Linton Construction Ltd. v. C.N.R.

The Plaintiff is a company in good standing incorporated under the laws of Canada and engaged in the construction industry in Alberta, British Columbia and elsewhere.

The Defendant operates, inter alia, a telegraph company and had at the material time its western Regional Head Offices at Edmonton, Alberta.

Beecher Gifford Linton was, at all material times, the President of the Plaintiff and acting within the scope of his authority.

The Department of Public Works of Canada had called for tenders on a project known as The Jackfish

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Creek Bridge at a place on the Alaska Highway. Tenders were required to be made and alterations thereto were required to be made under the instructions to bidders either by a letter in writing or a telegram delivered to the Department of Public Works in Vancouver and telex messages were unacceptable. The Plaintiff had delivered a tender with bid deposit in accordance with the instructions to bidders some four days before tenders were to close. Had the Plaintiff been the low bidder, it would have been awarded the contract for the project.

Tenders were to close at 11:00 a.m., Vancouver time, on April 10th, 1969.

On the evening of April 9th, 1969, the Plaintiff received a revised price for steel which was $27,000.00 lower than the amount calculated for steel in the Plaintiff’s tender.

As a result, Beecher G. Linton went to the telegraph office of the Defendant at Fort Nelson, British Columbia, at 9:30 a.m. on the morning tenders were to close which was 2½ hours before the closing time because of the time difference between Fort Nelson and Vancouver.

Mr. Linton handed the following message to an employee of the Defendant:

Supervisor of Tendering

Dept. of Public Works

Pacific Pallisades

747 Bute St.,

Vancouver 5, B.C.

Tender for: Project #95003, April 10/69 11 a.m. Jackfish Creek Bridge, Mile 278.2 Alaska Highway, B.C.

Please reduce our bid by Twenty-Seven Thousand Dollars ($27,000.00)

Revised lower bid due to new quotation on item number 12

B.G. Linton Construction Limited

The message was on the letterhead of the Plaintiff. Mr. Linton explained that because of Department of Public Works instructions to bidders the message could not be sent by telex and that a telegram would have to be delivered to the addressee before 11:00 a.m. Vancouver time. There was some discussion about the way the message was set up with the heading separated from the body of the message. Mr. Linton stated that the identification in the first paragraph following the address was also required under the instructions to bidders.

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It was agreed that the message would be sent in the form submitted and it was sent out from the Fort Nelson office at 9:52 a.m.

The operator told Mr. Linton that the message would be delivered by telegram on time and in reliance thereon Mr. Linton did not call on one of the Plaintiff’s Vancouver employees to deliver a written change of tender which he could have done.

The message was accepted for sending without being placed on the usual telegram form ordinarily filled in by persons desiring to engage the Defendant to send telegrams. The usual form contains a limitation of liability in the following terms:

Terms and conditions upon which telegraph and cable messages shall be transmitted are prescribed by Order No. 49274, dated December 5th, 1932, of the Board of Transport Commissioners for Canada and published in The Canada Gazette.

It is agreed between the sender of the message on the face of this form and this Company that said Company shall not be liable for damages arising from failure to transmit or deliver, or for any error in the transmission or delivery of any unrepeated telegram, whether happening from negligence of its servants or otherwise, or for delays from interruptions in the working of its lines, for errors in cipher or obscure messages, or for errors from illegible writing, beyond the amount received for sending the same.

To guard against errors, the Company will repeat back any telegram for an extra payment of one-half the regular rate; and, in that case, the Company shall be liable for damages suffered by the sender to an extent not exceeding $200.00, due to the negligence of the Company in the transmission or delivery of the telegram.

Correctness in the transmission and delivery of messages can be insured by contract in writing, stating agreed amount of risk, and payment of premium thereon at the following rates, in addition to the usual charge for repeated messages, viz: one per cent for any distance not exceeding 1,000 miles, and two per cent for any greater distance.

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This Company shall not be liable for the act or omission of any other Company, but will endeavour to forward the telegram by any other Telegraph Company necessary to reaching its destination, but only as the agent of the sender and without liability therefor. The Company shall not be responsible for messages until the same are presented and accepted at one of its transmitting offices, if a message is sent to such office by one of the Company’s messengers, he acts for that purpose as the sender’s agent; if by telephone, the person receiving the message acts therein as agent of the sender, being authorized to assent to these conditions for the sender. This Company shall not be liable in any case for damages, unless the same be claimed, in writing, within sixty days after receipt of the telegram for transmission.

No employee of the Company shall vary the foregoing.

The employee of the Defendant agreed to send the message on a rush basis but did not mark the message with the symbol indicating a rush message which is “RX”.

The employee of the Defendant who sent the message miscounted the words. Consequently, when the message was received in Edmonton for transmission to Vancouver it was rejected. Such rejection acts as a check for the customer as well as for the Defendant, because, if the word count and words in the message received do not correspond, the customer’s message may have been transmitted incorrectly.

The Edmonton office of the Defendant sent by teletype an inquiry to Fort Nelson. The Fort Nelson operator corrected the count after notifying the Fort Nelson office of the Plaintiff and again giving an assurance to an employee of the Plaintiff that the message would be sent on a rush basis and would be delivered on time in the manner instructed.

