COURT FILE NO.: CV-17-573863
DATE: 20180510
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MediaLinx Printing Ltd.
Plaintiff
– and –
United Parcel Service Canada Ltd.
Defendant
R. Andrew Biggart, for the Plaintiff
Alan Melamud, for the Defendant
HEARD: February 22, 2018
REASONS FOR JUDGMENT
NISHIKAWA J.
Overview
[1] In October 2008, the plaintiff, MediaLinx Printing Ltd. (“MediaLinx”), contracted with the defendant, United Parcel Service Canada Ltd. (“UPS”), to ship its customers’ materials through UPS. In order to make the shipments, MediaLinx was licensed to use UPS’s shipping system and proprietary software. When making the shipments, MediaLinx would add a profit mark-up of 0.7% to each shipment. MediaLinx alleges that in August 2014, a UPS technician mistakenly deleted the mark-up while addressing another issue. The mark-up was not added to shipments made for a period of almost two years.
[2] MediaLinx commenced an action against UPS for $457,582.42 in “money due and owing,” the lost profits on shipments made during this period. MediaLinx claims an additional $50,000 for breach of contract, breach of trust and/or breach of the duty of good faith.
[3] UPS brings this motion for summary judgment dismissing MediaLinx’s claims. In support of its motion, UPS relies upon a contractual exclusion clause as precluding any liability in the circumstances. UPS also seeks judgment on its counterclaim against MediaLinx for $54,037.91 in unpaid invoices and late fees.
Issues
[4] The issues to be determined in this motion for summary judgment are as follows:
(i) Is MediaLinx’s claim for lost profits barred by the exclusion clause?
(ii) Does MediaLinx have a claim for $50,000 in damages in addition to its alleged lost profits?
(iii) Is UPS entitled to damages on its counterclaim against MediaLinx for unpaid invoices?
(iv) Is MediaLinx entitled to set-off its claim against UPS’s counterclaim for unpaid invoices?
(v) Did the parties entered into a subsequent agreement?
Factual Background
[5] MediaLinx is a printing and graphics company located in Vaughan, Ontario with approximately ten employees. In 2005, MediaLinx expanded its business to provide its clients with processing, labelling, warehousing and shipping services. MediaLinx’s largest client is the Ontario Real Estate Association (“OREA”). OREA accounts for over 90% of MediaLinx’s labelling and shipping business.
[6] UPS is a carrier and package delivery company. In order to facilitate efficient shipping for customers that repeatedly ship with UPS, UPS routinely provides a computer system (the “UPS Shipping System”) that permits customers to process their shipments, including printing standard UPS labels and invoices; to track shipments; and to transmit daily shipping information electronically to UPS. According to UPS, “millions” of customers use the UPS Shipping System.
The UPS Contract Carrier Agreement
[7] In October 2008, MediaLinx contracted with UPS for its shipping services and to use the UPS Shipping System. MediaLinx entered into the UPS Contract Carrier Agreement (the “Carrier Agreement”), which sets out the general terms and conditions governing MediaLinx’s shipping with UPS, including special discounted shipping rates.
[8] In order to carry out the shipping services, UPS required MediaLinx to use UPS’s computer hardware, as well as its labelling and shipping software. On October 9, 2008, MediaLinx entered into the Software Licence Agreement (the “Software Agreement”), which permitted MediaLinx to use UPS’s proprietary shipping software, Maxiship, that was part of the UPS Shipping System.
[9] UPS installed all of the necessary hardware and software for the UPS Shipping System at MediaLinx’s facility. This allowed MediaLinx to process and print shipping labels and electronically track shipping orders. MediaLinx was not required to pay for the use of the UPS Shipping System, including the hardware, software, technical support and maintenance provided by UPS.
[10] The Software Agreement contained an exclusion clause that excluded any liability of UPS for breach of contract or tort, including negligence (the “Exclusion Clause”). The provision states as follows:
Section 4. Exclusions of Warranties and Limitations of Damages.
