2016 QCCQ 713, 2016 QCCQ 713

9232-3351 Québec inc. c. Total Logistics Partner (TLP) Air Express Inc. 2016 QCCQ 713 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-32-142524-141 DATE: February 17, 2016 ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ 9232-3351 QUÉBEC INC. 9250, Park Avenue Suite # 600 Montréal (Québec) H2N 1Z2 Plaintiff v.

TOTAL LOGISTICS PARTNER (TLP) AIR EXPRESS INC. 1425, Trans-Canadienne Suite 150 Montréal (Québec) H9T 2W9 Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] The Plaintiff, 9232-3351 Québec inc., a clothing manufacturer doing business under the name “Dino by DG Gaspari” (“DG”), sues the Defendant, Total Logistics Partner (TLP) AIR EXPRESS INC. (“TLP”), a transport service provider for economic losses related to the seizure of garments made of lynx fur during the transport arranged by TLP of samples destined for a trade show held in Hong Kong from February 25-28, 2013. [ 2 ] The essential allegation is that TLP was given goods to hold in its warehouse pending the issuance of a Convention on International Trade in endangered species of wild fauna and flora (“CITES”) permit for the export of lynx fur and then to expedite the transport by air to Hong Kong.

It is alleged that, because TLP sent the goods to an Air Canada warehouse without the permit having been issued, the lynx-fur garments were seized by Environment Canada. [ 3 ] DG alleges that the seizure of these garments made the expense of the trade show a waste of money and that substantial sales were lost.

The damages as alleged in the letter of demand (P-5) amounted to $ 32,981, but the claim made here is limited to $ 7,000, the maximum that could be claimed in the Small Claims Division at the time the demand was instituted. [ 4 ] TLP contests the claim, alleging that it bore no responsibility in connection with the commercial documentation and export permits: that these are the sole responsibility of the shipper. As soon as the goods were remitted to the custody of transporters it had arranged, they were considered to be in transit for export and could be seized if the CITES permit was not validly issued.

It states that there were no such documents provided, just a verbal description of the goods. When the commercial documentation was provided, the CITES permit was lacking. It alleges that it was not made aware of the necessity of the permit and that it had not yet been issued at the time the process of transport was initiated. [ 5 ] TLP therefore denies any liability for the failure of DG to obtain the proper permit and the resulting seizure. [ 6 ] As a question of fact, the goods entered the Air Canada facility, its last stop before the plane, as part of a series of logistical

steps. This led to the seizure, because when an official requested the anticipated CITES permit, quoting the number of what she believed to be the pending permit, DG was incapable of providing it. [ 7 ] Most of the boxes left on the flight, but the box containing the illegal lynx shipment was held back and later seized. [ 8 ] TLP sues for its invoiced freight charges of $ 2,123 for the seven boxes that were transported (D-7). DG refuses to pay, alleging faulty execution of the contract. Issues [ 9 ] To resolve this dispute, the Court must answer the following questions: 1.

Was the seizure of the lynx garments due to the fault of the Defendant? 2. If so, what amount of damages can be awarded? 3. Is the account for services rendered due in either case? Facts [ 10 ] The contract between the parties was not formalised with a written agreement. TLP was acting as a freight forwarder in this matter.

Essentially, TLP proposed to DG the means of transporting the goods, in terms of a particular flight, and was responsible for getting the goods from DG's premises to the flight, and for having them transported to the final destination as required for the trade show. [ 11 ] The issue of the permit arises because one of the central products of which D planned to show samples at the event in Hong Kong, the "2013 Honk Kong International Fur & Fashion Fair", was a collection of lynx fur coats.

Lynx species are protected by a treaty known as the Convention on International Trade in endangered species of wild fauna and flora (CITES).

Manufacturers such as DG may trade in lynx-fur products, so long as they comply with the legislation adopted under Canadian law pursuant to the treaty, hence the “CITES” permit. [ 12 ] DG had applied for such a permit to be authorised to ship the sample coats to the trade show, and had been led to believe that it would be issued on time for the transport of the coats, which were packed in one of the eight boxes of women's clothing for the transport of which TLP had arranged on behalf of DG through another logistics firm. [ 13 ] TLP did nothing to apply for the permit, to ensure it would be obtained and delivered.

