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Newsletter > May 2008

In this issue: 1. Firm News 2. CIFFA Terms Upheld 3. Dependants Under Marine Liability Act Reviewed 4. Occupiers Duties in Cross Country Ski Injury 5. Freight Monies in Trust

1. Firm News

  • Rui Fernandes will be presenting a paper on “Road and Rail Carriage” on June 9th, 2008 in Vancouver at the Canadian Maritime Law Association’s Seminar Day on “Carriage of Goods and Passengers in the 21st Century”
  • Gordon Hearn was elected to the executive of the Transportation Lawyers Association at its annual meeting on May 9, 2008 at Fort Lauderdale, Florida. Gordon will act as Secretary – Treasurer for the upcoming year. The Transportation Lawyers Association is an organization of more than 1,000 lawyers from the United States, Canada, Mexico and Europe representing providers and users of transportation and logistics services in all modes of the transportation industry.
  • Rui Fernandes’ three volume loose-leaf supplemented text “Transportation Law” published by Aerospark Press is updated three times per year with new releases. Release 2008-1 is now available. For more information visit the Aerospark Press website at http://www.aerosparkpress.com/pages/3/index.htm 
  • Tentative Fernandes Hearn Seminar Schedule – Keep an eye on our website for location and registration information

    – June 19th, 2008 – Personal Injury Claims – November 6th, 2008 – Insurance and Commercial Litigation Strategies – January 16th, 2009 – Maritime and Transportation Conference

    Program for June 19th, 2008 – Personal Injury Claims

    Lunch: Starts at 12:30 with program starting at 1:30 p.m. Cost is $20.00 per person including CD Location: Royal & Sun Alliance Lecture Theatre RSVP: azar@fernandeshearn.com or call 416-203-9548

    1. Personal Injury Introduction 2. Assumption of Risks and Waivers 3. Social Host Liability 4. Coffee break 5. Investigations, Surveillance, Defense Medicals 6. Damages and Costs 7. Caps, Time Bars, Limitations in Transport Mode

2. CIFFA Terms Upheld

Case Comment on: Locher Evers International v. Canada Garlic Distribution Inc, 2008 FC 319

A freight forwarder was successful in bringing a summary judgment for freight owed to it by an importer of garlic. The forwarder relied upon paragraph 17 of the CIFFA (Canadian International Freight Forwarders Association) standard terms and conditions which states:

“The Customer shall pay to the Company in cash, or as otherwise agreed, all sums immediately when due without reduction or deferment on account of any claim, counterclaim or set off.”

The importer’s defense that the CIFFA terms and conditions were not brought to its attention and that it could set off for damages to the cargo failed. The court upheld the credit agreement which the importer signed and which stated:

“Customer” will be bound by the Standard Trading Conditions (“Conditions”) (as amended or revised from time to time) of the Canadian International Freight Forwarders’ Association Inc. and the Canadian Society of Customs Brokers which amendments or revisions LEI will, upon request, send to the “Customer”. “Customer” acknowledges having received a copy of said “Conditions” and “Contract Terms” on or before the date of this application.

The court found that the CIFFA terms applied and that the forwarder was not a carrier but an agent of the importer. Justice Hugessen of the Federal Court found that:

There are constant and consistent references to the CIFFA terms and conditions in virtually all the documents emanating from the plaintiff to the defendant, notably in the Credit Agreement and on the bills of lading mentioned above. I am persuaded that the former took reasonable steps to draw those terms and conditions to the defendant’s attention. I find that the CIFFA terms form part of the contractual arrangements between them. …In particular I find that the CIFFA terms and conditions exclude any claim to set-off for alleged claims for damage to cargo and when read with the face page of the bills of lading issued in respect of the disputed shipments, make it plain that LEI was acting as agent for the defendant in concluding the contracts of carriage and as agent for the carrier in acknowledging receipt of the goods in apparent good order and condition. LEI was not the actual carrier, the latter being clearly identified in the bills of lading. The evidence is virtually all to be found in contemporary documents and there are no questions of credibility in this case. I find that there is no genuine issue for trial and the defense to the claim must fail.

