Date: 20051130
Docket: T-1832-04
Citation: 2005 FC 1628
Ottawa, Ontario, November 30, 2005
PRESENT: THE HONOURABLE MADAM JUSTICE TREMBLAY-LAMER
BETWEEN:
RHODIA UK LIMITED and
RHODIA INC.
Plaintiffs
(Defendants by Counterclaim)
and
JARVIS IMPORTS (2000) LTD. and
116038 B.C. LTD.
Defendants
(Plaintiffs by Counterclaim)
REASONS FOR ORDER AND ORDER
[1] This matter involves three motions:
(1) Defendant Jarvis Imports (2000) Ltd.'s (the "Defendant Jarvis") motion for a better affidavit of documents from the Plaintiffs.
(2) Defendants' appeal from the Order of Prothonotary Morneau dated October 25, 2005.
(3) Plaintiffs' appeal from the Order of Prothonotary Morneau dated October 25, 2005.
[2] These motions arise from an action commenced by the Plaintiffs on October 12, 2004 against the Defendants alleging infringement of a registered trade-mark, passing off and depreciation of goodwill. The Plaintiffs are seeking declarations, injunctions, destruction of allegedly infringing items and damages.
(1) Defendant Jarvis's motion for a better affidavit of documents from the Plaintiffs
[3] The Defendant Jarvis requests an order compelling each of the Plaintiffs (Defendants by Counterclaim) to deliver a further and better affidavit of documents listing all documents relating to any unadmitted allegation in the pleadings.
[4] The Defendant Jarvis alleges that the Plaintiffs have failed to list all of the relevant documents in the possession, power or control of each Plaintiff in its affidavit of documents, and has therefore failed to provide a proper and complete affidavit of documents, pursuant to Rules 222 and 223 of the Federal Court Rules, 1998, SOR/98-106 (Text of Rules 222 and 223 at Annex "A").
[5] It is well established that the party seeking further production must offer persuasive evidence that documents are available, but have not been produced, and the burden of showing that another party's productions are inadequate lies with the party making the allegation: Montana Band v. Canada, [2001] F.C.J. No. 991 (T.D.) at para. 5; Havana House Cigar & Tobacco Merchants Ltd. v. Naeini (1998), 80 C.P.R. (3d) 132 at para. 19, aff'd (1998), 80 C.P.R. (3d) 563 (F.C.T.D.); Apotex Inc. v. Merck & Co., (2004) 33 C.P.R. (4th) 387 (F.C.) at para.13 -14.
[6] It is also well settled law that the primary consideration on the scope of discovery is relevance: Reading & Bates Construction Co. v. Baker Energy Resources Corp. (1988), 24 C.P.R. (3d) 66 at 70 (F.C.T.D.) at 70-72, cited with approval in Merck & Co. v. Apotex Inc., [2003] F.C.J. No. 1725 (C.A.) at para. 10. The principle for determining what document properly relates to the matters in issue is that it must be one which might reasonably be supposed to contain information which may directly or indirectly enable the party requiring production to advance his own case or to damage the case of his adversary, or which might fairly lead him to a train of inquiry that could have either of these consequences: Compagnie Financiere Du Pacifique v. Peruvian Guano Co. (1882), 11 Q.B.D. 55 (C.A.) at 63, cited with approval in Fiddler Enterprises Ltd. v. Allied Shipbuilders Ltd., [2002] F.C.J. No. 78 (T.D.) at para. 8.
[7] The request for production consists of seven groups of documents as set out in the Notice of Motion.
