| Canada Steamship Lines Ltd v R | |
| Court: | Judicial Committee of the Privy Council |
| Date Decided: | 21 January 1952 |
| Citations: | UKPC . 1952 . 1 . [1952] AC 192. |
| Judges: | Lord Porter Lord Normand Lord Morton of Henryton Lord Asquith of Bishopstone Lord Cohen |
| Number Of Judges: | 6 |
| Decision By: | Lord Morton of Henryton |
| Appealed From: | The King v. Canada SS. Lines. 1950. scc. 40. canlii. [1950] SCR 532. 1950-06-23. auto., reversing judgments of Angers J in the Exchequer Court of Canada, [1948] ExCR 635 |
| Keywords: | Unfair terms, contra proferentum |
Canada Steamship Lines Ltd v R UKPC . 1952 . 1., also referred to as Canada Steamship Lines Ltd v The King,[1] is a Canadian contract law case, also relevant for English contract law, concerning the interpretation of unfair terms contra proferentem. The case was decided by the Judicial Committee of the Privy Council on appeal from the Supreme Court of Canada, as the cause for appeal arose before the abolition of such appeals in 1949.[2] Although arising in civil law under the Civil Code of Lower Canada, it has been influential in similar cases under English law, but is now recognised as providing "guidelines" rather than an "automatic solution".
In November 1940, Canada Steamship Lines Ltd (CSL) entered into a Crown lease for a twelve-year term, in which it became a tenant of certain dock property on which was situated a freight shed, on St Gabriel Basin on the Lachine Canal, part of the Port of Montreal.[3] The lease contained the following clauses:
In May 1944, while trying to keep the shed in repair with an oxy-acetylene torch, an employee started a fire and burned down the shed. According to proper practice he was negligent and should have used a hand drill because sparks flew and lit some cotton bales. $533,584 of goods were destroyed, of which $40,714 belonging to Canada Steamship Lines. The Crown argued that CSL could not sue because clause 7 excluded liability.
At the Exchequer Court of Canada, Angers J held that the Crown's employees had been negligent and that clause 7 could not be invoked as their negligence amounted to faute lourde (roughly equivalent to gross negligence in common law). For the same reason, he dismissed the third party proceedings instituted by the Crown under clause 17.
On appeal to the Supreme Court of Canada, the Court declared that the finding of negligence by the trial judge could not be disturbed. The Court ruled:
CSL appealed the ruling to the Privy Council.
Appeal was allowed against the SCC judgment. Lord Morton of Henryton said that clause 7 did not exclude negligence liability in clear enough terms and clause 17 was ambiguous and would be construed against the Crown. The Crown could realistically be said to have been strictly liable for damage to the goods (e.g. by breach of obligation to keep the shed in repair) and therefore negligence should not be covered. In that regard, he set out the following principles for courts to use in considering such clauses:
In this case, another form of liability for damage was strict liability, and so the exclusion clause did not work to cover negligence.