Date: 20060830
Docket: T-375-05
Citation: 2006 FC 1043
BETWEEN:
FIELDTURF (IP) INC.
Plaintiff/
Defendant by Counterclaim
and
LES INSTALLATIONS SPORTIVES
DEFARGO INC.
Defendant/
Plaintiff by Counterclaim
and
FIELDTURF TARKETT INC.
“Petitioner”
REASONS FOR ORDER
PROTHONOTARY
MORNEAU:
[1]
At issue in this case is a series of objections―which essentially
have the same objective―and which were raised by counsel for a deponent
at his cross-examination on affidavit.
[2]
It is important to describe the background to this dispute.
[3]
To simplify things, it should be noted by way of illustration that in
this docket and in dockets T‑283‑03, T‑350‑03, T‑491‑04
and T‑1473‑04 (collectively the Dockets), the defendant or
defendants (hereinafter, collectively, the defendants) are all represented by
the same counsel and secondly, that the only plaintiff in each docket is
Fieldturf (IP) Inc. (hereinafter Fieldturf (IP)), which is also represented by
the same counsel in each docket.
[4]
All of the Dockets involve allegations by Fieldturf (IP) of patent
infringement of several patents on artificial turf and, in turn, allegations by
the defendants that these patents are invalid.
[5]
According to the defendants, they discovered that Fieldturf (IP) had
been dissolved and had assigned all its assets and all its rights in the
Dockets and in the patents therein to Fieldturf Tarkett Inc.
[6]
However, the defendants state that they were not served in any of the
Dockets with a notice and affidavit regarding this assignment of rights within
the relevant time period, as required under sections 117 and 118 of the Federal
Courts Rules (the Rules). The defendants therefore filed a motion under
section 118 in each of the Dockets to dismiss each action (the defendants’
motion to dismiss).
[7]
Fieldturf (IP) has filed a response in each of the Dockets to the
defendants’ motion to dismiss. Concurrently, Fieldturf Tarkett Inc. has filed a
motion in each of the Dockets — using the same counsel—for an order under
subsection 117(2) of the Rules that it be substituted for Fieldturf (IP) in all
the Dockets (the motion for substitution by Fieldturf Tarkett Inc.).
[8]
The affidavit at issue was sworn by a lawyer, Mr. Levy, in the
Fieldturf (IP) matter in response to the defendants’ motion to dismiss. The
same affidavit was also filed by Fieldturf Tarkett Inc. on its motion for
substitution.
[9]
The defendants’ motion to dismiss and the motion for substitution will
be heard together on September 7, 2006.
[10]
In the meantime, the defendants proceeded to cross-examine Mr. Levy
on his affidavit.
[11]
These reasons and the accompanying order are given in this docket T‑375‑05,
but will also apply, mutatis mutandis, to dockets T‑283‑03,
T‑350‑03, T‑491‑04 and T‑1473‑04.
Analysis
[12]
It is well established that a party cross-examining on an affidavit does
not have the same latitude as on an examination for discovery of the opposing
party.
[13]
As stated in the following excerpts from Imperial Chemical Industries
Plc v. Apotex Inc. (1988), 23 C.P.R. (3d) 362, at pages 366 and 368, the
questions on a cross-examination on affidavit must be limited to the issue in
respect of which the affidavit was filed, or to the credibility of the
deponent:
A party cross-examining
his opponent's affidavit is not entitled to cover all matters that may be said
to be in issue in the action. Rather, the range of inquiry is limited to the
issue in respect of which the affidavit was filed or to the credibility of the
witness. Moreover, the question must
be a fair question in the sense of evincing a bona fide intention
directed to these ends, rather than being something in the nature of a fishing
expedition. See Weight Watchers Int'l Inc. v. Weight Watchers of Ontario
Ltd. (No. 2) (1972), 6 C.P.R. (2d) 196; Bally-Midway Mfg. Co. v. M.J.Z.
Electronics Ltd. (1983), 75 C.P.R. (2d) 160; and Boots Co. PLC v. Apotex
Inc. (1983), 76 C.P.R. (2d) 265.
. . .
