Judgments

[1996] 2 F.C. 853

T-293-91

Granville Shipping Co. Inc. (Plaintiff)

v.

Pegasus Lines Ltd. S.A., Amican Navigation Inc. and Her Majesty in Right of Canada (Defendants)

Indexed as: Granville Shipping Co. v. Pegasus Lines Ltd. (T.D.)

Trial Division, Tremblay-Lamer J.—Montréal, January 25 and February 21, 1996.

Practice — Judgments and orders — Summary judgment — Action for unpaid hire regarding charter of vessel — Defendants claiming set-off — RR. 432.3, 432.6 providing for summary judgment — General principles summarized — Genuine issues raised relating to deductibility of expenses from hire — Evidence insufficient to grant summary judgment — As credibility also questioned, conflicts better resolved by viva voce evidence.

Maritime law — Contracts — Referral to arbitration — Action for unpaid hire, bunker, diesel oil; counterclaim for damages due to Master’s refusal to discharge cargo in belief berth unsafe — Charter-party providing for arbitration of conflicts — Plaintiff seeking summary judgment, referral of counterclaim to arbitration — Commercial Arbitration Code, art. 8 providing if party so requests not later than when submitting first statement on substance of dispute, referral to arbitration shall occur — Request not timely — In choosing to commence action in Federal Court, plaintiff waiving right to request arbitration — By filing defence, defendant attorning to jurisdiction — Claim, counterclaim interrelated — Both should proceed to trial.

Equity — Set-off — Motion for summary judgment — Defendant seeking to set off advance payments against plaintiff’s claim for unpaid hire — Claims interrelated — Evidence insufficient to decide litigious issues — RR. 432.1 and following interpreted in own textual framework, not analyzing whether claim characterized as equitable set-off.

This was a motion for summary judgment pursuant to Rules 432.1 to 432.3, and for referral of the counterclaim to arbitration. The plaintiff shipowner claimed an amount owed under the charter-party for unpaid hire, bunker and diesel oil. The defendant charterer, Pegasus Lines Ltd., sought to have an advance payment set off against the plaintiff’s claim, and counterclaimed for damages as a result of the Master’s refusal to discharge the cargo because he believed that the berth was unsafe. The Italian consignee of the cargo then had the ship arrested to secure its claim for damages.

Rule 432.3 provides that summary judgment shall be granted where there is no genuine issue for trial. Where there is a genuine issue summary judgment may be granted, either upon an issue or generally, unless the judge is unable on the whole of the evidence to find the facts necessary to decide the questions of fact or law, or the judge considers that it would be unjust to decide the issues on the motion for summary judgment.

Charter-party, clause 41 stated that expenditures could be deducted from money owed for hire only if bona fide vouchers were presented. Clause 88 specified that in the event of a dispute, the conflict was to be arbitrated.

Held, the motion should be dismissed.

The purpose of the summary judgment provisions is to allow the Court to summarily dispose of cases which ought not proceed to trial because there is no issue to be tried. One test is whether the case is so doubtful that it does not deserve consideration by the trier of fact at a trial. Each case should be interpreted in its own contextual framework. Provincial practice rules can aid in interpretation. The Court may determine questions of fact and law on the motion for summary judgment if possible on the material before it. Summary judgment cannot be granted if, on all the evidence, the necessary facts cannot be found or if it would be unjust to do so. In the case of a serious issue with respect to credibility, the case should go to trial because the parties should be cross-examined before the trial judge. The mere existence of apparent conflict in the evidence does not preclude summary judgment; the court should take a “hard look” at the merits and decide if there are issues of credibility to be resolved.

There were here several genuine issues, including the bona fides of certain vouchers; whether the plaintiff should accept certain agency fees and expenses; and whether the expense incurred because of the delay in discharging the vessel and expenses caused by the vessel’s arrest were deductible from hire. Interpretation of the charter-party was necessary to decide the issues. The evidence was not sufficient to grant summary judgment. As well, since important questions of credibility were raised, the conflicts would be better resolved by viva voce evidence.

