Provincial Plating Ltd. v. Steinkey et al., (1997) 162 Sask.R. 241 (QB)

• Judge: Klebuc, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: September 16, 1997
• Jurisdiction: Saskatchewan
• Citations: (1997), 162 Sask.R. 241 (QB)

Provincial Plating Ltd. v. Steinkey (1997), 162 Sask.R. 241 (QB)

MLB headnote and full text

Temp. Cite: [1997] Sask.R. TBEd. DE.002

Provincial Plating Limited (plaintiff/applicant) v. Allan Steinkey and Arrow Star Bumper and Automotive Inc. (defendant/respondent)

(1997 Q.B.G. No. 707)

Indexed As: Provincial Plating Ltd. v. Steinkey et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Saskatoon

Klebuc, J.

September 16, 1997.

Summary:

Allan was a director, a shareholder and a sales representative of Provincial. Allan's brother was the chief executive officer and majority shareholder of Provincial. Allan resigned and set up a business in direct competition with Provincial. Provincial sued Allan and his company and sought an inter­locutory injunction prohibiting Allan from contacting or dealing with Provincial's cus­tomers pending trial.

The Saskatchewan Court of Queen's Bench granted an injunction against Allan. The court enjoined Allan's company from solicit­ing Provincial's customers unless it posted security or Allan granted a security interest on his shares in Provincial.

Injunctions - Topic 1617

Interlocutory or interim injunctions - Gen­eral principles - Breach of negative cove­nant - The Saskatchewan Court of Queen's Bench discussed whether it was appropriate to apply the strong prima facie case test or the serious issue to be tried test to an application for an injunction concerning a breach of a restrictive coven­ant - The court stated that the serious question threshold would apply if there was no clear public interest or unless determination of the application would dispose of the principal issue - See para­graphs 12 to 14.

Injunctions - Topic 1617

Interlocutory or interim injunctions - Gen­eral principles - Breach of negative cove­nant - Allan was a director, a share­holder and a sales representative of Prov­incial - Allan's brother was the chief executive officer and majority shareholder of Provin­cial - Allan resigned and set up a business in direct competition with Pro­vincial - Provincial sued Allan and his company and sought an interlocutory injunction prohib­iting contact or dealing with Provincial's customers pending trial - The Sas­katchewan Court of Queen's Bench granted an injunction against Allan and enjoined his company from soliciting Provincial's customers unless it posted security - The court found that Allan's duties as a direc­tor established a serious issue to be tried; loss of goodwill estab­lished potential ir­reparable harm; and the balance of con­venience favoured Provin­cial, but the possibility of Allan's compa­ny's failure had to be considered - See paragraphs 12 to 43.

Master and Servant - Topic 343

Fiduciary duty - When owed - Allan was a director, a shareholder and a sales repre­sentative of Provincial - Allan's brother was the chief executive officer and major­ity shareholder in Provincial - Allan resigned and set up a business in direct competition with Provincial - The Saskatchewan Court of Queen's Bench discussed the tests to be applied to deter­mine whether Allan owed a fiduciary duty to Provincial - See paragraphs 16 to 25.

Cases Noticed:

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; 111 D.L.R.(4th) 385; 54 C.P.R.(3d) 114, refd to. [para. 12].

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; 18 C.P.C.(2d) 273; 38 D.L.R.(4th) 321; 25 Admin. L.R. 20; [1987] 3 W.W.R. 1, refd to. [para. 12].

Goodsman et al. v. Saskatchewan Power Corp. (1997), 152 Sask.R. 143; 140 W.A.C. 143; 145 D.L.R.(4th) 213 (C.A.), refd to. [para. 12].

Agencies Ltd. v. Gregga (L.J.) & Associ­ates Insurance Inc. et al. (1986), 54 Sask.R. 276; 13 C.P.R.(3d) 457 (Q.B.), refd to. [para. 12].

Roblan Distributors Ltd. v. Theofan, [1993] 4 W.W.R. 49; 107 Sask.R. 268 (Q.B.), refd to. [para. 13].

Kemsol Products Ltd. v. Anderson (1992), 40 C.P.R.(3d) 511; 98 Sask.R. 233 (Q.B.), refd to. [para. 13].

Deloitte, Haskins & Sells v. Brooker et al. (1982), 23 Sask.R. 58 (Q.B.), refd to. [para. 13].

