Court File and Parties

COURT FILE NO.: CV-20-069 DATE: 2023/09/18 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: CONRAD REFRIGERATED TRUCKING INC. Plaintiff – and – IBERICA TRANSPORT LTD. And SKYWAY TRUCKING INC. Defendants

Counsel: Michael Polvere, for the Plaintiff Kimberly Newton & Matthew Stanley, for the Defendant Iberica Patrick Essig, for the Defendant Skyway

HEARD: June 12, 2023

TRANQUILLI J.

[1] This motion requires the court to consider whether summary judgment in favour of any of the parties is an appropriate disposition of this commercial dispute commenced under Rule 76 of the Rules of Civil Procedure.

Overview

[2] The plaintiff Conrad Refrigerated Trucking Inc. is a broker specializing in the transportation of perishable commodities throughout Canada and the United States of America. On May 10, 2028, Conrad brokered a shipment for its customer, Goodmark Poultry (Toronto) Inc., for the transportation of approximately 42,000 pounds of processed frozen poultry product from Toronto to Newark, New Jersey. The defendant Skyway Trucking Inc. agreed to transport the product. The terms of the agreement were secured by a document prepared by the plaintiff in a “Carrier Confirmation Form”.

[3] The terms of the plaintiff’s Carrier Confirmation Form provided in part that: “IF SHIPMENT IS STOLEN UPON ARRIVAL INTO CANADA YOU WILL BE FULLY RESPONSIBLE FOR ALL QUOTA COSTS OF BRINGING THE PRODUCT INTO CANADA.” The form also advised Skyway that: “Acceptance of this order is a binding contract. The carrier accepts full responsibility for any claims relating to theft, damaged goods, late delivery.”

[4] Conrad’s customer Goodmark relied upon a customs broker to prepare the documentation for the poultry product to cross from Canada to the USA.

[5] Skyway was unable to carry the US poultry product due to capacity issues. Skyway sub-brokered the shipment to the defendant Iberica Transport Ltd. Skyway did not provide Conrad’s Carrier Confirmation Form but substituted its own form, without the terms just summarized.

[6] The load was stolen while in Iberica’s care and control in Toronto and before Iberica could cross the US border with the product.

[7] The frozen poultry had originated in the USA and was shipped to Conrad’s customer Goodmark for processing. As the processed poultry product was intended to return to the USA, it was exempt from certain duties and tariffs under the Duties Relief Program. However, as the poultry product was stolen in Canada, the Canada Border Services Agency levied a customs duty of 249% against Goodmark as it exceeded its tariff quota for foreign poultry, on the assumption the stolen poultry was now in the Canadian market.

[8] Conrad compensated its customer Goodmark Poultry (Toronto) Inc. for both the loss of the stolen poultry product in the amount of $42,336.00 (USD) as well as the customs duty of $135,639.59 as the US poultry product was stolen in the Canada and presumably remained in the Canadian market.

[9] Conrad then commenced this action under the simplified procedure against Skyway and Iberica, seeking damages on grounds of breach of contract, negligence, breach of trust and unjust enrichment. It relies upon the terms of the Carrier Confirmation Form and seeks compensation for the sums Conrad paid to its client Goodmark for the value of the stolen product, the customs duty of 249% and the ancillary freight and shipping costs.

[10] Skyway and Iberica deny liability. Among other grounds, they each plead the claim is barred for lack of notice. In the alternative, they assert crossclaims against each other for contribution and indemnity.

[11] Examinations for discovery have taken place. Conrad now moves for summary judgment requiring the defendants to pay the damages sought. The parties have exchanged affidavits of the principals of each party. They have also filed affidavits of experts or individuals who they seek to qualify as being knowledgeable in the carrier industry. There were no cross-examinations on any of these affidavits as these are foreclosed by Rule 76.04.

Positions of the Parties

[12] Conrad submits the record allows this court to reach a fair and just determination of the liability and damages arising from the defendants’ negligence and breach of contract and the plaintiff’s entitlement to be made whole. The words of the agreement are clear that the carrier would be responsible for any quota costs in the event the product was stolen in Canada. This is a claim for an unpaid invoice that is entirely amenable to summary judgment: Peri Formwork Systems Inc. v. Future Design Canada Inc., 2020 ONSC 4855.

