Docket: A-415-13
Citation:
2015 FCA 100
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CORAM:
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STRATAS J.A.
WEBB J.A.
SCOTT J.A.
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BETWEEN:
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IMPERIAL
MANUFACTURING GROUP INC.
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and HOME DEPOT
OF CANADA INC.
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Appellants
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and
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DECOR GRATES
INCORPORATED
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Respondent
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REASONS
FOR JUDGMENT
STRATAS J.A.
[1]
The appellants appeal from the Order dated
November 26, 2013 of the Federal Court (per Justice Gleason): 2013 FC
1189.
[2]
In the Federal Court, the appellants moved for
particulars of certain allegations in the respondent’s statement of claim. The
Federal Court dismissed the motion. The appellants, Imperial Manufacturing and
Home Depot, appeal from the dismissal.
[3]
For the reasons set out below, I would dismiss
the appeal with costs.
A.
Basic facts
[4]
In this case, the respondent, Decor Grates
Incorporated, has sued the appellants for infringement of certain industrial
designs. It was granted registrations for two designs for floor heating grates
under the Industrial Design Act, R.S.C. 1985, c. I-9.
[5]
In the Federal Court, the appellants moved for
an order for particulars. Discussions ensued and the discussions helped to
narrow the parties’ dispute.
[6]
When the matter came before the Federal Court,
the particulars sought fell into three categories:
•
Particulars as to the store locations and
outlets where the products of Decor Grates are sold, as well as the scope and
nature of its products, and the duration it has been selling its products (for
paragraph 2 of the statement of claim);
•
Particulars regarding both industrial designs,
including how and when each design was created and finalized, the names and
addresses of those who created the designs, their relationship with Decor
Grates and copies of any agreements or assignments (for paragraph 6 of the
statement of claim);
•
Particulars of all floor registers sold by Decor
Grates to the appellant, Home Depot, from the late 1990’s to January 2013 (for
paragraph 10 of the statement of claim).
[7]
The Federal Court set out the principles that
govern the granting of particulars (at paragraph 3):
The rules applicable to requests for
particulars and pleadings are well-established and require a party to plead
with sufficient particularity to set out the basis for its claim or defence so
as to inform the other party of the case it has to meet, allow it to prepare
its responding pleading, avoid surprise and appropriately limit and shape the
scope of discovery and evidence at trial (see e.g. Gulf Canada Ltd.
v. Mary Macklin, [1984] 1 F.C. 884 (C.A.)). As the plaintiff correctly
notes, the scope of permissible requests for particulars is narrower at the
pleading stage than later on in the litigation or during discovery (see e.g.
Quality Goods IMD Inc. v. RSM International Active Wear Inc. (1995), 63
C.P.R. (3d) 499 (F.C.T.D.) at para. 2). Moreover, a party is not entitled to
request particulars of information within its knowledge unless the pleading is
otherwise faulty through its failure to plead a necessary material fact, and a
request for particulars equivalent to a fishing expedition, to determine if
there is a factual basis for a potential defence, is not appropriate (see e.g.
Quality Goods at paras. 2-3; Windsurfing International Inc v.
Novaction Sports Inc. (1987), 18 C.P.R. (3d) 230 (F.C.T.D.) at para. 17; Embee
Electronics Agencies Ltd. v. Agence Sherwood Agencies Inc. (1979), 43
C.P.R. (2d) 285 (F.C.T.D.) at para. 3).
[8]
I see no error in the Federal Court’s summary of
the relevant principles, though later I shall offer some further guidance on
the relevant principles.
[9]
In the Federal Court, the appellants submitted,
as they submit in this Court, that the particulars are relevant to certain
defences to Decor Grates’ claim of infringement. The appellants would like to
advance two defences:
•
The appellants query whether Decor Grates is a “proprietor” under the Industrial Designs Act,
R.S.C. 1985, c. I-9. Under that Act, registrations may be granted only to “proprietors” of industrial designs. Section 12 of the
Act states that the “author of the design is the first
proprietor of the design, unless the author has executed the design for another
person for…consideration, in which case the other person is the first
proprietor.” Section 13 of the Act provides for transmission of
proprietorship through assignment, which must be registered with what was known
as the Office of the Commissioner of Patents (now the Canadian Intellectual
Property Office).
