2016 QCCQ 5550, 2016 QCCQ 5550

Murphy c. United Parcel Service China 2016 QCCQ 5550 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-22-199722-136 DATE: June 3, 2016 ______________________________________________________________________ BY THE HONOURABLE DOMINIQUE GIBBENS, J.C.Q. ______________________________________________________________________ SEAN MURPHY, es qualité -and- chateau d’argent inc.

Plaintiffs v. united parcel service china -and- UNITED PARCEL SERVICE DU CANADA LTÉE Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Sean Murphy, es qualité of attorney in Canada of Lloyds Underwriters (“ Lloyds ”), and Lloyds’ insured, Chateau D’Argent Inc. (“ Chateau ”), claim $35,961.85 from Defendants United Parcel Service China and United Parcel Services du Canada Ltée (collectively “ UPS ” or “ Defendants ”) following the loss of a package during transportation from China to Montreal.

The package arrived at UPS’ facility in Lachine, Québec, but disappeared prior to delivery to Chateau. [ 2 ] Defendants admit that they are liable for the loss of the package, but claim that their liability is limited to $100 by the terms of the contract with Chateau.

Plaintiffs respond that the limitation of liability is inapplicable or, in the alternative, that it does not protect Defendants from liability given the facts of the case. [ 3 ] The amounts claimed are uncontested and the dispute is limited to the applicability or effect of the limitation of liability provision at issue. the FACTs [ 4 ] Lloyds is the insurer of Chateau, who carries on business in Montréal as a manufacturer, exporter and importer in the jewellery industry. [ 5 ] UPS China and UPS Canada are part of the worldwide UPS network, carriers for hire in the transportation of cargo. [ 6 ] In August 2012, Chateau retained the services of UPS for the transportation of two packages from China to Montreal. [ 7 ] At the time, Chateau had been a long-time and regular user of UPS’ transportation services and it is uncontested that the transportation contract at issue was subject to the UPS Canada Terms and Conditions of Service effective January 2, 2012 [1] (the “ UPS Terms ”). [ 8 ] The UPS Terms provide a maximum liability on the part of UPS where a shipper chooses not to indicate on the bill of lading a declared value for carriage for the shipment: “ 2.

Terms Used (…) - Declared Value for Customs is the value of the contents declared by the Shipper on international Shipments for the assessment of customs, duties and taxes by the destination country. - Declared Value for Carriage refers to the amount for which the Shipper wishes to obtain additional protection against loss or damage during shipping. If no declared value is entered, UPS’s maximum liability for the Package or Shipment is $100 . For a Declared Value above $100, an additional charge applies, as listed in the UPS Rates in effect at the time of shipping. See

Section 21 for details . 21. Responsibility for Loss or Damage

Except for articles listed in

Section 3.3 (Prohibited Article) and

Section 3.4 (Articles Requiring Pre-approval for shipping within Canada, Internationally or Both), UPS automatically protects against loss or damage of a Package or Shipment up to a value of $100. If the Shipper wishes to declare a value greater than $100 for a Package or Shipment, the greater Declared Value must be entered on the UPS shipping documentation, and an additional charge will be applied.” [Our emphasis] [ 9 ] On August 17, 2012, two packages containing silver jewellery items purchased by Chateau from MBLON Jewellery Co.

Ltd. (“ Mblon ”) were remitted to UPS in China for delivery to Chateau in Montreal. They were sent under the same international waybill (bill of lading) bearing number H930 2186 115 (the “ Waybill ”), [2] which Mblon completed on behalf of Chateau. [ 10 ] The Waybill described the goods as “Silver Jewelry”.

No value was indicated in the box entitled “Declare value of shipment for carriage only”, but the amount of US$34,466.25 was indicated in the adjacent box entitled “Declare value of shipment for customs only”. [ 11 ] Both packages arrived at the UPS facility in Lachine, Québec early in the morning on August 21, 2012. One of the packages was delivered to Chateau later that same day, but the other one (the “ Missing Package ”) was not.

It was later determined that the Missing Package was physically scanned at 8:24 am on August 21, 2012 as it entered the non-bonded sorting area of the UPS Lachine facility, after being cleared for customs. [3] UPS lost track of it afterwards. [ 12 ] Chateau reported the Missing Package to UPS on August 21, 2012. It was initially told to wait one or two days while UPS tried to locate it.

