Judgments

Decision Information

Decision Content

A-226-77
Marketing International Ltd. (Appellant) v.
S. C. Johnson and Son, Limited and S. C. Johnson & Son, Inc. (Respondents)
Court of Appeal, Jackett C.J., Pratte J. and MacKay D.J.—Toronto, April 22, 1977.
Practice — Appeal from order dismissing application to stay or postpone injunction until principal appeal decided — Exercise of discretion by Trial Judge — Irreparable damage proved — In "interests of justice" appeal allowed — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 50(1)(b) — Federal Court Rule 1909.
Appellant appealed from the Trial Division's decision to dismiss its application to stay or postpone the application of an injunction until after the principal appeal had been decided. The appellant alleges that bankruptcy would result if the injunction were applied, and that it could not enjoy the benefits of ultimately winning the principal appeal. The respondents would suffer minimal damages should the application of the injunction be postponed.
Held, the appeal is allowed. Where an injunction has been granted by a final judgment, prima facie, it should remain in force until the judgment has been found, on appeal, to be wrong. However, there are cases where the "interests of jus tice" require interference, even by a Court of Appeal on review, in a special case, of the exercise of discretion of a judge of first instance. Where the preponderance of irreparable detriment to the defendant flowing from maintaining the injunction in force pending appeal (if the judgment should turn out to be wrong) in relation to the irreparable detriment to the plaintiff, if any, flowing from suspending the injunction pending appeal (if the judgment should turn out to be correct) is such that the interests of justice require that the injunction should be sus pended pending appeal, then the Court should exercise its discretion to do so.
APPEAL. COUNSEL:
Kent H. E. Plumley for appellant.
J. D. Kokonis, Q.C., and Nicholas H. Fyfe for
respondents.
SOLICITORS:
Gowling & Henderson, Ottawa, for appellant. Smart & Biggar, Ottawa, for respondents.
The following are the reasons for judgment of the Court delivered orally in English by
JACKETT C.J.: This is an appeal, launched on April 7, 1977, from a judgment of the Trial Divi sion dismissing an application under section 50(1)(b) of the Federal Court Act or Rule 1909' for an order suspending the operation of a final injunction. 2
The appeal was dealt with expeditiously pursu ant to an order made on April 14, the body of which reads as follows:
WHEREAS this is an appeal from a judgment of the Trial Division delivered on April 7, 1977, dismissing an application postponing or staying the commencement of the operation of an injunction and other relief granted by a final judgment of the Trial Division dated April 4, 1977, pending disposition of an appeal from that final judgment;
AND WHEREAS the appellant has, by letter dated April 7, 1977, sought an order expediting the hearing of this appeal, without compliance with the Rules regulating appeals from the Trial Division, on a representation that the dismissal of the appellant's application will
a) render any such appeal nugatory,
b) cause irreparable and irrevocable damage to the Appel lant as it will be placed in bankruptcy,
c) be unable to change to a non-offending trade mark,
d) trade suppliers will be placed in dire financial straits or placed in bankruptcy,
e) customers will irrevocably lose trade credits,
with the result that the Appellant will irrevocably have lost its statutory right to proceed with its Appeal from the judgment in the main action of April 4, 1977.
Those provisions read as follows:
50. (1) The Court may, in its discretion, stay proceedings
in any cause or matter,
(b) where for any other reason it is in the interest of justice that the proceedings be stayed.
Rule 1909. A party against whom a judgment has been given or an order made may apply to the Court for a stay of execution of the judgment or order or other relief against such judgment or order, and the Court may by order grant such relief, and on such terms, as it thinks just.
2 The judgment also dealt with an application to suspend a direction for delivery up but this aspect of the matter was disposed of before us by agreement of counsel.
and, by such letter, proposed that this appeal be heard on certain material submitted by it, and that a memorandum filed in the Trial Division (to be supplemented) be accepted as its memorandum in this Court;
AND WHEREAS, the respondent has, by a letter dated April 12, 1977, made the following submissions:
The notice of appeal dated April 7th relates to an interlocu tory order refusing an application by Marketing Internation al Ltd. postponing or staying the commencement of the operation of the injunction provided for in the formal judg ment of the court dated April 5th. The appellant's solicitors by letter dated April 7th addressed to the Administrator, requested the hearing of this appeal at the earliest opportu nity convenient to the court and in order to expedite matters copies of material were sent to the court in order to assist the registry in preparing the appeal case. Those materials were supplemented by additional material which was enclosed with a letter addressed to the Administrator April 12th. Clearly, the materials identified in the April 7th and 12th letters must form part of the appeal case. We regret to advise, however, that we do not believe that these materials in themselves are complete.
As the Registry will have noticed, Mr. Justice Cattanach in giving his reasons for rejecting the appellant's application, indicated that his judgment was based in part as a result of the consideration of "all the surrounding circumstances as discussed in the evidence at trial ...". That being so, we fail to see how the provisions of Rule 1206 are complied with unless at least a transcript of the evidence at trial forms part of the case. In this connection we have reference specifically to Rule 1206(2). We understand from representations made to the Honourable Mr. Justice Cattanach at the hearing of the appellant's application now under appeal that a tran script of the evidence is now being prepared.
