Court File and Parties

COURT FILE NO.: CV-16-554961 MOTION HEARD: 2018-06-27 REASONS RELEASED: 2018-11-02

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

ATS AUTOMATION TOOLING SYSTEMS INC. and IWK (THAILAND) LTD. Plaintiffs

• and-

CHUBB INSURANCE COMPANY OF CANADA Defendant

BEFORE: MASTER D. E. SHORT

COUNSEL: Robin Squires and Alannah Fotheringham, for moving plaintiffs Rui M. Fernandes and Alan Cofman, for defendant

RELEASED: November 2, 2018

Reasons for Decision

I. Overview

[1] This matter brings into contrast, the manner of addressing two separate but related pieces of international litigation relating to the shipment of medical packaging equipment from Thailand to India. The case reflects difficulties flowing from a global economy as remedies might be sought in fora more than half a world apart.

[2] This is a motion by ATS Automation Tooling Systems ("ATS") and IWK (Thailand) Ltd. ("IWK") to temporarily stay this action brought against Chubb Insurance Company of Canada pending the final resolution of related arbitral proceedings in India.

[3] IWK is an ATS subsidiary that carries on the business of manufacturing factory automation systems in Samutprakarn, Thailand.

[4] The Ontario action and the foreign arbitral proceedings arise out of a dispute regarding insurance coverage for damage to a cargo of “cartoning” machines sold and shipped from Thailand to India by IWK to its customer, Dr. Reddy's Laboratories Ltd. ("DRL''). When the machines arrived at DRL's inland warehouse, they were found to be irreparably damaged.

[5] Upon learning of the damage, ATS made a claim on the insurance policy they held with Chubb relating to this shipment. Chubb denied the claim on the basis that the damage occurred during inland transit and that based on the coverage documentation related to the purchase and sale of the machines, Chubb's coverage did not extend to the inland portion of the shipment.

[6] The plaintiff asserts that the ultimate purchaser, DRL subsequently took the necessary steps to permit the commencement of an arbitration in India against IWK (alone) for the losses associated with the damaged machines (the "Foreign Arbitration") on the basis that there was no proof that the damage occurred during inland transit and the documentation related to the purchase and sale of the machines mandated that the vendor, IWK, was responsible for damage until the machines were received by DRL at final destination.

[7] Following the invocation of the Foreign Arbitration, ATS and IWK commenced the within action against Chubb in Ontario pleading that the damages are within the coverage under the policy, asserting that Chubb has failed to provide indemnity in breach of the policy.

[8] Thus the moving parties submit that the allegations in this action and in the issues Foreign Arbitration are legally and factually intertwined in that both concern:

(i) where the damage to the cargo was sustained; (ii) which contractual provisions relating to the equipment sale overseas govern; and (iii) who is responsible to cover the losses for the damaged cargo.

[9] Moreover, they argue that as there is a claim for damages in the Foreign Arbitration and a claim for coverage for those damages in this action, the outcome of the former necessarily determines the complexion of the latter.

[10] However, Chubb points out that it has no standing in the Arbitration in India. Nevertheless, the moving parties assert their motion to stay this action, is justified because:

“It is in the interests of justice that this action be temporarily stayed, because:

(i) the issues in the Foreign Arbitration are substantially the same as the issues in this action, and the results of the Foreign Arbitration may render this action unnecessary; (ii) prejudice will result to the Moving Parties if this action and the Foreign Arbitration proceed in tandem; (iii) the Respondent will not suffer any prejudice if this action is stayed; and (iv) the efficient resolution of disputes and the efficient management of the resources of the court and the parties favour granting the stay.”

[11] On July 15, 2016, ATS and IWK brought this action against Chubb for its refusal to extend coverage under the Policy and the Certificate (the “Claim”). The Claim specifically refers to matters leading up to and including the Foreign Arbitration, and pleads that the damages are within the coverage under the policy, and Chubb has failed to provide indemnity in breach of the policy.

[12] Chubb has not delivered a statement of defence in this action. Rather, following the delivery of the Claim, Chubb advised, through its counsel, that it intended to bring a summary judgment motion to dismiss the Claim. The parties could not agree which motion - this stay motion, or Chubb's proposed summary judgment motion - ought to be heard first.

