Monday 12 September 2011

CASE-HAJI WAN HABIB SYED MAHMUD V DATUK PATINGGI HAJI ABDUL TAIB MAHMUD & ANOR [1986] 2 MLJ 198


HAJI WAN HABIB SYED MAHMUD V DATUK PATINGGI HAJI ABDUL TAIB MAHMUD & ANOR [1986] 2 MLJ 198
FACTS:
·         That a resolution suspending the appellant was passed in his absence. He was orally informed. A letter followed on 26/11/1985.
·         That the appellant was not notified of Majlis Kerja Tertinggi’s intention to resolve his suspension.
·         That the appellant was not given any notice specifically of what he was accused of. It was only the appellant’s belief that Majlis Kerja Tertinggi (MKT) was going to discuss his conduct when he was asked to leave the meeting.
·         The appellant was not given the opportunity of being heard before the resolution was made to suspend him.

JUDGMENT:
The appeal was dismissed.

RATIO DECIDENDI:
The reason was based on the governing principles:

·         A prima facie case of natural justice having been denied to the appellant. The claim was not frivolous and there was a serious question to be tried. There is no distinction in law between expulsion and suspension.
·         That alone is not sufficient for the appellant to obtain the interlocutory injunction as of right. In this case the trial judge considered that the balance of convenience did not lie in favour of the appellant.

***2 factors which the judge considered. First is the fact that half of the period of suspension had lapsed. The second is the found the delay of 2 months unreasonable and no explanation given. So the learned trial judge refused the interlocutory injunction.

·         Discretionary remedies are exceptional in their nature and should not be made available to those who sleep on their rights.
·         The grant of the interlocutory injunction was a matter for the exercise of discretion by the learned judge and in this case his decision should not be interfered with.  

CIVIL-INJUNCTION


INTERLOCUTORY INJUNCTIONS

(Outline covers items A – E on syllabus)

  • Interlocutory injunctions are pre-trial injunctions aimed at preserving the status quo pending the final determination of the rights of the parties. Restrains D from committing a real or threatened wrong prior to the trial.
  • Interim injunction: interlocutory injunction made for a specified period (normally to allow the D time to file material in reply or to permit cross-examination on the applicant’s affidavit evidence)
  • Interlocutory Injunctions: remain in effect until trial
  • Injunction may require parties to restore the status quo or to order their affairs in a way that is consistent with justice.
  • Purpose:
1.     Protects P's interests against the risk of imminent irreparable harm in the period before trial.
2.     It minimizes the risk of injustice to the P during the period of delay prior to trial by preserving the status quo
3.     Preserves the integrity and credibility of the judicial process by ensuring that P has an effective remedy when case is finally determined.
  • Concern: Court being requested to make a decision that can be detrimental to D without the benefit of all the evidence. Application is mostly supported by affidavit evidence. Thus, the risk to P must be weighed against the risk of irreparable harm to D should injunction be granted and D is successful at trial.  Courts therefore have to balance the competing interests of the parties and make an order in favour of the party who risks the most irreparable harm.

ACCESSIBILITY THRESHOLD

Refers to the level of proof that an applicant must demonstrate re the existence of and/or infringement of a legal right, and chances of success at trial before a court will issue an interlocutory injunction.

Traditional Model or Multi-requisite Approach (Pre-American Cyanamid) –

1. P to demonstrate a strong prima facie case
a.     P has a legally recognised right
b.    Right in question is threatened with infringement and based on the evidence before the court P would be entitled to a permanent injunction - see Diplock’s interpretation of the lower courts’ decision in American Cyanamid – CB, pp. 818-9.

·         Failure to establish a strong prima facie case was fatal to P’s application. Court did not have to consider other factors.

·         Merits-based – Availability of interlocutory injunction based on P’s chances of success at trial. Courts had to determine merits of case based on limited evidence.

  • Reflects court’s uneasiness in interfering with D’s rights before final determination of dispute


2. Irreparable harm to P – If injunction denied, monetary damages cannot adequately vindicate rights threatened at trial should P be successful.

3. Balance of Convenience favours grant of injunction. P must show that they would suffer more hardship or irreparable harm than D if injunction were denied.

