2000 SKQB 366 Q.B.G. A.D. 1998 No. 766 J.C.S. IN THE QUEEN’S BENCH JUDICIAL CENTRE OF SASKATOON BETWEEN: BIG QUILL RESOURCES INC. APPLICANT (PLAINTIFF) and POTASSIUM SULPHATE COMPANY ALSASK INC. and ROBERT NYLEN RESPONDENTS (DEFENDANTS) William J. Klebeck for Big Quill Resources Inc. Jeffrey N. Grubb for Potassium Sulphate Company Alsask Inc. and Robert Nylen JUDGMENT ALLBRIGHT J. September 5, 2000 [1] The applicant Big Quill Resources Inc., by way of notice of motion, seeks the following relief:1. An Interlocutory Injunction pursuant to section 65 of The Queen’s Bench Act and Queen’s Bench Rule No. 387(a) prohibiting and restraining the Respondent Potassium Sulphate Company Alsask Inc., or any person or party claiming under or through the Respondent Potassium Sulphate Company Alsask Inc., from producing and manufacturing potassium sulphate at its plant located at or near Alsask, Saskatchewan, until further order of this court;2. An order pursuant to section 65 of The Queen’s Bench Act and Queen’s Bench Rule No. 387(a) prohibiting and restraining the Respondents, Robert Nylen and Potassium Sulphate Company Alsask Inc., or any person or party claiming under or through them, from selling, marketing or otherwise disposing for profit potassium sulphate produced at the plant of the Respondent Potassium Sulphate Company Alsask Inc. located at or near Alsask, Saskatchewan, until further other [sic] of this court;3. Such further and other ancillary relief ordered by way of injunction, or otherwise, as counsel may advise and this Honourable Court may allow;4. Costs of this application. [2] In summary, the applicant seeks injunctive relief against the respondent such as would prohibit the respondent from producing any potassium sulphate, and would further enjoin both defendants from selling, marketing or otherwise disposing of any potassium sulphate during the life of the injunctive order. [3] The factual foundation upon which the applicant relies is set forth in detail in the affidavit of Harvey Haugen, businessman resident at the town of Wynyard, in the Province of Saskatchewan wherein he deposes as follows: 1. THAT, at all material times to this action, have been the President and Director and Shareholder of the Plaintiff, BIG QUILL RESOURCES INC., and, as such, have personal knowledge of the matters and facts herein deposed to, except where stated to be on information and belief and, whereso stated, verily believe the same to be true. 2. THAT, prior to 1991, the Potash Corporation of Saskatchewan (hereinafter called “PCS”) was involved in Pilot Project utilizing facilities located at Big Quill Lake near Kandahar, Saskatchewan, said Pilot Project being to develop plant to manufacture potassium sulphate utilizing ion exchange technology and process. That myself and one Les Hoiseth were employees of PCS during this Pilot Project phase which commenced on or about the month of September, 1985. 3. THAT, in 1991, several employees of PCS, including myself and Les Hoiseth, incorporated the Plaintiff, BIG QUILL RESOURCES INC., (hereinafter called “Big Quill”) and Big Quill purchased the Pilot Project plant from PCS that year. Concurrent with the purchase of the Pilot Project plant from PCS, Big Quill also obtained an exclusive license from PCS to utilize the ion exchange technology developed by PCS to produce potassium sulphate and attached and marked as Exhibit “A” to this my Affidavit is copy of the Technology Licensing Agreement between PCS and Big Quill Resources Inc. dated August 29, 1991. 4. THAT Big Quill further developed the ion exchange technology and began producing potassium sulphate at an expanded plant located at Big Quill Lake near Kandahar, Saskatchewan, in 1991 and began marketing potassium sulphate throughout Canada and the United States and, to limited extent, overseas. 5. THAT, to the best of my knowledge, in 1991 there was no other plant in the world that manufactured potassium sulphate utilizing ion exchange technology. 6. THAT Les Hoiseth subsequently left the employ of Big Quill in July, 1994 and became involved with one Lloyd Virag, then President and principal shareholder of Sotec Products Ltd., company involved with the production and manufacture of sodium sulphate at plant near Cabri, Saskatchewan. Les Hoiseth approached Big Quill in the fall, 1994, regarding establishing manufacturing plant near Alsask, Saskatchewan, to produce potassium sulphate utilizing ion exchange technology. The Defendant POTASSIUM SULPHATE COMPANY ALSASK INC. (hereinafter referred to as “PSC Alsask”) was incorporated subsequently for that purpose. 7. THAT, in May, 1995, Big Quill and PSC Alsask entered into two agreements, the first being Technology Licensing Agreement whereby Big Quill agreed to grant to PSC Alsask the right and license to use ion exchange technology to produce potassium sulphate, copy of which Technology Licensing Agreement dated May 23, 1995, is attached and marked as Exhibit “B” to this my Affidavit, and the second agreement being an Exclusive Marketing Agreement whereby PSC Alsask agreed that Big Quill would market all of the potassium sulphate produced by PSC Alsask, copy of which Exclusive Marketing Agreement dated May 23, 1995 is attached and marked as Exhibit “C” to this my Affidavit. 