Cite as: Natural Beauty Products Ltd. v. Body Reform Canada Ltd., 1990 NSCA 1 S.C.A. No. 02250 IN THE SUPREME COURT OF NOVA SCOTIA
APPEAL DIVISION
Hart, Jones and Chipman, JJ.A.
BETWEEN: NATURAL BEAUTY PRODUCTS P. Bryson LIMITED, a body corporate for the appellant (in receivership) J.C. MacPherson Appellant F.M. Greening for the respondents - and - Appeal Heard: April 4, 1990 BODY REFORM CANADA LIMITED, Judgment Delivered: a body corporate, RONALD F. April 6, 1990 CARSON, DOUGLAS MacDONALD and ARTHUR PELLICCIONE Respondents THE COURT: Appeal allowed in part, the decision of the trial jUdge awarding costs varied to award costs in the cause and that the principal appeal herein be dismissed with costs in the cause per reasons for judgment of Hart,J.A.; Jones and Chipman, JJ. A~'- concurring
HART, J .A.: This is an appeal J. rendered in chambers on refused to grant an interlocutory the respondent from manufacturing requiring the return to the formulae for the manufacture appellant, a British company and sale of beauty products agreement with the respondent, the manufacture and sale of some of the States of the United States. of this business arrangement place in escrow certain secret formulae and business know-how utilized in the production the British company was unable consistently to its Canadian licensee the information held in escrow was to be passed to the Canadian company so that it could manufacture and produce its own supply. The British company went a debenture and the Canadian escrow agent the information receivers of the appellant wished to dispose of the assets and business of the appellant experienced some difficulty when who was their largest account, from the jUdgment of Davison, February 27, 1990, whereby he injunction to prevent certain products and appellant of certain secret of those products. The involved in the manufacture had entered into a business a Canadian company, for those products in Canada and Under the terms the parties had agreed to of the beauty products. If to supply the product into receivership under company obtained from the being held in escrow. The as a going concern but the Canadian distributor, was in a position to
- manufacture the product and for supplies from the British that the Canadian company was as the appellant was at all supply the product to the respondent failure of the source of supply that the could start to manufacture its own product. applied to the Supreme Court injunction preventing the respondent the product and demanding a formulae transferred to the respondent. Mr. Justice Davison after three hours of evidence and argument in chambers said in his oral decision: "This' is an application for an interim unjunction restraining disclosure of confidential information said to be the property of the plaintiff. plaintiff is a United Kingdom corporation engaged in the manufacture of February 2, 1990 the receivership. The plaintiff's manufactured according to confidential formulae. On December 14, 1988 the plaintiff entered into a licensing agreement defendants. The corporate incorporated in early agreement was a license plaintiff's products in Canada and several eastern states of the United agreement also contained the following clauses: 'The Licensee will also rights in the Market (including either direct manufacture or through one or more sub licenses). may not exercise the manufacturing rights without the prior consent of unreasonably withheld) , can reasonably demonstrate that the Licensor's 2 would have no further need principal. They claimed in breach of the agreement times ready and willing to and it was only upon Canadian company The receivers of this Province for an from manufacturing return of the information and The cosmetic products. On plaintiff was placed in products are with the non-corporate defendant was 1989. Basically the to distribute the States of America. The have the exclusive to manufacture Products However, the Licensee the Licensor (not to be unless the Licensee
- facilities are no longer Product requirements of the Market on an ongoing and continuing basis.' In Paragraph 8 of the said agreement, the following is set out: I The parties acknowledge may arise which are beyond Licensor, which may prevent it supplying Product to to protect the Licensee Licensor has agreed formulae and other know-how of the Body Canadian agency of a major U.K. acceptable to both parties. The escrow agent is and know-how to the to maintain the confidentiality if the Licensor is unable to supply the Product requirements of the Market continuous basis.'" The chambers judge then concluded: "The evidence from the the plaintiff does not the main purpose the plaintiff wishes the return of the formulae was to enhance the value of the assets for the purpose not the company, will be sold. The plaintiff says it is at this moment and there is agreement. The plaintiff says it has established a prima facie case. of the agreement supports the plaintiff's argument but the receiver stated that the plaintiff company will not be able to continue to supply the product. Indeed, the evidence of me that the defendants of the product for any time or on a continuing basis." The chambers judge discretion in favour of refusing to grant 3 able to supply the that circumstances the control of the from properly the Market. Accordingly, in such event, the to escrow all Product confidential essential Reform system with the bank reasonably to release the formulae Licensee (which agrees thereof) only on an ongoing and receiver was clear that intend to carryon and of sale. The assets, in fact carrying on no breach of the A literal interpretation the receiver convinces cannot expect a supply significant period of thereupon exercised his the injunction
- requested and as I am satisfied that there upon which he could have reached the finding he did I find no error in the manner in which he exercised his discretion. This being would therefore be improper with the decision of the trial judge. The appellant has judge should not have awarded the court below and with this ground of appeal I to agree. Costs on interlocutory matters are usually the cause" so that if after full trial it becomes apparent that a different view should interlocutory application the be penalized with costs. No the trial judge to justify his can see no reason for departing in this case I would hold that his respondent was in error. In the result I would and vary the award of the trial judge to costs in the cause and dismiss the principal appeal with costs in the cause. Concurred in: Jones, J.A.~' Chipman,J .A. f;(f..;C . 4 was evidence of fact that an interlocutory matter it for this Court to interfere also argued that the trial costs to the respondent in am inclined "in have been taken of the party applying should not explanation was advanced by order for costs and as I from the ordinary rule award of costs to the allow the appeal in part J.A.
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