Date: 20020312
Docket: T-1761-89
Montréal, Quebec, March 12, 2002
Before: Richard Morneau, prothonotary
BETWEEN:
DYNAFLAIR CORPORATION CANADA INC.
Plaintiff
and
MOBILFLEX INC.
and
PRODUITS D'ARCHITECTURE
DE QUÉBEC 1979 INC.
Defendants
ORDER
I do not feel it would be proper for Mr. Fugère's examination to be held in Montréal at his expense. The said examination will have to continue in Québec on the same conditions as in November 2001. The examination must be held within 30 days of this order so that Mr. Fugère can answer the questions which he must answer in accordance with the reasons accompanying this order, and questions which reasonably derive from the answers given.
Any motion resulting from continuance of this examination must be served and filed within 30 days of receipt of the transcript.
The plaintiff's motion is otherwise dismissed.
As the outcome on the instant motion is divided, no costs will be awarded.
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Richard Morneau
prothonotary
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Certified true translation
Suzanne M. Gauthier, C. Tr., LL.L.
Date: 20020312
Docket: T-1761-89
Neutral citation: 2002 FCT 272
BETWEEN:
DYNAFLAIR CORPORATION CANADA INC.
Plaintiff
and
MOBILFLEX INC.
and
PRODUITS D'ARCHITECTURE
DE QUÉBEC 1979 INC.
Defendants
REASONS FOR ORDER
RICHARD MORNEAU, PROTHONOTARY
[1] The Court has before it a motion by the plaintiff asking it to resolve in its favour certain objections made by counsel for the defendant Mobilflex Inc. at the last examination of the defendant's representative on November 28 and 29, 2001.
[2] The motion forms part of an ongoing dispute between two competitors in the aluminum safety grills business.
[3] It should be noted at the outset that a question requires an answer in an examination for discovery if it is relevant to the matters at issue between the parties, namely whether it may directly or indirectly advance the case of one of the parties or damage that of the other (see Sydney Steel Corp. v. Omisalj (The), [1992] 2 F.C. 193, at 197-8).
[4] The questions not answered must now be analyzed category by category.
Category 1
[5] This category contains general questions on the scope of the examination which the plaintiff can conduct. For the reasons put forward by the plaintiff in paras. 29 to 31 of his written representations filed in support of this motion, questions 1 to 3 in category 1 must be answered.
Category 2
[6] This category is intended to obtain particulars from the defendant regarding the translation of the terminology used by the defendant in para. 17 of the defendant's defence.
[7] Questions 4 and 5 deal with para. 17 of the amended defence, and this paragraph has never been amended and therefore has been known to the plaintiff since the defence was filed, namely since November 1992.
[8] It appeared that counsel for the plaintiff admitted at the examination of Mr. Fugère that if a second examination of a Mobilflex representative was authorized, the questions would have to be limited to the paragraphs of the defence which were amended in June 2000.
[9] Questions 4 and 5 put by counsel for the plaintiff should have been asked in the first examination of the Mobilflex representative held on April 11, 1995, especially as in that examination counsel for the plaintiff put questions to Mr. Fugère about the terms used by Mobilflex in describing its products. Consequently, the plaintiff is now barred from asking these questions.
[10] Additionally, I do not consider that the Court should permit re-examination of the defendant's representative on these questions. The situation here is certainly not as pronounced as in CAE Machinery Ltd. v. 29598505 Québec Inc., an unreported judgment by Hugessen J. on January 21, 2000, case T-730-97, at para. 13. The fact that the plaintiff's current counsel were not counsel for that party at the time of the first examination of the defendant should not change anything and prejudice the defendant here.
Category 3
[11] In general this category is concerned with calculating the profits potentially made by the defendant. The sub-categorization used by the plaintiff in its written representations must be followed by the Court in this category.
(a) Sales/profits breakdown by grill model
[12] By question 7 in this category, counsel for the plaintiff wish to know Mobilflex's internal policy on the commissions it pays in the course of its activities.
[13] It appears to the Court that this question goes too far. It attempts excessive interference in the daily running of a competitor's affairs in a market characterized as limited and competitive. It will not have to be answered.
[14] On questions 8 to 11, I consider that these deal with an exercise or result which the plaintiff can reasonably reach itself by an analysis and review of the information in the data bank sent to it in the past. These questions will also not have to be answered.
(b) Corporations associated with the defendant
[15] This category deals with corporations which may be associated with the defendant. Questions 12 to 17 appear to the Court to be legitimate questions, since they are relevant to the question of profits and derive from the financial reports supplied. They will therefore have to be answered.