[13] Accordingly, in November 2017, counsel for the parties attended at a chambers appointment before Justice Akbarali, seeking directions with respect to this issue. Justice Akbarali agreed with the submissions of counsel for the Moving Parties, and ordered that the stay motion be scheduled first, and Chubb's summary judgment motion be scheduled if the stay motion is not ultimately granted.

[14] Thus, I now come to address the Stay motion. My analysis requires consideration of a range of elements which I acknowledge may result in a degree of repetition.

II. Applicable Provisions

[15] I first turn to the Courts of Justice Act, with these sections with portions emphasized by me:

STAY OF PROCEEDINGS

106. A court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just.

MULTIPLICITY OF PROCEEDINGS

138. As far as possible, multiplicity of legal proceedings shall be avoided.

[16] As well, my interpretation of all the material before me must be guided by Rule 1.04 of the Rules of Civil Procedure:

General Principle

1.04 (1) These rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits.

Proportionality

(1.1) In applying these rules, the court shall make orders and give directions that are proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding.

[17] I intend to apply these provisions to the examination that follows.

III. Defendant’s Factual Position

[18] In response to the plaintiffs’ factual submissions Chubb’s counsel’s factum, in part, notes:

1. The Plaintiffs seek to stay their own $15,000,000.00 action.
2. In 2013, they had sold equipment to a customer in India, who paid in full. However, the customer alleged that the cargo arrived damaged and it threatened arbitration in India.
3. The equipment had been transported in two legs, first by sea from Thailand to the Port of Chennai, then inland by truck over 2,500 km to Baddi, India. By the agreement of the parties, risk had passed to the customer in Thailand, but the vendor was responsible for arranging the ocean freight and insurance to the Port of Chennai.

[19] The Plaintiffs arranged insurance for the ocean leg pursuant to an open marine cargo policy issued by the Chubb. Apparently, at least to the date this motion was heard:

“No arbitration was commenced; and there is no indication that one ever will be commenced. No steps have been taken by the Plaintiffs' customer in many months.”

[20] Responding counsel asserts that “this action is a $15,000,000.00 place-holder to preserve an indemnity claim against Chubb, in case an arbitration should ever be commenced and the Plaintiffs should lose it.”

[21] Whether that constitutes sufficient grounds to delay or stay the present matter gives me pause. However, I am also mindful of the need to weigh the merits in the overall calculus of the motion before me. The position of the insurance company is summarized in this way:

“Most fundamentally, Chubb says that the Plaintiffs have suffered no insurable loss. The claim against Chubb is not maintainable at law, the policy does not insure the Plaintiffs' liability to their customers. It only insured property damage during ocean carriage.

In any event, the evidence suggests that the equipment arrived sound at the Port of Chennai. Any damage would have occurred on land en route to Baddi.

Thus, Chubb disputes coverage and says that this action has devolved to an abuse of process.”

IV. The Policy

[22] The events leading up to this action commence in late 2013. IWK sold a custom-built tube-filling and crimping machine to the Indian buyer, Dr. Reddy's Laboratories Inc. ("DRL") and, it is asserted, agreed to ship it on "CIF" terms to a “port of destination” (a shipping term governed by the Rules of the International Chamber of Commerce).

[23] The Plaintiff ATS Automation Tooling Systems Inc. ("ATS") obtained an open cargo marine insurance policy from Chubb (the "Policy").

[24] Chubb’s evidence is that IWK arranged for, and paid for, freight to the Port of Chennai; and it arranged for a certificate of insurance to be issued under the Policy for the ocean carriage from Thailand to the Port of Chennai.

[25] No insurance coverage was arranged by IWK with Chubb for onward transportation from the Port of Chennai to DRL's location at Baddi, some 2,500 km inland. The evidence placed before me is that DRL had a policy in place with another insurer, Tata-AIG for inland shipments from the port.

V. Incoterms

[26] The field of international shipping insurance is rarely before this court. To appreciate some of the nuances involved an appreciation of Incoterms or International Commercial Terms is needed.

[27] Wikipedia’s description found at https://en.wikipedia.org/wiki/Incoterms reports that Incoterms are “a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law”:

They are widely used in international commercial transactions or procurement processes and their use is encouraged by trade councils, courts and international lawyers.