Commercial Arbitration Code, Article 8 provides that “if a party so requests not later than when submitting his first statement on the substance of the dispute” referral to arbitration shall occur. The plaintiff chose to file an action in the Federal Court. The defendants attorned to this jurisdiction by filing a defence. They further filed a counterclaim which the plaintiff sought to have sent to arbitration as an independent proceeding. The request for arbitration herein was not timely. The plaintiff cannot now request that the counterclaim be sent to arbitration and that the main action be stayed. The plaintiff waived its right to request a reference to arbitration. The intention of the parties as to choice of venue was clear. Both claims will therefore proceed to trial. This conclusion was further supported by the fact that the claim and the counterclaim were interrelated and should not be separated.

The disputes originated from the same charter-party, but the evidence on file was not sufficient to decide the litigious issues. Rules 432.1 and following should be interpreted by reference to their own textual framework, not by an analysis of whether or not a claim is characterized as an equitable set-off.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Commercial Arbitration Act, R.S.C., 1985 (2nd Supp.), c. 17.

Commercial Arbitration Code, being Schedule to Commercial Arbitration Act, R.S.C., 1985 (2nd Supp.), c. 17, arts. 7, 8.

Federal Court Rules, C.R.C., c. 663, RR. 432.1 (as enacted by SOR/94-41, s. 5), 432.2 (as enacted idem), 432.3 (as enacted idem), 432.6 (as enacted idem).

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, R. 20.

CASES JUDICIALLY CONSIDERED

APPLIED:

Nanisivik Mines Ltd. v. F.C.R.S. Shipping Ltd., [1994] 2 F.C. 662 (1994), 113 D.L.R. (4th) 536; 167 N.R. 294 (C.A.); Ruhrkohle Handel Inter GMBH v. Federal Calumet (The), [1992] 3 F.C. 98 (1992), 144 N.R. 70 (C.A.); affg sub nom. Ruhrkohle Handel Inter GmbH v. Fednav Ltd. (1991), 36 C.P.R. (3d) 521; 49 F.T.R. 316 (F.C.T.D.); Maersk Inc. v. Coldmatic Refrigeration of Canada Ltd. (1994), 74 F.T.R. 70 (F.C.T.D.); Vallorbe Shipping Co. S.A. v. The Tropwave, [1975] F.C. 595 (T.D.); Marine Atlantic Inc. v. Blyth (1994), 77 F.T.R. 97 (F.C.T.D.); Homelife Realty Services Inc. v. Sears Canada Inc., [1996] F.C.J. No. 51 (T.D.) (QL).

REFERRED TO:

Nova Scotia Barristers’ Liability Claims Fund v. Ship Ashley Lynn (1994), 80 F.T.R. 141 (F.C.T.D.); Productions & Distributions Videodrome Inc. v. Cavis Marketing Inc. (1994), 56 C.P.R. (3d) 449; 82 F.T.R. 88 (F.C.T.D.); Patrick v. Canada, [1994] F.C.J. No. 1216 (T.D.) (QL); Penthouse International Ltd. v. 163564 Canada Inc. (1994), 86 F.T.R. 95 (F.C.T.D.); Old Fish Market Restaurants Ltd. v. 1000357 Ontario Inc. et al. (1994), 58 C.P.R. (3d) 221 (F.C.T.D.); Kishinchand & Sons (Hong Kong) Ltd. v. Wellcorp Container Lines Ltd., [1995] 2 F.C. 37 (1994), 88 F.T.R. 301 (T.D.); Forde v. Canada (Minister of National Revenue, Customs and Excise—M.N.R.), [1995] F.C.J. No. 48 (T.D.) (QL); Mintzer (N. A.) v. Canada, [1995] 1 C.T.C. 220; (1995), 95 DTC 5131; 90 F.T.R. 314 (F.C.T.C.); affd [1996] 2 F.C. 146(C.A.); Expeditors International Forwarding Ltd. v. Propack Systems Ltd. (1995), 92 F.T.R. 281 (F.C.T.D.); Pallmann Maschinenfabrik G.m.b.H. Co. KG v. CAE Machinery Ltd. (1995), 62 C.P.R. (3d) 26 (F.C.T.D.); Shelburne Marine Ltd. v. Stokes, [1995] F.C.J. No. 1547 (T.D.) (QL); Collie Woollen Mills Ltd. v. Canada, [1996] F.C.J. No. 193 (T.D.) (QL); Feoso Oil Ltd. v. Sarla (The), [1995] 3 F.C. 68 (1995), 184 N.R. 307 (C.A.); Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 225; 45 C.P.C. (2d) 168; 33 C.P.R. (3d) 515 (Gen. Div.).

