Dow Chemical Can. v. Shell Chemicals,

• Judge: Kenny,Slatter,Watson
• Neutral Citation: 2010 ABCA 126
• Court: Court of Appeal (Alberta)
• Date: 08 April 2010
• Citation: (2010), 477 A.R. 112,2010 ABCA 126,25 Alta LR (5th) 221,477 AR 112,[2010] CarswellAlta 746,[2010] AJ No 432 (QL),(2010), 477 AR 112,[2010] A.J. No 432 (QL),477 A.R. 112

Dow Chemical Can. v. Shell Chemicals (2010), 477 A.R. 112; (CA);

      483 W.A.C. 112

MLB headnote and full text

Temp. Cite: [2010] A.R. TBEd. AP.122

Dow Chemical Canada Inc. (respondent) v. Shell Chemicals Canada Ltd. and Shell Chemicals Americas Inc. (appellants)

(1001-0006-AC; 2010 ABCA 126)

Indexed As: Dow Chemical Canada Inc. v. Shell Chemicals Canada Ltd. et al.

Alberta Court of Appeal

Watson and Slatter, JJ.A., and Kenny, J.(ad hoc)

April 22, 2010.

Summary:

Shell Chemicals agreed to supply styrene monomer to Dow Chemical at a price set by a formula in the long-term contract in question. Dow argued that the formula was no longer workable under the terms of the contract, and that the re-negotiation and dispute resolution provisions of Article 5.8 of the contract had been triggered. Dow sought the negotiation or arbitration of a new price. Shell argued that the formula still worked and was applicable, and applied for summary dismissal of Dow's claim that it overpaid for the styrene.

A Master of the Alberta Court of Queen's Bench, in a decision reported at (2009), 467 A.R. 144; 2009 ABQB 108, granted summary dismissal. Dow appealed.

The Alberta Court of Queen's Bench, in a decision reported at (2009), 473 A.R.312; 2009 ABQB 706, reversed the Master's decision. Shell appealed. The essential issue was whether Article 5.8 could be interpreted summarily, or whether a trial was required.

The Alberta Court of Appeal allowed the appeal and summarily dismissed Dow's action. There was no reason why the dispute could not be decided summarily. Dow had not identified any admissible evidence that could be produced at trial, and that would result in a finding of fact that would affect the outcome of the case. On its proper interpretation, the re-negotiation and dispute resolution provisions of Article 5.8 had not been triggered.

Contracts - Topic 7404

Interpretation - General principles - Ordinary meaning (Golden Rule) - General - [See first Practice - Topic 5719 ].

Contracts - Topic 7430

Interpretation - Ambiguity - Admissibility of extrinsic evidence - [See first Practice - Topic 5719 ].

Practice - Topic 5702

Judgments and orders - Summary judgments - Jurisdiction or when available or when appropriate - The parties disagreed on whether there were controverted facts on the record which had to be resolved at a trial, or whether the litigation was capable of being resolved summarily - The Alberta Court of Appeal set out the test for summary judgment as summarized in Tottrup et al. v. Clearwater No. 99 (Municipal District) (2006), and noted the important role of summary judgment in the civil litigation system, as emphasized by the Supreme Court of Canada in Lameman et al. v. Canada (Attorney General) et al. (2008) - See paragraphs 13 and 14.

Practice - Topic 5702

Judgments and orders - Summary judgments - Jurisdiction or when available or when appropriate - At issue was whether an article of the contract in question could be interpreted summarily, or whether a trial was required - The Alberta Court of Appeal stated that "Trials are held to make findings of fact ... In order to establish that there is a 'genuine issue for trial' the party resisting summary judgment should be able to articulate what facts are in dispute that could be resolved at a trial. Those could be the background facts of the case, or facts that are needed to provide context to the issue of law " - See paragraph 15.

