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IN THE SUPREME COURT OF BRITISH COLUMBIA
Date: 20090402 Between: XY, Inc. Plaintiff And IND Lifetech, Inc. Defendants - and - Docket: S082044 Between: XY, Inc. Plaintiff And International Newtech Development Incorporated, IND Lifetech Group Ltd., Defendants Before: The Honourable Mr. Justice Slade Reasons for Judgment
I. INTRODUCTION [1] The plaintiff, XY Inc., seeks summary judgment, pursuant to Rule 18 of the Rules of Court, against the defendant, JingJing Genetic Inc. (“JJG”), in the amount of USD $472,671. This amount represents the royalty payable by JJG on embryos and sexed semen produced under a commercial license agreement entered between XY and IND LifeTech on February 6, 2004, amended on May 13, 2004, and supplemented by an addendum dated October 26, 2004 (“CLA”). IND later changed its name to JingJing Genetic Inc. [2] JJG opposes this application. It claims an equitable set-off against its counter claim for damages arising out of XY’s termination of the CLA. If judgment is granted, JJG seeks a stay of execution. [3] This application is one of several heard in this, and other related proceedings. The history of the relationship between the parties is discussed in my reasons dated November 16, 2007 [2007 BCSC 1666], and September 8, 2008 [2008 BCSC 1215], and summarized below. II. BACKGROUND A. Basis for Present Application [4] XY has developed technology for the production of sex-selected inseminates. It licenses its technology to various companies around the world, including the defendant JJG. [5] Clause 2.1 of the CLA grants JJG a license to manufacture, use and sell certain “Licensed Products”. It may manufacture Licensed Products, which include sex-selected inseminates, in the U.S. and Canada. It may use or sell Licensed Products in China. Initially, JJG was restricted to the sale only of sex-selected cattle embryos in China. [6] Clause 2.9 of the CLA gave JJG an option to procure a license to manufacture a limited number of insemination straws, containing sex-selected sub-populations of cattle spermatozoa, for sale in China. This option was exercised, and an addendum was executed between the parties on October 26, 2004. The CLA called for the payment of USD $250,000 for the exercise of the option, which sum was paid. [7] Clause 3.1.1(b) of the CLA calls for the payment of a royalty of ten percent of all receipts from any sale or use of Licensed Products, with a minimum royalty of USD $6. [8] The claim for summary judgment is in the amount of the minimum royalty for embryos and straws of sexed semen, both of which are Licensed Products, which were shipped to China in 2007. JJG has admitted that 49,871 embryos were implanted in China, and that 40,757 straws of sexed semen had been sold. The minimum royalty payable is the sum of USD $472,671. B. History of Proceedings [9] Licensees of XY, including JJG, are able to manufacture sex-selected inseminates with the use of a cytometer that has been modified for the use of proprietary technology owned by XY. In the fall of 2007, XY learned that IND (now JJG) intended to sell two of the three cytometers it had used for the production of sex-selected inseminates to a person in China. On October 12, 2007, on application by XY, this court granted an injunction prohibiting the sale. On October 23, 2007, XY filed its statement of claim in action no. S076862, the action in which the injunction had been granted. The statement of claim seeks permanent injunctive relief to prevent IND from selling its cytometers, and from disclosing to any person, or in any way disposing of, XY’s confidential information. Confidential information is said to include any trade secrets, designs, and the like. [10] On November 16, 2007, the October 12, 2007 order was vacated, and a less comprehensive order was pronounced, which continued the prohibition of the sale of the cytometers. The latter order is based on my reasons for judgment of November 16, 2007. [11] Tensions between XY and IND Lifetech Inc. did not start with the attempt of the latter, in October 2007, to sell the two cytometers to a third party in China. The following extract from my reasons for judgment dated November 16, 2007 addresses events leading up to this attempted sale: [6] The affidavit of Dr. Remillard, a principal of the defendant, deposes to the circumstances leading up to the defendant’s agreement to sell the two cytometers. [7] In summary, Dr. Remillard says: 1. The plaintiff has not been engaged directly or indirectly in the business of separating spermatozoa into X and Y chromosome-bearing inseminates. Its primary business is that of a licensor “of certain intellectual property rights”, and that it “earned income through the collection of royalties from the arms-length licensees of those rights”. 