Westwood Shipping Lines Inc (the defendant) provided ocean carriage and multimodal carriage services to Cami Automotive Inc (the plaintiff) on an annual basis, carrying various containers for the plaintiff from Japan to Canada via the port of Seattle, Washington, USA.

In this case, pursuant to its service contract with the plaintiff, the defendant issued a shipping document to the plaintiff. As part of its obligations, the defendant subcontracted the carriage of the goods to CN Truck for rail transportation from British Columbia to Ontario. The cargo was damaged during the rail transportation. The plaintiff thereafter claimed damages against the defendant.

The issue, among others, before the Court was whether the defendant could limit its liability by the terms of the shipping document, and, if so, what that limitation was.

Held: The defendant could limit its liability, and its liability was limited to USD 500 per pallet.

Based on the evidence, the Court found that the shipping document issued by the defendant was a waybill.

Clause 8 of the waybill provided that 'the ocean carrier's responsibility with respect to the goods shall in all cases, including where the goods are lost or damaged while in the custody of the inland carrier, be governed by COGSA or the Hague Rules, whichever is applicable, as provided in Clause 2 herein'.

Clause 2 was the paramount clause:

This bill of lading shall have effect subject to all of the provisions of the United States Carriage of Goods by Sea Act 1936 (COGSA). If, however, the Hague Rules or the Hague-Visby Rules (collectively the Hague Rules) are made compulsorily applicable to this bill of lading in the country where a dispute hereunder is adjudicated, then this bill of lading shall have effect subject to the Hague Rules.

Since COGSA (the US version of the Hague Rules) applied only if the Hague or Hague-Visby Rules were not compulsorily applicable to this waybill in Canada, the first step in determining which regime governed the transportation under this waybill was to examine whether the Hague-Visby Rules were compulsorily applicable.

Section 43 of the Marine Liability Act, SC 2001, c 6 (the Act) was the statutory provision giving the Hague-Visby Rules force of law in Canada in respect of contracts for the carriage of goods by water between different States. These States were enumerated in art 10 of the Hague-Visby Rules. It was undisputed that both Canada and Japan were contracting States for the purposes of art 10.

The Hague-Visby Rules only applied to a 'contract for carriage'. This term was defined in art 1 of the Hague-Visby Rules as a contract covered by 'a bill of lading or any similar document of title'. Since the shipping document at issue was not a bill of lading or similar document of title, the Hague-Visby Rules did not compulsorily apply. It followed, therefore, pursuant to cl 2 of the waybill, that the applicable regulatory regime was COGSA.

Article 4.5 of COGSA provided that '[n]either the carrier nor the ship shall, in any event, be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding USD 500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading'.

The plaintiff contended that 'package' should be defined as the individual assemblies and modules; while the defendant contended that 'package' should be defined as a pallet. The Court found from the intention of the parties as evidenced by the language of the waybill, the method by which the goods were prepared for transportation, the purpose of the pallets, and the lack of individual wrapping for the assemblies and modules, that the pallets were the 'packages' for the purposes of the waybill. Thus, the defendant's liability was limited to a maximum of USD 500 per pallet.