•
The appellants query whether they have a defence
under paragraph 6(3)(b) of the Act. That paragraph provides that the
Minister shall refuse to issue a registration if the application for
registration is filed more than one year after the design is published
anywhere. The appellants wish to investigate whether this may have happened,
triggering the paragraph 6(3)(b) defence.
[10]
The Federal Court acknowledged that the two
defences do exist in law and can potentially arise in a case such as this.
However, it denied the request for particulars, finding that the appellants had
embarked upon a “fishing expedition” (at
paragraph 8):
The [appellants] argued that they are
entitled to the requested particulars as they concern potential defences, and,
therefore, are material facts. With respect, I disagree and instead believe
that the requests constitute an impermissible “fishing expedition” to discover
whether there might be a defence open to the defendants, which is not the
subject of a proper request for particulars. As Justice Marceau noted in Embee
[Electronics Agencies Ltd. v. Agence Sherwood Agencies Inc. (1979), 43
C.P.R. (2d) 285 (F.C.T.D.)] at para. 3, a defendant should not be allowed to
use a request for particulars “as a means to go on a fishing expedition in
order to discover some grounds of defence still unknown to him”. That is
precisely what the defendants seek to do here with respect to the facts outside
their knowledge; they seek the particulars to determine if grounds for the two
potential defences exist.
[11]
Later, the Federal Court added that the particulars
were simply not relevant (at paragraph 10):
Here, on the other hand, the requested
particulars are not an essential element of the plaintiff’s claim as under [sub]sections
7(3) and 9 of the [Industrial Design Act]. The fact of registration
is all that the plaintiff must establish to prove its entitlement to the
exclusive right to use the registered designs. The information the defendants
seek concerns potential defences and is not a requisite element of the
plaintiff’s claim.
[12]
In refusing the particulars, the Federal Court
also relied on the fact that some of the particulars sought were known to the
appellant, Home Depot, and could be shared with the appellant, Imperial
Manufacturing. It noted the law to the effect that a party cannot seek particulars
when the information underlying those particulars lies within its own
knowledge. The Federal Court added that the particulars sought went far beyond
what was necessary to trigger the defences and included many “extraneous elements that would be time-consuming to locate.”
[13]
The appellants appeal to this Court on all
issues.
B. Analysis
(1) Standard of review
[14]
In this Court, the parties agree that deference
is to be accorded to the Federal Court’s decision unless the Federal Court
proceeded “on a wrong principle, gave insufficient
weight to relevant factors, misapprehended the facts or where an obvious
injustice would result”: David Bull Laboratories (Canada) Inc. v.
Pharmacia Inc., [1995] 1 F.C. 588 at page 594, 58 C.P.R. (3d) 209 at page
213 (C.A.); Reliance Comfort Limited Partnership v. The Commissioner of
Competition, 2013 FCA 129 at paragraphs 3-4; Apotex Inc. v. Canada (Governor in Council), 2007 FCA 374, 370 N.R. 336 at paragraph 15. The parties
say that this is the standard of review to be applied in appeals from
discretionary orders of the Federal Court in interlocutory matters.
[15]
In their memorandum of fact and law, the
appellants take this one step further, suggesting, on the basis of Apotex,
above at paragraph 15, that if the Federal Court “has
given insufficient weight to relevant factors,” this Court can “substitute the [Federal Court’s] discretion for its own.”
[16]
As will be seen below, the appellants do submit
that the Federal Court erred in law. But, relying upon the cases, above, they
also submit that the Federal Court weighed the relevant factors improperly and
so this Court should reweigh those factors and substitute its discretion for
that of the Federal Court.
[17]
The appellants’ submission that the improper
weighing of matters entitles this Court to intervene requires closer
examination.
[18]
Discretionary orders, such as the one in issue
in this case, are the result of applying law to the facts of particular cases –
in other words, they are questions of mixed fact and law.
[19]
In a ruling binding upon us, the Supreme Court
has held that the standard of review for questions of mixed fact and law is “palpable and overriding error” unless there is an
extricable legal principle at issue: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. If there is no extricable
legal principle or error of law, the standard of review is “palpable and overriding error”: Housen; see
also H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1
S.C.R. 401.
[20]
The line of authority on the standard of review
of discretionary interlocutory orders of the Federal Court, cited in paragraph
14, above, began with the David Bull decision in 1995. This Court has
applied this line of authority – I shall call it the David Bull line of
authority – as if it were a separate rule of law that stands apart from the
more general standard of review jurisprudence from the Supreme Court in Housen.