2. The defendant had a good business relationship with Dr. Jacobson, the former CEO of the plaintiff. 3. The defendant is a licensee of the plaintiff’s technology. Another licensee carries on business under the name “Sexing Technologies”. Mr. Rosenstein is the co-CEO of Sexing Technologies. 4. In May 2007, Dr. Jacobson sold his shares in the defendant to Sexing Technologies, which ultimately acquired the majority of the shares of the defendant in summer 2007. [This reference to “defendant” is in error; the reference should be to the plaintiff] Mr. Rosenstein is now the co-CEO of the plaintiff. The plaintiff has become involved in the business of producing sex-selected inseminates. 5. Before Sexing Technologies took control of the plaintiff, the plaintiff and defendant entered an amendment to the agreement to allow the defendant to sell sex-selected inseminates internationally. This had positioned the defendant to compete effectively with Sexing Technologies in the market for sex-selected inseminates. 6. In August 2006 the defendant made an arrangement with another third party, Semex, by which the defendant would manufacture sex-selected inseminates using semen provided by bulls owned or controlled by Semex. In June 2007 the defendant and Semex were negotiating an agreement by which the defendant would use semen supplied by Semex to manufacture sex-selected inseminates for Semex. On the strength of this, the defendant purchased an additional cytometer SX from Dako. 7. On August 21, 2007 the plaintiff, now under the control of Sexing Technologies, objected to the 2007 Semex contract on the basis that Semex was not a licensee of the plaintiff’s technologies. 8. Without a sustained supply of sperm from Semex, the defendant does not have sufficient quantities of semen to justify having its three cytometer SX models. In October 2007 the defendant agreed to sell two of these, at a price of $600,000 USD each, for delivery in China. [8] Dr. Remillard’s evidence, to the extent summarized above, is not controverted on any matter of substance. [12] The subject of the proposed sale of the cytometers is also discussed in my reasons dated September 8, 2008: [37] A third party, Dako, manufactures the devices that are used, employing XY’s technology, to manufacture sex separated spermatozoa. These are known as SX cytometers. As a licensee of XY’s technology, JJG was able to purchase SX cytometers from Dako. JJG obtained its first SX cytometer in March 2004. Around this time, XY sent a number of representatives to JJG’s premises to assist JJG with the installation of the SX cytometers and the training of JJG staff. As well, JJG sent a number of its employees to XY’s premises in Denver, Colorado to receive training on how to operate the SX cytometer to sort cattle spermatozoa. After the training, employees of JJG were able to operate the SX cytometer independently to sort cattle spermatozoa. [38] JJG purchased a second SX cytometer in October 2004. [39] By June 2006, JJG had received XY’s approval to sell both sexed semen and embryos internationally under the terms of the license. XY’s approval was obtained after JJG had demonstrated satisfactory quality levels of the products it made using XY’s technology. [40] In July 2006, JJG obtained a price quote from Dako for three additional SX cytometers. However, JJG did not purchase any more SX cytometers from Dako because it did not have a sufficient supply of semen to warrant the purchase of additional SX cytometers. [41] Between June and August 2006, JJG negotiated an agreement with Semex, an established distributor of cattle inseminates and embryos, under which JJG would use semen supplied by Semex to manufacture sex-selected inseminates for Semex. On the strength of its dealings with Semex, JJG purchased a third SX cytometer. Both JJG and Semex required the approval of XY for their arrangement to proceed. Though JJG sought XY’s approval, this approval was not forthcoming. JJG contends that XY did not approve the arrangement with Semex because control of XY had been acquired by a company engaged in the business of producing sex-selected inseminates using XY’s technology. JJG contends that XY wanted to stifle competition. JJG maintains the XY’s dual interest as a licensor of technology and