Source: https://www.fernandeshearn.com/newsletter-2007-january-fernandes-hearn-toronto-law-firm/
Timestamp: 2019-04-21 18:16:39+00:00

Document:
The cap on damages for non-pecuniary loss was entrenched by the Supreme Court of Canada in 1978 by the trilogy of cases and has remain unchanged and is presently at approximately $311,000.00 CAD or so (see Statistics for Litigators by Rich Rotstein and Ian Wollach). This amount is applied in the most serious of losses including those of paraplegics and quadriplegics and provides a decreasing scale for damages for less and less serious injuries. Unlike our American counterparts, we do not have an unbridled range of damages even for the most severe of cases.
Recently, the British Columbia Court of Appeal announced reasons for judgment and Lee v. Dawson 2006 BCCA 159 which included the plaintiff’s charter arguments and attempted to challenge the upper limit of non-pecuniary loss damages. The jury at trial had awarded $2,000,000.00 for general damages but had not been instructed on the upper limits. The trial judge replaced this verdict with a judgment of $292,600.00 for non-pecuniary loss (the highest amount at that time pursuant to the trilogy).
The plaintiff appealed and sought a substituted award of $2,000,000.00 to conform to the jury’s assessment. The Court of Appeal dismissed the appeal and stated that the upper limit of damages established by the trilogy in the Supreme Court of Canada cases back in 1978 were binding upon the Court of Appeal of British Columbia.
The Supreme Court of Canada then dismissed the application for leave to appeal with costs and the conditional leave to cross-appeal was dismissed with costs on October 19, 2006.
The plaintiff had argued that the rough upper limit of the trilogy could be revisited and that the Court of Appeal could overturn the trilogy and that rough upper limit could be extended. The defendants in turn also appealed for various items including a reduction in management fee and tax and sought to have three of the damage awards reduced. The plaintiff’s arguments centered on s.15 of the Charter which indicated that such upper limits were in breach of the Charter because the affect of such application discriminates between classes of persons injured in tort actions founded in negligence. The decision for the Supreme Court of Canada in Thornton (Next Friend of) v. Prince George School District No 57  2 S.R.C. 267, Andrews v. Grand & Toy Alberta Ltd.  2 S.C.R. 229 and Arnold v. Teno (Next friend of)  2 S.C.R. 287 (“the trilogy”) predate the entrenchment in the Constitution of the Canadian Charter of Rights and Freedoms. The Charter values, it was argued, were inconsistent with this finding.
The defendant’s appeal in Lee v. Dawson was also dismissed on the basis of the facts of the case and the decision maintained in the regard. Further, the trial judge had dismissed the defendant’s complaints regarding the failure to award a structured settlement in the action. The trial judge was found that there was no suggestion that the plaintiff’s parents were spending the plaintiff’s money and that there was merit in the plaintiff’s argument that, on the one hand, the defendant suggested that the plaintiff was not sophisticated enough to handle money and that on the other hand he had to be sophisticated enough to save for his retirement after the age of 65. The plaintiff satisfied the trial judge that a structured settlement was not in the plaintiff’s best interest and she declined to make such an order. The Court of Appeal went on to indicate that the decision of the trial judge was consistent with the view that the best interests of the plaintiff were demonstrated as a matter of evidence. In this case, the trial judge found that questions of fiscal irresponsibility on the part of the plaintiff or his family were not of concern. The defendants did not demonstrate any error in principle and the conclusion reached by the trial judge was open to her on the evidence.
The plaintiff’s submissions in Lee v Dawson at the Court of Appeal level centered around the fact that, for less serious injuries, juries are not advised of the cap. Therefore, those who are seriously injured are treated differently because the cap is mentioned to the jury and imposes a differential treatment with the result that seriously injured plaintiffs are not properly compensated for their loss. The cap creates favoured classes and sub-classes based on the severity of the plaintiff’s injury and that this was impermissible. In the same vein, reference was made to a medical malpractice case in Alabama in Moore v. Mobile Infirmary Association 592 So. 2d 156. Analogy was made to the cap in Canada. Further analogies were made to those with mental injuries as apposed to physical injuries as well as the fact that that the upper limit does not apply in defamation cases.
