July 17, 2020
In Double Diamond Distribution Ltd. vs. Crocs Canada, Inc., 2019 FCA 243, Double Diamond Distribution Ltd. (“Double Diamond”) brought a motion for a stay of an Order of the Federal Court, which granted Crocs Canada, Inc.’s (“Crocs Canada”) motion for particulars in part. Ultimately, the Federal Court of Appeal dismissed the motion with costs, and did not accept Double Diamond’s argument that it would suffer irreparable harm if the stay was not granted.
Double Diamond commenced an action in the Federal Court by filing a Statement of Claim. Although Crocs Canada had not yet filed a Statement of Defence, it brought a motion under Rule 206 of the Federal Courts Rules for an order requiring Double Diamond to provide copies of each document referred to in its Statement of Claim (“Rule 206 Motion”). The parties settled this motion.
On May 13, 2019, Crocs Canada served Double Diamond with a Demand for Particulars, which resulted in Double Diamond bringing a motion for default judgment, or, in the alternative, striking the Demand for Particulars and requiring Crocs Canada to file a Statement of Defence.
The Federal Court dismissed Double Diamond’s motion for default judgment or to strike the Demand for Particulars. Double Diamond appealed the first part of the Order, which granted Crocs Canada’s motion for particulars in part, and brought this motion for a stay of the Order.
In denying Double Diamond’s motion, the Federal Court of Appeal applied the three-part test from RJR-MacDonald v Canada,  1 SCR 311 to determine if a stay should be granted. The focus of the hearing was on the test’s second element – whether Double Diamond would suffer irreparable harm if the stay was refused.
Double Diamond argued that it would suffer irreparable harm because its appeal would be rendered moot, and because the appeal was linked to the agreement between counsel related to the settlement of the Rule 206 Motion.
In dismissing the first argument, the Court considered Moore v British Columbia (Securities Commission), (1996), 22 BCLR (3d) 277, where the British Columbia Court of Appeal upheld the refusal of a stay, even though it rendered the appeal moot. The Court also reasoned that, during the course of the argument for the stay motion, Double Diamond acknowledged that the litigation would continue (i.e., Double Diamond would not be pursuing the appeal in relation to the dismissal of its motion for default judgment). Even if the stay were granted, during the course of the litigation, Double Diamond would eventually disclose the particulars to Crocs Canada. The only harm to Double Diamond would be the disclosure of particulars before it might otherwise be required to do so, which the Court determined did not constitute irreparable harm.
The Court also dismissed Double Diamond’s second argument that it would suffer irreparable harm linked to the agreement in relation to the settlement of the Rule 206 Motion, in that it would no longer be able to reach any agreement with opposing counsel. The Court determined that this speculative harm was insufficient to support a stay.
The motion for a stay of the Order requiring Double Diamond to provide particulars to Crocs Canada was dismissed with costs as there was no reason to delay the disclosing of the particulars as ordered.
Authors: Jaclyn Tilak and Farrah Kudus