After further inquiries, it was eventually told by UPS that the Missing Package could not be found and that no explanation could be provided as to the cause of its disappearance. [ 13 ] All parties admit that the Missing Package contained jewellery valued at $33,014.12 and after adjustments to account for duty ($1,554.87), freight ($181.60) and a 10% profit ($3,127.91), a total insurance claim of $35,961.85 was submitted by Chateau to Lloyds, of which Lloyds paid $33,461.85 after deduction of the $2,500 deductible. [4] [ 14 ] The shipping costs of the Missing Package were eventually reimbursed to Chateau. [5] A 100$ payment, corresponding to UPS’ maximum liability under the UPS Terms, was also made by UPS, but later returned by Chateau.

At trial, UPS formally offered to pay this amount. [ 15 ] Plaintiffs demanded payment of $35,961.85 from UPS on December 21, 2012. [6] [ 16 ] Although Chateau did not enter a “Declared Value for Carriage” on the Waybill and accepted the limitation of liability, Plaintiffs now seek to have it set aside on three grounds, namely:

a) the Missing Package was not in transit at the time of its loss and the limitation is altogether inapplicable;

b) The loss of the Missing Package results from Defendants’ gross negligence; and/or

c) The loss of the Missing Package results from an intentional fault of UPS, given that it must be presumed to have been stolen by a UPS employee. questions in issue [ 17 ] These facts and the position of the parties call for the resolution of the following questions:

a) Was the Missing Package “in transit” at the time of its loss?

b) Was the loss of the Missing Package caused by UPS’ gross negligence?

c) Have Plaintiffs proven that the Missing Package was stolen by a UPS employee and, if so, does the theft constitute an intentional fault on the part of UPS? [ 18 ] The Court must also rule on an evidentiary objection taken under advisement during the trial. ANALYSIS

a) The objection to the expert testimony of Captain Nelson Furtado [ 19 ] During the course of the trial, UPS objected to a portion of the testimony of Captain Nelson Furtado of Furtado Maritime Inc., led by Plaintiffs. The Court allowed the testimony under reserve of the objection. [ 20 ] Capt. Furtado was retained by Lloyds on October 4, 2012 to carry out an investigation into the loss of the Missing Package. It was hoped that his investigation would lead to the recovery of the Missing Package or, at least, to the determination of the probable cause of the loss. [ 21 ] Capt.

Furtado had several communications with representatives of both Chateau and UPS and he reviewed the Waybill, tracking documents, invoices, email communications between the parties and other relevant documents. Despite his efforts, the Missing Package was not recovered, nor was he able to determine why it disappeared. [7] [ 22 ] Most of Capt. Furtado’s testimony at trial was factual in nature and did not give rise to any objection.

He did, however, offer his opinion regarding Defendants’ collaboration in the context of his investigation and it is this aspect of his testimony to which UPS objects. [ 23 ] UPS invokes the well-established principle that in order to be admissible, expert evidence must be necessary to enable the Court

to understand complex or technical matters that are outside the scope of its experience or knowledge. [8] UPS argues that Mr. Furtado’s testimony does not concern technical or scientific issues and that the Court does not require his assistance. [ 24 ] The Court agrees with UPS. [ 25 ] Although Capt. Furtado may be highly specialized in maritime cargo claims, an area in which assistance can be required depending on the circumstances of a case, his expert testimony in the instant case is not required.

The opinion he wishes to express regarding the level of collaboration offered by UPS during his investigation and related issues is not technical or complex and the Court is able to form its own opinion and rule on the facts without his assistance. [ 26 ] Capt. Furtado’s opinion evidence is therefore inadmissible and the Court has disregarded it for the purpose of this judgment.

b) Was the Missing Package “in transit” at the time of its loss? [ 27 ] The first ground raised by Plaintiffs to set aside the limitation of liability contained in the UPS Terms is that it is entirely inapplicable because the Missing Package was not in transit at the time of its loss. [ 28 ] Plaintiffs rely on the decision of Justice Pepita G. Capriolo in Smith v.

