Date: 20020524
Docket: A-629-01
Neutral citation: 2002 FCA 215
CORAM: RICHARD C.J.
ON APPEAL FROM THE FEDERAL COURT OF CANADA,
TRIAL DIVISION, FROM THE ORDER OF THE HONOURABLE
MR. JUSTICE HUGESSEN DATED 23RD OCTOBER, 2001
ADMIRALTY ACTION IN REM AND IN PERSONAM
BETWEEN:
MARIANA MARITIME S.A.
THE OWNERS OF THE SHIP "MARIANA"
APPELLANT
(Defendant)
and
STELLA JONES INC.
- and -
AXA BOREAL ASSURANCE INC.
RESPONDENTS
(Plaintiffs)
Heard at Ottawa, Ontario, on May 14, 2002.
Judgment delivered at Ottawa, Ontario, on May 24, 2002.
REASONS FOR JUDGMENT OF THE COURT BY: NADON J.A.
CONCURRED IN BY: RICHARD C.J.
PELLETIER, J.A.
Date: 20020524
Docket: A-629-01
Neutral citation: 2002 FCA 215
CORAM: RICHARD C.J.
ON APPEAL FROM THE FEDERAL COURT OF CANADA,
TRIAL DIVISION, FROM THE ORDER OF THE HONOURABLE
MR. JUSTICE HUGESSEN DATED 23RD OCTOBER, 2001
ADMIRALTY ACTION IN REM AND IN PERSONAM
BETWEEN:
MARIANA MARITIME S.A.
THE OWNERS OF THE SHIP "MARIANA"
APPELLANT
(Defendant)
and
STELLA JONES INC.
- and -
AXA BOREAL ASSURANCE INC.
RESPONDENTS
(Plaintiffs)
REASONS FOR JUDGMENT OF THE COURT
[1] This is an appeal from a decision of Hugessen J., 2001 FCT 1148, dated October 24, 2001, who concluded that the terms and conditions of the contract of carriage entered into by the parties did not include a "Centrocom" arbitration clause. As a result of that conclusion, the
motions judge dismissed the appellant's motion for a stay of the proceedings commenced by the respondents.
[2] By their Statement of Claim, the respondents, respectively the owners and insurers of a cargo of telegraph poles, seek compensation by reason of damage caused to their cargo, while on board the vessel "MARIANA" (the "vessel"), during the return leg of a voyage which commenced in Bécancour, Québec and Pictou, Nova Scotia.
[3] The cargo, owned and shipped by the respondent Stella Jones Inc. ("Stella Jones") and sold to the government of Syria for discharge at the port of Lattakia, in Syria, was described in the booking note contract dated March 3, 1998, as consisting of 9-metre and 12-metre creosoted telegraph poles.
[4] Following the commencement of discharge at Lattakia, the buyer rejected the 12-metre poles on the ground that they did not comply with contract specifications. As a result of the buyer's rejection, it was agreed between Stella Jones and Hawknet Ltd., the time charterer of the vessel, that the 12-metre poles would be carried back to Canada on board the vessel.
[5] While the vessel was passing through the Bosphorus Strait en route to Canada, a fire occurred and caused damage to the respondent's cargo. It is on the basis of this event that the respondents have commenced their action against the appellant, the owners of the vessel.
[6] In due course, the appellant brought a motion under s. 50 of the Federal Court Act and ss. 2 and 5 of the Commercial Arbitration Act, for an order staying the proceedings commenced by the respondents. Hugessen J., as I have already indicated, held that the arbitration clause was not a term of the contract of carriage and, as a result, he dismissed the appellant's motion.
[7] In concluding as he did, Hugessen J. held that the return voyage to Canada was subject to the same terms and conditions as those agreed to by the parties for the outbound voyage from Canada to Syria. As he had concluded that the booking note contract entered into by the parties on March 3, 1998 was not subject to the arbitration clause, Hugessen J. was of the view that the return voyage was also not subject to the clause.
[8] For the reasons that follow, I am of the view that Hugessen J. made no error in concluding that the arbitration clause did not form part of the terms and conditions agreed to by the parties.
[9] First of all, let me say that on the evidence, the motions judge was correct in expressing the view that the terms and conditions of the return voyage, except to the extent that they had been modified by an addendum to the March 3, 1998 booking note, were the same as the terms and conditions originally agreed upon by the parties. Counsel for the respondents took issue with that view, but I see no merit in his submission that Hugessen J. erred. I agree entirely with Hugessen J. when he says, at paragraph 11 of his reasons, that:
[11] [...] I can see no other logical conclusion from the document which the parties themselves drew and signed as an "addendum" to the booking note and the detailed list of "logical amendments" thereto. [...]