MOTION for summary judgment and for referral of the counterclaim to arbitration. Motion dismissed.

COUNSEL:

David G. Colford for plaintiff.

Louis Buteau for defendants.

SOLICITORS:

Brisset Bishop, Montréal, for plaintiff.

Sproule, Castonguay, Pollack, Montréal, for defendants.

The following are the reasons for order rendered in English by

Tremblay-Lamer J.: This is a motion by the plaintiff for summary judgment pursuant to Rules 432.1 to 432.3 of the Federal Court Rules [C.R.C., c. 663 (as enacted by SOR/94-41, s. 5)] and for referral of the counterclaim to arbitration.

The substantive aspect of the case involves maritime law and the litigation surrounds a charter-party. The main action was commenced on February 7, 1991 by way of statement of claim. The defendants responded with statements of defence and a counterclaim on the part of Pegasus. While the Crown is a named defendant, an agreement has been struck between the parties to leave the Crown issues aside until the main action is resolved.

THE FACTS

Granville Shipping Co. Inc. is the owner of a ship named the M.V. Young Sportsman while the defendants Pegasus Lines Ltd. and Amican Navigation Inc. are both in the business of chartering vessels. Amican Navigation Inc. conducts business as general agent for Pegasus Lines Ltd. The Young Sportsman was chartered by the defendants to transport dairy products, which were shipped by the Canadian Dairy Milk Commission, an agent for Her Majesty the Queen. The charter-party was entered into on September 28, 1990 and was terminated at the end of December of the same year. Granville claims that at the termination of the contract, it was owed a total of US$63,468.45 (CAN$73,623.40) for unpaid hire, bunker, and diesel oil.

Pegasus indicates in the amended statement of defence that it owes nothing to the plaintiff. Pegasus argues that it had given US$91,890.36 (CAN$118,850.99) in advance payment which should be set off against the hire being claimed by the plaintiff. Further, it claims the payment of the balance after set-off.

Pegasus also counterclaims for damages in the amount of US$175,690.05 (CAN$227,237.51) as a result of acts or omissions of the Master of the ship while the ship was offshore from Catania, Italy. The problem arose when the Master refused to discharge the cargo because he claimed that the conditions were unsafe. As a result, the Italian consignee of the cargo arrested the ship in order to secure its claim for damages.

ISSUES AND ANALYSIS

1.         Summary judgment

Rules 432.3 and 432.6 [as enacted idem] of the Federal Court Rules pertaining to summary judgment provide:

Rule 432.3 (1) Where a judge is satisfied that there is no genuine issue for trial with respect to a claim or defence, the judge shall grant summary judgment accordingly.

(2) Where a judge is satisfied that the only genuine issue is the amount to which the moving party is entitled, the judge may order a trial of that issue or grant summary judgment with a reference to determine the amount.

(3) Where a judge is satisfied that the only genuine issue is a question of law, the judge may determine the question and grant summary judgment accordingly.

(4) Where a judge decides that there is a genuine issue with respect to a claim or defence, the judge may nevertheless grant summary judgment in favour of any party, either upon an issue or generally, unless

(a) the judge is unable on the whole of the evidence to find the facts necessary to decide the questions of fact or law; or

(b) the judge considers that it would be unjust to decide the issues on the motion for summary judgment.