. . . if we were dealing
with an examination for discovery, where the test of relevancy involves a
consideration of what might reasonably be supposed to contain information
likely to assist the party in advancing his own case and in damaging the case
of his adversary. The same broad standard of relevancy is not an appropriate
test of relevancy for cross-examination of an affidavit. In my opinion, the
learned prothonotary erred in law in treating these questions as being properly
relevant to the issue in respect of which the affidavit was filed or as going
to the credibility of the witness. I consider that they are unfair and
oppressive questions in the nature of a fishing expedition, and nothing more.
(Emphasis added.)
[14]
As emphasized by Fieldturf (IP) and Fieldturf Tarkett Inc., the
dissolution of Fieldturf (IP) and the assignment of all its assets to Fieldturf
Tarkett Inc. were raised in Mr. Levy’s affidavit for the purpose and in
the specific context of, first, opposing the defendants’ motion to dismiss
under section 118 and, second, obtaining an order under subsection 117(2) of
the Rules that Fieldturf Tarkett Inc. be substituted for Fieldturf (IP).
[15]
By way of context, I note that sections 117 and 118 read as follows:
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117. (1) Subject
to subsection (2), where an interest of a party in, or the liability of a
party under, a proceeding is assigned or transmitted to, or devolves upon,
another person, the other person may, after serving and filing a notice and
affidavit setting out the basis for the assignment, transmission or devolution,
carry on the proceeding.
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117. (1) Sous réserve du paragraphe (2), en
cas de cession, de transmission ou de dévolution de droits ou d’obligations
d’une partie à une instance à une autre personne, cette dernière peut
poursuivre l’instance après avoir signifié et déposé un avis et un affidavit
énonçant les motifs de la cession, de la transmission ou de la dévolution.
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(2) If a party to a proceeding objects to its
continuance by a person referred to in subsection (1), the person
seeking to continue the proceeding shall bring a motion for an order to be
substituted for the original party.
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(2) Si une partie à
l’instance s’oppose à ce que la personne visée au paragraphe (1)
poursuive l’instance, cette dernière est tenue de présenter une requête
demandant à la Cour d’ordonner qu’elle soit substituée à la partie qui a
cédé, transmis ou dévolu ses droits ou obligations.
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(3) In an order given under
subsection (2), the Court may give directions as to the further conduct
of the proceeding.
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(3) Dans l’ordonnance
visée au paragraphe (2), la Cour peut donner des directives sur le
déroulement futur de l’instance.
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118.
Where
an interest of a party in, or the liability of a party under, a proceeding
has been assigned or transmitted to, or devolves upon, a person and that
person has not, within 30 days, served a notice and affidavit referred to in
subsection 117(1) or obtained an order under subsection 117(2), any
other party to the proceeding may bring a motion for default judgment or to
have the proceeding dismissed.
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118. Si la cession, la transmission ou la
dévolution de droits ou d’obligations d’une partie à l’instance à une autre
personne a eu lieu, mais que cette dernière n’a pas, dans les 30 jours,
signifié l’avis et l’affidavit visés au paragraphe 117(1) ni obtenu
l’ordonnance prévue au paragraphe 117(2), toute autre partie à
l’instance peut, par voie de requête, demander un jugement par défaut ou
demander le débouté.
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[16]
The reference in Mr. Levy’s affidavit to the assignment of assets
by Fieldturf (IP) to Fieldturf Tarkett Inc. appears to be prompting the
defendants to rely on the right of redemption under article 1784 of the Civil
Code of Quebec (C.C.Q.), in order to deter Fieldturf Tarkett Inc.
from bringing a motion for substitution under subsection 117(2) of the Rules,
and to have it question the relevance of doing so.
[17]
Article 1784 of the C.C.Q. reads as follows. For purposes of context in
reading this article, Fieldturf Tarkett Inc. must be viewed as the purchaser of
the rights of action that Fieldturf (IP) had against the defendants pursuant to
the Dockets.
art. 1784. Where litigious
rights are sold, the person from whom they are claimed is fully discharged
by paying to the buyer the sale price, the costs related to the sale and
interest on the price computed from the day on which the buyer paid it.