 

Rejection of Traditional Approach

House of Lords rejected traditional approach in American Cyanamid v. Ethicon

Reasons – see Hammond, CB, p. 814
  • Threshold for obtaining interlocutory injunction was too high
  • Uncertainty about the degree of probability required to establish a strong prima facie case
  • Injunction applications were in effect mini-trials b/c court had to determine which party was more likely to succeed at trial. Parties rarely proceeded to trial. There would normally be a settlement based on the outcome of the interlocutory injunction application
  • Unfairly prejudiced Ps who could not establish a strong prima facie case at the interlocutory stage


New Approach – American Cyanamid v. Ethicon, 1975 (H.L.)


Summary:

P sought an interlocutory injunction to prevent D from marketing sterile sutures in Britain b/c they alleged it infringed their patent. Trial Court granted injunction on the basis that P had established a strong prima facie case. Injunction was dissolved on appeal b/c in the opinion of the Court of Appeal P had not established a strong prima facie case. The House of Lords (HL) restored the trial decision, but for different reasons. HL established a less stringent accessibility threshold for obtaining interlocutory injunctions.

Emphasis is on balance of risks.
Inappropriate to consider merits based on affidavit evidence
Interlocutory applications must not to be used as mini-trials.

  1. Accessibility Threshold – P to demonstrate that there is a serious/fair question to be tried. No need to establish prima facie case. Court should not to assess merits of the case
  2.  Irreparable harm
    1. There must be a risk of irreparable harm to P should an injunction be denied. Injunction is refused if injury to P’s interests in the interim can be adequately compensated at trial. If there is a risk of irreparable harm to P should injunction be denied the court must go to the next level
    2. Court must assess potential risk of irreparable harm to D should an injunction be granted and D is successful at trial. Court assesses potential risk to D. Where harm can be sufficiently remedied with P’s damages undertaking (to be discussed below) should D be successful at trial, injunction will be granted.
    3. Where both parties risk irreparable harm court has to determine the balance of convenience - which party risks the most prejudice should injunction be granted or denied.
  3. Balance of Convenience – Extent of irreparable harm that each party risks. Application is determined in favour of party who risks the most irreparable harm.
  4. If application can’t be disposed of based on balance of convenience, then court must decide outcome of the application based on the merits of each party’s case (that is, order should be made in favour of the party who is likely to be successful at trial).

How did the HL apply the new test to the facts of the American Cyanamid case?

Reasoning:
·         Fairness to Ps
·         Danger of adjudicating on case based on incomplete and untested evidence
·         Maintains purpose of interlocutory injunctions as a mechanism for preserving the rights of parties pending trial


Adoption of American Cyanamid model in Canada
  • Yule v. Atlantic Pizza Delight, 1977 (Ont. H.C.)[1] – Appellant challenged reliance on the American Cyanamid lower threshold test. Court considered competing tests and concluded that the American Cynamid serious question test is the appropriate approach where there is conflicting evidence. In such cases, P would not be able to establish a strong prima facie case as required under the traditional approach.
  • In RJR-MacDonald Inc. v. Canada, [1994] 1 SCR 311, the SCC unequivocally accepted the American Cyanamid model as the applicable test in Canada. In so doing, the SCC noted that it is inappropriate for courts to engage in a prolonged assessment of the merits of claims at the interlocutory stage.

What Constitutes a Serious Question?
  • 50/50 probability of success not required. P only has to show that action is not impossible and that s/he would be able to sustain the action.

2. IRREPARABLE HARM
·         P must establish that harm feared cannot be quantified in monetary terms or D cannot satisfy judgment.
·         Emphasis is on nature and not magnitude of harm. Irreparable injury does not mean that injury to interests at stake can never be remedied but that harm would be substantial and monetary compensation could not sufficiently restore the status quo.
·         Court must assess risk of irreparable harm first to P and then to D – American Cyanamid; Yule; Hunt v. Canada
·         Injunction denied if P is unable to establish risk of irreparable harm
·         Exception: No requirement of irreparable harm where a public authority seeks interlocutory injunction to protect the public interest - Hunt v. Canada[2]
·         Injunction may be withheld where D gives an undertaking not to engage in the conduct in question and the P’s interests will be sufficiently safeguarded by the undertakings and it is the most desirable thing to do in the circumstances. For example, in the context of breach of confidence, D may undertake to keep an account of profits pending final determination.