[21]
Despite Housen, the David Bull
line of authority on the standard of review persists. As a result, counsel
coming to this Court have to consider whether the matter they are litigating is
interlocutory and discretionary. If so, the David Bull line of authority
applies; if not, Housen applies. This raises problems.
[22]
First, there is the problem of stare decisis.
Housen is a decision of the Supreme Court, binding on all. In those
cases, the Supreme Court provided the definitive word on the standard of review
in civil cases. It did not make informal comments of the sort we might be
tempted to distinguish. Rather, it analyzed the matter thoroughly – examining
precedent, doctrine and legal policy – and it pronounced clearly and broadly on
the matter, without any qualifications or reservations. For example, it did not
carve out any special exceptions based on whether the matter being appealed is
interlocutory or final, or whether discretionary orders are somehow different
from issues of mixed fact and law, or whether the matter is a motion, or a
particular type of motion, or something else. So the David Bull line of
authority seems to persist these days as a bit of an anomaly.
[23]
With one exception, the Supreme Court has
applied the Housen standard of review in all civil cases before it. In
the one exception, the Supreme Court suggested in a single isolated sentence
that, among other things, an appellate court could interfere where the lower
court “gives no or insufficient weight to relevant
considerations”: Penner v. Niagara (Regional Police Services Board),
2013 SCC 19, [2013] 2 S.C.R. 125 at paragraph 27. However, less than a year
later, the Supreme Court dropped “no or insufficient
weight to relevant considerations” as a ground to interfere. It reaffirmed
that discretionary decisions should be disturbed only if the court “misdirected itself” or “came
to a decision that is so clearly wrong that it resulted in an injustice”:
Hryniak v. Mauldin,
2014 SCC 7, [2014] 1 S.C.R. 87 at paragraph 83. Misdirection
means instructing oneself improperly on the law, in other words an error of
law. And a decision that is so clearly wrong that it resulted in an injustice
is another way of saying that there has been an obvious error that affects the
outcome of the case – in other words, palpable and overriding error. Hryniak
expresses the Housen standard. Today, the Housen standard
remains the basis upon which appellate courts can interfere with discretionary
decisions.
[24]
The second problem with the David Bull
line of authority is the practical difficulty it can cause when litigants try
to apply it. While discretionary orders are not usually hard to spot, in some
cases it can be unclear whether a particular order is interlocutory or final:
see, e.g., Ontario Federation of Anglers and Hunters v. Alderville
Indian Band, 2014 FCA 145, 461 N.R. 327.
[25]
Third, to some extent, now that we have Housen,
the continued existence of the David Bull line of authority is
redundant. The David Bull line of authority suggests that this Court
should interfere where the first instance court has proceeded on a wrong
principle. But that is just a different way of saying, to use the language in Housen,
that there has been an error on an extricable point of law. As for the giving
of insufficient weight to relevant factors, misapprehending the facts or
causing an obvious injustice, if severe enough, these can qualify under Housen
as a “palpable and overriding error.” So I do
not take the David Bull line of authority, properly interpreted and
applied, to be saying anything much different from Housen: and for a
similar observation made in substance by this Court, see Elders Grain Co. v.
Ralph Misener (Ship), 2005 FCA 139, [2005] 3 F.C. 367 at paragraphs 6-13.
As a matter of language, though, the David Bull line of authority,
unlike Housen, does not capture the “palpable
and overriding error” concept and, as a result, offers the false hope
that appellate courts will interfere on the basis of reweighings.
[26]
This takes me to the fourth problem with the David
Bull line of authority. It poses a trap for the unwary. Read literally, it
allows this Court to interfere where the Federal Court has given “insufficient weight to relevant factors.” This sounds
like an invitation to this Court to reweigh the evidence before the Federal
Court and substitute our own opinion for it. Many counsel appearing in our
Court construe it as such, asking us on appeal to do just that. As we shall
see, that is what the appellants are asking us to do here. But, plainly, this
is not what we ever do: see, e.g., Peguis First Nation v. Canada
(Attorney General), 2014 FCA 7, 456 N.R. 239; Sandoz Canada Inc. v.
Abbott Laboratories, 2010 FCA 168, 404 N.R. 356 (where, despite citing the David
Bull line of authority, this Court applied the Housen standard of “palpable and overriding error”).