Rui Fernandes


3. Dependants under Marine Liability Act Reviewed

The recent decision of the Federal Court of Canada in Wilcox v. Miss Megan (Ship), 2008 FC 506 is interesting in that it looks at dependants’ claims under the Marine Liability Act, 2001, c. 6.

On Saturday, May 8, 2004, John Wilcox was lawfully working on board the fishing vessel Miss Megan when it foundered, took on water and capsized or partially sank. The deceased drowned; he was 63 years old at the time of his death.

On April 29, 2005, Patsy Ann Wilcox filed a statement of claim against Gary Ross Hanley, the owner of the Miss Megan alleging the wrongful death of her husband pursuant to the Marine Liability Act, 2001 c.6. The plaintiff made claims for loss of financial support and loss of valuable services on behalf of herself and her disabled daughter, Tina Wilcox. The plaintiff also sought damages for loss of guidance, care and companionship on behalf of herself, the couple’s three adult children, and the deceased’s brother and sister.

The defendants filed a statement of defense dated May 26, 2005 whereby they admitted liability for the death of the deceased, but disputed the entitlement to certain damages. By order dated April 11, 2006, the plaintiffs were granted summary judgment with costs and the matter was referred for an assessment of the quantum of damages owed to the plaintiff. On October 2, 2007, Prothonotary Lafrenière rendered his report allocating and quantified the damage awards.

On October 30, 2007, the applicants filed a notice of motion to appeal the report pursuant to Rule 163(1) of the Federal Court Rules, above.

This decision is the appeal of Prothonotary Lafrenière’s report in the decision Patsy Ann Wilcox v. “Miss Megan” et al., above.

Prothonotary Lafrenière’s report addressed the following three issues: (1) the eligibility of the deceased’s siblings to seek damages, (2) pecuniary losses suffered by the deceased’s widow and disabled daughter, and (3) damages for care, guidance and companionship. Issues (1) and (2) are discussed below.

A. Eligibility of the deceased’s siblings to seek damages

With regards to the question of eligibility, Prothonotary Lafrenière reviewed sections 6 and 4 of the Act which grant the opportunity to recover damages and limit eligibility to recover, respectively. A question arose at trial as to whether the deceased’s siblings qualified under subsection 4(c) of the Act to claim damages. The Marine Liability Act provides:

4. In this Part, “dependant”, in relation to an injured or deceased person, means an individual who was one of the following in relation to the injured or deceased person at the time the cause of action arose, in the case of an injured person, or at the time of death, in the case of a deceased person:

(a) a son, daughter, stepson, stepdaughter, grandson, granddaughter, adopted son or daughter, or an individual for whom the injured or deceased person stood in the place of a parent;

(b) a spouse, or an individual who was cohabiting with the injured or deceased person in a conjugal relationship having so cohabited for a period of at least one year; or

(c) a brother, sister, father, mother, grandfather, grandmother, stepfather, stepmother, adoptive father or mother, or an individual who stood in the place of a parent.

The applicants argued that the words “brother, sister” must be read as qualified by “an individual who stood in the place of a parent. In other words a brother or sister were only eligible if they stood in the place of a parent to the deceased.

Prothonotary Lafrenière stated at paragraph 10 of his report that words contained in a statute are to be given their ordinary meaning and that other principles of statutory interpretation “only come into play where the words sought to be defined are ambiguous.

Prothonotary Lafrenière found at paragraph 12:

There is simply no ambiguity in paragraph 4(c). Persons who stood in the place of a parent are a separate class of individuals set out in paragraph 4(c) of the Act who might qualify as a dependant. This interpretation is consistent with the French version of the provision which refers to “toute autre personnne”, that is, any other individual who does not fit within the class of family members listed.

Consequently, the deceased’s siblings were entitled to claim damages as dependents pursuant to the Act.

