Citation: Kingston Automation Technology Inc. v. Kuehne + Nagel Ltd. et al., 2022 ONSC 3299

Court File No.: CV-19-00000390-00 Date: 2022-06-02

Superior Court of Justice - Ontario

Re: Kingston Automation Technology Inc., Plaintiff And: Kuehne + Nagel Ltd., Defendant And: Zurich Insurance Company, Defendant And: Nacora Insurance Brokers Ltd., Defendant

Before: Muszynski J.

Counsel: Gavin Magrath, for the Moving Party, Kuehne + Nagel Ltd. R. Steven Baldwin, for the Responding Party, Kingston Automation Technology Inc.

Heard: May 25, 2022

Reasons for Decision on Partial Summary Judgment Motion

Background

[1] This litigation arises out of a dispute between Kingston Automation Technology Inc. ("KAT") and Kuehne + Nagel Ltd. ("K + N").

[2] KAT contracted with K + N, a freight forwarder, to arrange for the transportation of machinery from Brazil to Ontario, via sea to Montreal and then by land to Kingston, Ontario.

[3] There is no dispute that the machinery was delayed in reaching its destination in Ontario. There is also no dispute that the ultimate invoice rendered by K + N to KAT was significantly more than had been quoted. An agreement was reached whereby KAT would make a partial payment to K + N, some funds would be held in trust, and K + N would deliver the machinery. The agreement was made without prejudice to either party's ability to pursue claims against one another.

[4] KAT commenced litigation against K + N seeking damages associated with alleged damage to the machinery that occurred during transport and loss of opportunity and revenue caused by the delay in delivery. Further, there is a dispute as to the amounts invoiced by K + N.

[5] K + N counterclaimed against KAT seeking payment of the unpaid portion of the invoice rendered.

[6] This partial summary judgment motion was brought by K + N for judgment on its counterclaim.

Position of the Parties

[7] In support of its motion, K + N relies on clause 17 of the Standard Trading Conditions (the "STCs") of The Canadian International Freight Forwarders Association Inc. ("CIFFA"). K + N alleges that the STCs were incorporated into its contract with KAT. Clause 17 provides: "The Customer shall pay to the Company in cash, or as otherwise agreed, all sums immediately when due without reduction or deferment on account of any claim, counterclaim or set off." K + N takes the position that its counterclaim is a discrete issue that can be dealt with easily based on the written record.

[8] KAT submits that the issues raised in the counterclaim go to the very core of what the main action will be considering and, therefore, partial summary judgment is not appropriate as it may lead to inconsistent findings of fact and will not make the ultimate trial more efficient.

Issue

[9] Should partial summary judgment be granted?

Analysis

[10] Rule 20 provides that the court shall grant summary judgment if it is satisfied that "there is no genuine issue requiring a trial with respect to a claim or defence": Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 ("Rules"). In determining whether there is a genuine issue requiring a trial, a motion judge may weigh the evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence, unless it is in the interest of justice for such powers to be exercised only at trial: Rules at 20.04(2.1).

[11] The appellate authority cited by KAT provides helpful insight about issues that arise on motions for partial summary judgment.

[12] In Baywood Homes Partnership v. Haditaghi, the Court of Appeal for Ontario cautioned motion judges to "assess the advisability of a staged summary judgment process in the context of the 'litigation as a whole'": 2014 ONCA 450, 120 O.R. (3d) 438, at para. 35.

[13] In Butera et al. v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at paras. 30-33, the Court of Appeal identified difficulties associated with partial summary judgment motions, including:

i. they can cause the resolution of the main action to be delayed; ii. they can be expensive; iii. judges are required to spend time hearing these motions and writing reasons on an issue that does not dispose of the action; and iv. the evidentiary record is less expansive than at trial, increasing the danger of inconsistent findings.

[14] Further, in Butera, the Court of Appeal writes: "A motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be readily bifurcated from those in the main action and that may be dealt with expeditiously and in a cost effective manner": at para. 34.

[15] There is a time and a place for partial summary judgment motions. Where it may result in a party being released from the litigation, a partial summary judgment motion makes good sense. Where it may dispose of a discrete issue in the litigation, and therefore reduce the duration and complexity of the trial, a partial summary judgment motion makes good sense. In this case, none of these factors come into play.

[16] K + N relies heavily on clause 17 of the STCs. It claims that the clause was incorporated into the contract with KAT and would require KAT to pay any invoice as presented, when presented.

[17] In the case of ITN Transborder Services Inc. v. WC Wood Corporation Ltd., 2009 CanLII 21762 (Ont. S.C.), MacDonnell J. addressed this very issue and noted at para. 17:

I am not persuaded that clause 17 of the Standard Trading Conditions requires Wood to pay invoiced amounts notwithstanding a genuine dispute as to whether the invoices are accurate. The Standard Trading Conditions were obviously drafted by ITN for its benefit and accordingly any ambiguity within them should be construed against ITN. While clause 17 requires Wood to pay "all sums...due" without reduction for any claim, counterclaim or set-off, whether a sum is 'due' is susceptible of more than one meaning. ITN's interpretation appears to be that a sum is "due" 30 days after the invoice is submitted, whether or not the invoice is accurate. An alternative interpretation is that only sums that have been accurately calculated and that are actually owing are "due". Applying the contra proferentum rule of construction, I am of the view that clause 17 does not preclude Wood from declining to pay an overcharged portion of an invoice.