It appears that the Federal Court Rules relating to appeals of this nature also provide that the respondents' memorandum of fact of law is due at the earliest one week after the respondents' solicitors have been served with both the appel lant's corresponding memorandum and a copy of the case on appeal. We shall, of course, make every endeavour to comply with this time limit but in view of the difficulty referred to above relating to the preparation of the case on appeal we submit that the appellant's "unilateral application for the hearing of this appeal" is premature. On the other hand, once the case has been prepared and both parties have filed their memoranda of fact and law we are prepared to make every endeavour to co-operate with the appellant's solicitors in setting a mutually convenient date. At this particular time (and not knowing when the time limits set by the rules will in fact expire) we can indicate that we would prefer to have the appeal heard in Toronto (our second choice would be Ottawa) on one of the Fridays that Mr. Justice Collier is not sitting in the Xerox v. IBM trial. This would enable Mr. Kokonis (who argued the case for the respondent before Mr. Justice Cattanach) to appear on behalf of the respondents on the appeal. We understand that Mr. Justice Collier is not sitting on Friday April 22nd, May 6th, May 20th or June 3rd so we can at this time, subject to the foregoing, say that any of these dates would be satisfactory.
It is ordered that this appeal be heard at Toronto commenc ing at 10:30a.m. on Friday, April 22nd, on the following conditions and understandings:
1. The material constituting the case for such hearing will be the material already filed by the appellant for such purpose plus any additional material so filed before that time with the concurrence of the respondent;
2. The appellant's memorandum will consist of that which it has proposed therefor;
3. The respondent is excused from filing or serving a memoran dum unless it chooses to do so; and
4. If, after hearing the parties at that time, the Court is persuaded that it might otherwise grant the appeal, it will hear the parties on the questions
(a) what further material should be added to the case,
(b) what time should be granted to the respondent to file its memorandum, and
(c) what time should be fixed for completion of the hearing of the appeal.'
We are satisfied that the Trial Division had power to make the order sought.
In our view, where an injunction has been grant ed by a final judgment, prima facie, it should remain in force until that judgment has been found, on appeal, to be wrong.
However, there are cases where the "interests of justice" require interference, even by a Court of Appeal on review, in a special case, of the exercise of discretion by a judge of first instance'. Where the preponderance of irreparable detriment to the defendant flowing from maintaining the injunction in force pending appeal (if the judgment should turn out on appeal to be wrong) in relation to the irreparable detriment to the plaintiff, if any, flow ing from suspending the injunction pending appeal (if the judgment should turn out to be correct) is such that the interests of justice require that the injunction should be suspended pending appeal, then the Court should exercise its discretion to do so.
In this case, on the material that was before the Trial Judge, it appears that, if the injunction is not suspended,
By consent, the appeal was fully argued this day on the record as constituted in accordance with this order subject to certain additions set out in the Court Minutes, and without a respondents' memorandum having been filed or served.
4 Cf. Frank v. Alpert [ 1971 ] S.C.R. 637, per Hall J., deliver ing the judgment of the Court at page 640.
(a) the appellant's business operation will be finally terminated with the result that, in the event that the principal appeal is successful, the success will be of no benefit to the appellant—in other words, in that event, it would appear that the appellant will have been eliminated as a competitor of the respondent litigation that will have turned out to have been without legal foundation, and
(b) the appellant will go into bankruptcy with the result that, in the event that the principal appeal is successful, there will have been sub stantial losses and business inconvenience suf fered by its financial backers, its customers, its suppliers and others having business relations with it, which losses and inconvenience would not have been suffered if it were not for the litigation that will have turned out to have been without legal foundation.
On the other hand, on the same material, if the injunction is suspended on terms substantially similar to those imposed, at an earlier stage, by Marceau J., the respondent (i.e., the United States company) 5 will be entitled to damages or an accounting for or in respect of the sales resulting from the suspension if, as a result of the appeal, it appears that such sales were in contravention of the respondent's trade mark rights; and the only irreparable damage that it will have suffered, if any, is any diminution in its trade position result ing from the appellant's infringement of its trade mark that is not susceptible of evaluation in finan cial terms. Having regard to the fact that the respondent does not carry on business in Canada, it seems unlikely that this factor is of any appre ciable importance.
We have concluded, therefore, that this appeal should be allowed and that judgment should be given suspending the injunction on the following terms, viz:
1. that the appeal from the principal judgment be prosecuted as expeditiously as possible;
2. that the appellant keep an account of all sales of goods in association with the trade mark "bugg-off" and pay into Court on the 15th and last days of each month an amount equal to 10
5 The first respondent seems to have been wrongly named in the style of cause as there is no judgment in its favour.
per cent. of the selling price of such goods sold in the preceding half month, as security to pay any damages or profits payable to the respond ent in respect of such sales; and
3. that the respondent may apply to re-instate the injunction upon the termination of such appeal or for any failure on the part of the appellant to comply with these terms.
We have also concluded that costs of the applica tion and costs of this appeal should follow the event of the appeal from the principal judgment.
 You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.