THE LICENSED PROGRAM IS PROVIDED TO CUSTOMER AND LICENSED ON AN “AS IS” BASIS. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OR CONDITIONS WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABLE QUALITY OR FITNESS FOR A PARTICULAR PURPOSE, WHETHER ARISING BY LAW OR BY STATUTE OR FROM COURSE OF DEALING OR USAGE OF TRADE. UPS ITS AGENTS AND SUPPLIERS SHALL IN NO EVENT BE LIABLE TO CUSTOMER FOR ANY DAMAGES, INCLUDING ANY INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, LOST PROFITS OR DAMAGED DATA, LOST SAVINGS OR OTHER SUCH DAMAGES ARISING OUT OF THE POSSIBILITY OF SUCH DAMAGES, REGARDLESS OF THE FORM OR CAUSE OF ACTION, WHETHER IN CONTRACT OR IN TORT, INCLUDING NEGLIGENCE OR FOR ANY CLAIM BY ANY OTHER PERSON OR ENTITY.
Custom Programming
[11] In the fall of 2009, MediaLinx asked UPS to provide a solution that would allow MediaLinx to apply a 0.7% mark-up on UPS’s shipping rates automatically, and to provide reports on a daily basis for all shipments for its principal customer, OREA.
[12] UPS developed a solution by upgrading MediaLinx to an updated program, UPS Worldship. This program included a “Cost Centre Calculator” that was capable of adding the mark-up to the UPS shipping rate and enabled UPS customers to bill to their own customers. UPS customers were able to add or remove the mark-up themselves, and to increase or decrease it at their own discretion.
[13] UPS also created custom programming that would integrate UPS Worldship into the processes used by MediaLinx. The custom programming was necessary to enable MediaLinx to input data into UPS Worldship using MediaLinx’s Excel spreadsheet, and then have that data output with the mark-up and other shipping details on an End-of-Day Report (“EOD Report”).
[14] The custom programming was not covered by the contracts previously entered into by the parties. As a result, on October 7, 2009, UPS and MediaLinx entered into the Master Consulting and Professional Services Agreement (the “Master Consulting Agreement”). A work order was attached to the Master Consulting Agreement and set out the custom work that UPS would perform for MediaLinx. The work order further provided that the “Client will be responsible for adjusting the mark up rate for each commissioned account to the Client’s desired level.”
[15] The Master Consulting Agreement contained a limitation of liability clause and a contractual limitation period of one year. Both the Master Consulting Agreement and Work Order were signed by Michael Lacaria, manager of MediaLinx responsible for the OREA account.
The Alleged Negligence
[16] On July 31, 2014, due to the need to upgrade from Windows XP to Windows 7, a UPS technician attended at MediaLinx and replaced and upgraded the UPS Shipping System. Since Microsoft would no longer be supporting Windows XP, this would impact on MediaLinx’s ability to use the UPS Shipping System. MediaLinx’s evidence is that after this upgrade, the UPS Shipping System worked properly, including the application of the 0.7% mark-up.
[17] The following day, MediaLinx encountered an unrelated issue and contacted UPS. A UPS technician attended at MediaLinx’s facility and fixed the issue.
[18] On August 4, 2014, MediaLinx advised UPS that it had problems generating the EOD Reports. This time, a UPS technician remotely accessed MediaLinx’s UPS Shipping System to address the issue. MediaLinx alleges that it was on this occasion that the 0.7% mark-up was deleted.
[19] MediaLinx further alleges that on August 6, 2014, a UPS technician attended at MediaLinx and confirmed that the UPS Shipping System was in good working order. MediaLinx does not claim, and there is no evidence, that it asked the technician to confirm that the mark-up was still in place at the time.
[20] Almost two years later, on April 29, 2016, a MediaLinx employee noticed that the profits did not reflect the increased level of shipments made for OREA during the preceding period. She then realized that the mark-up was missing. The employee contacted the UPS helpdesk and was able to restore the mark-up after being walked through the Cost Centre Calculator function of UPS Worldship. MediaLinx alleges that the mark-up was not being included from August 5, 2014 to April 29, 2016.
Subsequent Discussions
[21] After MediaLinx discovered the deletion of the mark-up, UPS and MediaLinx entered into negotiations for a new Carrier Agreement. The negotiations were also an attempt to resolve the issue of MediaLinx’s losses. The parties met on numerous occasions and discussed the possibility of allowing MediaLinx to recoup those losses over a certain period of time through reduced rates.
[22] MediaLinx alleges that a new shipping contract with UPS was entered into on June 9, 2016, and claims that the terms were contained in a PowerPoint presentation.