[18] In ITN, it was agreed that the shipper would be responsible for paying ITN a significant portion of the invoice rendered for services. The dispute arose with certain aspects of the invoice where the shipper claimed it was overcharged. ITN brought a motion for summary judgment because the shipper had refused to pay any amounts owing. MacDonnell J. granted partial summary judgment with respect to portions of the invoices rendered that were not in dispute. A trial was ordered with respect to the portions of the invoice that were in dispute.

[19] In this case, the evidence on this motion is that KAT understood that the cost of shipping the machinery from Brazil to Kingston would be in or around $170,459. Once the machinery was en route, K + N advised KAT that, instead of $170,459, the amount owing was $744,662.68. To get the machinery released and avoid further charges, KAT and K + N agreed that $300,000 would be paid by KAT to K + N and a further $100,000 would be held in trust pending a final resolution of the dispute. Later, K + N provided KAT with a revised invoice totalling $571,325.23. Since $300,000 has already been paid, K + N's motion for partial summary judgment concerns the $271,325.23 that it claims is outstanding. This case can be distinguished from ITN, where the shipper simply did not pay any portion of the freight forwarder's invoice prior to the motion.

[20] The invoice rendered by K + N includes charges from third parties that K + N has already paid on behalf of KAT. However, KAT takes issue with these sums as being inappropriately incurred and alleges they were overcharged in various ways. The sums are very much in dispute and are deeply connected to KAT's underlying claim against K + N. KAT is not withholding payment by virtue of an alleged set off against a claim for damages in negligence. Rather, KAT is challenging the appropriateness of the sums being claimed by K + N in the first place. This is similar to the situation addressed in ITN wherein MacDonnell J. noted that clause 17 of the STCs did not preclude the shipper from declining to pay an overcharged portion of the invoice.

[21] Counsel for K + N repeatedly made the submission that other judges routinely grant summary judgment in these types of cases. Specifically, K + N cites several cases out of the Federal Court wherein clause 17 of the STCs was invoked. I find that none of those cases are on point. For example, the case of Kuehne + Nagel Ltd. v. Agrimax Ltd., 2010 FC 1303, 382 F.T.R. 47 (Eng.) dealt with a situation where the shipper refused to pay the invoice of a freight forwarder because the freight forwarder refused to issue a fraudulent bill of lading. In Locher Evers International v. Canada Garlic Distribution Inc., 2008 FC 319, the freight forwarder was successful in obtaining summary judgment against the defendant shipper. In that case, the shipper did not dispute the amount claimed, but rather argued that damage to the cargo resulted in a set off. In that scenario, the Federal Court found that clause 17 of the STCs most certainly applied.

[22] On this motion, there is a voluminous record before the court. K + N submits that the record supports its position that the charges billed to KAT were appropriately incurred and that any overcharges can be attributable to KAT's actions. I am not prepared to sift through a voluminous written record to make the factual findings that are required in the circumstances of this case. Similarly, I am not prepared to resolve credibility issues based on the written record. I say this because there will be a three-week trial involving the same subject matter and the same parties regardless of this motion.

[23] Counsel for K + N submits that granting partial summary judgment on the counterclaim could reduce the three-week trial by one day. Counsel for KAT takes the position that, due to the overlap in issues, there will be virtually no time savings or efficiencies gained if partial summary judgment is granted in K + N's favour.

[24] Even if K + N is correct in regard to the limited time-saving effect of granting partial summary judgment, it should not be lost on anyone that we have spent half a day of court time on this motion, in addition to the time required for me to review the voluminous written record and prepare these reasons, and the time spent by the parties to prepare the written record and attend at cross-examinations. When viewed in the context of the litigation as a whole, this motion for partial summary judgment simply does not make good sense. It has unnecessarily increased the cost and complexity of this litigation, not to mention put increased strain on an already stressed justice system. This is the exact type of partial summary judgment motion that should be discouraged.

[25] Further, I have serious concerns that if I were to engage in fact finding and credibility weighing based on the written record – which I expect would take days of reviewing volumes of invoices and correspondence contained within the written record – my findings may conflict with those of the trial judge, who would have the benefit of an expanded evidentiary record through viva voce testimony.

Result

[26] I find that there is a genuine issue requiring a trial with respect to K + N's counterclaim for the outstanding portion of the invoice rendered to KAT. When this motion is considered in the context of the broader litigation, and for the reasons set out above, I find that it is in the interest of justice for the enhanced powers (i.e. weighing the evidence, evaluating credibility, and drawing reasonable inferences from the evidence) to be reserved for the trial judge.

[27] K + N's motion for partial summary judgment is dismissed. The counterclaim shall proceed to trial together with the main action.

[28] While I am not seized with this matter, neither am I precluded from being the trial judge.

Costs

[29] The parties are encouraged to reach an agreement with respect to costs of this motion. If an agreement is not reached by June 10, 2022, I will receive cost submissions in accordance with the following schedule: KAT shall serve and file cost submissions (not to exceed 5 pages) on or before June 24, 2022; K + N shall serve and file responding cost submissions (not to exceed 5 pages) on or before July 8, 2022; thereafter I shall determine the issue of costs based on the materials filed. Cost submissions shall be sent to my judicial assistant, Tia Phillips, by email at Tia.Phillips@ontario.ca.

Next Steps

[30] As discussed with the parties at the conclusion of the hearing, counsel shall schedule a case conference through the Kingston trial coordinator's office for the purpose of creating a litigation timetable, which shall include attending at a second pre-trial conference and setting a date for trial. All counsel, including counsel for the defendant insurers, shall attend at the case conference.

Muszynski J.

Date: June 2, 2022