Date: 19980724
Docket: T-1092-98
BETWEEN:
IMPERIAL TOBACCO LIMITED
Plaintiff
- and -
ROTHMANS, BENSON & HEDGES INC.
Defendant
REASONS FOR ORDER
REED, J.:
[1] The plaintiff ("Imperial") seeks to strike almost all of paragraph five of the defendant's ("Rothmans") Statement of Defence. The cause of action to which this pleading relates is a claim by Imperial for a declaration that letters patent 2,011,254 is invalid, or, if valid, for a declaration that Imperial's product does not infringe that patent.
[2] Paragraph five of Rothmans' Statement of Defence asserts that Imperial commenced this action immediately after receiving a letter from Rothmans wherein the latter indicated that it was contemplating commencing an action against Imperial. This would be an action for patent infringement.
[3] The paragraph in question reads:
| 5. Paragraph 7 of the Statement of Claim is admitted as far as it goes. Further to what the Plaintiff has said in that paragraph 7, however, said letter dated May 20, 1998 included a draft Statement of Claim. Prior to delivery of the letter of May 20, 1998, the Defendant, through its solicitor Mr. Robert Carew, spoke with the Plaintiff's in-house counsel, Mr. Roger Ackman, to advise that the letter was coming, and invited the Plaintiff's representatives to meet with the Defendant's representatives so as to determine whether the matter could be settled. The Plaintiff responded simply by instituting these proceedings. The draft Statement of Claim was filed by Rothmans, Benson & Hedges Inc. in this Court as Action No. T-1098-98, given the institution by the Plaintiff Imperial of these proceedings. |
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[4] Paragraph seven of the Statement of Claim reads:
| 7. By letter dated May 20, 1998, the Defendant, by its solicitor, advised the Plaintiff that it is the owner of Canadian Patent No. 2,011,254, (hereinafter "the 3254 patent"). In the said letter, the Defendant demanded that the Plaintiff withdraw its PLAYERS INSTA-KIT product from the market on the basis that the 3254 patent includes claims that read on the Plaintiff's said PLAYER'S INSTA-KIT product. |
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[5] As noted, an action based on the draft Statement of Claim that was attached to the May 20, 1998 letter was commenced (T-1098-98) on the same day as the present action (T-1092-98) but a few hours later.
[6] The first sentence of paragraph five of the Statement of Defence is not challenged; Imperial considers it to be a proper answer to paragraph seven of its Statement of Claim. Counsel for Imperial argues, however, that the rest of the paragraph is irrelevant. Counsel argues that all that is in issue between the parties is: (1) whether the patent is valid and, if so, (2) whether the patent has been infringed by the selling of the plaintiff's product. He argues that the conduct described in paragraph five is relevant to neither issue.
[7] Counsel for Rothmans argues that Imperial's conduct in refusing to discuss settlement and in filing a pre-emptive Statement of Claim is relevant to the issue of solicitor/client costs (claimed by Imperial) and to Rothmans' request set out in its Defence that the two actions (T-1092-98 and T-1098-98) be consolidated.
[8] Counsel for Imperial responds by stating that facts relating to costs do not belong in the pleadings since costs are not part of the lis between the parties, that these should be addressed after disposition of the merits of the lis, that is, after trial. He states that the request for a consolidation order is a procedural matter and factual assertions relating thereto properly belong in the affidavit filed in support of a motion for consolidation not in the Statement of Claim. Also, he argues that, in any event, the motive of Imperial in commencing its action is not relevant to the issue of costs and allowing the paragraph to remain in the pleadings opens up an irrelevant area for examination on discovery.
[9] The jurisprudence relating to pleadings regarding costs is somewhat unsettled. In Royal Bank of Canada v. Fogler (1985), 3 C.P.C. (2d) 248 the Ontario High Court (Potts J.) held that the facts relating to costs could be pleaded in a defence. In A.I. MacFarlane & Associates Ltd. v. Delong (1986), 55 O.R. (2d) 89, the Ontario High Court (McRae J.) found to the contrary. I was referred to a number of decisions by masters of the Ontario Supreme Court that have followed the A.I. MacFarlane case, see Delray Development Corporation et al. v. Rexe et al. (1986), 13 C.P.C. (2d) 133, Wood Gundy Inc. v. Financial Trustco Capital Ltd. et al. (1988), 26 C.P.C. (2d) 274 at 290, Rundle v. Kruspe, [1998] O.J. No. 2078. The A.I. MacFarlane case was also followed in Drexler v. State Farm Mutual Automobile Insurance Co., [1995] O.J. No. 899 (Salhany J.).
[10] In the Federal Court an attempt was made to reconcile the Fogler and the A.I. MacFarlane decisions in Starline Agencies Inc. v. Macintosh Graphics Inc. (1988), 21 C.P.R. 159 (Fed. Proth.). It was suggested that where there is a "patent causal connection" between the pleading of motive and a claim for solicitor/client costs that such a pleading should stand. A reference also occurs in Nolan v. Silex International Chemical Systems Inc. (T-1108-94, October 27, 1994) stating, without reference to either the Fogler or MacFarlane decisions, that questions of cost are best left to be determined by the Court following the completion of trial. In Norac Systems International Inc. v. Massload Technologies Inc. (1996), 70 C.P.R. (3d) 88 (F.C.T.D.) pleadings were struck that alleged an improper motive for the commencing of the litigation. It was held that motive was not relevant to that litigation, litigation concerning the validity and infringement of a patent.
[11] In my view, the second sentence of paragraph five (explaining that a draft Statement of Claim was attached to the May 20th letter) and the last sentence (explaining that the Rothmans' claim became T-1098-98) may be and unnecessary but do no more than describe what would appear from the May 20th letter itself and the Court records. They are relevant to the request that the two actions be consolidated. I am not persuaded that they must be struck. The applicable test for striking pleadings is found in cases such as Mitchell v. M.N.R., [1993] 3 F.C. 276 (F.C.T.D.) at 292. At the same time, although the pleading does not directly allege motive, I have not been persuaded that allegations respecting unwillingness to enter into settlement negotiation, while they may be relevant to costs, are properly pleaded at this stage. The third and fourth sentences of paragraph five will therefore be struck out.
Judge
OTTAWA, ONTARIO
July 24, 1998
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