Examples of Irreparable Harm

·         Harms that have traditionally defied quantification
               Threat to a person’s ability to earn a living and/or defend themselves in legal proceedings: Mott-Trille v. Steed – Denial of injunction will affect P’s ability to present his case in disciplinary hearings, could lead to disbarment which could in turn affect his ability to earn a living;
               Damage to business reputation: Yule v. Atlantic Pizza Delight – P risked loss of profit, loss of reputation and goodwill. Difficult to quantify in monetary damages
               Aboriginal peoples’ loss of right to negotiate or be consulted - Musqueam Indian Band v. Canada (Governor in Council) [2004] F.C.J. No. 702
               Threat to Aboriginal rights and culture including evidence necessary to support Aboriginal title and rights claim – MacMillan Bloedel v. Mullin (1985)
·         Inability of a public authority to carry out its legislative duties – Hunt v. Canada. When assessing risk of irreparable harm to a public authority, adequacy of monetary damages may not the determining factor. Focus is on whether the grant or denial of injunction will interfere with the protection of the public interest of which the party is a guardian. In Hunt, an injunction enjoining the Minister of Agriculture from carrying out its plan to slaughter cattle imported from the U.K. in the wake of a reported case of mad cow disease could have disastrous impact on Canada’s beef industry if in fact the P’s cattle is infected.
·         Inadequacy of compensation under a statutory regime  - Hunt v. Canada. P risked irreparable harm if cows are wrongly slaughtered b/c compensation under the statutory scheme was considerably less than the actual loss that P would suffer from the destruction of the cows.

Damages Undertakings
·         P is required to give an undertaking to compensate D for damages that D will sustain by reason of the injunction should the P fail at trial.  Court must be satisfied that D will be adequately protected by the undertaking, otherwise a ruling of irreparable harm could be made in D’s favour.
·         Undertakings of damages shifts all or part of the risk of the injunction being wrongly granted onto P
·         Exception:
o    Courts retain discretion to relieve public authorities of the damages undertaking where they seek to enforce the public interests and to prevent public injury - Hunt. Is this fair?
o    Special Circumstances – Courts may also relieve Ps of the damages undertakings in special circumstances, for example where P has a strong case but is unable to give a meaningful undertaking because of financial circumstances. First Nations groups seeking to protect aboriginal rights/title have sometimes been relieved of the obligation to provide damages undertaking. For e.g. see Coalition to Save Northern Flood v. Canada (1995) 106 Man. R. (2d) 28 (QB); Soowahlie Indian Band v. Canada (AG) (2001) 209 DLR (4th) 677 (FCA) [These are not required readings]
·         Failure to give an undertaking could be fatal to P’s case.
·         Also, inability of D to satisfy judgment in P’s favour may be a reason to grant injunction – Hubbard v. Pitt – CB p. 857, note 1.
·         If injunction is subsequently dissolved, D wins at trial, or P withdraws application or P subsequently discontinues the action prior to trial the court must make a reference for the assessment of damages due to compliance with injunction, if any unless there are special circumstances - Vieweger Construction v. Rush.
·         Examples of special circumstances include (1) Where P is a public authority (2) Where D won on technical grounds – Vieweger Construction v. Rush

3. BALANCE OF CONVENIENCE
Where both parties risk irreparable harm or substantial prejudice, court may assess the balance of convenience or relative hardship to the parties to determine which party risks the most irreparable injury should an injunction be granted or denied.

The party who risks the most injury wins – Hunt v. Canada. Although both parties risked irreparable harm, D had much more at stake because of the substantial repercussion for the Canadian economy should a second mad cow disease be reported. The P’s financial loss should he be successful at trial pails in comparison to the substantial prejudice to the Canadian public. But note that injunction was granted on another ground.

Factors that courts take into consideration in balance of convenience Include:
·         Preservation of the Status quo – American Cyanamid – since D had not yet started marketing its product, it was better to keep it out of the market until a final determination of the issue b/n the parties
·         Inability to restore the status quo should P be successful at trial is likely to tilt the scales in P’s favour - Yule

4. MERITS OF CASE

Merits to be considered when the balance of convenience does not clearly point in favour of one party. Application will be determined in favour of the party likely to be successful at trial.

