Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20210909 DOCKET: C68961

Juriansz, Lauwers and Sossin JJ.A.

BETWEEN

Dunn Aggregates Limited Plaintiff (Appellant)

and

Coco Paving Inc. Defendant (Respondent)

Counsel: James K. Ball, for the appellant John D. Leslie and Ted Kalnins, for the respondent

Heard: August 30, 2021 by video conference

On appeal from the order of Justice Scott K. Campbell of the Superior Court of Justice, dated December 4, 2020, with reasons at 2020 ONSC 7095.

Reasons for Decision

[1] The appellant Dunn Aggregates previously operated as a stone merchant, whose assets were acquired by the respondent, Coco Paving. The agreement closed on March 11, 2011. A number of post-closing disagreements arose. On September 6, 2011, Coco Paving moved for an interlocutory injunction in the context of an anticipated action and the injunction was granted. It restrained Dunn Aggregates from breaching the non-competition and restrictive covenant agreements entered into pursuant to the asset purchase agreement. Coco Paving gave the customary undertaking as to damages.

[2] The action started by Dunn Aggregates and the action started by Coco Paving proceeded to trial together. The trial judge concluded that Coco Paving’s contractual breaches did not justify Dunn Aggregates’ non-performance of the non-competition agreement. He concluded that it would not be appropriate to make the interlocutory injunction permanent, in part because the non-competition agreement had expired by its own terms prior to trial.

[3] The assessment of damages remains outstanding.

[4] The trial judge made an order barring Dunn Aggregates from claiming damages under r. 40.03 arising from the interlocutory injunction.

[5] The purpose of the customary undertaking as to damages is to protect the party against whom the injunction is granted, in this case Dunn Aggregates, if the injunction were found to have been wrongly granted. The trial judge cited several authorities for this proposition and pointed to the decision in United States of America v. Yemec, 2013 ONSC 50, 35 C.P.C. (7th) 57, aff’d 2014 ONCA 274, 58 C.P.C. (7th) 223 as being especially persuasive. In Yemec, Belobaba J. considered the undertaking to pay damages and noted, at para. 14, that its purpose is “to cover damage caused by a wrongly granted injunction.”

[6] The trial judge concluded that because Coco Paving was the successful party at trial the injunction had not been wrongfully granted. He pointed out that Dunn Aggregates had not made “efforts to appeal the granting of the injunction or to alter it in the course of over five years of litigation.” He found there to be no “special circumstances that would warrant the awarding of damages [to Dunn Aggregates] based on the undertaking.” There was, in his view, no basis on which Dunn Aggregates should be able to advance a claim for damages as a result of the injunction having been granted. We agree with the trial judge and do not disturb his order.

[7] The appeal is dismissed with costs to Coco Paving fixed in the amount of $3,500, all inclusive.

“R.G. Juriansz J.A.”

“P. Lauwers J.A.”

“L. Sossin J.A.”