Canadian National Railway v. Southern Railway of British Columbia

Both the Plaintiff and Defendant in this matter were rail carriers. They had entered into an agreement with Johnson & Johnson for the carriage of goods from Quebec to British Columbia. Some of the goods were destroyed by fire. The Plaintiff paid Johnson & Johnson the full amount of its loss. Subsequently, pursuant to an agreement the matter was referred to arbitration. In the arbitration it was held that the Defendant was fully responsible for the loss. The Plaintiff then brought this action for reimbursement. The Defendant argued, inter alia that the claim of the Plaintiff was time barred and that the Plaintiff had paid Johnson & Johnson more than the limitation amount to which Johnson & Johnson was entitled. With respect to the time bar issue, the Defendant argued that the claim was for property damage and that the applicable limitation under the Limitation Act of British Columbia was two years. The Court held that, although a claim by Johnson & Johnson might be for property damage, the claim by the Plaintiff was for breach of contract (i.e.. the agreement to refer to matter to arbitration and abide by the results thereof) and was therefore subject to a six year limitation period. On the issue of the limitation amount the Defendant relied on the fact that Johnson & Johnson prepared a bill of lading that stated liability was limited to $2.00 per pound. The Court found, however, that the original agreement between the parties was that the carriers would be liable for the value of the goods and that the bill of lading was nothing more than a record of the goods. It was not signed by the parties and did not have the effect of varying the original agreement.