AGF Steel Inc. v. Miller Shipping Limited

In Carriage of Goods by Sea, Judgments and Enforcement of Judgments on (Updated )

Précis: The court held that a transportation services contract between the parties was, in fact, a contract for the charter of a ship and the Hague-Visby Rules did not apply.

Facts:The plaintiff and the defendant, Miller Shipping (“Miller”), entered into a contract for the transportation of 43,000 metric tonnes of steel rebar over 8 voyages by tug and barge. The contract was called a “Time Charter Party”, identified the plaintiff as “charterer” and referred to “Employment of the Vessel” and “Hire”. The contract contained a so-called “knock for knock” clause stipulating, inter alia, that each party would be liable for all losses, costs, damages and expenses incurred by the party on account of loss of or damage to its property. The contract also contained insurance clauses requiring the plaintiff to obtain cargo insurance and Miller to obtain Hull and Machinery insurance and protection and indemnity insurance. The first two voyages were completed without incident. During the third voyage on 10 May 2013 the barge capsized with the loss of the entire cargo. The plaintiff commenced suit for the value of the lost cargo (in excess of $8 million) against Miller and its various subcontractors including the actual owner of the tug and barge and the surveyor that surveyed and approved the stowage of the barge. Miller brought this summary judgment application for a declaration that it was not liable. The plaintiff opposed the application.

Decision: The application is allowed, in part.

Held: The test on a summary judgment application is that there is no genuine issue for trial. The onus is high and is on the party bringing the application. Summary judgment should be granted only in the clearest of cases.

Miller argues that the contract between the parties is a charterparty and that the contract excludes the liability of Miller and the other defendants. The plaintiff, on the other hand, argues that the contract is one for the carriage of goods by water, that the Hague-Visby Rules apply, that any exclusion or limitation clauses in the contract are rendered invalid by article III, r.8 of those rules and that, in any event, on a proper interpretation, the contract does not exclude the liability of Miller and the other defendants. Thus, there are two issues: first, is the contract governed by the Hague Visby Rules; and, second, if the contract is not governed by the Hague Visby Rules, do the “knock for knock” and insurance clauses exclude the liability of Miller and the other defendants.

The nature of the contract between the parties is a discrete issue that is capable of being determined by summary judgment as the principal evidence required to assess its nature is the contract itself. The contract is entitled “Time Charter Party”, describes the plaintiff as “charterer” and refers to “Employment of the Vessel” and to “Hire”. This is sufficient to find the contract is a charterparty and not covered by the Hague-Visby Rules. Accordingly, the parties were free to negotiate their own terms concerning liability. However, the contractual interpretation of the “knock for Knock” and insurance clauses is an issue of mixed fact and law which is not appropriate for summary judgment. These issues will proceed to trial.