[10] I now turn to the real issue between the parties in this appeal, i.e. the terms and conditions agreed upon by the parties on March 3, 1998. The booking note signed by the parties was one in the "Conline" form. The relevant part thereof for determination herein is as follows:
It is hereby agreed that this Contract shall be performed subject to the terms contained on Page 1 and 2 hereof which shall prevail over any previous arrangements and which shall in turn be superceded (except as to dead freight and demurrage) by the terms of the Bill of Lading, the terms of which (in full or in extract) are found on the reverse side hereof.
[11] As Hugessen J. points out, what the parties signed was a facsimile copy of the booking note which Hawknet had transmitted to Stella Jones by fax. Neither the first page of the booking note, nor the reverse side thereof, were passed on to Stella Jones. In other words, neither page 1 of the booking note which contained the "Conline" standard booking note terms, nor the reverse side thereof on which appeared the "Conline" standard bill of lading terms, were sent to Stella Jones.
[12] It is not disputed that the standard terms printed on the "conline" bill of lading do not comprise an arbitration clause. Consequently, even if Stella Jones had received pages 1 and 2 of the booking note, with the reverse side, it would not have seen an arbitration clause.
[13] On April 2 and April 7, 1998, after Stella Jones' cargo was loaded onto the vessel at Bécancour and Pictou, bills of lading, under the master's signature, were issued. Accompanying the standard printed terms and conditions of the "conline" bill of lading, was a "Centrocom" arbitration clause, which had been typewritten in the margin at right angle to the printed text. As the motions judge points out, it is the terms of that clause which the appellant seeks to enforce by way of its motion for a stay. The arbitration clause reads as follows:
THIS BILL OF LADING IS GOVERNED BY ENGLISH LAW. ANY DISPUTE OR CLAIM TO BE SETTLED IN ARBITRATION IN LONDON UNDER ENGLISH LAW. CENTROCOM ARBITRATION CLAUSE TO APPLY AND AMENDED SO THAT BOTH ARBITRATORS AND UMPIRE ARE MEMBERS OF THE L.M.A.A.
[14] After stating that the issue before him stood to be resolved by reference to the Commercial Arbitration Act, and more particularly, to the Commercial Arbitration Code, of which Article 7(2) provides that "the arbitration agreement shall be in writing", the learned motions judge, at paragraphs 8 and 9 of his reasons, states:
[8] Here it is quite clear that there was no arbitration clause in writing printed on the back of the booking note. It is quite clear also, indeed on the defendant's own evidence, that the terms printed on the back of the full booking note printed form were those of the standard "Conline" Bill of Lading. Those terms do not include an arbitration clause. The arbitration clause which it is sought here to enforce is, as I have already said, inserted as an amendment to the standard "Conline" Bill of Lading and "Conline" booking note and there is no evidence that the terms of that arbitration clause were ever signed and agreed to by the plaintiff. There is no reference to the "Centrocom" clause in any document signed by the parties.
[9] It is the defendant's burden as the one invoking the terms of the arbitration clause to prove that that arbitration clause was entered into and was in force and is enforceable in accordance with the terms of the Commercial Arbitration Code. In my view, it has failed in that burden.
[15] Mr. Harrington, on behalf of the appellant, argued that since Mr. Kaddis, Stella Jones' contract negotiator, conceded that he had never seen nor read the "other side" of the "Conline" booking note, he could not complain that the bills of lading signed by the master did not conform to the full booking note form, i.e. which did not include an arbitration clause. In Mr. Harrington's submission, Mr. Kaddis was aware that the terms of the booking note were to be superceded by those of the bills of lading and that consequently, based on his previous dealings with Hawknet, he was on notice that the bills of lading "might contain a London Arbitration Clause". Since Mr. Kaddis made no enquiries with Hawknet with respect to the terms and conditions of the bills of lading to be issued, he cannot, in Mr. Harrington's submission, now complain that he was not aware that the bills would contain an arbitration clause.
