Halford v. Seed Hawk Inc., 2001 FCT 668

Date: 20010615

Docket: T-2406-93

Neutral Citation: 2001 FCT 668

Ottawa, Ontario, this 15^th day of June 2001

PRESENT: THE HONOURABLE MR. JUSTICE PELLETIER

BETWEEN:

JAMES W. HALFORD and VALE FARMS LTD.

Plaintiffs

- and -

SEED HAWK INC., PAT BEAUJOT, NORBERT BEAUJOT,

BRIAN KENT and SIMPLOT CANADA LIMITED

Defendants

REASONS FOR ORDER AND ORDER

PELLETIER J.

[1]    On November 6, 2000, the trial of this matter began. But on November 9, 2000, the trial which had been set for three weeks was adjourned due to the unfortunate inability to continue of counsel for the defendants, Seed Hawk Inc., Pat Beaujot, Norbert Beaujot and Brian Kent ("the Seed Hawk defendants"). In due course, other counsel were appointed and, after a false start, a date was fixed for the resumption of the trial. That date, October 15, 2001, is approximately four months away.

[2]    The Seed Hawk defendants now bring a motion which seeks:

1.          An order granting leave to the Seed Hawk defendants to file and serve a further amended Statement of Defence in accordance with the draft attached to the Notice of Motion.

2.          An order granting leave to the Seed Hawk defendants to file a further Supplemental Affidavit of Documents disclosing certain recently-located additional documents, which are set out in Appendix B to the Notice of Motion.

3.          An order granting leave to the Seed Hawk defendants to serve on all other parties a Supplementary Affidavit of the expert witness, Clifford J. Anderson, to be tendered as an exhibit at the testimony of Mr. Anderson on the resumption of the trial, such affidavit relating to:

-            the validity of patent 1,239,835 ("the Halford patent") and claims alleged to be infringed in this action, particularly in view of the documents sought to be introduced by the present motion;

-            more detail on the allegations of infringement of the Halford patent.

[3]    The other defendant, Simplot Canada Limited ("Simplot"), brings a motion for leave to file an amended Statement of Defence which will incorporate the amendments made in the further amended Statement of Defence of the Seed Hawk defendants.

[4]    The grounds on which the orders in question are sought are the following. New counsel appointed by Seed Hawk Inc. have determined that certain amendments to the Statement of Defence are necessary to more clearly and expressly plead and present Seed Hawk Inc.'s defences to the claim. In relation to the documents sought to be introduced, it is said that the documents have only recently come into the possession of the counsel for the Seed Hawk defendants, Mr. Horn, as a result of a trip to Scandinavia to interview two witnesses whose work has previously been cited as prior art. As for the further supplementary affidavit of Mr. Anderson, it is said that he was not properly instructed in the preparation of his earlier affidavit and that he is required to comment on the documents which the Seed Hawk defendants seek to put in. Overall, it is said that the failure to grant this relief will prejudice the Seed Hawk defendants in the defence of the claim.

[5]                Counsel for Simplot supports Seed Hawk's motion. He says that no prejudice will be caused to his client's position. His own motion is brought simply for the purpose of incorporating the amended defence into his client's defence.

[6]                Counsel for the plaintiffs, Mr. Raber, opposes the motions on various grounds. One is an argument about due diligence in the sense that the documents sought to be introduced could have been obtained and produced earlier by the exercise of some diligence by prior counsel for the Seed Hawk defendants. The amendments to the Statement of Claim may, in some cases, be more precise formulations of allegations contained in the Statement of Claim but they also contain new allegations which had not previously been raised. As for the Affidavit of Mr. Anderson, I am asked to draw an inference from the fact that there is no Affidavit from Mr. Anderson or former counsel setting out the nature of the alleged improper instruction.

[7]                However, the real substance of the plaintiffs' argument is that it is unfair to introduce changes of this nature in the course of a trial which has already commenced. Counsel has made his opening statement and Mr. Halford, the inventor, has testified in chief and has been cross-examined. Counsel argues that, having crafted his case to meet one case, it is unfair to allow the Seed Hawk defendants to change the case by amending their defence and introducing new evidence in the form of additional documents and an expert's report. The effect is to change the cast of the case after Mr. Halford has already given his evidence. This is particularly acute in the case of certain allegations in the proposed Amended Statement of Claim which refer to dealings between Mr. Halford and Mr. Dyck which are said to contradict the evidence given at the trial by Mr. Halford. This is made all the more difficult to remedy by the fact that Mr. Halford and Mr. Raber are subject to an order of the Court which prohibits them from discussing Mr. Halford's evidence until his re-examination has been completed.