Did American Cyanamid lower accessibility threshold in all cases?
In American Cyanamid, the H.L. said the new test of Serious Question is now applicable in all cases (CB, p. 819).  However, in Yule, the court said the American Cyanamid test is not suitable in all cases.

Serious question is the minimum requirement that a P has to satisfy in order to obtain an interlocutory injunction. A higher threshold that requires a preliminary assessment of the merits may be required depending on the nature of the right asserted, the extent of the threatened infringement, the evidence available to P to establish their case at the interlocutory stage and the consequences of a grant or denial of injunction. In such cases the balance of convenience may be irrelevant.

Post-Cyanamid case law has shown that courts don’t apply the lower threshold test
  • Where the facts are not in dispute
  •  Balance of convenience appears even or
  • The outcome of the interlocutory application will effectively dispose of the case b/n the parties. Specific areas in which courts have insisted on a higher proof include: (1) restrictive covenants, (2) interlocutory mandatory injunctions  (3) free speech (4) Intellectual Property and confidential information and (5) trade disputes (will focus on first three).

Exceptions
  1. Restrictive Covenant
·         Employment contracts and contract for the sale of businesses may include restraint of trade clause that restrict the covenantor from competing with the employer or vendor of the business within a defined geographical area and for a defined period of time.
·         Given the temporal nature of restrictive covenants the outcome of interlocutory applications will often be determinative of the case. In substance, the injunction will give P all the relief that they need and there will be no need to proceed to a final hearing
·         Injunction threatens D’s right to earn a living and therefore courts prefer to consider merits before issuing or denying injunction.
·         Courts are also mindful of unequal bargaining power b/n employer and employees at the time of hiring and the need to protect employees
·         In any event, the court will usually have all the evidence needed to make a decision before it at the interlocutory stage
·         In such cases, it may be appropriate for court to insist on a higher probability of success than is required by the minimum threshold requirement to determine the reasonableness of the covenant that P seeks to enforce as b/n the parties and also whether it is consistent with public policy – Cantol v. Brodi; Towers v. Perrin.

Q. Why did court refuse to enforce the restrictive covenant in Cantol v. Brodi?

·         Where reasonableness of restraint is not in issue, courts assume that P will suffer irreparable harm from breach of the covenant – Towers et al v. Cantin

Sale of Business

In Dreco Energy Services v. Kenneth Hugo Wenzel [2004] 27 Alta. L. R. (4th) 81; 6 W.W.R. 54 (Alta. CA) leave to app to SCC dismissed, the CA suggested that the higher threshold test of strong prima facie may not be applicable in applications to enforce a restraint of trade clauses arising from sale of a business as opposed to employment contract.

  1. Interlocutory Mandatory Injunctions
Injunctions that require a D to take some positive steps are perceived to be more invasive and not easily granted b/c there is a greater risk of harm to D should they win at trial. Thus, courts use a higher threshold test that allows them to assess the merits of the case at the interlocutory stage. In the contractual setting, the effect of an interlocutory mandatory injunction would be to grant specific performance of contractual undertakings. This also justifies an assessment of the merits at the interlocutory stage – Films Rover v. Cannon Films Sales
Reasons for a higher test include:
    1. Order exceeds preservation of status quo. It actually changes the status quo.
    2. Injunction likely to be determinative of case
    3. Difficulties of formulating the order with precision to be enforceable
    4. Due Process – courts feel uncomfortable interfering with D’s rights in this manner without giving D the opportunity to present their case.

3 Free Speech – Canada Metal v. C.B.C.C.B. 878 & 885

  • Interlocutory injunction may be obtained to prevent a party from publishing defamatory or libellous information about the applicant. It is often easy for Ps to establish risk of irreparable harm if D is not restrained.

·         Courts must balance competing interests of free speech and the public’s right to have information on the one hand and P’s right not to be defamed on the other. Given the nature of defamation, irreparable harm may easily  be established. On the other hand, D might not have much at stake if injunction is granted other than wanting to publicize the information in question.
·         Courts tend to tip the scale in favour of the public right to information and insist on a higher threshold test. Injunction refused where D intends to defend the action unless defence is clearly unreasonable or D is motivated by malice.
·         Court must be satisfied that words in question are defamatory before an injunction is granted. Interlocutory injunctions to prevent P from being defamed are rarely granted.





















