When will seeking injunctive relief against a non-party amount to abuse of process? At what stage in a proceeding should that determination be made? The British Columbia Court of Appeal addressed these questions in Tangerine Financial Products Limited Parternship v. The Reeves Family Trust, the result being that it is easier, both substantively and procedurally, for non-parties to oppose such remedies on a preliminary basis.
In December 2012, RSP Generation Limited Partnership (“RSP”) bought the assets of Tangerine LP, which had previously been sold as part of a receivership proceeding. Among the assets sold was an investing strategy which Tangerine LP had originally obtained from Tangerine Financial Products Corp., along with consent to use the name “Tangerine Financial Products” until a time when Tangerine LP was dissolved.
In 2013, Scotiabank changed the name of its recently-acquired subsidiary ING Bank to Tangerine, and applied to register various trade-marks related to the new name. RSP notified Scotiabank of its objection to the name Tangerine, and applied to register its own Tangerine trade-marks.
In March 2014, RSP filed a notice of application in the Tangerine LP receivership proceedings seeking an order restraining Scotiabank and ING (neither of whom were parties to the proceedings) from using the Tangerine name. RSP relied on a provision in the vesting order approving the sale of Tangerine LP’s property which states:
That every person having notice of this Order shall not take any steps to appropriate, interfere with, or use without the written permission of the Purchaser any part of the Assets, undertaking, goodwill, know how or intellectual property purchased hereby.
In response, Scotiabank brought a notice of application seeking to strike RSP’s application on the basis that it consituted an abuse of process. In essence, Scotiabank submitted that RSP was attempting to obtain the benefit of a successful passing off action without the necessity of bringing one let alone proving its case.
The application judge Justice Smith dismissed Scotiabank’s application, holding that it was not plain and obvious that RSP’s application was an abuse of process, and that the issue should be left for the judge to decide on the merits. Justice Smith agreed with Scotiabank that if RSP succeeds in its application, it would have succeeded in a passing off claim without having to prove its case in the normal way. For that reason, Justice Smith acknowledged that RSP faced “substantial hurdles”, but could not say that RSP was “certain to fail”.
Scotiabank appealed the decision of Justice Smith to the British Columbia Court of Appeal, arguing that Justice Smith erred in holding that the issue was not ripe for determination.
Justice Frankel, for a unanimous British Columbia Court of Appeal, granted the appeal and dismissed RSP’s application as an abuse of process.
First, Justice Frankel, relying on Justice Slatter’s decision in Reece v. Edmonton (City), 2011 ABCA 238, leave to appeal ref’d  1 S.C.R. xi, rejected the motion judge’s decision that an assessment of whether RSP’s application ought to be struck as an abuse of process could not be determined before trial. In that case, the Court held that the question is whether the record before the court is sufficient to fairly decide whether there is an abuse of process. In this case, Justice Frankel held that all of the facts relevant to the determination of Scotiabank’s application to strike were known, and so there was no need to defer the issue to trial.
Second, on the merits of Scotiabank’s application, the Court asked the parties for submissions on Equustek Solutions v. Google Inc., 2015 BCCA 265, a judgment released earlier this year in which the BCCA ruled that a superior court has the jurisdiction to grant injunctive relief against non-parties. Justice Frankel relied on the reasons of Justice Grobeman in Equusek to hold that although the courts may have the jurisdiction to grant orders against non-parties, it would be inappropriate to do so when the applicant has the ability to obtain the relief it seeks by means of an action. This is to afford the party against whom relief is sought the procedural protections of a party. The question to be determined is whether the relief is sought as a means to preserve the rights of one of the parties in those proceedings. In this case, Justice Frankel held that there was no justiciable issue between the parties to the receivership proceeding which would require the remedy sought against Scotiabank. Justice Frankel held that RSP was attempting to use the receivership proceedings as a “Trojan Horse” for a passing-off action, thereby denying Scotiabank the procedural and substantive rights it would have had as a defendant to such an action.
Accordingly, Justice Frankel dismissed RSP’s application as an abuse of process.
This case is significant in that it demonstrates that the jurisdiction of superior courts to enjoin non-parties does not in itself entitle a party to an injunction in every case. The case suggests that the instances where a court will grant this relief will be unusual, and must serve a very specific purpose.
Parties who wish to seek injunctive relief against non-parties (and entities who are faced with the threat of an injunction in proceedings in which they are not named) should consider whether the remedy sought is intended to protect some right of a party that is connected to the underlying issue of the proceeding, and and whether the remedy sought could be obtained through another means.
The case is of particular significance to organizations that obtain intellectual property in the course of receivership proceedings. Parties should keep in mind that it will likely still be necessary to pursue traditional enforcement proceedings to protect any rights to intellectual property obtained in this way, as orders issued in the course of these proceedings will not exempt them from proving the substantive elements of their claim, nor the procedural steps required to obtain relief.
Docket: CA41863; CA41976
Date of Decision: August 13, 2015