8. THAT, subsequent to the signing of the documents marked as Exhibits “B” and “C”, respectively, to this my Affidavit, PSC Alsask, primarily with the technical assistance of Les Hoiseth, constructed plant near Alsask, Saskatchewan, to produce potassium sulphate. 9. THAT am advised by Lloyd Virag, and verily believe the same to be true, that PSC Alsask has been manufacturing potassium sulphate since the early spring or summer of 1997 and that PSC Alsask has been marketing the potassium sulphate on its own behalf. 10. THAT am advised by Lloyd Virag, and verily believe the same to be true, that PSC Alsask has, to December 31, 1998, produced slightly in excess of 11,000 metric tonnes of potassium sulphate and had marketed slightly in excess of 10,000 tonnes of potassium sulphate on its own behalf. 11. THAT, to date, PSC Alsask has not paid any funds whatsoever to Big Quill under the terms of the Technology Licensing Agreement and/or the terms of the Exclusive Marketing Agreement, and as result thereof, the within litigation was commenced in February, 1998. 12. THAT Big Quill has made repeated requests to PSC Alsask to comply with the two agreements to no avail. 13. THAT PSC Alsask has not allowed representatives of Big Quill to enter or examine the potassium sulphate plant constructed by PSC Alsask near Alsask, Saskatchewan, with view to determining whether PSC Alsask is utilizing an ion exchange technology licensed to it under the Technology Licensing Agreement marked as Exhibit “B” to this my Affidavit and it is only as result of Examination for Discovery, and under threat of court application to produce documents, that sufficient documentation was produced by the Defendant, PSC Alsask to Big Quill for Big Quill to determine exactly whether the technology being utilized by PSC Alsask to produce potassium sulphate is the technology licensed to PSC Alsask by Big Quill under the Technology Licensing Agreement. 14. THAT Big Quill has obtained an expert opinion report from an independent engineer that concludes that “the process used by PSC Alsask clearly falls under the Technology Licensing Agreement signed with Big Quill Resources Inc.” 15. THAT the curriculum vitae of the expert engineer, Ed Hinz, is attached and marked as Exhibit “D” to this my Affidavit and the written expert opinion report of Ed Hinz dated March 22, 2000, is attached and marked as Exhibit “E” to this my Affidavit. 16. THAT all of the documentation to which Mr. Hinz reviewed to provide his expert opinion is set out on the last page of Exhibit “E”, which documentation is included in binder approximately five inches thick and which said binder can be provided to the court, if necessary. 17. THAT verily believe that Big Quill has established prima facie case that the Defendant PSC Alsask is utilizing ion exchange technology licensed to it under the Technology Licensing Agreement attached and marked as Exhibit “B” to this my affidavit and that the Defendant PSC Alsask is in breach of the Technology Licensing Agreement as result of not paying any licensing fee whatsoever as contemplated under section of the said Technology Licensing Agreement. 18. THAT am advised by Lloyd Virag, and verily believe it to be true, that PSC Alsask had been put into receivership by its secured creditors in or about the month of May, 1999, and that PSC Alsask is still producing potassium sulphate and marketing it under the receiver’s management. 19. THAT have been made aware that another corporation, Prairie Sulphate Corporation, has apparently acquired the assets of PSC Alsask, which no doubt includes the ion exchange technology utilized at the plant of PSC Alsask to manufacture potassium sulphate, and attached and marked as Exhibit “F” to this my Affidavit is Notice to Customers document of Prairie Sulphate Corporation confirming that Prairie Sulphate Corporation has acquired the assets of PSC Alsask. 20. THAT the Defendant Robert Nylen was the Vice-President in charge of marketing at Big Quill from November, 1991, to November, 1995. 21. THAT, during the term of his employment, the Defendant Robert Nylen executed Confidentiality Agreement dated December 29, 1994 and attached and marked as Exhibit “G” to this my Affidavit is copy of said Confidentiality Agreement. 22. THAT have been advised by Robert Nylen, and verily believe the same to be true, that, prior to his employment with Big Quill, he never had any experience in marketing potassium sulphate and, further, am advised by Robert Nylen, and verily believe the same to be true, that he has been employed as Senior Marketing Manager for the Defendant PSC Alsask since October 1, 1996. 23. THAT the Defendant Robert Nylen, in the said Confidentiality Agreement, agreed that the agreement applied to all client lists of Big Quill and the Defendant Robert Nylen, in paragraph of the said Confidentiality Agreement, agreed that he will not use, directly or indirectly, during or after his employment with Big Quill any of the proprietary and confidential information obtained as result of his employment, particularly including client lists. 