B. Damages for Loss of Care, Guidance and Companionship

With regards to the damages claimed for loss of care, guidance and companionship, Prothonotary Lafrenière noted that paragraph 6(3)(a) of the Act provides for the recovery of these damages, but the Act fails to provide guidance on quantifying the amounts. Prothonotary Lafrenière discussed two approaches taken in various jurisdictions, but in the end found that the legislative provisions in the Province of Ontario bore the closest resemblance to section 6 of the Act in both form and effect. Prothonotary Lafrenière discussed the Supreme Court’s decision in Augustus v. Gosset, 1996 CanLII 173 (S.C.C.), [1996] 3 S.C.R. 268, stating at paragraph 90:

[…] the Supreme Court signalled its acceptance of the approach taken by the Ontario Courts for a full assessment of the evidence on a case-by-case basis, and has rejected a conventional award approach in jurisdictions where there does not exist an amount stipulated by statute. Various factors should be considered, including the circumstances of the death, the ages of the deceased and the dependant, the nature and quality of the relationship between the deceased and the dependant, the dependant’s personality and ability to manage the emotional consequences of the death, and the effect of the death on the dependant’s life.

The appeal was dismissed.

Rui M. Fernandes


4. Occupiers Duties

Owner of Recreational Parkland Found Liable for Injuries Sustained by Cross-Country Skier: Know Your “Occupier’s Duties” – Schneider et al v. St. Clair Region Conservation Authority et al (2008) 89 O.R. (3d) (Ont. Sup. Ct.)

This case should concern any insurer, owner or manager of lands advertised and promoted for recreational use by members of the public. The approach taken by the court in this case can apply equally to marinas, outdoor parks or recreational facilities.

The Facts

The St. Clair Region Conservation Authority (“St. Clair”) owns a 67-acre conservation area in southwestern Ontario. This is known as “Coldstream Park”. Coldstream Park is available on a year round basis to residents for recreational activities. A river works its way through the park, and many years ago a concrete wall had been constructed related to a dam facility. This wall is located 10 feet from the shore and about 4 feet of water, rising some 6 inches above water level. The structure is 15 feet long with a thickness of 1 foot. It has not been in use for many years and remains only for visual effect purposes.

St. Clair developed the property for use by the general public for recreational purposes. It contains a trail system, a wooden boardwalk marked by signs and maps and other facilities including soccer fields and playground equipment. Activities during the summer include daycare, soccer leagues and camping and in the winter the park is used for hockey, hiking, tobogganing and skating. The park is also used for cross-country skiing, both on and off the trails and on the ice surface of the river.

The Accident

January 30, 2005 was a sunny and clear day. The plaintiff, Angela Jo-Anne Schneider, decided to go on a cross-country ski outing with her family at the Coldstream Park. The snow in the park was sufficient for cross-country skiing purposes and the aforementioned concrete wall was covered with snow – there being more than 6 inches worth of snowfall. The family skied in single file with the plaintiff leading. Various ski tracks and footprints were followed along the boardwalk and then, when reaching a berm located along the shoreline the plaintiff left the trail and followed existing “herring bone” ski marks in the snow leading to the top of the berm. The plaintiff then skied down the berm to the ice surface on the river, and during this process she struck her right ski on an unknown and unexpected object below the snow on the ice, being the concrete wall. Although the plaintiff had frequented the area on many occasions and lived nearby, she had never seen this concrete structure before. It was located in a part of the river that she would not normally visit. There was no signage to indicate or warn of the presence of this structure.

The plaintiff sustained a compound fracture of three bones in her right ankle. She underwent an operation under general anesthesia the following day and was involved in an extended period of rehabilitation and recovery, involving significant pain and limitations on her employment functioning.

The Lawsuit

The plaintiff (and her husband, who claimed Family Law Act damages) sued St. Clair (as well as the Township in which the property was situate), as occupiers, on the basis that they breached their duty to care to her by failing to visually or otherwise identify or mark as a hazard the presence of the concrete wall of which she was not aware.

The Township denied that it was an occupier of the lake within the park where the accident occurred. (Ultimately, the Township prevailed in this argument: during the summer months it carried on certain functions in the area but during the winter months it had no involvement with the park whatsoever. It was ultimately found to be not liable because it was not an “occupier” at the time of the loss). The remaining defendant, St. Clair, argued that while it was an occupier that its duty of care was restricted to the following standard as set forth in the Occupiers Liability Act, R.S.O. 1990, c. O.2, which provides:

Risks Willingly Assumed

4(1) The duty of care provided for in subsection 3(1) [see below] does not apply in respect of risks willingly assumed by the person who enters onto the premises, but in that case the occupier owes a duty to the person to not create a danger with a deliberate intent of doing harm or damage to the person or his or her property and to not act with reckless disregard of the presence of the person or his or her property.

