Direct Source Special Products Inc. v. Sony Music Canada Inc., 2003 FC 1227

Date: 20031021

Docket: T-1483-99

Citation: 2003 FC 1227

Vancouver, British Columbia, Tuesday, the 21^st day of October, 2003

Present:           THE HONOURABLE MADAM JUSTICE HENEGHAN

BETWEEN:

                                       DIRECT SOURCE SPECIAL PRODUCTS INC.

                                                                                                                                                          Plaintiff

                                                                              - and -

                                                    SONY MUSIC CANADA INC. and

                                   SONY MUSIC ENTERTAINMENT (CANADA) INC.

                                                                                                                                                    Defendants

AND BETWEEN:

                                   SONY MUSIC ENTERTAINMENT (CANADA) INC.

                                                                                                                            Plaintiff by Counterclaim

                                                                              - and -

                                       DIRECT SOURCE SPECIAL PRODUCTS INC.

                                                                                                                     Defendant by Counterclaim

                                               REASONS FOR ORDER AND ORDER

INTRODUCTION

[1]         Direct Source Special Products Inc. (the "Plaintiff") appeals from an order of Prothonotary Lafrenière made on June 9, 2003, and says that the order improperly limits its discovery right pursuant to the Federal Court Rules, 1998.

BACKGROUND

[2]         The Plaintiff commenced this action against Sony Music Canada Inc. and Sony Music Entertainment (Canada) Inc. (the "Defendants") on August 19, 1999. Following a series of letters, telephone conversations and telephone messages, the discovery examination date was set on a peremptory basis and the Defendants produced their witness for discovery examination on April 24, 2003. However, after approximately an hour, counsel for the Plaintiff adjourned the examination.

[3]         The Plaintiff filed a motion on April 24, 2003, seeking various orders including an order to strike the Defence and Counterclaim of the Defendants and, alternatively, that the Defendants re-attend for completion of the examination. A further supplementary motion was filed on April 30, 2003, seeking an order for substitution of the Defendants' representative on the discovery examination, but this motion was subsequently withdrawn. The Defendants also filed a motion on April 30, 2003, seeking an order dismissing the Plaintiff's action.

[4]         The motions were heard at a special sitting of the Court on June 4, 2003, and an order was made on June 9, 2003. In his order, Prothonotary Lafrenière considered a number of questions that the Defendants' representative had refused to answer and ordered that answers be provided to questions 12 and 13, and otherwise dismissed the motion concerning the refusals. He further ordered that the Plaintiff's discovery examination conducted on April 24, 2003 "completes the first round of discovery of the Defendants" and that further attendance would be limited to outstanding undertakings and the questions ordered to be answered, subject to paragraph 5 of the order.

SUBMISSIONS

[5]         The Plaintiff argues that the Prothonotary erred in law by foreclosing its right of discovery. It refers to Rule 96(2) of the Rules and says that this rule provides a "code" concerning discovery. Rule 96(2) grants an examining party an election to seek an adjournment of an examination. The Plaintiff says that the Prothonotary erred in ruling that question 282 was overly broad. The order of the Prothonotary here amounts to a sanction and that sanction is excessive.

[6]         The Plaintiff submits that the Prothonotary erred in principle in making his order and that the determination of the issue of relevancy at the discovery stage is not fully discretionary. In this regard, the Plaintiff refers to Reading & Bates Construction Co. v. Baker Energy Resources Corp., (1988), 24 C.P.R. (3d) 66 (T.D.). Further, it argues that the general principles concerning the scope or the requirement of a deponent on discovery to answer questions support the view that, in a doubtful case, the deponent should answer. The Plaintiff here relies on Sydney Steel Corp. v. Omisalj (The), [1992] 2 F.C. 193.

[7]         Finally, the Plaintiff submits that the Prothonotary failed to balance the prejudice resulting to the parties if his order is allowed to stand. It says there is no harm to the Defendants if required to re-attend and complete the discovery but there is significant prejudice to the Plaintiff if unable to finish its examination.

[8]         The Defendants argue that the Prothonotary was under no misapprehension about the conduct of the discovery when he made the order under appeal. The transcript of the discovery was before the Prothonotary and is now before the Court, although not as part of the record. The Defendants say that the Plaintiff does not refer to the transcript and does not challenge the findings of the Prothonotary regarding the transcript. Accordingly, those findings remain unchallenged.

