Court File and Parties

COURT FILE NO.: 11-4741-SR DATE: 2016-04-21 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

B-W Feed & Seed Ltd. Plaintiff

• and – Zehr Transport Ltd., Michael Leslie Pullen and Stargate Manufacturing Inc. Defendants

AND BETWEEN:

Zehr Transport Ltd. Plaintiff

• and – Transit Trailer Limited and Stargate Manufacturing Inc. Defendants
• and – B-W Feed & Seed Ltd. Third Party

Counsel: Nolan Downer, Counsel for the Plaintiff B-W Feed & Seed Ltd. Stuart R. MacKay, Counsel for the Defendants Zehr Transport and Michael Pullen Stuart R. Mackay, Counsel for the Plaintiff, Zehr Transport Ltd. Sean Brennan, Counsel for the Defendant Transit Trailer Limited Sarah L. G. Pottle, Counsel for the Defendant Stargate Manufacturing Sandra Monardo, Counsel for the Third Party B-W Feed & Seed Ltd.

HEARD: February 23 and 29, 2016

The Honourable Mr. Justice P.B. Hambly

Judgment

[1] There are three motions for summary judgement arising from 2 actions resulting from a single accident.

The Incident

[2] On June 2, 2010, Zehr Transport Ltd. (“Zehr”) delivered a load of soybean meal in a dump trailer pulled by a Peterbilt tractor driven by Michael Leslie Pullen (“Pullen”), in the approximate amount of 4 tons, to B-W Feed and Seed Ltd. (“BWFS”) at 183 Mill Street (“the premises”) in New Hamburg Ontario. After Pullen had backed the trailer down a ramp adjacent to the premises he activated a hoist. This caused a ram, located at the front of the trailer, to lift the front of the trailer into the air. This procedure was intended to cause the load of soybean meal to slide off the back of the trailer into a pit. The tractor trailer was facing north. The trailer tipped over to the west on its left side while the soybean meal was sliding off it. This caused damage to the tractor, the trailer, the property of BWFS and a neighbouring property. It also resulted in the loss of the soybean meal. Stargate Manufacturing Inc. (“Stargate”) installed the hoist manufactured by Hyva Holdings B.V. Company (“Hoist”) in the trailer. Transit Trailer Limited (“Transit”) sold the trailer to Zehr on October 23, 2009. Transit represented to Zehr that the trailer was capable of delivering grain throughout South Western Ontario, Quebec and New York State, to businesses with differing unloading areas.

The Actions and Pleadings

[3] On September 9, 2011 the insurer of BWFS commenced a subrogated action brought by its insurer in simplified procedure for $50,000 against Zehr, Pullen and Stargate. It alleged negligence against these defendants. The defendants, Zehr and Pullen, filed a statement of defence and crossclaim against Stargate. They denied the allegations of negligence of BWFS against them. In their crossclaim they alleged negligence against Stargate. Stargate filed a statement of defence and crossclaim against Zehr and Pullen in which it alleged negligence against them. BWFS filed a reply to the statement of defence and crossclaim of Stargate. I refer to this action as the “BWFS action”.

[4] On February 8, 2012 Zehr commenced an action against Stargate and Transit for its damages, consisting of damage to its trailer and tractor, incidental losses and loss of business in the amount of $350,000. It is both a subrogated claim brought by its insurer and a claim for damages not covered by insurance. It alleged breach of contract, breach of warranty and negligence against these defendants. Transit filed a statement of defence and crossclaim. It alleged negligence against Zehr. It crossclaimed against Stargate. It alleged negligence, breach of contract and breach of warranty against Stargate. Stargate filed a statement of defence in which it alleged negligence against Zehr. It also issued a third party claim against BWFS in which it alleged negligence against BWFS. Stargate claimed contribution and indemnity against BWFS for damages for which it might be found liable. BWFS filed a statement of defence to the third party action. I refer to this action as the “Stargate third party action”.

[5] On September 25, 2014 an order was made consolidating the 2 actions.

