Canada Steamship Lines Ltd v The King

Guidelines for deciding whether an exclusion clause covers the negligence of the party relying on it.

Citation
[1952] AC 192
Court
Privy Council
Year
1952
Subject
Contract Law
Topic
Exclusion clauses and unfair terms

Facts

Canada Steamship leased a freight shed in Montreal from the Crown. The lease contained a clause stating that the tenant would not have any claim against the Crown for damage to goods in the shed, and another requiring the tenant to indemnify the Crown against all claims arising from the lease. Employees of the Crown, carrying out repairs to the shed, negligently caused a fire with sparks from an oxy-acetylene torch, destroying the shed and the goods in it. Canada Steamship sued the Crown for negligence, and the Crown relied on the clauses.

Legal principle

The Privy Council held that the clauses did not protect the Crown against liability for its own negligence. Lord Morton set out three guidelines. If a clause expressly excludes liability for negligence, effect must be given to it. If it does not, the court must consider whether its words are wide enough, in their ordinary meaning, to cover negligence, resolving any doubt against the party relying on it. If they are, the court must consider whether the clause might cover some other head of liability, not based on negligence, that is not too fanciful or remote; if so, the clause will generally be confined to that other liability. Here the Crown could be liable without negligence under the Quebec Civil Code, so the clauses were confined to that liability. Modern courts treat these guidelines as aids to interpretation rather than rigid rules.

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