a serious issue to be tried with respect to the
enforceability and effectiveness of the negative covenants in the shareholders agreement. Furthermore, it was likely S owed
plaintiff a common law as well as a contractual duty. However, there was no need for
injunctive relief. Although plaintiff claimed it
was at risk of sustaining damages, including
loss of customers, loss of revenue, and disclosure of confidential information, there was
no evidence those concerns were based on
actual events. If plaintiff was sustaining damage, it appeared to be barely consequential.
Furthermore, if damages were being sustained, they were ascertainable and measurable. The balance of convenience did not
favour plaintiff. Refusing to grant an injunction would have no significant effect on
plaintiff’s business or well-being.
Consumer Impact Marketing Ltd. v.
Shafie, [2010] O.J. No. 2424, Ont.
S.C.J., Grace J., June 7/10. Digest No.
3011-013 (Approx. 12 pp.)
of 2002, appellant, the United States government, brought proceedings in Illinois
and Ontario to prevent respondents from
continuing to operate. In October 2002, a
U.S. District Court judge granted an ex
parte temporary restraining order with
asset freeze. Within days, the Ontario court
issued a Mareva injunction and an Anton
Piller order against respondents. Those
orders were eventually set aside on the
grounds that they had been wrongfully
obtained. Appellant brought a $30,000,000
action in Ontario on behalf of consumers
allegedly harmed by respondents. It also
brought proceedings against them in Illinois, and obtained a permanent injunction
and a $19,000,000 judgment. In 2005
appellant amended its Ontario claim and
added a claim to enforce the Illinois judgment in Ontario. At the hearing of those
motions, the motion judge ordered an
immediate damages inquiry and immediate payment of any damages awarded. The
motion judge dismissed appellant’s motion
for partial summary judgment to effectively
enforce the Illinois judgment on the basis
that there was a genuine issue as to whether
respondents were denied a meaningful
opportunity to be heard in the context of
the U.S. proceedings.
HELD: Appeal allowed in part. The
court ordered that the $19,000,000 U.S.
court order be enforced in Ontario. The
order was stayed pending the conclusion of
the damages inquiry. Respondents had a
full, fair and meaningful opportunity to
defend the U.S. proceedings. There was
nothing to suggest any unfairness to
respondents in the U.S. summary judgment
proceeding and it was not an abuse of pro-
cess. However, the order with respect to the
damages inquiry was upheld. After wrongly
obtaining the ex parte orders, appellant
now sought to avoid an inquiry into dam-
ages on the basis that the undertakings
were worthless from the outset since there
could have been no damages flowing from
the termination of an illegal operation. To
give effect to such an argument under the
circumstances would have undermined the
serious nature of a damages undertaking.
Accordingly, an assessment of damages was
required to determine what, if any, com-
pensable damages had been sustained as a
result of the wrongfully obtained orders.
INTERNATIONAL LAW
INSURANCE (ALL RISK)
UNDERTAKING IN DAMAGES –
Appellate court found that a foreign
order should be enforced in Ontario but
not until after a hearing on an inquiry
into damages caused by wrongfully
obtained injunctions.
Appeal from the dismissal of appellant’s
motion for partial summary judgment and
an order granted to respondents for a damages inquiry. Respondents operated cross-border telemarketing businesses which
sold Canadian and foreign lottery tickets to
consumers in the United States. In the fall
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SOVEREIGN IMMUNITY – Claims
against two defendants did not fall under
the purview of the State Immunity Act.
Motion by defendants G Inc. and RP for
an order staying or dismissing the action
against them. Plaintiff B Ltd. marketed
products including raw cane sugar from
Mauritius which it sold under the trade-mark “Demerara Gold” and a brown sugar
product described as “Guyanese Pride”.
Both had a map of Guyana on their label.
Neither product contained Guyanese Demerara sugar. Guyana was a small sovereign
state. G Inc. was wholly owned by the government of Guyana and was the largest
employer in Guyana. RP was the minister
of agriculture of Guyana. B Ltd. sued
defendants, claiming that they had made
false statements concerning B Ltd.’s business and products and had disparaged their
Canadian and United States trademark
“Demerara Gold”. G Inc. asked that the
action be dismissed against them, primarily
on the basis of the State Immunity Act.
