Yara Belle Plaine Inc. v. Ingersoll-Rand Co. et al., (2014) 453 Sask.R. 79 (QB)

• Jurisdiction: Saskatchewan
• Judge: Pritchard, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Citation: (2014), 453 Sask.R. 79 (QB),2014 SKQB 254
• Date: 13 August 2014

Yara Belle Plaine v. Ingersoll-Rand (2014), 453 Sask.R. 79 (QB)

MLB headnote and full text

Temp. Cite: [2014] Sask.R. TBEd. AU.051

Yara Belle Plaine Inc. (plaintiff) v. Ingersoll-Rand Company; Dresser-Rand Company, a New York Partnership; Dresser Rand Group, Inc.; and Dresser-Rand Canada, Inc. (defendants)

(2013 Q.B.G. No. 1561; 2014 SKQB 254)

Indexed As: Yara Belle Plaine Inc. v. Ingersoll-Rand Co. et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Regina

Pritchard, J.

August 13, 2014.

Summary:

Yara Belle Plaine Inc. owned and operated a nitric acid plant in Saskatchewan. The plant contained a nitric acid expander which included two rotors. Between 2004 and 2012, Yara entered into several agreements with Dresser-Rand Canada, Inc. to perform work and maintenance on the expanders and rotors. Five of the agreements contained a forum selection clause which stipulated that disputes were to be dealt with through the courts of Alberta. In 2012, Rotor A allegedly failed, which caused a fire and resulted in damage to Yara's property and operations. Yara sued Dresser-Rand and others for breach of the duty to warn, and alternatively for negligent inspection and/or repair, and breach of contract. Three of the defendants applied for an order staying Yara's action in Saskatchewan on the basis of the forum selection clause.

The Saskatchewan Court of Queen's Bench dismissed the application.

Conflict of Laws - Topic 603

Jurisdiction - General principles - Jurisdiction simpliciter (territorial competence) - Yara owned and operated a nitric acid plant in Saskatchewan - The plant contained a nitric acid expander which included two rotors - On several occasions between 2004 and 2012, Dresser-Rand performed work and maintenance on the rotors - One of the rotors allegedly failed in 2012, which caused a fire and resulted in extensive damage to Yara's property and operations - Yara sued Dresser-Rand and others, alleging, inter alia, that Dresser-Rand breached its duty to warn Yara that the rotor was defective - Three of the defendants applied for an order staying Yara's action in Saskatchewan because of a forum selection clause contained in five contracts between Yara and Dresser-Rand which stipulated that disputes were to be dealt with through the courts of Alberta - An initial issue was whether the Saskatchewan court had territorial competence - The Saskatchewan Court of Queen's Bench held that there was a real and substantial connection to Saskatchewan, and thus it did have territorial competence over the proceedings - Yara was registered in Saskatchewan and carried on business in the province - The expander and rotors were located and operated in Saskatchewan for several years - The alleged failure of the rotor and all resulting damage occurred in Saskatchewan - See paragraphs 30 to 34.

Conflict of Laws - Topic 728

Jurisdiction - Jurisdiction excluded by contract - Stay of proceedings - When available - [See fourth Conflict of Laws - Topic 7286 ].

Conflict of Laws - Topic 7286

Contracts - Jurisdiction - Choice of forum by parties - Between 2004 and 2012, Yara and Dresser-Rand entered into several contracts respecting Dresser-Rand's maintenance of Yara's industrial equipment which was located in Saskatchewan - Five of the contracts contained a forum selection clause which stipulated that disputes were to be dealt with through the Alberta courts - Yara sued Dresser-Rand and others in tort and contract after the equipment failed and caused damage to its property and operations - Three of the defendants applied for an order staying Yara's action in Saskatchewan on the basis of the forum selection clause - An initial issue was the scope of the clause - The Saskatchewan Court of Queen's Bench determined that the clause was restricted to disputes that arose from and related to the contracts containing the clause - First, a reading of the relevant contracts in their entirety showed broader language than that used in the forum selection clause, and this suggested that the clause was not intended to apply to every potential dispute between the parties - Second, since the clause was drafted by Dresser-Rand, the principle of contra proferentem applied - Third, the reasonable commercial explanation for the clause's inclusion in five contracts and absence from the rest was that the parties intended to restrict its application to matters arising out of each separate contract - Finally, it was not clear and explicit that the clause was intended to govern every potential dispute between the parties - See paragraphs 45 to 54.

Conflict of Laws - Topic 7286

Contracts - Jurisdiction - Choice of forum by parties - Yara owned and operated a nitric acid plant in Saskatchewan - The plant contained a nitric acid expander which included two rotors - In 2004 and 2009, Yara contracted with Dresser-Rand to repair Rotor A - The 2009 contract contained a forum selection clause which stipulated that disputes were to be dealt with through the Alberta courts - The 2004 contract did not contain a forum selection clause - The parties entered into several other contracts over the years respecting work on the expander, some of which contained a forum selection clause - In 2012, Rotor A allegedly failed, which caused a fire and resulted in damage to Yara's property and operations - Yara sued Dresser-Rand and others, alleging that the defendants knew Rotor A was defective, and breached their duty to warn Yara about the problem - Three of the defendants applied for an order staying Yara's action in Saskatchewan on the basis of the forum selection clause - The Saskatchewan Court of Queen's Bench dismissed the application - Yara's claim did not arise from and was not connected to any of the contracts containing the forum selection clause - First, Yara asserted that the dangers were known to Dresser-Rand by 2004, and the other defendants in the 1980s at the latest, so Yara's claim predated the execution of those contracts containing the clause - Second, the alleged breach of the duty to warn was not grounded in contract - Further, the defendants other than Dresser-Rand were not privy to the contracts, so they could not rely on the forum selection clause - See paragraphs 56 to 60.