A series of three-letter trade terms related to common contractual sales practices, the Incoterms rules are intended primarily to clearly communicate the tasks, costs, and risks associated with the global or international transportation and delivery of goods. Incoterms inform sales contracts defining respective obligations, costs, and risks involved in the delivery of goods from the seller to the buyer, but they do not themselves conclude a contract, determine the price payable, currency or credit terms, govern contract law or define where title to goods transfers. [my emphasis]

[28] The entry continues:

The Incoterms rules are accepted by governments, legal authorities, and practitioners worldwide for the interpretation of most commonly used terms in international trade. They are intended to reduce or remove altogether uncertainties arising from differing interpretation of the rules in different countries. As such they are regularly incorporated into sales contracts worldwide

[29] Two of the “three letter terms” needing to be addressed in this case are CIF and CIP. The Wikipedia entry provides these over-views which refer in part to terms having significant coverage differences:

CIP – Carriage and Insurance Paid to (named place of destination):

This term is broadly similar to the above CPT term, with the exception that the seller is required to obtain insurance for the goods while in transit. CIP requires the seller to insure the goods for 110% of the contract value under at least the minimum cover of the Institute Cargo Clauses of the Institute of London Underwriters (which would be Institute Cargo Clauses (C)), or any similar set of clauses. The policy should be in the same currency as the contract, and should allow the buyer, the seller, and anyone else with an insurable interest in the goods to be able to make a claim.

CIP can be used for all modes of transport, whereas the Incoterm CIF should only be used for non-containerized sea-freight.

CIF – Cost, Insurance & Freight (named port of destination):

This term is broadly similar to the above CFR term, with the exception that the seller is required to obtain insurance for the goods while in transit to the named port of destination. CIF requires the seller to insure the goods for 110% of their value under at least the minimum cover of the Institute Cargo Clauses of the Institute of London Underwriters (which would be Institute Cargo Clauses (C)), or any similar set of clauses. The policy should be in the same currency as the contract. The seller must also turn over documents necessary, to obtain the goods from the carrier or to assert claim against an insurer to the buyer. The documents include (as a minimum) the invoice, the insurance policy, and the bill of lading. These three documents represent the cost, insurance, and freight of CIF. The seller's obligation ends when the documents are handed over to the buyer. Then, the buyer has to pay at the agreed price. Another point to consider is that CIF should only be used for non-containerized seafreight; for all other modes of transport it should be replaced with CIP. [my emphasis throughout]

VI. The Denial of Coverage

[30] By letter dated October 5, 2015 Chubb wrote to ATS denying coverage for this loss.

[31] The letter read in part:

“Chubb Insurance Company of Canada ("Chubb"), reiterates that its obligations to insure the equipment ceased at the Port of Chennai and your Marine Cargo policy will not respond to this claim.

The insured bears the onus of establishing on a balance of probabilities that the loss falls within the coverage grant and within the policy terms and conditions.

This claim involves the shipment of a tube filling and crimping machine manufactured by your company. The equipment in question was a custom order shipped from Thailand to the consignee in India, terms of sale C.I.F Chennai Port India. The Purchase Order, Irrevocable Letter of Credit, Certificate of Insurance, Bill of Lading, and Commercial Invoice have the Port of Chennai, India.

You will note that the Certificate of Insurance specifically states: NO RISK PRIOR TO LANDING AT PORT, NO RISK AFTER DISCHARGE AT PORT OF ARRIVAL.”

[32] Put simply Chubb asserts that its C.I.F. policy only covered the cargo for damage occurring while it was aboard the ship until the goods were off-loaded at Chennai, after the ship carrying the cargo arrived in India.

[33] The plaintiff asserts that there may be coverage for the entire journey and particularly for the over land portion of the delivery (or that there may be a finding by the arbitrator that the goods were damaged prior to their over-land shipment). As a result the moving parties seek to await a resolution of those, still potential, claims which may be arbitrated in India.

VII. Shipping Documents

[34] I regard part of my responsibility, while not finally deciding the relevant facts, to nevertheless weigh the strength of the parties’ positions in the face of the plaintiff’s present motion seeking to freeze their own action.

[35] The documentation placed before me seems consistent in its description of the nature of the insurance arranged. For example, the following documents have the notations (many in upper case) indicated, clearly stated on their face:

i. the proforma invoice: “Costs, insurance & freight Chennai Sea Port” ii. the commercial invoice: “CIF CHENNAI SEA PORT ,INDIA” iii. the purchase order: “Costs, insurance & freight Chennai Sea Port” iv. the packing list: “CIF CHENNAI SEA PORT , INDIA” v. the letter of credit: “INSURANCE TO COVER FROM SUPPLIERS WAREHOUSE TO APPLICANTS WAREHOUSE

[36] Thus it seems at least probable that the coverage provided by Chubb ended in Chennai. I turn to the balance of the delivery route to the ultimate customer.

