Potash Corp. of Saskatchewan Inc. et al. v. Barton, (2013) 427 Sask.R. 206 (CA)

• Judge: Jackson, Klebuc and Ottenbreit, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: March 12, 2013
• Jurisdiction: Saskatchewan
• Citations: (2013), 427 Sask.R. 206 (CA);2013 SKCA 141

Potash Corp. v. Barton (2013), 427 Sask.R. 206 (CA);

    591 W.A.C. 206

MLB headnote and full text

Temp. Cite: [2013] Sask.R. TBEd. DE.054

Keith Barton (appellant/respondent by cross-appeal/defendant) v. Potash Corporation of Saskatchewan Inc. and Potash Corporation of Saskatchewan Sales Limited (respondents/appellants by cross-appeal/plaintiffs)

(CACV2213; 2013 SKCA 141)

Indexed As: Potash Corp. of Saskatchewan Inc. et al. v. Barton

Saskatchewan Court of Appeal

Jackson, Klebuc and Ottenbreit, JJ.A.

December 20, 2013.

Summary:

Barton was employed by the Potash Corporation of Saskatchewan Inc. and Potash Corporation of Saskatchewan Sales Ltd. (collectively, "PCS") as general counsel for 10 years. He also served as vice-president and secretary to the board of directors for parts of that time. He resigned in 1988. Five years later, consent interim injunctions were granted against him which, with certain exceptions, restrained him from disclosing information concerning PCS's business or affairs. The injunctions were set aside on September 10, 2003 and PCS discontinued the underlying actions on March 27, 2009. Barton sought orders for $16,000,000 damages, solicitor and client costs against PCS, and an order directing PCS to make a public apology to him. He submitted that by discontinuing the actions, PCS admitted that it had no right to the injunction, which he claimed destroyed his reputation and health and caused him to lose his life savings.

The Saskatchewan Court of Queen's Bench, in a decision reported at 348 Sask.R. 251, held that Barton was not entitled to an assessment of damages and that he was entitled to only certain taxable costs. Barton appealed.

The Saskatchewan Court of Appeal, in a decision reported at 375 Sask.R. 194; 525 W.A.C. 194, allowed the appeal. The court ordered that the matter be returned to the Court of Queen's Bench for a reference to determine whether or not Barton suffered any damage as a result of obtaining the interlocutory injunction and, if so, fixing the amount of damages that he did suffer, as well as for a determination of whether Barton was entitled to punitive damages and/or costs on a solicitor-client basis.

The Saskatchewan Court of Queen's Bench, in a decision reported at 388 Sask.R. 202, did not order any damages for loss of income or pension and did not award punitive damages, but did order PCS to pay $20,000 damages for mental distress and to reimburse Barton his solicitor and client fees. Barton appealed (i) the failure to order any damages for loss of income or pension benefits; (ii) the failure to award punitive damages; and (iii) the amount of the award ordered for damages for mental distress. PCS cross-appealed: (i) the decision to award any damages at all for mental distress; and (ii) the decision ordering that solicitor and client fees be reimbursed.

The Saskatchewan Court of Appeal allowed the appeal in part, increasing the award for mental distress and awarding damages for loss of income and pension benefits. The court dismissed the appeal from the failure to award punitive damages and dismissed the cross-appeal. The trial judge's order that Barton be awarded damages as an actual reimbursement of legal bills paid or due and owing, was extended by the court to the payment of his legal bills in relation to the appeal. Ottenbreit, J.A., dissenting in part, would have: allowed Barton's appeal on the quantum of damages for mental distress; dismissed all other aspects of Barton's appeal; dismissed PCS's cross-appeal; and made no order as to costs.

Damage Awards - Topic 205

Injury and death - Psychological injuries - Mental distress (incl. nervous shock) - Barton was employed as general counsel by PCS for 10 years - He also served as vice-president and secretary to the board of directors for parts of that time - He resigned in 1988 - Five years later, consent interim injunctions were granted against him which, with certain exceptions, restrained him from disclosing information concerning PCS's business or affairs - The injunctions were set aside on September 10, 2003 and PCS discontinued the underlying actions on March 27, 2009 - Barton sought damages for, inter alia, mental stress - He alleged that he suffered severe anxiety, frustration, anger and depression as a result of the interlocutory injunctions; lost weight and became suicidal and consumed alcohol to excess; was humiliated and embarrassed at the attacks on his professional reputation; had to borrow money from his son and applied for and received welfare payments - A chambers judge considered the evidence and its level of persuasiveness and set damages for mental distress at $20,000 - On appeal, the Saskatchewan Court of Appeal increased the award for mental distress to $50,000 - See paragraphs 8 and 189 to 210.

