53385 Newfoundland v. Labrador Incorporated, 2022 NLSC 173

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : 53385 Newfoundland and Labrador Incorporated v. WorldWide Integrated Supply Chain Solutions, Inc. , 2022 NLSC 173 Date : December 7, 2022 Docket : 202101G6827 Between: 53385 Newfoundland and Labrador Incorporated o/a akita equipment Plaintiff And: Worldwide Integrated Supply Chain Solutions, Inc. d/b/a WORLDWIDE LOGISTICS, INC. First Defendant/ fourth party And: East Coast Tubulars Limited Second Defendant And: Hunt's Transport Limited Third Party Before: Justice Vikas Khaladkar Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: November 21, 2022

Summary: The Court stayed the Statement of Claim by declaring itself forum non conveniens. Appearances: Robin F. Cook Appearing on behalf of the Plaintiff Joseph J. Thorne Appearing on behalf of the First Defendant/Fourth Party John B. French Appearing on behalf of the Second Defendant Susan C. Hounsell Appearing on behalf of the Third Party Authorities Cited: CASE CONSIDERED: Van Breda v. Village Resorts Ltd., 2012 SCC 17 , [2012] 1 S.C.R. 572 STATUTE CONSIDERED: Bills of Lading Act, R.S.C. 1985, c. B-5 RULE CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch.

D REASONS FOR JUDGMENT Khaladkar J.: INTRODUCTION [1] The First Defendant/Fourth Party, WorldWide Integrated Supply Chain Solutions, Inc. (“WorldWide”) has made anApplication, pursuant to Rule 6.07(7) of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D for an order setting aside theservice of a Statement of Claim against it issued by the Plaintiff, 53385 Newfoundland and Labrador Incorporated (“Akita Equipment”)and permanently staying the Statement of Claim against WorldWide. [2] Rule 6.07(7) states as follows:

(7) A person who has been served with an originating document outside of the province may apply without submitting to the

jurisdiction of the court, before filing or serving a defence or appearing on an application, (

a) for an order setting aside the service and any order that authorized the service; or (

b) for an order staying the proceeding. [ 3 ] There are a number of additional parties to this action. East Coast Tubulars Limited (“ECTL”) has been named as a Second Defendant by Akita Equipment. Hunt’s Transport Limited (“Hunt’s”) has been added as a Third Party by ECTL. And, in turn, Hunt’s has added WorldWide as a Fourth Party. [ 4 ] The lawsuit involves the carriage of goods, namely drill pipe, from Houston, Texas to Paradise, Newfoundland and Labrador. The drill pipe was required by ECTL for use in the offshore oil industry. ECTL contracted with Hunt’s to arrange for the carriage of the pipe.

Hunt’s, in turn, contacted WorldWide to make the necessary arrangements. WorldWide contracted with Akita Equipment for the delivery of the pipe. [ 5 ] WorldWide and Akita Equipment entered into a Transportation Agreement (“Agreement”) on August 2, 2019. It was entered into on an electronic counterpart as well as a hard copy. Both documents, electronic and paper, were initialed by Lauralee Legge, the dispatch manager for Akita Equipment.

The salient features of that Agreement, for the purposes of the within Application, are as follows: 2. … Carrier represents and warrants that it will transport property under this Agreement pursuant to its own operating authority and will not re-broker, double broker, subcontract, assign, or interline the shipments made pursuant to this Agreement, without prior written consent of WorldWide .

If Carrier breaches this provision, WorldWide shall have the right of paying the monies it owes Carrier directly to the delivering carrier, in lieu of payment to Carrier and Carrier will not be released from any liability and damages (including consequential damages) to WorldWide under this Agreement.

Additionally, if Carrier breaches this provision, WorldWide shall have the right to deduct up to five (5) times, per violation, the amount of freight charges from the Carrier’s account that would have otherwise been paid or payable to the Carrier. [emphasis added] 11. … Carrier agrees that WorldWide is solely liable for all freight charges related to the transportation services provided herein, and, as such, Carrier agrees to refrain from all collection efforts against the shipper, receiver, consignor, consignee or the WorldWide customer. … [emphasis added] 16.

To the extent the parties stipulate to resolve a dispute arising under this Agreement by way of Arbitration, the parties agree that such arbitration shall proceed according to the Rules of the American Arbitration and take place in Des Moines, Iowa.