The process was handled by DG through another logistics firm, “Alpha”. [ 14 ] DG's version of the events hinges on the allegation that TLP was instructed to hold on to the goods in a warehouse until given the green light to put them into circulation. The goods were picked up at D's premises on February 14, 2013. A delivery bill on the letter head of Air Trans Express Inc. (D-4) shows that the goods, described as “Cargo Aérien” were to be received by Swissport Cargo Services. The delivery bill indicates the broker to be TLP.

A warehouse receipt issued by Swissport Cargo Services shows that the 8 pieces shipped by DG and destined for Hong Kong entered the warehouse on February 14, 2013. [ 15 ] TLP does not operate its own warehouse; it uses the facilities of Swissport. [ 16 ] The description of the goods that was the basis of a CAED Export Declaration (known as a D-13A) prepared by TLP on February 15, 2013 (D-5) was provided by DG. In box 17 of the declaration entitled "Items description" is entered: "81 pieces (fur coats, dresses, shoes/boots).

The box on the form for the "Export permit, licence or certificate no. (if applicable)" is left blank. [ 17 ] Once the goods were in the warehouse, to expedite them to be transported by air, a set of documents were prepared and sent by TLP to customs. This set included a commercial invoice prepared by DG: a detailed list of all the products with their price in Canadian dollars. [ 18 ] Customs, seeing the description of several items of lynx fur, enquired on February 15 as to the permit.

In the meantime, the goods had already been moved from the Swissport warehouse to an Air Canada facility one step closer to the airport. [ 19 ] An email exchange of Monday February 18, 2013 (D-3) shows that Katerina (also known as Karerini) Hulis of “OCEAN EXPORTS”, another name used by TLP, is asking Gisèle Paul of DG is asking about the permit copy (permit # LE212434) that was to be received by the previous Friday, February 15. [ 20 ] DG had applied for the CITES permit on February 5, 2013.

Canadian government officials had indicated that the permit would come on the 14 th or 15 th of February, but then, on the 15 th , DG was told by these officials that it would only come on the 18 th . This process was being coordinated on behalf of several Canadian manufacturers by the firm known as Alpha. [ 21 ] On the 18 th , the officials were promising it for the next day. Gisèle Paul contacted TLP asking if she could come to their warehouse to remove the lynx fur products so that the rest of the products could be shipped.

The idea would be to ship the lynx products as soon as the permit would come in, and not delay the shipment of the rest of the products. [ 22 ] Katernini Hulis got back to her later in the day to inform her that the box containing the lynx fur coats had been seized at the Air Canada warehouse to which the goods had been moved.

[ 23 ] Gisèle Paul called an official from Environment Canada, Robert Marinier, the fur council, and others, but it became impossible to obtain the issuance of permit after the goods had been seized. [ 24 ] Gisèle Paul left with the DG delegation to Hong Kong on February 22, arriving on the 23 rd . [ 25 ] A report of Environment Canada (P-9) shows that the enquiry into the lynx coats initiated by an agent on February 15 th led to the confirmation that a permit had been applied for but not yet issued.

Because the goods were, technically, in transit because they were confirmed for departure on an Air Canada flight, an agent of the Canadian Border Security Agency (“CBSA”) contacted the manager of the WED (in English, the Wild Life Enforcement Directorate) and was put in touch with Robert Marinier who decided, because the export was in progress before the issuance of the permit, rather than issue the permit, to suspend it’s issuance. [ 26 ] This is the sort of thing that one might refer to as a “Catch 22” [1] . [ 27 ] Because one branch of the government failed to issue a permit on time, it suspended the issuance of the permit when another branch of the same government discovered the transit of the goods toward the airport without the permit.

The issuance of the permit was suspended because the government itself had failed to deliver as promised. [ 28 ] A technically correct

interpretation of the rules, apparently, but one that thwarted an export that yet another branch of the same government had been promoting as part of its trade objectives. [ 29 ] The other 7 boxes were transported under modified documents that excluded the lynx fur products (Email February 19, 2013 (D- 3)). [ 30 ] DG believes that the initial transit to the warehouse was lawful, but that to move the goods out of that warehouse to the Air Canada facility was risky without the CITES permit and another document, the transport permit, being with them. [ 31 ] Katerini Hulis argues that in international transport, the roles and responsibilities are such that it is the shipper, not the freight forwarder that packs the goods and provides the necessary documents.