[23] On June 30, 2016, UPS made a brief PowerPoint presentation to MediaLinx setting out a potential framework to resolve the issue. The PowerPoint presentation was three pages long, and expressly stated that “any written or oral statements in connection with this assessment do not create any binding or legal relationship between you and UPS.” The parties met again on July 26, 2016 to discuss the framework.
[24] On September 8, 2016, MediaLinx sent an email to UPS containing its own proposal to resolve the issues.
[25] On September 19, 2016, UPS presented a formal Carrier Agreement to MediaLinx, which MediaLinx rejected.
Unpaid Invoices
[26] After it discovered the lost mark-up, MediaLinx continued to ship with UPS and continued to pay its invoices. In November 2016, MediaLinx entered into an agreement with FedEx. At that stage, MediaLinx refused to pay any outstanding charges, including those incurred for the month of October 2016. UPS claims a total amount of $54,037.91 for unpaid invoices and late fees. MediaLinx concedes that it failed to pay these invoices and does not challenge their accuracy.
Analysis
Principles on a Summary Judgment Motion
[27] Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, states that a court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.
[28] In Mayers v. Khan, 2017 ONSC 200, at para. 18, Glustein J. provided a helpful summary of the principles applicable to summary judgment articulated by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87:
(i) Summary judgment must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims. It is no longer merely a means to weed out unmeritorious claims but rather a “legitimate alternative means for adjudicating and resolving legal disputes” (Hryniak, at paras. 5 and 36);
(ii) An issue should be resolved on a motion for summary judgment if the motion affords a process that allows the judge to make the necessary findings of fact, apply the law to those facts, and is a proportionate, more expeditious and less expensive process to achieve a just result than going to trial (Hryniak, at paras. 4 and 49);
(iii) On a motion for summary judgment, the judge must first determine whether there is a genuine issue requiring a trial based only on the evidence before him or her, without using the fact-finding powers. If there appears to be a genuine issue requiring a trial, the judge should then determine if the need for a trial can be avoided by using the powers under Rules 20.04(2.1) and (2.2) (Hryniak, at para. 66); and
(iv) The standard for determining whether summary judgment will provide a fair and just adjudication is not whether the procedure is as exhaustive as a trial, but rather “whether it gives the judge confidence that [the judge] can find the necessary facts and apply the relevant legal principles so as to resolve the dispute” (Hryniak, at para. 50). A judge must be confident that he or she can fairly resolve the dispute (Hryniak, at para. 57).
[29] On a motion for summary judgment, the court is entitled to assume that the record contains all the evidence that the parties would present if the matter proceeded to trial: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at paras. 26-27, aff’d 2014 ONCA 878, leave to appeal to SCC refused, [2015] S.C.C.A. No. 97. Each party must “put their best foot forward” with respect to the existence or non-existence of material issues to be tried: Hryniak, at paras. 57, 66.
Is the Claim Barred by the Exclusion Clause in the Software Agreement?
Does the Software Agreement Apply?
[30] MediaLinx takes the position that the Software Agreement does not apply to the circumstances of this case because that agreement did not contemplate the mark-up capability. Therefore, before turning to the interpretation of the Exclusion Clause, it is first necessary to determine whether the Software Agreement applies.
[31] In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, the Supreme Court of Canada observed that the approach to contract interpretation “has evolved towards a practical, common-sense approach not dominated by technical rules of construction.” The overriding concern, “the intent of the parties and the scope of their understanding,” is determined by reading a contract “as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract”: Sattva Capital, at para. 48.
[32] In Plan Group v. Bell Canada, 2009 ONCA 548, 96 O.R. (3d) 81, at para. 37, the Court of Appeal held that a commercial contract should be interpreted: (i) as a whole, by giving meaning to all the terms of a contract to avoid an interpretation that would render any term ineffective; (ii) by determining the intention of the parties with reference to the words used in the contract; (iii) with regard to objective evidence of the factual matrix underlying the negotiation of the contract, but without reference to subjective intention; and (iv) to the extent that there is any ambiguity in the contract, in a fashion that accords with sound commercial principles and good business sense and that avoids a commercial absurdity.