The defendant argued that the above section of the Act governed, and that the plaintiff was deemed to have willingly assumed the risks associated with her cross-country ski activities and that accordingly, they did not owe a duty to her other than to simply not deliberately create a danger or to recklessly create a danger.

The court disagreed, ruling that instead the general duty of care was in fact owed by St. Clair to the plaintiff as follows:

Occupiers Duty

3(1) An occupier of premises owes a duty to take such care as in all of the circumstances of the case is reasonable to see that persons entering on the premises, and the property brought on the premises by those persons are reasonably safe while on the premises.

The court did not accept the defendant’s argument that it was not reasonable or practical to have marked the concrete wall with signage to alert the users of the park, particularly skaters and cross-country skiers, of its presence in the ice. The court reasoned that while the lesser standard at section 4 above might well apply in case of “rural premises”, or “vacant” or “undeveloped” properties, that on a common sense basis the parkland in question, while expansive at 67 acres, did not meet any of those specific types of non-usage of land (which, by virtue of other parts of the Occupiers Liability legislation, limit the duty of care owed to that set forth at section 4 above). The court noted that the park had been used for recreational purposes and was advertised, promoted and encouraged by the defendants for use by the public. Further, the evidence was clear that cross-country skiing was an expected use of the park. The court found on the evidence that St. Clair had installed the concrete wall, and thereby knew of its location, design and appearance and the like and further that the wall had not been in use for more than 15 years and that it no longer served any purpose or utility. The court also found that St. Clair should have known that the concrete wall, barely visible above the water surface, would likely be covered by a blanket of snow in the winter and thus either partially or entirely hidden from view and also that the defendant should have known that the park, including the river, was regularly used by skaters and cross-country skiers during the winter months.

The court found that on the day of the accident the concrete wall was hidden beneath the snow surface and, as such, had become a trap, although not intentionally or deliberately set. The court found that any users of the park could easily have been alerted of its presence with adequate signage erected at minimal cost.

The court ruled that an occupier of lands may not have a duty to clear lands of any natural objects, being part of the natural or expected terrain of the park, however that once a non-natural object, such as a concrete wall, was constructed and introduced to the lands, that the occupier had a duty to keep this object from interfering with the normal and promoted use of the park. The court held that an occupier is not expected to guard against the contingency of every possible accident, but was to fulfill its duty of care obligation under section 3 produced above by exercising reasonable care against dangers that were sufficiently and normally reasonable.

Accordingly, St. Clair was found 80% liable for not posting adequate warnings or signage. The court found the plaintiff contributorily negligent for 20% of her injuries simply on the basis that cross-country skiing does have possible inherent dangerous consequences and therefore there was a modest degree of assumption of risk.


The duty of care set forth by the Occupiers Liability Act is of course fact specific and can only be assessed on a case-by-case basis. The above commentary by the judge about the obligation for an occupier to ensure that non-natural objects on the premises do not interfere with the normal and promoted use of the park spells out very clearly a due diligence exercise for all occupiers of lands upon which members of the public are to be invited.

Gordon Hearn


5. Freight Monies in Trust

In the Matter of the Bankruptcy of Norame Inc.:  The Ontario Court of Appeal Again Weighs in on the Protection of Freight Monies due to Carriers as Being Trust Funds [2008] O.J. No. 1580

In a judgment released at the end of April, the Ontario Court of Appeal ruled once again on a dispute between an unpaid carrier and secured interests of a load broker who became insolvent before the payment of freight monies [collected by the broker] earmarked for the carrier. This case involved a priority dispute for freight monies as between an unpaid carrier and the trustee having in mind the interest of secured creditors.

Norame Inc. carried on business as a load broker, arranging the transportation of goods for various shipper clients. One such shipper client was Dimplex North America.

Norame Inc. engaged a carrier, Vitran Corporation, as a carrier to ship goods for Dimplex North America. At some point in time, before Vitran Corporation was paid freight monies owing to it, Norame Inc. filed a voluntary assignment into bankruptcy. Prior to this, Norame Inc. had co-mingled or mixed the monies received from various shipper customers, being freight charges intended for carriers, with its own funds, rather than segregating those funds as was the requirement under the then existing Load Brokers Regulation(Ontario Regulation 556/92). Then, as at present (albeit under a different current legislation) intermediaries receiving monies from shippers or consignees of goods intended to be paid to carriers for freight charges were obliged to hold them in a separate trust account.

