Date:
20130730
Docket:
T-290-13
Citation:
2013 FC 831
[UNREVISED ENGLISH CERTIFIED TRANSLATION]
Ottawa, Ontario, July 30, 2013
PRESENT: The Honourable Mr. Justice Boivin
BETWEEN:
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DOMAINES PINNACLE
INC.
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Plaintiff /
Defendant by Counterclaim
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and
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BEAM INC. and BEAM
CANADA INC.
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Defendants /
Plaintiffs by Counterclaim
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and
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WHITE ROCK
DISTILLERIES, INC.
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Defendant
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and
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JIM BEAM BRANDS CO.
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Plaintiff by Counterclaim
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REASONS FOR ORDER
AND ORDER
I. Introduction
[1]
The
plaintiff and defendant by counterclaim, Domaines Pinnacle Inc. (the plaintiff),
under section 51 of the Federal Courts Rules, SOR/98-106 (the Rules),
are appealing from an order by Prothonotary Morneau on May 14, 2013.
[2]
Prothonotary
Morneau dismissed the plaintiff’s motion filed under section 75 of the Rules for
the purpose of amending its statement of claim. The amendment sought by the
plaintiff was to explicitly exclude Quebec from the scope of the Federal Court
action. Prothonotary Morneau found that the amendment did not seek to determine
the real questions in controversy between the parties and did not seek to serve
the interests of justice.
II. Issue
[3]
The
issue in this case is the following: did the Prothonotary err in dismissing the
motion to amend filed by the plaintiff?
III. Standard of review
[4]
The
test for determining the standard of review applicable to the discretionary order
of a prothonotary was set out by the Federal Court of Appeal in Canada v
Aqua-Gem Investments Ltd. (FCA), [1993] 2 FC 425, 149 NR 273. That test was
subsequently affirmed by the Supreme Court of Canada in Z.I. Pompey
Industrie v ECU-Line NV, 2003 SCC 27, [2003] 1 SCJ 450, and was reformulated
by the Federal Court of Appeal in Merck & Co. v Apotex Inc., 2003 FCA
488, [2004] 2 FCR 459 (Merck), at paragraph 19:
[19] . . . Discretionary orders
of prothonotaries ought not be disturbed on appeal to a judge unless:
(a) the questions raised in the motion are vital to the final issue of 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 the facts.
[5]
The
present case involves a discretionary decision of the prothonotary to dismiss the
plaintiff’s motion to amend. The decision is not vital to the final issue of
the case in this case before the Federal Court. In fact, regardless of whether
the plaintiff’s motion excludes the Province of Quebec, the action may proceed.
[6]
Thus,
applying the test described in Merck, above, the Court must not,
therefore, intervene, except where the prothonotary’s order is clearly wrong,
in the sense that the exercise of discretion was based upon a wrong principle or
misapprehension of the facts. The Court, however, specified that even if such
an error existed and the discretion was de novo, it would come to the
same conclusion.
IV. Facts
[7]
The
plaintiff manufactures various apple-based alcoholic products, particularly an
ice cider named “Domaine Pinnacle.” The plaintiff has been selling it since 2001
in its store and since 2002 to the Société des alcools du Québec. The defendants
distribute flavoured vodkas also called “Pinnacle.” The vodka brand Pinnacle was
first introduced in the United States in 2003, and then in Canada in 2005 by
one of the defendants in the Federal Court action: White Rock Distilleries,
Inc. It was subsequently acquired in June 2012 by Jim Beam Brands Co. and Beam
Inc., who continued to sell the Pinnacle vodka in Canada, with the exception of
Quebec.
[8]
On
December 7, 2012, the plaintiff filed a motion to institute proceedings in the
Quebec Superior Court, seeking to obtain a permanent, interlocutory and interim
injunction against the defendant Beam Inc. to prevent the commercialization of
vodkas and other Pinnacle on the Quebec market.
[9]
On
February 13, 2013, the plaintiff also instituted proceedings in the Federal Court
against defendants Beam Inc., Beam Canada Inc., and White Rock Distilleries
Inc., alleging unfair competition and trade-mark infringement under paragraphs 7(b)
and 7(c) of the Trade-marks Act, RSC 1985, c. T-13. Defendants Beam
Inc. and Beam Canada Inc. brought a counterclaim seeking, inter alia, a
declaration that the use of the “Pinnacle” mark for their vodka does not
infringe any of the rights alleged by the plaintiff in Canada under the Trade-
marks Act.
[10]
On
April 25, 2013, the defendants indicated their intention to request a stay of
proceedings in the Quebec Superior Court, on the basis that there was a
bifurcation of proceedings in the Federal Court as far as Quebec was concerned
and of lis pendens and/or forum non conveniens. On April 26,
2013, the plaintiff filed a motion in the Federal Court to amend its statement
under section 75 of the Rule, expressly seeking to exclude Quebec from its pleading.