There were further delays in the transmission of the message and in the result the message was not received by the addressee until one hour after the close of tenders and then it was a telex message and not a telegram. The Defendant got in touch with the Department of Public Works in an attempt to have the tender considered but the Department of Public Works refused.

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The tender from another contractor was accepted, but had the telegram been delivered on time, the Plaintiff would have been the low bidder.

Mr. Linton learned soon after the closing of tenders that the revised tender of the Plaintiff had not been received by the Department of Public Works and went immediately to the office of the Defendant in Fort Nelson and lodged his complaint and indicated that action would be taken. The Superintendent of the Defendant conducted a comprehensive investigation and prepared a full report delivered the following day criticizing the procedure adopted by the employees of the Defendant and indicated that the Plaintiff should not be charged for the message. Such charge would have been $3.81.

Had the telegram been delivered on time, the contract would have been awarded to the Plaintiff and the Plaintiff claims to have suffered a loss of $160,000.00 as a result of the failure of the Defendant to deliver the telegram on time.

It is agreed that unless the limitation of liability is effective in the circumstances, the Defendant is liable to the Plaintiff for such loss and damage as may be established by the Plaintiff on an assessment of damages or agreed upon between the parties.

The parties have agreed that the applicability of the limitation of liability shall first be submitted for determination as a question of law.

In the Fort Nelson office of the Defendant there were no notices of a limitation of liability posted nor was any mention thereof made to the Plaintiff’s employees.

Limitation of the liability of a Telegraph Company subject to the jurisdiction of the Canadian Transport Commission or either of its predecessors: The Board of Transport Commissioners of Canada and the Board of Railway Commissioners for Canada, has been one of the topics considered by those bodies through the years, and limitation of the liability of a Telegraph Company has been specifically dealt with in the following Order and General Orders:

(a) General Order of the Board of Railway Commissioners for Canada number 162 dated 30 March 1916 and found in Volume 6 of the Board of Railway Commissioners for Canada, Judgments, Orders, Regulations and Rulings at page 27, which General Order reads as follows:

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Thursday, the 30th day of March, A.D. 1916

SIR HENRY L. DRAYTON, K.C., Chief Commissioner.

D’ARCY SCOTT, Asst. Chief Commissioner. HON. W.B. NANTEL, Deputy Chief Commissioner.

S.J. MCLEAN, Commissioner.

A.S. GOODEVE, Commissioner.

IN THE MATTER OF the application of the Canadian Pacific Railway Company for approval of the conditions on its telegraph forms:

AND IN THE MATTER OF the Order of the Board No. 12745, dated January 9th, 1911, temporarily approving the forms of contract used by the Canadian Pacific Railway Company’s Telegraphs, the Great North Western Telegraph Company of Canada, the Canadian Northern Telegraphs Company, the North American Telegraph Company, the Western Union Telegraph Company, the Anglo-American Telegraph Company, the White Pass & Yukon Route, the Marconi Wireless Telegraph Company, and the Grand Trunk Telegraph Company, and other companies subject to the jurisdiction of the Board:

File No. 13622

UPON hearing the parties concerned at the sittings of the Board held in Ottawa on April 20th and November 15th, 1910, and considering what was submitted in writing (this matter having been allowed to remain in abeyance till the investigation into telegraph rates was concluded)—

IT IS ORDERED that the conditions of the telegraph forms used by telegraph companies subject to the jurisdiction of the Board on which messages to be transmitted are to be written, be, and they are hereby, approved as follows, namely:

“It is agreed between the sender of the message on the face of this form and this Company that said Company shall not be liable for damages arising from failure to transmit or deliver, or for any error in the transmission or delivery of any unrepeated telegram, whether happening from negligence of its servants or otherwise, or for delays from interruptions in the working of its lines, for errors in cypher or obscure messages, or for errors from illegible writing, beyond the amount received for sending the same.

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To guard against errors, the Company will repeat back any telegram for an extra payment of one-half the regular rate; and, in that case, the Company shall be liable for damages suffered by the sender to an extent not exceeding $200.00, due to the negligence of the Company in the transmission or delivery of the telegram.

Correctness in the transmission and delivery of messages can be insured by contract in writing, stating agreed amount of risk, and payment of premium thereon at the following rates, in addition to the usual charge for repeated messages, viz: one per cent for any distance not exceeding 1000 miles, and two per cent for any greater distance.

This Company shall not be liable for the act or omission of any other Company, but will endeavor to forward the telegram by any other Telegraph Company necessary to reaching its destination, but only as the agent of the sender and without liability therefor. The Company shall not be responsible for messages until the same are presented and accepted at one of its transmitting offices; if a message is sent to such office by one of the Company’s messengers, he acts for that purpose as the sender’s agent; if by telephone, the person receiving the message acts therein as agent of the sender, being authorized to assent to these conditions for the sender. This Company shall not be liable in any case for damages, unless the same be claimed, in writing, within sixty days after receipt of the telegram for transmission.

No employee of the Company shall vary the foregoing.”

