Court File and Parties

COURT FILE NO.: CV-18-26169 DATE: 20210301

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ZD Metal Products Inc. Plaintiff – and – Metamag Inc. Defendant

Counsel: Ted A. Kalnins, for the Plaintiff Lianne J. Armstrong, for the Defendant

HEARD: November 23, 2020

Reasons for Decision

CAREY J.

[1] This is a motion brought by the plaintiff for summary judgment in a lawsuit involving contracts for the manufacture of two industrial ovens: one known as the aluminum oven and the other as the magnesium oven.

[2] For the reasons set out below, I have concluded that there are a variety of undetermined facts that require a trial and accordingly for reasons set out below, the plaintiff’s motion is dismissed with costs.

Overview

Plaintiff’s Position

[3] The plaintiff contracted with and paid the defendant approximately $400,000 (U.S. funds) for these two ovens (furnaces). The aluminum furnace was delivered and installed in June 2017 but failed in September of that year. A higher priced (approximately $300,000 U.S. funds) magnesium furnace originally scheduled for delivery in March 2017, had its delivery delayed and in November of that year the date cancelled. None of the money paid has been refunded by the defendant to the plaintiff.

[4] The plaintiff asserts breach of contract by the defendant and seeks a summary judgment for payment, in Canadian currency, the equivalent of $403,395.40 (U.S.) plus pre- and post-judgment interest and substantial indemnity costs.

[5] ZD asserts that this amount is owing to them as a result of the defendant’s fundamental breach of contract in relation to both furnaces. The plaintiff says that the aluminum furnace was defective, and while taking responsibility for the defects, the defendant failed to repair it. The furnace failed within three months’ time, after which, it did not work at all. They allege it was not fit for its intended purpose. The magnesium furnace which was contracted for but never delivered had an ultimate delivery date of May 20, 2017. The plaintiff relies on the wording of the contract stating “100% on time delivery is required …” to assert that time was of the essence in that contract. Thus, they say by November of 2017, the fundamental breach of the contract had occurred.

Defendant’s Position

a) Aluminum Furnace

[6] The defendant asserts that the plaintiff overlooks in its claim that the aluminum furnace contracted for was sold at a discount as it had been used by the defendant in its own operation. A new aluminum furnace of this size, they assert, would have been sold for between $160,000 and $180,000 (U.S.). The defendant further asserts that employees of Metamag attended at the plaintiff’s facility to complete the installation of the furnace. As part of the installation procedure, they assert they tested the furnace by melting “a furnace full of aluminum” and that it worked “perfectly”. Further after installation, the defendant’s principal, Alain Boulet, attended for approximately six days training the plaintiff’s staff on the operation and maintenance of the furnace.

[7] The defendant asserts that the plaintiff’s second payment under the contract of 40 percent of the purchase price was two months late and only received after numerous calls from the defendant’s supply chain manager. The defendant further asserts that prior to any complaints received from the plaintiff regarding the operation of the furnace, Mr. Boulet had concerns about the number of new employees working at the plaintiff’s location as well as the cleaning and maintenance protocols he had outlined to the plaintiff’s staff not being followed. The defendant also asserts that Mr. Boulet had raised concern with the plaintiff, ZD’s, operation manager, Mr. Rambo, about the furnace being run constantly without use and the need to turn it off on a periodic basis. According to the defendant, Mr. Rambo made it clear to Mr. Boulet that he “had no interest in Boulet’s advice”.

[8] The defendant further says that after inspecting the furnace upon complaints that it was operating at too high of a temperature, Mr. Boulet informed the plaintiff that the furnace would need to be taken back to the defendant’s facility for at least one week. The defendant company denies that Mr. Boulet or the company took any responsibility for the damage to the furnace or a guarantee that it would be repaired in one week. The defendant, Metamag, states that upon inspection, they determined that the breaks in the element of the aluminum furnace were due to the failure of the plaintiff to properly maintain that furnace. The defendant asserts through Mr. Boulet’s affidavit filed on this hearing that “green rot” assisted with the overheating of the furnace and data received from the furnace’s panel verify that the furnace was being run at 2200 degrees when it was supposed to be set at 1800 degrees Fahrenheit. Metamag further asserts that there was evidence that the ceramic tubes inside the furnace made to withstand heat of up to 3600 degrees Fahrenheit were melted. Their position is that the plaintiff’s decision to keep the furnace running without using it, and the failure to follow the cleaning and maintenance protocols, as well as exceeding the maximum recommended heat settings, caused the failure of the furnace.