VIII. The Last Leg of Delivery & Insurer’s Position

[37] It seems somewhat odd that if the goods were severely damaged when off-loaded from the ship, they would nevertheless be loaded onto trucks and transported across India to the ultimate destination.

[38] As well, the fact that there was separate insurance placed for that journey is inconsistent with the position that the insurance from Chubb might provide coverage that the plaintiffs would also have from a different insurer for the road portion, all the way to the place of final delivery.

[39] Chubb also points out that any future claim flowing from arbitration would be a liability claim arising from the parties' contractual dispute. Chubb does not insure such claims under the Policy; but rather only the value of the goods shipped.

[40] I feel there is merit in the submissions in Chubb’s factum that:

25. IWK does not assert that the cargo was delivered damaged to the Port of Chennai. It only asserts that such a finding may be made in a theoretical Indian arbitration with DRL.
26. Chubb says that the vast preponderance of evidence confirms that the cargo arrived sound at the Port of Chennai.
27. Still further to the foregoing, a survey report commissioned by Chubb's adjusters found that the cargo had arrived sound at the Port of Chennai. It found that the equipment was likely damaged during inland road transportation because of bad roads over 2,500 km.
28. In December 2015, IWK wrote to DRL that “it [wa]s still not proven that the damage occurred during the journey on the vessel BEFORE it was discharged at the port of Chennai.’
29. In effect, this action is entirely contingent on a theoretical potential that DRL will commence a future arbitration and that IWK might become liable to it. However, Chubb repeats that it does not cover IWK's liability to DRL.

[41] There also appears to be some doubt as whether “a three-year Indian limitation period may not have expired yet…”.

[42] If the stay sought by the plaintiff is refused, Chubb intends to seek a summary judgment on the basis that there is no loss and, in any event, no coverage. Moreover, it says that the existence of this proceeding in the absence of an actual arbitration with DRL is an abuse of process.

IX. Issues & Argument

[43] The Moving Parties submit that the issues raised on this motion are as follows:

• What is the test for a temporary stay of an action pending the resolution of related foreign arbitral proceedings?
• Are the issues in the Foreign Arbitration substantially the same as the issues in the action?
• Would the continuance of the action cause prejudice to ATS and IWK?
• Would the stay cause prejudice to Chubb?
• Do the interests of convenience and efficiency favour granting the stay?

The Test for a Temporary Stay

[44] Pursuant to section 106 of the Courts of Justice Act I clearly have the jurisdiction to grant a stay in the present case.

[45] The power to stay under section 106 of the CJA is broad and highly discretionary. The test turns upon what the court in its discretion considers the interest of justice to demand. It is well-established that the risk of multiplicity of proceedings, the avoidance of cost and inconvenience and the risk of inconsistent results are factors to be taken into account in the exercise of the discretion conferred by this section. see *McEwen v. Marino*, 2012 ONSC 999, 2012 CarswellOnt 1448 at para. 8.

The Foreign Arbitration

[46] There are additional elements to be considered when dealing with a motion to stay an action, pending the resolution of related arbitral proceedings, where all of the parties to the present action are not parties to the arbitration agreement.

[47] To recapitulate, I quote these portions from the Moving Parties’ factum:

19. The Machines arrived in India on November 1, 2014. On November 10, 2014, an examination order was issued, directing the opening and inspection of two or more packages from both of the shipping containers containing the Machines. Shortly thereafter, the Machines were inspected. On November 12, 2014, Expert Surveyors and Loss Adjusters Pvt. Ltd. undertook a survey of the Machines. Their survey reports noted "external damages" and damages to "both side of the panels" of the Machines.
20. In December 2015, following unsuccessful efforts at negotiation and reconciliation, DRL invoked the Foreign Arbitration against IWK. In their Notice of Invocation of Arbitration (the "Arbitration Notice"), DRL rejected Chubb's assertions that there was any proof that the Machines arrived at the Port of Chennai undamaged, and took the position that IWK was responsible for any loss or damages caused to the Machines until they were delivered to DRL's warehouse in Baddi, India. Chubb is not a party to the Foreign Arbitration.
21. Under Indian law, DRL has three years from 30 days after the date they invoked arbitration to file their arbitration application with the Supreme Court. That time period can be extended by written acknowledgement by IWK. In the present circumstances, the earliest possible date by which DRL will have to file their arbitration application with the Supreme Court is January 23, 2019. However, it may be that certain correspondence between IWK and DRL has extended that deadline to July 2019.