producer of sex-selected inseminates has led it to embark upon a plan to restrict JJG’s ability to carry out its business. [42] JJG says that XY’s actions caused it to abandon its arrangement with Semex. In the result, it no longer had a sufficient supply of sperm to justify having three SX cytometers. Zhu deposed that as a result of XY’s refusal to endorse the arrangement of Semex, he determined that “the future of JJG was no longer in the production of sorted sexed semen in North America”. These circumstances led Zhu to develop and explore his options with JJG. Zhu initiated a search for investors interested in developing in China herds of cows with the strong genetic makeup of Canadian cattle. As a result of these efforts Zhu was approached by Zheng Hong Liu and Shuxi Wang. [43] Contact with Liu led JJG to negotiate the sale of two of its SX cytometers to Liu’s company, Shanghai Jing Jing Biotech Co. Ltd. On September 27, 2007, JJG agreed to sell two of its SX Cytometers to Shanghai Jing Jing, at a price of $600,000 USD each, for delivery in China. When JJG informed XY of this agreement, XY sought an injunction to stop the sale on the strength of the terms of the license agreement between XY and JJG. The court initially granted an interim junction, and later an interlocutory injunction. The court’s reasons on this matter are reported as XY, Inc. v. IND LifeTech, Inc., 2007 BCSC 1666. [13] On December 4, 2007, Mr. Moreno, CEO of XY, wrote to IND to advise that, until the dispute that was the subject matter of litigation in Canada is resolved, “XY will return and will not retain any royalty amounts paid by IND”. The letter demanded that IND continue to maintain records and submit monthly reports of royalty amounts owed under the CLA. [14] In July 2008, XY brought another application in action no. S076862. This application sought broader injunctive relief than previously granted. XY sought to enjoin the IND companies from using confidential information obtained as of a result of the CLA. It also sought to enjoin JJG from providing confidential information to others. I refer to the following extracts from my reasons dated September 8, 2008: [2] The plaintiff contends that the defendant JingJing Genetic Inc. (“JJG”), which is a licensee of the plaintiff’s technology, is planning with the other corporate defendants to establish a sperm sorting operation in China, and that the confidentiality that protects XY’s technology would be compromised if the defendants’ plans are carried out. [3] This is the relief sought in the plaintiff’s notice of motion dated April 25, 2008: 8. The Defendants, by themselves, their servants, agents or any company owned or controlled by any of them or otherwise, be restrained from transferring, selling, leasing, licensing, or in any other way disclosing Confidential Information, as defined in the Statement of Claim, until the trial of this matter or further Order of the Court; 9. Further, the Defendants, other than JJG and the individual Defendants Jesse Zhu, Richard Remillard, Selen Zhou and Tang Jing acting strictly within the scope of their employment with JJG, be restrained from using such Confidential Information, until the trial of this matter or further Order of the Court; …. [4] The following paragraphs from the statement of claim contain the definition of “Confidential Information”: 23: XY is the owner of certain confidential information, trade secrets, know-how, technical data, masks, code programs, designs, processes, methods, operations, devices, innovations and inventions (collectively, the “Confidential Information”) which it uses or licenses in the ordinary course of its business. 24. The Confidential Information includes, but is not limited to: (a) techniques, processes and protocols for adapting and using flow cytometry equipment, and making parts for such equipment, to separate spermatozoa into X-chromosome bearing (female) and Y-chromosome bearing (male) populations (“Sex-Selected Inseminates”); (b) techniques, processes and protocols for using Sex-Selected Inseminates for in vitro and in vivo fertilization of cattle oocytes; (c) techniques, processes and protocols for producing sex-selected cattle embryos from the Sex-Selected Inseminates (“Sex-Selected Embryos”); (d) techniques, processes and protocols for the cryogenic storage of cattle semen, Sex-Selected Inseminates, and Sex-Selected Embryos. [15] On August 2, 2008, U.S. counsel for XY wrote to JJG. This letter alleges various breaches of the CLA, and gives notice of a thirty day cure period under