24. THAT attached and marked as Exhibit “H” to this my Affidavit is client list of Big Quill provided to our legal counsel at the Examination for Discovery in the within action and am aware and verily believe it to be true that PSC Alsask has been marketing and selling potassium sulphate to various customers and clients of Big Quill which are disclosed on the client list attached and marked as Exhibit “H” to this my Affidavit. 25. THAT Big Quill is now making this application for an interlocutory injunction to restrain and prohibit PSC Alsask, or any party claiming under or through it, from manufacturing potassium sulphate using the ion exchange technology licensed to it under the Technology Licensing Agreement and, further, for an interlocutory injunction restraining and prohibiting Robert Nylen and/or PSC Alsask, or any party claiming under or through them, from marketing potassium sulphate produced at the plant of PSC Alsask, at or near Alsask, Saskatchewan for the following reasons: (i) That Big Quill has now only been able to establish prima facie case that the ion exchange technology licensed under the Technology Licensing Agreement is being used by PSC Alsask to produce potassium sulphate due to the fact that it only obtained documentation this spring sufficient to confirm the design of PSC Alsask plant and the flow charts illustrating the process being used to manufacture potassium sulphate at the said plant. Further, it has been only this spring that Big Quill has been able to determine through an independent expert that PSC Alsask is utilizing the ion exchange technology licensed to PSC Alsask by Big Quill under the Technology Licensing Agreement; (ii) That, even though damages are claimed in the Statement of Claim of the Plaintiff Big Quill, damages in all likelihood cannot be recovered due to the fact that PSC Alsask is in receivership and has been in receivership for more than one year; (iii) That there is now urgency in obtaining requested interlocutory injunctions as result of Prairie Sulphate Corporation apparently having acquired the assets of PSC Alsask as stated in paragraph 19 herein. 26. THAT make this my Affidavit in support of an interlocutory injunction restraining and prohibiting PSC Alsask, or any person or party claiming under or through it, from producing and manufacturing potassium sulphate at its plant at or near Alsask, Saskatchewan, due to its breach of the Technology Licensing Agreement and, further, for an interlocutory injunction prohibiting the Defendants Robert Nylen and/or PSC Alsask, or any person or party claiming under or through them, from selling, marketing or otherwise disposing of potassium sulphate manufactured at the said plant in Alsask, Saskatchewan due to breach of the Exclusive Marketing Agreement. [4] In response, the respondents rely upon the affidavits of Lloyd Virag, Robert Nylen and Guy Mommaerts. [5] Lloyd Virag, of Cabri, Saskatchewan’s affidavit provides as follows: 1. am the former President and CEO of Potassium Sulphate Company Alsask Inc. (“PSC Alsask”), one of the defendants named in the within action, and as such have personal knowledge of the matters and facts herein deposed to except where stated to be based upon information and belief and where so stated, verily believe the same to be true. 2. Potassium sulphate is form of fertilizer. Although its specific uses vary with quality, it is used generally in the agricultural and horticultural markets, as well as in the oil patch as an additive to drilling mud. 3. Its two major secured creditors placed PSC Alsask into receivership on or about May 10, 1999, with KMPG Inc. being the receiver and manager. PSC Alsask’s assets were liquidated by the receiver/manager and the company no longer carries on business. In particular, neither PSC Alsask nor its receiver/manager currently manufactures or markets potassium sulphate. 4. The assets of PSC Alsask were sold to Prairie Sulphate Corporation (“Prairie Sulphate”). am currently the General Manager of Prairie Sulphate. In disposing of the assets of PSC Alsask, the receiver/manager solicited proposals for the purchase of such assets. In addition to Prairie Sulphate, understand that the plaintiff, Big Quill Resources Inc. (“Big Quill”), also sought to acquire the assets of PSC Alsask from the receiver/manager, but was unsuccessful in its bid. 5. Prairie Sulphate has no contractual or other relationship with Big Quill. Further, other than having acquired the assets of PSC Alsask through the receiver/manager, Prairie Sulphate has no contractual or other relationship with PSC Alsask. 6. Although was the President and CEO of PSC Alsask, and am currently the General Manger of Prairie Sulphate, the companies are unrelated. The shareholders of PSC Alsask were the Saskatchewan Opportunities Corporation, Saskatchewan Government Growth Fund II and Sotec Products Ltd. was one of 17 equal shareholders in Sotec Products Ltd., but such company made an assignment into bankruptcy in early 1998. The shareholders of Prairie Sulphate are Saskatchewan Government Growth Fund II Ltd., Saskatchewan Government Growth Fund III Ltd., Lloyd Virag and Rose Virag, Robert Nylen and Betty-Lynn Nylen, Wayne Galecki and Marilyn Galecki and an American investor. 