This right of redemption may not be exercised where
the sale is made to a creditor in payment of what is due to him, to a coheir or
co‑owner of the rights sold or to the possessor of the property subject to
the right. Nor may it be exercised where a court has rendered a judgment
affirming the rights sold or where the rights have been established and the
case is ready for judgment.
(Emphasis added.)
[18]
The defendants had article 1784 in mind when they asked Mr. Levy a
series of questions on his cross‑examination that were all met with
objections. All these questions had the same objective and, therefore, the
outcome will be the same for all.
[19]
It is clear from the outset that the objective of the defendants’ questions
was not to impugn the credibility of the deponent. The objective was specific
and unique, and consisted in the following, as set out in paragraph 8 of the
defendants’ written representations:
[TRANSLATION]
In this context, all the
questions asked and all the requests made during the cross-examination of
Mr. Levy had only one objective: to establish the amount that Defargo
should pay to exercise its right of redemption in opposition to Tarkett’s
motion.
[20]
I intend to dismiss all the questions asked by the defendants at the
cross-examination of Mr. Levy on his affidavit for the following two main
reasons.
[21]
First, the objective of the defendants’ line of questions, i.e. to
establish an amount for a possible right of redemption, is different,
extraneous and therefore irrelevant to the issue in respect of which
Mr. Levy’s affidavit was filed, i.e. a reference to an assignment of
assets for the purpose of opposing the defendants’ motion for dismissal and to
obtain on motion an order substituting one entity for another.
[22]
This conclusion alone is sufficient to dismiss the defendants’ motion.
[23]
Second, it also appears that, although article 1784 C.C.Q. does not
mention it explicitly, there must be an aspect of speculation in the sale of
litigious rights in order to exercise the right of redemption under article
1784 C.C.Q. In my view, the burden of establishing this aspect lies with the
defendants and not with Fieldturf (IP) or Fieldturf Tarkett Inc. The Québec
Superior Court in 2025225 Ontario Ltd. v. Compagnie d’assurances ING du
Canada, (S.C., 2005‑12‑21), SOQUIJ AZ‑50348962, J.E. 2006‑303,
[2006] R.J.Q. 524, points out at paragraphs 30 and following that both the
doctrine and the case law look for this aspect of speculation:
[TRANSLATION]
[30] The aspect
of speculation in litigious rights is the basis of the debtor’s right of
redemption. In this way, the legislature intended to shield the assigned debtor
from having its debt increased by giving him a special remedy of satisfying the
claims of the assignee of the litigious rights.
[31] Professor
Pierre Gabriel Jobin [See Note 4 below] believes that the right of redemption
is subject to certain conditions.
[32] The first
condition is that there must be a true sale of litigious rights. The professor
writes:
The first
condition of the right of redemption is that the transfer of litigious rights
must be a real sale, because in order for the redemption to be exercised the
debtor must pay the sale price to the buyer. This sale can occur by the
assignment of debt by onerous title or even, it seems, by subrogation, even
though these mechanisms are governed by the general rules of the law of
obligations.
[33] The
author then adds:
On the other hand, the
right of redemption does not apply to a giving in payment because normally the
giving is a method of payment and not a mechanism for speculation—it is often
in desperation that a creditor resorts to the giving in payment to collect
its debt.
[34] Professor Jobin states the following
about exceptions to article 1784 C.C.Q.:
Third, the statute itself
prohibits the right of redemption in certain circumstances, mainly where the
sale of a litigious right is made to a coheir or co‑owner of the right
sold. In this context, the legislature considers that there is no speculation
in buying the right but rather a partition between coheirs or co‑owners.
[35] Accordingly, the speculative nature of the transaction
is essential to the court’s assessment of the right of redemption.
[36] The case law also recognizes that it is not possible to
exercise the right of redemption when the transaction of the debt is not the
subject of a form of speculation.
[37] In Rénovation Langis inc. v. Cabessa, [1996]
A.Q. No. 1279 [See Note 5 below], my colleague Mr. Justice Verrier
concluded that the assignment of the right in this case does not give rise to
the right of redemption in article 1784 C.C.Q., because the parties did not
engage in bargaining to buy the lawsuit. He concludes that the transaction
does not involve any form of speculation, which would prevent the exercise of
the right of redemption.