(5) Where a motion for summary judgment is dismissed, either in whole or in part, a judge may order the action, or the issues in the action not disposed of by summary judgment, to proceed to trial in the usual way, but upon the request of any party, a judge may order an expedited trial under rule 327.1.

Rule 432.6 Where it appears that the enforcement of a summary judgment ought to be stayed pending the determination of any other issue in the action or a counterclaim, cross-demand or third party claim, a judge may so order on such terms as the judge deems just. [Underlining added.]

It should be noted at the outset that since these Rules were only introduced January 13, 1994, they are the subject of little jurisprudence by this Court.[1]

I have considered all of the case law pertaining to summary judgment and I summarize the general principles accordingly:

1. the purpose of the provisions is to allow the Court to summarily dispense with cases which ought not proceed to trial because there is no genuine issue to be tried (Old Fish Market Restaurants Ltd. v. 1000357 Ontario Inc. et al);[2]

2. there is no determinative test (Feoso Oil Ltd. v. Sarla (The))[3] but Stone J.A. seems to have adopted the reasons of Henry J. in Pizza Pizza Ltd. v. Gillespie.[4] It is not whether a party cannot possibly succeed at trial, it is whether the case is so doubtful that it does not deserve consideration by the trier of fact at a future trial;

3. each case should be interpreted in reference to its own contextual framework (Blyth[5] and Feoso);[6]

4. provincial practice rules (especially Rule 20 of the Ontario Rules of Civil Procedure, [R.R.O. 1990, Reg. 194]) can aid in interpretation (Feoso[7] and Collie);[8]

5. this Court may determine questions of fact and law on the motion for summary judgment if this can be done on the material before the Court (this is broader than Rule 20 of the Ontario Rules of Civil Procedure) (Patrick);[9]

6. on the whole of the evidence, summary judgment cannot be granted if the necessary facts cannot be found or if it would be unjust to do so (Pallman[10] and Sears);[11]

7. in the case of a serious issue with respect to credibility, the case should go to trial because the parties should be cross-examined before the trial judge (Forde[12] and Sears).[13] The mere existence of apparent conflict in the evidence does not preclude summary judgment; the court should take a “hard look” at the merits and decide if there are issues of credibility to be resolved (Stokes).[14]

In a memorandum of fact and law filed in August 1994, the plaintiff argues that the claim for an unpaid balance of US$63,468.45 is not in dispute and should be paid by the defendants through summary judgment. The original amount claimed in the first statement of claim was reduced from US$86,733.56 to US$63,468.45 because the plaintiff agreed to deduct the amounts substantiated by bona fide vouchers. In effect, clause 41 of the charter-party specifically states that expenditures can be deducted from money owed for hire only if bona fide vouchers are presented. In accordance with that clause, the plaintiff refused to deduct other amounts because no bona fide vouchers were presented.

According to the plaintiff, the sum of US$63,468.45 is therefore the balance due after the equitable set-off of claims for which the defendants have produced bona fide vouchers evidencing disbursements incurred on plaintiff’s behalf.

The plaintiff argues that the testimony of Mr. Karathanos, president of the defendant company Amican Navigation, confirmed that US$63,468.45 is owing as the balance of hire, and that whatever amounts that are being claimed by the defendants cannot be equitably set off against hire that is due but must be claimed separately. Accordingly, the plaintiff seeks summary judgment for its claim.