The Motions

[6] BWFS has brought a motion for summary judgment dismissing the third party claim brought against it by Stargate in the Zehr action. BWFS has also brought a motion for summary judgment against Stargate in its action against Stargate and Zehr. Transit has brought a motion for summary judgment dismissing the action against it by Zehr.

Summary Judgment Rule and Hryniak

[7] The Rules of Civil Procedure, R.R.O. 1990, Reg. 194 state the following:

20.04 (2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

(2.1) In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.

[8] In Hryniak v. Maudlin, 2014 SCC 7, [2014] 1 S.C.R. 87 the Supreme Court of Canada in the judgment of Justice Karakatsanis explained how a trial judge should use this rule as follows:

49 There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

50 These principles are interconnected and all speak to whether summary judgment will provide [page107] a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.

She described how the rule should be applied as follows:

66 On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will [page112] serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

The Expert Reports

[9] BWFS obtained an engineering report from Rochon Engineering dated March 7, 2011 (“first Rochon report”) in relation to defects in the hoist mechanism of the dump trailer as a cause of the trailer dumping. Stargate obtained an engineering report from Giffen Koerth Inc. dated June 6, 2011 (“first Giffen Koerth report”) in response to the Rochon report and in relation to the slope of the ramp leading to the pit at BWFS as a cause of the trailer dumping. BWFS obtained a report from Rochon Engineering dated February 10, 2016 (“second Rochon report”) responding to the first Giffen Koerth report. Stargate obtained a report from Giffen Koerth dated February 12, 2016 (“second Giffen Koerth report”) responding to the second Rochon report.

Industry Standard and Practice

[10] Dominic Zangrilli, president of Stargate, produced advisory warnings attached to his affidavit sworn January 19, 2015 from the Construction Safety Association of Ontario, Infrastructure Health and Safety Association of Ontario, College of Agricultural Sciences at Penn State University and the Texas Department of Insurance. These documents advise that dump trailers releasing their load from the rear by elevating the front of the trailer are at risk of tipping if they are on a slanted surface. The risk is greater with longer trailers. This has resulted in tractor trailer operators following a practice of dumping their trailers from flat surfaces. BWFS takes the position that the court cannot take judicial notice of these practices and the evidence to be admissible needs to be introduced through an expert. Stargate does not seek to have the court take judicial notice of these practices. It takes the position that the evidence is admissible through the affidavit of a person knowledgeable about practices of the industry. The evidence does not require that it be introduced through an expert. I agree. (see the decision of A.J. Goodman J. in Miltenberg v. Metro, [2012] ONSC 1063, Para. 36).

Cause of the Trailer Tipping

[11] The first Rochon report expressed the opinion that the trailer tipped over because of the failure of a metal pin in the hoist mechanism – it was too short, it had a hole in it which weakened it and it was not sufficiently hardened. Colin Osterberg, a lawyer who is with the firm that represents Transit, in his affidavit sworn November 20, 2014, at paragraph 10 summarized the conclusion of the report as follows:

“The 2010 “Stargate Durawall…fell to the side due to the loss of support of its load lifting devise (Hoist)… The 2” Pin which provided the support for the Hoist through its connection to the trailer frame, fractured at the left-hand-side area between the cylinder yoke and the Support Bracket… The force created during normal the [sic] Hoist operation exceeded the mechanical strength of the base metal…cutting the opening and causing further shifting of the hoist… The Pin was fabricated with carbon steel grade barstock which was not subjected to the hardening process…we would suggest the material selection to be reconsidered since the high range of the ‘Ductile to Brittle Transition Temperature’…would compromise the Pin ability to withstand an impact stress in the Province of Ontario climate conditions… [ In summary, it is our opinion that an incorrect Pin was used in the…Hoist Assembly which was the direct cause of the trailer tipping over.” ] (emphasis added).