[9] The defendant also argues that the plaintiff has produced no first-hand evidence from any persons with personal knowledge of alleged attempts to contact the defendant regarding further issues with the furnace or any of its contradicting of Mr. Broulet’s observations of the furnace and the cause of its breakdown.

[10] The defendant also states evidence will show that Mr. Rambo, Metamag’s main contact at ZD, was terminated following an inspection of ZD’s facility by its ownership in August, after being given four weeks to improve the operations. The defendant Metamag, asserts, as well, that they as “a show of good faith” installed new elements and ceramic tubes and replaced all of the wiring despite there being no evidence of defect in these components. They did this work for free and paid for the shipping of the furnace back to them. They assert that after the return of the aluminum furnace, they were never contacted by the plaintiff with respect to further issues.

b) Magnesium Furnace

[11] In relation to the second contract, the affidavit material of the defendant asserts that there was an initial misquoting of the price due to the plaintiff’s failure to include an important component; the addition of which added over $52,000 to the total price.

[12] The affidavit material of the defendant also asserts that there was never an agreed-upon delivery date or compliance by the plaintiff with 90 percent payment of the quoted cost prior to delivery.

[13] The affidavit of Mr. Boulet on behalf of the defendant, further alleges that unbeknownst to them the plaintiff, ZD, moved a magnesium furnace from another plant that it was closing to the location that the contracted furnace was intended for. The defendant states that despite routinely following up with the plaintiff, no one from ZD attended at its location to inspect and approve the new furnace between July and November of 2017, and no one requested delivery of the completed furnace to ZD at any time.

[14] The plaintiff has not adduced any evidence of written or other specific requests for delivery of the magnesium furnace, says the defendant.

[15] The defendant asserts that as a result of the breach of the sale agreement by the plaintiff, it was left with a custom made furnace with little resale value that was sold at auction as the option likely to recoup the highest price for the furnace. The auction brought a price of $12,150 (Canadian), less commission to the auctioneers of $2,187.

Analysis

[16] It is undisputed that a court shall grant summary judgment if it is satisfied that there is “no genuine issue regarding a trial”. That will be the case where a court is able to reach a fair and just determination on the merits on a motion for summary judgment allowing the court to make necessary findings of fact and apply those facts to the law resulting in a proportionate, more expeditious and less expensive means to achieve a just result. The onus is on the moving party to show that there is no genuine issue requiring a trial.

[17] Here, the material on the motion satisfies me that there is a multitude of issues that cannot be determined without a trial. They include the following:

1. Was the aluminum furnace defective when delivered?
2. Did the defendant fail to repair any defect that might have existed?
3. Did the plaintiff cause the damage to the aluminum furnace by its failure to follow operating, cleaning and maintenance protocols as set out by the defendant?
4. Was the plaintiff ready and able to proceed with the final payment and purchase of the magnesium furnace?
5. Can the plaintiff rely on an assertion that time was of the essence in the second contract in the circumstances of their alleged non-compliance with the terms of the contract?

[18] For these issues and others highlighted in the defendant’s argument, there is at the very least conflicting evidence in the material before me. I accept the plaintiff has an obligation to put their best case or “best foot” forward on this motion. The material put forward by the plaintiff and the defendant is such that I do not see that my exercise of the fact finding powers under r. 20.04(2.1) and (2.2) would be consistent with the test set out in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, paras. 60 and 62.

[19] As a result, due to the many evidentiary disputes on the underlying facts and their inter-connection, I decline to exercise my discretion to hear oral evidence.

[20] For the foregoing reasons, the plaintiff’s motion is dismissed with costs to the defendant.

Costs

[21] In the event the parties are unable to agree on costs, they may make brief written submissions (three double-spaced pages), along with a costs outline and any relevant offers to settle, according to the following timeline:

a) The defendant may provide submissions within 15 days; b) The plaintiff may provide submissions with 15 days thereafter; and c) The defendant may provide reply submissions within 5 days thereafter.

Original signed by Justice Thomas J. Carey Thomas J. Carey Justice

Released: March 1, 2021