Damages - Topic 558

Limits of compensatory damages - Remoteness - Contracts - Damages within reasonable contemplation of parties - Barton was employed as general counsel by PCS for 10 years - He also served as vice-president and secretary to the board of directors for parts of that time - He resigned in 1988 - Five years later, consent interim injunctions were granted against him which, with certain exceptions, restrained him from disclosing information concerning PCS's business or affairs - The injunctions were set aside on September 10, 2003 and PCS discontinued the underlying actions on March 27, 2009 - Barton sought damages for, inter alia, loss of income and pension - A chambers judge first determined that the proper approach to measuring damages arising from an interim injunction was based on contract principles - The chambers judge refused to award damages for loss of income or pension holding that the damages were not foreseeable and too remote to be recoverable - On appeal, the Saskatchewan Court of Appeal held that the chambers judge erred by finding that Barton's loss of income and pension benefits during the whole of the injunction was not a loss that flowed directly from the imposition of the injunction - The court stated that "... the Chambers judge asked himself the wrong question. The question is not whether the injunction prevented him from getting one of the jobs for which he applied after the date of the Saskatchewan injunction, but whether it was the injunction that caused the loss claimed. The first question is one of mitigation and the second requires the Court to construe the injunction - what did it actually restrain Mr. Barton from doing. It is the latter question, which is the most important for the within appeal." - See paragraph 43.

Damages - Topic 558

Limits of compensatory damages - Remoteness - Contracts - Damages within reasonable contemplation of parties - Barton was employed as general counsel by PCS for 10 years - He also served as vice-president and secretary to the board of directors for parts of that time - He resigned in 1988 - Five years later, consent interim injunctions were granted against him which, with certain exceptions, restrained him from disclosing information concerning PCS's business or affairs - The injunctions were set aside on September 10, 2003 and PCS discontinued the underlying actions on March 27, 2009 - Barton sought damages for, inter alia, loss of income and pension - A chambers judge first determined that the proper approach to measuring damages arising from an interim injunction was based on contract principles and constructed a pretend or notional contract - The chambers judge refused to award damages for loss of income or pension, holding that the damages were not foreseeable and too remote to be recoverable - On appeal, the Saskatchewan Court of Appeal held that the chambers judge erred by finding that Barton's loss of income and pension benefits during the whole of the injunction was not a loss that flowed directly from the imposition of the injunction - Injunctions restraining employment were cautiously granted and on occasion refused because of the potential harm to the individual - Here, the injunction restrained a 57 year old lawyer from working in his field of expertise for 10 years - No authority was cited to the court where a former employer obtained an injunction preventing a former employee from obtaining employment and then the employer was permitted to resile from the obligation to pay damages on the basis that the employee could not show that the injunction was the reason why he was prevented from getting other employment - Barton's evidence showing his efforts to obtain other employment should have been considered as his efforts to mitigate the losses caused by the breach of the constructive contract, and should not have been tested against whether the injunction prevented him obtaining the employment in question - It was simply not possible to allow PCS to rely upon the principles of foreseeability and remoteness to deny a claim for the whole of the injunction period - The claim of loss was not different in kind from that which the injunction restrained - It was a matter of duration only, a time period that was almost exclusively controlled by PCS - See paragraphs 18 to 76.

Damages - Topic 1305

Exemplary or punitive damages - Breach of contract - Barton was employed as general counsel by PCS for 10 years - He also served as vice-president and secretary to the board of directors for parts of that time - He resigned in 1988 - Five years later, consent interim injunctions were granted against him which, with certain exceptions, restrained him from disclosing information concerning PCS's business or affairs - The injunctions were set aside on September 10, 2003 and PCS discontinued the underlying actions on March 27, 2009 - Barton sought, inter alia, punitive damages - A chambers judge determined that the proper approach to measuring damages arising from an interim injunction was based on contract principles and constructed a pretend or notional contract - The court refused to award punitive damages - Barton appealed - The Saskatchewan Court of Appeal agreed with PCS that an independent actionable wrong was necessary to ground a claim for punitive damages for breach of contract and that Barton failed to prove an independent actionable wrong, which was what the chambers judge had decided on this point - The only possible independent actionable wrong that conceivably might exist in this case was the tort of an abuse of process - While PCS's actions might be considered high-handed and vindictive, the evidence did not disclose any overt action, extraneous to the legal proceedings, to support an abuse of process claim - PCS's actions supported the chambers judge's decision to award legal fees as damages and to grant damages for mental distress, but fell short of proving the tort of abuse of process - Although it was not strictly necessary for the court to consider whether punitive damages were available for a breach of an undertaking, the court questioned the proposition that they might not be available - See paragraphs 86 to 98.

