T-2582-93
Ciba-Geigy Ltd. (Plaintiff)
v.
Novopharm Ltd. (Defendant)
T-2583-93
Ciba-Geigy Ltd. (Plaintiff)
v.
Apotex Ltd. (Defendant)
Indexed as: Ciba-Geigy Ltd.v. Novopharm Ltd. (T.D.)
Trial Division, MacKay J."Toronto, September 29; Ottawa, December 19, 1997.
Injunctions — Interlocutory injunctions pursuant to Trade-marks Act, s. 7 prohibiting sale of defendants' products — Incumbent on plaintiff to meet underlying responsibility to pursue matters with due diligence — Injunctions dissolved as inordinate and inexcusable delay in proceeding with actions, plaintiff treating interlocutory injunctions as resolution of disputes.
Trade marks — Practice — Interlocutory injunctions under Act, s. 7 prohibiting sale of defendants' products — Injunctions dissolved where plaintiff failing to meet underlying responsibility to move actions to trial with due diligence.
Three years have elapsed since the plaintiff obtained, quia timet, interlocutory injunctions under paragraph 7(b) of the Trade-marks Act prohibiting the defendants from selling slow-release diclofenac sodium tablets in look-alike appearances similar to the plaintiff's slow-release diclofenac sodium tablets. The Federal Court Judge, Rothstein J., who issued the interlocutory injunctions, did so on the basis that the balance of convenience favoured the plaintiff. He also found that the defendants would suffer irreparable harm if interlocutory injunctions were granted but were later found at trial to be unwarranted. The defendants filed motions seeking dissolution of the interlocutory injunctions on the ground that the plaintiff, having obtained the injunction, failed to take any step to move the action forward to trial, without reasonable explanation, and causing prejudice to them by reason of the delay. The plaintiff argued that the defendants had failed to establish that they had suffered prejudice or further irreparable harm, or that there had been a change of circumstance justifying dissolution of the interlocutory injunctions.
Held, the motions should be allowed.
An interlocutory injunction is an extraordinary and drastic restraint on the liberty of action of the enjoined party, in circumstances where the merits of the other party's complaints have yet to be determined. That infringement on the liberty of action of the enjoined party is only justifiable where it is temporary, and meant merely to maintain the status quo until such time as the judicial process can be completed. The plaintiff has a duty to pursue the action with reasonable dispatch. The plaintiff cannot simply assume that, in the absence of a complaint, the defendant is content to treat the injunction as permanent without any further steps having to be taken and to wait until the defendant finds the situation sufficiently burdensome to prompt him to make an application for variation of its terms. There is an obligation to press on with the action as rapidly as possible so that if the plaintiff should fail to establish liability in the defendant, the disadvantage which the injunction imposes on the defendant will be lessened so far as possible. The plaintiff herein has virtually conceded that it had treated the interlocutory injunctions as the permanent resolution of the disputes.
Where the plaintiff fails to meet its underlying responsibility to pursue the matter in the courts with due diligence, so that the injunction acts as a continuing bar on the defendant's liberty of action, the Court may, on application of the defendant, dissolve the injunction. Furthermore, the irreparable harm to the defendants, found by Rothstein J. when he issued the injunctions herein, continues so long as the defendants' liberty to enter the market continues, without any final determination on the merits of the parties' claims.
The delay herein was inordinate and inexcusable. It caused the injunction to be something other than a "temporary" injunction. The failure of the plaintiff to proceed with due diligence was sufficient to justify dissolution of the injunctions. There was no burden on the defendants to demonstrate more than that failure, and in particular no burden to establish a new, or additional, irreparable harm, other than that found by Rothstein J., arising from exclusion of the defendants from the market before the rights of the parties are determined.
statutes and regulations judicially considered
Federal Court Rules, C.R.C., c. 663, R. 469(5).
Trade-marks Act, R.S.C., 1985, c. T-13, s. 7(b).