The defendants argue that there are genuine issues that should go to trial. The defendants’ position is summarized as follows:

—although there is no dispute with respect to the charter period, there are several genuine issues for trial in so far as the computation of the hire pursuant to the terms of the charter-party;

—the accuracy of the computation of hire set forth by the plaintiff was never admitted, except exclusively for the purpose of assessing the amount of Pegasus’ claim for the difference between the amounts still owed to Pegasus;

—the plaintiff has agreed to deduct some amounts; however, the following triable issues remain with respect to the computation of the hire pursuant to the terms of the charter-party:

a) Although the plaintiff has agreed to accept agency fees for services rendered by Amican at Québec City, Cacouna and Contrecœur, they refuse to accept the agency fees and expenses incurred at Nordenham (for the purchase of ship stores) and at Algiers (for the release of the four crew members);

b) There is a genuine issue as to whether or not the invoices issued by Amican are sufficient vouchers with respect to clause 41 which allows Pegasus to deduct from hire the expenditures incurred for the plaintiff’s account, but it is submitted that the invoices submitted by local port agents or services at Catania (from Sermar for US$15,528), Alexandria (from Unimar for US$15,965) and at Algiers (from Entreprise Portuaire d’Alger for US$49,054.49) are sufficient vouchers pursuant to clause 41;

c) The vessel was properly declared off-hire and extra expenses deducted during periods while the vessel was at Catania on November 13 through 17 and 24 as the discharge of the vessel was delayed for reasons pertaining to vessel’s Master, officers and crew or cranes pursuant to clauses 50 and 23 of the charter-party, including the Master’s wrongful declaration that the berth was unsafe (the sum of US$39,290.05 is therefore deductible in the computation of the hire);

d) As well, the vessel was arrested at Catania for seven (7) days, which arrest was caused by reason of the Master’s wrongful declaration that the berth was unsafe and lasted because of the plaintiff’s P & I Club failure to provide assistance for the release of the vessel as a result of which, the amount of US$47,079.76 can be deducted from any hire that could be due (clauses 50 and 60).

The defendants also question:

—whether Van Shipping was in fact the actual owner of the vessel, using Granville for the purpose of avoiding liability, and whether or not Granville, provided it still exists, has the legal standing or capacity to institute proceedings.

—whether the plaintiffs were negligent in causing the damages suffered by the defendants while the ship was in Catania, Italy.

Upon careful review of the material filed and upon consideration of the arguments put forward by the parties, I must conclude that there are genuine issues that cannot be decided by summary judgment. On the whole of the evidence before me, I am unable to decide the questions of fact and law.

More particularly, there are genuine issues as to whether or not the invoices issued by the defendants pertaining to expenditures made at Catania, Alexandria and at Algiers constitute bona fide vouchers which would permit them to deduct from hire the expenditures incurred for the plaintiff; as to whether the plaintiff should accept the agency fees and expenses incurred at Nordenham and at Algiers; as to whether the expense incurred because of the alleged delay of the vessel discharge for reasons pertaining to the vessel’s Master, officers and crew or cranes is deductible in the computation of the hire pursuant to clauses 23 and 50 of the charter-party; and as to whether the vessel’s arrest, which was allegedly caused by the Master’s wrongful declaration that the berth was unsafe and which caused expenses, can be deducted from any hire that could be due pursuant to clauses 50 and 60.

Although the two last elements are particular to the counterclaim, they cannot be decided in a vacuum. Interpretation of the charter-party is necessary to decide whether the expenses incurred can be deducted from hire. The evidence before me is not sufficient to allow me to grant summary judgment in these circumstances. As was stated by Teitelbaum J. in the recent Sears[15] decision at pages 15-16 (QL):

… Rule 432.3 (4) provides that summary judgment should not be granted where, on the whole of the evidence, the judge cannot find the necessary facts, for it would be unjust to do so. I am also of the view that summary judgment should only be granted in circumstances where the facts are clear.

I also feel that questions of credibility are important in this matter. The conflicts will be better resolved by viva voce evidence. Accordingly, the motion for summary judgment is denied.

2.         The counterclaim referral to arbitration

The plaintiff seeks to have the counterclaim sent to arbitration according to clause 88 of their charter-party. Clause 88 of the agreement specifies that in the event of a dispute the conflict is to be arbitrated:

If any dispute shall arise in connection with the interpretation and fulfilment of this contract, same shall be decided in the City of London and shall be referred to a single arbitrator to be appointed by the parties hereto….