[12] The first Giffen Koerth report was of the opinion that the pin in the hoisting device was strong enough to support the load when the trailer was raised to dump its contents. It expressed the opinion that the trailer tipped for several reasons as follows:

1. Weather conditions causing the soybean meal to stick to the surface of the trailer.
2. Pullen causing the trailer to lift too high.
3. The ramp on which the trailer was placed sloping to the north vertical to the trailer.
4. The ramp on which the trailer was placed sloping to the west horizontal to the trailer.
5. Force being put on the ram which Pullen activated by causing the hoist to lift the trailer by the load shifting “eccentric to the ram”.
6. The pin in the hoist was satisfactory. It was sufficient to support the loading on it. It may have failed when the load shifted or after the trailer tipped. If the pin did not have a hole it might still have failed.
7. If the trailer had been on level ground and used according to the manufacturer’s instructions it would not have tipped over.

[13] The second Rochon report expresses the opinion that the camber (horizontal slant) of the ramp leading to the pit had an unlikely effect on the unloading condition of the trailer. The second Giffen Koerth report states that this opinion is based on an incorrect assumption of the degree of camber of the ramp. The second Rochon report refers to contact marks on the pin in the hoist, which it states was indicative of stresses on the pin which may have contributed to the pin failing. The second Giffen Koerth report states its opinion that any contact marks on the pin did not contribute significantly to any reduction in the load carrying capacity of the pin. In summary, the second Rochon report did not cause Giffen Koerth to change its opinion.

Summary Judgment Motion of BWFS to Dismiss the Third Party Claim Against it by Stargate in the Zehr Action

[14] Zehr sued Transit and Stargate. Stargate takes the position that if it is liable to Zehr that BWFS is liable to it. Stargate relies on the Giffen Koerth reports.

[15] BWFS is an occupier. This is the result of it’s owning the ramp and the pit where the trailer tipped. BWFS asserts that it has used the ramp leading to the pit for many years for trucks to dump feed, including tractor trailers from Zehr without incident. The Occupiers' Liability Act, R.S.O. 1990, c. O.2 states the following:

3.--( 1) An occupier of premises owes a duty to take such care as in all the circumstances of the case is reasonable to see that persons entering on the premises, and the property brought on the premises by those persons are reasonably safe while on the premises.

[16] Stargate asserts that BWFS had a duty as an occupier to provide a level surface at the base of its ramp for trucks to dump feed into the pit. In my view, if BWFS had such a duty it was owed to Zehr and not to Stargate. It was Zehr, and not Stargate, which sent Pullen with its tractor trailer to BWFS at the invitation of BWFS to dump feed.

[17] If a trial judge accepted the conclusions of the Rochon report and rejected the conclusions of the Giffen Koerth he/she could find that the sole cause of the tipping incident was a faulty pin in the hoist. This would result in a finding of negligence against Stargate as the manufacture of the hoist, liability for the trailer tipping and judgment against Stargate. If a trial judge accepted the conclusions of the Giffen Koerth report and rejected the conclusions of the Rochon report he/she could find that the cause of the trailer tipping was a combination of its length, the manner in which the load of soybean was dumped and the condition of the ramp leading to the pit. This could result in findings of negligence against Pullen for whose negligence Zehr is responsible and against BWFS. Stargate would be exonerated. Zehr’s action against it would be dismissed. A trial judge could also accept both the Rochon report that defects in the pin were at least a contributing cause of the trailer tipping and the Giffen Koerth report that contributing causes of the tipping were the slope of the ramp, the length of the trailer and the manner of dumping. This could result in a finding of negligence against Stargate, liability of Stargate for the tipping and judgment against Stargate.

[18] None of these three possible scenarios would result in a judgment by Stargate against BWFS. Stargate does not have a cause of action against BWFS on the evidence before me. There is no triable issue in the Third party action. Stargate’s summary judgment motion is granted.

Summary Judgment Motion By BWFS Against Stargate

[19] BWFS has brought a summary judgment motion against Stargate. It did not bring a summary judgment motion against Pullen and Zehr. On the above analysis, the action of BWFS against Stargate raises the issues of whether the tipping of the trailer resulted solely as a result of the negligence of Stargate, solely as a result of the negligence of BWFS or as a result of their combined negligence. To determine these issues the authors of both the Rochon report and the Giffen Koerth report will need to testify. These reports were both a team effort with several persons from each of these firms contributing to them. Pullen would need to testify. Witnesses from BWFS who can testify about the slope, both vertical and horizontal, of the ramp and the history of the use of the ramp for dumping feed into the pit will be required. This is a complex issue that a motion judge is unable to decide either with his/her expanded powers under Rule 20.04(2.1) or by a mini trial under Rule 20.04(2.2). The summary judgment motion of BWFS against Stargate is dismissed.

