Date: 20090211
Dockets: A-331-08
A-355-08
Citation: 2009 FCA 41
CORAM: DESJARDINS
J.A.
EVANS
J.A.
RYER
J.A.
Docket: A-331-08
BETWEEN:
j2 GLOBAL COMMUNICATIONS, INC.
Appellant (Plaintiff)
and
PROTUS IP SOLUTIONS INC.
Respondent (Defendant)
AND
BETWEEN
PROTUS IP SOLUTIONS INC.
Respondent
(Plaintiff by Counterclaim)
and
j2 GLOBAL COMMUNICATIONS, INC.
and CATCH CURVE INC.
Appellants
(Defendants by Counterclaim)
Docket: A-355-08
BETWEEN:
CATCH CURVE INC.
Appellant (Plaintiff)
and
PROTUS IP SOLUTIONS INC.
Respondent (Defendant)
AND
BETWEEN:
PROTUS IP SOLUTIONS INC.
Respondent
(Plaintiff by Counterclaim)
and
CATCH CURVE INC. and
j2 GLOBAL COMMUNICATIONS, INC.
Appellants
(Defendants by Counterclaim)
REASONS FOR JUDGMENT
EVANS J.A.
[1]
The
appellants, Catch Curve Inc. and j2 Global Communications Inc., are related
companies and have instituted separate actions against Protus IP Solutions Inc.
(“Protus”) for infringing their Canadian patents relating to internet-based
facsimile services. Although the actions have not been consolidated, they are
being case managed together in the Federal Court.
[2]
The
appellants are appealing from a decision of the Federal Court (2008 FC 759) in
which Justice Russell dismissed motions by the appellants appealing an order of
Prothonotary Tabib, dated February 8, 2008. In that order, the Prothonotary had
permitted Protus to amend some of its pleadings, but had not accepted other
amendments that it proposed to its statements of defence and counterclaim. This
Court heard the appeals together, since the facts and issues are materially
identical. I shall dispose of both with a single set of reasons, a copy of
which will be placed in each Court file.
[3]
The
appellants allege that Justice Russell committed reversible error when he
upheld the Prothonotary’s order allowing motions by Protus to amend their pleadings,
and setting up a special procedure for enabling Protus to provide particulars
of the proposed amendments which the Prothonotary had not accepted.
(i) proposed amendments
[4]
This
Motions Judge regarded the part of the appellants’ motions dealing with the
proposed amendments as vital to the final issue in the case and, accordingly,
reviewed de novo the Prothonotary’s order allowing, and not allowing,
Protus’s proposed amendments. In order to succeed in their appeals, the
appellants must demonstrate that Justice Russell’s dismissal of their motions
was plainly wrong, in the sense that it was based on an error of law or a
misapprehension of the facts: Merck & Co. Inc. v. Apotex Inc., 2003
FCA 488 at para. 20. Justice Russell gave lucid and extensive reasons for
upholding the order of the Prothonotary, who is case managing the proceedings.
[5]
In these
circumstances, and given the discretionary and interlocutory nature of the
orders, the appellants have a heavy burden to discharge in order to persuade
this Court that it should intervene.
[6]
Justice
Russell agreed with the Prothonotary’s finding that the amendments would not
prejudice the appellants in a manner that could not be compensated by costs.
The appellants have not challenged this finding in this appeal. Absent
prejudice, the Motions Judge noted that, as a general rule, a litigant should
be able to amend its pleadings at any stage of the action, in order to ensure
that the real issues in dispute between the parties are before the court.
[7]
In
determining whether to permit the amendments, Justice Russell applied the test
used on motions to strike, namely, whether it is plain and obvious that the
amendments have no chance of success. The appellants say that this was an error
of law because this is not the test applicable for deciding whether to permit
an amendment, even when the amendment, if granted, would not cause prejudice.
[8]
The
appellants allege that, on a motion for leave to amend pleadings, it is also
relevant to consider the degree of change to the proceedings that the proposed
amendments would make. In this case, they say, the amendments proposed by
Protus would convert patent infringement actions into disputes about whether
the appellants have breached the Competition Act, a radically different proceeding.
[9]
I do not
agree. Justice Russell carefully considered this argument (at paras. 71-80) and
concluded that, in the absence of non-compensable prejudice, the fact that the
proposed amendments would effect a “radical departure” in the proceeding was
not a discrete ground for refusing an amendment, provided that the proposed
amendments satisfied the “plain and obvious test”.
[10]
I see no
error of law in this conclusion on the present facts. I note, in particular,
that the appellants’ infringement actions remain intact, and that Protus has
not abandoned its defence to the actions, but seeks to add to it and to the
counterclaim.
[11]
Nor am I
persuaded that the Judge committed any reversible error in his application of
the “plain and obvious” test to the proposed amendments. In particular, Justice
Russell was not clearly wrong in declining to refuse the proposed amendments
which rely on section 32 of the Competition Act. In view of the nature
of Protus’s internet-based business, and the need to interpret the section in
light of current information technology, it cannot be said at this point that
the defence based on section 32 is bound to fail.
[12]
Nor, in my
opinion, can it be said, given the trans-national nature of Protus’s business
and the fact that statements made, and conduct engaged in, by the appellants in
the United States may adversely affect Protus’s business in Canada, that the
proposed amendments dealing with these matters have no prospect of success as
the basis of a defence or counterclaim to the appellants’ infringement actions.
