Date: 20011107
Docket: S. H. No. 173653
IN THE SUPREME COURT OF NOVA SCOTIA
[Cite as: Marketing Concepts Group Insurance Agencies Inc. v. Seaway Life Insurance Services Ltd.,, 2001 NSSC 160]
BETWEEN:
MARKETING CONCEPTS GROUP INSURANCE
AGENCIES INC., a body corporate
PLAINTIFF/
APPLICANT
- and -
SEAWAY LIFE INSURANCE SERVICES LIMITED,
a body corporate, JOHN CAMPBELL and JANICE
CAMPBELL
DEFENDANTS/
RESPONDENTS
D E C I S I O N
HEARD: At Halifax, Nova Scotia, before the Honourable Justice C. Richard Coughlan, on November 6th, 2001
DECISION: November 7th, 2001 (Orally)
RELEASE OF
DECISION: November 13th, 2001
COUNSEL: William L. Ryan, Q.C. and Joe Burke (articled clerk), for the Plaintiff/Applicant
Michael T. Pugsley, for the Defendants/Respondents
COUGHLAN, J.: (Orally)
[1] This is an application by Marketing Concepts Group Insurance Agencies Inc. (MCG) for an interlocutory injunction pursuant to Civil Procedure Rule 43 prohibiting:
The Respondents and any other persons acting upon their instructions or any other person having notice of this Order be and they are hereby strictly enjoined and restrained from interfering or in any way dealing with the business or undertaking of Marketing Concepts Group Atlantic Inc.;
[2] MCG made application to strike paras. 134 and 135 of Mr. Campbell’s affidavit. The paragraphs set out Mr. Campbell’s belief as to MCG’s strategy and motives. No sources or grounds for Mr. Campbell’s belief are set out as required by Civil Procedure Rule 38.02. I refer to Wall v. 679927 Ontario Ltd. et al. (1999) 176 N.S.R. (2d) 96 (N.S.C.A.) and Waverley (Village Commissioners) et al. v. Nova Scotia (Minister of Municipal Affairs) et al. (1993), 123 N.S.R. (2d) 46 (N.S.S.C.). I strike paras. 134 and 135 of Mr. Campbell’s affidavit.
FACTS:
[3] I have read the material filed, including the affidavits of Klaus Zabel, John Campbell and Gerald N. Boudreau, and the cases to which I was referred by counsel. I have also heard the oral evidence of Mr. Zabel and Mr. Campbell.
[4] MCG is a managing general agency based in Toronto, Ontario. It is a well known company in the insurance industry. Seaway Life Insurance Services Limited (Seaway) is also a managing general agency. John Campbell, the president of Seaway, has a long history and good reputation in the insurance industry in the Maritime Provinces.
[5] MCG wanted to expand into the Atlantic Provinces and Mr. Zabel contacted Mr. Campbell to discuss an arrangement whereby MCG and Seaway would establish a managing general agency in Nova Scotia in which MCG and Seaway would each have a fifty percent interest. The new company would service Atlantic Canada. John Campbell, his wife, Janice Campbell, Mr. Zabel, and his business partner, Michael Krause, would be directors, with Mr. Campbell in charge of day-to-day operations.
[6] For many reasons the merger failed and problems arose with regard to the division of the assets between MCG and Seaway, and the present action was commenced.
[7] Mr. Campbell’s evidence was that he and Janice Campbell are the sole shareholders of MCG Atlantic. Mr. Zabel testified MCG Atlantic is now a fairly inactive company. Mr. Campbell testified MCG Atlantic had surrendered its license to the Superintendent of Insurance.
LAW:
[8] The test to be used on an application for an interlocutory injunction was set out in RJR - Macdonald Inc. v. Canada (Attorney-General) et al. (1994), 111 D.L.R. (4th) 385 in which Sopinka and Cory J.J., in giving the judgment of the Supreme Court of Canada, stated at p. 400:
Metropolitan Stores adopted a three-stage test for courts to apply when considering an application for either a stay or an interlocutory injunction. First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits. ...