Injunctions - Topic 1669

Interlocutory or interim injunctions - Undertaking as to damages - Enforcement - The Saskatchewan Court of Appeal stated that "A court enforcing an undertaking for damages must keep firmly in mind that the undertaking was obtained as the price for the injunction. The undertaking is a promise to the Court that will be enforced absent proof of special circumstances." - See paragraph 20.

Injunctions - Topic 7945

Setting aside injunctions - Remedies - Damages - Barton was employed as general counsel by PCS for 10 years - He also served as vice-president and secretary to the board of directors for parts of that time - He resigned in 1988 - Five years later, consent interim injunctions were granted against him which, with certain exceptions, restrained him from disclosing information concerning PCS's business or affairs - The injunctions were set aside on September 10, 2003 and PCS discontinued the underlying actions on March 27, 2009 - A chambers judge rejected Barton's claim for the loss of $90,000 U.S. which was due to him in equal installments on October 1, 1993 and January 1, 1994 under a consulting contract with a law firm dated May 1, 1993, and never paid - A U.S. decision by Kyle, J., had resulted in Barton's termination by the law firm - This was a reality that could not be ignored - The chambers judge did not know why the law firm did not pay up on October 1, 1993 nor of any efforts made by Barton to get paid - However, it would make no sense and would be fundamentally unfair to grant damages of $90,000 (U.S.), plus interest, to Barton and ignore the reality that regardless of any Canadian injunction, Barton was not going to get the $90,000 in any event - The Saskatchewan Court of Appeal held that this was an unassailable finding of fact - See paragraph 35.

Injunctions - Topic 7945

Setting aside injunctions - Remedies - Damages - The Saskatchewan Court of Appeal overturned a chambers judge's decision not to award damages for loss of income and pension arising out of an undertaking given for an interlocutory injunction in proceedings that were eventually ultimately discontinued - The court found that the injunction restrained a 57 year old lawyer (Barton) from working in his field of expertise for 10 years) - Regarding these damages, Barton had submitted to the chambers judge a report prepared by KPMG, which put forward two scenarios - One scenario was based on what Barton had been paid by the defendant (PCS) in the year before his departure - The second scenario was based on what Hamilton, his successor at PCS, earned - The court held that the second scenario was wholly unreasonable - Barton had left PCS in 1988 - He subsequently secured a settlement based on his having been constructively dismissed - He could not now assert that if he had stayed he would have enjoyed the same benefits as Hamilton - The first scenario also appeared somewhat arbitrary, but it approximated what Barton would have earned under a contract with a U.S. law firm (Cohen contract), had a U.S. injunction not disqualified that law firm from acting in that particular matter - Notwithstanding that there was no causal connection between the loss of that contract and the injunction in issue here, the figures used in it were fairly representative of what Barton would have earned had he been working - The injunction was in force from November 18, 1993 until September 10, 2003 - The court rejected the argument that Barton was entitled to damages for the whole of the injunction period - The better view was that PCS's obligation should end on December 31, 2001, when Barton turned 65 and became entitled to receive some pension benefits - The Cohen contract was set to expire on March 1, 1994 - Thus, Barton was entitled to damages for six years and nine months - See paragraphs 79 to 85.

Injunctions - Topic 7945

Setting aside injunctions - Remedies - Damages - [See Damage Awards - Topic 205 , both Damages - Topic 558 , Damages - Topic 1305 and Injunctions - Topic 1669 ].

Practice - Topic 7408

Costs - Solicitor and client costs - General principles - Solicitor and client costs as damages or punishment - Barton was employed as general counsel by PCS for 10 years - He also served as vice-president and secretary to the board of directors for parts of that time - He resigned in 1988 - Five years later, consent interim injunctions were granted against him which, with certain exceptions, restrained him from disclosing information concerning PCS's business or affairs - The injunctions were set aside on September 10, 2003 and PCS discontinued the underlying actions on March 27, 2009 - A chambers judge did not order any damages for loss of income or pension and did not award punitive damages, but did order PCS to pay $20,000 damages for mental distress and to reimburse Barton his solicitor and client fees - Barton appealed (i) the failure to order any damages for loss of income or pension benefits; (ii) the failure to award punitive damages; and (iii) the amount of the award ordered for damages for mental distress - PCS cross-appealed: (i) the decision to award any damages at all for mental distress; and (ii) the decision ordering that solicitor and client fees be reimbursed - The Saskatchewan Court of Appeal allowed the appeal in part - The court dismissed the cross-appeal, including the cross-appeal from the award of solicitor and client costs - The trial judge's order that Barton be awarded damages as an actual reimbursement of legal bills paid or due and owing, was extended by the court to the payment of his legal bills in relation to the appeal - See paragraphs 8, 99 and 219 to 221.