INJUNCTION
A court order by which an individual is required to perform, or is restrained from performing, a particular act. A writ framed according to the circumstances of the individual case.
An injunction commands an act that the court regards as essential to justice, or it prohibits an act that is deemed to be contrary to good conscience. It is an extraordinary remedy, reserved for special circumstances in which the temporary preservation of the status quo is necessary.
An injunction is ordinarily and properly elicited from other proceedings. For example, a landlord might bring an action against a tenant for waste, in which the right to protect the land-lord's interest in the ownership of the premises is at issue. The landlord might apply to the court for an injunction against the tenant's continuing harmful use of the property. The injunction is an ancillary remedy in the action against the tenant.
Injunctive relief is not a matter of right, but its denial is within the discretion of the court. Whether or not an injunction will be granted varies with the facts of each case.
The courts exercise their power to issue injunctions judiciously, and only when necessity exists. An injunction is usually issued only in cases where irreparable injury to the rights of an individual would result otherwise. It must be readily apparent to the court that some act has been performed, or is threatened, that will produce irreparable injury to the party seeking the injunction. An injury is considered irreparable when it cannot be adequately compensated by an award of damages. The pecuniary damage that would be incurred from the threatened action need not be great, however. If a loss can be calculated in terms of money, there is no irreparable injury. The consequent refusal by a court to grant an injunction is, therefore, proper. Loss of profits alone is insufficient to establish irreparable injury. The potential destruction of property is sufficient.
Injunctive relief is not a remedy that is liberally granted, and, therefore, a court will always consider any hardship that the parties will sustain by the granting or refusal of an injunction. The court that issues an injunction may, in exercise of its discretion, modify or dissolve it at a later date if the circumstances so warrant.