Conflict of Laws - Topic 7286

Contracts - Jurisdiction - Choice of forum by parties - Yara owned and operated a nitric acid plant in Saskatchewan - The plant contained a nitric acid expander which included two rotors - In 2004 and 2009, Yara contracted with Dresser-Rand to repair Rotor A - The 2009 contract contained a forum selection clause which stipulated that disputes were to be dealt with through the Alberta courts - The 2004 contract did not contain a forum selection clause - The parties entered into several other contracts over the years respecting work on the expander, some of which contained a forum selection clause - In 2012, Rotor A allegedly failed, which caused a fire and resulted in damage to Yara's property and operations - Yara sued Dresser-Rand, alleging negligent inspection and/or repair of the expander and rotors - Dresser-Rand applied for an order staying Yara's action in Saskatchewan on the basis of the forum selection clause - The Saskatchewan Court of Queen's Bench dismissed the application - The court rejected Yara's assertion that its claim was a concurrent tort liability and did not relate to a liability in contract - There would be no claim for negligent inspection or repair if Yara had not contracted with Dresser-Rand to perform repairs and maintenance to Rotor A - Such a claim was exactly the type of action that would be within the reasonable contemplation of parties who incorporated a forum selection clause into a contract for service and repair - However, insofar as the allegations related to work performed pursuant to the 2004 contract, the claim was not covered by the forum selection clause - See paragraphs 61 to 66.

Conflict of Laws - Topic 7286

Contracts - Jurisdiction - Choice of forum by parties - Yara owned and operated a nitric acid plant in Saskatchewan - The plant contained a nitric acid expander which included two rotors - In 2004 and 2009, Yara contracted with Dresser-Rand to repair Rotor A - The 2009 contract contained a forum selection clause which stipulated that disputes were to be dealt with through the Alberta courts - The 2004 contract did not contain a forum selection clause - The parties entered into several other contracts over the years respecting work on the expander, some of which contained a forum selection clause - In 2012, Rotor A allegedly failed, which caused a fire and resulted in damage to Yara's property and operations - Yara sued Dresser-Rand and others for breach of the duty to warn, and alternatively for negligent inspection and/or repair, and breach of contract - Three of the defendants applied for an order staying Yara's action in Saskatchewan on the basis of the forum selection clause - The Saskatchewan Court of Queen's Bench dismissed the application - Yara had demonstrated a "strong cause" for not giving effect to the clause - The clause was inapplicable to the principal cause of action, and to three of the four defendants - Most significantly, it would be inappropriate to sever the claims given the interrelated nature of the allegations, and the concern against creating a multiplicity of proceedings based on the same accident - See paragraphs 69 to 83.

Conflict of Laws - Topic 7605

Torts - Jurisdiction - Real and substantial connection - [See Conflict of Laws - Topic 603 ].

Conflict of Laws - Topic 7608

Torts - Jurisdiction - Choice of forum by parties - [See all Conflict of Laws - Topic 7286 ].

Contracts - Topic 7401

Interpretation - General principles - Intention of parties (incl. reasonable expectations) - [See first and third Conflict of Laws - Topic 7286 ].

Contracts - Topic 7407

Interpretation - General principles - Whole contract to be considered - [See first Conflict of Laws - Topic 7286 ].

Contracts - Topic 7416

Interpretation - General principles - Most commercially reasonable interpretation - [See first Conflict of Law - Topic 7286 ].

Contracts - Topic 7433

Interpretation - Ambiguity - Contra proferentem rule - [See first Conflict of Laws - Topic 7286 ].

Contracts - Topic 9000

Rights and liability of strangers to contract - General - Privity of contract - [See second Conflict of Laws - Topic 7286 ].

Cases Noticed:

Teck Cominco Metals Ltd. v. Lloyd's Underwriters - See Lombard General Insurance Co. of Canada v. Cominco Ltd. et al.

Lombard General Insurance Co. of Canada v. Cominco Ltd. et al., [2009] 1 S.C.R. 321; 384 N.R. 351; 266 B.C.A.C. 32; 449 W.A.C. 32; 2009 SCC 11, refd to. [para. 28].

Microcell Communications Inc. v. Frey - see Frey et al. v. BCE Inc. et al.

Frey et al. v. BCE Inc. et al. (2011), 377 Sask.R. 156; 528 W.A.C. 156; 2011 SKCA 136, refd to. [para. 28].

Hudye Farms Inc. v. Canadian Wheat Board (2011), 377 Sask.R. 146; 528 W.A.C. 146; 2011 SKCA 137, refd to. [para. 28].

