Date: 20120213
Docket: A-421-10
Citation: 2012 FCA 48
CORAM: LAYDEN-STEVENSON
J.A.
GAUTHIER J.A.
STRATAS
J.A.
BETWEEN:
GARFORD PTY LTD.
Appellant
and
DYWIDAG SYSTEMS INTERNATIONAL, CANADA,
LTD.,
MR. BOB BISHOP AND MR. KENNETH
R. SOSTEK
Respondents
REASONS FOR JUDGMENT OF THE
COURT
(Delivered from the Bench at Toronto, Ontario on February 13, 2012)
LAYDEN-STEVENSON J.A.
[1]
Garford
Pty Ltd. (Garford) is an Australian company. It commenced an action against
Dywidag Systems International (DSI), Mr. Bob Bishop and Mr. Kenneth R. Sostek
(collectively the defendants) claiming profits or damages arising from the
defendants’ alleged infringement of certain of Garford’s Canadian patents as
well as loss or damages arising from alleged breaches of the Competition Act,
R.S.C., 1985, c. C-34 (the Act). DSI moved for summary judgment with respect to
Garford’s claims under the Act.
[2]
Justice
Russell of the Federal Court (the judge) granted summary judgment and dismissed
Garford’s claim under the Act on the basis that it was out of time. The judge’s
reasons are reported at 2010 FC 996. Garford appeals from that judgment.
[3]
We are of
the view that the appeal must be dismissed. For ease of reference, the relevant
provisions of the Act are attached to these reasons as Schedule “A”.
[4]
Briefly,
Garford owns Canadian patents related to rock anchors and rock bolts (referred
to as cablebolts) used primarily in underground mines. Garford granted a
license to a Canadian company, Camada Technology International Pty. Ltd.
(Camada), to manufacture, use and sell Garford’s cablebolts throughout Canada. The Garford cablebolts were
commercialized through a joint venture between Camada and Thiessen Equipment
Ltd.
[5]
DSI, also
a Canadian company, manufactures and distributes cablebolts. Through three
transactions, which I will refer to as the purchase agreements, DSI acquired
the assets of a number of entities in the cablebolt market:
·
Thiessen
Equipment Ltd. in November, 2003;
·
Stewart
Mining Products Ltd. in February, 2005; and
·
Ground
Control Sudbury Ltd. in March, 2006.
[6]
Garford
alleged DSI was in breach of subsection 45(1) of the Act and claimed “loss and
damages” under subsection 36(1) of the Act. Section 36 provides a private right
of action where anticompetitive conduct has caused any person to suffer a loss.
Its scope is limited to conduct that is contrary to Part VI of the Act and
breaches of Court or Competition Tribunal orders. Part VI of the Act includes
subsection 45(1), upon which Garford relies, and relates to conspiracies,
agreements and arrangements that unduly lesson competition. Subsection 36(4) of
the Act prescribes a two-prong limitation period. It is common ground that the
applicable limitation period in this matter is found in subparagraph 36(4)(a)(i),
which requires a claim to be brought within two years of the relevant conduct.
[7]
The judge
summarized the principles in relation to summary judgment and noted that it
should be granted “only in the clearest cases where the Court is entirely
satisfied that a trial is unnecessary” (judge’s reasons at para.10). After
reviewing the pleadings and Garford’s particulars, he concluded that the
“negotiations and discussions leading up to and including the three purchase
agreements and related transactional documents recorded in those agreements”
constituted the conduct for purposes of the relevant limitation period (judge’s
reasons at para.14). Having regard to the dates of the purchase agreements (as
noted earlier), he specified the dates upon which the limitation periods
expired as follows:
·
Thiessen
Acquisition – November, 2005;
·
Stewart
Acquisition – February, 2007; and
·
Ground
Control Acquisition – March, 2008.
[8]
The judge
observed that, even if the agreement or arrangement were the sum total of the
three separate agreements, the limitation period expired in March, 2008, at the
latest. Since the action was not commenced until August 15, 2008, it is
“time-barred and so discloses no reasonable cause of action” (judge’s reasons
at para.12).
[9]
We can
detect no error in the judge’s enunciation or application of the law or any
palpable and overriding error with respect to his factual findings. We are in
substantial agreement with his reasoning with respect to the limitation period.
[10]
The crux
of Garford’s argument is that the judge erred in failing to find that the
“discoverability principle” applied to extend the limitation period. In our
view, the issue of discoverability does not arise on the facts of this case.
[11]
First, in
response to Garford’s contention that it was not in a position to commence its
subsection 36(1) claim until it had access to the documentation or contents of
the purchase agreements to determine what kind of problem and damages it was
facing, the judge correctly observed that Garford commenced its action before
it had access to the documents and before it began the discovery process.
[12]
Second,
Garford was aware generally that losing access to its distributors would cause
damage (appeal book, vol. 4, p. 1295 – cross examination of Neville Hedrick). An
agreement and the potential for harm are the required elements under section 45
of the Act.
[13]
Third, on
April 10, 2006, Garford’s solicitors sent a cease and desist letter to the
directors of DSI. The letter explains Garford’s knowledge of DSI’s activities
and threatens legal action against DSI and each of its directors personally for
patent and trademark infringement “and breach of the Competition Act.”
[14]
Fourth, and
most importantly, between April 10, 2006 and the date upon which the action was
commenced, there were no new facts relevant to the alleged breach of the Act.
The information available to Garford on April 10, 2006 was essentially the same
information it had when it commenced the action. DSI’s response of April 19,
2006 to the cease and desist letter simply crystallized the need for an action
and made clear that it would be opposed.