[16] In support of his submission, Mr. Harrington relies on this Court's decision in Thyssen Canada Ltd. v. MARIANA (The), [2000] 3 F.C. 398, and in particular on the words of Robertson J.A. found at paragraph 19 (pages 411 and 412):
[19] The appellant also raises an alternative submission. It asserts that it cannot be bound by a provision contained in a charter party of which it had no knowledge at the time it accepted the bills of lading. In my respectful view, this argument is not persuasive. If the obligation to arbitrate damage claims in London, or any other city, was of critical concern to the appellant then in theory it could have raised this matter at the time it entered into the contract to purchase the steel coils and insisted that any bills of lading comply with that contract. If the appellant did not bargain in this fashion, then presumably it made adequate arrangements to protect itself against financial loss arising from damage to the goods in the normal commercial manner - the procurement of adequate insurance. Admittedly, a bill of lading may be looked on as a contract of adhesion (the so-called "standard form contract") which does not fit within the classical model of a bargained agreement. But it is also true that we are dealing with sophisticated parties familiar with the exigencies of this particular market-place; parties who are well aware that commercial efficacy demands the use of contracts which cannot reasonably be expected to be read until such time as a loss arises. In the end, the appellant cannot argue that there was no "agreement to arbitrate" when, in reality, it simply failed to inform itself of the terms pursuant to which it agreed to have its goods shipped. This is not a case where the appellant may invoke legal principles designed to protect the weak from the strong.
[17] The Thyssen cargo, a cargo of steel coils, was the only other cargo carried back to Canada by the vessel on its return voyage from Lattakia to Canada. The steel cargo was loaded onto the vessel at Constanza, Romania for carriage to Windsor, Ontario. The issue in Thyssen, supra, as here, was whether the contract of carriage was subject to a London arbitration clause. On the reverse side of the bills of lading, Clause 1 read as follows:
All terms and conditions, liberties and exceptions of the Charter Party dated as overleaf, including the Law and Arbitration clause, are herewith incorporated.
[18] One of Thyssen's arguments, and the one dealt with by Robertson J.A. in the above passage, was that it had no knowledge of the "Charter Party" referred to in Clause 1 of the bills of lading. The issue was whether, by reason of Clause 1 of the bills of lading, Thyssen ought to have been aware of the arbitration clause which could be found in the "Charter Party dated as overleaf". As there were two charter parties in existence, a time charter party and a voyage charter party, Thyssen argued that the arbitration clause was unenforceable because the bills of lading failed to identify, by date or by other means, in which of the charter parties the arbitration clause could be found. It is in that precise context that Robertson J.A. made the above remarks, and in particular, that "the appellant cannot argue that there was no ‘agreement to arbitrate' when, in reality , it simply failed to inform itself of the terms pursuant to which it agreed to have its goods shipped ...".
[19] In Thyssen, supra, there was no dispute regarding the existence of clause 1 of the bills of lading, which incorporated the arbitration clause into the contract. The issue, as I have indicated, concerned the applicability of the arbitration clause because the "Charter Party", in which the arbitration clause appeared, had not been properly identified. Here, however, the existence of the arbitration clause is precisely the subject of the dispute between the parties. In my view, this Court's decision in Thyssen, supra, is of no avail to the appellant.
[20] It seems to me quite clear that the terms of contract proposed to Stella Jones by Hawknet were the terms contained in the "Conline" booking note, which were to be superceded by the terms and conditions of the "Conline" standard form of bill of lading, neither of which contained an arbitration clause. In my view, the fact that Mr. Kaddis of Stella Jones was not aware of these terms and conditions, or that he had never read them in the past, is irrelevant. Had he been aware of those terms or had he taken the time to read them, he would have noted that they did not include an arbitration clause. If it was the appellant's intention to make the contract of carriage subject to an arbitration clause, it should have made its intention known to Stella Jones.
[21] The motions judge concluded that the arbitration clause had never been agreed to by Stella Jones and, in my view, he arrived at the correct conclusion. For these reasons, this appeal should be dismissed with costs.
Marc Nadon
J.A.
"I agree.
J. Richard, C.J."
" I agree.
J.D. Pelletier, J.A."
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-629-01
STYLE OF CAUSE: MARIANA MARITIME S.A. and other v. STELLA JONES INC. and others
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: May 14, 2002
REASONS FOR JUDGMENT : Nadon J.A.
CONCURRED IN BY: Richard C.J.
Pelletier J.A.
DATED: May 24, 2002
APPEARANCES:
Mr. Sean J. Harrington FOR THE APPELLANT
Mr. Louis Buteau FOR THE RESPONDENT
SOLICITORS OF RECORD:
Borden Ladner Gervais FOR THE APPELLANT
Montreal (Quebec)
Flynn, Rivard FOR THE RESPONDENT
Montreal (Quebec)