Carriage charges recovery: the receiver might well be an option

28 October 2019

By M. Pierre-Olivier Ménard Dumas, partner and M. Gilles-Étienne Lemieux, lawyer

One might say that the height of the shipping industry is the business pace. The service requests and shipping keep rolling until the time comes when one must attempt to collect the unpaid carriage charges. That is when the shippers or the transportation service agents will always push back the due date of the payment, will not give any news or even will become bankrupt. Ever experienced that situation? You probably did.

There is usually no carriage contract. In those cases, the shipping is then governed by the provisions of the bill of lading, by the applicable specific legislation and the Civil Code of Québec the (“CcQ “).

The CcQ provides that the shipper is responsible for the carriage charges and that they are usually payable on delivery, unless specific provisions to the contrary are stipulated in the bill of lading or in an agreement entered among the parties. Moreover, both the Act respecting Bills of Lading and the CCQ provide that the receiver of the shipment acquires the rights and assumes the obligations arising out of the carriage contract. As such, the carriage charges payment is considered as one of those obligations. It is thus possible for the carrier to recover his unpaid carriage charges directly against the shipper and/or the receiver, subject to the following conditions.

As a rule, the receiver must generally satisfy a claim brought against him by the shipper for the payment of his carriage charges. It will afterwards be incumbent to the receiver to take the necessary steps against the shipper or the transportation services agent or intermediate in order to be reimbursed those charges.

Both the Act respecting Bills of lading and the CcQ impose a liability presumption for the payment of carriage charges upon the receiver.

To be exempted from the application of that presumption, the receiver must establish (i) the existence of another agreement with the shipper under the terms of which he undertakes to solely assume the payment of the carriage charges, or (ii) that the shipper has departed from that legal presumption in an express or implicit manner. Such a waiver may be implied from a specific provision of the shipping contract between the carrier and the shipper, or even from any annotations contained in the bills of lading.

Furthermore, the mention “prepaid” or “prépayée” appearing on a bill of lading may also assist the receiver to immunize himself from his legal obligation towards the shipper with regards to the payment of the carriage charges. This will however only be the case if that indication is in fact perceived as such by the receiver, in other words if it is clearly understood that the carrier had been paid before the shipment was completed. In cases where it appears that the carriage charges had to be paid after the delivery, the mention “prepaid” or “prépayée” should not interfere with the shipper’s remedy for the payment of his carriage charges.

In short, if the receiver cannot be excused of his payment obligation, the carrier may rely on two separate sources for the recovery of his carriage charges regardless of the shipper’s or shipping services agent’s solvency. The law at issue thus imposes the inclusion of a new debtor for the benefit of the carrier with an opportunity to select to one of his choice.

Finally, this remedy offers a particularly interesting option in cases where the solvency of the party who would – normally − be liable for the carriage charges is in jeopardy. For example, in cases where the debtor of the carriage charges is in bankruptcy or where another debtor protection rights plan applies (ex: proposal in bankruptcy, reorganization under the Companies’ Creditors Arrangement Act, etc.), an option will generally be granted to the carrier to act towards the receiver in order to recover his charges. Henceforth, the receiver forced to pay the carriage charges might be subrogated in the rights of the carrier allowing him to then join the mass of the creditors of the bankrupt/debtor, at his own peril to recover, in whole or in part, his debt.

Hence, acting as a carrier, you should always be on the look-out: (i) ensure that you are in possession of a valid and extensive bill of lading, (ii) never waive, explicitly or even in an implicit fashion, your recourses against the receiver and (iii) expeditiously initiate the recovery procedures against the shipper or the carrier’s agent and even the receiver.

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