The Court of Appeal in Lee found that the non-pecuniary award provided no direct relationship between degrees of damages sustained and the quantum of the non-pecuniary damages that is appropriate. The Court of Appeal found that the comparative groups as used by the plaintiff in this case though were not well aligned.
In Lindal, the court found that there was no justification for exceeding the upper limit of $100,000.00 “at that time”.
The Court of Appeal in Lee v. Dawson stated “I agree with the plaintiff and the intervenor that the time may have come for the rationalization or conceptual underpinning for having a rough upper limit on non-pecuniary damages to be re-examined. However, I am not persuaded that it is open to this Court to proceed on the footing that the trilogy establishing the rough upper limit is not binding on us. Some of the submissions made by the appellant and the intervenor advocating a reconsideration of the rough upper limit seem to me to be compelling but, in the end, this Court cannot overturn the trilogy.
The Supreme Court of Canada dismissed the leave to appeal. It is not yet time apparently to overturn the trilogy and to reexamine the rough upper limit. The cap has been securely fastened again for the foreseeable future.
As a matter of custom and practice, the term “freight broker” (synonymous with “load broker”) has developed a distinct meaning in Canada as one who arranges the transportation of goods by road carriage from a shipper to a consignee, for compensation.
Freight brokers are essentially unregulated. This could be a ‘good thing’ – or maybe not – for the broker. While the unregulated field readily allows new entrants and arguably trims costs [in a low profit margin world], the absence of codification as to standards of care and liability may prove to be problematic for the unwary freight broker who fails to implement a deliberate and consistent business model and method of operation. Unlike the statutory governance of motor carriers, there is no ‘uniform bill of lading’ or contract deemed applicable to freight brokerage operations. The freight broker is not handed specific liability guidelines or defenses. Rather, the freight broker must fend for itself with the ‘freedom of contract’ that comes with operating in what is essentially an unregulated world. The liability of the freight broker is simply assessed on the basis of agency principles. In acting as an agent, the freight broker undertakes responsibility for arranging the transportation of the cargo from origin to destination, and must obey and competently perform his instructions with due care and skill. As will be seen below, this lack of regulation, combined with frequently undocumented and casual ‘middleman’ dealings between shipper and carrier may not bode well for the freight broker in terms of liability exposure.
I made mention of the fact above that the freight brokerage industry is essentially unregulated. While freight brokers are not required to hold operating licenses in Ontario they are required to hold as trust funds monies received from a shipper or consignee earmarked for payment as freight charges billed by a performing carrier.
The freight brokerage industry in Canada has not yet published standard trading conditions at the industry level for freight brokers to “opt into” and incorporate in their dealings with shippers. The National Transportation Brokers Association is presently the only Canadian association representing the interest of companies who primary business is load brokerage.
Accordingly, it is clear, on the basis of agency principles that a broker will be liable for the incompetent dispatch of instructions to a carrier resulting in non-delivery or late delivery. Liability could also potentially extend to failing to timely place a claim against a carrier, in time, if this formed part of the expectation placed upon the freight broker in the circumstances.
advise the motor carrier of a value of a shipment, if advised of the value by the consignor or consignee, for the purpose of ensuring that the motor carrier has sufficient road haulers liability insurance to cover the value of the goods being carried.
And so it should follow, one would think, that matters should work easily for the freight broker given its apparent limited involvement. After taking preliminary details concerning a shipment, and thereafter providing a quotation to a shipper (whether prior to or after securing the services of a motor carrier) the freight broker then as a matter of course and practice simply faxes a ‘load confirmation sheet’ to the motor carrier covering the essential performance parameters. Subsequently, the motor carrier attends at the shipper’s location. Following delivery, the motor carrier invoices the load broker, attaching a copy of the proof of delivery. As a rule, the load broker would have independently invoiced the consignor or the consignee effecting a low profit margin or markup over the carrier’s charges.
Simple enough. What could possibly go wrong? Lots. Things may not have been properly documented from the standpoint of the freight broker.
It follows from the foregoing that there are potential pitfalls and gaps for the freight broker.
Could the Freight Broker be Regarded as a Carrier?
