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.