[8]                Mr. Raber also points out that the introduction of new documents which have not been seen by his experts put them at risk of being compromised. Having expressed themselves on the basis of the information available to them, they may now be in the position of having to change their position on the basis of the documents sought to be introduced. This will subject them to cross-examination on their change in position. On the other hand, there is no shame in not commenting on a document which was not in issue at the time the expert affidavit was prepared. The experts for the defendants will be subject to the same criticism.

[9]                Finally, Mr. Raber points to the unfairness of the defendants being able to backfill their position in mid-trial.    The fact that this trial stands adjourned as a result of facts over which no one had any control ought not to give the defendants a tactical advantage. On the other hand, the loss of a tactical advantage, if there was one, is not grounds to deny an amendment which would otherwise be allowed.

[10]            The legal principles applicable to the motion are not particularly complex. They were recently set out in the case of Visx v. Nidek Co. (1998), 234 N.R. 94 (F.C.A.). The Court had before it an appeal from a failure to allow an amendment of a Statement of Defence at an interlocutory stage. The Federal Court of Appeal quoted and applied the following passage from Steward v. North Metropolitan Tramways Co. (1886), 16 Q.B.D. 556:

The rule of conduct of the court in such a case is that, however negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should be allowed, if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs; but, if the amendment will put them into such a position that they may be injured, it ought not to be made.

[11]            In Visx, supra, the Court of Appeal allowed the amendment even though the Statement of Defence had been amended five times previously. Mr. Raber seeks to distinguish Visx on the ground that it is a case about an interlocutory motion whereas this is a case about a trial which is in progress. Mr. Horn points to the four months remaining until the trial resumes and argues that this is effectively an interlocutory motion.

[12]            The difference between this situation and an interlocutory motion is that the evidence of the prinicipal fact witness has already been taken. A change in the pleadings which is said to contradict evidence already given causes a prejudice which cannot be made right by an order in costs. There may be other amendments which will require further evidence to be called.

[13]            Nor is the question of prejudice a matter which can be set over to be dealt with after the amendments have been allowed and the additional documents and evidence put into the record. It was suggested that if the plaintiffs could show some prejudice once the various heads of relief sought had been granted, they could then apply by motion for the appropriate relief. This fails to recognize that prejudice is a bar to allowing the relief sought. If the relief sought cannot be granted without prejudice to the position of the other side, even with the imposition of conditions, then the relief sought ought not be granted.

[14]            My reading of the proposed amendments satisfies me that they will permit the Court to decide the matters in issue between the parties.    So the question becomes whether it is possible by the imposition of terms to remedy the prejudice to the plaintiffs caused by the amendments sought and the introduction of the various documents and the supplemental affidavit ( which will be collectively referred to as "the relief sought") at this stage in the proceedings? The introduction of the various documents does not impact directly on Mr. Halford's evidence to the extent that they deal largely with the content of the expert evidence as to prior art. The plaintiffs' expert evidence has yet to be heard. An affidavit as to the significance of the documents as prior art is a matter which could be dealt with by an appropriate affidavit in reply, if it were thought necessary to do so. Similarly, to the extent that the proposed affidavit deals with the operation of a particular device, this too can be remedied by an appropriate affidavit in reply. The additional expense incurred in taking these steps is a matter for costs.

[15]            The problem arises when one considers to the amendments to the Statement of Defence. Before turning to the specifics of the amendments, it is worth recalling that a trial is a dynamic process. It begins with each party having a reasonably well defined view of the significance of the evidence they intend to lead. As each party's case develops, counsel assesses the quality of the evidence as it goes in and the damage if any done by cross-examination. If it appears that certain elements need to be reinforced, adjustments are made in the evidence of subsequent witnesses to plug any gaps that may have developed. There is an internal logic to this process as each party's perception of its tactical position causes it to make adjustments. At the end of it all, one often finds that matters which were thought to be relatively unimportant assume, or appear to assume, a significance which one would not have predicted.

[16]            With that background, one can see why Mr. Raber would have serious misgivings about any amendment to the pleadings in the course of a trial. In addition to the tactical issues arising from the flow of the evidence, one now adds the possibility of some fact assuming unforeseen significance as a result of what appears to be an innocuous change in the pleadings. The view of the case which counsel tried to build through the evidence lead may no longer correspond to the language of the amended pleading. Evidence given with one perspective in mind may now open avenues of cross-examination or contradiction not contemplated when the examination-in-chief was planned.

