Docket: A-240-16
Citation:
2017 FCA 32
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CORAM:
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STRATAS J.A.
GLEASON J.A.
WOODS J.A.
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BETWEEN:
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NOV DOWNHOLE
EURASIA LIMITED and DRECO ENERGY SERVICES ULC
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Appellants
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and
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TLL OILFIELD
CONSULTING LTD. and ACURA MACHINE INC.
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Respondents
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REASONS
FOR JUDGMENT
WOODS J.A.
[1]
The appellants, NOV Downhole Eurasia Limited and
Dreco Energy Services ULC, sought leave in the Federal Court to amend their
statement of claim in a patent infringement action against TLL Oilfield
Consulting Ltd. and Acura Machine Inc.
[2]
The proposed amendments fall into two categories:
the addition of individuals as parties and a claim for joint and several
liability.
[3]
The appellants seek to add three individuals as
additional defendants in the action: Troy Lorenson, David Nicholson, and Petr
Macek. Messrs. Lorenson and Nicholson were each directors and officers of one
of the respondents, and Mr. Macek was involved in the development of an allegedly
infringing product.
[4]
The motion was dismissed by the Federal Court (per
Prothonotary Milczynski), and a Rule 51 appeal was similarly dismissed (per
Bell J., the judge) (2016 FC 685).
[5]
In this further appeal, the appellants submit
that the judge made reviewable errors and that leave to make the amendments
should be allowed. Since the judge had substantially adopted the Prothonotary’s
analysis and conclusions (reasons, paragraph 9), this appeal focused mainly on
the reasons of the Prothonotary.
[6]
In my view, the Federal Court did not err in law
in identifying and applying the legal principles concerning the amendment of
pleadings. Nor did it err in law in its understanding of this Court’s decision
regarding the personal liability of directors and officers in Mentmore
Manufacturing Co. v. National Merchandise Manufacturing Co. (1978), 89
D.L.R. (3d) 195, 40 C.P.R. (2d) 164, which was also cited in Cinar Corporation
v. Robinson, 2013 SCC 73, [2013] 3 S.C.R. 1168 (at para. 60). Similarly,
the Federal Court did not err in law with respect to the legal principles to be
applied regarding the personal liability of third parties such as Mr. Macek.
[7]
Absent an error of law, the decision whether to
allow an amendment can be set aside only on the basis of palpable and
overriding error: Hospira Healthcare Corporation v. The Kennedy Institute of
Rheumatology, 2016 FCA 215, at paras. 69-79. This is a high standard: Benhaim
v. St-Germain, 2016 SCC 48 at paras. 38-39, citing Canada v. South Yukon
Forest Corporation, 2012 FCA 165 at para. 46 and J.G. v. Nadeau,
2016 QCCA 167 at para. 77. I am not persuaded that there is any palpable and
overriding error in this case.
[8]
The appellants submit that the Federal Court
erred by failing to properly consider all relevant pleaded facts with respect
to the allegations against the three individuals. I disagree. When the
decisions of the Prothonotary and the judge are reviewed as a whole, it is
clear that the Federal Court took into account all relevant pleadings.
[9]
Further, in my view the proposed pleading is
deficient because it does not contain material facts with sufficient
specificity to establish “the deliberate, wilful and
knowing pursuit of a course of conduct,” as described in Mentmore.
Most of the pleaded facts describe ordinary activities of directors and
officers, such as causing the corporations to develop a competing product and to
pay out profits to the officers and directors. The facts set out in the
proposed pleading do not establish the type of conduct that is necessary for personal
liability.
[10]
Although the pleading does contain a statement
that “the defendants knowingly and willfully pursued a
course of conduct that was likely to constitute an infringement of the 065
Patent or reflected an indifference to the risk of infringement”
(paragraph 72), this is merely a conclusory statement that parrots the applicable
test from Mentmore. It does not constitute a material fact: Merchant
Law Group v. Canada Revenue Agency, 2010 FCA 184, 321 D.L.R. (4th) 301, at
paragraph 34.
[11]
Accordingly, there is no reviewable error in the
Federal Court’s decision to deny leave to add further defendants.
[12]
The second type of amendment adds a claim for joint
and several liability. The appellants submit that the Federal Court failed to
consider that this claim applies to the original corporate defendants as well
as the individuals. The Federal Court denied leave to make these amendments,
although the reasons do not explicitly refer to joint and several liability of
the two corporations.
[13]
A claim for joint and several liability
requires, at a minimum, material facts which support that liability should be
joint. In this case, the pleaded facts are to the effect that each of the
corporate defendants infringed the plaintiffs’ patent. These material facts are
not sufficient to support a claim for joint and several liability. Accordingly,
the Federal Court made no reviewable error in declining this amendment.
[14]
Accordingly, I would dismiss the appeal with
costs.
“Judith M. Woods”
“I agree
David Stratas J.A.”
“I agree
Mary J.L. Gleason J.A.”
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