However, neither party is required to Arbitrate a dispute arising under this Agreement and reserves any and all rights to pursue legal action in a Court of competent jurisdiction in Polk County, Iowa. [emphasis added] Carrier and Worldwide agree that the laws of the State of Iowa (excluding conflicts of law principles that would result in application of the law of a state other than Iowa) and any applicable federal law shall govern this Agreement and all claims and disputes relating to or arising out of this Agreement or Carrier’s loading, handling, transportation, driving, unloading or delivery of any shipment or cargo under this Agreement. [emphasis added] If Worldwide is the prevailing party in any court action against the Carrier, arbitration proceeding, or other alternative dispute resolution procedure with respect to any claim or dispute relating to or arising out of this Agreement or Carrier’s loading, handling, transportation, driving, unloading, or delivery of any shipment or cargo under this Agreement, Worldwide shall be entitled to recover from Carrier its attorneys’ fees, costs and expenses in connection with the dispute. [ 6 ] There is no dispute about the facts.

Akita Equipment was in breach of the terms of the Agreement at the outset. It was contemplated by the Agreement that the load would be picked up by Akita Equipment in Houston, Texas and continuously transported by the same trucking firm, using the same trucks, to Paradise, Newfoundland and Labrador. Instead, the load was picked up, on Akita Equipment’s instructions, by two subcontractors – one from Ontario and the other from Quebec. The loads were taken by these subcontractors to Quebec, where they were offloaded in Montreal onto Akita Equipment trucks and transported to Paradise, Newfoundland and Labrador.

The offloading and loading onto Akita Equipment trucks was also in breach of the express terms in the Agreement.

[7] When it became apparent to WorldWide that there had been a breach, various communications were exchanged among theparties. Testing was undertaken to ensure that the drill pipe remained suitable for its intended use, and negotiations were undertaken,primarily between WorldWide and Akita Equipment with a view to settling the matter. Those negotiations proved fruitless and, onAugust 16, 2021 WorldWide commenced an action in District Court, Polk County, Iowa for breach of contract. The petition was servedon Akita Equipment on November 8, 2021 when it became apparent that settlement was not a possibility.

It was followed up by acommunication on December 21, 2021 from WorldWide’s counsel to Akita Equipment’s counsel that WorldWide intended to obtain adefault judgment. [8] Akita Equipment did not file a defence to WorldWide’s action in Iowa. It’s counsel did not respond to the notice of intention toobtain a default judgment. On January 19, 2022 WorldWide obtained a default judgment and an order for liquidated damages in theamount of $85,000.00 US, together with $4,557.60 US in attorney’s fees and costs, together with interest on those amounts.

WorldWidehas made an Application to this Court to have its judgment for liquidated damages enforced in this Province. [9] Meanwhile, Akita Equipment filed a Statement of Claim against WorldWide and ECTL on December 14, 2021 claimingpayment of its account for carriage of the goods. Its Statement of Claim against ECTL is made in its role as consignee pursuant to theBills of Lading Act, R.S.C. 1985, c.

B-5. issues [10] Does this Court have territorial jurisdiction to entertain the action commenced by Akita Equipment? [11] If it has territorial jurisdiction should this Court decline to exercise it? analysis [12] The Agreement that lies at the heart of the action was entered into in both Iowa and Newfoundland and Labrador. The drillpipe was delivered by a Newfoundland and Labrador carrier, Akita Equipment, to a Newfoundland and Labrador consignee, ECTL.Hunt’s facilitated, and was compensated presumably, for locating WorldWide. Hunt’s is a Newfoundland and Labrador company.

Thebreach of the Agreement commenced in Texas, continued to Montreal and, there, was breached anew by transferring the load onto AkitaEquipment trucks. I have no hesitation in finding these connecting factors give rise to a real and substantial connection for the purposesof the law of conflicts.

The Supreme Court of Newfoundland and Labrador has concurrent jurisdiction to hear this matter. [13] It can also be said, however, that the courts of Iowa, where the contract between WorldWide and Akita Equipment was enteredinto and, also, being the jurisdiction that the parties agreed would have jurisdiction over any issues that arose, also has concurrentjurisdiction over the dispute. [14] In Van Breda v.

Village Resorts Ltd., 2012 SCC 17 , [2012] 1 S.C.R. 572, Lebel J. stated, at paragraph 102 as follows: Once jurisdiction is established, if the defendant does not raise further objections, the litigation proceeds before the court of the forum.The court cannot decline to exercise its jurisdiction unless the defendant invokes forum non conveniens. The decision to raise thisdoctrine rests with the parties, not with the court seized of the claim. [15] WordWide has raised the issue of forum non conveniens.