Summary Judgment Brought by Transit to Dismiss the Action Against it Brought by Zehr

[20] Zehr has sued Transit for breach of contract, breach of warranty and negligence. Bryan Watson has been a sales representative for Transit for 11 years. On October 23, 2009 he sold the trailer, on behalf of Transit, to Zehr which tipped over at the premises of BWFS on June 2, 2010. He was examined for discovery by Zehr, as a representative of Transit, on October 29, 2013. He testified as follows:

150. A. His was a specific requirement of running both Michigan and into Ontario.

151. Q. Yes

A. That’s the reason the five axles. Most trailers in Ontario, we would use four most of the time, but to get the payload that he required he needed the five axles. Because of the five axles the trailer had to get longer, because there’s certain rules and regulations of specific dimensions between axles to achieve the maximum weight. So, that’s how we got derived at this 47-and-a-half foot trailer.

152. Q. Okay. And did you know what he was going to be using that for?

A. Oh, grain, grain by-products. Yes, absolutely, yes. And …

153. Q. All over in Michigan and Ontario?

A. Yeah. Yeah. He had a scheduled run just back-and-forth over to Michigan, back into Ontario. Yes.

154. Q. So, what did he tell you about what that trailer would be doing? I mean, you said he had a scheduled run. Did he tell you that? Did he say, “I need this trailer because I have a scheduled run back-and-forth”?

A. Well, he had, he said… Yeah. He had, this is what he needed the five axle for was that because he had loads coming out of Michigan constantly.

155. Q. Okay. And four axle wouldn’t do the trick?

A. No. He would lose a considerable amount of payload.

[21] The conditions set out in s.15 of the Sale of Goods Act, R.S.O. 1990, c. S.1 may be found to be part of the sales contract between Zehr and Transit. It states the following:

15. Subject to this Act and any statute in that behalf, there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale, except as follows: 1. Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description that it is in the course of the seller's business to supply (whether the seller is the manufacturer or not), there is an implied condition that the goods will be reasonably fit for such purpose, but in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose. (emphasis added) 2. Where goods are bought by description from a seller who deals in goods of that description (whether the seller is the manufacturer or not), there is an implied condition that the goods will be of merchantable quality, but if the buyer has examined the goods, there is no implied condition as regards defects that such examination ought to have revealed. 3. An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade. 4. An express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith. R.S.O. 1990, c. S.1, s. 15. (emphasis added)

[22] Transit provided to Zehr a document as part of the sales transaction for the trailer entitled “Warranty and Limitations on Liability”. It stated the following:

1. NEW EQUIPMENT WARRANTY – (A) Transit provides no warranty other than or widerthan [sic] that provided by the original manufacturer. The warranty is provided solely to the first purchaser from Transit with respect to new equipment from a Manufacturer which Transit is an authorized dealer or distributor for. Transit will provide a copy of the Manufacturer’s Warranty, when requested. (b) NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR PURPOSE IS MADE BY TRANSIT OTHER THAN THAT EXTENDED BY THE MANUFACTURER. (c) Transit and Purchaser agree Transit shall have no liability for any cargo loss, loss of use or any other incidental or consequential damages arising out of this order or which are alleged to have been caused by any of the goods delivered hereunder.

2. NO WARRANTY ON USED EQUIPMENT: The purchaser acknowledges and agrees that the used merchandise covered by this order is not new but it is used merchandise and that there is no warranty or guarantee whatsoever in respect to the said merchandise or any component part, accessory or equipment thereof. In consideration of the acceptance of this order, the purchaser hereby agrees that Transit shall not be liable for any defect in material or workmanship of or in respect to the merchandise supplied hereunder and the purchaser hereby expressly waives the benefit of, and agrees that he shall be stopped from claiming under any warranty, representation or condition whether statutory or contractual unless the same is expressly set forth herein.

