Paine Machine Tool Inc. v. Can-am West Carriers Inc.

Two high precision machine tools carried by the Defendant were damaged when they struck an overpass. In answer to the Plaintiff’s claim for damages, the Defendant argued that its liability was limited to $4.41 per kilogram pursuant to the Uniform Conditions of Carriage in Part 7 of the Regulations under the Motor Vehicle Act of British Columbia. At first instance, the trial Judge held that the Defendant was not entitled to avail itself of the limitation provisions since the bill of lading did not substantially comply with the requirements of s.9.21 of the Regulations and was never sent to the Plaintiff and, therefore, was never “issued”. Further, the trial Judge held the bill of lading failed to reflect the prior course of dealings between the parties. The Court found as a fact that the carrier had previously advised the Plaintiff that insurance up to a value of $500,000 was included in freight rates. On Appeal by the Defendant, the British Columbia Court of Appeal held the Motor Vehicle Act Regulations should be strictly complied with by the carrier “unless it is proved that the parties agreed to other terms for their contract, either expressly, by course of dealings or industry practice”. Non-compliance with the Regulations in this case was not excused because, inter alia, the evidence of the prior course of dealings was conflicting. The Court of Appeal further noted that the obligation “on the carrier is to clearly establish the liabilities and obligations of the parties prior to shipment. It would be inappropriate for the appellant to be allowed to rely on the benefits of the conditions contained in the Regulations when it failed to comply with the obligations they impose.” In the result, the appeal was dismissed. (Note: The comments in this case regarding industry practice should be compared with those in Valmet Paper Machinery Inc. v Hapag-Lloyd AG, 2004 BCCA 518.)