Clause 5.1.2 of the CLA. One demand was that JJG pay, within the thirty day period, the sum of $1,650,560.76. This figure is based on XY’s understanding of the number of embryos sold or transferred, and the number of artificial insemination straws sold or transferred, based on the USD $6 minimum royalty rate, plus interest. The letter includes notice of XY’s intention to terminate the CLA if JJG does not comply within the thirty days. [16] XY’s July 2008 application was dismissed on the basis of my reasons dated September 8, 2008. In short, XY did not prove that JJG intended to disseminate Confidential Information. [17] In a letter dated November 3, 2008 from JJG’s Canadian counsel, addressed to Canadian and U.S. counsel for XY, JJG responded to XY’s October 2, 2008 demand. In this letter, JJG gave XY numerous of the assurances that had been demanded. However, JJG took issue with XY’s claim that the minimum royalty payment then due was $1,650,560.76. The particular issue raised had primarily to do with the definition in the CLA of the event that triggered the obligation to pay the minimum royalty. On the basis of its understanding of the proper method of determining when payment was due, JJG said: JingJing hereby tenders to pay to your client the sum of USD $472,671.00 (the “Payment”) in payment of all royalties due under the License Agreement to September, 2008. This amount reflects the “pay when used” calculation, and is comprised of the following: (a) USD $200,919.00 (royalties payable on 49871 embryos used to September 30, 2008, subtracting the $20,616 paid previously); and (b) USD $244,542.00 ($6.000 per AI Straw royalty) payable on sexed semen to September 30, 2008. JJG also stated: On your confirmation, we will forward a cheque in the amount of USD $472,671.00 payable to [your counsel], in trust. [18] On November 17, 2008, U.S. counsel for XY wrote to JJG’s Canadian counsel, saying, in part: We have not received any unconditional payment from JJG within the required thirty (30) day notice period, quite apart from other unresolved breaches. Accordingly, JJG has failed to cure its breach of the Agreement. Pursuant to Section 5.1.2 of the Agreement, XY hereby terminates the Agreement effective November 17, 2008, by reason of JJG’s breaches of the Agreement. All technology, all proprietary rights and all other rights licensed to JJG under the Agreement immediately revert to XY and JJG shall immediately cease all manufacture, use, offer-for-sale and sale of licensed products under the Agreement. [19] The above exchange took place after XY filed its consolidated statement of claim on August 20, 2008. There are 17 named defendants in the action. Included are companies incorporated in the Cayman Islands, British Columbia, Quebec, California, Pennsylvania, and China. Some of the personally named defendants are residents of China. [20] The allegations in the consolidated statement of claim include infringement of intellectual property rights, breach of the CLA, conspiracy to misappropriate confidential information and falsify books of accounts and records, preparation of fraudulent reports, and fraudulent concealment. [21] XY’s allegations of wrongdoing include the attempted sale of the cytometers. [22] A short time before the hearing of the present application, JJG retained new counsel. As at the date of the hearing, counsel for JJG had prepared an amended statement of defence, which had not yet been filed. The amended statement of defence includes the following paragraphs: 12. Disputes arose between [JJG] and XY regarding the proper interpretation of certain terms of the Contract. 13. However, most of those disputes were resolved. The principal main remaining dispute is whether royalties are due in respect of certain products produced by [JJG] or will only become due in future. [23] The amended Statement of Defence acknowledges liability for the monies claimed due on this application, in the following terms: 17. Subject to its counterclaim and claim for set off, [JJG] is liable under the Contract to pay USD $472,671 ([JJG]’s Contingent Liability”). [24] As for the October 2, 2008 demand, and November 3, 2008 response, the amended Statement of Defence says: 18. On November 3, 2008, XY tendered payment in full of the amount of [JJG]’s Contingent Liability but XY wrongfully refused to accept the payment and instead on November 17, 2008 terminated the Contract. [25] JJG pleads, in paragraph 19 of its amended Statement of Defence: 19. XY’s termination of the Contract was unlawful, in breach of the Contract, and has caused [JJG] damage. [26] The following paragraphs in the amended statement of defence relate to the evidence discussed in the extracts from my November 16, 2007 and September 8, 2008 reasons, set out at paragraphs 11 and 12 herein: XY’s Breach of Duty of Good Faith 58. When the Contract first came into existence in 2004, XY was not engaged in business competing with [JJG]. 