First, the freight broker may face a claim that it is liable, as a carrier, strictly by virtue of the loss or damage to the cargo. The shipper may express surprise that the load was ‘brokered’ and argue that it gave the broker the business, trusting ‘it and only it’ with the shipment. The freight broker, if confronted with assertions that it was understood by the customer to have been a carrier, may have difficulty if it is found that this undertaking was given. The broker is then saddled with the significant exposure faced by carriers. The broker may not be able to assert the ‘uniform bill of lading’ defences. There is no known case law on point. The problem in this respect arises from the fact that paragraph 1 of the Uniform Bill of Lading provides that “the carrier of the goods described in this contract is liable for any loss or damage to goods accepted by the carrier or the carrier’s agent except as provided in this Schedule“.
Whether the broker, liable as a carrier, (but who did not issue a bill of lading or for that matter actually accept the goods) can rely on the Uniform protections would then seem to fall on the question as to whether the actual carrier is considered on the facts of the case to have been the ‘agent’ of the broker in receiving the goods for carriage. The problem here will be obvious: the broker may face the problem of not having the same limitation of liability defense that the actual carrier [who is responsible for the loss] will have. As a carrier the broker will have certain common law defenses [i.e. exonerations from liability] but if liable, it may not have the limitation of liability defense that the carrier would have (for lack of a declared value on the contract of carriage). The broker is then caught in the middle, in effect underwriting the difference between the amount of the loss and the carrier’s limit of liability, the carrier presumably ‘being on the hook’ for at least the limitation amount.
How can the Freight Broker be liable even if acting only as an intermediary agent?
There may be a potential exposure for the freight broker, tied into the fact that it tends to exist on the basis of earning modest mark ups on carrier freight bills over a volume of shipments. This may lead to casual and undocumented exchanges and receipt of instructions. This could lead to problems for the broker, as illustrated below.
There will always be a first time that a broker engages the services of a particular carrier. The broker faces exposure to claim if it is seen to be negligent in the selection of a carrier. Increasingly brokers log onto, and make use, of Internet services such as LoadlinkTM for introductions to carriers. The freight broker should be prepared to defend its selection of a carrier. Consider the case where a carrier causes loss or damage to a shipment. The carrier may be able to limit liability, and as such the affected cargo interest may wish to make full its recovery by including a claim against the broker for negligence in choosing the carrier involved. The limited case law on the point would suggest that the duty extends to the ‘reasonable’ selection of a carrier [whatever this might mean], ensuring that the carrier is properly licensed, and, where the value of the cargo in question is known, properly insured.
A concern for the freight broker is that in the event of a claim coming forward for loss, damage or delay, it will not necessarily be the case that it can simply claim ‘middleman’ status seeking the carrier to be fixed with any and all liability. The problem, essentially, is that as a middleman the broker has had separate dealings with the shipper and with the carrier.
Your client is a freight broker.
your client takes a phone inquiry from a shipper, who provides a request for the shipment of a general description of cargo (i.e. ‘x’ number of boxes, contents not disclosed) for carriage between certain points, perhaps accompanied with an instruction as to when the cargo is to be picked up and a date by which the same must be delivered to destination1. Assume in this case that your client is told to ensure that the cargo will be ready for pick up on a Friday afternoon for delivery to destination the following Monday. Assume further that the geography between origin and destination is such that the shipment will not always be in transit, but that at some point therefore that the trailer in question is left stationary overnight by the carrier while en route pending final delivery.
Assume that your client does not have standardized internal methods of recording or memorializing information and requests received from a shipper. In essence, it trades only on a ‘shipment by shipment / instruction by instruction’ basis and information may be written down, ‘somewhere’, as and when received.
After taking the above details verbally from the shipper, a representative from your client sends a freight rate quote to the customer. The rate quote features standard conditions in this illustration.
Thereafter, a “carrier confirmation sheet” is issued to the carrier listing the above pick up and delivery instructions.
Assume however that a bill of lading is issued by the pickup carrier and there was not a declared value endorsed on same by the shipper.
Assume that the trailer is stolen by unknown third parties (of course for whom no recovery could ultimately be obtained) and that there is then a cargo claim filed by the shipper customer.