cases judicially considered
applied:
Hagwilget Indian Band v. Canada (Minister of Indian Affairs and Northern Development) et al. (1996), 115 F.T.R. 268 (F.C.T.D.); Romano v. Ciraco (1985), 4 C.P.C. (2d) 291 (Ont. S.C.); Cedarville Scrap Iron & Metals (1968) Ltd. v. Deeks (1981), 25 C.P.C. 190 (Ont. S.C.); Allen v. Sir Alfred McAlpine & Sons Ltd., [1968] 2 Q.B. 229 (C.A.); Rae Import Corp. v. Fed. Pac. Lakes Line; Rae Import Corp. v. Fed. Commmerce & Navigation Co. (1984), 46 C.P.C. 30 (F.C.T.D.); Canada v. Ichi Canada Ltd., [1994] 2 C.T.C. 350; (1994), 94 DTC 6608; 82 F.T.R. 304 (F.C.T.D.); Molson Companies Ltd. v. Labatt Brewing Co. (1996), 69 C.P.R. (3d) 138; 118 F.T.R. 254 (F.C.T.D.); Farrar v. McMullen, [1971] 1 O.R. 709 (C.A.); Gouzenko v. Sinnott News Co. Ltd. et al., [1972] 2 O.R. 296 (H.C.); Teal Cedar Products (1977) Ltd. v. Canada, [1989] 2 F.C. 158; (1988), 18 C.E.R. 214; 92 N.R. 308; 2 T.C.T. 4158 (C.A.); American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.); ETI Explosives Technologies International (Canada) Ltd. v. East Coast Explosives Ltd. et al. (1994), 135 N.S.R. (2d) 142; 57 C.P.R. (3d) 525 (S.C.); Investors Group Financial Services Inc. v. Smith, [1994] N.S.J. No. 466 (S.C.) (QL); Wabasso Cotton Co. Ltd. v. Syndicat des Ouvriers, [1953] 2 S.C.R. 469; [1954] 2 D.L.R. 193; Bourganis v. Glarentzos et al. (1978), 19 O.R. (2d) 327; 85 D.L.R. (3d) 446 (H.C.); International Forest Products Ltd. v. Pascal (1994), 96 B.C.L.R. (2d) 335 (S.C.); D'Amore v. Russ, [1991] O.J. No. 749 (Gen. Div.) (QL); Newsgroup Newspapers Limited v. The Mirror Group Newspaper (1986) Limited, [1991] F.S.R. 487 (Ch. D.); Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc., [1988] 1 W.L.R. 1337 (C.A.); Operation Dismantle Inc. et al. v. The Queen et al., [1985] 1 S.C.R. 441; (1985), 18 D.L.R. (4th) 481; 12 Admin. L.R. 16; 13 C.R.R. 287; 59 N.R. 1; 826129 Ontario Inc. v. Sony Kabushiki Kaisha (1995), 65 C.P.R. (3d) 171; 105 F.T.R. 99 (F.C.T.D.).
distinguished:
White Consolidated Industries, Inc. v. Beam of Canada Inc. (1990), 32 C.P.R. (3d) 196 (F.C.T.D.); Cdn. Tire Corp. v. Pit Row Services Ltd. (No. 2) (1987), 15 C.I.P.R. 279; 19 C.P.R. (3d) 230; 13 F.T.R. 145 (F.C.T.D.); Allergan Pharmaceuticals Inc. et al. v. Bausch & Lomb Inc. et al. (1986), 10 C.P.R. (3d) 427 (F.C.T.D.).
considered:
NWL Ltd v Woods, [1979] 3 All ER 614 (H.L.).
MOTIONS for orders dissolving interlocutory injunctions ((1994), 56 C.P.R. (3d) 289; 83 F.T.R. 161 (F.C.T.D.); and (1994), 56 C.P.R. (3d) 344; 83 F.T.R. 233 (F.C.T.D.)). Motions granted.
counsel:
Mark K. Evans and J. Sheldon Hamilton for plaintiff.
Keri A. F. Johnston for defendant Novopharm Ltd.
H. B. Radomski for defendant Apotex Inc.
solicitors:
Smart & Biggar, Toronto, for plaintiff.
Malcolm Johnston & Assoc., Toronto, for defendant Novopharm Ltd.
Goodman Phillips & Vineberg, Toronto, for defendant Apotex Inc.
The following are the reasons for orders rendered in English by
MacKay J.: These reasons concern similar motions, heard at the same time, brought by the defendants in two actions, Apotex Ltd. and Novopharm Ltd., for orders dissolving interlocutory injunctions issued against them by decision of my colleague, Mr. Justice Rothstein, on July 21, 1994 (reported at (1994), 56 C.P.R. (3d) 289). The issues raised by these motions are rather unusual and I begin with a brief overview of the background to the actions.