(S’G’D.) H.L. DRAYTON,

Chief Commissioner,

Board of Railway Commissioners for Canada.

BOARD OF RAILWAY COMMISSIONERS FOR CANADA.

Examined and certified as a true copy under Section 23 of “The Railway Act”.

(SGD) R.RICHARDSON,

Asst. Sec’y, and Registrar, B.R.C.

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OTTAWA, Feb. 15, 1929.

(b) Order of the Board of Railway Commissioners for Canada number 49274 dated 5 December 1932 and found in Volume 22 of the Board of Railway Commissioners for Canada, Judgments, Orders, Regulations and Rulings at page 251, which Order reads as follows:

Monday, the 5th day of December, A.D. 1932.

HON. C.P. FULLERTON, K.C., Chief Commissioner,

S.J. MCLEAN, Asst. Chief Commissioner.

F.A. LABELLE, Deputy Chief Commissioner.

HON. T. C. NORRIS, Commissioner.

IN THE MATTER OF the General Order of the Board No. 162, dated March 30th, 1916 approving the conditions on the telegraph forms used by telegraph companies subject to the jurisdiction of the Board on which messages to be transmitted are to be written:

J.A. STONEMAN, Commissioner.

G.A. STONE, Commissioner. File No. 13622

UPON the joint application of the Canadian Pacific and the Canadian National Railway Companies, and reading what is filed in support thereof—

IT IS ORDERED that the terms and conditions approved by the Board under its General Order No. 162, dated March 30th, 1916, be, and they are hereby, prescribed as the terms and conditions upon which telegraph and cable messages shall be transmitted and dealt with by Telegraph and Cable Companies subject to the jurisdiction of the Board; and that the said General Order No. 162, including the said terms and conditions, and this Order, be published for three weeks in The Canada Gazette.

Chief Commissioner,

Board of Railway Commissioners

for Canada

(c) General Order of the Board of Transport Commissioners for Canada number T‑40 dated 1 February 1965 and found in Part IV of the Revision and Consolidation of General Orders of the Board of Transport Commissioners for Canada, which General Order reads as follows:

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GENERAL ORDER NO. T-40

THE BOARD OF TRANSPORT COMMISSIONERS FOR CANADA

Telegraph and Cable

Messages, Terms and Conditions.

File No. 13622

IT IS HEREBY ORDERED AS FOLLOWS:

The following terms and conditions are prescribed as the terms and conditions upon which telegraph and cable messages shall be transmitted and dealt with by Telegraph and Cable Companies subject to the jurisdiction of the Board:

TERMS AND CONDITIONS

It is agreed between the sender of the message on the face of this form and this Company that the said Company shall not be liable for damages arising from failure to transmit or deliver, or for any error in the transmission or delivery of any unrepeated telegram, whether happening from negligence of its servants or otherwise, or for delays from interruptions in the working of its lines, for errors in cypher or obscure messages, or for errors from illegible writing, beyond the amount received for sending the same.

To guard against errors, the Company will repeat back any telegram for an extra payment of one-half the regular rate; and, in that case, the Company shall be liable for damages suffered by the sender to an extent not exceeding $200.00, due to the negligence of the Company in the transmission or delivery of the telegram.

Correctness in the transmission and delivery of messages can be insured by contract in writing, stating agreed amount of risk, and payment of premium thereon at the following rates, in addition to the usual charge for repeated messages, viz: one per cent for any great distance not exceeding 1000 miles, and two per cent for any greater distance.

This Company shall not be liable for the act or omission of any other Company, but will endeavour to forward the telegram by any other Telegraph Company necessary to reaching its destination, but only as the agent of the sender and without liability therefor. The Company shall

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not be responsible for messages until the same are presented and accepted at one of its transmitting offices; if a message is sent to such office by one of the Company’s messengers, he acts for that purpose as the sender’s agent; if by telephone, the person receiving the message acts therein as agent of the sender, being authorized to assent to these conditions for the sender. This Company shall not be liable in any case for damages, unless the same be claimed, in writing, within sixty days after receipt of the telegram for transmission.

No employee of the Company shall vary the foregoing.

(SGD) ROD. KERR,

Chief Commissioner,

The Board of Transport Commissioners for Canada.

Mr. Linton said on his examination for discovery that he had no actual knowledge of the terms and conditions in the said Orders and the terms and conditions contained on the usual telegram form. That statement is deemed to be part of these agreed facts and is not disputed by the Defendant.

Order number 49274 and General Order number 162 were published in the Canada Gazette once on each of the following three dates: December 24, 1932; December 31, 1932; and January 7, 1933.

General Order T-40 has not been published in the Canada Gazette.

No actual payment of one-half the regular rate for repeating back the telegram was made or to be made in respect of the telegram in question.

No premium insuring correctness in the transmission and delivery of the message was paid or agreed to be paid in this case.

The questions posed for determination are whether there is a limitation of liability in respect of the Defendant in the circumstances outlined herein and, if so, the extent of any such limitation of liability.

The parties to this action have further agreed that costs of the action to date may be based upon the disposition of this point of law and that the amount of the charge for sending the telegram is deemed to have been tendered by the Defendant to the Plaintiff prior to the commencement of this action.