59. However, XY subsequently began engaging in business in competition with [JJG]. 60. XY deliberately sought to create artificial disputes with [JJG] in order to manufacture a circumstance in which it could purport to terminate the Contract so it could destroy [JJG] as a competitor. 61. XY’s conduct was in breach of its duty of good faith owed to [JJG] and caused [JJG] damage. [27] In its counterclaim, JJG says, in paragraph 6, that: 6. XY breached the Contract in at least three material respects: a) XY breached its duty of good faith owed to [JJG]. b) XY terminated the Contract unlawfully. c) XY failed to provide [JJG] with further intellectual property it developed during the term of the Contract. [28] Paragraph 6(a) relates to XY’s alleged action that resulted in JJG’s attempt to sell the cytometers. [29] The counterclaim asserts that the CLA was a contract of indefinite duration unless terminated for cause or unless it was in material breach of the contract. It is further alleged that: 13. In reliance of XY’s lawful performance of the Contract, [JJG] paid: a) $500,000 to XY as licensing fees. b) $1.2 million to purchase equipment to make the products. c) Expended funds generally on business operations. 14. [JJG] carried on business profitably as a result of the Contract. XY’s wrongful termination of the Contract has caused [JJG] loss and damage including loss of profit. III. ISSUES [30] These are the issues: 1. Does the defendant’s claim for equitable set-off constitute a bona fide triable issue barring summary judgment? 2. Can JJG rely on the defence of tender? 3. If summary judgment is granted, what is the correct means of calculating the conversion from US to Canadian currency? 4. If summary judgment is granted, should there be a stay of execution? IV. DISCUSSION & ANALYSIS Issue 1 Does the defendant’s claim for equitable set-off constitute a bona fide triable issue barring summary judgment? [31] Rule 18(1) of the Rules of Court permits a plaintiff to apply for summary judgment on the ground that there is no defence to the whole or part of the claim. The test to be applied is whether there is a bona fide triable issue: HSBC Bank Canada v. Tahvili, 2004 BCCA 22, 193 B.C.A.C. 12 at para. 13. [32] However, a chambers judge has the discretion to grant summary judgment for the amount of a claim even if there is an arguable cross-claim or counterclaim offered as a defence: Tahvili at para. 16, citing First City Development Ltd. v. Stevenson Construction Co. Ltd. (1983), 48 B.C.L.R. 242, 3 D.L.R. (4th) 505 at 508 (C.A.). When there is a cross-claim, “…the chambers judge should decline to grant summary judgment only if the defendant’s allegations represent a ‘true’ defence to the plaintiff’s claim”: Old Mac’s Pty. Ltd. v. Cavallo Horse & Rider Inc., 2007 BCSC 726 at para. 38. [33] As Dickson J. wrote in Old Mac’s at para. 39: Set-off will not necessarily follow, however, simply because competing claims arise from the same contract or related dealings. Rather, for a defendant's claim to be viewed as a true equitable set-off defence, as opposed to a separable cross-claim, it must be so intimately connected with the plaintiff's claim that it goes to the claim's very root. [34] JJG takes no issue with the plaintiff’s right to collect on the royalties admittedly owed. JJG does not contest the accuracy of the amount sought by XY. [35] Whatever success the defendant has in advancing its counterclaim for damages for breach and termination of the contract at trial, the royalties owing in relation to inseminates and embryos JJG admits it sold or used remains valid and outstanding. In this respect, it cannot be said that the counterclaim is a “true defence” that goes to the very root of the plaintiff’s claim. [36] The facts in Old Mac’s are similar to those in the present case, and the reasoning of Dickson J. in denying the equitable set-off applies. In Old Mac’s, the plaintiff, an Australian supplier of equine products, sought summary judgment for a debt owing for goods sold to the defendant. There was a formal written agreement between the parties that the defendant was the worldwide distributor of a