Background
On November 3, 1993, Ciba-Geigy commenced an action, T-2583-93, seeking, inter alia, interim, interlocutory and permanent injunctive relief restraining Apotex from selling slow-release diclofenac sodium tablets (Apotex' product) having an appearance similar to the tablet formulations of slow release diclofenac sodium sold by Ciba-Geigy (Ciba-Geigy's product). The latter product has been sold under the trade-name Voltaren SR in 100 mg and 75 mg strengths since 1985 and 1989 respectively. The statement of claim alleges that the Ciba-Geigy product's appearances have become well known by health care professionals and members of the public as being distinctive. The sale, then proposed, of Apotex' product, it was alleged, with similar or "look-alike" appearance, is likely to cause confusion among these parties as to the source of the products. If not prohibited, it was alleged the defendants would be passing off, in breach of paragraph 7(b ) of the Trade-marks Act, R.S.C., 1985, c. T-13, as amended. A virtually identical statement of claim making similar allegations against Novopharm and its then planned slow-release diclofenac sodium tablets (Novopharm's product) was filed that same day, November 3, 1993, in action T-2582-93.
Within days, Ciba-Geigy also brought separate motions seeking, quia timet, interim and interlocutory injunctions restraining sales of the defendants' products in look-alike appearances similar to the plaintiff's product. The application in relation to Apotex was adjourned on consent to January 1994. By order dated November 30, 1993, Ciba-Geigy obtained an interim injunction, issued by Gibson J., prohibiting the sale of Novopharm's product pending a hearing on the application for interlocutory relief. Subsequently, Ciba-Geigy brought a motion seeking, quia timet, an interlocutory injunction restraining sales of Novopharm's product in an appearance similar to the Ciba-Geigy product.
The motions for interlocutory injunctions were heard together by Rothstein J., commencing on January 26, 1994 and continuing from time to time until June 8, 1994. Reasons were issued on July 21, 1994 and orders followed on August 5, 1994, granting interlocutory injunctions prohibiting the sale of the defendants' 100 mg products, the only tablet strength for which evidence of imminent production was adduced. On September 2, 1994 [(1994), 56 C.P.R. (3d) 344 (F.C.T.D.)], Mr. Justice Rothstein released orders modifying his orders of August 5 slightly, and refusing the plaintiff's request for reconsideration to extend the injunctions to the defendants' 75 mg products, still then proposed for production in the future, at a time unspecified.
In extensive reasons of July 21, 1994, Rothstein J. found there was a serious issue raised by the evidence adduced, that is whether the appearance of the plaintiff's tablets distinguished them as goods coming from one source, Ciba-Geigy, so that protection under the Trade-marks Act was warranted. Further, he held that the plaintiff would suffer loss of goodwill manifested in a loss of market share from marketing of look-alike tablets by the defendants and damages would not be an adequate remedy, so that the plaintiff would suffer irreparable harm if an injunction were not granted but the plaintiff's claim to relief should be upheld at trial. At the same time, he found that the defendants would suffer irreparable harm if an interlocutory injunction were granted but it was found later at trial to be unwarranted. Finally, he found that the balance of convenience favoured the granting of injunctions to the plaintiff, and on this basis the interlocutory injunctions were granted.
Both defendants filed appeals in relation to the injunction granted by Rothstein J. against each of them and against the orders he issued to implement his findings. In each case, appeals relating to the initial determination, by reasons of July 21, 1994, were dismissed by the Court of Appeal for want of prosecution. At the time the applications here under consideration were considered, each of the defendants still had an appeal outstanding, and the plaintiff had a cross-appeal in regard to Apotex' appeal, but on none of these had the parties apparently taken any step to pursue the matters under appeal.
On May 27, 1997, in the case of Apotex, and May 28, 1997, in the case of Novopharm, almost three years after Mr. Justice Rothstein's orders granting interlocutory relief, the defendants each filed a notice of motion seeking dissolution of the injunctions. It is these motions that came before the Court on September 29, 1997 and are dealt with in these reasons.
In written submissions and in oral argument before me, counsel for Apotex urged that since July 1994, Ciba-Geigy has enjoyed its equitable remedy without taking a single step to pursue its action. It has provided no acceptable explanation for its delay. It has not even taken a step to expedite its action in either case in the four months which elapsed between the filing of the defendants' notices of motion and this hearing at the end of September. No affidavit of documents has been served by the plaintiff and no discovery has been sought. During this interval, Ciba-Geigy has enjoyed a prolonged period of time to establish an association in the mind of the public between the appearance of its product and Ciba-Geigy as the source of this product. When the trial occurs, Apotex urges it will be required to defend the action on the basis that patients do not make this association, based on the memories of witnesses about their association with the product prior to 1994. It is said Apotex is at great disadvantage, and indeed it will be more and more prejudiced as the period of application of the injunction carries on.