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - The parties were very large and sophisticated petrochemical companies - The defendants sought summary dismissal of the plaintiff's claim - At issue was whether an article of the long-term contract in question could be interpreted summarily, or whether a trial was required - The Alberta Court of Appeal considered whether there were any unproven facts needed to resolve the case, and if so, what admissible evidence on the meaning of the contract would be available - In the result, the court held that the plaintiff's proposed evidence, if the matter went to trial, would be inadmissible - There were no ambiguities in the wording of the contract that would warrant extrinsic evidence about the context in which it was entered into - And the plaintiff was not entitled to call evidence to explain the "meaning of words", in the absence of technical terms of art - The case turned primarily on the grammatical and ordinary interpretation of the words of the agreement on its face - "Reading the agreement as worded enables the court to provide a complete answer to the dispute" - It followed that the dispute was capable of summary disposition - See paragraphs 16 to 27.

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - Shell Chemicals agreed to supply styrene monomer to Dow Chemical at a price set by a formula in the long-term contract in question - Dow argued that the formula was no longer workable under the terms of the contract, and that the re-negotiation and dispute resolution provisions of Article 5.8 of the contract had been triggered - It sought the negotiation or arbitration of a new price - Shell argued that the formula still worked and was applicable, and applied for summary dismissal of Dow's claim that it overpaid for the styrene - A Master granted summary dismissal, but the decision was reversed on appeal - This appeal followed - The Alberta Court of Appeal allowed the appeal and summarily dismissed Dow's action - There was no reason why the dispute could not be decided summarily - Dow had not identified any admissible evidence that could be produced at trial and that would result in a finding of fact that would affect the outcome of the case - And, on its proper interpretation, the re-negotiation and dispute resolution provisions of Article 5.8 had not been triggered - The intention of the parties was that the price would be set by a neutral, knowledgeable third party, and that party had continued to publish the benchmark price required - See paragraphs 28 to 40.

Practice - Topic 8808

Appeals - General principles - Duty of appellate court respecting conclusions or interpretation of trial judge (incl. contractual interpretation) - The Alberta Court of Appeal stated that "[t]he interpretation of a contract may invoke several standards of review. Some findings of fact may be required. In some cases the trial judge may have to determine which documents, promises, and consideration constitute the contract. There is a limited ability to introduce evidence regarding the circumstances surrounding the formation of the contract. Findings of fact on such issues will only be disturbed on appeal if they disclose palpable and overriding error ... A trial judge's determination of the factual matrix surrounding the contract in light of the evidence as a whole (including if appropriate extrinsic evidence) is a matter of fact, although the determination may be influenced by legal concepts ... Once the exact terms and nature of the contract, and the surrounding facts, have been established, the interpretation of the words of the contract is a matter of law. The interpretation and application of contract principles to a settled set of facts is a question of law reviewed for correctness" - See paragraphs 11 and 12.

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 10].

Andrews v. Coxe (2003), 320 A.R. 258; 288 W.A.C. 258; 2003 ABCA 52, refd to. [para. 10].

Double N Earthmovers Ltd. v. Edmonton (City) et al. (2005), 363 A.R. 201; 343 W.A.C. 201; 2005 ABCA 104, affd. [2007] 1 S.C.R. 116; 356 N.R. 211; 401 A.R. 329; 391 W.A.C. 329; 2007 SCC 3, refd to. [para. 11].

Jiro Enterprises Ltd. v. Spencer, [2008] A.R. Uned. 42; 2008 ABCA 87, refd to. [para. 11].

Diegel v. Diegel, [2008] A.R. Uned. 304; 100 Alta. L.R.(4th) 1; 2008 ABCA 389, refd to. [para. 11].

Alberta Importers and Distributors (1993) Inc. et al. v. Phoenix Marble Ltd. et al. (2008), 432 A.R. 173; 424 W.A.C. 173; 88 Alta. L.R.(4th) 225; 2008 ABCA 177, refd to. [para. 12].