As mentioned, Norame Inc. failed to do so. Such monies not being maintained as a proper “trust”, in accordance with common law requirements, the Ontario Court of Appeal earlier ruled that any such co-mingled monies became part of the estate of the bankrupt to then fall under the usual priority distribution rules under bankruptcy law (see GMAC Commercial Credit Corp. – Canada v. TTC Logistics Inc. (2005) 74 O.R. (3d) 382) wherein a secured creditor, (ie. GMAC, in the case just mentioned), wins the priority dispute.

The question in the present case concerned what was to be done as concerns monies received after the filing in bankruptcy. In this particular case, after the bankruptcy of Norame Inc., the trustee brought an application for advice and directions to the court. An order was issued that all monies owed by shippers in respect of carriage services be paid to the trustee to be held in a separate account, pending further orders of the court. Eventually, the court ruled that those funds, which the trustee had received and segregated, satisfied the conditions for a trust and accordingly had to be paid to Vitran Corporation. The trustee was unable to concede that this carrier had priority to the funds. The carrier argued that it was entitled to the funds pursuant to Section 67(1)(a) of the Bankruptcy and Insolvency Act which provides that a bankrupt’s property is available for distribution to creditors however such does not include “property held by the bankrupt in trust for any other person”.

It should be recalled that Section 15 of the then existing Load Brokers Regulation provides that every load broker “shall hold in trust for the benefit of the carriers to whom the load broker is liable all of the money that the load broker receives in respect of the carriage of goods”. The trustee maintained that it held the funds for distribution to Norame Inc.’s creditors pursuant to the Bankruptcy and Insolvency Act. Citing the GMAC Commercial Credit Corp. – Canada v. TTC Logistics precedent, the court ruled that it had been concluded that any statutory deemed trust created by Section 15 of the provincial Load Brokers Regulation would not be a trust for the purposes of Section 67(1)(a) of the Bankruptcy and Insolvency Act, and thereby excluded from distribution to creditors, unless it otherwise conformed with the three common law trust principals of certainties of intention object and subject matter – specifically, that the funds be segregated.

The GMAC case was analogous to some degree, as in that case an interim receiver was appointed to assume the business of the load broker who failed in that case (TTC Logistics). The GMAC Commercial Credit case culminated in a finding that the interim receiver was bound by the s. 15 Regulation trust obligation with regard to carrier freight charges that it collected after the receivership’s commencement and that it was required to segregate those funds in trust.

In this case, the trustee in bankruptcy attempted to argue that it was not subject to the same rules as it did not “step into the shoes of Norame Inc.” as the bankrupt to continue its business – as the receiver did in the GMAC Commercial Credit Corp. case. However, the court held that there was no difference between a receiver carrying on the business of a company with a trustee in bankruptcy for the purposes of such a priority dispute and that a trustee in bankruptcy, upon receiving funds that were to be segregated and held in a separate trust account, would continue to hold those funds in accordance with the provincial regulation (Section 15) for the benefit of the unpaid carrier as beneficiary.

In conclusion, the court ruled in favour of the unpaid carrier with this priority dispute in holding that a load broker’s creditors were not entitled to monies paid to the trustee in bankruptcy in respect of a carrier’s shipping services where those funds had been segregated into a separate trust account.

Gordon Hearn

This newsletter is published to keep our clients and friends informed of new and important legal developments. It is intended for information purposes only and does not constitute legal advice. You should not act or fail to act on anything based on any of the material contained herein without first consulting with a lawyer. The reading, sending or receiving of information from or via the newsletter does not create a lawyer-client relationship. Unless otherwise noted, all content on this newsletter (the “Content”) including images, illustrations, designs, icons, photographs, and written and other materials are copyrights, trade-marks and/or other intellectual properties owned, controlled or licensed by Fernandes Hearn LLP. The Content may not be otherwise used, reproduced, broadcast, published,or retransmitted without the prior written permission of Fernandes Hearn LLP.

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