Voest-Alpine Canada Corp (the plaintiff) purchased 1,288 pieces of high-pressure steel pipe from a company in Korea and had it shipped to Calgary, Alberta. The Sammi Crystal, owned by Pan Ocean Shipping Co Ltd (Pan Ocean), transported the pipe to British Columbia. When the pipe was loaded, it received a clean bill of lading. After the pipe was unloaded in British Columbia, Fraser Surrey Docks Ltd (Fraser Surrey), the company responsible for removing the pipe from the dockside and for its interim storage, noted on its bill of lading that 9 pieces were damaged. Then Tri-Line Expressways Ltd (Tri-Line), the trucking company hired to transport the pipe to its final destination in Alberta, noted on its bill of lading that 31 pieces were damaged. Approximately one month after arrival at the plaintiff's stockyard, the pipe was inspected and the plaintiff alleged that 1,130 pieces of pipe were so damaged as to be unusable. This portion of the pipe was auctioned for salvage. The plaintiff filed a cargo damage claim against Pan Ocean, Fraser Surrey and Tri-Line (the defendants).

Held: Judgment in favour of the plaintiff against Pan Ocean for 9 pieces of pipe and against Fraser Surrey for 22 pieces of pipe; action against Tri-Line dismissed.

Where there is a successive chain of bailees and the owner of the cargo has proven delivery of the cargo to the first bailee in good order and the receipt of that cargo in bad order at the end of the chain of successive carriers, there is a presumption that the loss occurred during the period that the last custodian had control of the cargo.

In addition, art 3.4 of the Hague Rules provides that a bill of lading is prima facie evidence that the cargo was received by the carrier in apparent good order and condition. The Rules also provide that, in the event of loss or damage to the cargo, the burden of proof that the loss or damage was not due to the fault or neglect of the carrier, its agents or servants is on the party seeking to be absolved from liability.

The key to this kind of case is documentation. The bills of lading are absolutely vital. The plaintiff only needs to prove that the cargo was delivered to the first carrier in good condition and that it was received in damaged condition. The plaintiff then has a right to rely on the presumption that the last carrier was responsible for all damage except that which was noted on the bills of lading along the chain of carriers. To be able to rely on the presumption, the plaintiff must carefully document the amount and type of damage, and must prove that the correct cargo was being documented. Once this has been done, the responsibility falls to the last carrier to prove that the cargo was not damaged while in its possession, or that, if the cargo was damaged while in its possession, it was not negligent. It is then for the last carrier to shift the responsibility for damage to other carriers, if indeed other carriers were responsible. The reason for this presumption is that it is impossible for the plaintiff to prove where and how the damage occurred along the chain of carriers. The presumption is important and should be strictly applied. In view of the presumption, it is vital that each carrier carefully documents all damage as it receives the cargo. Failure to do so would, prima facie, impose liability for damage that is noted by a subsequent carrier.

Accordingly, the Court gave judgment to the plaintiff for the value of 22 pieces of the pipe against Fraser Surrey, and for 9 pieces of pipe as against Pan Ocean. Since no evidence was provided against Tri-Line, the plaintiff's action against the last party was dismissed.