[8] The first group of documents relates to sales in Canada and worldwide of textile fibres; yarns and woven, knitted, netted, felted, and bonded fabrics; lace and embroidery, ribbons and braid; mats and matting, fireproofing preparations for the treatment and processing of textile fibres, yarns and woven, knitted, netted, felted and bonded fabrics of all kinds in association with the PROBAN trade-mark, including without limitation:
- purchase orders;
- invoices;
- price lists;
- documents exchanged with customers, distributors or licensees;
- any corporate, financial or other documents referring to the volume of sales of the PROBAN products; and
- storage media recording such information
[9] The Plaintiffs have made allegations that the PROBAN trade-mark is well-known in Canada and worldwide and that considerable time, effort and money has been invested in the development, promotion and advertisement of the trade-mark. The Defendant Jarvis maintains that the Plaintiffs have failed to list or produce any documents to establish that fact, such as through documents relating to the extent of sales or time, effort and money expended, in Canada and worldwide in association with the PROBAN trade-mark in issue.
[10] In an Order for bifurcation rendered on February 21, 2005, Prothonotary Hargrave stated that any question as to the extent of the infringement of any right, any question as to the damages flowing from the infringement of any right, and any question as to the profits arising from the infringement of any right (collectively, the "Deferred Issues") would be the subject of a separate determination to be conducted after the trial of the remaining issues in the action. The Plaintiffs submit that this category of documents is directed to issues regarding the extent of infringement, damages flowing from the infringement, and profits arising from the infringement and therefore need not be produced.
[11] In Montana Band v. Canada, [2001] F.C.J. No. 528 (T.D.), Hugessen J. stated at paragraphs 4-5:
That brings me to the motion I have today with respect to discoveries. It is in my view fundamental that when an order for severance is made the severed issues which are not then going to be tried in the first trial are irrelevant for the purposes of that first trial. To put it in a very familiar context where liability and damages are severed questions relating to damages are not relevant to the trial on the issue of liability.
It flows from that, that discoveries whether they be written or oral which are conducted following an order for severance should be limited to the issues which are to be tried at the first trial. Questions relating to matters which will only become relevant if they ever do become relevant at the second trial should not be put. [...]
[12] Similarly, in Intel Corp. v. 3395383 Canada Inc. (2003), 28 C.P.R. (4th) 48 (Proth.) at para. 28, (aff'd (2004), 30 C.P.R. (4th) 469 (T.D.), aff'd (2004), 35 C.P.R. (4th) 97 (C.A.)):
Accordingly, where, as in this case, issues regarding the extent of infringement and damages/profits have been separated from issues regarding liability, questions relating to the extent of damages and/or profits should not be ordered to be answered at the liability stage. To do so would undermine the very purpose of Rule 107.
[13] While both of these cases dealt with questions asked at oral discovery, I find the reasoning equally applicable to production of documents. In view of the Order of bifurcation, documents relating to matters which will only become relevant should a determination of the Deferred Issues arise need not be produced for the purposes of the first trial. In my view, the majority of the first group of documents will have no bearing on the issue of liability for the alleged infringement of the trade-mark as they are directed to issues regarding damages flowing from infringement. Therefore, they should not be produced. However, I do find that corporate and financial documents referring to the volume of sales of the PROBAN products in Canada and worldwide, given that they relate to how well known the trade-mark is, are relevant to the alleged infringement of a registered trade-mark, passing off and depreciation of goodwill and should be produced.
[14] The second group of documents relates to advertisement or marketing of the trade-mark PROBAN in Canada and worldwide, including without limitation:
- advertising, flyers, catalogues, brochures and newsletters;
- documents establishing the value of volume of such advertising, including invoices and corporate, financial or other documents referring to volume or expenses relating to marketing; and
- storage media recording such information
[15] The third group of documents relates to the development, promotion and advertisement of the PROBAN trade-mark in Canada and worldwide, including without limitation:
- business plans, marketing plans and advertising plans;
- financial documents indicating expenses involved in such development, promotion and advertisement;
- documents reflecting the number of personnel and efforts involved in such activities; and
- storage media recording such information;
[16] The fourth group includes any publications in Canada or elsewhere containing references to PROBAN and any documents indicating the scope, extent or circulation of media in which such references occur.
[17] The Plaintiffs submit that they have provided the Defendants with relevant documents relating to the development, promotion and advertising of the PROBAN trade-mark that are in their power and control.