particular horse boot. Not long after, the plaintiff entered into voluntary administration and the agreement was subsequently terminated. The defendant counterclaimed for alleged contractual breaches and wrongful termination of the contract. [37] Dickson J. provided the following reasons in granting the summary judgment to the plaintiff in Old Mac’s: 57. If it would be unjust for summary judgment to be granted whenever there is an arguable cross-claim characterized by the defendant as an equitable set-off then Old Mac's Rule 18 application should be dismissed. That, however, is not the law. Rather, the key question in this context is whether the equitable set-off at issue operates as a true defence that goes to the root of the plaintiff's claim or, alternatively, amounts to a related, but fairly separable, cross-claim. 58. I conclude that Cavallo's claim for equitable set-off falls into the latter category. Although it arises out of the same contractual relationship as Old Mac's debt claim it is free-standing and independent, without regard to the existence of the Debt or Old Mac's demand for its repayment. In these circumstances, given that there is no real dispute as to whether the Debt is due and owing to Old Mac's, I award judgment to Old Mac's… [38] Like the defendant in Old Mac’s, JJG’s counterclaim for damages for contractual breaches and termination arises out of the same contract, and is to that extent related to XY’s claim. Again like the defendant in Old Mac’s, the claim is free-standing and separable, and as such, it falls into the latter category. Issue 2 Can JJG rely on the defence of tender? [39] JJG relies on the defence of tender. However, a tender is invalid where it is conditional on the plaintiff accepting the sum in full satisfaction of the claims: Alex Gair & Sons Ltd. v. Steveston Unit No. 284 of Army, Navy & Air Force Veterans in Canada(1983), 37 C.P.C. 203 at para. 5 (B.C.S.C.). In Alex Gair, at paras. 7-8, it was held that where a defendant admits that it owes a certain sum to the plaintiff, and purports to tender that sum on condition that the plaintiff accept it in consideration of all amounts owing, the plaintiff is entitled to summary judgment for the admitted sum, and to pursue the remainder of its claims at trial. This is precisely the situation of the plaintiff in the present case. JJG stipulated in its “tender” that the amount stated, USD $472,671, represented all royalties due up to September 2008. XY’s claim is not so limited. Issue 4 What is the correct means of calculating the conversion from US to Canadian currency? [40] Clause 3.1.4 of the CLA states, in part, that “remittance of all royalty amounts…shall be in United States dollars with conversion of any foreign currency to United States dollars made at the closing exchange rate on the last business day of that applicable reporting period…”. [41] Accordingly, the plaintiff submits that the award should be measured in US funds, in accordance with the Foreign Money Claims Act, R.S.B.C. 1996, c. 155. Section 1 of the Act reads as follows: 1(1) If, before making an order for the payment of money arising out of a claim or loss, the court considers that the person in whose favour the order will be made will be most truly and exactly compensated if all or part of the money payable under the order is measured in a currency other than the currency of Canada, the court must order that the money payable under the order will be that amount of Canadian currency that is necessary to purchase the equivalent amount of the other currency at a chartered bank located in British Columbia at the close of business on the conversion date. 1(2) The conversion date is the last day, before the day on which a payment under the order is made by the judgment debtor to the judgment creditor, that the bank referred to in subsection (1) quotes a Canadian dollar equivalent to the other currency. [42] The defendant maintains that the determination of the appropriate conversion rate and conversion date constitutes a triable issue, and has presented various authorities dealing with the issue of the appropriate conversion date. I do not think it is necessary to engage in the analysis suggested by JJG on this application. [43] The question of the appropriate conversion rate and conversion date is not a triable issue because it is squarely, and unequivocally, answered by ss. 1(1) and 1(2) of theAct. Given that the CLA provides for payment in US dollars, and that the plaintiff is an American company, I think that XY is correct in claiming