Date : 20040120
Docket : T-577-02
Citation : 2004 FC 74
BETWEEN :
CABIN SAFETY INC., CABIN SAFETY
INTERNATIONAL LTD. and CHARLES G. REESE JR.
Plaintiffs
AND :
MARSH CANADA LIMITED/MARSH CANADA LIMITEE
Defendant
REASONS FOR ORDER and ORDER
ROULEAU, J.
[1] This application by the plaintiffs seeks: to set aside the Order of the Prothonotary dated July 24, 2003 dismissing the plaintiffs' action for delay; and to revive the action and allow it to continue as a specially managed proceeding under terms as directed by the Court.
[2] A brief explanation as to what is at issue in this action is essential. The plaintiffs, Cabin Safety Inc. as well as Cabin Safety International Ltd., are the owners of copyrights in both Canada and the United States of original graphic illustrations used on the safety feature cards and designs that are put on board aircraft. These particular safety cards and designs and the original graphic illustrations were created by the plaintiff Charles G. Reese Jr. while employed by the plaintiffs corporation. The plaintiffs have used and advertised the trademark "Cabin Safety" in association with their business since 1989. It was subsequently discovered in the late 1990's that the defendant Marsh Canada Limited was printing, distributing and selling cabin safety cards which were in direct violation of the plaintiffs' property as alleged in the Statement of Claim and that the defendant was infringing copyrights owned by the plaintiffs.
[3] The defendant Marsh Canada Limited carries on business in Canada and is affiliated or wholly owned by a US corporation located in New York City. A first action was launched by these plaintiffs in Court File Number T-985-00 in July, 2000 against the defendants Marsh Canada Limited and Black Tusk Helicopter Inc. It had been brought to the attention of some individuals working for the plaintiffs that their safety feature cards for which they have copyright were discovered in helicopters owned and operated by the defendant Black Tusk Helicopter Inc. and had been printed or reproduced by the defendant Marsh Canada Limited.
[4] In the initial action the defendant Black Tusk Helicopter Inc. was represented by one Bruce M. Green from Vancouver who entered an Appearance and filed a Statement of Defence on their behalf. In January 2001, a Notice of Status Review was issued and forwarded to counsel for the plaintiffs as well as counsel for both defendants. In a reply dated February 22, 2001, counsel for the plaintiffs advised that, even though the defendant Marsh Canada Limited had not filed a Statement of Defence, they were prepared to discuss settlement which had been proposed by the defendant Marsh Canada Limited. In the event that they failed to reach some type of agreement, the defendant Marsh would file a Statement of Defence.
[5] The plaintiffs wrote again that the defendant Marsh Canada Limited had not contacted the plaintiffs until March 2001 at which time they requested a Statement of Defence; also that they were pursuing this matter diligently. Counsel for Black Tusk Helicopter Ltd. in reply suggested that the matter should be discontinued as against them since negotiations to settle had been initiated between the plaintiffs and the defendant Marsh Canada Limited; that neither his clients nor he had been contacted and matters had been languishing as far as the defendant Black Tusk Helicopter Ltd. was concerned. In March 2001, action T-985-00 was dismissed by an order of this Court.
[6] The dismissal would have been of little concern to the plaintiffs since they were of the belief that they would settle the issue with the defendant Marsh; also one can surmise that the defendant Black Tusk Helicopter Ltd. probably had an absolute defence.
[7] The present action T-577-02 was commenced by a "simplified action" when a Statement of Claim was filed with this Court in April 2002. It involved the same plaintiffs and defendant Marsh Canada Limited as in the previous action; it did not indicate as defendants any of the airline companies that were displaying the infringing safety cards. A Statement of Defence was filed on May 5 of the same year.
[8] The plaintiffs were served with a Notice of Status Review on May 12, 2003. Representations were filed by both parties on June 15 and 20, 2003 respectively and further representations on July 7 and 14. The learned Prothonotary then wrote the parties that two questions would be addressed by the Court; whether delay in the proceeding had been justified and if the plaintiff could propose reasonable measures to move the case forward. The Prothonotary noted that there was a significant delay between the exchange of parties' lists of documents in June 2002 and discussions in the fall of 2002 concerning the completeness of the lists of documents; also she was unhappy with the schedule advanced for examinations for discovery and proposed settlement.