[18] The Plaintiffs furthersubmit that the documents sought by the Defendant Jarvis relate to the quantum of damages, which will be the subject of a reference after trial, should one arise.
[19] I cannot accept that the second and fourth groups of documents relate only to the quantum of damages. In my opinion, these documents are indeed relevant to the issue in litigation as they relate to the use of the trade-mark PROBAN. The Plaintiffs have pleaded that the Plaintiff Rhodia UK Limited and its predecessors have used the PROBAN trade-mark for more than 45 years and that it is well-known in Canada and throughout the world. Documents relating to the extent to which PROBAN is well-known in Canada and throughout the world are relevant to the first trial as they may tend to prove or disprove the allegations of the Plaintiffs that the Defendants' actions have caused confusion, damaged the Plaintiffs' goodwill and caused other harm to the businesses of the Plaintiffs. For these reasons, I order that the second and fourth groups of documents be produced.
[20] The second and fourth groups of documents relate to the advertisement and marketing of the trade-mark PROBAN. The six pieces of documentation already produced by the Plaintiffs, including the Powerpoint Presentation, excerpts from the Rhodia website and the press release, are examples of such documents as they are directed to the development, promotion and advertising of the trade-mark. In contrast, the third group of documents encompasses business, marketing and advertising plans as well as financial documents indicating expenses and efforts involved in the development, promotion and advertisement of the trade-mark PROBAN. In my view, the third group is not relevant to determining whether the Defendants' actions have caused confusion or damaged the Plaintiffs' goodwill. They relate more appropriately to the issue of quantum of damages. Therefore, these documents should not be produced.
[21] The fifth group includes documents available from the Plaintiffs' licensees which fall into the same categories as group one through four above.
[22] This group of documents is held by third parties. The Plaintiff first submits that the Defendants adduce no evidence that such documents are available and no evidence as to their relevance. Secondly, the Plaintiffs have produced the available license agreements between themselves and their licensees and have also produced a bundle of invoices pertaining to sales by one of its licensees, Westex Inc., of fabrics and fibers treated with the PROBAN material. Lastly, production of the type of documents requested should take place only in the context of a reference after trial.
[23] While it can be presumed that some sort of business relationship exists between the Plaintiffs and their authorized licensees, the mere fact that the Plaintiffs have been able to produce the licensing agreements does not mean that they have the requisite possession, power or control to produce the licensees' marketing, advertising and promotion materials, as sought by the Defendant Jarvis. The Defendant Jarvis has not discharged its burden to show that the fifth group of documents should be produced.
[24] The sixth group of documents relates to the corporate status of Rhodia UK Limited and Rhodia Inc., including but not limited to:
- articles of incorporation;
- memoranda of incorporation.
[25] This has been resolved by the parties as the Plaintiffs have included as items 47 and 48 of their amended affidavits of documents, the certificate of incorporation of Rhodia Inc. and the certificate of incorporation of Rhodia UK Limited.
[26] The seventh group of documents relates to the ownership of and rights to the PROBAN trade-mark and registration, including without limitation assignments or other change of name documents from the original registrant Proban Limited to Albright & Wilson Ltd., the apparent next successor in title.
[27] In response to the Defendants' request, the Plaintiffs have listed the relevant documents as items 1 to 4, 28 to 30 and 32 of Schedule 1 of the amended affidavit of documents.
[28] The eighth is a copy of the schedule(s) to document number 17 of each of the Plaintiffs' affidavit of documents.
[29] I accept the affidavit evidence of Ginette Renaud, in response to the Defendants' request, that the document requested could not be located.
[30] The ninth is a copy of the technology transfer license referred to in document number 26 of each of the Plaintiffs' affidavits of documents.
[31] Said document was included as document 25 of the Plaintiffs' affidavit of documents. The Plaintiffs' have also included as items 39 to 46 of their amended affidavits of documents, copies of additional license agreements.
[32] In response to the Defendants' request for documentation relating to the "channels of trade", I accept the Plaintiffs' submission that this is a matter for testimony at trial and that the Plaintiffs do not have any specific documents relating to "channels of trade" other than the documents already produced.