The defendants opposed the motion to amend and a hearing was held before Prothonotary
Morneau on May 13, 2013.The order under was appeal was issued on May 14, 2013.
V. Analysis
[11]
The
plaintiff alleges that Prothonotary Morneau failed to appreciate its primary
intention, exclude Quebec from the jurisdiction of the injunction application before
the Federal Court, as a motion to that effect was filed with the Superior Court
of Québec before the statement of claim was filed in the Federal Court. The plaintiff
submits that however negligent or careless may have been its omission to clarify
that intention, the amendment should nonetheless be allowed (citing VISX Inc
v Nidek Co. (1998), 234 NR 94, 84 ACWS (3d) 662 (CA) (Visx)).
[12]
The
basic principle of amendment remains that set out in Canderel Ltd. v Canada
(1993), [1994] 1 FC 3, 157 NR 380 (CA) (Canderel): the amendment must be
sought for the purpose of determining the real questions in controversy between
the parties, and serve the interests of justice:
. . . while it is impossible to enumerate all the factors that a judge
must take into consideration in determining whether it is just, in a given
case, to authorize an amendment, the general rule is that an amendment should
be allowed at any stage of an action for the purpose of determining the real
questions in controversy between the parties, provided, notably, that the
allowance would not result in an injustice to the other party not capable of
being compensated by an award of costs and that it would serve the interests of
justice.
[13]
In
his order, Prothonotary Morneau referred to the Canderel case to identify
the approach to be used for amendments to pleadings. The prothonotary was of
the view that the amendment had not been sought for the purpose of determining
the real questions in controversy between the parties and did not seek to serve
the interests of justice. The prothonotary found that the primary
purpose of the amendments was to thwart the defendants’ intentions to request a
stay of proceedings in the Superior Court of Québec. The prothonotary also
noted that the defendants’ counterclaim in the Federal Court included Quebec, and
that accordingly, Quebec would be party to that proceeding even if the amendment
was allowed. The prothonotary also adopted the submissions of the defendant
White Rock Distilleries Inc. that an amendment that facilitates a number of related
litigation does not serve the interests of justice (Motion Record of the
Plaintiff, Tab 3, Order of Prothonotary Morneau, page 3).
[14]
I
note, from the outset, that the issue of the jurisdiction of the Superior Court
and of the Federal Court is not at issue. The parties agree that the two courts
in the present case have jurisdiction.
[15]
The
plaintiff admits that its intention to institute an action before the Federal Court
for all matters beyond Quebec was unclear and is not reflected in the record. In
addition, the plaintiff submits that Prothonotary Morneau concerned himself
with lis pendens when the issue was not before him. However, on this
point, it is important to note that the motion filed by the defendant Beam
Inc., seeking a stay of proceedings in the Superior Court of Québec in June
2013, was allowed. In its decision dated July 15, 2013, the Superior Court of
Québec ordered a stay of proceedings. In its judgment, the Superior Court took
into account the criteria for lis pendens (identity of the parties,
identity of the object and identity of the cause) and ordered that the proceedings
in the Superior Court be stayed until the earliest of the following dates: (a) the
date of a judgment allowing an appeal from the decision of Prothonotary Morneau
on the motion to amend; or (b) the date of a final judgment of the Federal Court
on the merits in this case.
[16]
The
plaintiff’s approach, of instituting two actions in two separate jurisdictions―albeit
concurrent―(Superior Court and Federal Court) raises not only the issue
of multiplicity of proceedings as indicated by the prothonotary (Motion Record
of the Plaintiff, Tab 3, Order of Prothonotary Morneau, page 4), but also
a real possibility of contradictory judgments
that the plaintiff did not seek to deny before this Court. The
only difference in the plaintiff’s approach is in the remedies to which the
plaintiff may be entitled if successful: although it would entail a mere
injunction for Quebec, it would entail an injunction accompanied by compensatory
damages for the other jurisdictions where the Pinnacle vodka has already been
marketed for several years.
[17]
The
plaintiff also claims that the prothonotary failed to consider the plaintiff’s
choice of forums. However, the Court will simply note that one must not lose
sight of the fact that the present situation is one where the plaintiff itself instituted
proceedings before two Courts of separate jurisdiction, and not the defendants who
subsequently brought an action in a different forum. The plaintiff itself
commenced an action in the Federal Court after having done the same in the
Superior Court of Quebec. The plaintiff retains all of its remedies before a Court
chosen by it.
[18]
For
all these reasons, the Court is not satisfied, in the circumstances of this
case, that the impugned order is clearly wrong that the exercise of discretion
by the prothonotary was based upon a wrong principle or misapprehension of the
facts.
ORDER
THE
COURT ORDERS that the appeal from the order issued on May
14, 2013, is dismissed. With costs.
“Richard
Boivin”
Certified
true translation
Daniela
Guglietta, Translator
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