Date: 20051117
Docket: T-1655-04
Citation: 2005 FC 1557
BETWEEN:
CANADIAN PRIVATE COPYING COLLECTIVE (CPCC)
Applicant
and
FUZION TECHNOLOGY CORP. and
1565385 ONTARIOINC. and
MICKEY YEUNG
Respondents
REASONS FOR ORDER
HUGHES J.
[1] The Applicant Canadian Private Copying Collective ("CPCC") brings this motion in writing under the provisions of Rule 369 for:
A. An Order pursuant to Rule 107 of the Federal Court Rules stipulating that the present application proceed henceforth as an action, with a trial of the issues raised in the present case;
B. An Order pursuant to Rule 107 of the Federal Court Rules bifurcating the present proceeding after its conversion into an action, and ordering that the issue of CPCC's right to audit the books and records of Fuzion Technologies Inc. and 1565385 Ontario Inc. be heard and determined by the Court first, before a trial of the issues relating to the respondents' liability for the payment of levies and damages;
C. Alternatively, in the event this Court refuses the relief requested in paragraphs A and B above, an Order pursuant to Rule 312 of the Federal Court Rules permitting CPCC to file an Additional affidavit or affidavits in support of its application and extending CPCC's delay to serve and file its Application Record.
D. Such further and other relief as counsel may advise and as to this Honourable Court may seem just.
[2] This proceeding was commenced by way of an application under the provisions of section 34(4) of the Copyright Act RSC 1985, c. C-42 which provisions were proclaimed in force as of October 1, 1999. The proceedings are directed to recovery of sums allegedly due from the Respondents under a tariff certified by the Copyright Board in respect of blank audio recording media under Part VIII of the Copyright Act. The proceedings have been the subject of Case Management in this Court. Affidavits have been filed by the parties certain cross-examinations conducted and several case management conferences held.
[3] The evidence shows that the Applicant in these proceedings CPCC has commenced a proceeding, by way of an action, also in the Federal Court, T-376-05 against persons not parties in this application for recovery of Part VIII tariff amounts. Discovery has taken place in that action.
[4] The factual basis for the Applicant's present motion is set out in paragraphs 17 to 20 of the Affidavit of Laurie Gelbloom which states:
17. At the same time as CPCC began making enquiries of FTC's customers, on August 4, 2005, counsel for CPCC conducted an examination for discovery in the case of CPCC v. Bx Pro Computer Ltd., 1597332 Ontario Ltd. and Vincent Chow, Court File No. T-376-05. During the course of that examination the deponent Vincent Chow gave evidence which is highly relevant to the issues raised in the present application, particularly as they relate to the potentially fraudulent conduct of one or more of the respondents.
18. CPCC's counsel has advised me that Mr. Chow will not voluntarily offer the same evidence in this proceeding, for fear of intimidation. If necessary, therefore, CPCC will ask the Court in File No. T-376-05 to be relieved of its implied confidentiality undertaking so that CPCC may produce Chow's evidence into the record of this case.
19. Following the examination for discovery on August 4, CPCC made enquiries of several FTC customers, the whole as appears from the affidavits of Michelle Roy McSpurren and Karen Davidson filed herein.
20. CPCC wishes to convert the present application into an action in order to adduce new evidence which bears directly on the conduct of the respondents and the question of whether this Court should order audits of the corporate respondents in accordance with the provisions of the private copying tariffs certified under Part VIII of the Copyright Act.
[5] It is appropriate to consider that part of this motion requesting conversion of this proceeding from an application to an action, first. Prior to the coming into force of section 34(4) of the Copyright Act supra as of October 1, 1999, proceedings to do with infringement of copyright and recovery of tariff monies had to be conducted by way of an action, whether in the Federal Court or another Court such as a superior court of a province. Section 34(4) gives, now, an option to a person wishing to commence such proceedings, in whatever court is appropriate, by way of action or application. An application allows the party instituting the proceeding to put in its evidence at the beginning by way of affidavit and requires the Respondent to do likewise. Neither party can examine the other for discovery. In theory at least, a trial can be arrived at more quickly and directly than in an action.
[6] The downside of an application is that the party instituting the proceeding must be ready with its evidence at the outset. It cannot depend upon getting further evidence from the other party by way of discovery. The other party may adduce no evidence as very little evidence if it chooses. The initiating party essentially must depend on its evidence alone when it comes to trial.