Types of Injunction

Preliminary A preliminary or temporary injunction is a provisional remedy that is invoked to preserve the subject matter in its existing condition. Its purpose is to prevent dis-solution of the plaintiff's rights. The main reason for use of a preliminary injunction is the need for immediate relief.
Preliminary or temporary injunctions are not conclusive as to the rights of the parties, and they do not determine the merits of a case or decide issues in controversy. They seek to prevent threatened wrong, further injury, and irreparable harm or injustice until such time as the rights of the parties can be ultimately settled. Preliminary injunctive relief ensures the ability of the court to render a meaningful decision and serves to prevent a change of circumstances that would hamper or block the granting of proper relief following a trial on the merits of the case.
A motion for a preliminary injunction is never granted automatically. The discretion of the court should be exercised in favor of a temporary injunction, which maintains the status quo until the final trial. Such discretion should be exercised against a temporary injunction when its issuance would alter the status quo. For example, during the Florida presidential-election controversy in 2000, the campaign of george w. bush asked a federal appeals court for a preliminary injunction to halt the manual counting of ballots. It sought a preliminary injunction until the U.S. Supreme Court could decide on granting a permanent injunction. In that case, Siegel v. Lepore, 234 F.3d 1163 (11th Cir. 2000). the U.S. Court of Appeals for the Eleventh Circuit refused to grant the injunction, stating that the Bush campaign had not "shown the kind of serious and immediate injury that demands the extraordinary relief of a preliminary injunction."
Preventive Injunctions An injunction directing an individual to refrain from doing an act is preventive, prohibitive, prohibitory, or negative. This type of injunction prevents a threatened injury, preserves the status quo, or restrains the continued commission of an ongoing wrong, but it cannot be used to redress a consummated wrong or to undo that which has already been done.
The Florida vote count in the presidential election of 2000 again serves as a good example. There, the Bush campaign sought preventive injunctions to restrain various counties from performing recounts after the Florida results had been certified. The Bush campaign did not attempt to overturn results already arrived at, but rather attempted to stop new results from coming in. In turn, the Gore campaign attempted to obtain a preventive injunction to prevent Florida's secretary of state from certifying the election results.
Mandatory Injunctions Although the court is vested with wide discretion to fashion injunctive relief, it is also restricted to restraint of a contemplated or threatened action. It also might compel Specific Performance of an act. In such a case, it issues a mandatory injunction, commanding the performance of a positive act. Because mandatory injunctions are harsh, courts do not favor them, and they rarely grant them. Such injunctions have been issued to compel the removal of buildings or other structures wrongfully placed upon the land of another.
Permanent Injunctions A permanent or perpetual injunction is one that is granted by the judgment that ultimately disposes of the injunction suit, ordered at the time of final judgment. This type of injunction must be final relief. Permanent injunctions are perpetual, provided that the conditions that produced them remain permanent. They have been granted to prevent blasting upon neighboring premises, to enjoin the dumping of earth or other material upon land, and to prevent Pollution of a water supply.
An individual who has been licensed by the state to practice a profession may properly demand that others in the same profession sub-scribe to the ethical standards and laws that govern it. An injunction is a proper remedy to prevent the illegal practice of a profession, and the relief may be sought by either licensed practitioners or a professional association. The illegal Practice of Law, medicine, dentistry, and architecture has been stopped by the issuance of injunctions.
Acts that are injurious to the public health or safety may be enjoined as well. For example, injunctions have been issued to enforce laws providing for the eradication of diseases in animals raised for food.
The government has the authority to protect citizens from damage by violence and from fear through threats and intimidation. In some states, an injunction is the proper remedy to bar the use of violence against those asserting their rights under the law.
Acts committed without Just Cause that interfere with the carrying on of a business may be enjoined if no other adequate remedy exists. A Trade Secret, for example, may be protected by injunction. An individual's right of personal privacy may be protected by an injunction if there is no other adequate remedy, or where a specific statutory provision for injunctive relief exists. An individual whose name or picture is used for advertising purposes without the individual's consent may enjoin its use. The theory is that injunctive relief is proper because of a celebrity's unique property interest in the commercial use of his or her name and likeness (i.e., their right of publicity).
Restraining Orders A Restraining Order is granted to preserve the status quo of the subject of the controversy until the hearing on an application for a temporary injunction. A Temporary Restraining Order is an extraordinary remedy of short duration that is issued to prevent unnecessary and irreparable injury. Essentially, such an order suspends proceedings until an opportunity arises to inquire whether an injunction should be granted. Unless extended by the court, a temporary restraining order ceases to operate upon the expiration of the time set by its terms.

Contempt

An individual who violates an injunction may be punished for Contempt of court. A person is not guilty of contempt, however, unless he or she can be charged with knowledge of the injunction. Generally, an individual who is charged with contempt is entitled to a trial or a hearing. The penalty imposed is within the discretion of the court. Ordinarily, punishment is by fine, imprisonment, or both.


[1] Yule v. Atlantic Pizza Delight: D granted P exclusive licence to market its franchises in Ontario. P also provided supplies to franchisees. P was in the process of constructing a distribution centre when D suddenly terminated the contract on alleged complaints of customer dissatisfaction by telegram and informed franchisees that P was no longer its agent. P sought an interlocutory injunction to enjoin D from terminating the contract, alleging that his reputation in the business would be tarnished and as well, he would incur financial losses if an injunction were denied. Court held that there was conflicting evidence re complaints against P and whether D was entitled to terminate the K in the way it did. Since these issues could not be determined based on the affidavit evidence a lower threshold is required for granting an injunction to preserve P’s rights until the issue can be determined at trial. Since the D’s conduct threatened the P’s contractual rights, the court was satisfied that P had demonstrated there was a serious issue to be tried.
[2] Hunt: Government ordered slaughter of cows imported from Britain since 1986 after a single case of mad cow disease in Alberta. Govt offered to compensate farmers at $2000 per cow, but the actual value of cows was about $5,000. P sought an injunction to restrain D from slaughtering his cows, arguing that there had been no reported cases of mad cow from the herds where he purchased his cattle. Court found that threat to the Canadian economy from further cases of mad cow disease could be catastrophic. Though P also risked not being adequately compensated under the scheme, the balance of inconvenience favoured the D as the risk to the Canadian economy far outweighed risk to P. However, injunction was granted in P’s favour b/c D had permitted another farmer to delay slaughter until final determination of the case.