[9] As Matthews, J.A., in the decision of the Court of Appeal in Gateway Realty Limited v. Arton Holdings Ltd. et al. (1990), 96 N.S.R. (2d) 82 stated at p. 84:
The authority to grant an injunction is derived from s. 39(2) of the Judicature Act, S.N.S. 1972, c. 2, which provides that an injunction may be granted by an interlocutory order of the Court “in all cases in which it appears to the Court to be just or convenient that such order should be made; ...”
ANALYSIS:
1) A SERIOUS ISSUE TO BE TRIED
[10] The first question for the court to answer is whether there is a serious issue to be tried.
[11] Both Mr. Campbell and Mr. Zabel, in their evidence, agreed there are serious issues between the parties to be tried. I am not to consider the merits of the case any more than necessary to determine if there is a serious issue to be tried.
Considering all of the evidence, I find there are serious issues to be tried.
2) IRREPARABLE HARM
[12] The second part of the test for injunctive relief is that the applicant has to show irreparable harm which is not compensable by an award of damages. Irreparable harm was described in RJR-Macdonald Inc. v. Canada (Attorney-General) et al., supra, at p. 405:
“Irreparable” refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. Examples of the former include instances where one party will be put out of business by the court’s decision (R.L. Crain Inc. v. Hendry (1988), 48 D.L.R. (4th) 228, 67 Sask. R. 123, 8 A.C.W.S. (3d) 380 (Q.B.)); where one party will suffer permanent market loss or irrevocable damage to its business reputation (American Cyanamid, supra); or where a permanent loss of natural resources will be the result when a challenged activity is not enjoined (MacMillan Bloedel Ltd. v. Mullin, [1985] 3 W.W.R. 577, 61 B.C.L.R. 145 (C.A.)). ...
[13] MCG is a well known company in the insurance industry. It has opened a branch in Halifax and, as Mr. Campbell admitted in cross-examination, there could be confusion between MCG and MCG Atlantic if the name MCG Atlantic is used.
[14] Marketing Concepts Group Insurance Agencies Inc. is referred to as MCG in the industry. Use of the name MCG Atlantic could be confused with MCG. Mr. Zabel gave evidence the perception of MCG is important in the industry in which it operates. Confusion between MCG and MCG Atlantic has caused a lot of problems. Mr. Zabel stated it affected some relationships in Ontario. He testified MCG has now largely controlled the problem.
[15] MCG’s concern is about any negative perception connected to the name MCG Atlantic and thereby MCG. MCG has no control over the name MCG Atlantic. Improper use of the name MCG Atlantic could affect MCG’s reputation in the insurance industry, resulting in permanent market loss or irreparable damage to its business reputation.
[16] I therefore find MCG could suffer irreparable harm from the use of the name MCG Atlantic.
3) BALANCE OF CONVENIENCE
[17] The third part of the test for injunctive relief is a determination of whether the balance of convenience is in favour of granting or refusing the injunction. In this case, the use of the name MCG Atlantic could cause confusion with and loss of reputation to MCG with possible irreparable harm. On the other hand, Mr. Campbell testified he has not conducted business under the name MCG Atlantic since May, 2001 and his concern with any possible injunction is concern over the perception the injunction will have on the industry.
[18] I find the balance of convenience strongly favours an injunction concerning the use of the name MCG Atlantic.
[19] The proposed injunction sought by the plaintiff is too broad and not necessary to protect the plaintiff from the irreparable harm as defined in RJR-Macdonald Inc. v. Canada (Attorney-General) et al., supra. I am not prepared to grant the injunction in the form sought. I am prepared to and grant an injunction enjoining and restraining the use of the name MCG Atlantic or Marketing Concepts Group Atlantic Inc.
[20] Considering Mr. Zabel’s evidence that MCG Atlantic is a fairly inactive company and MCG has largely controlled the problem, and the evidence as a whole, I am not prepared to grant an injunction broader than stated above. I am not satisfied that the test for injunctive relief has been met, other than concerning the use of the name of MCG Atlantic.
[21] The issuance of the injunction will be subject to the plaintiff giving an undertaking to the defendants to respond to the defendants in damages if the plaintiff is unsuccessful at the time of the full action in this proceeding.
[22] Costs will be in the cause.
________________________________
C. Richard Coughlan, J.