7. Sotec Products Ltd. initiated the development of the potassium sulphate plant near Alsask, Saskatchewan in 1994, and such was taken over by PSC Alsask in the spring of 1995. 8. have reviewed the Affidavit of Harvey Haugen sworn June 29, 2000 in relation to the within application and make the following comments: (a) PSC Alsask did begin producing and marketing potassium sulphate in the summer of 1997. (b) With respect to the Exclusive Marketing Agreement attached as Exhibit “C” to the Affidavit of Harvey Haugen, PSC Alsask maintains that Big Quill made fundamental misrepresentations and breaches in relation to such contract and as consequence PSC Alsask’s purported obligations under such contract have been discharged. Particulars of the misrepresentations and breaches by Big Quill are referred to in the Statement of Defence and Counterclaim filed on behalf of the defendants in the within action, and confirm that such particulars are true and accurate. Further, Big Quill was well aware prior to PSC Alsask commencing production and marketing of potassium sulphate in 1997 that PSC Alsask would not be having Big Quill market its product. (c) Contrary to the assertion of Harvey Haugen, PSC Alsask did not receive from Big Quill the technology described in the Technology Licensing Agreement attached as Exhibit “B” to the Affidavit of Harvey Haugen. Attached hereto and marked as Exhibit “A” to this my Affidavit is copy of the May 30, 1995 letter with enclosures that PSC Alsask received from Big Quill. PSC Alsask received no other written or verbal information from Big Quill that could even remotely be considered technology. Further the information that is provided in the May 30, 1995 letter from Big Quill is generic, could be obtained from many science texts, and is not information that would assist PSC Alsask in establishing the plant it developed near Alsask, Saskatchewan. In addition to personally having many years of experience in producing and marketing sodium sulphate, many of the technical personnel employed by PSC Alsask also had significant experience at producing sodium sulphate and/or potassium sulphate. Although there are differences between producing sodium sulphate and potassium sulphate, the fundamental principles are the same. One of the people who assisted in setting up the PSC Alsask potassium sulphate plant was Les Hoiseth. As noted in the Affidavit of Harvey Haugen, Les Hoiseth left the employ of Big Quill in July of 1994, long before PSC Alsask entered into the Technology Licencing Agreement and Exclusive Marketing Agreement attached as Exhibits “A” and “B” respectively to the Affidavit of Harvey Haugen. The assistance Les Hoiseth provided to PSC Alsask was not by or on behalf of Big Quill, but rather was on his own behalf with his personal technical knowledge. In addition to the internal expertise, PSC Alsask sought the assistance of outside experts to establish its potassium sulphate plant at Alsask, Saskatchewan. One of such experts was Advanced Separation Technologies (“AST”), company based out of Florida, U.S.A. Attached hereto and marked as Exhibit “B” to this my affidavit is true copy of February 9, 1995 fax from AST, such fax confirming that AST had no limitations regarding the production of potassium sulphate with its ISEP equipment. ISEP equipment for the production of potassium sulphate is based upon ion exchange techniques. PSC Alsask eventually decided not to go with AST’s system, but such demonstrates that Big Quill was not the only source for such technology. (d) PSC Alsask established its plant near Alsask to produce potassium sulphate through an ion exchange and crystallization process. Such is NOT patented process. While Big Quill undoubtedly had system of machines and equipment that were configured in certain way so as to utilize an ion exchange and crystallization process to produce potassium sulphate, such was not the only one that could be utilized to produce potassium sulphate. As an analogy, ion exchange is comparable to process that water softener might utilize to soften water. Although each company in the water softener business will follow the same basic scientific principles to soften water, their machines may be unique in terms of how they utilize the scientific principles. The process itself is matter of scientific principle available to the public, whereas the intricacies of each company’s machine may be private and proprietary to each separate company. In the present case, Big Quill is attempting to assert that it somehow has proprietary interest in the scientific principles known as ion exchange and crystallization. Such process, however, consists of public, non-patented scientific principles, and Big Quill provided no machinery or equipment to PSC Alsask. All equipment utilized by PSC Alsask to establish its potassium sulphate plant at Alsask was either purchased from third parties, or was specifically manufactured for PSC Alsask purposes. Again, although PSC Alsask’s potassium sulphate plant uses ion exchange and crystallization to produce potassium, it does so via system that was developed completely independently of Big Quill and is not modelled on or copied from Big Quill. (e) PSC Alsask entered into the Technology Licensing Agreement with the view to considering