Agility Logistics Co. (Geologistics Co.) , [9] where a limitation of liability provision contained in a bill of lading was indeed set aside on the basis that the merchandise at issue was not “in transit” when it was stolen. [ 29 ] The facts in Smith were quite different from the facts of this case, however. [ 30 ] In Smith , successive contracts were put in place to ensure customs clearance and shipment of clothing from Stuttgart to the importer’s premises on Chabanel Street in Montreal.

Justice Capriolo concluded that the limitation of liability appearing on the bill of lading specific to the final leg of the shipping was inapplicable because the merchandise was stolen before that final leg even began, when the goods were not yet in transit. [10] [ 31 ] Here, the Waybill establishes the existence of a single contract providing for the carriage of the packages from China to Montreal and the Missing Package was clearly lost during the execution of that contract. [ 32 ] Indeed,

Article 2040 of the Civil Code of Québec (“ C.C.Q. ”) provides that a contract for carriage of property extends from the time the carrier receives the property into his charge for carriage until its delivery. [ 33 ] UPS received the Missing Package on August 17, 2012. It was shipped from China to Canada, arrived at the UPS Lachine facility and disappeared prior to delivery. On plain reading of

Article 2040 C.C.Q., the loss of the Missing Package occurred during the execution of the contract. [ 34 ] Since all admit that the UPS Terms containing the limitation of liability were applicable to the contract, the limitation of liability provision is clearly applicable.

c) Was the loss of the Missing Package caused by UPS’ gross negligence? [ 35 ] Secondly, Plaintiffs argue that the limitation of liability provision does not protect UPS from liability because the loss of the Missing Package results from UPS’ gross fault or negligence. [ 36 ] Plaintiffs are correct of course that a contractual limitation of liability cannot protect a person from liability for material injury caused by gross fault or gross negligence. This is expressly provided in

Article 1474 C.C.Q.: 1474. A person may not exclude or limit his liability for material injury caused to another through an intentional or gross fault; a gross fault is a fault which shows gross recklessness, gross carelessness or gross negligence. He may not in any way exclude or limit his liability for bodily or moral injury caused to another. [ 37 ] Gross fault or negligence has been further described as follows by the Court of Appeal in Kingsway Transports Limited v.

Chubb Insurance Company of Canada [11] : « Les clauses limitatives ou exonératrices de responsabilité n’ont pas pour effet de permettre au débiteur d’une obligation "de se soustraire à la responsabilité provenant de sa faute intentionnelle ou de sa faute lourde." Pour expliquer la faute lourde, la jurisprudence et les auteurs ont souvent fait référence à la définition qu’en donnait Pothier : [La] faute lourde consiste à ne pas apporter aux affaires d’autrui le soin que les personnes les moins soigneuses et les plus stupides ne manquent pas d’apporter à leurs affaires.

Récemment, cette Cour a préféré une définition plus nuancée du moins, dans son application.

Ainsi, on peut affirmer que si par faute lourde on entente la faute " grossière et inexcusable qui dénote une insouciance, une imprudence ou une négligence grossière et donc un total mépris des intérêts d'autrui " chaque cas doit s'apprécier en fonction des circonstances qui lui sont propres. » [12] [Emphasis in original text; references omitted;] [ 38 ] Have Plaintiffs met their burden of proving gross fault or negligence on the part of UPS? [ 39 ] Plaintiffs argue that the following factual elements, when considered together, amount to gross fault or gross negligence:

a) Systems in place at the UPS facility in Lachine were inadequate because there is no way to determine what happened to the

Missing Package after the physical scan of 8:24 am on August 21, 2012 when it entered the non-bonded sorting area;

b) Although there is a closed-circuit camera system in place, no tapes of the sorting and loading areas were available;

c) No police report was filed and no “formal” internal investigation was conducted;

d) UPS should have been particularly careful with security in August 2014 given that an employee at the Lachine facility was suspected at the time of stealing merchandise from Costco deliveries. [ 40 ] The Court does not believe that these facts or the evidence otherwise presented establish “gross recklessness, gross carelessness or gross negligence” (Article 1474 C.C.Q.) on the part of UPS for the following reasons. [ 41 ] Firstly, it must be noted that two or more “simple” faults cannot amount, cumulatively, to gross fault or negligence, as the Court of Appeal stated in Kingsway Transports : « En l'espèce, même en appliquant aux faits la définition nuancée de faute lourde, c'est-à-dire en comparant la conduite des préposés de l'appelante à celle d'un camionneur prudent et diligent dans l'exercice normal de ses activités, on peut conclure tout au plus à négligence, tant en ce qui concerne la conductrice du camion stationné laissant une