Practice - Topic 8327.2

Costs - Appeals - Costs of appeal - Solicitor and client costs (incl. special costs) - [See Practice - Topic 7408 ].

Practice - Topic 9256

Appeals - Judgments by appeal court - Remittal to lower court - When appropriate - The Saskatchewan Court of Appeal overturned a chambers judge's decision not to award damages for loss of income and pension arising out of an undertaking given for an interlocutory injunction in proceedings that were ultimately discontinued - The court stated that "In a usual case, an appellate court would arrive at this point in the analysis and might well remit the matter to the Court of Queen's Bench for the purposes of quantifying the loss. In this case, however, it would be inappropriate to do so." - It had been over 20 years since the injunction was imposed and the plaintiff was now 77 years old and should not have to wait to receive compensation any longer - See paragraphs 77 and 78.

Practice - Topic 9257

Appeals - Judgments by appeal court - Assessment of damages - [See Practice - Topic 9256 ].

Torts - Topic 6254

Abuse of legal procedure - Abuse of process - What constitutes - [See Damages - Topic 1305 ].

Cases Noticed:

Nelson Burns & Co. et al. v. Gratham Industries Ltd. et al. (1987), 25 O.A.C. 89; 23 C.P.C.(2d) 279 (C.A.), refd to. [para. 20].

Hoffmann-La Roche & Co. AG and others v. Secretary of State for Trade and Industry, [1974] 2 All E.R. 1128 (H.L.), refd to. [para. 22].

Air Express Ltd. v. Ansett Transportation Industries (Operations) Pty. Ltd. (1979-1981), 146 C.L.R. 249 (Aust. H.C.), refd to. [paras. 23, 129].

642947 Ontario Ltd. v. Fleischer et al. (2001), 152 O.A.C. 313; 56 O.R.(3d) 417; 209 D.L.R.(4th) 182 (C.A.), refd to. [para. 23].

International Pediatric Products Ltd. et al. v. Lambert et al. (1967), 66 D.L.R.(2d) 157 (B.C.C.A), refd to. [para. 25].

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. 50].

Triodos Bank v. Dobbs, [2005] EWHC 108 (Ch.), refd to. [para. 52].

Farm Credit Corp. v. Valley Beef Producers Co-operative Ltd. et al. (2002), 223 Sask.R. 236; 277 W.A.C. 236; 218 D.L.R.(4th) 86; 2002 SKCA 100, refd to. [para. 55].

Hadley v. Baxendale (1854), 156 E.R. 145; 9 Exch. 341 (Eng. Ex. Div.), refd to. [paras. 65, 125].

Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085; 94 N.R. 321, refd to. [para. 87].

Whiten v. Pilot Insurance Co. et al., [2002] 1 S.C.R. 595; 283 N.R. 1; 156 O.A.C. 201; 2002 SCC 18, refd to. [paras. 87, 221].

Canadian Pacific International Freight Services Ltd. v. Starber International Inc. (1992), 12 C.C.L.T.(2d) 321; 44 C.P.R.(3d) 17 (Ont. Gen. Div.), refd to. [para. 96].

Metrick v. Deeb et al. (2003), 172 O.A.C. 229; 16 C.C.L.T.(3d) 298 (C.A.), refd to. [para. 96].

Apotex Inc. v. Ontario (Minister of Health and Long-Term Care) et al. (2005), 204 O.A.C. 275; 42 C.P.R.(4th) 392 (C.A.), refd to. [para. 96].

Beckingham v. Sparrow (1977), 2 C.C.L.T. 214 (Ont. H.C.), refd to. [para. 96].

Digital Equipment Corp. v. Darkcrest Ltd., [1984] Ch. 512, refd to. [para. 98].

Columbia Pictures Inc. v. Robinson, [1987] Ch. 38, refd to. [para. 98].