[33] In conclusion, I will allow the motion in part. A better affidavit of documents, in accordance with these reasons, is to be produced within twenty-one (21) days from the date of this Order. Costs in the cause.
(2) Defendants' appeal from the Order of Prothonotary Morneau dated October 25, 2005.
[34] This motion by the Defendants is for an order setting aside in part the Order of Prothonotary Morneau dated October 25, 2005 by which the Court ordered in part that examinations for discovery of both Defendants be held within sixty (60) days of the date of the aforesaid Order.
[35] The Defendants submit that Prothonotary Morneau erred in failing to take into account and giving effect to the fact that documentary discovery of the Plaintiffs is incomplete having regard to the Defendant's pending motion for a complete affidavit of documents from the Plaintiffs and that fairness requires full documentary discovery by the Plaintiffs before examination of the Defendants. The Defendants also submit that fairness requires that the Defendants have full disclosure of documents so that they may properly prepare for the discoveries.
[36] It is well established that discretionary orders of prothonotaries ought not to be disturbed on appeal unless (a) the questions raised in the motion are vital to the final issue to the case, or (b) the orders are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of facts: Merck & Co. Inc. v. Apotex Inc., [2004] 2 F.C.R. 459 (C.A.) at para. 19.
[37] In determining whether the questions are vital to the final issue of the case, the Court has held that "the emphasis is put on the subject of the orders, not on their effect" (Merck & Co., ibid., at para. 18).
[38] Production of documents, before examination for discovery and trial, is one of our most important procedures (HavanaHouse, supra, at para. 19). Thus, in my view, it raises a question that is vital to the final issue of the case.
[39] Additionally, fairness dictates that each side should have full documentary discovery as well as properpreparation time before examination (British Columbia Ferry Corp. v. Royal Vancouver(The), [1995] F.C.J. No. 507 (Proth.) at para. 28.
[40] I agree with the Defendants that it was incorrect for Prothonotary Morneau to order that examinations for discovery of the Defendants take place despite the Defendants' outstanding motion for a further and better affidavit of documents from the Plaintiffs. I do not accept the Plaintiffs' argument that production of the Plaintiffs' amended affidavit of documents will not affect the examination of the Defendants. The Defendants should have full disclosure of all documents in preparing for examination for discovery. If the Defendants are successful in ferreting out further documents, on examination for discovery, or the existence of further documents, there would very likely be additional examinations for discovery, adding delay and expense (Havana House, supra, at para. 23).
[41] For these reasons, I will allow the Defendants' appeal. The examinations for discovery of the Defendants shall be held within sixty (60) days from the date of filing of a better affidavit by the Plaintiffs. Costs in the cause.
(3) Plaintiffs' appeal from the Order of Prothonotary Morneau dated October 25, 2005
[42] This motion by the Plaintiffs is for an order setting aside in part the Order of Prothonotary Morneau dated October 25, 2005 and ordering the Defendant 116038 B.C. Ltd. to file a further and better affidavit of documents and ordering that the examinations for discovery of both Plaintiffs be held within 60 days of the day on which the examinations for discovery of the Defendants are completed.
[43] By decision dated October 25, 2005, Prothonotary Morneau:
(a) ordered that the examination for discovery of both Defendants be held within sixty (60) days of the date of this order and be held one after the other on the same day or on consecutive days;
(b) refused to order the Defendant, 116038 B.C. Ltd. to produce a better affidavit of documents;
(c) refused to order that the examinations for discovery of the Plaintiffs be held within sixty (60) days of the completion of the examination for discovery of the Defendants.
[44] Prothonotary Morneau was not satisfied that the Plaintiffs had advanced persuasive evidence establishing that the Defendant, 116038 B.C. Ltd. was precluding the production of relevant documents.
[45] The Plaintiffs submit that the exercise of discretion by Prothonotary Morneau was based upon a wrong principle and upon a misapprehension of the facts. The Plaintiffs further submit that the Prothonotary improperly exercised his discretion on a question vital to the final issue of the case.