HELD: Motion dismissed. It was not
disputed that RP fell within the definition of
“foreign state” and was entitled to protection under the Act where applicable. The
onus was on defendants to bring themselves
within the protection of the Act. Section 5 of
the Act recognized that state activity could
fall within a spectrum that must be cloaked
with immunity so that the state was not fettered in carrying out its sovereign responsibilities. It also recognized that there was a
range of activity on the spectrum that could
be regarded as commercial and which did
not involve sovereign acts. These proceedings related to public statements which
were directly related to the commercial
activity carried on by G Inc., and had to do
with the protection of G Inc.’s brand. The
statements in issue were not statements of
policy or information but were basically
advertisements for G Inc.’s products. To permit a lawsuit by B Ltd. in relation to such
activity was neither an affront to the dignity
of the Guyanese state nor an interference
with its sovereign functions. There was evidence that G Inc. was a direct participant in
the activities in question, by funding the
newspaper advertisements and by preparing a briefing note for RP.
Bedessee Imports Ltd. v. Guyana
Sugar Corp., Inc., [2010] O.J. No. 2414,
Ont. S.C.J., Strathy J., June 10/10. Digest
No. 3011-016 (Approx. 14 pp.)
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EXCLUSIONS – Trial judge erred in
finding that an exclusion clause in an
insurance policy did not apply to mould
found in an apartment complex.
Appeal from an order finding appellant
insurer liable to respondents under the
terms of a broad-form, all-risk policy of
insurance, to cover the costs of mould
remediation and prevention to an apartment complex. The policy was issued in
1993. In 2002, respondent M Ltd. filed two
proofs of loss relating to damage caused by
toxigenic and other mould in the complex.
Appellant argued that the growth of the
mould was inevitable due to the condominium’s defective design and construction,
which led to high humidity and moisture
levels. The exclusion clause in the policy
provided that damage caused directly or
indirectly by water was not covered. The
trial judge determined that the evidence
established that there was seepage of water
through doors or windows, that there was
the entrance of rain, snow or sleet through
doors or windows, and that there was dampness of atmosphere in the complex, all of
which contributed to excess humidity and
moisture within the units of the complex.
He also determined that moisture was an
essential ingredient for the development of
mould. However, because the evidence
established that mould would not inevitably
result from moisture or humidity problems,
the judge was unable to conclude that the
excessive moisture was a direct or indirect
cause triggering the appearance of the
mould. He further found that the growth of
mould, toxigenic or otherwise, was a fortuitous event and was therefore a risk covered
by the policy. He awarded M Ltd. $476,117.
HELD: Appeal allowed. The judgment
was set aside and the action was dismissed.
In interpreting the exclusion clauses in a
way that damage had to be inevitably
caused by the seepage, rain or humidity, the
trial judge erred by applying the wrong test.
As long as the evidence indicated that
mould was a direct or consequential result
of the seepage, rain and humidity, the
exclusion clause applied. Even if the mould
was the result of concurrent causes, the use
of the phrase “directly or indirectly caused”
in the exclusion clause allowed the exclusion clause to apply.
Minox Equities Ltd v. Sovereign Gen-
eral Insurance Co., [2010] M.J. No. 201,
Man. C. A., per Monnin J. A. (Scott C.J.M.
and Steel J.A. concurring), June 16/10.
Digest No. 3011-015 (Approx. 10 pp.)
FORECLOSURE – Respondent bank
was entitled to an order for foreclosure
against property pledged as collateral
security to a personal guarantee.
Appeal from an order that respondent
bank was not barred, by virtue of the doctrine of res judicata, from seeking an order
for foreclosure. Appellant gave the bank
two personal guarantees, the first secured
by a collateral mortgage on his property
and the second unsecured. The bank
obtained judgment pursuant to the second
guarantee for the total amount of the
indebtedness. It then successfully applied
for an order for foreclosure on the collateral
mortgage which secured the first guarantee. Appellants argued the motion judge
erred in holding that the bank was entitled
to an order for foreclosure against property
pledged as collateral security to a personal
guarantee without having first determined
