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Wins Against Intier/Magna Appeal
upheld against Intier
Magna subsidiary tried to cancel deals with
Small auto parts supplier refused to cut prices by 31.8%
ALPHEN - BUSINESS REPORTER - TorontoStar
A Magna International subsidiary has lost a
bid to overturn a court decision that stopped it from cancelling
contracts with a small auto parts supplier.
Mr. Justice John
Jennings of the Ontario Superior Court of Justice rejected a motion
by Intier Automotive for leave to appeal a lower court ruling that
granted an interim injunction and blocked the firm from cancelling
agreements with Aurora-based Axiom Group.
"It is clear
the motions judge applied the correct legal test for the granting of
an interlocutory injunction," Jennings said in rejecting the
Intier request for leave to appeal.
In February, Madam
Justice Harriet Sachs granted the injunction that prevented Intier
from terminating about 40 contracts until a trial resolves a dispute
between the two firms.
Sachs said Intier
did not give reasonable notice of the cancellations and therefore
put Axiom in a position of suffering irreparable damage.
Intier's argument that an injunction would determine the outcome of
a lawsuit by Axiom, which claims the contracts cover the life of
vehicle programs if they meet performance terms. Some of the
contracts extend to 2009.
In his decision
last week, Jennings said Sachs was correct in ruling Axiom had made
a strong case that Intier's notice was unreasonable and there are
still serious issues for trial regarding whether it was required and
Last year, Intier
demanded that Axiom slash its prices on existing contracts by 31.8
per cent. Axiom, which makes small components for window systems,
said such a cut would eventually kill the company.
Intier said it had
to push for the cuts in prices because of pressures from auto makers
such as DaimlerChrysler and General Motors.
Axiom, which had
resisted some earlier demands, charged Intier knew that the deep
price cuts would cripple the company, trigger major layoffs and hurt
Axiom also said
Intier cited financial pressures at a time when the Magna subsidiary
was making unprecedented profits. Since the start of the dispute,
Magna, also of Aurora, has taken Intier private.
The case has
attracted the attention of many players in the highly competitive
auto industry over the issue of how far companies can go in their
efforts to reduce costs.
so-called Tier Two suppliers such as Axiom are under pressure to cut
costs during existing contracts or face losing future business.