[38] In the most recent Deutsche Bank A.G. Canada Branch
v. Patrick Hariz [2003] J.Q. No. 18777 [See Note 6 below], Mr. Justice
Clément Gascon dealt with the issue of the application of the right of redemption,
and stated the following:
The basis
of the provisions of the Civil Code of Québec concerning the assignment of
litigious rights is simple: to prevent speculation on the outcome of lawsuits.
The legislature does not want to encourage the sale of lawsuits, or favour
those who profit from a situation to buy uncertain rights at a low price that
could ultimately generate a large profit. It is the aspect of speculating on
litigious rights that the legislature wants to address and discourage.
[39] The judge adds:
On the one
hand, apart from the fact that this case does not involve so‑called
litigious rights, the assignment of debt signed by BT Canada and the Bank does
not disclose any form of speculation or bargaining in the purchase of a
lawsuit, which is at the very heart of the provisions of the Civil Code of
Québec concerning the assignment of litigious rights.
The doctrine points out
that the purpose of these provisions is to prevent speculation:
530. – The buyer who recognizes the litigious nature of the
right he is acquiring enters into an aleatory contract. The legislature does
not object to that, except for the special prohibition set out in article 1485.
However, nor does it favour this buyer of a lawsuit, who is speculating on
rights that are in dispute, and who continues the litigation that the first
parties have probably abandoned. Since the legislature’s goal is to limit these
transactions, it allows the debtor to apply the right of redemption of
litigious rights against the acquirer.
If the assignment is gratuitous,
the assignee cannot be disregarded. The statute is intended to prevent
speculation on litigious rights; giving away these rights does not have any of
the characteristics of an act of speculation. . . . [See Note 7 below].
Author Michel Pourcelet
states in his well‑known work [See Note 8 below]:
In certain cases where
the idea of speculation did not enter into the purchase of the litigious right
by the assignee, i.e., where the assignee acquired the right for a legitimate
reason, the redemption cannot be exercised. Article 1582 does not apply to the
scenarios set out in article 1584.
[40] Last, my colleague concludes in these terms:
In this case, not only is there no evidence of speculation or
bargaining to buy a lawsuit, but in addition, the only witness who testified at
the hearing indicated that this assignment of debt was simply part of a
transfer of all the debts of BT Canada to the Bank, following the merger of two
entities, which involved assets whose value greatly exceeded the value of the
debt relating to Mr. Hariz.
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Note 4: La
réforme du Code civil, Obligations, contrat nommé, Les Presses de l'Université
Laval, pages 543, 544.
Note 5: REJB 1996‑30611
(May 10, 1996).
Note 6: EYB 2003‑51607
– S.C. (December 15, 2003).
Note 7:
MIGNAULT, P.-B., Le Droit civil canadien, Volume 7., Montréal, Wilson &
Lafleur, 1906, page 200.
Note 8:
POURCELET, Michel, La vente, 5th edition, Montréal, Les Éditions Thémis, 1987,
page 244.
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(Emphasis added.)
[24]
In this case, there is nothing in Mr. Levy’s affidavit to suggest
directly or indirectly that there was an aspect of speculation in the assignment
between Fieldturf (IP) and Fieldturf Tarkett Inc. Moreover, none of the
questions put to Mr. Levy suggested the possibility of speculation either
directly or indirectly.
[25]
Accordingly, the defendants’ motion will be dismissed with costs. Both
Fieldturf (IP) and Fieldturf Tarkett Inc. have requested costs at a higher
level (on a solicitor-client basis and/or the maximum in column V,
Tariff B) because, in their view, the entire exercise surrounding the
cross‑examination of Mr. Levy, including this motion, was clearly
pointless.
[26]
I do not intend to award costs at a higher level because, in my view,
from the outset of the cross-examination, counsel for Mr. Levy made
himself judge in his own cause regarding this finding of futility, and made
that perfectly clear to counsel for the defendants.
[27]
Accordingly, this motion is dismissed with costs under column III of
Tariff B.
“Richard Morneau”
Montréal, Quebec
August 30, 2006
Certified
true translation
Mary
Jo Egan, LLB
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