This was a claim for damage to a cargo of synthetic resin shipped from Montreal to Bangkok and Manila on board the ship "Hudson Bay". The Plaintiffs were the shipper of the cargo and the consignees. The consignees purchased the cargo on cif Bangkok and cif Manila terms. The "Hudson Bay" was under time charter pursuant to a New York Produce Exchange Form time charter agreement. The bills of lading were signed by the charterer "by authority of master as agents only". The issues in the case were: whether the shipper was a proper Plaintiff, whether the charterer was liable in contract as a "carrier", whether the charterer was liable in tort for negligent stowage, and whether the Plaintiffs had properly proven their damages. On the first issue the Court held that the shipper was not a proper Plaintiff. The Court held that under the cif terms the risk of loss passed to the buyer upon shipment and further that pursuant to the Bills of Lading Act all rights of action in respect of the cargo were vested in the consignees. The Court also held that the rule in Dunlop v Lambert (1939) 7 ER 824, (which allows the shipper to recover substantial damages as trustee for the true owner of the goods) had no application because the claims were covered by the Bills of Lading Act.
On the second issue, the Court held that there could be only one carrier and, where the bills of lading are signed for or on behalf of the Master, that the carrier is the shipowner unless there is an express undertaking on the part of the charterer to carry the goods. The Court found that there was no such express undertaking notwithstanding that the charterer had described itself as the carrier in the booking note. In reaching this conclusion the Court refused to follow Canastrand Industries Ltd. v. The "Lara S",  2 FC 553, (affirmed by the Court of Appeal 176 N.R. 31), wherein Madame Justice Reed held that both shipowner and charterer should be jointly liable.
The Plaintiffs further argued that the charterer was liable in tort for negligently stowing the pallets more than three tiers in height. The Court found that the charterer was not aware of any restrictions in the height to which the pallets could be stowed and that it was not obvious they should be restricted to three levels. The Court further held that the charterer could not be liable for the negligence of the stevedores.
Finally, on the question of quantum, the Court held that evidence of the settlement of the Plaintiffs’ cargo insurance claim was neither relevant to the question of, nor admissible to prove, the Plaintiffs’ damages. The Court held that the Plaintiffs must testify as to the actual losses suffered by them and that it was not sufficient to simply rely on generic evidence of arrived sound market value and arrived damaged market value.