[7] There are in the Federal Courts Rules pertinent to Applications which do afford some opportunity to an applicant to expand upon its initial evidence. Rules 312 and 313 provide for additional affidavits, cross-examination, records and other material. Rule 316 provides for factual testimony to be given in Court in certain circumstances. Rules 87 to 100 provide for examination of witnesses outside the courtroom.
[8] Section 18.4(2) of the Federal Courts Act, RSC 1985, c. F-7 provides for the conversion of an application to an action by the Federal Court. That provision, however, is stated to be an exception to subsection (1) which applies only to sections 18.1 to 18.3 of the Act, that is, only to applications for judicial review. It cannot be said that section 18.4(2) applies to other proceedings such as those commenced by way of application under section 34(4) of the Copyright Act.
[9] There is no specific Rule of the Court directed to the conversion of an application to an action. Rule 61(4) addresses situations such as the one here where an Act of Parliament gives an option to proceed by way of action or application, then a party may do so under Rules appropriate to one or the other. However, no procedure for conversion is set out there.
[10] Rule 107 which is invoked by the Applicant here provides for the separate determination of an issue in a proceeding, including procedures applicable to discovery. This Rule has been invoked during the course of an action to sever, for instance, issues as to quantum of damages, but not so as to convert an application to an action.
[11] In non-judicial review cases, one being KRAFT CANADA INC. v. EURO EXCELLENCE INC. (2003), 25 CPR (4th) 224 a prothonotary of this Court considered an application by a respondent to convert a proceeding brought by way of application under section 34(4) of the Copyright Act, to an action. The prothonotary proceeded by way of analogy to section 18.4 of the Federal Courts Act and declined to make such a conversion on the basis of insufficient evidence. In MERCK FROSST CANADA INC. v. CANADA (MINISTER OF HEALTH) (1997), 76 CPR (3rd) 468 a judge of the Federal Court was asked to convert an Application brought under the Patented Medicines (Notice of Compliance) Regulations, SOR/93-133 to an action. Such proceedings must be brought by way of application and it was the respondent who sought conversion. The Court declined to convert the proceeding on the bases that it did not appear to be expedient to do so. No consideration was given as to whether section 18.4(2) was appropriate for doing so.
[12] There may be a suggestion that there is an inherent power in the Court to control its own process, thus to convert an application to an action where, as Rule 3 says, it may be "just, most expeditious and least expensive". If there is, there is no merit in saying that an action is more expeditious or less expensive than an application. Is it "just"? Here the Applicant had a choice, application or action, it chose application. No statute or rule compelled that choice, there is no suggestion that the Applicant was coerced or deceived into making that choice. It seems now that the applicant regrets that choice because it may not have put in its case as fully as it might or now sees more opportunity to gain further evidence in an action. The only evidence before this Court that might be compelling in that regard is paragraph 4 of the Geldbloom affidavit which says "CPCC wishes to convert the present application into an action in order to adduce new evidence...". This is not sufficiently compelling to justify a conversion of the Applicant's own choice in proceeding by was of application, to an action.
[13] In summary, section 18.4(2) of the Federal Court Act is not applicable to proceedings commenced under section 34(4) of the Copyright Act; Rule 107 of the Federal Courts Rules is not applicable. Even if there were inherent jurisdiction, which is by no means certain, no compelling reason for conversion where the choice was made initially by the party now seeking conversion, has been shown. That part of the motion is dismissed.
[14] As to the balance of the motion, this proceeding is being Case Managed by another judge and a prothonotary. In these Reasons several Rules have been referred to which may permit further evidence to be adduced. It is such more appropriate that those other matters be dealt with by those who are case managing these proceedings. Therefore, the balance of this motion is dismissed but without prejudice to the applicant to bring the same motion or other appropriate motion in the context of the Case Management.
[15] As to costs, the Applicant has been unsuccessful as to one part of the motion, the balance has been left to another time. There have been affidavits filed and cross-examination conducted pertinent to the motion dealt with here. The Respondent numbered company and Respondent Yeung are entitled to one-half of this costs and one half of their disbursements to be assessed under the middle of Column III. The balance of the costs and disbursements are deferred to the Case Management judge or prothonotary hearing any motion arising out of this disposition of this motion.
"Roger T. Hughes"
Toronto, Ontario
November 17, 2005
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