[48] In light of those circumstances Chubb asserts:

• The International Commercial Arbitration Act, 2017; S.O. 2017, c. 2, in Sched. 5, section 9 makes provision for stays of actions pending an arbitration, but it has no application to actions against non-parties.
• Their counsel states that he is unaware of any case law where an arbitrating plaintiff has successfully moved to stay its own action against a non-arbitrating defendant.

[49] No cases granting such interim relief were placed before me by the moving parties. Chubb’s factum also asserts:

“Chubb is similarly unaware of any case law where an action was stayed in favour of arbitration where none of the defendants were parties to the arbitration.”

Where is Greater Prejudice?

[50] In Novotrax International Inc. v. Hagele Landtechnik GmbH, 2016 ONCA 771, 2016 CarswellOnt 16387; 410 D.L.R.(4th) 36 at para., the Ontario Court of Appeal has recently approved of the dicta of the Alberta Court of Appeal in UCANU Manufacturing Corp. v. Graham Construction and Engineering, 2015 ABCA 22; 2015 CarswellAlta 62, where the following considerations were suggested in connection with the exercise of the court's discretion:

i.) are the issues in the arbitration and the action substantially similar? ii.) whether the moving party has satisfied the court that continuing the action would work an injustice? and iii.) whether the moving party has satisfied the court that staying the action would not cause prejudice to the responding parties.

[51] In Novatrax, the court stayed an action in favour of arbitration, notwithstanding that some of the parties to the action were not parties to the arbitration. However, the non-arbitrating parties in that case were the principals of one of the arbitrating parties and a non-arm's-length affiliate that had been set-up as a vehicle to sell the arbitrating defendants' products. In other words, although the arbitrating parties and non-arbitrating parties did not technically have a unity of interest, they were very tightly connected.

[52] Also in Alberta, a court addressed the position of an unrelated non-arbitrating party and the UCANU test in Toyota Tsusho Wheatland Inc. v. Encana Corp., 2016 ABQB 209; 2016 CarswellAlta 672; 265 A.C.W.S. (3d) 565, 55 B.L.R. (5th) 20; 84 C.P.C. (7th) 360.

[53] In Toyota, the matter was stayed as amongst the arbitrating parties (the plaintiff and one of the defendants), as required by statute. However, the Court declined to extend the stay to a second defendant that was not a party to the arbitration agreement. The action was permitted to proceed as between the plaintiff and the non-arbitrating party (including any cross-claims against the party whose position was stayed).

[54] I believe this decision provides helpful guidance in determining the correct approach in the present case.

Convenience and Efficiency

[55] Neither the findings at the Foreign Arbitration, nor their impact on the determination or resolution of this action can be predicted. The moving parties assert that as a result, if this court does not grant the stay and the above-outlined issues are determined within this action, there is a possibility of inconsistent results. However, I do not see that either result binds the foreign decision maker.

[56] The moving parties submit that the resolution of the above-outlined issues in the Foreign Arbitration could render this action against Chubb entirely unnecessary, thereby eliminating the need for court and party resources to be expended: if the foreign arbitral tribunal concludes that (i) the damage to the Machines took place during inland transit; and (ii) the governing terms of the contracts are CIF Chennai Seaport; it would ultimately be in agreement with Chubb's position that the Policy and Certificate should not respond to the loss, and this action would not need to proceed.

[57] All that being a possible outcome, why should Chubb be denied or delayed its day in court at this point?

[58] The moving parties’ factum asserts:

The fact that Chubb is not a party to the Foreign Arbitration does not preclude this court from exercising its discretion and ordering the requested stay. The Federal Court of Appeal addressed an analogous situation in Nanisivik Mines Ltd. v. F.C.R.S. Shipping Ltd., , [1994] 2 F.C. 662; 113 D.L.R. (4th)536; 1994 CarswellNat 274 at paras. 22-24,

[59] In that case, Nanisivik had entered into a charterparty agreement with the defendant Canarctic Shipping Company Limited, which provided for mandatory arbitration. The claim arose when a cargo vessel was lost at sea. Zinc Corporation, the second plaintiff in the action, was not privy to the charterparty but was privy to a bill of lading with Nanisivik. The Federal Court of Appeal upheld the motion judge's decision to stay Zinc's claim pending the outcome of arbitration as an exercise of discretion, notwithstanding they were not a party to the arbitration.