that they will be “most truly and exactly compensated” if the order is measured in the amount of Canadian currency necessary to purchase the equivalent amount of USD $472,671. The conversion date shall be determined in accordance with s. 1(2) of the Act. Issue 3 As summary judgment has been granted, should there be a stay of execution? [44] Under Rule 18(2)(a), the court has the discretion to impose a stay of execution on an order for summary judgment. [45] In Old Mac’s, Dickson J. said that it was necessary to consider whether to stay execution when summary judgment is granted in the face of a cross-claim. At para. 42, she writes that “…the chambers judge should assess the merits and potential quantum of the cross-claim and stay execution to the extent necessary to provide reasonable security”. This approach has its origin in the judgment of Tysoe J. (as he then was) inClearly Canadian Beverage Corp. v. Remic Marketing & Distributing Inc. (1992), 22 C.P.C. (3d) 387 at para. 12 (B.C.S.C.). [46] In Clearly Canadian, Tysoe J. said at para. 12: Although summary judgment should be granted in the face of a counterclaim, it would not be fair to the defendant if the plaintiff were allowed to execute on the entire amount of its judgment prior to the hearing of the cross-claim. It is my view that the procedure to be followed in this type of situation is as follows: 1. The Court should grant summary judgment in favour of the plaintiff. 2. The Court should allow the counterclaim to proceed to trial (subject to an application for summary dismissal of the counterclaim). 3. The Court should assess the merits of the counterclaim and the potential amount of an award on the counterclaim, and after weighing these considerations, the Court should stay execution on the judgment in whole or in part for the period until the hearing of the counterclaim or for such other period as may be appropriate in the circumstances. Execution on the entire judgment will not necessarily be stayed and the amount of the judgment to be stayed will not necessarily be the maximum amount of the counterclaim. The amount should be a reasonable figure determined in the same fashion in which the Court establishes the amount of security to be posted for a claim (for example, security posted for the release of a lis pendens pursuant to ss. 235 and 236 of the Land Title Act). 4. As a term of the imposition of the stay of execution or upon separate application by the plaintiff, the Court can consider whether the stay of execution should cease if the plaintiff posts a letter of credit (or other form of security) to act as security for the counterclaim [47] XY moves for summary judgment within a much broader claim that includes fraud and conspiracy involving other defendants that are located in numerous jurisdictions, including China. JJG’s counterclaim is for breach of a duty of good faith and wrongful termination of a contract. This contract, the CLA, represents a very significant investment for JJG. The investment includes licensing fees and a substantial outlay of cash to purchase the equipment required to manufacture sex selected inseminates. The termination of the CLA strikes at the heart of JJG’s business undertaking. [48] XY says that, if it is permitted to execute on its summary judgment, JJG’s financial interest remains secured by its retention of unpaid royalties claimed due by XY that exceed USD $1,200,000. XY says that, as such royalties will remain payable even if the counterclaim succeeds, JJG has no meritorious defence to the claim for royalties, and therefore is secured against any award it may receive. [49] I do not accede to XY’s argument concerning JJG’s obligation to pay royalties in the amount claimed by XY. Further, JJG’s defence raises an issue over the event that makes the royalty payment due. These are issues for the trial. [50] It is, in any case, apparent that JJG’s claim exceeds USD $1,200,000. [51] It would, in all the circumstances, be unfair to JJG if XY is allowed to execute on its summary judgment. V. DISPOSITION [52] I order the following: 1. XY is granted summary judgment in the sum of USD $472,671; 2. Execution on the summary judgment is stayed pending trial. This will not preclude XY from bringing on an application to post security for the counterclaim; 3. When and if the sum awarded by way of summary judgment becomes payable, the conversion date to the Canadian dollar equivalent will be determined in accordance with s.1(2) of theForeign Money Claims Act; 4. Costs will be in the cause. “H.A. Slade J.” |