Potash Corp. of Saskatchewan Inc. v. Mosaic Potash Esterhazy Limited Partnership, 2011 SKCA 120

• Jurisdiction: Saskatchewan
• Judge: Richards, Smith and Herauf, JJ.A.
• Neutral Citation: 2011 SKCA 120
• Court: Court of Appeal (Saskatchewan)
• Date: 16 September 2011
• Citation: 2011 SKCA 120,(2011), 377 Sask.R. 78 (CA),341 DLR (4th) 407,[2012] 2 WWR 659,[2011] SJ No 627 (QL),377 Sask R 78,341 D.L.R. (4th) 407,377 SaskR 78,377 Sask.R. 78,(2011), 377 SaskR 78 (CA),[2011] S.J. No 627 (QL)

Potash Corp. v. Mosaic Potash (2011), 377 Sask.R. 78 (CA);

    528 W.A.C. 78

MLB headnote and full text

Temp. Cite: [2011] Sask.R. TBEd. OC.045

Mosaic Potash Esterhazy Limited Partnership (appellant/defendant/plaintiff by counterclaim) v. Potash Corporation of Saskatchewan Inc. (respondent/plaintiff/defendant by counterclaim)

(CACV2137; 2011 SKCA 120)

Indexed As: Potash Corp. of Saskatchewan Inc. v. Mosaic Potash Esterhazy Limited Partnership

Saskatchewan Court of Appeal

Richards, Smith and Herauf, JJ.A.

October 24, 2011.

Summary:

Mosaic owned and operated the Esterhazy potash mine. PCS owned potash reserves around the mine. Mosaic mined the PCS reserves under a mining agreement. A dispute arose regarding the agreement's termination. PCS sued Mosaic, seeking, inter alia, a declaration as to the amount of potash that remained to be delivered. PCS applied for an interlocutory injunction restraining Mosaic from altering the status quo by ceasing to deliver potash in accordance with the terms of the mining agreement.

The Saskatchewan Court of Queen's Bench, in a decision reported at (2011), 381 Sask.R. 1, allowed the application. Mosaic appealed.

The Saskatchewan Court of Appeal dismissed the appeal.

Injunctions - Topic 1600

Interlocutory or interim injunctions - General principles - General principles respecting grant of interlocutory or interim injunction - Mosaic owned and operated a potash mine - PCS owned potash reserves around the mine - Mosaic mined the PCS reserves under a mining agreement - A dispute arose regarding the agreement's termination - PCS sued Mosaic, seeking, inter alia, a declaration as to the amount of potash that remained to be delivered - PCS obtained an interlocutory injunction restraining Mosaic from ceasing to deliver potash in accordance with the mining agreement - On Mosaic's appeal, the Saskatchewan Court of Appeal discussed the basic approach to granting interlocutory injunctive relief - The court disagreed with Mosaic's assertion that the factors of (a) strength of the case, (b) irreparable harm and (c) balance of convenience were to be approached as "a series of necessary hurdles", each of which had to be satisfied - While these were prescribed and necessary parts of the analysis, they were not usefully seen as an "inflexible straightjacket" - Instead, they were to be regarded as a framework within which the court would assess whether an injunction was warranted - The court's ultimate focus was the justice and equity of the situation in issue - See paragraphs 20 to 28.

Injunctions - Topic 1600

Interlocutory or interim injunctions - General principles - General principles respecting grant of interlocutory or interim injunction - The Saskatchewan Court of Appeal provided an overview of the proper approach to be taken when deciding whether to grant interlocutory injunctive relief - See paragraph 113.

Injunctions - Topic 1606

Interlocutory or interim injunctions - General principles - Balance of convenience - Mosaic owned and operated a potash mine - PCS owned potash reserves around the mine - Mosaic mined the PCS reserves under a mining agreement - A dispute arose regarding the agreement's termination - PCS sued Mosaic, seeking, inter alia, a declaration as to the amount of potash that remained to be delivered - PCS obtained an interlocutory injunction restraining Mosaic from ceasing to deliver potash in accordance with the mining agreement - Mosaic appealed, asserting, inter alia, that the chambers judge had erred in his assessment of the balance of convenience - The Saskatchewan Court of Appeal dismissed the appeal - There was no merit to Mosaic's argument that the chambers judge was wrong to proceed as if Mosaic had some obligation to provide evidence that it would suffer irreparable harm in order to tip the balance away from PCS - The balance of convenience was just that, a balance - Further, the court rejected Mosaic's assertion that the chambers judge should not have considered maintaining the status quo - The chambers judge's reference to the status quo was a subsidiary basis for the assessment of the balance of convenience and was made in the context of the complex and ongoing case management - The procedural context was a factor that the chambers judge was entitled to include in weighing the equities of granting or refusing an injunction - See paragraphs 104 to 112.