Novopharm makes similar submissions. It argues that the plaintiff, whose position has been protected by an interlocutory injunction, is obliged to proceed with its action with due diligence, so as to limit as far as possible the period of prohibited access by the defendants to the market before the merits of the plaintiff's claim are decided. Ciba-Geigy, it is urged, has not shown the requisite diligence. Specifically, as of the time of filing of Novopharm's memorandum of fact and argument in July 1997, 42 months had passed since the statements of claim were filed, 36 months or longer had passed since the statements of defence were filed by the defendants and 34 months had passed since Rothstein J.'s reasons and final order. Novopharm submits that it is prejudiced by this delay because of the difficulty the defendant will have in establishing by evidence of patients and others, its position as of 1993.
In response to both defendants, Ciba-Geigy argues the Court should decline to dissolve the injunctions because the defendants have failed to provide clear and non-speculative evidence that they have suffered prejudice or further irreparable harm arising out of any delay in proceeding to trial. Moreover, the defendants have not provided evidence that they have an interest in this matter proceeding to trial. Nothing has changed since the judgment of Rothstein J. to show that Ciba-Geigy would now not suffer irreparable harm if the injunctions were dissolved. It is urged that dissolution of the injunctions would disturb the status quo and would allow the defendants to launch new look-alike products prior to trial that could bias patient testimony at trial. Finally, it is submitted the rights of the parties can be dealt with by a remedy other than dissolution, such as ordering an expedited trial. In light of their own behaviour in not seeking a speedy trial, the defendants should now be estopped from seeking dissolution. In particular, Novopharm and Apotex have not taken any steps "to pursue defence of this litigation", such as serving an affidavit of documents, nor have their counsel "inquired about the status of this litigation or expressed any concern relating thereto." In written submissions, the plaintiff submits that "Throughout this proceeding, all parties have proceeded as if the injunction had finally disposed of the issue between the parties." While it was not urged in the proceedings before me, the fact that both defendants have subsequently entered the market with slow release diclofenac sodium tablets, different in appearance from those originally planned which were enjoined by the interlocutory injunctions, may have contributed to the plaintiff's sense that the injunctions had finally disposed of these matter.
Issues
The parties perceive the issues somewhat differently. For Novopharm the issues are said to be two:
1. whether the plaintiff, having obtained the extraordinary remedy of an interlocutory injunction, had a duty to proceed with reasonable despatch to bring the action to trial, and,
2. whether the Court should dissolve the interlocutory injunction when the plaintiff, having obtained the injunction, failed to take any step to move the action forward to trial, without reasonable explanation, and causing prejudice to the defendant by reason of the delay.
The issues, so stated, are reflected in the arguments on behalf of Apotex. For the plaintiff, the issue is said to be whether there has been a change of circumstances that justifies dissolution of the interlocutory injunction granted by Rothstein J.
Analysis
Subsection 469(5) of the Federal Court Rules, C.R.C., c. 663, as amended, clearly indicates that "Every interlocutory or interim injunction is, whether or not it contains such an express term, subject to rescission, suspension or amendment by order of the Court (which may, in case of urgency, be made ex parte ) at any time after the order granting the injunction was made."
The plaintiff urges that a court should not, except in extraordinary circumstances, entertain an application to dissolve an injunction order. They cite as authority for this proposition my colleague Mr. Justice Teitelbaum's decision in White Consolidated Industries, Inc. v. Beam of Canada Inc.,1 where his Lordship wrote:
An application to reopen or reconsider an application for interlocutory injunctive relief, that is, to vary the terms of an order issued, is an extraordinary application and will be refused unless the applicant can show that since the order was issued, the facts are significantly different.
Associate Chief Justice Jerome came to a similar conclusion in Cdn. Tire Corp. v. Pit Row Services Ltd. (No. 2)2 where he wrote:
The relief sought is in essence to have me reopen or reconsider the plaintiff's application for interlocutory injunctive relief [18 C.P.R. (3d) 97]. It is obvious, of course, that that is the most extraordinary kind of disposition of any kind of matter adjudicated upon by the Court. It, of course, requires material in support which would have to be also of an extraordinary nature. It is quite likely that such an application might succeed in the face of factual evidence that indicates that the factual basis for the original disposition was substantially incorrect, not simply a matter of shade of meaning or degree. It would have to be substantially different. The true facts would have to be shown to be so substantially different from the facts upon which the original disposition was made that it would be, in my opinion, extraordinary.
