Executive Summary: Key Legal and Evidentiary Issues

• Rona's right to terminate the Block Space Agreement (BSA) hinged on whether the BSA was incorporated into and subject to the DTA's termination provisions

• DHL's admissions in its Statement of Claim that the BSA was incorporated into the DTA proved fatal to its argument that the BSA was a standalone agreement

• Typographical errors in Rona's Notice of Termination citing the wrong section and effective date did not invalidate the termination notice

• Quebec civil law governed the contract interpretation, with article 2863 CCQ barring affidavit evidence that contradicted the written agreements

• DHL failed to meet its evidentiary burden to establish that claimed Deadfreight Penalties related to weeks prior to the BSA's effective termination date

• The costs award of $46,778.64 represented 22.5% of Rona's actual legal costs, reflecting the trend toward lump sum awards between sophisticated commercial parties

Background and contractual framework

DHL Global Forwarding (Canada) Inc. and the Defendants, Lowe's Canada and Rona Inc., entered into a DHL Transportation Agreement (DTA) on December 11, 2019, governing transportation and related services. The DTA was subsequently amended through the "First Amendment to DHL Transportation Agreement and Statement of Work No.001" (the Amending Agreement), which was executed on March 18, 2022, but made effective as of December 11, 2021. Critically, the Amending Agreement incorporated a Block Space Agreement (BSA) as Schedule G into the DTA, establishing that Rona would tender a minimum quantity of Twenty Foot Equivalent Container Units (TEUs) and/or Forty Foot Equivalent Container Units (FEUs) per week at negotiated rates, with Deadfreight Penalties payable for any failure to meet the Weekly Volume Commitment.

The termination dispute

On March 23, 2023, Rona delivered a written 30-day notice of termination purporting to terminate the BSA. The notice cited paragraph 11.2(b) of the DTA as the basis for termination and indicated March 23, 2023, as the effective termination date. DHL rejected this notice on April 17, 2023, arguing that the BSA was a fixed-term agreement containing no language that permitted its termination prior to the expiry of its Term and constituted an "entire agreement" separate from the DTA. Rona responded on May 4, 2023, clarifying that the references to section 11.2(b) and the March 23, 2023, effective date were typographical errors, and that it had exercised its right of termination without cause pursuant to section 11.2(d) of the DTA, with an effective date of termination of April 23, 2023.

The plaintiff's claims and legal position

DHL brought a motion for summary judgment pursuant to Rules 214 and 215 of the Federal Courts Rules, claiming that Rona was liable for Deadfreight Penalties for the period of March 23, 2023, to December 23, 2023, pursuant to the BSA. DHL sought the Canadian equivalent of US$3,720,000 together with interest at the rate of 5% from March 23, 2023, and a declaration that the Defendants were jointly and severally liable for all deadfreight owing pursuant to the BSA. DHL maintained that the BSA was a fixed-term contract that could not be terminated prior to the expiry of its Term on December 31, 2023, and that Rona's purported termination was invalid.

Court's analysis of contractual interpretation

The Federal Court, presided over by Justice Duchesne, applied the principles from Uniprix inc. v Gestion Gosselin et Bérubé inc., 2017 SCC 43, for interpreting commercial agreements under Quebec law. The Court found the contractual language unambiguous: Article 10 of the Amending Agreement explicitly stated that "The attached Schedule G is hereby added to the DTA," and the preamble declared the parties' intention to put in place a block space agreement "as part of the DTA." The Court held that DHL's own admissions at paragraphs 7 and 8 of its Statement of Claim confirmed that the BSA was incorporated into the DTA and subordinate to its terms in the event of any ambiguity, inconsistency, or conflict between the two documents.

Termination rights and validity of notice

The Court determined that paragraph 11.2(d) of the DTA granted Rona the right to terminate "the DTA and/or any Statements of Work... in whole or in part without cause or reason" by providing not less than thirty (30) days' advance written notice. Since the BSA was a "part" of the DTA, it was subject to this termination provision. The Court rejected DHL's argument that the typographical errors in Rona's notice rendered it null and void, finding that nothing in the DTA or article 1439 CCQ required Rona to identify the specific clause relied upon or to specify the precise effective termination date. The substantive basis for termination—the provision of 30 days' written notice of termination, without communicating any "cause" for the termination—was properly communicated.

Deadfreight penalties and evidentiary issues

Regarding Deadfreight Penalties, the Court found that under section 3.4 of the BSA, such penalties arose only if there was a failure to tender the Weekly Volume Commitment during a week of the BSA's Term, calculated on a "per occurrence" basis. There was no language in the BSA supporting DHL's argument that Deadfreight Penalties accrued as a liability from the BSA's commencement for its entire term. The Court also rejected DHL's reliance on the UK Court of Appeal decision in King Crude Carriers SA et al. v. Ridgebury November LLC et al, [2024] EWCA Civ 219, finding that English common law principles regarding debt and liabilities had no application where the parties agreed that the DTA and all matters related to it would be governed by the laws of the Province of Quebec.

Insufficient evidence for remaining claims

After requesting additional representations from the parties during the hearing, the Court found that DHL failed to establish on a balance of probabilities that any outstanding Deadfreight Penalties were properly owing for the period between the notice date and the effective termination date of April 23, 2023. The only potentially applicable invoice (Y0404148 for US$90,000) lacked sufficient particulars to establish it was issued in connection with a week during which Rona failed to tender its Weekly Volume Commitment prior to the effective termination of the BSA.

Costs determination

Following the dismissal of DHL's motion and claims against Rona on October 28, 2025, the Court issued a subsequent costs order on January 8, 2026. Rona sought $116,946.60, representing 50% of its reasonably incurred costs of $233,893.20, while DHL argued for costs assessed under Tariff B (which Rona calculated would yield $7,380, and DHL calculated would be in the range of $9,180 to $16,200 at the high end of Column V) or alternatively a lump sum not exceeding 20% of Rona's actual legal fees (i.e. $23,289.32). The Court applied the factors under Rule 400(3) of the Federal Courts Rules, noting that Rona was entirely successful on the motion for summary judgment and in the proceeding; the matter was not a particularly complex proceeding, either legally or factually; neither party engaged in conduct that tended to lengthen the proceeding and the parties worked cooperatively; and both parties were large and sophisticated commercial entities. The Court determined that a lump sum award was more appropriate than a Tariff B calculation to meet the indemnification objective of a costs award, consistent with jurisprudence regarding sophisticated commercial parties in maritime law matters. However, the Court rejected Rona's proposed 50% and found 22.5% of actual costs appropriate, as the proceeding was neither factually nor legally complex and did not fall within intellectual property litigation that typically results in costs awards of 25 to 50% of actual fees. This resulted in a costs award of $46,778.64 all-inclusive, payable by DHL to Rona.