In Canada, arbitration agreements (such as clause 88) are implemented by virtue of the Commercial Arbitration Act.[16] The Act in turn implements an international agreement called the Commercial Arbitration Code [being Schedule to Commercial Arbitration Act, R.S.C., 1985 (2nd Supp.), c. 17]. Clause 88 clearly meets the definition of an arbitration agreement as defined by article 7 of the Code:

Article 7

…

(1) “Arbitration agreement” is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(2) The arbitration agreement shall be in writing. An agreement is in writing if it is contained in a document signed by the parties or in an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement provided that the contract is in writing and the reference is such as to make that clause part of the contract.

Article 8 of the Code concerns the issue of how a court should deal with an arbitration agreement. The Code indicates that a judge must refer the matter to an arbitrator in most circumstances:

Article 8

…

(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

Therefore, a court need not refer a matter to arbitration when the agreement is “null and void, inoperative, or incapable of being performed”. That is not the case of this agreement.

Another situation where referral to arbitration need not occur, arises when the request for arbitration is not made in a timely fashion. The Code indicates that “if a party so requests not later than when submitting his first statement on the substance of the dispute,” referral to arbitration shall occur. If the criteria set out in the provision are met, the judge must send the matter to arbitration.[17]

In the case at bar, the plaintiff chose to file an action against the defendants in the Federal Court of Canada. No reference is made in the statement of claim to the arbitration clause. The defendants attorned to this jurisdiction by filing a defence. They further filed a counterclaim which the plaintiff is now seeking to have sent to arbitration, as it is an independent proceeding. At the hearing I was inclined to send the counterclaim to arbitration. However, I have reviewed my position on this point.

According to Nanisivik,[18] if the Court were to refer the counterclaim to arbitration, this would have the effect of staying the main action pending the outcome of the arbitration. In that decision, the Court of Appeal emphasizes that all proceedings must be stayed even if some of the issues are not subjected to arbitration. The Court states at pages 674-675:

I conclude that, once a reference to arbitration has been made, there is no residual discretion in the court to refuse to stay all proceedings between the parties to the arbitration even though there may be particular issues between them not subject of the arbitration.

In effect, to order the counterclaim to arbitration would lead to a stay of the main proceeding instituted in the Federal Court at the request of the plaintiff. This kind of result was examined by the Court in Ruhrkohle Handel Inter GMBH v. Federal Calumet (The).[19] In that case, the plaintiff had filed a statement of claim to which the defendants responded with a defence and a counterclaim. The plaintiffs requested that the claim be stayed while the counterclaim proceeded to arbitration. Speaking about the Commercial Arbitration Code, the Court stated at page 105:

For the Code to be effective, parties must know that in whatever court they make a request for reference to arbitration, such request shall be made, in order to deprive that court of any discretion, before or at the very precise moment they submit in that court their first statement on the substance of the dispute. That very precise moment may vary from one jurisdiction to another but it constitutes the very objective standard that must be met in any given jurisdiction.

The Court continued [at pages 105-106]:

In the instant case, the appellants, which were the plaintiffs, took the very unusual step of seeking a stay of the proceedings they had themselves instituted only after the defendants had filed their statement of defence. By no stretch of the imagination can such request be considered as having been made in a timely fashion.

The Court agreed with the decision from the Trial Division [Ruhrkohle Handel Inter GmbH v. Fednav Ltd. (1991), 36 C.P.R. (3d) 521], at page 106:

I therefore fully agree with the view expressed below by Pinard J. in the following words [at pages 523-524]:

Indeed, the plaintiffs, who have chosen to institute proceedings in the Federal Court of Canada in respect of a matter which they had agreed to refer to arbitration in New York City, made no mention of arbitration in their statement of claim and waited until after the defendants had filed their statement of defence and counterclaim before moving for a stay of proceedings. By thus delaying their application for a stay of proceedings, the plaintiffs have failed to meet an essential requirement of art. 8(1) of the Commercial Arbitration Code; accordingly, at such a late date, this court no longer had the imperative duty to refer the matter to arbitration at their request.