[27]
Fifth, there is no rationale that would support
the standard of review on discretionary matters or matters of mixed fact and
law in the Federal Courts being different from the standard of review applied
by other courts across Canada. No other court in Canada uses a formulation of
the standard of review similar to that set out in the David Bull line of
authority. In the interests of simplicity and coherency, all other
jurisdictions apply Housen on all standard of review cases across the
board. And so should we: see also Apotex Inc. v. Bristol-Myers Squibb Co., 2011 FCA 34, 414 N.R. 162 at paragraph 9.
[28]
Sixth, the provenance of the David Bull
formulation of the standard of review calls it into question. David Bull
simply asserts it, without any explanation in law or legal policy. The only
authority it relies upon is Nabisco Brands Ltd.-Nabisco Brands Ltée. v.
Proctor & Gamble Co. et al. (1985), 5 C.P.R. (3d) 417 at page 418, 62
N.R. 364 (Fed. C.A.). There, in extremely brief
reasons, the Court stated:
The Appellant has a
preliminary hurdle to surmount to successfully appeal a discretionary,
interlocutory order. It must satisfy the Court that, in refusing to exercise
her discretion in favour of the applicant on a motion to strike all or part of
a pleading, the Motions Judge clearly erred in her appreciation of the nature
of the pleading or that she proceeded on a wrong principle.
Clear error in the “appreciation of the nature of the pleading” on a motion to strike would probably qualify
today as “palpable and
overriding error” on a
question of mixed fact and law justifying appellate intervention, as would
proceeding “on a wrong
principle.” But David
Bull seems to have gone beyond the defensible articulation of the standard
of review set out in Nabisco and added “giving insufficient weight to relevant factors.”
[29]
To eliminate these problems and in the interests
of simplicity and coherency, only the Housen articulation of the
standard of review – binding upon us – should be used when we review
discretionary, interlocutory orders. In accordance with Housen, absent
error on a question of law or an extricable legal principle, intervention is
warranted only in cases of palpable and overriding error.
(2) The
merits of the appeal
[30]
The appellants submit that the Federal Court
erred in legal principle when it stated that “the fact
of registration is all the plaintiff must establish to prove its entitlement to
the exclusive right to use the registered designs.”
[31]
In my view, this sentence cannot be viewed in
isolation. First, the purpose of particulars must be kept front of mind.
[32]
Courts grant motions for particulars of
allegations in a statement of claim when defendants need them in order to
plead. In short, the purpose of particulars is to facilitate the ability to
plead. Put another way, without the particulars on an important point, the
party cannot plead in response.
[33]
This is to be distinguished from discoveries
and, in particular, what courts must consider before ordering a discovery
witness to answer a question. There, the Court considers whether the
information sought is relevant and material to the legal and factual issues in
the proceeding and consistent with the objectives set out in Rule 3 of the Federal
Courts Rules, S.O.R./98-106.
[34]
The appellants seem to have a discovery purpose
in mind. They seem to be supporting their request for particulars on the basis
that the information they seek is relevant and material to the legal and
factual issues in the case. In paragraph 32 of their memorandum of fact and
law, they submit that the provision of particulars will enable them “to appreciate the facts on which the case is founded and
better understand [Decor Grates’] position.” But these matters are
relevant to the propriety of information sought on discovery, not whether
particulars in a statement of claim should be granted because a party needs
them in order to plead.
[35]
In paragraphs 31 and 32 of their memorandum of
fact and law, the appellants suggest that the provision of the particulars
would have a “significant impact” on their
statement of defence by affecting its “submission,
structure and tone.” Here again, the appellants misapprehend the purpose
of particulars. They are not supplied because they will make a pleading better
or more forceful. They are supplied because without them they cannot plead in
response to an important point.
[36]
Had this been a request for information during a
discovery, the appellants might be on firmer ground. Subsection 7(3) of the Industrial
Design Act creates a rebuttable presumption, not a conclusive presumption.