The burden is on WorldWide to show that the courts of Iowa areclearly more appropriate. [16] Lebel J. stated, at paragraph 104 in Van Breda: … When it is invoked, the doctrine of forum non conveniens requires a court to go beyond a strict application of the test governing therecognition and assumption of jurisdiction. It is based on a recognition that a common law court retains a residual power to decline toexercise its jurisdiction in appropriate, but limited, circumstances in order to assure fairness to the parties and the efficient resolution ofthe dispute.

The court can stay proceedings brought before it on the basis of the doctrine. [17] Lebel J. lists a number of non-exhaustive factors that can be considered in determining whether to order a stay of proceedings.These are set out in paragraph 105 in Van Breda as follows: (

a) the comparative convenience and expense for the parties to the proceeding and for their witnesses, in litigating in the court or in anyalternative forum; (

b) the law to be applied to issues in the proceeding; (

c) the desirability of avoiding multiplicity of legal proceedings; (

d) the desirability of avoiding conflicting decisions in different courts; (

e) the enforcement of an eventual judgment; and (

f) the fair and efficient working of the Canadian legal system as a whole. [18] Let us analyze each of these factors in turn: (

a) the comparative convenience and expense for the parties to the proceeding and for their witnesses, in litigating in the court orin any alternative forum; [19] Had this action been brought in this jurisdiction in the first place this factor might have assumed greater importance. However,it is clear that WorldWide initiated an action first in Polk County, Iowa in accordance with the agreement that the parties had reached in

the Agreement. If Akita Equipment took issue with the jurisdiction of the Iowa courts to consider the matter, it ought to have entered a conditional appearance in that court and made representations concerning jurisdiction. It did not do so – even after being served with a notice that WorldWide would be applying for a default judgment and liquidated damages for Akita Equipment’s breach of contract. As a result of Akita Equipment’s decision to refrain from litigating the matter in the State of Iowa, there is now a default judgment in place and WorldWide has taken steps to have it registered in this jurisdiction.

It is unfair to WorldWide to force it to litigate the action anew in Newfoundland and Labrador. (

b) the law to be applied to issues in the proceeding; [ 20 ] The parties agreed, in the Agreement, that any disputes would be resolved applying the laws of Iowa and, as necessary, the federal laws of the United States of America. In so doing it is reasonable to assume that the parties and, in particular, Akita Equipment, considered the cost and inconvenience of agreeing to be bound by Iowa and federal American laws and agreeing to attorning to the jurisdiction of the Iowa courts in Polk County. If Akita Equipment did not do so, it should have done so. The parties reduced their Agreement to writing.

It contained a number of terms and conditions. A person with the actual, or ostensible, authority of her employer executed the Agreement and initialed each page – to signify that it had been read and that the contents of the page were agreed upon. [ 21 ] Counsel for Akita Equipment invited me to consider discussions that took place concerning this consignment between representatives of Akita Equipment and WorldWide. I pointed out that this would offend the parol evidence rule – which prohibits the use of parol evidence to deny or contradict the terms of a written agreement.

The Agreement was clear that certain activities were disallowed. Having engaged in them, Akita Equipment did so at its own peril and, eventually, was sued in Iowa. [ 22 ] While it is possible for this Court to apply Iowa and federal American laws of contract and transportation, the courts of Iowa would be more familiar with them. [ 23 ] This factor favours Iowa as being the more appropriate forum to deal with this action. (

c) the desirability of avoiding multiplicity of legal proceedings; [ 24 ] An action was already started concerning the dispute between the parties in August, 2021. It was the first action to be commenced in one of at least two jurisdictions that had concurrent jurisdiction to hear the matter. My view, without ruling on the issue of whether or not the choice of law and forum contained in the Agreement was binding on both parties, is that the first party to bring an action in one of two concurrent jurisdictions prevails.

