Date: 19990211
Docket: T-1721-98
Admiralty action in personam against
UNISPEED GROUP INC.
BETWEEN:
ORDINA SHIPMANAGEMENT LTD.
Plaintiff
- and -
UNISPEED GROUP INC.
Defendant
REASONS FOR ORDER
NADON J.
[1] This is an application by International Maritime Services Inc. ("I.M.S.") for an order directing an assessment of its damages following the order made by Dubé J. on September 1, 1998. By his order, Dubé J. allowed Ordina Management Ltd."s ("Ordina") application for an order for protective measures in the form of a Mareva injunction against the defendant Unispeed Group Inc..
[2] The order made by Dubé J. reads as follows:
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HAVING READ the ex parte Motion on behalf of the Plaintiff, ORDINA SHIPMANAGEMENT LTD. regarding the issuance of an Order for an Interlocutory Injunction, and having heard representations of counsel for the Plaintiff, this Court hereby orders that: |
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1. Unispeed Group Inc. be enjoined from disposing of, encumbering, releasing, or dispossessing itself of any assets or removing them from Canada until further Order of this Court. |
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2. Unispeed Group Inc., Mr. Talal Hallal, and any person who may become aware of the present Order of this Court, be enjoined from doing any act whatsoever, sending any communication, issuing any order, or making any statement which would in any way, either directly or indirectly, as a consequence thereof, interfere with, delay, obstruct, or inhibit. Unispeed Group Inc. from receiving and being paid in the normal course of its operations freight monies validly due, or which will become due, to Unispeed Group Inc. with respect to the normal course of its operations, and from having such freight monies deposited into the bank accounts of Unispeed Group Inc. which are kept at the Bank of Montreal, 1205 Ste-Catherine Street West, Montreal; |
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3. Unispeed Group Inc., Mr. Talal Hallak, and any person who may become aware of the present Order of this Honourable Court immediately deposit into Court in the present action all freight or other monies which may be in the possession of Unispeed Group Inc., on deposit in any bank account held or managed by Unispeed Group Inc., or which may be owing or which may become due to Unispeed Group Inc., up to the amount of $846,300.00 pending further Order of this Court; |
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4. Paragraph 3 of the present Order is to remain executory until such time as the amount of $846,300.00 has been deposited into Court. Any further amounts tendered into Court in excess of the said amount shall be refused by the Registry or returned to the person tendering same. Any amounts deposited into Court, up to the said amount of $846,300.00, shall remain so deposited until further Order of this Court; |
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5. the present order, the Statement of Claim and the Plaintiff"s Application for Interlocutory Injunction may be validly served upon the Defendant and any other person by sending a copy thereof by facsimile transmission; |
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6. the Court hereby dispenses with the requirement of the filing of the present ex parte Motion at least two days before the date of hearing; |
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7. the present matter is adjourned until Monday, September 14, 1998. Montréal. Qc. at which time the Court will hear the Plaintiff and, as the case may be, the Defendant as to the renewal, variance, or setting aside of the present Order. |
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| 8. Ordina has undertaken to file security in the form of a security bond or bank letter of guarantee or cash in the amount of $10,000.00 for possible damages to Unispeed, within 10 days. |
[3] For the reasons that follow, I.M.S."s application must be dismissed.
[4] The law is clear that the order sought by I.M.S. can only be made where the applicant has given an undertaking to the Court. The law is also clear that the Court cannot compel an applicant to provide an undertaking as to damages. If the applicant refuses to provide the undertaking, the Court may, in its discretion, refuse to grant the order sought. In Hoffman-La Roche v. Trade Sec., [1975] A.C. 295 (H.L.), at page 361, Lord Diplock explained the matter as follows:
The Court has no power to compel an applicant for an interim injunction to furnish an undertaking as to damages. All it can do is to refuse the application if he declines to do so. The undertaking is not given to the defendant but to the court itself. Non-performance of it is contempt of court, not breach of contract, and attracts the remedies available for contempts, but the court exacts the undertaking for the defendant"s benefit. It retains a discretion not to enforce the undertaking if it considers that the conduct of the defendant in relation to the obtaining or continuing of the injunction or the enforcement of the undertaking makes it inequitable to do so, but if the undertaking is enforced the measure of the damages payable under it is not discretionary. It is assessed on an inquiry into damages at which principles to be applied are fixed and clear. The assessment is made upon the same basis as that upon which damages for breach of contract would be assessed if the undertaking had been a contract between the plaintiff and the defendant that the plaintiff would not prevent the defendant from doing that which he was restrained from doing by the terms of the injunction: see Smith v. Day (1882) 21 Ch.D. 42221, per Brett L.J., at p. 427.
[5] It appears clearly from the order made by Dubé J. that Ordina gave an undertaking and provided security in the form of a security bond in respect of the damages which might be suffered by the defendant. However, no undertaking was given in respect of damages which might be suffered by third parties such as I.M.S..
[6] Since no undertaking was given by Ordina in respect of damages which third parties might suffer, the matter would appear to be at an end. The Court"s power to direct an inquiry into damages stems from its discretion to enforce the undertaking given by the applicant. As no undertaking was given, the Court, in my view, cannot direct an inquiry into damages suffered by I.M.S..
[7] Counsel for I.M.S. argues that, by reason of Rule 373(2) of the Federal Court Rules, an applicant who obtains an interlocutory injunction is deemed to have given an undertaking to all those who might suffer damages as a result of the Court granting the order sought. Rule 373(2) reads as follows:
373. (2) Unless a judge orders otherwise, a party bringing a motion for an interlocutory injunction shall undertake to abide by any order concerning damages caused by the granting or extension of the injunction.
(2) Sauf ordonnance contraire du juge, la partie qui présente une requête pour l'obtention d'une injonction interlocutoire s'engage à se conformer à toute ordonnance concernant les dommages-intérêts découlant de la délivrance ou de la prolongation de l'injonction.
[8] I do not read this rule as counsel reads it. In my view, the rule simply provides that a judge may, in his discretion, grant an injunction to a party without requesting that party to provide an undertaking for damages. In the case at bar, Dubé J. issued the injunction and, in so doing, requested an undertaking from Ordina in regard to damages which the defendant might suffer. Dubé J. did not request an undertaking from Ordina in regard to damages which might be suffered by third parties.
[9] In the transitional supplement to Federal Court Practice 1998 concerning the Federal Court Rules, 1998, the learned authors make the following comments regarding Rule 373(2).
Rule 373(2) is new. It provides that a party shall undertake to abide any order concerning damages caused by the granting of the injunction. The rule appears to codify the practice of providing undertakings as to damages. The rule would appear to make an undertaking mandatory, save where a party satisfies the Court that an undertaking is unnecessary or inappropriate.
[10] I am of the view that Rule 373(2) cannot be read the way counsel for I.M.S. suggests. Consequently, as no undertaking for damages to third parties was given by Ordina, the order sought by I.M.S. cannot be granted. The application will therefore be denied.
[11] Ordina shall have its costs on the motion.
Ottawa, Ontario "MARC NADON"
February 11, 1999 JUDGE
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