[33] MediaLinx argues that the mark-up capability was not contemplated when the parties originally entered into the Software Agreement. It relies upon the language of Section 1 of the Software Agreement, which grants MediaLinx the use of the software “solely to record, rate and generate pickup records for United Parcel Service shipments.” According to MediaLinx, the mark-up capability falls outside the permitted uses of the software. MediaLinx claims that the mark-up was implemented under the subsequent Master Consulting Agreement.
[34] To further support its view that the Software Agreement does not apply, MediaLinx argues that the Software Agreement refers only to “Maxiship”, the UPS software originally provided to MediaLinx, and not the upgraded software, “UPS Worldship” that was later installed. MediaLinx argues that in the absence of a written agreement, “common law principles of contract” governed the parties’ relationship.
[35] UPS’s position is that all software provided by UPS to MediaLinx to allow MediaLinx to use the UPS Shipping System falls under the scope of the Software Agreement. According to UPS, the change from Maxiship to UPS Worldship is immaterial. UPS further argues that the Master Consulting Agreement covered the one-time provision of services for custom programming to integrate the mark-up with MediaLinx’s Excel spreadsheets to generate the necessary EOD Reports. UPS states that if the Software Agreement does not apply, this would lead to the commercially unreasonable conclusion that there was no agreement governing MediaLinx’s use of the UPS Shipping System.
[36] Reading the Software Agreement as a whole, I find that the Software Agreement encompassed the mark-up capability. The purpose of the Software Agreement was to grant MediaLinx a non-exclusive licence to use UPS’s proprietary software. Section 1 of the agreement identifies the “Licensed Program” as “Maxiship or other UPS-provided Software System and any updates to it provided by UPS to Customer.” Based on this broad language, it is clear that the Software Agreement applied to MediaLinx’s ongoing use of UPS’s software systems, irrespective of whether this was the version that existed at the time the parties entered into the agreement or to upgraded versions.
[37] As long as the mark-up capability was part of UPS’s proprietary software, it fell under the terms of the Software Agreement. The uncontested evidence is that the mark-up capability was within the Cost Centre Calculator, which was available under UPS Worldship. It was for this very reason that MediaLinx was upgraded from Maxiship to UPS Worldship. UPS Worldship was software that MediaLinx was licensed to use pursuant to the terms of the Software Agreement. Contrary to MediaLinx’s view, the fact that the mark-up capability is not specifically mentioned in the Software Agreement does not mean that it is outside the scope of the agreement. The Software Agreement does not deal with the specific capabilities of the licensed software in detail, whether they relate to the mark-up or otherwise.
[38] Similarly, MediaLinx’s reliance upon the sole use language in Section 1 of the Software Agreement to exclude the mark-up capacity is of no avail. This provision simply restricts MediaLinx from using the software for unauthorized purposes, for example, to ship with a competitor. The implementation of the mark-up did not constitute a change in the purpose of the software, as MediaLinx characterizes it. The purpose of the software remained the facilitation of shipments through UPS. The mark-up capability was within the UPS Worldship program, and the custom programming was an enhancement or add-on that was intended to assist MediaLinx in meeting its internal requirements.
[39] The argument that the Software Agreement came to an end once the mark-up was implemented does not accord with sound commercial principles. It is commercially absurd to suggest that the parties intended that no agreement would apply to their ongoing commercial relationship, or that they would be governed solely by common law principles.
[40] MediaLinx argues that if any agreement applies, it is the Master Consulting Agreement that governs the mark-up capability. However, the terms of that agreement and attached work order do not include terms regarding the ongoing use of UPS proprietary software or evince a long-term relationship. The work order describes the services to be delivered under the Master Consulting Agreement as follows:
Adjust existing integration between Client Excel file and UPS Shipping System to allow client to adjust mark-up rates on the UPS Shipping System’s End of Day report.
[41] Under the heading “Deliverables” the Work Order further states that “the Client will be responsible for adjusting the mark up rate for each commissioned account to the Client’s desired level.” This language makes clear that the purpose of the Master Consulting Agreement was to cover a one-time provision of services, or custom programming, that permitted the mark-up to be connected to the Excel spreadsheet function that MediaLinx required. In further support of the interpretation of the Master Consulting Agreement as covering a specific provision of services is the fact that it provided a one-time fee of $1,200.00 for this service. The evidence is that UPS waived the fee.