[9]         The Defendants argue that the Prothonotary did not terminate the Plaintiff's right to discovery and paragraph 5 of his order shows that the rights of the parties were balanced.

[10]       The Defendants submit that the Plaintiff is here ignoring the standard of review applicable to a decision by a prothonotary and improperly attempting to convert a question of discretion into a question of principle. Referring to James River Corp. of Virginia v. Hallmark Cards, Inc. et al. (1997), 72 C.P.R. (3d) 157 (F.C.T.D.), the Defendants argue that the Plaintiff's first motion before the Prothonotary relates to the exercise of discretion relative to the discovery process. The Rules contemplate a single examination; see Rules 95, 96, 97 and 235. The Prothonotary had jurisdiction to make the order in question.

[11]       The Defendants note that the Plaintiff does not refer to the transcript except in relation to question 282. Again, this was properly dealt with by the Prothonotary. The Defendants rely on Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.), as establishing the applicable standard of review and argue that the Prothonotary's decision meets this standard.

[12]       In reply, the Plaintiff submits that it is not appealing all the findings of the Prothonotary, but the parts of the order that curtail its rights of discovery. Relying on Andersen Consulting v. Canada, [1997] 2 F.C. 893 (T.D.), it expresses that there are limits to the Prothonotary's attempts to govern the conduct of the discovery process.

ANALYSIS

[13]       The Plaintiff is essentially challenging the order of the Prothonotary that was issued in response to its motion, pursuant to section 96 of the Rules, following its purported adjournment of its discovery examination of the Defendants' representative on April 24, 2003. The Prothonotary ordered that the discovery on that day was to be treated as the first round of discovery and further re-attendance would be limited to responses to outstanding questions, subject to paragraph 5 of his Order. That paragraph provides as follows:

Refusal no. 11 (Q. 210) is premature and overly broad and need not be answered, subject to the Plaintiff's right to ask proper follow-up questions about the Defendant's production nos. 42, 49, 50, 51, 52, 53 and 54.

[14]       The motion before the Prothonotary referred to Rule 97 which provides as follows:

Rule 97 refers to Rule 96 and in this appeal, brought by way of motion, the Plaintiff relies on Rule 96(2) which provides as follows:

[15]       The Plaintiff argues that it has the right to adjourn a discovery examination and seek the directions of the Court following such adjournment, without being subject to the termination of that discovery.

[16]       The standard test for the review of a decision of a prothonotary is set out in Aqua-Gem, supra. Such an order is to remain undisturbed on appeal unless it is clearly wrong in the sense that the exercise of discretion was based on a wrong principle of law or misapprehension of the facts, or where the order raises a question vital to the final disposition of the case, where the reviewing judge ought to exercise discretion de novo.

[17]       The Plaintiff attempts to characterize the order of the Prothonotary as one involving an issue of principle, attracting a de novo standard of review, rather than one involving the exercise of discretion. In my opinion, this approach is erroneous. The Prothonotary was asked to rule on a motion arising from the discovery process that is part of the pre-trial process. His ruling neither attempts to nor, in fact, bears upon the ultimate disposition of the action. Furthermore, the Prothonotary was acting in his capacity as a case management judge, having been assigned this action for case management purposes by order dated March 6, 2002.

[18]       The standard of review applicable to a decision of a prothonotary, while discharging his function as a case management judge, was addressed by the Federal Court of Appeal in Sawridge Band v. Canada, [2002] 2 F.C. 346 (C.A.). Mr. Justice Rothstein spoke about the level of deference due to decisions made by case management judges. At paragraph 11, he said as follows:

We would take this opportunity to state the position of this Court on appeals from orders of case management judges. Case management judges must be given latitude to manage cases. This Court will interfere only in the clearest case of a misuse of judicial discretion. This approach was well stated by the Alberta Court of Appeal in Korte v. Deloitte, Haskins and Sells (1995), 36 Alta. L.R. (3d) 56, paragraph 3, and is applicable in these appeals. We adopt these words as our own.