The Court wrote:

The Motions Judge recognized the possibility that Zinc Corp. was not bound by the arbitration agreement and, while he did not resolve that doubt [...] he did stay its action in the Court in an exercise of discretion under subsection 50(1) of the Federal Court Act.

[60] The reasons of the Federal Court then referred to the decision in Kaverit Steel and Crane Ltd. v. Kone Corp., 1992 ABCA 7, 1992 CarswellAlta 226; 87 D.L.R. (4th)129; 40 CPR(3rd) 161 at para. 21; where of Kerans J.A.observed:

I agree with the learned Queen's Bench judge that he cannot refer any of the claims of any of the "extra" parties to arbitration. I add only that he might nevertheless stay claims pending arbitration when it would appear just and equitable to do so. [my emphasis]

[61] I accept that, despite that Chubb is not a party to the Foreign Arbitration, and the claims advanced in the within action cannot be referred to the Foreign Arbitration, it remains open to this court to exercise its discretion and grant the stay. However I am not convinced that there is anywhere near a strong enough justification to overlook the guidance of Justice Karakatsanis in Hryniak v. Mauldin, 2014 SCC 7, at para. 59:

What is fair and just turns on the nature of the issues, the nature and strength of the evidence and what is the proportional procedure.

[62] Here the moving parties assert that:

The facts necessary to determine all the issues that need to be addressed in this action for coverage will be decided in the Foreign Arbitration. The fact that these issues are inextricably linked tips the balance in favour of granting the stay.

[63] I do not accept this proposition as it seems to me that the interpretation of the extent of coverage provided by the Chubb policy will be irrelevant to the outcome of the possible Indian arbitration,

[64] In submitting that the interests of convenience and efficiency favour the granting of a stay at this time, the moving parties rely upon the decision of Campbell, J. in Boart Sweden AB v. NYA Stromnes AB, 1988 CarswellOnt 125, [1988] O.J. No. 2839, 14 A.C.W.S. (3d) 348, 41 B.L.R. 295.

[65] However the facts as set out by the learned judge differ markedly from the present case:

“56. As the Ontario High Court of Justice noted in Boart Sweden AB v. NYA Stromnes AB regarding a domestic action and a foreign arbitration taking place in Sweden:

The factual basis of all the issues in the Ontario action has to do with the conduct of the parties under the international agreement which is the subject of arbitration.

It would be idle to proceed with the tort claims in Canada at the very same time that the arbitration proceeds in Sweden, even though the causes of action and the parties are not identical, when the factual basis of the tort claims is so tied up together with the matters being decided in the arbitration and when there is an obvious overlap between the witnesses required for the different proceedings in the two different countries. [my emphasis]

[66] The facts set out in Justice Campbell’s reasons, which on balance, I interpret as being distinguishable from the present case, are highlighted below and include:

28 The matters in dispute in the Ontario action are inextricably bound up with the matters which the parties agreed to arbitrate. It would be mischievous to continue to litigate, pending arbitration, matters which depend so much on the facts which form the basis of the arbitration. 29 The tort claim and the oral agreement claim can only be dealt with in the Court here because they depend on causes of action unknown to the law of Sweden. And they cannot be arbitrated because they involve additional issues and parties outside the four corners of the agreement. But they need not be litigated at the very same time that the common issues of fact and legal obligation are being thrashed out in another forum. 31 And the witnesses who must of necessity overlap significantly between the Swedish proceeding and the Canadian proceeding should not be ground between the millstones of two simultaneous proceedings in different countries. 32 To permit such multiplicity of proceedings can only interfere with the process of arbitration to which the parties have agreed and can only lead as a practical matter to great confusion and inconvenience.

[67] The Plaintiffs’ factum concludes:

58. Moreover, if the stay is not granted, there will be prejudice to IWK and inconvenience to others of having the same witnesses participate in the two proceedings in two different countries. There will also be duplication related to the process of interviewing, taking statements, and discovery. Those witnesses should not be "ground between the millstones" of two proceedings in different countries. To permit the multiplicity of proceedings will interfere with the Foreign Arbitration and lead to confusion and inconvenience.