Viroforce Systems Inc. et al. v. R & D Capital Inc. (2011), 306 B.C.A.C. 271; 516 W.A.C. 271; 2011 BCCA 260, refd to. [para. 28].

Van Breda et al. v. Village Resorts Ltd. et al., [2012] 1 S.C.R. 572; 429 N.R. 217; 291 O.A.C. 201; 2012 SCC 17, refd to. [para. 32].

Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R. 393; 1 N.R. 122, refd to. [para. 33].

Tolofson v. Jensen and Tolofson, [1994] 3 S.C.R. 1022; 175 N.R. 161; 77 O.A.C. 81; 51 B.C.A.C. 241; 84 W.A.C. 241, refd to. [para. 33].

Expedition Helicopters Inc. v. Honeywell Inc. (2010), 262 O.A.C. 195; 2010 ONCA 351, leave to appeal refused (2010), 413 N.R. 397 (S.C.C.), refd to. [para. 36].

Goetz v. Barber - see Barber et al. v. Height of Excellence Financial Planning Group Inc. et al.

Barber et al. v. Height of Excellence Financial Planning Group Inc. et al. (2001), 213 Sask.R. 302; 260 W.A.C. 302; 2001 SKCA 135, affing on other grounds (2001), 206 Sask.R. 141; 2001 SKQB 214, refd to. [para. 39].

Kim et al. v. APK Holdings Ltd. et al. (2013), 431 Sask.R. 291; 2013 SKQB 382, refd to. [para. 40].

Matrix Integrated Solutions Ltd. v. Naccarato et al. (2009), 252 O.A.C. 222; 2009 ONCA 593, refd to. [para. 41].

Scalas Fashions Ltd. v. Yorkton Securities Inc. et al. (2003), 184 B.C.A.C. 197; 302 W.A.C. 197; 2003 BCCA 336, dist. [para. 43].

Hans v. Volvo Trucks North America Inc. et al., [2010] B.C.T.C. Uned. 1700; 2 C.P.C.(7th) 149; 2010 BCSC 1700, refd to. [para. 44].

Nickel Developments Ltd. v. Canada Safeway Ltd. et al. (2001), 156 Man.R.(2d) 170; 246 W.A.C. 170; 2001 MBCA 79, refd to. [para. 46].

Tercon Contractors Ltd. v. British Columbia (Minister of Transportation and Highways), [2010] 1 S.C.R. 69; 397 N.R. 331; 281 B.C.A.C. 245; 475 W.A.C. 245; 2010 SCC 4, refd to. [para. 47].

Eli Lilly & Co. et al. v. Novopharm Ltd. et al., [1998] 2 S.C.R. 129; 227 N.R. 201, refd to. [para. 47].

Ironside et al. v. Smith (1998), 223 A.R. 379; 183 W.A.C. 379; 1998 ABCA 366, refd to. [para. 47].

Alliance Pipeline Limited Partnership et al. v. Franklin (C.E.) Ltd. et al. (2005), 373 A.R. 29; 2005 ABQB 102, refd to. [para. 52].

Bow Valley Husky (Bermuda) Ltd. et al. v. Saint John Shipbuilding Ltd. et al., [1997] 3 S.C.R. 1210; 221 N.R. 1; 158 Nfld. & P.E.I.R. 269; 490 A.P.R. 269, refd to. [para. 57].

Hollis v. Dow Corning Corp. et al., [1995] 4 S.C.R. 634; 190 N.R. 241; 67 B.C.A.C. 1; 111 W.A.C. 1, refd to. [para. 57].

Rivtow Marine Ltd. v. Washington Iron Works, [1974] S.C.R. 1189, refd to. [para. 58].

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109, refd to. [para. 62].

Pompey (Z.I.) Industrie et al. v. Ecu-Line N.V. et al., [2003] 1 S.C.R. 450; 303 N.R. 201; 2003 SCC 27, refd to. [para. 73].

Vita Food Products Inc. v. Unus Shipping Co. Ltd., [1939] UKPC 7; [1939] A.C. 277, refd to. [para. 75].

Magill v. Expedia Canada Corp. et al., [2010] O.T.C. Uned. 5247; 1 C.P.C.(7th) 129; 2010 ONSC 5247, refd to. [para. 79].

Chateau Des Charmes Wines Ltd. v. Sabate USA Inc. et al., [2005] O.T.C. 936 (Sup. Ct.), refd to. [para. 80].

Skyway Canada Ltd. v. Clara Industrial Services Ltd. et al., [2005] O.T.C. Uned. A50; 47 C.L.R.(3d) 311 (Sup. Ct. Master), refd to. [para. 80].

Counsel:

Leonard Andrychuk, Q.C., for the plaintiff;

Alan S. Rudakoff, Q.C., for the defendant, Ingersoll-Rand Company;

Daniel Gallagher, Q.C., for the defendants, Dresser-Rand Company, a New York Partnership; Dresser Rand Group, Inc.; and Dresser-Rand Canada, Inc.

This application was heard before Pritchard, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Regina, who delivered the following decision on August 13, 2014.