Bardsley v Stewart, 2014 NSCA 106
The Nova Scotia Court of Appeal refused to overturn an order requiring James Bardsley, an appellant, to transfer his interests to the extent possible in Canadian Patent Application 2,584,770 (“the ‘770 Application”) to High Performance Energy Systems Inc. (“High Performance”), a respondent, who was in receivership. Bardsley argued that the order was against procedural fairness since it had been agreed upon by the parties that directly ordering assignment was not an option as it would bind a co-inventor and co-owner who was not a party to the proceeding.  Nevertheless, the Court found that the order was fair as it was merely ordering that Bardsley transfer his interests in the ‘770 Application to the extent possible, thus stopping just short of ordering assignment.  A second issue on appeal was whether the judge had erred in refusing to grant equitable set-off to the appellants. The judge was found to have made no palpable and overriding error in that regard. 
This particular dispute arose out of litigation involving “hopeless financial disputes” [1, 48] between three shareholders, directors, and officers of High Performance (respondent): David Stewart (respondent), Peter Beaini (respondent), and James Bardsley (appellant).  High Performance was in receivership during the course of this proceeding. Without going into much of the background of the dispute,  the Court identified two grounds of appeal that were before it:
- Did the judge err by granting a remedy that was not before him by granting the remedy regarding the ‘770 Application sought in paragraph 4(c) of the respondents’ amended notice of application?
- Did the judge err by refusing to grant Bardsley equitable set-off of any amount owed to them by High Performance against the amounts they were ordered to pay to High Performance? 
The Order to Transfer Bardsley’s Patent Rights
The order granted by the judge included (1) “an order for a mandatory injunction requiring Mr. Bardsley to do whatever is necessary to transfer the application to High Performance or, if it cannot be transferred, to abandon the application in favour of one to be filed by High Performance,” and (2) “a declaration that High Performance developed the ‘Coaxial Borehole Exchange System for Storing and Extracting Underground Cold’ that is the subject of a patent application”, and (3) enjoined Mr. Bardsley to “take all steps necessary to have High Performance recognized as the owner of the patent.” 
Bardsley argued that these remedies were against procedural fairness,  since it had been agreed upon by the parties that ordering assignment, which was once requested by the respondent under paragraph 4(c) of its amended notice of application, was now stayed.  The judge was cognizant that such an order could not be made, since it would bind a co-inventor and co-owner, Mr. Lay, who was not a party to the proceeding. [12, 37]
Nevertheless, the Court found the order to be procedurally fair  by making the distinction that the remedy was being granted pursuant to the general remedy of returning all High performance assets to High Performance, which was requested under paragraph 4(a) of the respondent’s amended notice of application,  not pursuant to paragraph 4(c).  The order stopped short of granting the assignment remedy. It was restricted to obliging Mr. Bardsley to transfer his interests in the ‘770 Application to High Performance to the extent possible. 
The Denial of Equitable Set-off
The appellants unsuccessfully argued that the judge erred by not granting them equitable set-off in respect of some amounts owed by them to High Performance.  Each of the appellants’ arguments in this regard was rejected.
First, the Court rejected the argument that the judge had first decided he would grant set-off and then changed his mind. The Court found that no such decisions were ever made.  Second, the Court rejected the argument that the clean hands doctrine no longer applies to equitable set-off after Holt v Telford,  2 SCR 193. [55-56] Third, the appellants unsuccessfully argued that the judge applied the clean hands doctrine too broadly by going toward bad character or “general depravity”. The Court found that the judge did not go so far.  Finally, contrary to the appellants’ argument, the Court found that the judge did not err when he considered whether set-off would cause an unfair preference contrary to the intent of receivership when deciding not to grant set-off. Overall, the Court found there was no palpable and overriding error in denying equitable set-off to the appellants. 
This case does not get into a discussion of whether Bardsley or High Performance are the true owner of the ‘770 Application. Furthermore, the issue of whether or not an assignment remedy can be granted when a person who is a co-inventor and co-owner is not a party to the proceeding is not argued in this case. It is taken for granted that such an order cannot be made. 
Rather, the case is merely about procedural fairness. It may have appeared to Mr. Bardsley that the judge had made an order that Bardsley assign the ‘770 Application to High Performance, even though it had been agreed upon by the parties and the judge that such an option was not available. Given the wording in the judge’s reasons: “I will grant an order for a mandatory injunction requiring Mr. Bardsley to do whatever is necessary to transfer the application to High Performance…” [emphasis added] that understanding seems understandable.
The Court of Appeal seems to have clarified the judge’s phrasing by restricting the order to merely requiring that Bardsley transfer his interest in the ‘770 Application to High Performance, not that it be assigned in its entirety.