Subsection 7(3) provides as follows:
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7. (3) The
certificate, in the absence of proof to the contrary, is sufficient
evidence of the design, of the originality of the design, of the name of the
proprietor, of the person named as proprietor being proprietor, of the
commencement and term of registration, and of compliance with this Act. [my
emphasis]
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7. (3) En
l’absence de preuve contraire, le certificat est une attestation
suffisante du dessin, de son originalité, du nom du propriétaire, du fait que
la personne dite propriétaire est propriétaire, de la date et de l’expiration
de l’enregistrement, et de l’observation de la présente loi. [je soulinge]
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[37]
If subsection 7(3) set up a conclusive
presumption, then all questions concerning facts inconsistent with the
presumption would be out of bounds. But subsection 7(3) sets up only a
rebuttable presumption. Provided a party has some evidence that conflicts with the
certificate (i.e., “proof to the contrary”),
it can rely upon that evidence in support of an allegation in its statement of
defence that the presumption is rebutted to the extent of the conflict. For
example, if the appellants have information suggesting that Decor Grates is not
a “proprietor” because it is not or cannot be an
author of the design in issue, it can plead an allegation based on that
conflicting fact as “proof to the contrary.”
Depending on the circumstances, a party may be able to draw wider inferences
from the conflicting evidence and make a wider allegation that other aspects of
the presumption are also rebutted. But if the appellants do not have any
conflicting evidence at all, they cannot plead they have “proof to the contrary.” To do so would be an abuse of
process: Merchant Law Group v. Canada Revenue Agency, 2010 FCA 184, 321 D.L.R. (4th) 301 at paragraph 34; Canada (National
Revenue) v. JP Morgan Asset Management (Canada) Inc., 2013 FCA 250, [2014] 2 F.C. 557 at paragraph 45.
[38]
The appellants also submit that the judge erred
in finding that their request for particulars was a “fishing
expedition.” Here, the Federal Court set out the law relating to the Industrial
Design Act and subsection 7(3) of that Act in particular, and did not err
on any legal point. As a result, the Federal Court’s finding that the
appellants are engaged in a “fishing expedition”
– a search by an empty-handed party looking for something to grasp onto – is a
question of mixed fact and law heavily suffused by facts. Therefore, in order
to succeed on this, the appellants must persuade us that the Federal Court
committed a palpable and overriding error.
[39]
Further, the Federal Court made other
supplementary findings in support of its decision, namely that some of the
particulars sought were known to the appellant, Home Depot, those particulars
could be shared with the appellant, Imperial, the particulars sought went far
beyond what was necessary to trigger the defences, and many of the particulars
sought include many “extraneous elements that would be
time-consuming to locate.” To some extent, some of these concerns seem
more appropriate to the issue whether a question should be answered on
discovery rather than whether a party needs the information in order to plead.
But they are largely factual in nature. Here again, to set these findings
aside, the appellants must persuade us that the Federal Court committed a
palpable and overriding error.
[40]
Palpable and overriding error is a high
standard: see, e.g., Canada v. South Yukon Forest Corporation,
2012 FCA 165, 431 N.R. 286; Waxman
v. Waxman (2004), 186 O.A.C. 201, 44 B.L.R.
(3d) 165 (C.A.) at paragraphs 278-84. In South Yukon, this
Court expressed the standard as follows (at paragraph 46):
Palpable and overriding error is a highly
deferential standard of review: H.L. v. Canada (Attorney General), 2005 SCC 25, [2005]
1 S.C.R. 401; Peart v. Peel Regional
Police Services (2006), 217 O.A.C. 269 (C.A.) at paragraphs 158-59;
Waxman, supra. “Palpable” means an error that is
obvious. “Overriding” means an error that goes to the very core of the outcome
of the case. When arguing palpable and overriding error, it is not enough to
pull at leaves and branches and leave the tree standing. The entire tree must
fall.
[41]
In this case, the appellants have not persuaded
me that the threshold of palpable and overriding error has been met. All of the
Federal Court’s findings of mixed fact and law (including matters of
discretion) and findings of fact have a basis in the evidence. Put another way,
there is no error that is obvious and goes to the very core of the outcome
reached.
[42]
The appellants also submit that the costs order
made by the Federal Court should be set aside. One reason is that the Federal
Court’s judgment must be set aside on appeal. For the above reasons, there are
no grounds to set aside the Federal Court’s judgment. The appellants also
submit that, in making its costs award, the Federal Court should have taken
into account Decor Grates’ late delivery of requested particulars on the eve of
the hearing. However, in the Federal Court the parties agreed that costs should
follow the event and that they be fixed in the amount of $1,500. Thus, the
appellants’ submission is without merit.
C. Proposed disposition
[43]
For the foregoing reasons, I would
dismiss the appeal with costs.
“David Stratas”
“I agree
Wyman W. Webb
J.A.”
“I agree
A.F. Scott
J.A.”
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