As is clear from these passages, at issue in both cases was a request to reconsider and vary an injunctive order earlier issued. However, in White Consolidated and Cdn. Tire, as in Allergan Pharmaceuticals Inc. et al. v. Bausch & Lomb Inc. et al.,3 another decision relied upon by the plaintiff in the cases at bar, the request for reconsideration, a request the Court has power to grant under subsection 469(5) of the Rules, came on before the judge who had granted the order some weeks or few months earlier. In the cases at bar, the requests for dissolution of the interlocutory injunctions are filed almost three years after the orders were issued, indeed, more than three years had elapsed when the motion was heard, in circumstances that it is said clearly show that no action has been taken by the plaintiff, after the injunctions were granted, to bring the matter to trial. This extended delay distinguishes the cases at bar from those dealing with requests to vary or reconsider interlocutory orders, where the requests were made soon after the issuance of those orders, arguably on the basis of new evidence.
In the cases at bar, the plaintiff urges that the defendants themselves bear part of the blame for the lengthy delay for they have not sought to expedite matters, either to bring on the trials, or to advance their appeals of the orders of Rothstein J. It is my view, however, that the plaintiff, not the defendants, bears the burden to pursue the actions. This point was made by Prothonotary Hargrave in the recent case of Hagwilget Indian Band v. Canada (Minister of Indian Affairs and Northern Development) et al.,4 in dealing with a motion for dismissal for want of prosecution:
. . . in any litigation a plaintiff has duties and a defendant has rights. A duty on the part of a plaintiff is to move the action forward at a proper pace; a defendant has a right to expect a trial of an action without undue delay, so that the defendant may not be prejudiced by being unable to put forward its best case and then, win or lose, certainty and an opportunity to get on with business within a reasonable time.
In Rae Import Corp. v. Fed. Pac. Lakes Line; Rae Import Corp. v. Feb. Commerce & Navigation Co.,5 another case concerning a motion for dismissal for want of prosecution, Jerome A.C.J. noted that where both parties are responsible for, or acquiesce in the delay, "it seems far more appropriate to compensate by way of costs, and where possible to expedite the trial, than to risk final determination of issues because of procedural developments for which the parties may not be directly responsible."
Yet, even a motion for dismissal for want of prosecution may not be rejected simply because of a defendant's lack of action. In Farrar v. McMullen,6 the Ontario Court of Appeal commented that the defendant need not attempt to spur the plaintiff on in all instances, or lose the right to apply successfully for a dismissal for want of prosecution.
At any rate, it is my view that the Court should not draw too close an analogy between the considerations of delay relevant in the context of an application for dismissal for want of prosecution and those relevant in an application for the dissolution of an interlocutory injunction. An interlocutory injunction is an extraordinary and drastic restraint on the liberty of action of the enjoined party, in circumstances where the merits of the other party's complaints have yet to be determined.7 That infringement on the liberty of action of the enjoined party is only justifiable where it is temporary, and meant merely to maintain the status quo until such time as the judicial process can be completed, a point made by a majority of the Supreme Court of Canada in Wabasso Cotton Co. Ltd. v. Syndicat des Ouvriers.8 In that case, Kellock J., dissenting in the result, wrote:
The interlocutory injunction is a temporary conservatory measure designed to protect the alleged right until such time, normally after a trial, when its existence or non-existence can be finally investigated . . . .
. . . no interlocutory judgment becomes final in the sense of being the last judgment contemplated by a proceeding merely because a plaintiff does not elect to pursue the normal course of the litigation beyond that stage.
Fauteux J., with whom Taschereau J. concurred, made similar observations, noting that an interlocutory injunction aims to maintain the status quo during the proceeding and is to be distinguished from those remedies obtained only by success in the action. An interlocutory judgment is, without a doubt, provisional.
As injunctions, unlike the filing of pleadings, constrain behaviour, the unlawfulness of which remains to be determined, and because an underlying assumption of an interlocutory injunction is that it is to persist only through the period during which the parties are pursuing the merits of their arguments in the courts, delays resulting in the undue prolongation of interlocutory relief are a more serious concern than is tardiness in the context of a motion for dismissal for want of prosecution. It is my view that, in such a context, the responsibility of the plaintiff to pursue the action with reasonable dispatch is to be closely observed.
The consequence for the plaintiff failing to meet this duty was described by the Ontario High Court in Bourganis v. Glarentzos et al.,9 a case in which the Court was asked to dissolve an interlocutory injunction granted a year earlier. Southey J. held:
A plaintiff who obtains an interlocutory injunction is under a duty to proceed with reasonable dispatch to bring his action to trial. If he fails to do so, the injunction will be dissolved: see Attorney-General v. McLaughlin (1849), 1 Gr. 34 at p. 48; Snell's Principles of Equity, 27th ed. (1973), p. 36; O'Callaghan v. Barnad, [1875] W.N. 37. In this case the plaintiff has shown a complete disregard for that duty. It would appear from his conduct that, having obtained his interlocutory injunction, he is prepared to defer for as long as possible any adjudication of the issues at trial. This attitude will not be countenanced by the Courts and an order will go dissolving the interlocutory injunction forthwith.