[68] I disagree. Many of those steps will only be required if the arbitration proceeds and the motion for summary judgment is unsuccessful.

[69] It is my understanding that there is no existing arbitration hearing scheduled in India; there is no evidence that there ever will be arbitration in India; and, even if there ever was arbitration in India, Chubb would not be a party to it.

[70] The prejudice in delaying this action is all to Chubb, which currently must maintain a significant reserve against this claim on its books.

[71] Justice Akbarali has already directed that in the event I refuse the requested stay, Chubb may bring a summary judgment motion against the Plaintiffs on grounds that they have suffered no insurable loss.

X. Conclusion

[72] I am satisfied that the Plaintiffs’ request for a stay should be refused. To the extent there was any uncertainty as to the correct approach to be taken, I return to the guidance for the reasons of Justice Karakatsanis, writing “for the Court” in Hryniak (supra). In that case she articulated a clear philosophical position on the trade-offs in the current civil litigation system. The court seems to be signaling that striving for perfection in all cases is too costly. The net benefit to society is greater with increased access to the justice system for a larger number of participants. Which part of the scales of justice need “proportional” assistance in such circumstances will need to be addressed case by case.

[73] The guidance provided unanimously by the Supreme Court of Canada is so significant that it is useful to set out verbatim these extracts from the decision considering the appropriate use of Summary Judgment hearings:

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.

These principles are interconnected and all speak to whether summary judgment will provide 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.

Often, concerns about credibility or clarification of the evidence can be addressed by calling oral evidence on the motion itself. However, there may be cases where, given the nature of the issues and the evidence required, the judge cannot make the necessary findings of fact, or apply the legal principles to reach a just and fair determination.

The enhanced fact-finding powers granted to motion judges in Rule 20.04(2.1) may be employed on a motion for summary judgment unless it is in the "interest of justice" for them to be exercised only at trial. The "interest of justice" is not defined in the Rules.

While I agree that a motion judge must have an appreciation of the evidence necessary to make dispositive findings, such an appreciation is not only available at trial. Focussing on how much and what kind of evidence could be adduced at a trial, as opposed to whether a trial is "requir[ed]" as the Rule directs, is likely to lead to the bar being set too high. The interest of justice cannot be limited to the advantageous features of a conventional trial, and must account for proportionality, timeliness and affordability. Otherwise, the adjudication permitted with the new powers — and the purpose of the amendments — would be frustrated.

In practice, whether it is against the "interest of justice" to use the new fact-finding powers will often coincide with whether there is a "genuine issue requiring a trial". It is logical that, when the use of the new powers would enable a judge to fairly and justly adjudicate a claim, it will generally not be against the interest of justice to do so. What is fair and just turns on the nature of the issues, the nature and strength of the evidence and what is the proportional procedure.

The "interest of justice" inquiry goes further, and also considers the consequences of the motion in the context of the litigation as a whole. For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice. On the other hand, the resolution of an important claim against a key party could significantly advance access to justice, and be the most proportionate, timely and cost effective approach.

[74] Ultimately, what I am addressing is the more appropriate method of addressing these disputes involving the plaintiff companies and the insurer, as well as the purchaser of their goods.

[75] In my view motion the summary judgment route, based on an interpretation of the terms of the contract, somewhat in the nature of an Application under rule 14.05(d) dealing with interpretation of a contract has historically been seen as a efficient way of addressing key or underlying contractual elements of a dispute between parties.

[76] I am satisfied that justice delayed is justice denied. As well if the motion results in a decision in Chubb’s favour both sides will avoid the costs of keeping this action going.

[77] Conversely, having to wait an indefinite period of time with respect to the outcome of the dispute in which the insurer has no right of participation with ambiguous timelines at best, does not convince me that a waiting game is appropriate in this case.

[78] At least not to the extent of denying an opportunity to have a motions judge address the coverage issue at this stage.

[79] If he or she interprets the contract as unclear, and finds a need for further evidence before resolving the case and the motion for judgment, I feel that by then, the parties should have a better handle on the progress of the arbitration.

[80] In the result the motion for a stay is refused.

[81] I am satisfied based on the submissions of both parties that costs in the amount of $20,000 shall be payable by the plaintiffs within 60 days.

[82] I thank counsel for their detailed and helpful submissions.

R. 255/DS Master D.E. Short