The plaintiff deals in agricultural crops and commodities. The defendant is a Canadian subsidiary and agent of Hapag Lloyd Aktiengesellschaft. This was a motion for summary judgment brought by the defendant against the plaintiff regarding non-delivery of a cargo of red lentils, due to be carried by sea from Vancouver, Canada to Kolkata, India. The port of final discharge was subsequently changed to Karachi, Pakistan.

The plaintiff alleged that the defendant was a common carrier by water and agreed to carry the cargo as 'the owner, operator, manager, and/ or charterer' of the Athos. It further alleged that the defendant failed to deliver the cargo to Karachi.

The defendant argued that the action was improperly brought against it as a 'common carrier', since it signed the relevant bills of lading as the 'declared agent' of the carrier, Hapag Lloyd Aktiengesellschaft. It admitted that the cargo was never delivered to Karachi, but denied responsibility for its non-delivery. The defendant sought summary judgment on the basis that the plaintiff's action was time-barred, since it was commenced more than one year after the cargo should have been delivered.

Held: Summary judgment for the defendant.

The defendant argues that cl 6 of the bills of lading sets out a one-year time limit for the commencement of an action in respect of any loss or damage related to the contract of carriage:

In any event Carrier shall be discharged from all liability in respect of loss of or damage to the Goods, non-delivery, mis-delivery, delay or any other loss or damage connected to or related to the Carriage unless suit is brought within one (1) year after delivery of the Goods or the date when the Goods should have been delivered.

The defendant also relies on the Marine Liability Act, SC 2001, c 6 (the Act), which incorporates the Hague-Visby Rules in Sch III. Article 3.6 of those Rules imposes a one-year time limit for the commencement of an action:

Subject to paragraph 6bis the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered. This period may, however, be extended if the parties so agree after the cause of action has arisen.

The defendant pleads that it is an agent of the carrier, which should be a party to the action. Further, art 4 bis.2 of the Hague-Visby Rules provides that all defences under the Rules apply to the servants and agents of the carrier:

If such an action is brought against a servant or agent of the carrier (such servant or agent not being an independent contractor), such servant or agent shall be entitled to avail himself of the defences and limits of liability which the carrier is entitled to invoke under these Rules.

The plaintiff argues that a geographic deviation took place when the goods were delivered to Kolkata, rather than to Karachi. It submits that this geographic deviation amounted to a fundamental breach of contract, resulting in repudiation of the contract, so that it was not bound by the time bar.

The statement of claim in this proceeding was issued on 24 August 2022, nearly 24 months after the arrival of the cargo in Kolkata, and nearly 21 months after the anticipated arrival of the cargo in Karachi.

The time bar is set out in cl 6 of the bills of lading. The shipment originated in a Canadian port and is subject to Canadian maritime law, including the Act. The Act incorporates the Hague-Visby Rules, which include a one‑year time bar. The defendant has shown that the plaintiff's action is time-barred.

The issue now becomes whether the time-bar defence is defeated by the geographic deviation from Karachi to Kolkata. Geographic deviation as a defence has not been definitively recognised in Canada. The subject was considered by the Supreme Court of Canada in Drew Brown Ltd v The 'Orient Trader' 1972 CanLII 194 (SCC), 34 DLR (3d) 339 (SCC), where Spence J, in dissent, said the following at 354:

Having already determined that there was an unreasonable deviation in the performance of this marine contract which unreasonable deviation was not waived by the shipper, I am of the opinion that the effect in law is that the contract is at an end and apart from any procedural provisions as to the adjustment of the compensation no party can depend on the provisions of that contract.

The plaintiff refers to Dera Commercial Estate v Derya Inc; The Sur [2019] 1 All ER 1147 (CMI170); ZI Pompey Industrie v ECU-Line NV 2003 SCC 27 (CanLII), [2003] 1 SCR 450 (SCC), and the opinion of the late William Tetley in his book Marine Cargo Claims (4th edn, Thomson Carswell, 2008) at 239 and 259:

[C]ourts are encouraged to construe the contract as a whole (including any exemption or limitation clause) in the light of the circumstances of the case, in an attempt to ascertain whether the specific 'deviation' which occurred was one which the parties may be said to have reasonably contemplated as falling within the scope of the exclusion or limitation of liability provision in their agreement. If the exclusion or limitation clause is found applicable to the particular deviation, a reasonableness test is then applied to determine whether or not the exclusion or the limitation is enforceable. ...

In the U.K., and therefore throughout the Commonwealth as well, there is now uncertainty as to whether unreasonable geographic deviation still deprives the carrier of the Hague Rules package limitation or other defences.

The Court is not persuaded by the plaintiff's arguments. No Canadian court has recognised geographic deviation as a defence to a time limitation in respect of a contract of carriage by water. In Dera, the geographic deviation in issue occurred with the knowledge of the plaintiff but without its consent. That is not the situation here. In ZI Pompey, the Supreme Court of Canada considered arguments about the effect of a geographic deviation. However, the determinative issue before that Court was whether the proceedings in Canada should be stayed in view of a forum selection clause in the contract of carriage.

According to the applicable law, ie the language of art 3 of the Hague-Visby Rules as incorporated in the Act, an action for loss of or damage to cargo is to be commenced within one year 'in any event'. The meaning of the words 'in any event' have been considered by the England and Wales Court of Appeal in Parsons Corp v CV Scheepvaartonderneming (The Happy Ranger) [2002] 2 Lloyd's Rep 357 (CMI829), and the Supreme Court of the United Kingdom in Fimbank Plc v KCH Shipping Co Ltd [2024] UKSC 38 (CMI2555). Following those decisions, which are of persuasive value in Canada, the one-year time limitation is not defeated by the geographic deviation of which the plaintiff complains.

The one-year time limitation set out in art 3.6 of the Hague-Visby Rules is to be interpreted broadly and applied generally. The public policy behind this time bar is well-established and needs no justification, especially in the context of maritime trade, which is an international undertaking.