partie de la remorque empiéter sur la route qu'en ce qui concerne Houle qui a vu l'obstacle trop tard ou encore le chauffeur précédant Houle qui n'aurait pas utilisé le clignotant de gauche . De plus, même s'il était acquis que trois fautes ont été commises et tenant pour établi qu'il ne s'agit pas de fautes lourdes mais de fautes simples, leur conjugaison n'est pas possible aux fins de les assimiler à une faute lourde attribuable à l'appelante, aucune règle de droit ne permettant un tel cumul.

Le premier juge, avec égards, n'était donc pas justifié de conclure que l'appelante, par l'un ou l'autre ou l'ensemble de ses préposés, avait commis une faute lourde rendant inapplicable la clause limitant la responsabilité du transporteur.

La clause devant avoir plein effet, les offres de l'appelante étaient suffisantes. » [13] [Emphasis added] [ 42 ] Secondly, the Court does not believe that any of the factual elements raised by Plaintiffs, taken individually, establish gross negligence on the part of UPS. [ 43 ] According to the Court of Appeal, the unexplained loss of a package does not, in and of itself, establish gross negligence on the part of a carrier.

To conclude to gross negligence, it must be shown that the carrier’s procedures were deficient : « [3] Le 18 décembre 1985, l’intimée fait appel à Transport Pelletier pour faire livrer à Québec un moule qu’elle utilise pour la production de casques de sécurité en plastique. (…) [4] Personne ne sait depuis ce qui est arrivé à ce moule de 1 500 livres et d’un volume (20" × 20" × 12") relativement petit. (…) [16] Dans un arrêt rendu le 25 février 1992, notre Cour sous la plume du juge Roger Chouinard, conclut que la perte inexpliquée par un transporteur n’est pas, en soi, une faute lourde.

C’est à l’analyse des faits de chaque cas qu’il faudra décider si les circonstances permettent de conclure à l’existence d’une faute lourde.

Rien dans la preuve ne permet ici de tirer pareille conclusion: aucune preuve n’a été faite à l’effet que les procédures de l’appelante seraient habituellement déficientes ou, tout au moins, l’auraient été dans la situation particulière qui nous occupe. [17] Dans ces conditions, il faut conclure que l’appelante a raison de prétendre que le juge aurait dû limiter à la valeur maximale prévue au connaissement. » [14] [Emphasis added; references omitted] [ 44 ] Plaintiffs have provided no evidence suggesting that UPS’ processes were deficient as compared to those of other carriers, either generally or in the context of the carriage of the Missing Package. [ 45 ] On the contrary, the evidence shows that UPS’ processes and the level of security in the Lachine facility are serious and thorough.

The sorting and loading areas are secure areas with restricted access and video cameras in certain areas.

Additional physical scans of packages during the sorting and loading process and additional video cameras would provide an even more secure environment, but that is not to say that the system in place is deficient, let alone so seriously deficient as to constitute gross recklessness or gross carelessness. [ 46 ] The evidence shows, moreover, that a high volume of packages were being delivered to Chateau regularly for 15 years prior to the loss and the Missing Package was the only package ever lost, which confirms that UPS’ processes are efficient and safe. [ 47 ] In hindsight, it would have been better for Chateau to retain additional protection against loss or damage during shipping by indicating a Declared Value for Carriage on the Waybill.

The security measures would then have involved a signature at every stage of the shipment process. Chateau chose not to retain such additional protection, however, and Plaintiffs must accept the consequences of this decision.

d) Have Plaintiffs proven that the Missing Package was stolen by a UPS employee and, if so, does the theft constitute an intentional fault on the part of UPS?

[ 48 ] Plaintiffs also argue that the limitation of liability provision fails to protect UPS because the loss of the Missing Package results from its intentional fault. They submit that the Missing Package was most likely stolen by a UPS employee and that such a theft constitutes an intentional fault on the part of UPS. [ 49 ] To succeed with this argument, Plaintiffs must first prove, on a balance of probabilities, [15] that the Missing Package was stolen by a UPS employee.