Big Quill’s potassium sulphate production system as possible option for its Alsask plant. If PSC Alsask decided to model Big Quill’s system (equipment included) and use its technology, then PSC Alsask would become obliged to pay the fee specified in the Technology Licensing Agreement. If, however, PSC Alsask decided not to use Big Quill’s technology, then no fees would be payable. Just as PSC Alsask decided not to use the ISEP equipment offered by AST, it also decided not to model Big Quill’s system or use its technology. Instead, PSC Alsask developed its own system from scratch with the assistance of third parties and NOT Big Quill. One of the primary reasons PSC Alsask decided not to use Big Quill’s technology was that it could not obtain sufficient assurances that Big Quill’s system was efficient enough for PSC Alsask’s needs. As it turns out, was informed by Harvey Haugen at his May 26-27, 1999 examination for discovery in the within action that Big Quill itself did not use its ion exchange technology to produce potassium sulphate when it expanded its plant in 1997, but rather implemented different production technology based upon what is known as the glaserite method. (f) Robert Nylen commenced his employment at PSC Alsask in or about October, 1996. Robert Nylen is currently employed by Prairie Sulphate. Robert Nylen has not disclosed to either PSC Alsask or Prairie Sulphate any information characterized as “Proprietary and Confidential Information” in the Confidentiality Agreement attached as Exhibit “G” to the Affidavit of Harvey Haugen. 9. Prairie Sulphate currently employees [sic] 21 people and its sole business is producing and marketing potassium sulphate at its plant near Alsask. If any injunction were granted that prevented it from producing and marketing potassium sulphate, such would effectively put it out of business. 10. am informed by legal counsel for the defendants herein that pre-trial conference in relation to the within action has been scheduled for Tuesday September 12, 2000. [6] The affidavit of Robert Nylen, of Saskatoon, Saskatchewan, Market Manager provides as follows: 1. am one of the defendants named in the within action, and as such have personal knowledge of the matters and facts herein deposed to except where stated to be based upon information and belief, and where so stated verily believe the same to be true. 2. am currently employed by Prairie Sulphate Corporation (“Prairie Sulphate”), the company that acquired the assets of PSC Alsask from the receiver and manager of such company, KPMG Inc. My principal area of responsibility with Prairie Sulphate is marketing potassium sulphate. am also shareholder of Prairie Sulphate. was neither shareholder nor director of Potassium Sulphate Company Alsask Inc. (“PSC Alsask”), the other defendant named herein. 3. The plaintiff, Big Quill Resources Inc. (“Big Quill”) previously employed me, from November, 1991 to November, 1995. left the employ of Big Quill to pursue other interests in northern Saskatchewan. In the late summer of 1996, noticed an ad in the newspaper in which PSC Alsask was looking for an employee with marketing experience. responded to the PSC Alsask ad and was the successful applicant and commenced employment with PSC Alsask in October, 1996, approximately 11 months after left the employ of Big Quill. 4. The Confidentiality Agreement attached as Exhibit “G” to the Affidavit of Harvey Haugen sworn June 29, 2000 was signed by me on December 29, 1994, which was approximately years after had started working for Big Quill. neither received, nor was promised, any consideration of value for signing the Confidentiality Agreement. simply signed the document. 5. Although PSC Alsask did sell some potassium sulphate to third parties that were also customers of Big Quill, emphatically deny that disclosed or used any “Proprietary and Confidential Information” as described in the Confidentiality Agreement attached as Exhibit “G” to the Affidavit of Harvey Haugen. When joined the employment of PSC Alsask in October, 1996, had no written client lists or other written information that belonged to Big Quill. Further, did not solicit Big Quill customers on behalf of PSC Alsask. To the extent that PSC Alsask made sales of potassium sulphate to third parties who were also customers of Big Quill, such parties initiated the contact with PSC Alsask looking for product, and not the other way around. 6. recognize the client list attached as Exhibit “H” to the Affidavit of Harvey Haugen as one that developed when was employed by Big Quill. did not keep copy of such document when left the employ of Big Quill. From the document it appears to have been faxed on May 24, 1995. As noted above, on May 24, 1995 was still employed by Big Quill. further note that although someone else from Big Quill might have faxed the client list, at no time did ever do so. 7. currently earn my living marketing potassium sulphate for Prairie Sulphate. If the injunction sought by Big Quill against me in the within application is granted, my livelihood would be completely cut off. [7] The affidavit of Guy J. Mommaerts, of Elmira, Ontario, Professional Engineer, provides as follows: 1. am the Technical Director of Ion Exchange Services Canada Inc., and as such have personal knowledge of the matters and facts herein deposed to except where stated to be based upon information and belief, and where so stated verily believe the same to be true. 2. am professional engineer with many years of ion exchange experience. In my current role as Technical Director of Ion Exchange Services Canada Inc. provide expert resource assistance to parties utilizing ion exchange processes. Attached hereto and marked as Exhibit “A” to this my Affidavit is true copy of my Curriculum Vitae. The information contained in my Curriculum Vitae is true and accurate. 