Case information

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Damages – Compensatory damages – Loss of employment income and pension benefits – Mental distress – Quantum – Punitive damages – Solicitor-client costs – What is the proper test to be applied in assessing damages pursuant to an undertaking given in connection with an interlocutory injunction? – In what circumstances are damages for mental distress available in the context of a claim made pursuant to an undertaking? – Can legal costs be awarded as damages when remedies are sought under an undertaking? If so, what test must be satisfied before courts can award costs on a solicitor-client or full indemnity basis? – Must an independent actionable wrong be found in order to award punitive damages pursuant to an undertaking filed to obtain an interlocutory injunction? If so, can litigation misconduct which amounts to abuse of process but does not amount to the tort of abuse of process substitute for an actionable wrong and thus enable an award of punitive damages?

Mr. Barton, respondent, was employed by the applicant corporations (“PCS”) in various capacities, including as general counsel and vice-president. He resigned in 1988, because he was concerned about PCS’ dealings with the price of potash which he believed violated antitrust laws. After leaving PCS, Mr. Barton actively sought employment in large part based on his asserted knowledge of what he contended were illegal acts of price fixing by certain senior executives of PCS. PCS became concerned with Mr. Barton’s activities and eventually sued him. In the process, it obtained an interlocutory injunction against Mr. Barton which significantly affected his ability to earn a living. In exchange for the injunction, PCS undertook to “abide by any order the court may make as to damages in case it is later shown that [Mr. Barton] has, by reason of the injunction granted in these proceedings, sustained any damages which [PCS] ought to pay”. PCS eventually discontinued its action against Mr. Barton, and he subsequently sought an order assessing damages against PCS. Mr. Barton claimed damages for loss of income and pension benefits during the 10-year period of the injunction, damages for mental distress, reimbursement of solicitor-client costs, and punitive damages. The chambers judge awarded Mr. Barton damages for mental distress as well as solicitor-client costs. In a split decision, the Court of Appeal allowed Mr. Barton’s appeal in part, awarded him damages for loss of income and pension benefits and increased his award for mental distress. Ottenbreit J.A., dissenting, would have dismissed Mr. Barton’s claim for loss of income and pension benefits on the basis that he failed to prove that the injunction caused the loss.