The Litigator

THE LITIGATOR

Commentary on Law Affecting Business

The Litigator
AGM :: Affleck Greene McMurtry LLP

THE LITIGATOR

Affleck Greene McMurtry LLP
365 Bay Street, Suite 200  ·  Toronto, Canada
416 360 2800  ·  info@agmlawyers.com  ·  www.thelitigator.ca

Injunction chickens come home to roost

The Competition Tribunal has the power to order an inquiry into damages arising from an interim order granted by the Tribunal, but can refuse to order damages where special circumstances exist. Deliberate and flagrant breach of the interim order will constitute such special circumstances.

In the latest instalment in the Nadeau chicken saga, the Competition Tribunal held that Westco was not entitled to damages arising from an interim order because it deliberately and flagrantly breached that order.

The saga began when New Brunswick chicken processor Nadeau Poultry Farm Ltd obtained leave to apply, and applied, to the Tribunal under the Competition Act’s refusal to deal provisions to force Groupe Westco Inc. to continue supplying it with chickens in 2008. The Tribunal ordered Westco to continue supplying chickens to Nadeau pending the hearing of the application. After a trial, the Tribunal dismissed Nadeau’s application. Nadeau appealed, and lost again.

In the meantime, however, Westco made changes in the way it supplied chickens to Nadeau. Nadeau brought contempt proceedings. The Tribunal ruled that Westco had knowingly disobeyed the interim order and fined it $75,000. Westco appealed and lost.
In its application for interim relief, Nadeau had given the customary undertaking in damages. Recently, Westco applied to the Tribunal for an inquiry as to damages pursuant to Nadeau’s undertaking in damages.
Nadeau argued that the Tribunal lacked jurisdiction to order damages pursuant to an undertaking in damages, because this power has not been granted to it either expressly or by necessary implication, and that, even if the Tribunal had this power, it should not award damages because of Westco’s conduct.
The Competition Act gives the Tribunal the power to hear and dispose of matters under Part VIII (which includes the refusal to deal and interim order provisions) and “related matters”, Blanchard J. noted. An undertaking in damages is given to the Tribunal; it is not a matter of private contract between the parties. The power to enforce the undertaking goes hand in hand with the power to grant the interim order. Thus the power to enforce the undertaking is related to the Tribunal’s power to grant interim relief, Blanchard J. held, and by necessary implication, the Tribunal has this power.
Turning to the second issue, whether Westco’s conduct disentitled it to collect damages arising from the injunction, Blanchard J. noted that damages will be refused only if special circumstances exist. Breach of an injunction, without more, does not automatically constitute such special circumstances. Here, however, Westco knowingly breached the interim order and its spirit, and it did so for the purpose of financial gain, for nearly a full year. This deliberate and flagrant disregard for the order constituted special circumstances that entitled the Tribunal to refuse to order an inquiry in damages, Blanchard J. held.

W. Michael G. Osborne
Affleck Greene McMurtry LLP

W. Michael G. Osborne

Michael Osborne is a former Partner of Affleck Greene McMurtry LLP

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