On the facts, the defendant's motion was allowed some 15 months after the interlocutory injunction was granted, and under circumstances where the plaintiff had taken no steps whatsoever to bring the action to trial and had gone so far as to decline to co-operate with counsel for the defendants in the latter's efforts to advance proceedings in the matter.
This decision was cited with approval by the British Columbia Supreme Court in International Forest Products Ltd. v. Pascal.10 In that case, an injunction was granted in 1991 restraining interference with plaintiff's logging road construction. On the facts, virtually no steps had been taken in the action, apart from contempt proceedings, from the date of the injunction until a motion to dissolve the injunction was brought before Esson C.J.S.C. in late 1994. While His Lordship declined to dissolve the injunction forthwith, because the plaintiff could not be said to have failed in its duty to pursue the action to the same extent as had the plaintiff in Bourganis, the Court held that the injunction order should not be permitted to remain in place indefinitely and ordered that it be dissolved some three months after the decision.
Bourganis was also referred to by Mr. Justice Granger of the Ontario Court of Justice (General Division) in D'Amore v. Russ.11 At issue in that case was whether an interlocutory injunction against the defendants in a contractual dispute should be dissolved in light of the plaintiffs failure to proceed to trial with dispatch. As the source of the delay was unclear and the defendants had not shown that they had suffered any economic loss as a result of the interlocutory injunction and delay, Mr. Justice Granger declined to dissolve the injunction but issued orders designed to ensure that the matter was completed in a timely manner. He also ruled that if the plaintiff did not comply with any of the orders, the defendants would be at liberty to re-apply to the Court to have the interlocutory injunction dissolved.
I find persuasive the reasoning in Newsgroup Newspapers Limited v. The Mirror Group Newspapers (1986) Limited,12 a decision of the English High Court, Chancery Division. In that case, the plaintiff was granted an injunction precluding the publication by the defendant of an advertisement allegedly infringing the plaintiff's trade-mark. Having obtained the injunction, the plaintiff did nothing further for two years, then it was stirred to protest an alleged breach of the injunction and to threaten an action for contempt of court. In response to that threat the defendant moved to dissolve the interlocutory injunction. Characterizing the delay in proceeding with the action as inordinate and inexcusable, Hoffmann J. wrote:
In my judgment it is incumbent upon a plaintiff whose position has been protected in that way by an interlocutory injunction to proceed with the action with due diligence so as to limit as far as possible the period during which the defendant's liberty is restricted without there having been any determination of the merits . . . .
. . .
A plaintiff who has obtained an interlocutory injunction is not in my view entitled simply to rest upon that injunction, to assume . . . that in the absence of a complaint the defendant is content to treat the injunction as permanent without any further steps having to be taken and to wait until the defendant finds the situation sufficiently burdensome to prompt him to make an application for variation of its terms.
. . .
Nor do I think it is necessarily incumbent upon a defendant in a case like this to show that, for example, the circulation of his newspaper has been hampered by his being unable to place advertisements which are restricted by the terms of the order. It is in my view sufficient that the order has constituted a long-standing restriction on the defendants' freedom to use the forms of advertisement which they wish. These litigants are parties between whom quarter is neither given not sought and in my view there would be no injustice in depriving the plaintiffs of the interlocutory protection which was intended to preserve their position until trial but which they have been content to treat as if it already represented a final victory.
Newsgroup applied the principles developed by the English Court of Appeal in Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc.13 There, the enjoined party applied to the Court to have a Mareva injunction discharged, some two years after the injunction was granted. The Court held that the injunction should be discharged, in part because the party benefiting from the injunction had gone two years without having set the action down for trial. Glidewell L.J. wrote in that case that the party enjoying such relief was "in my view under an obligation to press on with his action as rapidly as he can so that if he should fail to establish liability in the defendant the disadvantage which the injunction imposes upon the defendant will be lessened so far as possible." In Dillon L.J.'s view, "where a party has obtained a Mareva injunction, that party is bound to get on with the trial of the action"not to rest content with the injunction. The injunction is merely ancillary to the trial of the action to hold the position until the action comes on for trial."