[42] MediaLinx, having received the benefit of being upgraded to UPS Worldship and being provided with additional services free of charge in order to enable it to include the mark-up in its reporting, cannot now use that as a basis for denying the applicability of the Software Agreement. The arguments raised by MediaLinx to avoid the application of the Software Agreement strain the interpretation of the agreement in a manner that is not consistent with its terms or the commercial relationship between the parties.
Does the Exclusion Clause Apply?
[43] Since the Software Agreement applies to the circumstances of this case, the next issue is whether the Exclusion Clause applies to MediaLinx’s claim.
[44] In addition to the principles of contract interpretation articulated above, an exclusion clause must be interpreted in harmony with the rest of the relevant agreement, in light of its purposes and commercial context. As Wilson J. noted in Hunter Engineering Company v. Syncrude Canada Ltd., 1989 CanLII 129 (SCC), [1989] 1 SCR 426:
...exclusion clauses, like all contractual provisions, should be given their natural and true construction. Great uncertainty and needless complications in the drafting of contracts will obviously result if courts give exclusion clauses strained and artificial interpretations in order, indirectly and obliquely, to avoid the impact of what seems to them ex post facto to have been an unfair and unreasonable clause.
[45] In Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69, at para. 82 (Binnie J. dissenting),[^1] the Supreme Court of Canada confirmed the public interest in freedom of contract and held that, absent a paramount overriding public policy consideration, exclusion clauses should be enforced.
[46] In Tercon, the Court at paras. 121-23, provided the framework for analyzing the applicability of an exclusion clause:
(a) As a matter of contractual interpretation, does the exclusion clause apply to the circumstances as established by the evidence in the case?
(b) If the exclusion clause applies, was the clause unconscionable at the time the contract was made, as might arise from situations of unequal bargaining power between the parties?
(c) If the exclusion clause is held to be valid and applicable, should the Court nevertheless refuse to enforce the clause because of the existence of an overriding public policy concern?
[47] On the first enquiry, the Exclusion Clause in the Software Agreement specifically excluded liability for lost profits from use of the “Licensed Program,” regardless of the form or cause of action, including breach of contract or negligence. The mark-up was enabled through the Cost Centre Calculator function in UPS Worldship, software provided by UPS under the Software Agreement. The alleged lost profits resulted from MediaLinx’s use of a Licensed Program. Giving the Exclusion Clause its “natural and true construction” based on the ordinary and grammatical meaning of the words used, I find that the Exclusion Clause applies to MediaLinx’s claim for lost profits from the deletion of the mark-up.
[48] In order to avoid the application of the exclusion clause, MediaLinx claims that the deletion of the mark-up took place when the UPS technician attended to upgrade the computer system from Windows XP to Windows 7, and that the changes involved were to the hardware and Microsoft software, and not to a “Licensed Program”. This argument is not supported by the evidence. The mark-up capacity was within UPS Worldship, not in Windows. If it was deleted, this would have been in the UPS software. Moreover, this argument is contradicted by the evidence of MediaLinx’s affiant, Mr. Lacaria, who recognized that the mark-up was still in place after the Windows upgrade, and that the mark-up was deleted when a subsequent technical issue was addressed remotely. In his affidavit, Mr. Lacaria specifically states that the mark-up was tested and worked after the upgrade.
Is the Exclusion Clause Unconscionable?
[49] MediaLinx argues that the Exclusion Clause should not apply because it is unconscionable. MediaLinx’s position is that the Carrier Agreement and Software Agreement were contracts of adhesion and that based on its lack of bargaining power, it had no choice but to accept the terms offered by UPS.
[50] A court must determine whether an exclusion clause was unconscionable at the time the agreement was made. The burden of proof is on the party alleging unconscionability: Tercon at para. 122.
[51] The Exclusion Clause is broad, but not unconscionable on its terms. It excludes liability for lost profits, including for breach of contract or negligence, but is not so broad as to encompass wrongful or intentional conduct by UPS employees. Moreover, it was not so obscured as to escape attention: see Fraser Jewellers (1982) Ltd. v. Dominion Electric Protection Co. (1997), 1997 CanLII 4452 (ON CA), 34 O.R. (3d) 1, at 11. The Exclusion Clause is the only provision of the one-page Software Agreement in upper case letters.