To meet this evidentiary burden, the evidence must be clear and convincing [16] and Plaintiffs must demonstrate that employee theft is not only possible, but probable. [17] The Court must decide liability on the basis of the most probable facts. [18] [ 50 ] Plaintiffs have not, on a balance of probabilities, proven that the Missing Package was stolen by a UPS employee. [ 51 ] No direct evidence of theft has been offered.

Plaintiffs are asking the Court to infer that an employee stole the Missing Package from the circumstantial evidence provided, relying entirely on presumptions of fact. [19] [ 52 ] Plaintiffs rely mostly on the fact that the Missing Package was last scanned entering an area of the UPS Lachine facility that is accessible only to UPS employees and authorized persons, making theft by a UPS employee the most probable cause of the loss.

They rely on a House of Lords decision in a case involving UPS [20] where theft by one or more UPS employees was found to be the most probable explanation to the unexplained loss of a package. [ 53 ] Plaintiffs also placed much emphasis on the fact that a UPS employee, Mr. Iskander Ohanoglu, was found in possession of jewellery stolen from a Costco delivery in September 2012, which lead to criminal prosecution. [21] [ 54 ] The Court does not consider this sufficient to conclude to theft by a UPS employee. [ 55 ] As concerns Mr.

Ohanoglu, he was not on staff on August 21, 2012 [22] and nothing suggests that he had access to the Lachine facility when the Missing Package disappeared. In fact, no connexion of any kind was established between him and the Missing Package or Chateau. [ 56 ] As to the UPS driver on the route providing deliveries to Chateau, Ms. Maria Georgas, who had been ensuring regular deliveries to Chateau for many years, nothing suggests that she could have stolen the Missing Package. [ 57 ] The evidence shows, moreover, that there are other possible explanations for the loss of the Missing Package.

It could have been placed on Ms.

Georgas’ delivery truck and have been left on the premises of another client by mistake or it could have fallen off her truck, it could have been loaded onto the wrong delivery truck, from which it could have been left on the premises of another client by mistake or fallen off the truck. [ 58 ] After careful consideration, the Court considers that the proven facts do not create sufficiently “serious, precise and concordant” presumptions [23] to allow it to conclude, on a balance of probabilities, that the Missing Package was stolen by one or more employees of UPS. [ 59 ] Even if it had found on a balance of probabilities that the Missing Package was stolen by an employee of UPS, the Court would not have considered the theft as an intentional fault of UPS. [ 60 ] The parties referred the Court to well-known judicial precedents setting out the conditions under which an employer can be held responsible for the fault of an employee pursuant to

Article 1463 C.C.Q. [24] [ 61 ] In the seminal case of Havre des femmes inc. v. Dubé , [25] the Court of Appeal stated that in order for an employer to be liable for the fault of an employee, t he fault had to occur within the framework of the employee’s duties and it must have benefited the employer at least partially. [26] [ 62 ] Plaintiffs referred the Court to the judgment in Axa Assurances inc. v.

Groupe de sécurité Garda inc. , [27] where Garda was held liable for the intentional fault of a security guard who intentionally started a fire in a building under his charge, arguing that the theft of the Missing Package should be treated in the same way. [ 63 ] The Court disagrees with Plaintiffs on this point.

In Axa , Justice Chantal Masse found that the employee had acted to impress his superiors; she concluded that had the employee been able to make it appear as though he and his team had extinguished a fire started by someone else, as he intended to do, Garda would have benefited from the employee’s fault, as it would have reflected on the quality of its services. [28] This satisfied the second condition of Havre des femmes . [ 64 ] In the instant case, the theft of the Missing Package by an employee, even if proven, would clearly not benefit UPS in any way and holding the employer responsible would not be justified. [ 65 ] This third and last argument of Plaintiffs must therefore fail.

FOR THESE REASONS, THE COURT: ORDERS defendants United Parcel Service China and United Parcel Service du Canada Ltée to pay to Plaintiffs Sean Murphy, es qualité and Chateau d’argent inc. the amount of $100 in accordance with the formal offer made; DISMISSES the action; WITH LEGAL COSTS .

__________________________________ DOMINIQUE GIBBENS, J.C.Q. Date of hearing: November 12 and 13, 2015 Me Lionel Liber Attorney for Plaintiffs Me Dominique Vallières LAVERY, DE BILLY Attorney for Defendants