[46] The Plaintiffs allege that while the Defendant, 116038 B.C. Ltd. has not listed any documents in Schedules 1, 2, 3 and 4 to its affidavit of documents, it produced relevant documents in support of its motion for summary judgment (which was dismissed). These documents were before Prothonotary Morneau as they were included in the Responding Motion Record, which included the affidavit of Sarah Jarvis filed in support of the motion for summary judgment and its exhibits as well as the transcript of her cross-examination. As such, the documents before Prothonotary Morneau included an asset purchase agreement and the schedules thereto documenting the sale of some of the assets of the Defendant, 116038 B.C. Ltd., to the other Defendant, Jarvis Imports (2000) Ltd. in November 2000.
[47] In the affidavit of Sarah Jarvis at paragraph 7 and in her cross-examination, reference is made to the CA number which appears on the infringing articles. The CA number is affixed to the articles in accordance with the Textile Labelling Act, R.S.C. 1985, c. T-10. The CA number was registered in the name of the Defendant, 116038 B.C. Ltd., until May 2005, at which point it was transferred to the other Defendant, Jarvis Imports (2000) Ltd. The CA registration and the documents evidencing its transfer are not listed in the affidavit of documents of 116038 B.C. Ltd.
[48] As stated above, production of documents is recognized as an essential cornerstone of the discovery process. In the absence of production of documents, the Plaintiffs cannot conduct effective examinations for discovery and thus it is vital to a final issue in this case.
[49] Moreover, in my respectful opinion, Prothonotary Morneau's conclusion on this issue was based on a misapprehension of the facts, given that there were documents before him at the motion which were relevant, such as the asset purchase agreement, which were not listed in the affidavit of documents. Additionally, from the material before him, it was clear the infringing articles bear labels with a CA number, which CA number stood until May 2005 in the name of 116038 B.C. Ltd. Yet, no documents have been produced as to the registration of the CA number by the Defendant, 116038 B.C. Ltd. or its assignment to the other Defendant, Jarvis Imports (2000) Ltd., in May 2005. In my view, documents evidencing transfer or assignment of the assets of a business are not merely historical records.
[50] In the result, I order the production of a better affidavit of documents by the Defendant, 116038 B.C. Ltd., within twenty-one (21) days of the date of this Order, to include the asset purchase agreement as well as documents as to the registration and assignment of the CA number.
[51] The decision of Prothonotary Morneau is silent as to the order requested for the discoveries by the Defendants of the Plaintiffs. In my opinion, having ordered that examinations for discovery of the Defendants take place within 60 days of the filing of a better affidavit of documents by the Plaintiffs, and in view of the delays encountered to date in this file, it is necessary for me to render such an Order to ensure that the matter moves forward. The examinations for discovery of both Plaintiffs will thus be held within sixty (60) days of the day on which the examinations for discovery of the Defendants are completed.
[52] Costs in the cause.
ORDER
THIS COURT ORDERS THAT:
[1] The Defendants' motion for a better affidavit of documents is granted in part. The Plaintiffs shall serve and file an amended affidavit of documents in accordance with these reasons within twenty-one (21) days from the date of this Order.
[2] The Defendants' appeal from the Order of Prothonotary Morneau dated October 25, 2005, is allowed.
[3] The Plaintiffs' appeal from the Order of Prothonotary Morneau dated October 25, 2005 is allowed. The Defendant 116038 B.C. Ltd. shall serve and file an amended affidavit of documents in accordance with these reasons within twenty-one (21) days from the date of this Order.
[4] A timetable for the examinations for discovery of the parties be set as follows:
(1) that the examinations for discovery of both Defendants be held within sixty (60) days of the date of filing of the Plaintiffs' amended affidavit of documents.
(2) that the examinations for discovery of both Plaintiffs be held within sixty (60) days of the day on which the examinations for discovery of the Defendants are completed.
[5] Costs in the cause.
"Danièle Tremblay-Lamer"
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