Court File and Parties

CITATION: FERRERO S.p.A v. 218587 ONTARIO LIMITED, 2016 ONSC 7036

COURT FILE NO.: CV-16-557647

DATE: 20161114

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: FERRERO S.p.A. and FERRERO CANADA LIMITED, Plaintiffs

-and-

218587 ONTARIO LIMITED d.b.a. “UPPER CRUST”, Defendant

BEFORE: F.L. Myers J.

COUNSEL: Michael Schafler, Christina Porretta, and Ari Basmadjian for the plaintiffs

Ronald G. Slaght. Q.C., Nadia Campion, and Brian Kolenda for the defendant

READ: November 14, 2016

COSTS ENDORSEMENT

[1] By Endorsement dated October 26, 2016, the court dismissed the plaintiffs’ motion for an interlocutory injunction. The plaintiffs had sought to restrain the defendant until trial from selling two products in packaging displaying the plaintiffs’ intellectual property. The plaintiffs argued that the sales violated contractual covenants made by the defendant. The court found that there were numerous serious issues to be tried. However, the plaintiffs did not establish, to the requisite degree, that they are likely suffer irreparably in the absence of interlocutory injunctive relief. The court also found that the balance of convenience supported maintaining the status quo without an injunction pending trial.

[2] As the defendant succeeded, it seeks its costs of the motion.

[3] The parties agree that the quantum of costs of the motion ought to be fixed at $150,000 and I do so accordingly.

[4] The defendant argues that cases such as Longyear Canada, ULC v. 897173 Ontario Inc. (J.N. Precise), 2008 3407 (ON SC), stand for the proposition that a defendant that succeeds in repelling a motion for an interlocutory injunction ought to be presumptively entitled to its costs payable forthwith. That is different from the situation where a plaintiff succeeds on the same type of motion. The general rule is that where an interlocutory injunction is granted in favour of a plaintiff the costs should be deferred to the trial judge. The rationale for the latter rule is that although the plaintiff succeeded on the motion, if it loses at trial, the defendant will have retroactively established that the plaintiff did not have the right to the pre-trial injunction that it obtained. The situation is different when the roles are reversed. Even if the plaintiffs win at trial, they arguably still had no right to interlocutory relief because they failed to prove that they were likely to suffer irreparable harm at the interlocutory stage. That is, the plaintiffs’ success on the merits at trial does not necessarily undermine the outcome of the pre-trial motion. The issue of irreparable harm will not be re-visited at the trial. As the defendant won on that issue, it argues that it should be entitled to costs and the law generally supports this position. Sharpe in Injunctions and Specific Performance, 2nd Edition (looseleaf), Toronto, Canada Law Book, 2006, at p. 2-106:

[5] The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.

[6] In my view, there is good reason to depart from the general rule in this case. The only relief that the plaintiffs claim at the trial of the action is a permanent injunction to stop the defendant from using their intellectual property. Damages are not claimed. The plaintiffs cannot succeed at trial and obtain relief other than an injunction. They cannot succeed and be awarded money as an adequate alternative to injunctive relief on the current pleadings. If they succeed, then they will be found to have been entitled to an injunction as of the date the cause of action arose and, a fortiori, at the date of the motion. In that case, the reason that the plaintiffs did not succeed on the motion was that the court system inserted interim procedural hurdles to reflect both the systemic delay required to get to trial and the policy to prevent pre-judgment execution except where a trial will not provide adequate alternative relief. But, again assuming that the plaintiff succeeds at trial, arguably, it should not have had to surmount these pre-trial hurdles.

[7] Moreover, there is an issue on the evidence as to whether the defendant was forthright with the plaintiffs as to its plans to seek approval to sell long shelf life products in association with the plaintiffs’ IP. If the trial judge finds that the defendant was not forthright, then the judge may find the defendant’s ability to take advantage of the procedural hurdles of irreparable harm and the balance of convenience to repel an interlocutory injunction was inequitable in all of the circumstances despite the defendant’s success. Perhaps the judge will not think that such is the case. In other words, I do not have enough information to properly inform the exercise of the broad discretion to determine the costs issue now. The trial judge will be able to assess the general rule as set out in Longyear Canada in a context where she knows the full extent of the parties’ rights and can consider the equities arising from the manner in which the parties behaved and developed their respective positons in these proceedings.

[8] If damages become an issue at trial, the trial judge will also be able to consider that development too in light of these reasons.

[9] The costs of the motion are fixed at $150,000 inclusive of disbursements and taxes. The issue of whether either side ought to be entitled to the costs of the motion so fixed is reserved to the trial judge.

F.L. Myers J.

Date: November 14, 2016