United States of America et al. v. Yemec et al., [2013] O.T.C. Uned. 50; 2013 ONSC 50, refd to. [para. 98].

Cheltenham & Gloucester Building Society v. Ricketts, [1993] 4 All E.R. 276 (C.A.), refd to. [para. 126].

Abbey Forwarding Ltd. & Anor. v. Hone & Ors, [2012] EWHC 3525 (Ch.); [2013] 1 Ch. 455, refd to. [para. 127].

European Bank Ltd. v. Robb Evans of Robb Evans & Associates, [2010] HCA 6, refd to. [para. 130].

Village Gate Resorts Ltd. v. Moore et al. (1999), 130 B.C.A.C. 267; 211 W.A.C. 267; 37 C.P.C.(4th) 5; 1999 BCCA 626, refd to. [para. 132].

Delrina Corp. v. Triolet Systems Inc. et al. (2002), 165 O.A.C. 160; 58 O.R.(3d) 339 (C.A.), refd to. [para. 133].

Trail-Rite Flatdecks Ltd. v. Larcon International Inc. (1988), 69 Sask.R. 57 (Q.B.), varied (1989), 80 Sask.R. 133 (C.A.), refd to. [para. 134].

Fletton Ltd. v. Peat Marwick Ltd. (1986), 7 B.C.L.R.(2d) 307 (S.C.), refd to. [para. 134].

Islands Trust v. Pinchin Holdings Ltd. (1980), 25 B.C.L.R. 150 (S.C.), refd to. [para. 134].

Bonz Group (Pty) Ltd. v. Cooke, [2000] NZCA 44; 9 TCLR 374, refd to. [para. 139].

Stonehocker et al. v. King et al. (1998), 113 O.A.C. 239; 165 D.L.R.(4th) 227 (C.A.), refd to. [para. 140].

Abbey Forwarding; Columbia Picture Industries Inc. v. Robinson, [1987] Ch. 38, refd to. [para. 141].

St-Jean v. Mercier, [2002] 1 S.C.R. 491; 282 N.R. 310; 2002 SCC 15, refd to. [para. 178].

Ratt v. Wolfe and Poff (1996), 144 Sask.R. 1; 124 W.A.C. 1 (C.A.), refd to. [para. 178].

Holt Holdings Ltd. v. Shumiatcher and Fox (1995), 134 Sask.R. 311; 101 W.A.C. 311 (C.A.), refd to. [para. 178].

Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 S.C.R. 3; 350 N.R. 40; 227 B.C.A.C. 39; 374 W.A.C. 39; 2006 SCC 30, refd to. [para. 189].

Mustapha v. Culligan of Canada Ltd., [2008] 2 S.C.R. 114; 375 N.R. 81; 238 O.A.C. 130; 2008 SCC 27, refd to. [para. 191].

Coppola v. Capital Pontiac Buick Cadillac GMC Ltd., [2013] 9 W.W.R. 15; 417 Sask.R. 213; 580 W.A.C. 213; 2013 SKCA 80, refd to. [para. 206].

J.O. et al. v. Strathcona-Tweedsmuir School et al., [2011] 1 W.W.R. 334; 504 A.R. 117; 2010 ABQB 559, refd to. [para. 209].

Authors and Works Noticed:

Irvine, John, The Resurrection of Tortious Abuse of Process (1989), 47 C.C.L.T. 217, pp. 219, 220 [para. 95].

Sharpe, Robert J., Injunctions and Specific Performance (Looseleaf 2012), para. 2.513 [para. 25].

Spry, Ian C.F., The Principles of Equitable Remedies (6th Ed. 2001), pp. 660 [para. 68]; 661 [paras. 68, 98].

Swan, Angela, and Adamski, Jakub, Canadian Contract Law (3rd Ed. 2012), para. 6.325 [para. 63].

Zuckerman, Adrian A.S., The Undertaking in Damages - Substantive and Procedural Dimensions (1994), 53 Cambridge L.J. 546, generally [para. 98].

Counsel:

James Ehmann, for the appellant;

Gordon Kuski, Q.C., and Kent Thomson, for the respondents.

This appeal was heard on March 12, 2013, by Jackson, Klebuc and Ottenbreit, JJ.A., of the Saskatchewan Court of Appeal. The Court of Appeal delivered the following reasons for judgment on December 20, 2013, which was comprised of the following opinions:

Jackson, J.A. (Klebuc, J.A., concurring) - see paragraphs 1 to 99;

Ottenbreit, J.A., dissenting in part - see paragraphs 100 to 222.