PRACTICAL CONSIDERATIONS McCarthy T - PDF document

PRACTICAL CONSIDERATIONS McCarthy Tétrault LLP The right people. The right results. McCarthyTétrault - 2 - Litigation is often a long and unwieldy process where parties often wait years to enforce their rights. One important exception to this rule is the interlocutory injunction. Because of the speed, timing and nature of this remedy, it can prove to be a powerful tool for the commercial litigator. Win or lose, an injunction can have an enormous impact on the future course of the litigation. A successful injunction will have the immediate effect of preventing the other party from ends the litigation entirely. At a minimum, it can provide a serious advantage in any future settlement negotiations. In effect, the injunction turns the table on the litigation as now it is result in a large and immediate award the moving party must give an undertaking as to damages, if the successful moving party By Steven Mason, Partner, McCarthy Tetrault. Mr. Mason would like to gratefully acknowledge the assistance of David Bross, an articling student at McCarthy Tetrault, in the preparation of these materials. McCarthyTétrault - 3 - ultimately loses at trial, they may be taking out their chequebook and writing a cheque to cover the damages incurred by the other siAn injunctions is an extraordinary remedy and whether your case fits the required test, marshalling the evidence needed to prove it, and determining the best method to bring this all beit can provide a powerful remedy for yourThe first and most important practical considwhether to seek an determine whether you can win. To do so, you must have confidence that your client’s case meets thAlthough there are various formulations based on the type of injunctive relief the moving tario for an interlocutory injunction is most st established a three-part testIs there a serious issue to be tried?; Will the applicant suffer irreparable harm if the injunction is not granted?; and Which party will suffer the greater harm from granting or refusing the remedy pending a decision on the merits? (often called “balance of convenience”) McCarthyTétrault - 4 - With some exceptions, the first branch of the injunction test is a low ththe Supreme Court in frivolous, the motions judge should proceed to consider the second and third tests, even if of the opinion that the plaintiff is unlikely to succeed at trial.”sis of common sense and a limited review of the case on the merits.”amination of the facts and law. In certain circumstances, the court will impose a more restrictive standard and require the moving party to demonstrate that it has a strong prima facieties, then the court may hold the plaintiff to this higher standard. Similarly, where the nature of the relief sought is mandatory or when the question is a question of mere law alone, thenment contracts. Irreparable Harm In most injunction cases, proving irreparable harm will be the most significant – and most difficult – hurdle to overcome. It is hereAccordingly, it is here where it is suggested that you focus most of your time and effort. R.J.R Macdonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311Dole Food Co. v. Nabisco Ltd. (2000), 8 C.P.R. (4) 461 (F.C.T.D.) ibid. Researcho Ltd. Partnership v. Real Estate Search Corp. (2004), 2004 CarswellOnt 4510 (S.C.J.) McCarthyTétrault - 5 - rable harm, the moving party must demonstrate that it is harm that terms or which cannot be cured. Harm to third parties will y irreparable harm to the movi“irreparable harm”? Courts seemingly quantify irreparable harm every day, like the award of damages given to a victim of sexual abuse, or even for pain and suffering from a broken leg. , states that irreparable harm “has not n: its meaning takes shape in the context of each particular case.” Irreparable harm will be considered on a case by case basis. Whether you are moving or responding, the cases can provide some assistance in gauging whether your client’s damages canvass them to determine whether and to what opponent’s, meets this part of the test. By way of example, courts have held that irreparable harm includes loss of goodwill or irrevocable damage to reputation, loss of market share (though not necessarily irreparable if the loss is recoverable) and permanent loss of natural a damages award, the court may consider this as terminative of the issue. supra note 2 ibid., 2-33 Robert Sharpe, Injunctions and Specific Performance, looseleaf, (Aurora, On: Canada Law Book, 1992) p. 2- McCarthyTétrault - 6 - The Balance of Convenience Here, the courts make a determination as to which party will suffer the greater harm with the outcome of the motion. The factors considered in making this determination will necessarily vary with the facts of eae test where the court can consider the harm refusing (or granting) an injunction will have on third parties. If the plaintiff has a strong case on the merits or thrm, it may influence the balance ourt will look to maintain the status quo in determining where the balance of convenience lies. Other Factors , the courts may also consider when determining whether to grant injunctive relief, for example whether the moving party the undertaking as to damages, and in some circumstances Although these factors usually permeate into r, there is some fluidity which gives the court room to manoeuvre. The three components are more of a guide rather than water-tight compartments. As Sharpe writes: “Canadian judges have tended to eschew general statements of principle when deciditions and emphasis has Christopher Werth, Interlocutory Proceedings, looseleaf, (Aurora, On: Canada Law Book Inc., 2004) p. 1-3. Sharpe, supra note 8, 1615 Regent Ltd. v. Kildonan Crossing Shopping Centre Ltd., [1994] M.J. No. 682 (C.A.) McCarthyTétrault - 7 - a healthy measure of discretion.”ngth in one can overcome anothemeasure of discretion can sometimes make it difficult to predict the outcome of an application for injunctive relief. Timet The test for an interlocutory injunction fluctuef: prohibitive, mandatory and e moving party is seeking to prevent the other side from doing something. This is the most common form of inprovides the moving party with the greatest chance for success. The guiding principle behind this type of injunction is maintaining the uses the standard three-paIn a mandatory injunction, the moving party is some positive action. Because of the nature of this remedy and the court’s concern over order, the courts are also more reluctant to grant this type case in order to obtain injunctive relief. Another formulation suggests that the court Sharpe, supra note 8 McCarthyTétrault - 8 - trial it will appear that the relief was rightly Framing the relief requested is therefore an important consideration when moving for an interlocutory injunction. Because a mandatory injunction requires a higher standard of proof than a prohibitive injunction (not to mention a greater reluctance on the part of the court to order such relief), framing your relief in term you are the moving party. Conversely, the responding party should argue that the relief will require a positive action on their client’s behalf and therefore should be considered mandatory in nature. ought prior to any actual harm occurring. The moving party is anticipating future harm and is taking pre-emptive steps to avoid it. The moving party must demonstrate that there is a high degree of probability that the harm will in fact occur and that the harm is imminent.Timing and Notice Once the decision has been made to proceed with the application for an injunction (i.e., that you can win it), the next importantming and notice. Do you give notice and if so, how much? Ticketnet v. Air Canada (1987), 21 C.P.C. (2d) 38 (O.H.C.J.), Alltricor Financial Management Inc. v. Romar Group Inc., [2003] O.J. No. 185 (S.C.J.) Operation Dismantle Inc. v. Canada, [1985] 1 S.C.R. 441 at para. 35, Jagtoo v. 407 ETR Concession Co.[1999] O.J. No. 4944 (S.C.J.), Fleatcher v. Bealey (1885), 28 Ch. D. 688 (Eng. Ch. Div.) McCarthyTétrault - 9 - Sometimes, the decision will be clear. If the responding party agrees not to take any steps until the issue is determined, the injunction can proceed in the normal course as any cross-examinations, brief the argument and atte and swift action where possible or even advisable. The notice period you choose to give will determine what you need to prepare – and how you need to prepare -- for the rest of the injunctive proceeding. No Notice vs. Short Notice vs. Full Notice complained of, the optimal choice is to seek anon with ample notice to pressing the conduct your client opposes (i.e. they will give you months prior notice of the not going to occur until some time in the future and there is no pressing need to have an injunction in place immediately. Both sides will have time to prepare arguments, conduct cross-examinations on affidavits and prepare for the hearing and the court will have set aside sufficient time for the parties to make full argument. The interlocutory injunction, if granted, will remain in place until trial. Ultimately, this is where the parties will end up but often, this is not how they get there. Rather, litigators are asked or are required circumstances, the amount of notice given McCarthyTétrault - 10 - There are only limited situations which would justify bringing a mojustifiable. For example, in a recent case d asserted that if notice was given, there was a significant risk that the defendant would remove the plane from the circumstances like these, where giving notice will lead to the conduct you are trying to avoid, it may be advisable to bring an injunction There are important considerations to proceeding . Courts are generally very reluctant to grant any injunctive relief without notice to the other party and will entertain injunctions on rare occasions.quire the moving party to give some notice to the other side An injunction is also time limited. Rule 40.02 of the Ontario Rules of Civil Procedure allows the court to award anmandatory order without notice for a period of up to 10 days. There is also a 10-day limit for Federal