TLP filled out the B13A form based on information that DG provided, because the Government must be provided with the information immediately. It was done on February 15 th when the goods were at the Swissport facility. The form was sent automatically to Customs. The airway bill and the rest of the transport documents that TLP could produce were done, but, the commercial invoice and packing slip had not yet been prepared by DG. [ 32 ] Ms Hulis received a call from Linda Bélanger of the CBSA asking for the permit that was required with respect to the box containing Lynx products. She gave a pending permit number.

When she spoke to DG, requesting a copy of the permit. She requested it again on February 18 th . [ 33 ] On February 20, she received from DG the commercial documents and a copy of a permit issued to DG by the U.S. Fish and Wildlife Service. [ 34 ] This permit was not adequate for the export of the Lynx products: it was outdated, and it was not the anticipated CITES permit. [ 35 ] She is not aware of a request by DG to come to remove the lynx products from the packages.

From her point of view, the goods were already in the supply chain from they moment the goods were moved from DG's premises with intention to ship. [ 36 ] She denies having any prior notice that there were restricted furs as part of the goods, and put the goods into the transport chain without knowing that there were products requiring a special permit. If she had seen a commercial invoice with reference to natural wild furs, she would have contacted the authorities to enquire as to the required permits prior to starting the export.

Analysis [ 37 ] The Plaintiff's case is based on the allegation that there were specific instructions to take custody of the goods but not to put them into the export chain until a permit could be obtained. [ 38 ] DG only realised on the 18 th of February that it would not have its permit until the 19 th . Earlier, it had expected the permit on the 14 th or 15 th .

TLP's position is that it was not given information from which it could have known that a permit was perhaps necessary, that it was necessary and had been applied for or that it was expected to take custody of the goods and to hold them pending receipt of a permit.

It states that, by putting the goods into circulation with a booking for a flight to Hong Kong, it had put them into export and, although a simple export permit could be put with the goods once in transit, it could not keep the goods out of a situation of potential seizure for illegal export if a CITES permit had not been issued. [ 39 ] Ms Paul states that she specifically instructed TLP to hold the goods, and that, when the permit was not issued on time, she would have taken them out of the shipment and sent them later by a faster flight. [ 40 ] A careful perusal of the written communications between the parties shows that no such instructions were given in writing, and, if they had been given in a way that was clear to TLP, in phone calls, say, TLP would have had to separated the goods into two shipments, with one being definite, and the other tentative. [ 41 ] Ms Paul sincerely had the impression that TLP had the goods in its own custody, and that therefore the lynx products could have been segregated from the rest of the shipment, but the evidence does not establish that clear instructions to TLP had been given to provide for this eventuality.

It rather seems that DG was operating under the belief that the Canadian government agency that was to issue the permit would do so on or close to the day that the goods were first put into warehousing and that it did not manage the situation with a plan B to segregate certain goods.

[ 42 ] The entire situation was very time sensitive and, in terms of the chain of causality, the real cause of the loss of control of the situation was the tardiness of the officials in issuing a permit that was essential for the successful preparation of DG's presence at the trade show. [ 43 ] To attach liability to TLP would require clear proof that the management of the situation depended upon modalities of contract that TLP had accepted and this proof was not made. [ 44 ] This is, however, a case where there should be no award of costs. [ 45 ] TLP's account should be paid for the part of the shipment that proceeded.

For these reasons, THE COURT: DISMISSES the Plaintiff’s Application; CONDEMNS the Plaintiff to pay the Defendant the sum of $ 2,123.63, together with interest at the legal rate and the additional indemnity provided for in

section 1619 of the Civil Code of Québec , calculated from July 4, 2014, date of the Cross-Claim; THE WHOLE without costs. __________________________________ DAVID L. CAMERON, J.C.Q. Date of hearing: October 27, 2015