Queen Charlotte Lodge Ltd. v. Hiway Refrigeration Ltd. and Royal Insurance

In Marine Insurance on (Updated )

In this matter the Plaintiff had purchased a used refrigeration unit from one of the defendants for use in transporting meat

and vegetables to the Plaintiff’s fishing lodge in the Queen Charlotte islands. The goods were insured under a policy of insurance that included the Institute Frozen Meat Clauses A-24. These clauses contained an exclusion excluding any loss arising from "unfitness of container… where loading therein is carried out prior to attachment of this insurance or by the assured or their servants ". While in transit the refrigeration unit ceased functioning and the goods within were spoiled. The Plaintiff sued both the vendor of the refrigeration unit and the insurer. The Court found that the cause of the failure of the refrigeration unit was a defective part. With respect to the liability of the vendor of the refrigeration unit, the Plaintiff argued the vendor was liable for breach of the implied warranties of fitness and merchantability in the Sale of Goods Act. The vendor argued that it had contracted out of the implied terms by the use of the words "No Warranty " in a quotation given to the Plaintiff. The Court held, however, that these words were not sufficiently clear to exclude the implied terms. With respect to the liability of the insurer, the Court held that the loss was excluded by the terms of the policy and the insurer was not liable. In reaching this conclusion the Court noted that the insurer did stipulate for the inclusion of the Institute Frozen Meat clauses in its negotiations with the broker and that the broker was, as a matter of law, the agent for the assured.