Injunctions - Topic 1607

Interlocutory or interim injunctions - General principles - Requirement of strong prima facie case or appearance of right - Mosaic owned and operated a potash mine - PCS owned potash reserves around the mine - Mosaic mined the PCS reserves under a mining agreement - A dispute arose regarding the agreement's termination - PCS sued Mosaic, seeking, inter alia, a declaration as to the amount of potash that remained to be delivered - PCS obtained an interlocutory injunction restraining Mosaic from ceasing to deliver potash in accordance with the mining agreement - Mosaic appealed, asserting, inter alia, that the chambers judge had erred in failing to require PCS to establish a strong prima facie case, rather than a serious issue to be tried - The Saskatchewan Court of Appeal dismissed the appeal - There were compelling reasons for preferring the serious issue to be tried standard over the prima facie case approach - First, the relief was granted or denied based on affidavit evidence - Where evidence was important and the material facts were complex or contradicted, it would be difficult to confidently choose one version over another - Second, it was typically necessary to consider more than the strength of the case - Requiring a strong prima facie case might truncate the analysis - Third, drawing the judge too far into the merits of the case on an interlocutory application might put that judge in an awkward situation if he or she came to a different conclusion at trial - See paragraphs 29 to 40.

Injunctions - Topic 1607

Interlocutory or interim injunctions - General principles - Requirement of strong prima facie case or appearance of right - Mosaic owned and operated a potash mine - PCS owned potash reserves around the mine - Mosaic mined the PCS reserves under a mining agreement - A dispute arose regarding the agreement's termination - PCS sued Mosaic, seeking, inter alia, a declaration as to the amount of potash that remained to be delivered - PCS obtained an interlocutory injunction restraining Mosaic from ceasing to deliver potash in accordance with the mining agreement - Mosaic appealed, asserting, inter alia, that the chambers judge had erred in failing to require PCS to establish a strong prima facie case, rather than a serious issue to be tried - The Saskatchewan Court of Appeal dismissed the appeal - The cases relied on by Mosaic to the effect that the strong prima facie case approach was to be used in relation to applications for mandatory injunctions, in particular, were now of questionable authority - Going forward, use of the serious issue to be tried approach was the general rule for interlocutory injunctive relief, including applications for mandatory relief - It was more important for the court to focus on the practical effects of the injunction, rather than getting bogged down in distinctions between what was prohibitory and what was mandatory - This did not mean that mandatory-type injunctions would be easier to obtain - It meant only that the analysis of the relative risks and equities should not end if the applicant could do no more than make out a serious issue to be tried - Here, the chambers judge made no error in determining that a serious issue to be tried had been established - See paragraphs 41 to 48.

Injunctions - Topic 1616

Interlocutory or interim injunctions - General principles - Arguable issues of law involved or serious question to be tried - [See both Injunctions - Topic 1607 ].

Injunctions - Topic 1779.9

Interlocutory or interim injunctions - Preservation of status quo - Pending outcome of action - [See Injunctions - Topic 1606 ].

Injunctions - Topic 1802

Interlocutory or interim injunctions - Requirement of irreparable injury - What constitutes - Mosaic owned and operated a potash mine - PCS owned potash reserves around the mine - Mosaic mined the PCS reserves under a mining agreement - A dispute arose regarding the agreement's termination - PCS sued Mosaic, seeking, inter alia, a declaration as to the amount of potash that remained to be delivered - PCS obtained an interlocutory injunction restraining Mosaic from ceasing to deliver potash in accordance with the mining agreement - Mosaic appealed, asserting, inter alia, that PCS had failed to prove that it was at risk of suffering irreparable harm if the injunction was denied - The Saskatchewan Court of Appeal dismissed the appeal - While the operative standard of review was a deferential one, the court noted that, here, the chambers judge had been intimately involved in the complex and ongoing case management - This provided him with a special vantage point - The court was not persuaded that he had committed any reviewable error in connection with the irreparable harm associated with PCS's ability to meet customer demands - See paragraphs 72 to 98.

Injunctions - Topic 1802

Interlocutory or interim injunctions - Requirement of irreparable injury - What constitutes - Mosaic owned and operated a potash mine - PCS owned potash reserves around the mine - Mosaic mined the PCS reserves under a mining agreement - A dispute arose regarding the agreement's termination - PCS sued Mosaic, seeking, inter alia, a declaration as to the amount of potash that remained to be delivered - PCS obtained an interlocutory injunction restraining Mosaic from ceasing to deliver potash in accordance with the mining agreement - Mosaic appealed, asserting, inter alia, that PCS had a "duty to mitigate" irreparable harm and that it should not be entitled to injunctive relief because it had failed to take reasonable steps in that regard - The argument was grounded on the fact that Mosaic had delivered a letter to PCS outlining three alternative courses of action for delivery of potash that it was prepared to take - The Saskatchewan Court of Appeal dismissed the appeal - The chambers judge had not erred in finding that PCS was not required to accept an alteration to the terms of the contract that it was seeking to enforce in order to avoid the irreparable harm that it would otherwise suffer - Mosaic's offer was not a "road block" to PCS' request for an injunction - See paragraphs 99 to 103.

