T-1246-72
Omark Industries, Inc. and Omark Canada, Ltd.
(Plaintiffs)
v.
Sabre Saw Chain (1963) Limited (Defendant)
Trial Division, Thurlow A.C.J.—Ottawa, March
10 and 15, 1977.
Patents — Practice — Application for order declaring ear
lier injunction restraining sale inapplicable to product held by
third party as security — Application made pursuant to Rule
1909 provision for "other relief' and under inherent jurisdic
tion of Court to clarify judgments — Burden of proving need
for relief applied for — Dilemma arising out of dual role of
receiver as receiver of defendant and agent for third party —
Bank Act, R.S.C. 1970, c. B-1, s. 88 — Federal Court Rule
1909.
Under an earlier judgment of the Trial Division finding that
the defendant had infringed the plaintiffs' patent rights, the
defendant was enjoined, inter alia, from further infringing
those rights by the sale of its safety saw chains. Subsequently
the Supreme Court of Ontario appointed a receiver on behalf of
the Canadian Imperial Bank of Commerce of all assets of the
defendant comprised in the security created by debentures
issued by the defendant to the bank. The defendant now seeks
an order declaring that the injunction is inapplicable to safety
saw chain in the possession of the receiver acting as agent for
the bank, which is now the owner of that chain, basing its
application on the provision for "other relief" in Rule 1909 or
on the Court's inherent jurisdiction to clarify a judgment with
respect to matters not foreseen when the judgment was ren
dered. Alternatively, the defendant seeks relief under Rule
1909 allowing it to sell the chain in question upon payment into
Court of a deposit from the proceeds as royalty. In the final
resort the defendant seeks an order stating that its agent, the
receiver, is not required to deliver up the chain currently in its
possession.
Held, the application is dismissed. As far as this Court is
concerned, only the defendant's rights and obligations are
involved, not those of the bank, and the order of the Trial
Division would be breached if the defendant was a party to the
sale of the chain. Neither of the grounds for relief relied on is
justification for the declaration sought: the defendant is really
seeking a determination that the chain is not his property and
such determination is not within the purview of the avenues of
relief relied on. There is no reason why the defendant should be
allowed to sell any portion of the chain since it is not perishable
and the only difficulties likely to arise in interfering with the
injunction would be those of the plaintiffs in calculating their
damages. The defendant's final application contradicts the
allegations in its notice of motion as to the possession of the
chain and asks for a reversal or variation of the judgment,
which is an application that cannot be entertained in the Trial
Division.
Poisson v. Robertson (1902) 50 W.R. 260; Yat Tung
Investment Co. Ltd. v. Dao Heng Bank Ltd. [1975] A.C.
581; Laboratoire Pentagon Limitée v. Parke, Davis &
Company [1968] S.C.R. 269 and Cristel v. Cristel [1951]
2 K.B. 725, applied.
APPLICATION for interlocutory relief.
COUNSEL:
George E. Fisk for plaintiffs.
Joseph A. Day for defendant.
SOLICITORS:
Gowling & Henderson, Ottawa, for plaintiffs.
Sim & McBurney, Toronto, for defendant.
The following are the reasons for order ren
dered in English by
THURLOW A.C.J.: By a judgment pronounced
in this action on September 13, 1976, it was
ordered and adjudged, inter alia,
(1) that the plaintiffs' patent number 652,529 had been
infringed by the defendant by the manufacture and sale of its
Sabre AVS safety saw chain;
(2) that the defendant be restrained from further infringement
by the manufacture or sale of such chain;
(3) that there should be a reference to determine the amount
of the damages sustained by the plaintiffs by reason of such
infringement or the profits made by the defendant by such
infringement as the plaintiffs might elect; and,
(4) that the defendant deliver up to the plaintiffs all Sabre
AVS safety saw chain in its possession or under its control.
On an application by the defendant, the refer
ence to assess damages or profits and the order for
delivery up were stayed pending appeal. The
learned Trial Judge refused to stay the injunction.
An appeal by the defendant from his order was
dismissed on November 3, 1976 1 .
By an order of the Supreme Court of Ontario
made on November 19, 1976, a receiver on behalf
of the Canadian Imperial Bank of Commerce was
appointed of all assets of the defendant comprised
in and subject to the security created by certain
debentures made and issued by the defendant to
the bank.