3. On February 14, 2000, inspected the potassium sulphate production plant near Alsask, Saskatchewan that was developed by Potassium Sulphate Company Alsask Inc. (“PSC Alsask”). The purpose of my visit was to determine whether the potassium sulphate production system utilized at the PSC Alsask plant was capable of being produced from “scratch”, and secondly whether the information provided to PSC Alsask by Big Quill Resources Inc. (“Big Quill”), including Big Quill’s May 30, 1995 letter to PSC Alsask with enclosures, was capable of allowing PSC Alsask to develop the production system it did. Attached hereto and marked as Exhibit “B” to this my Affidavit is true copy of the report prepared in relation to my review of the PSC Alsask plant, and the information contained therein is true and accurate. 4. Based upon my inspection of the PSC Alsask plant, as well as the various documents reflected in my attached report, come to the conclusion that although PSC Alsask had developed plant capable of producing potassium sulphate using ion exchange and crystallization techniques, the equipment and process configuration was quite capable of being designed from scratch without the use of whatever technology Big Quill might have possessed. In addition, in and of itself the information provided to PSC Alsask by Big Quill, including the May 30, 1995 letter with enclosures, would not be sufficient in terms of affording one the ability to establish potassium sulphate production plant using ion exchange and crystallization techniques. Not only was the information of general nature that could be obtained from many scientific text books and little experimenting, one would require considerably more knowledge and technical skill than one could glean from such information to construct the plant that PSC Alsask did. It is therefore my opinion that PSC Alsask did not use Big Quill’s technology to develop its plant near Alsask Saskatchewan. [8] The affidavits filed by the parties are conflicting on all of the substantive issues. [9] The statement of claim in this matter was issued on the 16th day of February, 1998 and the statement of defence and counterclaim were filed on March 31, 1998. The parties conducted examinations for discovery on May 26 and May 27, 1999. [10] At the request of the parties settlement pre-trial conference has been scheduled for Tuesday, September 12, 2000 at Saskatoon. [11] The applicant’s notice of motion seeking the particularized relief was brought returnable on August 3, 2000. [12] The application before the Court for an interlocutory injunction raises the following issues: 1. Whether the applicant has demonstrated that there is serious question to be tried in respect of its claim against either of the defendants; 2. Whether the applicant will suffer irreparable harm if the relief sought is denied; and 3. Whether the balance of convenience favours granting the injunctive relief sought. [13] Section 65 of The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01, in part reads as follows: 65(1) judge may, on an interlocutory application, grant mandamus or an injunction or appoint receiver where it appears to the judge to be appropriate or convenient that the order should be made. (2) An order pursuant to subsection (1) may be made unconditionally or on any terms and conditions that the judge considers appropriate. [14] Rule 387 of the Queen’s Bench Rules of Practice and Procedure provides as follows: 387A Subject to the provisions of The Queen’s Bench Act, interim orders for mandamus or an injunction or the appointment of receiver or for the interim preservation of property may be made by the court on an ex parte application or upon notice as the court may direct. [15] The framework within which relief by way of interlocutory injunction, may be granted was considered by the Saskatchewan Court of Appeal in Goodsman et al. v. Saskatchewan Power Corp. (1997), 1997 CanLII 9711 (SK CA), 152 Sask. R. 143. At pp. 147-149 Tallis J.A. for the Court observes as follows: As an initial matter we observe that an injunction is an equitable remedy which does not issue as of right or to restrain an act the injurious consequences of which are merely trifling. The exercise of equitable discretion includes the ability to deny as well as grant injunctive relief. An injunction should issue only when the intervention of court of equity is necessary to effectually protect property rights against injuries otherwise irremediable: see Weinberger v. Romero-Barcelo (1982), 102 S. Ct. 1798 and Board of Education of Dysart School District et al. v. Board of Education