those terms and conditions contained in the conditions of carriage set out in Schedule 3.

Schedule 3

s. 10 The amount of any loss or damage computed under section 9 of these Conditions of Carriage shall not exceed $4.41 per kilogram ($2 per pound) computed on the total weight of the shipment unless a higher value is declared on the face of the bill of lading by the consignor.

There was no higher value declared on the face of the bill of lading for the stolen shipment.

Applications Judge Farrington also relied on Alberta Court of Appeal authority in Hoskin v. West, 1988 ABCA 377, in particular the following at paragraph 8:

The agreement to transport between the shipper and the carrier has two important provisions imposed by statute. Firstly, the carrier is deemed to be liable for the loss or damage to goods hauled whether or not the carrier was negligent, subject to stated exceptions. Secondly, the carrier's liability is statutorily limited to $4.41 per kilogram unless the shipper declares a higher value on the bill of lading. Every contract of general hauling is deemed to include these two provisions. However, the shipper may contract to avoid the statutory limits on the carrier's liability by declaring the true value of his goods should it be in excess of $4.41 per kilogram. If no such higher value is indicated, then the statutory limits will apply. The limitation provision applies to all general hauling agreements to transport whether or not a bill of lading has been prepared and executed.

The Regulation places a blanket liability on a carrier for loss or damage to goods hauled, whether or not it was negligent. In consideration for that liability, and the Plaintiff being relieved of the burden of proving negligence, the carrier’s liability is limited to $2/lb. unless a higher value is stated on the bill of lading 

The Plaintiff prepared the bill of lading. The Plaintiff had the onus of declaring a higher value and was at liberty to enter a value on the face of the bill of lading. It did not. It sought the benefit of the blanket liability provision, without having fulfilled the burden of the provision. 

Accordingly, since there was no higher value indicated on the bill of lading, the statutory limit applied, and there was judgment for the Plaintiff in the sum of $38,894.00, the figure argued for by the Defendant.

Applications Judge Farrington

Counsel for the Plaintiff: Lyndsey Delamont, McCarthy Tetrault LLP

Counsel for the Defendant: Sarah E. Holder, Brownlee LLP