[16] However, question 18 suggests there may be machinery to enable the defendant to siphon off its profits into a corporation administered by Mr. Fugère's family. In my opinion, this question is in the nature of a fishing expedition, in view of the way the written pleadings between the parties are currently worded. It will not have to be answered.
[17] In the circumstances, questions 19 to 21 concern a factual exercise the performance of which it is not unreasonable to assign to the defendant's representative. These questions will therefore have to be answered.
(c) Bonuses
[18] In this category, the plaintiff is primarily trying to verify the bonuses which may have been paid to the defendant's directors.
[19] It appeared from the cases that the circumstances surrounding the payment of bonuses are relevant to whether such a payment can legitimately reduce the profits made.
. . . I conclude, on a balance of probabilities, that the bonuses paid to Mr. Titley were a series of sham transactions with their sole purpose, albeit with a legitimate motivation given the income tax considerations, being that of reducing the profits of Canwell. Whether a secondary motivation existed for the reduction of profits of Canwell is not, in this context, at issue. In the result, I conclude that the disallowance of the bonuses paid to Mr. Titley, as proposed on behalf of the plaintiffs, was entirely appropriate and that Canwell and Mr. Titley simply failed to discharge the onus on them to justify allowance of the bonuses as an expense for the purpose of this matter.
(Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd. (2001), 13 C.P.R. (4th) 193 at 252, par. 165 (F.C.T.D., per Gibson J.))
[20] I consider that the current wording of the written pleadings (the fact that the question of profits was pleaded) and the content of the financial documents filed allows questions 22 to 27 to be answered. These questions will therefore have to be answered.
(d) Ongoing access to financial documents and data bank
[21] Questions 28 and 29 will have to be dealt with since it can be assumed that the periodic updating of this information up to the time of the hearing is reasonable and relevant. Rule 226 of the Federal Court Rules (1998) contemplates such an exercise. Further, the information is protected by the existing confidentiality order.
[22] Question 30 seeks to have the defendant file some 4,003 invoices dealing with sales of the defendant's various doors between 1987 and 1996. First, it appeared that the defendant's representative had already answered this question to some extent, since in his examination in April 1995 Mr. Fugère's father provided an estimate of the percentage of sales which represented sales of the "Royal" model. Further, as with questions 8 to 11 in category 3(a), sales percentages by model may reasonably be obtained from the data bank supplied.
[23] Finally, these 4,003 invoices may be scattered among the defendant's various files. Locating them would be an exercise the burden and difficulty of which would exceed the value of obtaining the invoices.
[24] Question 30 will therefore not have to be answered.
[25] Additionally, I do not feel it would be proper for Mr. Fugère's examination to take place in Montréal at his expense. The said examination will have to continue in Québec on the same conditions as in November 2001. This examination must be held within 30 days of the order accompanying these reasons so that Mr. Fugère can answer the questions he must answer in accordance with the reasons and any questions reasonably resulting from the answers given.
[26] Any motion resulting from the continuance of this examination must be served and filed within 30 days of receipt of the transcript.
[27] The plaintiff's motion is otherwise dismissed.
[28] As the outcome on the instant motion was divided, no costs will be awarded.
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Richard Morneau
prothonotary
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Montréal, Quebec
March 12, 2002
Certified true translation
Suzanne M. Gauthier, C. Tr., LL.L.
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FEDERAL COURT OF CANADA
TRIAL DIVISION
Date: 20020312
Docket: T-1761-89
Between:
DYNAFLAIR CORPORATION CANADA INC.
Plaintiff
and
MOBILFLEX INC.
and
PRODUITS D'ARCHITECTURE DE QUÉBEC 1979 INC.
Defendants
REASONS FOR ORDER
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FEDERAL COURT OF CANADA
TRIAL DIVISION
SOLICITORS OF RECORD
FILE: T-1761-89
STYLE OF CAUSE: DYNAFLAIR CORPORATION CANADA INC.
Plaintiff
and
MOBILFLEX INC.
and
PRODUITS D'ARCHITECTURE DE QUÉBEC 1979 INC.
Defendants
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: February 18, 2002
REASONS FOR ORDER BY: RICHARD MORNEAU, PROTHONOTARY
DATED: March 12, 2002
APPEARANCES:
Judith Robinson for the plaintiff
Madeleine Lamothe-Samson
François Vallières for the defendants
Jean-François Pichette
SOLICITORS OF RECORD:
Ogilvy, Renault for the plaintiff
Montréal, Quebec
Lavery, de Billy for the defendants
Québec, Quebec
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