(ii) procedure for providing
particulars
[13]
The
Prothonotary refused to permit a number of amendments proposed by Protus
because they lacked sufficient particulars to enable her to determine if it was
plain and obvious that they could not succeed. However, instead of dismissing
the motions outright, and leaving Protus free to protract the matter further by
making another motion, or other motions, to amend its pleadings after adding
particulars, the Prothonotary established a procedure designed to streamline
the process.
[14]
Under this
process, Protus must submit to the appellants for comment particularized
proposed amendments to its pleadings. When the parties have gone as far as they
can in respect of the sufficiency of the particulars, Protus may file and serve
its proposed amended statements of defence and counterclaim. If the appellants
are not satisfied, they may move to dismiss the proposed amendments or to
require further and better particulars. This process will prevent the parties, on
a new motion for leave to amend, from re-litigating the legal question of
whether the particularized allegations constitute reasonable claims of breaches
of the Competition Act, a question that the Prothonotary has already
decided in favour of Protus.
[15]
Justice
Russell held that, since this aspect of the appellants’ motions was not vital
to the final issue in the case and the Prothonotary’s decision involved the
exercise of discretion, he should only intervene if satisfied that her decision
was clearly wrong. He found that it was not. I agree.
[16]
It has
often been said in this Court that, because of their intimate knowledge of the
litigation and its dynamics, prothonotaries and trial judges are to be afforded
ample scope in the exercise of their discretion when managing cases: see also Federal
Courts Rules, rules 75 and 385. Since this Court is far removed from the
fray, it should only intervene in order to prevent undoubted injustices and to
correct clear material errors. None have been demonstrated here. On the
contrary, Prothonotary Tabib’s order seems to me a creative and efficient
solution for moving along litigation that appears to have become bogged down.
[17]
The
appellants’ principal complaints about the Prothonotary’s order are that it (i)
compels them to particularize Protus’s case for it, (ii) permits Protus to
serve and file amendments without first obtaining leave of the Court, and
without affording the appellants an opportunity to oppose the motion for leave,
and (iii) imposes on the appellants the burden of bringing a motion to dismiss,
or to obtain further particulars, if they are of the view that the particulars
provided are not sufficient.
[18]
I do not
agree with this characterization of the Protonotary’s process or with the
appellants’ complaints about it. The order merely provides a mechanism for
enabling the parties to attempt to reach an agreement on particulars, or to
narrow the range of disagreement, before the matter returns to court. If the
appellants still contend that the particulars provided by Protus are
insufficient, they may challenge the amendments in court.
[19]
True, it
is unusual that a party opposing amendments must take the initiative and move
to strike. However, I am not persuaded that, in the context of a case-managed
proceeding, this imposes such an unfair burden on the appellants as to render
the order a clearly wrong exercise of discretion. After all, under the “normal”
procedure for amending pleadings, the appellants would have to file a response
to a motion by Protus to amend if they were not satisfied with the particulars.
[20]
If the
appellants intend to proceed with their actions, they would be well advised to
direct their time and resources to moving matters forward, rather than to
pursuing through three levels of judicial decision-makers the kinds of
pre-trial wrangling involved in these appeals.
[21]
For these
reasons, I would dismiss the appellants’ appeals with costs.
“John M. Evans”
“I agree
Alice Desjardins J.A.”
“I agree
C. Michael Ryer”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKETS: A-331-08
& A-355-08
For
A-331-08:(APPEAL FROM THE JUDGMENT OF MR.
JUSTICE RUSSELL DATED 18-JUN-2008, DISMISSING THE APPELLANTS’ APPEAL OF THE
ORDER OF PROTHONOTARY TABIB DATED 08-FEB-2008 IN FEDERAL COURT FILE T-139-06.)
For
A-355-08:(APPEAL FROM THE JUDGMENT OF MR.
JUSTICE RUSSELL DATED 18-JUN-2008, DISMISSING THE APPELLANTS’ APPEAL OF THE
ORDER OF PROTHONOTARY TABIB DATED 08-FEB-2008 IN FEDERAL COURT FILE T-140-06.)
STYLES OF CAUSE: A-331-08
J2
GLOBAL COMMUNICATIONS, INC. v. PROTUS IP SOLUTIONS INC.
AND
BETWEEN: PROTUS IP SOLUCTIONS INC. v. j2
GLOBAL COMMUNICATIONS, INC. and CATCH CURVE INC.
A-355-08
BETWEEN: CATCH
CURVE INC. v. PROTUS IP SOLUTIONS INC.
AND
BETWEEN: PROTUS IP SOLUTIONS INC. v. CATCH
CURVE INC. and j2 GLOBAL COMMUNICATIONS, INC.
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: FEBRUARY 10, 2009
REASONS FOR JUDGMENT BY: EVANS J.A.
CONCURRED IN BY: DESJARDINS J.A.
RYER J.A.
DATED: FEBRUARY 11, 2009
APPEARANCES:
|
Paul V. Lomic
Kenneth D. Hanna
|
FOR THE APPELLANT
|
|
Steven B.
Garland
Kevin K. Graham
|
FOR THE RESPONDENT
|
SOLICITORS
OF RECORD:
|
RIDOUT & MAYBEE
LLP
Toronto, Ontario
|
FOR THE
APPELLANT
|
|
SMART &
BIGGAR
Toronto, Ontario
|
FOR THE RESPONDENT
|
Email this Content