Injunctions - Topic 1808

Interlocutory or interim injunctions - Requirement of irreparable injury - Threshold test - Mosaic owned and operated a potash mine - PCS owned potash reserves around the mine - Mosaic mined the PCS reserves under a mining agreement - A dispute arose regarding the agreement's termination - PCS sued Mosaic, seeking, inter alia, a declaration as to the amount of potash that remained to be delivered - PCS obtained an interlocutory injunction restraining Mosaic from ceasing to deliver potash in accordance with the mining agreement - Mosaic appealed, asserting, inter alia, that the chambers judge had erred in employing an improperly low standard of proof regarding irreparable harm - The Saskatchewan Court of Appeal dismissed the appeal - As a general rule, an applicant seeking interlocutory injunctive relief was required to establish a meaningful risk of irreparable harm or a meaningful doubt as to the adequacy of damages if the injunction was not granted - This was a relatively low standard which would serve to fairly easily move the analysis into the balance of convenience stage of the decision-making where all of the relevant considerations could be weighed and considered with as much subtlety as the circumstances required - While the chambers judge here had misidentified the standard of proof regarding irreparable harm, his reasons showed that he had found that PCS "would" suffer irreparable harm if it was unable to access product under the mining agreement - Therefore, the misformulation was "ultimately of no moment one way or the other" - The higher standard had been satisfied - See paragraphs 49 to 71.

Injunctions - Topic 1935

Interlocutor or interim injunctions - Practice - Appeals - Duties of Appeal Court (incl. standard of review) - [See first Injunctions - Topic 1802 ].

Injunctions - Topic 2306

Mandatory injunctions - To compel continuation of business or service contract - [See second Injunctions - Topic 1607 ].

Injunctions - Topic 2309

Mandatory injunctions - Interim or interlocutory mandatory injunctions - [See second Injunctions - Topic 1607 ].

Cases Noticed:

Metropolitan Stores (MTS) Ltd. v. Manitoba Food and Commercial Workers, Local 832 and Labour Board (Man.), [1987] 1 S.C.R. 110; 73 N.R. 341; 46 Man.R.(2d) 241, refd to. [para. 23].

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. 25].

101109718 Saskatchewan Ltd. et al. v. Agrikalium Potash Corp. et al. (2011), 375 Sask.R. 136; 525 W.A.C. 136; 2011 SKCA 82, refd to. [para. 27].

La Plante et al. v. Society for the Prevention of Cruelty to Animals (Sask.) (2011), 371 Sask.R. 123; 518 W.A.C. 123; 2011 SKCA 43, refd to. [para. 30].

American Cyanamid Co. v. Ethicon Ltd., [1975] 1 All E.R. 504 (H.L.), refd to. [para. 32].

D.M. et al. v. Board of Education of Regina Roman Catholic Separate School Division No. 81(1994), 128 Sask.R. 206; 85 W.A.C. 206 (C.A.), refd to. [para. 41].

Potash Corp. of Saskatchewan Mining Ltd. v. Todd et al. (1987), 53 Sask.R. 165 (C.A.), refd to. [para. 41].

St. Brieux (Town) et al. v. Three Lakes No. 400 (Rural Municipality) et al., [2010] 11 W.W.R. 490; 354 Sask.R. 187; 2010 SKQB 73, refd to. [para. 41].

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. 51].

British Columbia (Attorney General) v. Wale, [1987] 2 W.W.R. 331 (B.C.C.A.), refd to. [para. 5].

Wang v. Luo et al., [2002] A.R. Uned. 230; 2002 ABCA 224, refd to. [para. 51].

Syntex Inc. v. Novopharm Ltd. (1991), 126 N.R. 114 (F.C.A.), refd to. [para. 51].

N.W.L. Ltd. v. Woods et al., [1979] 3 All E.R. 614 (H.L.), refd to. [para. 64].

Great Sandhills Terminal v. J-Sons Inc., [2008] 7 W.W.R. 297; 307 Sask.R. 295; 417 W.A.C. 295; 2008 SKCA 16, refd to. [para. 83].

Culligan Canada Ltd. et al. v. Fettes et al., [2010] 6 W.W.R. 420; 346 Sask.R. 100; 477 W.A.C. 100; 2009 SKCA 144, refd to. [para. 84].

Authors and Works Noticed:

Sharpe, Robert, Injunctions and Specific Performance (2010), paras. 1.540 [para. 44]; 2.90, 2.100 [para. 57]; 2.150 [para. 37]; 2.410 [para. 93].

Siebrasse, Norman, Interlocutory Injunctions and Irreparable Harm in the Federal Courts (2009), 88 Can. Bar Rev. 515, p. 525 [para. 58].

Counsel:

Douglas Hodson, Q.C., David Haigh, Q.C., and Ryan Lepage, for the appellant;

Gordon Kuski, Q.C., Kent Thomson and Maureen Armstrong, for the respondent.

This appeal was heard on September 16, 2011, by Richards, Smith and Herauf, JJ.A., of the Saskatchewan Court of Appeal. On October 24, 2011, Richards, J.A., delivered the following written reasons for judgment for the court.