[15]
Fifth, the
judge made a factual determination at paragraph 37 of his reasons that
“clearly, by April 10, 2006, [Garford] was fully aware of…what it saw as a
breach of the [Act] by the defendants.” In our view, he made no palpable and
overriding error in so finding.
[16]
For these
reasons, the judge’s findings of fact, which on the applicable standard of
review cannot be set aside in this case, preclude any argument based on
discoverability, assuming without deciding, it is legally available.
[17]
Last,
Garford argues that the judge erred in finding that any ongoing effects of the
conspiracy do not extend the time period established by subsection 36(4) of the
Act. The judge thoroughly canvassed this issue at paragraphs 39-46 of his
reasons. We are in substantial agreement with his analysis in this respect.
[18]
Eli
Lilly & Co. v. Apotex,
2005 FCA 361 (Eli Lilly) does not assist Garford because the evidentiary
issues at play in Eli Lilly are not present in this case. Here,
it is common ground that the basis of Garford’s claim under the Act is the
purchase agreements. Similarly, 351694 Ontario Ltd. v. Paccar of
Canada Ltd., 2004 FC 1764 (Paccar) is of no benefit to Garford.
Significantly, Paccar was not a section 45 case. Rather, it involved
vertical restraints between a manufacturer/distributor and a retail dealer. The
action was founded on resale price maintenance, refusal to supply and price
discrimination. I note peripherally that these offences are no longer contained
in the Act and thus cannot found a section 36 action. In Paccar, the
court found ongoing conduct for the purpose of the limitation period on the
basis that the prohibited conduct was discriminatory sales.
[19]
In this
case, as the judge explained, the alleged offence under section 45 was complete
at the time of the conclusion of the purchase agreements. Ongoing effects do
not extend the time period established in subsection 36(4). Garford’s position
is tantamount to saying that the conduct prohibited by section 45 is only an
agreement which, in fact, injured the market. That is not the law. At the
relevant time (section 45 has since been amended), the offence was complete
upon the finalization of an agreement that, if carried into effect, would
unduly limit competition.
[20]
For these
reasons, the appeal will be dismissed with costs.
"Carolyn
Layden-Stevenson"
SCHEDULE A
Competition Act, R.S.C., 1985, c. C-34
Loi sur la concurrence, LRC 1985, c C-34
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36. (1) Any
person who has suffered loss or damage as a result of
(a) conduct that is contrary to any
provision of Part VI, or
(b) the failure of any person to comply
with an order of the Tribunal or another court under this Act,
may, in any court of competent jurisdiction, sue for and
recover from the person who engaged in the conduct or failed to comply with
the order an amount equal to the loss or damage proved to have been suffered
by him, together with any additional amount that the court may allow not
exceeding the full cost to him of any investigation in connection with the
matter and of proceedings under this section.
[…]
(4) No action may be brought under subsection (1),
(a) in the case of an action based on
conduct that is contrary to any provision of Part VI, after two years from
(i) a day on
which the conduct was engaged in, or
(ii) the day
on which any criminal proceedings relating thereto were finally disposed of,
Prior to March 12, 2010:
45. (1) Every
one who conspires, combines, agrees or arranges with another person
(a) to
limit unduly the facilities for transporting, producing, manufacturing,
supplying, storing or dealing in any product,
(b) to
prevent, limit or lessen, unduly, the manufacture or production of a product
or to enhance unreasonably the price thereof,
(c) to
prevent or lessen, unduly, competition in the production, manufacture,
purchase, barter, sale, storage, rental, transportation or supply of a
product, or in the price of insurance on persons or property, or
(d) to
otherwise restrain or injure competition unduly,
is guilty of an indictable offence and liable to imprisonment
for a term not exceeding five years or to a fine not exceeding ten million
dollars or to both.
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36. (1) Toute
personne qui a subi une perte ou des dommages par suite :
a) soit d’un comportement allant à l’encontre
d’une disposition de la partie VI;
b) soit du défaut d’une personne d’obtempérer
à une ordonnance rendue par le Tribunal ou un autre tribunal en vertu de la
présente loi,
peut,
devant tout tribunal compétent, réclamer et recouvrer de la personne qui a eu
un tel comportement ou n’a pas obtempéré à l’ordonnance une somme égale au
montant de la perte ou des dommages qu’elle est reconnue avoir subis, ainsi
que toute somme supplémentaire que le tribunal peut fixer et qui n’excède pas
le coût total, pour elle, de toute enquête relativement à l’affaire et des
procédures engagées en vertu du présent article.
[…]
(4) Les
actions visées au paragraphe (1) se prescrivent :
(a) dans le cas de celles qui sont fondées
sur un comportement qui va à l’encontre d’une disposition de la partie VI,
dans les deux ans qui suivent la dernière des dates suivantes :
(i) soit
la date du comportement en question,
(ii) soit
la date où il est statué de façon définitive sur la poursuite;
Avant le 12 mars 2010:
45. (1) Commet
un acte criminel et encourt un emprisonnement maximal de cinq ans et une
amende maximale de dix millions de dollars, ou l’une de ces peines, quiconque
complote, se coalise ou conclut un accord ou arrangement avec une autre
personne :
a) soit
pour limiter, indûment, les facilités de transport, de production, de
fabrication, de fourniture, d’emmagasinage ou de négoce d’un produit
quelconque;
b) soit
pour empêcher, limiter ou réduire, indûment, la fabrication ou production
d’un produit ou pour en élever déraisonnablement le prix;
c) soit
pour empêcher ou réduire, indûment, la concurrence dans la production, la
fabrication, l’achat, le troc, la vente, l’entreposage, la location, le
transport ou la fourniture d’un produit, ou dans le prix d’assurances sur les
personnes ou les biens;
d) soit,
de toute autre façon, pour restreindre, indûment, la concurrence ou lui
causer un préjudice indu.
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