In my view, similar considerations are at play in the cases at bar because of the quia timet nature of the injunctions at issue. Discussing considerations in the issuance of declaratory relief, Dickson C.J., writing for the majority of the Supreme Court in Operation Dismantle Inc. et al. v. The Queen et al.,14 discussed this sort of injunction as follows [at pages 457-458]:
A similar concern with the problems inherent in basing relief on the prediction of future events is found in the principles relating to injunctive relief. Professor Sharpe, Injunctions and Specific Performance (1983), clearly articulates the difficulties in issuing an injunction where the alleged harm is prospective at pp. 30-31:
All injunctions are future looking in the sense that they are intended to prevent or avoid harm rather than compensate for an injury already suffered . . . .
Where the harm to the plaintiff has yet to occur the problems of prediction are encountered. Here, the plaintiff sues quia timet"because he fears"and the judgment as to the propriety of injunctive relief must be made without the advantage of actual evidence as to the nature of harm inflicted on the plaintiff. The court is asked to predict that harm will occur in the future and that the harm is of a type that ought to be prevented by injunction.
In other words, in quia timet proceedings in cases like those at bar there can be no evidence of actual harm because the defendants are not yet in the market place.15 In his decision granting interlocutory injunctions in these cases, Rothstein J. wrote [at pages 325-326]:
It will be remembered that these applications are brought quia timet. There is no actual evidence of harm because the defendants are not yet in the market-place. The evidence relating to loss resulting in irreparable harm must, of necessity, be inferred.
Where there is evidence supporting such an inference, that is, of irreparable harm, an injunction quia timet may issue; however, because that inference is necessarily based on reasonable expectations, not on evidence of any actual harm, in my view, the onus on the plaintiff to proceed with dispatch is even greater than under many other circumstances, and undue delays must be scrutinized by the court with great vigour. Here the defendants were enjoined by interlocutory order from entering the marketplace in the manner they had planned, a course of action they were at liberty to undertake were it not for the injunction granted before final determination of the plaintiff's claims against them.
In sum, based on these authorities, it is my view that where a temporary, discretionary remedy, an interlocutory injunction, is granted to a plaintiff, one that infringes the liberty of action of a defendant on the basis of some future, inferred harm, it is with the implied understanding that the plaintiff's complaint will be pursued, and will be evaluated on its merits by the court, with reasonable dispatch. Where the plaintiff fails to meet its underlying responsibility to pursue the matter in the courts with due diligence, so that the injunction acts as a continuing bar on the defendant's liberty of action, the Court may on application of the defendants dissolve the injunction.
The plaintiff urges that there is no cogent evidence that the defendants will suffer any harm or prejudice as a result of the passage of time. As a result, the defendants have failed to demonstrate irreparable harm arising from continuation of the injunction that would justify dissolution. With respect, as noted above, the circumstances of this case are very different from those where the Court is asked to reconsider an interlocutory injunction soon after its issuance. Moreover, as earlier noted, Rothstein J. found the defendants would suffer irreparable harm if the injunction were issued; that harm, then found, continues so long as the defendants' liberty to enter the market continues, without any final determination on the merits of the parties' claims.
In the cases at bar, it is my view that the delay is inordinate and inexcusable. It causes the injunction to be something other than a "temporary" injunction. As the plaintiff itself acknowledges, the plaintiff has done nothing to pursue these actions. Its explanation is in essence, that the defendants have done nothing to advance the action. I note again that is the plaintiff's responsibility. It appeared to the plaintiff that all parties were treating the interlocutory injunction as having finally determined the matter. If that perception had been enunciated at the hearing before Rothstein J., his reasons might have dealt more seriously with that possibility, which was not seriously argued by the parties. At the very least, in light of the Woods exception,16 where it is perceived an interlocutory injunction would effectively determine finally the interests of the parties, it would not be granted without extensive review of the merits of the cases.
In my view the plaintiff has not met its responsibility to proceed with due diligence. That failure in the circumstances of these cases is sufficient, in my opinion, to justify dissolution of the injunctions. There is no burden on the defendants to demonstrate more than that failure, and in particular no burden to establish a new, or additional, irreparable harm, other than that found by Rothstein J. arising from exclusion of the defendants from the market before the rights of the parties are determined.
In these cases, the defendants have done nothing to end the plaintiff's delay until now, yet they cannot be said to have been obstructionist or uncooperative, and they cannot be viewed as causing the delay. For the reasons outlined above, where the court has imposed a constraint on the freedom of action of the defendants, implicitly on the basis that the plaintiff will proceed with its actions with due diligence, and the plaintiff does not do so, failure of the defendants to take any steps in there actions does not bar them from seeking to regain their liberty of action by a motion to dissolve the interlocutory injunctions.