This is a very complicated lawsuit. It is subject to case management and has been since 1993. The orders made here are discretionary. We have said before, and we repeat, that case management judges in these complex matters must be given some "elbow room" to resolve endless interlocutory matters and move these cases on to trial. In some cases, the case management judge will have to be innovative to avoid having the case bog down in a morass of technical matters. Only in the clearest cases of mis-use of judicial discretion will we interfere. In this case, the carefully crafted orders made by the case management judge display a sound knowledge of the rules and the related case law. In particular, the order contains a provision that the parties are free to return to the case management judge for relief from the imposition of any intolerable burden imposed by the order. No clear error has been shown and we decline to interfere. While there may be some inconvenience to some of the parties, this does not translate into reversible error. We are not here to fine tune orders made in interlocutory proceedings, particularly in a case such as this one.

[19]       In Microfibres Inc. v. Annabel Industries Canada Inc. (2001), 214 F.T.R. 256, Mr. Justice Gibson followed this reasoning and said the following at paragraphs 11 and 12:

I conclude that Mr. Justice Rothstein's comments should apply by analogy to discretionary decisions of prothonotaries made in the course of case management in complex matters such as this. Case management prothonotaries must be given latitude to manage cases in the same manner in which case management judges are entitled to such latitude. In the words of the Alberta Court of Appeal quoted by Mr. Justice Rothstein:

... case management judges [and in this in the context of this Court I include case management prothonotaries] in ... complex matters must be given some "elbow room" to resolve endless interlocutory matters and to move these cases on to trial.

Case Management prothonotaries, like case management judges, are familiar with the proceedings that they are managing to a degree that a trial judge, sitting on appeal from a Prothonotary's discretionary decision in such a context, usually cannot be.

In short then, I regard the wisdom reflected in Mr. Justice Rothstein's comments on behalf of the Court of Appeal, by analogy, to represent a gloss on the standard of review of discretionary orders of prothonotaries reflected in the Aqua-Gem decision, supra.

[20]       Having regard to the recent decisions of this Court and the Federal Court of Appeal concerning the high level of deference due to the decisions of a prothonotary in the discharge of the case management functions, I am not persuaded that the order under review was based upon a wrong principle of law or upon a misapprehension of the facts or otherwise amounted to a misuse of judicial discretion. The conduct of the Plaintiff's discovery was within its control; it was not wrested from it but the Plaintiff by its own actions, diminished its scope. The Plaintiff utilized one hour of the full day that had been available to it.

[21]       In the present case, Prothonotary Lafrenière reviewed the motion materials before him. He was familiar with the file. He read the transcript. He made the following comments in his endorsement:

... I am simply not satisfied, upon reading the transcript of the examination, that the Defendants' representative or their counsel were uncooperative, let alone obstructive. Although numerous objections were made by counsel for the Defendants during the course of the examination for discovery, his interjections appear to have been warranted in light of the generality and repetition of the questions being posed to the Defendants' representative. I concluded that the Defendants were incorrect in refusing to answer a few questions. However, any futility or lack of efficaciousness of the examination, as alleged by the Plaintiff, was not due to those refusals, but rather to the failure by Plaintiff's counsel to ask clear questions.

[22]       In all these circumstances and having regard to the applicable standard of review for a decision of a case management prothonotary, I see no basis to interfere with the order under appeal.

[23]       The appeal is dismissed, with costs to the Defendants.

(Sgd.) "Elizabeth Heneghan"

Judge

                                       FEDERAL COURT

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:       T-1483-99

STYLE OF CAUSE: DIRECT SOURCE SPECIAL PRODUCTS INC.

                                                                                                        Plaintiff

- and -

SONY MUSIC CANADA INC. et al.

                                                                                                  Defendants

AND

SONY MUSIC ENTERTAINMENT (CANADA) INC.

                                                                            Plaintiff by Counterclaim

- and -

DIRECT SOURCE SPECIAL PRODUCTS INC.

                                                                        Defendant by Counterclaim

PLACE OF HEARING:         Toronto, ON

DATE OF HEARING:           August 11, 2003

REASONS FOR ORDER

AND ORDER:                        HENEGHAN J.

DATED:                                    October 21, 2003

APPEARANCES:

Arnold B. Schwisberg    For Plaintiff and Defendant by Counterclaim

Mr. Michael E. Charles For Defendants and Plaintiff by Counterclaim

SOLICITORS OF RECORD:

Arnold B. Schwisberg    For Plaintiff and Defendant by Counterclaim

Barrister & Solicitor

Markham, ON

Bereskin & Parr                         For Defendants and Plaintiff by Counterclaim

Toronto, ON