Application is now made on behalf of the
defendant for an order:
Declaring that the Injunction included in the Judgment dated
September 13th, 1976, herein is not applicable to 65,000 feet of
saw chain manufactured by the Defendant currently in the
possession of the agent for The Canadian Imperial Bank of
Commerce, pursuant to S. 88 of the Bank Act, R.S.C. 1970, C.
B-1.
It is common ground that the 65,000 feet of
chain referred to infringes the patent and is of a
kind referred to in the order for delivery up to the
plaintiffs.
The reason put forward for making the applica
tion Was that the receiver, who is also agent for the
bank, was in a dilemma because he was not able to
interpret the judgment of this Court.
In my opinion, there is no ambiguity in the
judgment and, if the receiver is in a dilemma, it is
one arising only from his occupying a dual role as
receiver of the defendant and agent of the bank.
The rights and obligations of the two are not the
same. Here, what is involved are the rights and
obligations of the defendant alone. The bank is not
before me in this proceeding and nothing that I
may say will affect its rights or obligations. The
injunction restrains the defendant from selling
chain that infringes the patent and it seems to me
to be perfectly plain that for the defendant to
participate in or be a party to a sale of the chain in
question, whether acting by a receiver or other
wise, would be a breach of the injunction.
But I do not rest my conclusion on that ground
alone. What is asked is a declaration that the
injunction does not apply to a particular quantity
I [1977] 1 F.C. 614.
of chain because it has been assigned to the bank
as security under section 88 of the Bank Act and
the basis of the application is that the bank, and
not the defendant, is accordingly the owner of the
chain. Counsel sought to support the application as
being an application for "other relief" against the
judgment within the meaning of Rule 1909 2 or
under the inherent authority of the Court to clarify
its judgment with respect to matters not foreseen
when the judgment was pronounced 3 .
In my opinion, the declaration sought could not
be justified under either the Rule or the inherent
power. What the defendant really seeks is a deter
mination of title to the chain or, more particularly,
a determination that the defendant has no interest
in the chain and, in my opinion, that does not fall
within the purview either of relief against the
judgment within the meaning of the Rule or clari
fying the effect of the judgment 4 .
Alternatively, the defendant sought an order
under Rule 1909 relieving the defendant from the
judgment so as to permit the chain to be sold. It
was said that this was a comparatively small quan
tity of chain ready to be sold and the sale of which
would not cause serious damage to the plaintiffs.
The defendant was also prepared to deposit in
Court from the proceeds of sale a reasonable
royalty in respect of the use of the patented
invention.
I think it is very doubtful whether it is open to
the defendant to raise this question on this applica
tion, following as it does the determination of an
2 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.
3 22 Halsbury's Laws, 3rd ed., 783.
4 See Poisson v. Robertson (1902) 50 W.R. 260.
earlier application in respect of the judgment in
which the matter might have been raised 5 . But,
assuming that it is open, I see nothing in the
situation which would justify an order of the kind
sought. The defendant has been enjoined from
selling chain that infringes the plaintiffs' patent. It
has no right to further infringe the patent. Though
the order is stayed pending appeal, the judgment
also orders the defendant to deliver up chain in its
possession. The chain is not perishable and, in my
view, no irreparable damage will be occasioned to
the defendant by being restrained from selling it
pending the appeal. Indeed, as I see it, greater
inconvenience to the plaintiffs might be expected if
the injunction were lifted to permit the sale of the
chain as the extent of the plaintiffs' damages could
be expected to be more difficult to ascertain than
any that may be sustained by the defendant if not
permitted to sell. On the facts, it is apparent, as
well, that the defendant is insolvent and that noth
ing more than the suggested royalty would ever be
likely to be recovered. On an application of this
kind, the burden on the applicant is greater than
that of a party seeking an interlocutory injunction 6
but even on that basis the balance here appears to
me to be in favor of refusing the application.
The third order sought by the application was
that the Agent and Trustee of the Defendant not be required to
deliver up to the Plaintiff the said 65,000 feet of saw chain
currently in possession of the Agent and Trustee of the
Defendant.
This, it will be observed, contradicts what is
alleged in the first paragraph of the notice of
motion as to the possession of the 65,000 feet of
chain. In my opinion, it asks a reversal or variation
of the judgment itself and is an application which
cannot be entertained in the Trial Division'.
ORDER
The application is dismissed with costs.
5 See Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd.
[1975] A.C. 581 at 589 et seq.
6 Per Martland J. in Laboratoire Pentagone Limitée v.
Parke, Davis & Company [1968] S.C.R. 269 at page 272.
7 See Cristel v. Cristel [1951] 2 K.B. 725.
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.