Conclusion
The plaintiff has taken no steps to proceed with the actions in these Court files for more than three years. It has taken no step in the four months following filing of the motions by Apotex and Novopharm to dissolve the injunction. The plaintiff virtually concedes it has treated the interlocutory injunctions as the permanent resolution of the disputes. In my opinion, the plaintiff had the responsibility, particularly where the injunction was granted on a quia timet basis, to pursue the matter with due diligence and dispatch.
The lengthy and inordinate delay, in these cases, constitutes an extraordinary circumstance that warrants the intervention of this Court. For these reasons, the motion brought by Apotex in T-2583-93 and the motion brought by Novopharm in T-2582-93 are both allowed and orders issue in each file dissolving the interlocutory injunctions ordered by Rothstein J. on July 24, 1994, as subsequently implemented by his orders.
Both defendants seek costs of the motion, and in the case of Novopharm, by written submission, those costs are requested on a solicitor and client basis. Costs were not addressed in any significant way when these applications were heard. There is no basis for an award of costs on a solicitor and client basis. Yet, in view of the success in these applications, in my view, the defendants are entitled to costs on the usual party and party basis, and the orders now issued so provide.
A copy of these reasons shall be filed on each of Court files T-2582-93 and T-2583-93 and a separate order is issued for each file.
1 (1990), 32 C.P.R. (3d) 196 (F.C.T.D.), at p. 199.
2 (1987), 15 C.I.P.R. 279 (F.C.T.D.), at p. 280.
3 (1986), 10 C.P.R. (3d) 427 (F.C.T.D.).
4 (1996) 115 F.T.R. 268 (F.C.T.D.), at p. 274. Other cases that have commented on the duty of the plaintiff to proceed to trial with reasonable dispatch in other contexts include: Romano v. Ciraco (1985), 4 C.P.C. (2d) 291 (Ont. S.C.) (in context of certificate of pending litigation); Cedarville Scrap Iron & Metals (1968) Ltd. v. Deeks (1981), 25 C.P.C. 190 (Ont. S.C.) (in context of caution regarding pending litigation); Allen v. Sir Alfred McAlpine & Sons Ltd., [1968] 2 Q.B. 229 (C.A.).
5 (1984), 46 C.P.C. 30 (F.C.T.D.) at pp. 31-32. See also Canada v. Ichi Canada Ltd., [1994] 2 C.T.C. 350 (F.C.T.D.); Molson Companies Ltd. v. Labatt Brewing Co. (1996), 69 C.P.R. (3d) 138 (F.C.T.D.).
6 [1971] 1 O.R. 709 (C.A.). See also Gouzenko v. Sinnott News Co. Ltd. et al., [1972] 2 O.R. 296 (H.C.).
7 See American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.), at p. 405 ("The grant of an interlocutory injunction is a remedy that is both temporary and discretionary."), cited with approval in many cases, including Teal Cedar Products (1977) Ltd. v. Canada , [1989] 2 F.C. 158 (C.A.), at p. 168; ETI Explosives Technologies International (Canada) Ltd. v. East Coast Explosives Ltd. et al. (1994), 135 N.S.R. (2d) 142 (S.C.), at p. 148 (Injunctions are "an extraordinary remedy reserved to those cases where there is clear evidence of circumstances requiring its imposition. To permit the application is to impose a harsh remedy at an interlocutory stage, well before there has been a full determination of the rights and obligations of the parties."); Investors Group Financial Services Inc. v. Smith , [1994] N.S.J. No. 466 (S.C.) (QL), at para 15 ("An interlocutory injunction is an extraordinary remedy which limits parties' rights without the benefit of a trial on the merits. Because of the lack of a trial there is an increased chance of court error").
8 [1953] 2 S.C.R. 469, at pp. 494-495.
9 (1978), 19 O.R. (2d) 327 (H.C.), at p. 329.
10 (1994), 96 B.C.L.R. (2d) 335 (S.C.).
11 [1991] O.J. No. 749 (Gen. Div.) (QL).
12 [1991] F.S.R. 487 (Ch. D.), at pp. 489-491.
13 [1988] 1 W.L.R. 1337 (C.A.), at pp. 1347, 1349-1350.
14 [1985] 1 S.C.R. 441.
15 826129 Ontario Inc. v. Sony Kabushiki Kaisha (1995), 65 C.P.R. (3d) 171 (F.C.T.D.).
16 NWL Ltd v Woods, [1979] 3 All ER 614 (H.L.).