[13] The defendants submit that this is an appropriate case where the court should dismiss the plaintiff’s motion and enter summary judgment dismissing the plaintiff’s claims. Both defendants submit the plaintiff failed to use clear and unambiguous language in putting the defendants on notice of the heightened damages that may flow through the imposition of duties in the event of theft. The general language in Conrad’s Carrier Confirmation Form warning of liability for “all quota costs of bringing the product into Canada” is insufficient. The damages arising from the duty payable were not foreseeable and too remote.

[14] Skyway also submits the plaintiff cannot recover damages as against it as Conrad failed to give notice of its claim in accordance with the Carriage of Goods Regulation, O. Reg. 643/05 pursuant to the Highway Traffic Act.

[15] Iberica also submits that the claim against it cannot succeed due to the plaintiff’s failure to give adequate notice in accordance with the same regulation. Moreover, Iberica contends there was no express or implied contract between it and Conrad. There was merely an oral agreement between Iberica and Skyway. There was no meeting of the minds that Iberica could be liable for duties if the goods were not transported across the Canada US border. To the extent there may be liability for the customs duty, the financial exposure is also capped pursuant to the Carriage of Goods Regulation unless a higher value was declared on the face of the contract of carriage, which it was not.

[16] For the reasons that follow, I find that this is not an appropriate case for summary judgment given the limitations imposed by Rule 76. Although the plaintiff has framed this action as a simple claim in breach of contract or negligence, the factual matrix is not amply captured by the Rule 76 process. For example, there are expert opinions in play that have not been subjected to cross-examination. There is also an issue as to the plaintiff’s notice of claim to the defendants. While this issue could arguably be addressed through a focused viva voce examination of the plaintiff, in the circumstances of the proceeding as a whole, and where there are other factual matters in dispute, I conclude it is advisable to avoid further delay and expense and for this matter to proceed to trial, with some recommendations to expedite the matter as I will summarize at the conclusion of my reasons.

Analysis

[17] This court’s exercise of its discretion and powers on a summary judgment motion under Rule 20 are well understood and need not be repeated in these reasons: Hyrniak v. Mauldin, 2014 SCC 7, paras. 65-68. There is also no question that, in general, the motion judge is entitled to assume the record contains all the evidence the parties would present at trial. The parties must put their best foot forward and “lead, trump or risk losing”: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 at para. 27; Boland v. Lyle, 2016 ONSC 7418 at para. 13.

[18] However, these principles are attenuated when considering the appropriateness of a summary judgment motion in the context of a simplified procedure action under Rule 76.

[19] In Manthadi v. ASCO Manufacturing, 2020 ONCA 485, the Court of Appeal reminded us that while a motion for summary judgment can be appropriate in Rule 76 proceedings, such cases remain “exceptional”. Rule 76 procedures are designed to get the parties to trial with a minimum of delay and costs. Discovery is restricted and cross-examination on affidavits are not allowed. The motion judge must assess the relative efficiencies of proceeding by way of summary judgment as opposed to trial. The simplified procedure rules are designed to allow the matter to be determined in an expedited fashion; however, this constrains the parties’ ability to marshal evidence on a summary judgment motion and meet their obligation to put their best foot forward. The risk of inappropriate use of Rule 20 is heightened in Rule 76 actions, where such motions can have the perverse effect of creating delays and wasting costs associated with preparing for, arguing, and deciding a motion for summary judgment, only to see the matter sent on for trial: Manthadi, paras. 32-39.

[20] The court was not favoured with a statement of law regarding the contractual issues arising from Skyway’s sub-brokering of the shipment to Iberica and the significance, if any, arising from the fact that Conrad’s Carrier Confirmation Form was not provided to Iberica. The parties also did not address whether duties that were imposed by the CBSA are properly subject to the limitation of liability set out in the Carriage of Goods Regulation.

[21] In any event, the difficulties with disposing of this action by way of summary judgment arise from gaps in the evidence, conflicting evidence, and the proposed expert affidavits.

[22] First, I find there is some question as to whether Conrad authorized the sub-brokering. Conrad’s principal, Conrad Manicom, testified on examination for discovery that he did not know of the sub-brokering until after the theft. His affidavit filed in support of the motion merely states that Skyway advised Conrad it no longer had an available truck and so had the load transported by Iberica. It does not explain when Conrad acquired this knowledge. In comparison, Skyway’s principal Rui Ariosa testified on examination for discovery and stated in his affidavit that Skyway received verbal permission from a Conrad employee, Mike Webb to sub-broker the shipment and that Mr. Arisoa expected that Mr. Webb would have first sought permission from Mr. Manicom. To that end, Iberica argues that its evidence should be preferred over that of the plaintiff’s as it claims Mr. Manicom has no personal knowledge of how Iberica entered into the contract of carriage with Skyway.