As there was no declared value on the bill of lading issued by the carrier it will seek to limit liability to the “Uniform bill of lading” rate of $2.00 per pound of the goods in question. This limitation amount may fall below the value of the lost shipment. The freight broker may be left ‘hanging’ for the ‘difference’ by virtue of its casual dealings with the shipper on the one hand and the carrier on the other.
The shipper may assert that the freight broker was negligent in its choice of a carrier (especially one used for the first time) however presumably compliance with the aforementioned standards would amount to some sort of a defense. The bigger problem lies with the credibility issues with the shipper now ‘conveniently’ announcing – post loss – that at the outset it had instructed the freight broker to ensure that a certain minimum of protection and security be afforded over the cargo while not actually in transit pending delivery. As such, while the carrier may or may not have employed security devices (i.e. pin locks, secured fencing, guard supervision, restricted access to the area in question etc.) the shipper might take the position that the goods were expected to have enjoyed an enhanced level of security, or indoor storage or the like – which, if complied with, would have prevented the theft in question.
The risk here, and the essential concern, is that in the commercial interest of keeping dealings separate and distinct as between the shipper and the carrier the freight broker may assume the risk of any difference in the receipt and dispensing of instructions between the two. The shipper is, for example, not given the opportunity to vet the carrier confirmation sheet given to the carrier to “sign off” that any and all instructions contained therein are thorough and complete. As such, the shipper might assert that verbal instructions were provided at the front end and if these instructions (i.e. in the nature of security required over the shipment) were not ultimately conveyed to the carrier that this was simply the fault of the freight broker.
What is then necessarily and essentially a volume based business poses potential hazard. While the freight broker might be held in a sympathetic light by virtue of a minimal markup relative to what exposure it might take on, from the court’s standpoint “profit is profit” (or “consideration is consideration”) for the purposes of holding a freight broker to the standard as agent. If found to have been given instructions, and having failed to take reasonable steps to implement those instructions, then the freight broker will be found liable for damages subject to the usual mitigation and remoteness limitations thereon. As mentioned the carrier will not always be liable for the full amount of loss to provide an ‘indemnify flow-through’ for the broker.
The freight broker therefore has to be deliberate with its business model and the capacity in which it acts. Standard procedures should be adopted concerning memorializing the detail of instructions received at the front end by the shipper. Certain leading load brokers are now publishing service conditions for access and review on a website which codify the nature of the services provided and the basis upon which rate quotations are provided. By this approach the customer is requested to advise the freight broker if there is anything by way of instruction not specifically reflected in the rate quotation submitted to it. The idea is for the freight broker to avoid liability for failure to communicate special handling, storage, security instructions, cargo needs or as to the value of a shipment to a carrier unless the customer has advised the freight broker accordingly.
Additionally the freight broker should be deliberate in laying the guidelines as to the responsibility of declaring a value on a bill of lading. The classic load broker function would suggest that this is left to the shipper to attend to when the carrier issues a bill of lading at the loading dock. Where the load broker gets involved in this regard it does so at its peril. This could blur the lines between it acting only as an agent and acting as a carrier. Even if not regarded as a carrier, this opens up a further liability exposure on the broker, calling for a credibility assessment: if no value was declared and there is a loss, with the limitation calculation being relevant, the broker may then have to defend a suggestion by the shipper that it was responsible to address a declaration of valuation with the carrier. This will certainly be a gratuitous exposure given the infrequency in which values are declared on bills of lading.
Service conditions may offer significant protection, featuring limitations of liability or outright exonerations from liability (for example, in the case of delay or consequential damage claims brought against the freight broker). Most importantly they will provide guidelines for shippers to understand who will be responsible for what. Notice of claim requirements will also provide significant protection.
Freight brokers should also take further protection in standardizing, internally, the method in which instructions are recorded from shippers such that it can be stated with some confidence that if there is no writing internally with the broker as to an instruction that the instruction was simply “never received”.
By implementing standard practices and putting the shipper to confirming details of needs in respect of the cargo, in a uniform way, the broker will more readily avoid the credibility issue pitfalls that seem to surface following a loss where for whatever reason liability does not flow for the full amount of a claim to the responsible carrier.

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