ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 12-34990
DATE: 2012-06-22

B E T W E E N:

CBS CANADA HOLDINGS CO., operating as CBS OUTDOOR CANADA

L.A. Frapporti and P.J. Kennedy, for the Applicant

Applicant

• and –

ALL VISION CANADA COMPANY and CANADIAN NATIONAL RAILWAY COMPANY

R. Walker and D. Bernstein, for the Respondent, All Vision Canada Company
M. Stewart and M. Sampson, for the Respondent, Canadian National Railway Company

Respondents

HEARD: June 11, 2012

The Honourable Mr. Justice D. J. Gordon

ENDORSEMENT

[ 1 ] When two sophisticated business organizations engage in aggressive negotiation tactics, the court should be reluctant to intervene by granting injunctive relief. Otherwise, one party obtains a tactical advantage.

BACKGROUND

[ 2 ] CBS Outdoor Canada (“CBS”) has approximately 240 billboard advertising structures situate on lands owned by Canadian National Railway Company (“CN”) that are the subject of certain license agreements entered into between 1999 and 2007. The structures are owned by CBS. An annual fee is paid to CN.

[ 3 ] In 2008, All Vision Canada Company (“All Vision”) assumed management of the CN signboard portfolio. Negotiations pertaining to the licence agreement renewal became more intense as the business relationship changed.

[ 4 ] All Vision informed CBS the 2009 renewals were subject to a 10% increase in the base rental rates. CBS objected and declined payment of the increase. Negotiations occurred as to various license terms until 2012.

[ 5 ] On April 16, 2012, All Vision gave notice to CBS as to the cancellation of the license agreements. It demanded payment of rental arrears of $927,214.00 and advised CBS of the 30 day period to remove its structures in accordance with CN’s procedural directive.

[ 6 ] Subsequently, All Vision commenced an action in Toronto seeking payment of the purported arrears. CBS intends on defending that action.

APPLICATION

[ 7 ] In its application, CBS seeks a number of remedies, including a determination of the rights of the parties, declaratory and injunctive relief and relief from forfeiture. No damage claim has yet been advanced.

[ 8 ] In this motion, CBS seeks an interim injunction and/or relief from forfeiture. Its counsel reports the claim for interlocutory relief could be addressed in August, 2012.

LICENCE AGREEMENTS

[ 9 ] The many license agreements contain the same or similar terms, including the following:

a) one year term, automatically renewed unless notice provided by either party;

b) prescribed fee payable in advance;

c) structures are the property of the licensee;

d) license may be terminated by licensor in its sole discretion on 30 days notice or cancelled by licensor at any time should the licensee be in breach;

e) on termination or cancellation, licensee shall remove its structures and refurbish the property within 30 days; failing which the licensor may remove the structures or take and hold the same as its sole property; and

f) licensee obligated to comply with CN safety standards.

PROCEDURE FOR REMOVING STRUCTURES

[ 10 ] The requirements for removing structures by licensees is said to have increased over the years, particularly since the involvement of All Vision. Various documents, including a site plan, must now be submitted in advance to All Vision who, in turn, delivers same to CN. Flagging, for safety needs, may be necessary with an apparent 15 day delay.

[ 11 ] CBS says the process can no longer be completed in the 30 day time period. Further, the cost of removal is said to exceed the cost of erection.

COMPLAINTS OF CBS

[ 12 ] CBS presents a number of complaints regarding the conduct of All Vision and, as well, CN, including:

a) unilateral increase in base rental rates;

b) cancellation within negotiations;

c) impossibility of removing structures within required time period will result in its property being taken without compensation; and

d) various matters of bad faith.

[ 13 ] Although the evidence is presented to support the injunctive claim, it has the appearance of also pertaining to punitive damages.

ANALYSIS

[ 14 ] To succeed on a claim for injunctive relief, the moving party must prove on a balance of probabilities:

a) there is a serious issue to be tried;

b) it will suffer irreparable harm if the application is denied; and

c) the balance of convenience is in its favour.

See RJR-McDonald Inc. v. Canada (A.G), 1994 SCC 117, [1994] 1 S.C.R. 311, at para.s 43 and 77-80.

[ 15 ] There is a significant dispute between the parties. The language in the license agreements may be clear; however, the conduct of certain parties is challenged. Hence, I am satisfied there is a serious issue to be tried.

[ 16 ] Irreparable harm brings into consideration the inability to compensate by damages. I am not persuaded CBS has or can meet this component of the test. Assuming CBS commences an action for damages and is successful in advancing its claim; damages can be calculated and awarded. The assessment of damages will be a difficult task, but not an impossible one. Damages, not an injunction, are the proper remedy to pursue. See Barton-Reid Canada Ltd. V. Alfresh Beverages Canada Corp., 2002 CarswellOnt 9294 (Ont. S.C.J.), at para. 18.

[ 17 ] In terms of the balance of convenience, I refer to paragraph one above. This factor favours neither party.

[ 18 ] I reach a similar conclusion regarding the alternative claim for relief against forfeiture. Equity can provide relief from harsh consequences. In this case, however, the real dispute is monetary. Interim relief is not appropriate.

[ 19 ] Accordingly, the motion is dismissed. If the parties are unable to agree on the issue of costs, brief written submissions shall be delivered to my chambers in Cayuga within 30 days.

Gordon, J

Released: June 22, 2012