[52] In respect of unequal bargaining power, the Carrier Agreement and Software Agreement are clearly contracts that were drafted by UPS and presented to MediaLinx. While it is unlikely that MediaLinx could have bargained significantly with respect to the specific terms, other than applicable shipping rates, MediaLinx was not in a position of having no choice but to accept UPS’s terms. As UPS noted, MediaLinx could have gone to one of UPS’s competitors, including FedEx, with whom it contracted after the relationship with UPS came to an end. Moreover, there is no evidence that MediaLinx attempted, but was unable, to negotiate the terms of the Software Agreement or the Exclusion Clause.
[53] In fact, the evidence demonstrates that MediaLinx was able to request and procure additional services from UPS for its own benefit, including the services under the Master Consulting Agreement. In the end, UPS waived the fees under that agreement. In addition, UPS entered into lengthy negotiations with MediaLinx after the deletion of the mark-up in an effort to retain MediaLinx as a customer. This undermines any allegation that the parties’ bargaining power was so unequal that MediaLinx had no choice but to accept UPS’s terms. The Software Agreement was “freely concluded” by both parties: Tercon, at para. 131.
[54] UPS had an interest in maintaining the relationship with MediaLinx in order to keep MediaLinx’s business. At various times, UPS made efforts to assist or accommodate MediaLinx, likely because MediaLinx could have gone to a competitor. I find that the parties’ respective bargaining power was not so unequal as to render the Exclusion Clause unconscionable.
[55] As UPS has argued, the Exclusion Clause is not commercially unreasonable because it served to protect UPS from potentially unlimited liability to users of its proprietary software. In the circumstances of this case, UPS would not have known that the mark-up had been deleted. UPS would only have known that it was being paid the appropriate amounts based on the volume of shipments, because the financial reporting in relation to the mark-up went to MediaLinx. UPS would not have been able to correct the issue until alerted by MediaLinx, and without an exclusion clause, would not have been able to limit its financial exposure.
[56] UPS provided the UPS Shipping System to customers free of charge, and with ongoing technical support for issues that arose from the software. Given this context, the exclusion of potentially unlimited liability by UPS is reasonable.
Is There an Overriding Public Policy Concern?
[57] The third enquiry, whether the court should nevertheless refuse to enforce the clause because of the existence of an overriding public policy concern, is not satisfied in the circumstances of this case. The examples of public policy concerns given by Binnie J. in Tercon involve broader risks to the public and the public interest, such as tainted baby food or a company knowingly providing defective material for pipelines and then attempting to use an exclusion clause to insulate itself from liability for the risk to human health: Tercon at para. 119. No such overriding public policy concern has been articulated here.
[58] The only public policy argument that MediaLinx makes is that public policy precludes a party from immunizing itself from liability for failure to perform under a contract. If effect was given to such claims, “there would be little room for the exclusion clause to operate”: Linde Canada Limited v. Luff Industries Ltd., 2016 ABQB 298, at para. 59, quoting Binnie J. in Tercon, at para. 136. If this were sufficient, no contractual exclusion clauses would be enforceable.
[59] Based on the application of the principles enunciated by the Supreme Court of Canada in Tercon, I find that the Exclusion Clause is valid and applicable to the circumstances of this case. MediaLinx’s claim against UPS for losses resulting from the deletion of the mark-up is barred by the Exclusion Clause.
Does MediaLinx Have a Claim for $50,000?
[60] In addition to the lost profits resulting from the deletion of the mark-up, MediaLinx seeks $50,000 for breach of contract, breach of trust, and/or breach of the duty of good faith and honesty in the performance of a contract. Other than to claim an entitlement, MediaLinx has pleaded no particulars to support this claim.
[61] Not only are there no particulars relating to this claim, MediaLinx has not identified what term, or even which contract, has been breached. It is also unclear how this amount is distinct from the damages MediaLinx seeks for lost profits. There are no allegations of bad faith or any particulars to support a breach of the duty of good faith.
[62] Not only is the claim for $50,000 not pleaded with any particularity, MediaLinx has provided no evidence on this motion to support the claim. It is not sufficient for MediaLinx to state that such evidence would be forthcoming if the matter goes to trial: Sweda Farms, at paras 26-27. In the absence of any evidence, I find there is no genuine issue requiring a trial as to MediaLinx’s entitlement to damages in the amount of $50,000. MediaLinx’s claim for $50,000 is dismissed.