Court. Therefore, it does not prevent the necessity for a full argument. Perhaps most importantly, proceeding ex parte requires the moving party to make full and obtained on the motion or application.” Therefore, the moving party ha has in its possession relating to the motion, Launch! Research & Development Inc. v. Essex Distributing Co., [1977] O.J. No. 1451 (H.C.J.) Rule 39.06, Rules of Civil Procedure McCarthyTétrault - 11 - good or bad. The court takes this requirement vecourt determines that notice ought to have been given, then you will have unnecessarily argued the case for the Another option for time-sensitive relief is gieeking interim relief pending a full hearing on the merits. The amcircumstances of your case. It should be commensuIn most situations, short-serving the other side will require them to seek an adjournment in order to prepare responding material. Depeusually insufficient time to conduct cross-examinations. Often there is insufficient time for the other side to prepare responding material. The issue for the court will be to determine whether and what terms should be ordered (sometimes referred to as “interim, interim relief”). Favourable adjournment terms can haveinjunction application, for it may cast the status quo. The issue for the court to determine on a request for interim relief is whether the moving party will suffer irreparable harminterim relief is resolved, the exchange further evidence (as necessary or permitted), conduct cross-examinations, e merits of the request for an interlocutory ) 367 (F.C.T.D.), an interim injunction was refused McCarthyTétrault - 12 - partly because Nabisco had waited just over two months after discovering Dole was to launch a product which could be confused with its brand to bring the motion. In that time, Dole had entered into contracts and spent money inMarshalling the evidence is probably the most important interlocutory injunction. Since all the evidence will be likely be paper-based, it is important all the relevant information necessary to satisfy the court that an injunction is warranted. The quality and quantity of evidence will vary depending on the For a prohibitive injunction, the first branch of the test is generally easy to meet. Since the court will only take a cursory look at the meritssteps that need to be proven are addressed although proving them is not necessary. For a mandatory injunction, strong evidence will be necessary. You will need to show the court that success is likely on the merits. You may want to considInvariably, the most important evidence you will require when preparing materials for an interlocutory injunction is the affidavit evidharm. No matter how well you have planned for the injunction and no matter how strong your case on the merits, if you cannot prove that the harm is irreparable, you will not get your remedy. McCarthyTétrault - 13 - ng your evidence on irreparable harm. First, evidence of irreparable harm must be clear and not speculative.harm; any actual customers lost, market loss or other irreparable damages. This is usually done by filing an affidavit of a knowledgeable employee of the moving party. More frequenaffidavits (such as those from forensic accountairreparable harm. As well, the evidence before the court needs to ential for irreparable harm. For example, the Federal Court ruled in a recent case that the evidence tendered, that confusion “may” lead to various scenarios which would cause a loss of customers, was too speculative. The court found that the confusIt is important to ensure your evidence is not just that general harm will occur but goes specifically to the irreparable nature of the harm. You cannot succeed unless you show evidence to the court that damages are not an adequate remedy.One good example of the necessity to make a case for irreparable harm comes from interim injunction against Dole’s launch of a new product called Fruit Bowls. In support, Nabisco filed affidavits of its VP of marketing (who provided evidence both for the company in marketing management, both of who indicated Centre Ice Ltd. v. National Hockey League, (1994), 53 C.P.R. (3d) 34, Kanda Tsushin Kogyo Co. et al v. (1997), 96 O.A.C. 324 (Ont. Div. Ct.) Boston Pizza International Inc. v. Boston Market Corp. (2003) 26 C.P.R. (4) 78 (F.C.T.D.) Canada (A.G.) v. Archibald (1984), 79 C.P.R. (2d) 287 (F.C.A.) McCarthyTétrault - 14 - rm to its reputation, goodwill and trade mark. meet the evidentiary burden. Citing Justice Rothstein in e market place such as these de the Court withrience and a mathematical or statistical analysis of the circumstances demonstrating that the some degree of confidence that the kind of loss being alleged The court went on to say that Nabisco had not laid the foundation for irreparable harm, even was potential for harm to the marketing strategy and market share of Nabisco. Absent some evidence as to to the impact, the court was not Conclusion tool. When exercised are for your motion or application. Unless cedure and evidence, you may be blunting the sharpness of the tool. 3971215