[23] Second, the court is also faced with untested expert opinion. Conrad relies on the affidavit opinion of customs specialist Dwane Bogart. Mr. Bogart’s affidavit outlines several aspects of the tariff and duty programs that apply to controlled commodities such as poultry. Iberica asserts Mr. Bogart’s opinion should be disregarded as it fails to meet the admissibility criteria for expert opinion: White Burgess Langille Inman v. Abott and Haliburton Co., 2015 SCC 23. I note that Mr. Bogart may arguably be a participant expert as he was the broker who prepared the customs documentation for Goodmark in respect of the stolen poultry product in issue.

[24] Iberica relies upon the affidavit opinion evidence of transportation lawyer Louis Amato-Gauci and seeks to qualify him as an expert in trade and customs practice, transportation law and industry practice and the role of the motor carrier of goods in cross-border transportation. Among other statements, Mr. Amato-Gauci deposes that it is industry standard and customary practice that motor carriers such as the defendants are unaware they are transporting goods subject to the Duties Relief Program and have no reason to assume special rules apply to a shipment in the absence of clear instructions to that effect on either the carrier confirmation form or the bill of lading.

[25] The credibility, reliability and relevance of these opinions is exceedingly difficult to assess where those individuals have not been cross-examined. It may have been a different situation had the parties opted to not exercise a right of cross-examination; however, there is no such right under the simplified procedure. As such, the court is left with largely de-contextualized affidavit evidence. In my view, it would risk imposing a manifest unfairness on one or other of the parties to weigh this untested evidence in the summary judgment context.

[26] Finally, there is the matter of Conrad’s notice of claim. The defendants each argue that failure to give notice under s. 12 of the Carriage of Goods Regulation is fatal to a subsequent claim for damages: R&S Transportation Inc. v. 1150726 Ontario Inc., aff’d R&S Transportation Inc. v. 1150726 Ontario Inc..

[27] Conrad apparently gave written notice of the claim to Iberica, although not to Skyway. Iberica also contends that Skyway failed to give Iberica notice of a claim. Iberica appeared to acknowledge that it did receive notice of the claim from Conrad; however, it noted that the letter referred to attachments which do not appear to have been provided. Conrad conceded that the attachments were not included, but suggested this gap could be remedied through a half-day of oral evidence under Rule 20.04 (2.2).

[28] I am not satisfied that a mini-trial on the notice issue will salvage something dispositive from the summary judgment process. There are still the issues as to the expert opinion and in testing the credibility and reliability of the parties as to formation of the contract(s) in issue. In order to do justice to the parties, the court would essentially need to conduct a summary trial within the summary judgment motion. To call the proposed experts to testify by way of a mini-trial would seem to indirectly allow what is otherwise prohibited under the simplified procedure. All of these concerns are why this action should continue on its original course under Rule 76. Given evidentiary issues, the limited rights of discovery and the prohibition of cross-examinations on affidavits, it is more efficient and cost-effective for this matter to proceed to summary trial.

Disposition

[29] The plaintiff’s motion for summary judgment is accordingly dismissed.

Directions

[30] However, I am of the view that the record from this motion can be salvaged and put to use in the trial. I recommend that the affidavits filed by the parties in support of their positions on this motion form part of the examination in chief of those witnesses at trial, without prejudice to the right of each party to file supplementary or reply affidavit evidence. Given the exigencies of judicial scheduling in this region, I cannot be seized of this matter.

Costs

[31] Iberica filed a Bill of Costs setting out partial indemnity fees of $27,235.41 and disbursements of $12,7971.91. Skyway’s Bill of Costs sets out partial indemnity fees of $10,746.30 and disbursements of $847.09. I do not have a Bill of Costs from Conrad.

[32] In any event, given the disposition of the motion, I have determined that in these circumstances it is appropriate to defer the costs of this motion to the final disposition of the matter, where it is anticipated that this summary judgment record will be put to use in the Rule 76 trial. Although the plaintiff was unsuccessful in the motion, both defendants were also unsuccessful in their responding positions seeking summary judgment dismissing the plaintiff’s claims.

Justice K. Tranquilli Released: September 18, 2023