[17]            It is known that at least one paragraph of the Amended Statement of Defence raises a matter which was canvassed in Mr. Halford's evidence to date and which alleges a state of affairs possibly at odds with the evidence. That is the proposed paragraph 13(d) which alleges the following:

The named plaintiff Halford is not the inventor of the subject matter of the aforesaid claims. If there be any invention, the said subject matter was invented by F. Benjamin Dyck and directly disclosed to the plaintiff Halford by way of a sketch drawing prepared by F. Benjamin Dyck and forwarded by mail to Mr. Halford by Mr. Dyck in or about 1979 - 1980.

[18]            It is not appropriate for me to comment on the evidence at trial, so I will limit myself to repeating what Mr. Raber says about this amendment.

Mr. Halford's involvement with Benjamin Dyck was canvassed at length when Mr. Halford gave evidence at the trial on November 6, 7, and 8, 2000. It was also reviewed in detail during examinations for discovery. Mr. Halford's evidence was to the effect that he was referred to Mr. Dyck by Mr. William Reed in 1983.

[19]            How can the plaintiffs respond to this pleading at this stage of the trial? Given that it is a fundamental factual issue, it would take highly unusual circumstances to reach the position that the Court would refuse to consider evidence on this point because of a late amendment. This would introduce an artificiality into the proceedings which is totally at odds with the fact-finding nature of a trial. But the plaintiffs cannot be asked to simply leave the issue where it is, given its significance for their case. Some relief in the way of further evidence would have to be allowed.

[20]            The same may be true for other changes introduced by the amendments. It is difficult for me to assess the significance of the various amendments without knowing the plaintiffs' case. It would be unfair to put the plaintiffs to the trouble of applying to lead new evidence on an issue by issue basis, both in terms of telegraphing their case and in terms of the cost and effort involved. It is therefore my view that if the amendments are to be allowed, examination-in-chief would have to be reopened on any issue arising out of the Amended Statement of Defence and cross examination allowed on those issues. Re-examination would then follow. It would also be necessary to release counsel and Mr. Halford from the order which prohibits discussion of Mr. Halford's evidence to date. Without knowing what issues might require further evidence, I cannot limit the topics of discussion without limiting the plaintiffs' ability to put their case before the court.    It also follows that the plaintiffs would have the right to re-examine for discovery on any issue arising out of the amendments and if necessary, to file a reply to the Amended Statement of Defence.

[21]            The plaintiffs should also have their costs thrown away resulting from any step undertaken as a result of the granting of the relief sought by the Seed Hawk defendants from those defendants only in any event of the cause.

ORDER

For the reasons set out above, it is hereby ordered that:

1-          The Seed Hawk defendants shall have leave to:

a)          serve and file the Amended Statement of Defence attached to their Notice of Motion, provided the document is served and filed before June 22, 2001;

b)          serve and file an Amended Affidavit as to documents incorporating the documents identified in their Notice of Motion materials as well as the documents tendered on the hearing of this motion, providing the Amended Affidavit of Documents is served and filed prior to June 22, 2001;

c)          serve and file a supplementary affidavit of Clifford J. Anderson in substantially the same form as the affidavit tendered at the hearing of this motion providing such affidavit is served and filed before June 29, 2001.

2-          Simplot Canada Limited has leave to file its Amended Statement of Defence in the form of the Amended Statement of Defence attached to the Notice of Motion materials providing such amended Statement of Defence is served and filed before June 22, 2001.

3-          The plaintiffs have leave to:

a)          conduct examinations for discovery of a representative of the Seed Hawk defendants on any issue arising out of the Amended Statement of Defence or the Amended Affidavit of Documents providing such examinations are concluded prior to August 15, 2001;

b)          conduct examinations for discovery of a representative of Simplot Canada Limited on any matter arising out of the Amended Statement of Defence of Simplot Canada Limited providing such examinations are completed prior to August 15, 2001;

c)          file a reply responding to any issue arising out of the Amended Statement of Defence, providing such reply is filed prior to June 29, 2001;

d)          file a supplemental affidavit responding to the supplementary affidavit of Clifford J. Anderson, providing that such affidavit is filed in compliance with Rule 279(b) of the Federal Court Rules, 1998.

4-          Counsel for the plaintiffs and Mr. Halford are released from the order made at the trial of this matter, prohibiting any discussion of the evidence given by Mr. Halford until his re-examination had been completed.

5-          The plaintiffs shall recover their reasonable costs thrown away as a result of any steps taken pursuant to this order in any event of the cause, such costs to be spoken to at the conclusion of the trial of this matter.

       "J.D. Denis Pelletier"           

Judge