There is nothing in this document specifically excluding the Sale of Goods Act. In Chabot v. Ford Motor Co. (1982), CarswellOnt. 132, Justice Eberle stated the following:

78 This review of the case law suggests to me certain principles of interpretation of exclusion clauses. First, general language may be sufficient to exclude what otherwise would be express conditions or warranties. Conditions and warranties implied by the Sale of Goods Act can be excluded only by explicit language, however. Second, words excluding implied warranties are sufficient only to exclude implied warranties, and do not also exclude implied conditions.

79 The exclusion clause of the purchase agreement makes no reference to conditions, implied conditions, or statutory conditions, nor to conditions of merchantability or fitness for a particular purpose. It is similar to the clauses considered in Wallis, McNichol and Cork, and clearly distinguishable from those considered in Advance-Rumely and L'Estrange. In view of the prior case law, I am of the opinion that, apart from the question of the effect of incorporation of the manufacturer's new vehicle warranty, the exclusion clause does not exclude conditions implied by the Sale of Goods Act.

[23] Zehr will have an argument at trial that Transit is in breach of a condition implied by The Sale of Goods Act in its contract of sale to Zehr that the trailer it sold to Zehr was “reasonably fit” for the purpose for which Zehr purchased it – namely the delivery of grain to feed mills.

[24] In the above clause from the Warranty and Limitations on Liability document, Transit extends the manufacturer’s warranty to Zehr. In Chabot, Justice Eberle was of the opinion that a similar clause in the purchase agreement with a dealer of a new vehicle had the effect of the dealer being liable on the manufacturer’s warranty. He stated the following:

85 Accordingly, I am of the opinion that cl. 7 should be interpreted as meaning that the purchaser, in addition to any other rights he might have under the purchase agreement, should have the benefit of an express warranty from the dealer in the same terms as found in the manufacturer's new vehicle warranty. However limited, niggardly or ungenerous that warranty might be, and however hemmed about or qualified by exclusions, exemptions for limitations, it was a warranty that the purchaser was to receive not a reduction of his other contractual and legal rights against the dealer.

Zehr will also have an argument at trial that Transit is liable to it for defects in the trailer on the manufacturer’s warranty.

[25] Transit argues that its duty to Zehr cannot extend so far as to require it to dismantle the trailer to check the condition of the pin in the hoist prior to the sale of the trailer to Zehr. Even if it did, Transit may not have discovered any flaw in the pin. However, I do not think that this is the whole answer to the claim in negligence. Transit was aware that it was selling a very long trailer to Zehr, as the above passage from the examination of Mr. Watson illustrates – 47 ½ feet with 5 axels. Was Transit under a duty to warn Zehr of the danger of lifting the front end of this trailer high into the air on uneven ground? There were advisory warnings of this danger as the above references illustrate. In my view this could be a live issue at trial.

[26] None of the three grounds of Zehr’s claim against Transit are amenable to resolution in a summary judgment under the expanded powers of a motion judge or by a mini trial.

Result

[27] The summary judgment motion of BFS to dismiss the third party claim against it by Stargate is allowed. The summary judgment motion of BWFS against Stargate is dismissed. The summary judgment motion of Transit against Zehr is dismissed.

[28] BWFS shall have 10 days from receipt of this judgment to deliver written submissions of its costs in its motion against Stargate dismissing the third party action against it. Stargate shall have 10 days to respond. Zehr shall have 10 days from receipt of this judgment to deliver written submissions of its costs against Transit for Transit’s motion for summary judgment dismissing Zehr’s claim against it. Transit shall have 10 days to respond. Stargate shall have 10 days from receipt of this judgment to deliver written submissions of its costs against BWFS for the motion of BWFS for summary judgment against it. BWFS shall have 10 days to respond.

P.B. Hambly J. Released: April 21, 2016