MTS Allstream Inc. v. Bell Mobility Inc. et al., (2008) 227 Man.R.(2d) 95 (QB)

• Judge: McCawley, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: April 07, 2008
• Jurisdiction: Manitoba
• Citations: (2008), 227 Man.R.(2d) 95 (QB);2008 MBQB 103

MTS Allstream Inc. v. Bell Mobility (2008), 227 Man.R.(2d) 95 (QB)

MLB headnote and full text

Temp. Cite: [2008] Man.R.(2d) TBEd. AP.039

MTS Allstream Inc. (plaintiff) v. Bell Mobility Inc. and Bell Distribution Inc. (defendants)

(CI 08-01-56030; 2008 MBQB 103)

Indexed As: MTS Allstream Inc. v. Bell Mobility Inc. et al.

Manitoba Court of Queen's Bench

Winnipeg Centre

McCawley, J.

April 7, 2008.

Summary:

On May 10, 1999, MTS Allstream Inc. entered into a business alliance with the defendants (Bell) for the delivery of wireless services. Under a related agreement, Bell agreed to supply MTS with wireless handsets, devices and related equipment. The federal government announced a "spectrum" (the regulated radio frequencies over which wireless services were delivered) auction. Certain incumbent corporations, including Bell, were precluded from bidding for 40% of the spectrum which was available, at a considerably lower opening bid price, to "new entrants" only. MTS could only participate as an incumbent unless it was no longer part of the May 10, 1999, agreement. MTS gave Bell notice that it was terminating the May 10, 1999, agreement and submitted an application for the spectrum auction as a new entrant. Bell advised MTS that it considered this a wrongful repudiation of the May 10, 1999, agreement and associated agreements and immediately suspended shipment of all wireless handsets and devices. On very short notice and, effectively, ex parte, MTS obtained an interim injunction enjoining Bell from suspending supply and delivery of wireless handsets and devices. MTS sought to continue the injunction until trial.

The Manitoba Court of Queen's Bench rescinded the interim injunction and dismissed the application for an interlocutory injunction.

Equity - Topic 1482

Equitable principles respecting relief - Clean hands doctrine - Application of - [See Injunctions - Topic 1604.2 ].

Injunctions - Topic 1604.2

Interlocutory or interim injunctions - General principles - Clean hands doctrine - On May 10, 1999, MTS Allstream Inc. entered into a business alliance with the defendants (Bell) for the delivery of wireless services - Under a related agreement, Bell agreed to supply MTS with wireless handsets, devices and related equipment - The federal government announced a "spectrum" (the regulated radio frequencies over which wireless services were delivered) auction - Certain incumbent corporations, including Bell, were precluded from bidding for 40% of the spectrum which was available, at a considerably lower opening bid price, to "new entrants" only - MTS could only participate as an incumbent unless it was no longer part of the May 10, 1999, agreement - MTS gave Bell notice that it was terminating the May 10, 1999, agreement and submitted an application for the spectrum auction as a new entrant - Bell advised MTS that it considered this a wrongful repudiation of the May 10, 1999, agreement and associated agreements and immediately suspended shipment of all wireless handsets and devices - On very short notice and, effectively, ex parte, MTS obtained an interim injunction enjoining Bell from suspending supply and delivery of wireless handsets and devices - MTS sought to continue the injunction until trial - The Manitoba Court of Queen's Bench rescinded the interim injunction and dismissed the application for an interlocutory injunction on the grounds that MTS had failed to make full and frank disclosure at the hearing of the interim motion - That conclusion was reinforced by the court's conclusion that MTS had not come to the court with clean hands - MTS pursued a deliberate course of conduct that disentitled it to a favourable consideration in equity - See paragraphs 73 to 79.

Injunctions - Topic 1687

Interlocutory or interim injunctions - Continuation of interim injunction - Evidence - On May 10, 1999, MTS Allstream Inc. entered into a business alliance with the defendants (Bell) for the delivery of wireless services - Under a related agreement, Bell agreed to supply MTS with wireless handsets, devices and related equipment - The federal government announced a "spectrum" (the regulated radio frequencies over which wireless services were delivered) auction - Certain incumbent corporations, including Bell, were precluded from bidding for 40% of the spectrum which was available, at a considerably lower opening bid price, to "new entrants" only - MTS could only participate as an incumbent unless it was no longer part of the May 10, 1999, agreement - MTS gave Bell notice that it was terminating the May 10, 1999, agreement and submitted an application for the spectrum auction as a new entrant - Bell advised MTS that it considered this a wrongful repudiation of the May 10, 1999, agreement and associated agreements and immediately suspended shipment of all wireless handsets and devices - On very short notice and, effectively, ex parte, MTS obtained an interim injunction enjoining Bell from suspending supply and delivery of wireless handsets and devices - MTS sought to continue the injunction until trial - The Manitoba Court of Queen's Bench rescinded the interim injunction and dismissed the application for an interlocutory injunction - MTS had failed to make full and frank disclosure on the interim motion - MTS's material had left the impression that Bell was retaliating because MTS wanted to compete with it and did not state Bell's position adequately - MTS had an obligation to ensure that all of the facts were before the court, including those favourable to Bell, and failed to do so - Further, MTS failed to disclose accurately the inventory of handsets and devices available to it and the effect the cancellation would have on its operation - The lack of full and frank disclosure was sufficiently serious to disentitle MTS from a consideration of the interlocutory injunction on its merits - See paragraphs 25 to 72.