[9] Plaintiffs' counsel replying to the Notice of Status Review on June 15 pointed out that there had been several attempts to negotiate a settlement of the matter but without success. Counsel further indicated that there were some discussions in the Fall of 2002 with respect to further productions relevant to the matter; that there remained outstanding issues in that regard; that there had been discussions between counsel as to whether there should be discoveries or written interrogatories; that it had been agreed that they would proceed with the latter proposal and the plaintiffs would be providing written questions forthwith; in her proposed scheduled to the Prothonotary it was indicated that written interrogatories would be provided to the defendant by July 31, 2003; that defendant's written questions to plaintiffs by July 31, 2003; plaintiffs' response to defendant's questions by September 15, 2003; settlement discussions to be concluded by October 31, 2003 and, if they failed, requisition for pretrial conference and pretrial memorandum by November 3, 2003.
[10] Counsel for the plaintiffs further suggested and requested that the Court allow the parties an opportunity to submit oral representations by way of a telephone conference should the Court have further questions or concerns relating to the conduct of the action, particularly if the Court was of the view that the action should be dismissed for delay.
[11] The defendant's submission of June 20, 2003 on the initial Notice of Status Review stated the following: "The defendant submits that the last communication between the parties was the defendant's correspondence on November 6, 2002 proposing the procedure for written interrogatories".
[12] In further submissions of July 7, counsel for the plaintiffs indicated that she had some personal problems commencing in November which were not cleared up until April 2003. She went on to say that the defendant had suffered no prejudice for the delay and anticipated that the defendant would be raising limitations as justification for dismissal; she explained that the plaintiffs had during this extended period discovered further infringement by the defendant Marsh; finally she was prepared to shorten any proposed time period at the request of the Court.
[13] In his second reply of July 14, defendants' counsel makes reference to action T-985-00 commenced by the same plaintiffs in June 2000 which was dismissed by Order of the Court on May 2, 2001; that the previous action contained substantially the same allegations. He went on to state that limitations applied to most of the claims which were the subject of the action; finally that one Paul J. Hamilton, formerly the defendant's Vice-President of Aviation and the primary personnel involved in this matter at issue is no longer employed by the defendant company.
[14] In reply, the Prothonotary wrote that the proposed schedule fell short of what one would expect on status review; the matter was not complex; the plaintiffs could have proposed a tighter schedule; the willingness of the plaintiffs to abide by a shorter delay was not sufficient to counterbalance the effect of the cumulative unjustified delay in moving this matter forward. The action was dismissed for delay.
[15] It should be noted that the Court did not entertain the teleconference requested by counsel for the plaintiffs.
[16] It is most instructive to carefully read the affidavit filed in this appeal in support and which was unchallenged. A history of the previous action, as noted by the defendant, which was dismissed by the Court is quite revealing as to who in effect caused delays in these proceedings. It is obvious that none of the previous exchanges were referred to by either counsel in their submissions with respect to the Status Review directed in May of 2003 and were therefore not before the Prothonotary when she rendered her decision.
[17] The second action Court File Number T-577-02 was filed with the Court in April 2002 as a simplified action. Though it should be noted that there is no liquidated amount of damages claimed and in the prayer for relief the plaintiffs seek damages, infringement, passing-off, loss of profits, post and pre-judgment interest.
[18] Even before the second action was commenced, the plaintiffs outline a series of events that occurred between May 2001 and the date the first action was dismissed.
[19] In May 2001, the plaintiffs indicate that some type of settlement agreement had been reached but certain items required clarification. By letter dated June 13, 2001 defendant's counsel replied that he was still seeking advice and further information.
[20] On July 7, 2001, counsel for the plaintiffs wrote the defendant advising again that they discovered more companies purchasing the infringing cards and sought further clarification.
[21] In a letter dated July 23, 2001, counsel for the plaintiffs writes again seeking an answer to their letter of July 7. On July 24, counsel for the defendant is proposing to put everything on a CD and provide other documents which would be forwarded to the plaintiffs for examination.
[22] On September 11, 2001 the World Trade Centre is destroyed in New York and the International Headquarters of Marsh were tenants in the building. Counsel for the defendant called the plaintiffs advising that in light of this disaster he did not want to "pester" his clients and sought more time.
[23] On November 12, 2001, plaintiffs wrote insisting on some type of negotiations or responses by November 30. On November 16, they write seeking more details and ask if the defendant can put someone forward to discuss settlement in order to determine how the settlement should be structured.