Akita Equipment could have sued in Newfoundland and Labrador, but chose not to do so until after WorldWide had commenced its claim in Iowa. For the same reason that it would be inappropriate to have conflicting decisions from two jurisdictions, it is undesirable that the subject matter of this Agreement be litigated in multiple forums. [ 25 ] This factor favours Iowa as being the more appropriate forum to deal with this action. (

d) the desirability of avoiding conflicting decisions in different courts; [ 26 ] We already have one decision from the Iowa District Court. Allowing the action brought against WorldWide in Newfoundland and Labrador to continue would, potentially, give rise to conflicting judgments. [ 27 ] This factor favours the staying of Akita Equipment’s Statement of Claim on the basis of forum non conveniens . (

e) the enforcement of an eventual judgment; [ 28 ] This is no longer a theoretical construct. There is already a judgment in place in the State of Iowa. The judgment creditor is seeking leave to register the judgment in this jurisdiction . [ 29 ] Akita Equipment, by virtue of the Agreement, attorned to the jurisdiction of the courts of Iowa and, specifically, the courts located in Polk County.

While the attornment may not have been exclusive to Iowa, nonetheless Akita Equipment agreed that either party could bring an action in an appropriate court in Polk County, Iowa. [ 30 ] Akita Equipment chose not to defend the action brought against it in Iowa despite having been served with a claim and being reminded that WorldWide was going to apply for default judgment. The issue of whether or not there was a breach of contract is res judicata .

Effectively the Iowa court ruled that Akita Equipment was in breach and awarded liquidated damages based upon the parties’ Agreement. [ 31 ] This factor weighs in favour of Iowa being the more appropriate forum to deal with this dispute. [ 32 ] I understand that a finding of forum non conveniens is an exceptional recourse. For the reasons that I have outlined earlier, the alternative forum is clearly more appropriate. It is more appropriate because it has already dealt with the subject matter of this litigation and awarded a judgment.

Akita Equipment made its first mistake in agreeing to a clause in the Agreement that attorned it to the jurisdiction of the courts of Iowa. It made its second mistake in not bringing its action in this Court in advance of WorldWide’s action in Iowa. It made its third mistake in failing to argue, in Iowa, that the action should be heard in Newfoundland and Labrador.

And it made its final mistake in failing to defend WorldWide’s action in Iowa. [ 33 ] Counsel for Akita Equipment argued that WorldWide raised an issue with respect to interlining/double brokering and referred to two load confirmation documents – which contained the edict against interlining and double brokering. Counsel argued that these documents came into being at some time after the formation of the Agreement, and had not been executed on behalf of his client. The argument is a bit of a red herring because, quite frankly, the load confirmation documents are irrelevant.

The parties agreed within the Agreement that Akita Equipment would provide services under its own operating authority and would not re-broker, double broker, subcontract, assign or interline the shipments without the prior written consent of WorldWide. If the same language was used on the load confirmation documents, it was only repeating what had already been agreed to in the Agreement.

[ 34 ] Counsel for Akita Equipment argued that his client did not submit to the jurisdiction of the Iowa court. He stated that the Agreement contained a forum selection clause, but that it was not a clause giving exclusive jurisdiction to the Iowa courts. That may well be the case. However, if jurisdiction is vested in both Iowa and in Newfoundland and Labrador, then either jurisdiction is a convenient forum for the adjudication of the dispute.

Akita Equipment, having failed to take any steps to safeguard its interests in Iowa, is now seeking a second chance to safeguard those interests here. [ 35 ] WorldWide is entitled to apply to have its judgment registered in this jurisdiction. It would be improper for this Court to allow Akita Equipment to cure the mistakes it made in Iowa by having a second chance of arguing the same issues here at home. [ 36 ] Akita Equipment brought its action against WorldWide and ECTL. With respect to ECTL, the action is based upon ECTL being the consignee of the goods.

The action is framed under the Bills of Lading Act . [ 37 ] Akita Equipment is entitled to sue ECTL based upon the bills of lading. ECTL will, of course, have a claim over against Hunt’s and Hunt’s, in turn, will have a claim over against WorldWide. In that regard, I anticipate that WorldWide will argue that Akita Equipment has no right to make claims directly against consignees – because it waived its ability to do so pursuant to the terms of the Agreement.

WorldWide will further argue, I expect, that there is nothing owing to Akita Equipment as a result of its own breach of the Agreement and the judgment it has taken out in the Iowa courts. However, I leave those matters to be decided for another day. [ 38 ] WorldWide’s Application is granted. The proceedings against WorldWide, in its capacity as a First Defendant in this action, are stayed. WorldWide shall remain a Fourth Party in Akita Equipment’s claim against ECTL. [ 39 ] WorldWide shall have its costs under Column IV of the

Schedule of Costs. _____________________________ Vikas Khaladkar Justice