Injunctions - Topic 1802

Interlocutory or interim injunctions - Requirement of irreparable injury - What constitutes - On May 10, 1999, MTS Allstream Inc. entered into a business alliance with the defendants (Bell) for the delivery of wireless services - Under a related agreement, Bell agreed to supply MTS with wireless handsets, devices and related equipment - The federal government announced a "spectrum" (the regulated radio frequencies over which wireless services were delivered) auction - Certain incumbent corporations, including Bell, were precluded from bidding for 40% of the spectrum which was available, at a considerably lower opening bid price, to "new entrants" only - MTS could only participate as an incumbent unless it was no longer part of the May 10, 1999, agreement - MTS gave Bell notice that it was terminating the May 10, 1999, agreement and submitted an application for the spectrum auction as a new entrant - Bell advised MTS that it considered this a wrongful repudiation of the May 10, 1999, agreement and associated agreements and immediately suspended shipment of all wireless handsets and devices - On very short notice and, effectively, ex parte, MTS obtained an interim injunction enjoining Bell from suspending supply and delivery of wireless handsets and devices - MTS sought to continue the injunction until trial - The Manitoba Court of Queen's Bench rescinded the interim injunction and dismissed the application for an interlocutory injunction on the grounds that MTS had failed to make full and frank disclosure at the hearing of the interim motion - However, the court also indicated that the application for an interlocutory injunction would have failed on its merits - There was a serious issue to be tried in MTS's assertion that it had not repudiated the agreement - However, irreparable harm was not established - Bell had offered to supply handsets, although not at the lower "alliance price" - If MTS was correct in its view that those rates were significantly higher, any resulting harm was quantifiable and compensable by damages - See paragraphs 80 to 100.

Injunctions - Topic 7845

Setting aside injunctions - Grounds - Failure to disclose relevant facts on application - [See Injunctions - Topic 1687 ].

Practice - Topic 3059

Applications and motions - General - Duty of disclosure on ex parte applications and motions - [See Injunctions - Topic 1687 ].

Cases Noticed:

Porter v. Anytime Custom Mechanical Ltd. et al. (2007), 412 A.R. 50; 404 W.A.C. 50; 2007 ABCA 208, refd to. [para. 26].

Hayes Forest Services Ltd. v. Forest Action Network et al. (2006), 224 B.C.A.C. 181; 370 W.A.C. 181; 2006 BCCA 156, refd to. [para. 26].

Hayes Forest Services Ltd. v. Krawczyk - see Hayes Forest Services Ltd. v. Forest Action Network et al.

United States of America v. Friedland, [1996] O.J. No. 4399 (Gen. Div.), refd to. [para. 27].

Griffin Steel Foundries Ltd. v. Canadian Association of Industrial, Mechanical and Allied Workers et al. (1977), 80 D.L.R.(3d) 634 (Man. C.A.), refd to. [para. 28].

Forestwood Co-operative Homes Inc. v. Pritz et al. (2002), 156 O.A.C. 359 (Div. Ct.), refd to. [para. 29].

Barmin Inc. v. Leger, [1991] O.J. No. 3430 (Gen. Div.), refd to. [para. 30].

Pulse Microsystems Ltd. et al. v. Safesoft Systems Inc. et al. (1996), 110 Man.R.(2d) 163; 118 W.A.C. 163; 134 D.L.R.(4th) 701 (C.A.), refd to. [para. 30].

4067712 Manitoba Ltd. et al. v. Lakeland Golf Properties Inc. et al. (2004), 186 Man.R.(2d) 235; 2004 MBQB 157, refd to. [para. 70].

Pro Swing Inc. v. Elta Golf Inc., [2006] 2 S.C.R. 612; 354 N.R. 201; 218 O.A.C. 339, refd to. [para. 73].

Keenberg v. Marwest Management Ltd., [1985] 1 W.W.R. 700; 30 Man.R.(2d) 267 (C.A.), refd to. [para. 74].

RJR-MacDonald Inc. et Imperial Tobacco Ltd. v. Canada (Procureur général), [1994] 1 S.C.R. 311; 164 N.R. 1; 60 Q.A.C. 241, refd to. [para. 81].

Look Communications Inc. v. Bell Canada, [2007] O.T.C. 1783 (Sup. Ct.), refd to. [para. 90].

674834 Ontario Ltd. v. Culligan of Canada Ltd. et al., [2007] O.T.C. 580 (Sup. Ct.), refd to. [para. 90].

Longyear Canada ULC et al. v. 897173 Ontario Inc. et al., [2008] O.T.C. 2817; 2007 CarswellOnt 7958 (Sup. Ct.), refd to. [para. 91].

Imperial Sheet Metal Ltd. et al. v. Landry et al. (2007), 315 N.B.R.(2d) 328; 815 A.P.R. 328; 2007 NBCA 51, refd to. [para. 91].

Cubex Ltd. v. Hannah et al. (2006), 206 Man.R.(2d) 71; 2006 MBQB 141, refd to. [para. 91].

American Cyanamid Co. v. Ethicon Ltd., [1975] 1 All E.R. 504 (H.L.), refd to. [para. 96].

Krahn Enterprises Ltd. v. Big Apple Imports Ltd. et al. (1992), 82 Man.R.(2d) 106 (Q.B.), refd to. [para. 100].

Authors and Works Noticed:

Sharpe, Robert J., Injunctions and Specific Performance (2007 Looseleaf Ed.), para. 2.45 [para. 71].

Counsel:

E. William Olson, Q.C., James G. Edmond and Ross A. McFadyen, for the plaintiff;

Peter J. Lukasiewicz and Deborah C. Templer (Gowling Lafleur Henderson LLP) and Dave Hill and Derek M. Olson (Hill Dewar Vincent), for the defendants.

This application was heard by McCawley, J., of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following judgment on April 7, 2008.