Fenrich v. Wawanesa Mutual Insurance Co. (2005), 371 A.R. 53; 354 W.A.C. 53; 46 Alta. L.R.(4th) 207; 2005 ABCA 199, refd to. [para. 12].

McDonald Crawford v. Morrow (2004), 348 A.R. 118; 321 W.A.C. 118; 28 Alta. L.R.(4th) 62; 2004 ABCA 150, refd to. [para. 12].

Tottrup et al. v. Clearwater No. 99 (Municipal District) (2006), 401 A.R. 88; 391 W.A.C. 88; 68 Alta. L.R.(4th) 237; 2006 ABCA 380, refd to. [para. 13].

Lameman et al. v. Canada (Attorney General) et al., [2008] 1 S.C.R. 372; 372 N.R. 239; 429 A.R. 26; 421 W.A.C. 26; 2008 SCC 14, refd to. [para. 14].

Eli Lilly & Co. et al. v. Novopharm Ltd. et al., [1998] 2 S.C.R. 129; 227 N.R. 201, refd to. [para. 16].

Gainers Inc. v. Pocklington Holdings Inc. (2000), 255 A.R. 373; 220 W.A.C. 373; 81 Alta. L.R.(3d) 17; 2000 ABCA 151, refd to. [para. 16].

Gainers Inc. v. Pocklington Financial Corp. - see Gainers Inc. v. Pocklington Holdings Inc.

Marthaller v. Landsdowne Equity Venture Ltd., [1998] 1 W.W.R. 428; 200 A.R. 226; 146 W.A.C. 226; 52 Alta. L.R.(3d) 329 (C.A.), refd to. [para. 16].

Lunenburg Industrial Foundry and Engineering Ltd. et al. v. Commercial Union Assurance Co. of Canada et al. (2004), 231 N.S.R.(2d) 378; 733 A.P.R. 378; 21 C.C.L.I.(4th) 140; 10 C.P.C.(6th) 376; 2005 NSSC 62, refd to. [para. 17].

Santarsieri (Michael) Inc. et al. v. Unicity Mall Ltd. (2000), 152 Man.R.(2d) 215; 2000 MBQB 202, refd to. [para. 17].

LHS Holdings Ltd. v. Laporte plc, [2001] EWCA Civ. 278, refd to. [para. 17].

Gorgichuk v. American Home Assurance Co. (1985), 5 C.P.C.(2d) 166 (Ont. H.C.), refd to. [para. 17].

Harris v. Nugent et al. (1996), 193 A.R. 113; 135 W.A.C. 113; 46 Alta. L.R.(3d) 264 (C.A.), refd to. [para. 18].

Dumbrell v. Regional Group of Companies Inc. et al. (2007), 220 O.A.C. 64; 85 O.R.(3d) 616; 2007 ONCA 59, refd to. [para. 18].

Canadian National Railway Co. v. Volker Stevin Contracting Ltd. et al. (1991), 120 A.R. 39; 8 W.A.C. 39; 1 Alta. L.R.(3d) 167; 48 C.L.R. 134 (C.A.), refd to. [para. 19].

Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488, refd to. [para. 20].

Gilchrist v. Western Star Trucks Inc. et al. (2000), 133 B.C.A.C. 144; 217 W.A.C. 144; 73 B.C.L.R.(3d) 102; 2000 BCCA 70, refd to. [para. 20].

Black Swan Gold Mines Ltd. v. Goldbelt Resources Ltd. (1996), 78 B.C.A.C. 193; 128 W.A.C. 193; 25 B.C.L.R.(3d) 285 (C.A.), refd to. [para. 20].

Counsel:

E.P. Groody and D.H. de Vlieger, for the respondent;

C.D. Simard and Z. Abbas, for the appellant.

This appeal was heard on April 8, 2010, by Watson and Slatter, JJ.A., and Kenny, J.(ad hoc), of the Alberta Court of Appeal. The court delivered the following Memorandum of Judgment, filed at Calgary, Alberta, on April 22, 2010.