[24] On November 19, 2001, counsel for the plaintiffs finally receives the supplementary material and CD on how the settlement should be structured. On reviewing the material on the CD they suddenly find that there are more helicopter companies purchasing the infringing cards.
[25] On December 18, 2001, plaintiffs suggest there are many problems and that they should meet for further settlement negotiations.
[26] On January 10, 2002, counsel for the defendant advised that they are aware of the problems with the CD and proposes the plaintiffs accept a Marsh Vice-President for legal matters meeting with counsel for the plaintiffs.
[27] A meeting was held on January 23, 2002 between counsel for the plaintiffs and the Marsh Vice-President for legal; together they reviewed the documents and the CD. It became apparent that Marsh's alleged infringement of the plaintiffs' copyright was greater than had been known when representatives of the parties had met in March 2001. Hence, settlement would now require a higher monetary amount than had previously been discussed. A settlement proposal was advanced to Marsh's Vice-President and she advised she would have to consult Toronto's Head Office.
[28] On January 31, counsel for the plaintiffs wrote to Marsh's Vice-President reiterating the discussions of January 23 and requiring a response by February 28 or that a new claim would be filed.
[29] Further offers and negotiations were advanced in February and March 2002 and, finally, in April a new draft Statement of Claim was sent to Marsh Canada Limited advising an action would be filed forthwith. A Statement of Defence was filed May 3, 2002.
[30] In June 2002, the parties exchanged lists of documents. Since the package of documents was voluminous, they agreed that a plaintiffs' representative could take the documents home for review and photocopy if necessary.
[31] The documents were picked up on August 29, 2002 from Marsh's solicitor and forwarded to the client and returned in mid-September 2002. In October 2002 there were discussions as to the examinations for discovery and who would be available. In November 2002, Marsh's solicitor finally named the officer who would answer the written interrogatories. Shortly after that counsel for the plaintiffs began to have personal problems.
[32] I have very briefly summarized the 40 paragraph Affidavit filed in support of this Motion by the applicant plaintiffs and though I have not referred to the numerous other delays in detail, it is more than obvious that if anyone was the cause for delays and was uncooperative throughout, it was certainly counsel for the defendant Marsh. I am aware and conscious that the Prothonotary was not awarded an opportunity to analyse in detail, as I have, the transgressions of counsel on both sides. I am nevertheless satisfied to set aside her Order.
[33] Counsel for the defendant had suggested two reasons why the matter should not be pursued, the first being limitations. That is not a valid defence as the Federal Court of Appeal clearly stated in Kibale v. Canada (F.C.A.), [1990] F.C.J. No. 1079. Limitation is a matter that should be determined by the trial judge. Many intervening actions can occur to revive limitations.
[34] Counsel's suggestion that the corporate officer who could testify is no longer employed by the company justifies the dismissal of the action, cannot be accepted. Surely, if the company has been infringing copyright as claimed by the plaintiffs, their books of accounts could be disclosed, read and attested to by other officers of the corporation.
[35] I am fully aware that the Court should not set aside discretionary Orders of a Prothonotary and that they should not be disturbed on appeal, but in this instance I am convinced that the exercise of discretion was based clearly on a misapprehension of the facts that raise questions vital to the final issue of the case.
ORDER
[36] The Order of the Prothonotary dated July 24, 2003 is hereby set aside and the action is hereby ordered revived.
[37] It is hereby ordered that this matter henceforth be specially managed pursuant to any direction issued by the Chief Justice. It is hereby further ordered that the case management judge or prothonotary shall establish a timetable which shall be adhered to by the parties.
[38] Costs to the applicant plaintiffs in any event of the cause.
JUDGE
OTTAWA, Ontario
January 20, 2004
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-577-02
STYLE OF CAUSE: CABIN SAFETY INC. ET AL v.
MARSH CANADA LIMITED
PLACE OF HEARING: CALGARY, AB
DATE OF HEARING: DECEMBER 11, 2003
REASONS FOR [ORDER or JUDGMENT] : ROULEAU, J.
DATED: JANUARY 20, 2004
APPEARANCES:
Mr. Graham Price, Q.C. FOR PLAINTIFF
Calgary, AB
Mr. Curtis D. Schmeichel FOR DEFENDANT
Calgary, AB
SOLICITORS OF RECORD:
Mr. Graham Price, Q.C. FOR PLAINTIFF
Barrister & Solicitor
Mr. Curtis D. Schmeichel FOR DEFENDANT
Macleod Dixon
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