Is UPS Entitled to Damages for Unpaid Invoices?
[63] UPS claims unpaid invoices, including late fees, from October 2016 to the present for over 4,700 shipments that were requested by MediaLinx and delivered by UPS. The invoices are included in the motion record, and MediaLinx has not disputed the amounts that UPS claims are owing. MediaLinx has raised no issue as to whether the shipments were made. Mr. Lacaria admitted on cross-examination that MediaLinx paid UPS’s invoices until October 2016, and that once it entered into an agreement with FedEx, MediaLinx stopped paying UPS’s invoices.
[64] Under the Carrier Agreement, MediaLinx has agreed to pay UPS for its shipping services “within the time required by UPS.” The 2016 UPS Canada Terms and Conditions of Service provide for a late fee of 5% on overdue invoices. When it signed the Carrier Agreement, MediaLinx agreed to be bound to the UPS Canada Terms and Conditions in effect at the time of shipping.
[65] The deterioration of the relationship between the parties does not abrogate MediaLinx’s obligation to pay for shipments that were in fact made through UPS and for which it has received invoices.
[66] Given that MediaLinx has not disputed the amounts owing on the invoices, there is no genuine issue of fact requiring a trial as to MediaLinx’s obligation to pay UPS for the unpaid invoices in the amount of $54,037.91.
Is MediaLinx Entitled to Set-off its Claim against UPS’s Counterclaim for Unpaid Invoices?
[67] Based on my findings on the applicability of the Exclusion Clause, and MediaLinx’s lack of entitlement to damages, I find that there is no genuine issue requiring a trial as to MediaLinx’s claim for set-off against UPS’s counterclaim for unpaid invoices.
[68] If I am wrong about the application of the Exclusion Clause, and UPS is liable for MediaLinx’s lost profits, I would nonetheless find that MediaLinx is not entitled to legal set-off. Legal set-off would not be available because MediaLinx’s claim for lost profits does not constitute a “debt”: Luxus Pack Packaging Industrial Co. v. Conros Corp., 2005 CarswellOnt 7848 (S.C.), at para. 13, rev’d in part on other grounds, 2006 CarswellOnt 203 (C.A.). In order be entitled to the lost profits, MediaLinx would still have to demonstrate UPS’s liability for negligence or breach of contract.
[69] Similarly, MediaLinx’s claim against UPS does not meet the legal test for equitable set-off. MediaLinx’s claim arises from alleged lost profits from August 2014 to April 2016, while UPS’s claim for unpaid invoices is for shipments made in October 2016. The claim for unpaid invoices post-dates the claim for lost profits, and MediaLinx’s claim for lost profits does not “go directly to impeach” UPS’s entitlement to payment on the unpaid invoices. The claims are not so clearly connected that it would be manifestly unjust to allow UPS to enforce payment without taking into consideration MediaLinx’s claim: see Univar Canada Ltd. v. Pax-All Manufacturing Inc., 2008 CarswellOnt 5204 (S.C.), at paras. 15, 27, aff’d, 2009 ONCA 341.
Did the Parties Enter into a New Contract?
[70] MediaLinx claims that it entered into a new contract with UPS on June 9, 2017. The existence of the contract was not pleaded in MediaLinx’s Statement of Claim or Defence to the Counterclaim. The first mention of this new contract is in the Lacaria affidavit. UPS argues that this is an affirmative defence to UPS’s counterclaim and must specifically be pleaded: Rules of Civil Procedure, r. 25.07(4). It also strikes me as a potentially new claim in the alternative, should the Exclusion Clause preclude recovery of lost profits. In any event, I agree that MediaLinx should not be permitted to raise an entirely new defence or cause of action in the context of a summary judgment motion for the purpose of defeating the motion. It does not appear that MediaLinx ever attempted to amend its pleadings.