I must conclude in the same fashion. The request for arbitration cannot be said to be timely as required by article 8(1) of the Code. Of its own volition, the plaintiff chose to proceed in this Court and cannot now request that the counterclaim be sent to arbitration and that the main action be stayed. In essence, the plaintiff has waived its right to request a reference to arbitration. As stated at page 72 of Maersk Inc. v. Coldmatic Refrigeration of Canada Ltd.,[20] “it is the plaintiff, in an action already commenced by it in this court, that is seeking to prevent the defendant from having this court hear and decide the defendant’s counterclaim". The Court there decided that where the plaintiff had chosen to pursue its claim before the Federal Court and the defendant had accepted the Court’s jurisdiction, the counterclaim should also be heard and decided by this Court.

The intention of the parties as to the choice of venue, I believe, was clear. The comments by Heald J. (as he then was) in Vallorbe Shipping Co. S.A. v. The Tropwave,[21] are relevant. He stated, at page 600:

In the case at bar, the plaintiff by bringing this action, clearly expressed its intention to revoke the arbitration clause and the defendant, by filing its statement of defence and counterclaim, has also clearly expressed a similar intention (a circumstance which was not present in the Normandin Lumber case (supra)). Thus, the plaintiff in November of 1974 and Canadian Transport in December of 1974, took actions which clearly indicated the intention of each to pursue its remedy in the Federal Court. Normally, that would be conclusive of the matter.

I must then conclude that the counterclaim should not be sent to arbitration and should rather remain before the Federal Court. As I have refused to grant summary judgment both claims will therefore proceed to trial. This conclusion is further supported by the fact that the claim and the counterclaim are interrelated and should not be separated. In effect, the disputes between the parties originate from the same charter-party. Essentially, the parties argued that the doctrine of equitable set-off should apply as the opposing claims arise from the relationship between the parties and raises an issue of equity as between them. This brings me back to the difficulty I faced earlier in these reasons with regard to the motion for summary judgment; the claims are interrelated and the evidence on file was not sufficient to decide the litigious issues.

Reed J., in Blyth,[22] stated the following on equitable set-off and related claims at page 103:

These cases distinguish between a defence of equitable set-off and a counterclaim. In the latter summary judgment will issue, while in the former it will not. The cases illustrate the difficulty that exists in trying to determine whether a defendant’s claim is more properly characterized as an equitable set-off or a counterclaim.

It is not clear to me that the new rules of this court (432.1. and following) are to be interpreted in the same fashion as the Ontario Rules. The definition of equitable set-off was developed in the equity courts for the purpose of ensuring that judgment would not issue on a claim when a closely linked claim of the opposing party existed. The purpose was to ensure that all related claims would be decided at the same time in order to avoid inequitable results. The rules respecting what constitutes an equitable set-off were not developed for the purpose of interpreting rules authorizing a court to issue summary judgment with respect to part of a case, nor in the context of a court having authority to order a stay of the execution of any such summary judgment until all issues in the case are decided. I am not convinced that a distinction must be made between set-offs and counterclaims for the sake of deciding whether summary judgment on part of a claim can issue pursuant to Rule 432.3.

In my view, Rules 432.1 and following should be interpreted by reference to their own textual framework. Rule 432.3(4) provides that summary judgment should not be granted on an issue when (1) on the whole of the evidence the judge cannot find the necessary facts or (2) it would be unjust to do so. These are the criteria which must be considered, not an analysis of whether or not a claim is characterized as an equitable set-off. [My emphasis.]

I believe the claims here to be intertwined, as they arise out of the interpretation of the same charter-party. Furthermore, as the plaintiff chose to proceed before this Court, I must deny the motion for a reference of the counterclaim to arbitration.

Costs will be awarded in the cause.

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