Grace (W.R.) & Co. of Canada Ltd. v. Sare (1980), 111 D.L.R.(3d) 204; 51 C.P.R.(2d) 83; 28 O.R.(2d) 612 (H.C.), refd to. [para. 14].

Lecuyer v. Alberta Junior "A" Hockey League et al. (1977), 3 A.R. 213 (T.D.), refd to. [para. 15].

Jogardi Design Furniture Inc. v. Palcu and Palcu Associates Inc. (1996), 149 Sask.R. 257 (Q.B.), refd to. [para. 15].

Alberts (Edgar T.) Ltd. et al. v. Mountjoy (1977), 16 O.R.(2d) 682 (H.C.), refd to. [para. 16].

Genesis Canada Inc. v. Hill (1994), 56 C.P.R.(3d) 419 (Ont. Gen. Div.), refd to. [para. 16].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14; 35 E.T.R. 1; 44 B.L.R. 1, refd to. [para. 18].

Baskerville et al. v. Thurgood (1992), 100 Sask.R. 214 (C.A.), refd to. [para. 18].

Canadian Aero Service Ltd. v. O'Malley, [1974] S.C.R. 592; 40 D.L.R.(3d) 371, refd to. [para. 19].

Hamilton (R.W.) Ltd. v. Aeroquip Corp. (1988), 40 B.L.R. 79 (Ont. H.C.), refd to. [para. 19].

Quantum Management Services Ltd. v. Hann (1989), 69 O.R.(2d) 26 (H.C.), affd. (1992), 11 O.R.(3d) 639 (C.A.), refd to. [para. 20].

Demarco Agencies Ltd. v. Merlo (1984), 48 Nfld. & P.E.I.R. 227; 142 A.P.R. 227 (Nfld. Dist. Ct.), refd to. [para. 20].

Hudson's Bay Co. v. McClockin, [1986] 5 W.W.R. 29; 42 Man.R.(2d) 283 (Q.B.), refd to. [para. 20].

Stenhouse Australia Ltd. v. Phillips, [1974] 1 All E.R. 117 (P.C.), refd to. [para. 20].

EII Ltd. v. Dutko et al., [1997] M.J. No. 225, refd to. [para. 21].

EJ Personnel Services Inc. v. Quality Per­sonnel Inc. (1985), 6 C.P.R.(3d) 173 (Ont. H.C.), refd to. [para. 22].

Sure-Grip Fasteners Ltd. v. Allgrade Bolt & Chain Ltd. (1993), 45 C.C.E.L. 276; 93 C.L.L.C. 14,021 (Ont. Gen. Div.), refd to. [para. 25].

Intertech Model Fixtures Inc. v. Rusch (1992), 8 B.L.R.(2d) 150 (Ont. Gen. Div.), refd to. [para. 31].

Waite's Auto Transfer Ltd. v. Waite, [1928] 3 W.W.R. 649 (Man. K.B.), refd to. [para. 31].

Church & Dwight Ltd. v. Sifto Canada Inc. (1994), 20 O.R.(3d) 483 (Gen. Div.), refd to. [para. 37].

Centre Ice Ltd. v. National Hockey League et al. (1994), 166 N.R. 44; 53 C.P.R.(3d) 34 (F.C.A.), refd to. [para. 37].

Tradeland Agencies Ltd. v. MacKinnon (1979), 5 Sask.R. 438 (Q.B.), refd to. [para. 37].

Saskatoon Funeral Home Co. v. Westwood Holdings Ltd. et al. (1988), 69 Sask.R. 113 (C.A.), refd to. [para. 37].

Indal Ltd. v. Halko (1976), 28 C.P.R.(2d) 230 (Ont. H.C.), refd to. [para. 38].

Canadian Industrial Distributors Inc. v. Dargue (1994), 20 O.R.(3d) 574 (Gen. Div.), refd to. [para. 42].

Authors and Works Noticed:

Ellis, M.V., Fiduciary Duties in Canada (1988), p. 16-10 [para. 23].

Hanbury's Modern Equity (1969), gen­erally [para. 15].

Counsel:

J.A. Hesje, for the applicant;

T.E. Turple, for the respondent.

This application was heard before Klebuc, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Saskatoon, who delivered the following judgment on Sep­tember 16, 1997.