[71] Irrespective of the deficiency in pleading, there is no air of reality to the alleged new contract. Mr. Lacaria claims that the terms were agreed to verbally between him and Alexander Andre and Susi Stutt of UPS during a meeting on June 9, 2016. Mr. Lacaria claims that the terms were contained in a PowerPoint slide shown during that meeting. A copy of that presentation has not been provided. Mr. Lacaria relies upon a PowerPoint presentation dated June 30, 2016 (the “PowerPoint”) as containing the terms that were agreed to on June 9, 2016. Mr. Lacaria deposes that pursuant to this new contract, UPS agreed to freeze MediaLinx’s rates for the OREA shipments and allow an increase of the mark-up. This would allow MediaLinx to recover approximately $315,000.00 over three years.
[72] The PowerPoint is three page document with minimal detail, and, unlike the Carrier Agreement, contains no specific contractual terms. The PowerPoint specifically states: “any written or oral statements made in connection with this assessment do not create any binding or legal relationship between you and UPS.” Given this language, and the level of detail in the Carrier Agreement, it is unlikely that UPS would have entered into an ongoing relationship with MediaLinx on the basis of a verbal agreement with vague terms.
[73] Moreover, the parties’ conduct after June 9, 2016 does not support the existence of a contract. They continued to meet and negotiate after that date, including on July 26, 2016. Mr. Lacaria explains these discussions as UPS having reneged on the agreement, but it is telling that at no time during these discussions did Mr. Lacaria insist on the terms already agreed to or direct UPS to them. For example, on September 8, 2016, Mr. Lacaria sent an email to UPS which stated as follows, with no mention of a previous agreement:
Here’s our proposal:
– Recoup 200K upfront now
– Recoup 245k using your proposed rate reductions
– You match the rates we can get from FedEx now
– We/UPS can re-negotiate rates after we have recouped our losses (4-5 years? Hopefully less).
[74] This belies MediaLinx’s position that an agreement was reached on June 9, 2016. If the parties had already entered into an agreement, there would be no need for Mr. Lacaria to propose terms. Further, Mr. Lacaria’s explanation, provided on cross-examination, that the UPS representative asked him to send a proposal so that she could obtain better terms for MediaLinx also does not support the existence of an agreement.
[75] If MediaLinx truly believed that there was a new contract, it is reasonable to expect that it would have relied upon the agreement in its discussions with UPS, and pleaded it in defence to UPS’s counterclaim.
[76] Based on the evidence in the record, there is no genuine issue of fact requiring a trial on the issue of whether MediaLinx and UPS entered into a new contract on June 9, 2016.
Conclusion
[77] In this case, the parties’ dispute centres upon the applicability and legal effect of the agreements into which they have entered. I am satisfied that based on the evidence before me, the summary judgment process allows the court to make the necessary findings of fact and to apply the law to those facts. Moreover, a summary judgment motion is a proportionate, more expeditious and less expensive process to achieve a just result than going to trial.
[78] This Court has granted summary judgment dismissing claims based on the interpretation of a limitation of liability clause: September Seventh Entertainment Ltd. v. Feldman Agency, 2017 ONSC 552, aff’d 2017 ONCA 815; Haliburton Forest & Wildlife Reserve Ltd. v. Toromont Industries Ltd., 2016 ONSC 3767, at paras. 49-57.
[79] For the foregoing reasons, I find that there is no genuine issue requiring a trial and grant the defendant’s motion for summary judgment dismissing MediaLinx’s claims.
[80] Similarly, there is no genuine issue requiring a trial with respect to the amounts owed by MediaLinx to UPS for unpaid invoices. The defendant, UPS, is entitled to judgment in the amount of $54,037.91, with pre-judgment and post-judgment interest pursuant to the Courts of Justice Act, R.S.O. 1990 c. C.43.
[81] Counsel for both parties submitted costs outlines at the hearing of the motion, but have asked for a further opportunity to make submissions on costs. If no agreement on costs is reached, defendant’s counsel shall make cost submissions within ten days of the release of this decision. Responding submissions on costs shall be made within ten days of receiving the defendant’s cost submissions. All cost submissions must be less than five pages in length.
Nishikawa J.
Released: May 10, 2018
COURT FILE NO.: CV-17-573863
DATE: 20180510
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MediaLinx Printing Ltd.
Plaintiff
– and –
United Parcel Service Canada Ltd.
Defendant
REASONS FOR JUDGMENT
Nishikawa J.
Released: May 10, 2018
[^1]: The majority agreed with Binnie J.’s analytical approach to exclusion clauses.