of Cupar School Division No. 28 (1996), 1996 CanLII 5042 (SK CA), 148 Sask. R. 41; 134 W.A.C. 41 (C.A.). In Metropolitan Stores (MTS) Ltd. v. Manitoba Food and Commercial Workers Local 832 and Labour Board (Man.), 1987 CanLII 79 (SCC), [1987] 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, the Supreme Court articulated three-stage test for granting interlocutory relief. This test was reaffirmed in RJR-MacDonald Inc. et Imperial Tobacco Ltd. v. Canada (Procureur général), 1994 CanLII 117 (SCC), [1994] 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 at p. 334 [S.C.R.]: “Metropolitan Stores adopted three-stage test for courts to apply when considering an application for either stay or an interlocutory injunction. First, preliminary assessment must be made of the merits of the case to ensure that there is serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending decision on the merits. .” In dealing with the first stage of the test, the court in RJR-MacDonald stated at pp. 337-338 [S.C.R.]: “What then are the indicators of ‘a serious question to be tried’? There are no specific requirements which must be met in order to satisfy this test. The threshold is low one. The judge on the application must make preliminary assessment of the merits of the case. The decision of lower court judge on the merits of the Charter claim is relevant but not necessarily conclusive indication that the issues raised in an appeal are serious: see Metropolitan Stores, supra, at p. 150. Similarly, decision by an appellate court to grant leave on the merits indicates that serious questions are raised, but refusal of leave in case which raises the same issues cannot automatically be taken as an indication of the lack of strength of the merits. “Once satisfied that the application is neither vexatious nor frivolous, the motions judge should proceed to consider the second and third tests, even if of the opinion that the plaintiff is unlikely to succeed at trial. prolonged examination of the merits is generally neither necessary nor desirable. “Two exceptions apply to the general rule that judge should not engage in an extensive review of the merits. The first arises when the result of the interlocutory motion will in effect amount to final determination of the action. This will be the case either when the right which the applicant seeks to protect can only be exercised immediately or not at all, or when the result of the application will impose such hardship on one party as to remove any potential benefit from proceeding to trial. Indeed Lord Diplock modified the American Cyanamid principle in such situation in N.W.L. Ltd. v. Woods, [1979] W.L.R. 1294, at p. 1307: ‘Where, however, the grant or refusal of the interlocutory injunction will have the practical effect of putting an end to the action because the harm that will have been already caused to the losing party by its grant or its refusal is complete and of kind for which money cannot constitute any worthwhile recompense, the degree of likelihood that the plaintiff would have succeeded in establishing his right to an injunction if the action had gone to trial is factor to be brought into the balance by the judge in weighing the risks that injustice may result from his deciding the application one way rather than the other.’ “Cases in which the applicant seeks to restrain picketing may well fall within the scope of this exception. Several cases indicate that this exception is already applied to some extent in Canada.” With respect to the second stage of the test irreparable harm the court summarized the appropriate approach in this way at pp. 340-341 [S.C.R.]: “Beetz, J., determined in Metropolitan Stores, at p. 128, that ‘[t]he second test consists in deciding whether the litigant who seeks the interlocutory injunction would, unless the injunction is granted, suffer irreparable harm’. The harm which might be suffered by the respondent, should the relief sought be granted, has been considered by some courts at this stage. We are of the opinion that this is more appropriately dealt with in the third part of the analysis. Any alleged harm to the public interest should also be considered at that stage. “At this stage the only issue to be decided is whether refusal to grant relief could so adversely affect the applicants’ own interests that the harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application. “‘Irreparable’ refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. Examples of the former include instances where one party will be put out of business by the court’s decision (R.L. Crain Inc. v. Hendry (1988), 1988 CanLII 5042 (SK QB), 48 D.L.R. (4th) 228 (Sask. Q.B.)); where one party will suffer permanent market loss or irrevocable damage to its business reputation (American Cyanamid, supra); or where permanent loss of natural resources will be the result when challenged activity is not enjoined (MacMillan Bloedel Ltd. v. Mullin, 1985 CanLII 154 (BC CA), [1985] W.W.R. 577 (B.C.C.A.)). The fact that one party may be impecunious does not automatically determine the application in favour of the other party who will not ultimately be able to collect damages, although it may be relevant consideration (Hubbard v. Pitt, [1976] Q.B. 142 (C.A.)).” And finally with respect to the third stage of the test balance of inconvenience and public interest considerations the court stated at pp. 342-345 [S.C.R.]: “The third test to be applied in an application for interlocutory relief was described by Beetz, J., in Metropolitan Stores at p. 129 as: ‘a determination of which of the two parties will suffer the greater harm from the granting or refusal of an interlocutory injunction, pending decision on the merits’. In light of the relatively low threshold of the first test and the difficulties in applying the test of irreparable harm in Charter cases, many interlocutory proceedings will be determined at this stage. [16] While the outstanding substantive issues between the parties are cast in conflicting terms through the contents of the affidavits to which have earlier referred, am satisfied that in conducting preliminary assessment of the matter, that the applicant has demonstrated that there is serious question between the applicant and the respondents to be tried. am therefore satisfied that in accordance with the established jurisprudence, that must now determine whether the applicant would suffer irreparable harm if the application were refused and in addition must conduct an assessment as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending trial of the issues on their merits. [17] In considering the issue of irreparable harm in the event that the interlocutory injunction is not granted, am mindful of the fact that the action was commenced on February 16, 1998, and that from the material, the applicant has been aware since some time in 1997 that PSC Alsask was producing and marketing potassium sulphate on its own. The applicant has also been aware for some time of PSC Alsask’s May 10, 1999 receivership when the applicant ostensibly offered to purchase PSC Alsask’s assets from the receiver. While the applicant has asserted through the affidavit of Harvey Haugen, reason for only now bringing the injunction application, am of the view that the potential matter of delay is factor to be considered in assessing whether the applicant will suffer irreparable harm if the interlocutory injunction is not granted. [18] In light of the settlement pre-trial conference scheduled for September 12, 2000, and upon considering the respective positions of the parties, I am of the view that the applicant has not demonstrated that it will suffer irreparable harm if the interlocutory injunction is denied. It well may be that the matter is resolved at the settlement pre-trial conference, or in the event that it is not, the parties would appear to be in position to shortly proceed to trial where full canvass of the conflicting positions of the parties would occur. [19] have also considered the third factor, that being an assessment as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending decision on the merits, and am of the view that the respondents, particularly the respondent Robert Nylen would suffer greater harm from the granting of the injunctive relief than would the applicant from the denial of that relief. The respondent Robert Nylen makes his living marketing and selling potassium sulphate. That is his only livelihood and if the injunction is granted he would ostensibly lose that livelihood. When comparing the situations of the applicant, and the respondent Potassium Sulphate Company Alsask Inc., the affidavits disclose that both of these corporate entities believe they would suffer significant harm, in the case of the applicant if the injunction is not granted, and in the case of the corporate respondent, if the application is granted. On balance, I am satisfied that the respondent corporation would suffer greater harm if the injunction were granted, than would the applicant corporation suffer if the injunction were not granted at this stage of the litigation. [20] Accordingly, I am of the view that the applicant has not, on the second and third stages of the three stage test, demonstrated an entitlement to the obtaining of injunctive relief and accordingly I dismiss the application for an interlocutory injunction with costs to the respondents in any event of the cause.
The applicant sought an interlocutory injunction pursuant to s.65 of the Queen's Bench Act and Queen's Bench Rule 387(a) prohibiting and restraining the respondents from producing and manufacturing potassium sulphate near Alsask until further order; an order restraining the respondent from selling, marketing, or disposing of the potassium sulphate for profit until further order; other ancillary relief; costs of the application. HELD: The application was dismissed with costs to the respondents in any event of the cause. The applicant did not demonstrate an entitlement to injunctive relief on the second and third stages of the three stage test. The applicant demonstrated there was a serious question to be tried but failed to demonstrate it would suffer irreparable harm. The delay (the action was commenced February 16, 1998) was considered. On balance the respondents would suffer greater harm if the injunction were granted as the respondent Nylen makes his living marketing and selling potassium sulphate.