Docket: T-1261-10
Citation: 2011 FC 1516
Ottawa, Ontario,
December 22,
2011
PRESENT: The
Honourable Mr. Justice Hughes
BETWEEN:
|
|
ASSOCIATION
OF CHARTERED
CERTIFIED
ACCOUNTANTS AND
ASSOCIATION OF
CHARTERED
CERTIFIED
ACCOUNTANTS (UK) IN
CANADA
|
|
|
|
Plaintiffs/
Defendants by
Counterclaim
|
|
and
|
|
|
THE
CANADIAN INSTITUTE OF
CHARTERED
ACCOUNTANTS, INSTITUTE OF CHARTERED ACCOUNTANTS OF
ONTARIO, ORDRE DES COMPTABLES
AGRÉÉ DU QUÉBEC, INSTITUTE OF
CHARTERED ACCOUNTANTS
OF BRITISH
COLUMBIA
AND INSTITUE OF
CHARTERED
ACCOUNTS OF ALBERTA
|
|
|
|
Defendants
|
|
|
and
|
|
|
|
INSTITUTE
OF CHARTERED ACCOUNTANTS OF
ONTARIO,
ORDRE DES COMPTABLES
AGRÉÉ DU QUÉBEC,
INSTITUTE OF
CHARTERED
ACCOUNTANTS OF BRITISH
COLUMBIA
AND INSTITUE OF
CHARTERED
ACCOUNTS OF ALBERTA
|
|
|
|
|
Plaintiffs by
Counterclaim
|
REASONS FOR ORDER AND ORDER
[1]
This is an appeal from an Order of Prothonotary
Milczynski dated June 2, 2011 in which she declined to strike out paragraphs 24
to 29 of the Plaintiffs’ Defence to Counterclaim. For the reasons that follow I
will set aside that Order and strike out those paragraphs with leave to amend
so as to provide further and better particularization of these pleas.
[2]
This action relates to a dispute between the
parties as to the use by their members engaged in the accounting profession of
terms including CA and others. The first plaintiffs claim to be a corporation
incorporated by Royal Charter in England and Wales, and the second,
a Canadian corporation which is affiliated with the first plaintiff. Four of the
defendants are each professional bodies established by statute in each of the
provinces of Ontario, Quebec,
British Columbia and Alberta. I
will call them the provincial defendants. They have counter-claimed. The other defendant
is a Canadian corporation that can be described as an accountants’ trade
association. It is not involved in the matters under consideration in this
appeal. Given the large number of very experienced and able counsel appearing
before me on this appeal there is no doubt that the parties are taking this
litigation very seriously.
[3]
The plaintiffs have chosen to join five separate
defendants in a single action. In that action, they seek a declaration of
invalidity in respect of several “section 9” trade-marks, of which some of the
Defendants have given public notice - or propose to do so – and for a
declaration of invalidity of several registered trade-marks owned by some of
the defendants; and for a declaration that the Plaintiffs’ members do not violate
certain trade-mark rights of some of the Defendants, and much other relief. The
defendants have each defended the action, and each of the provincial defendants
have counter-claimed, seeking injunctions against the plaintiffs and persons
under their control from using certain of these trade-marks, as well as other
relief.
[4]
The plaintiffs have filed a Defence to these
Counterclaims, which Defence includes the following paragraphs, which are the
subject of the present appeal:
24.
In further response to the entirety of
the Counterclaim, the Plaintiffs by Counterclaim are associations of
competitors of one another in the provision of professional accounting
services. Their counterclaims are made pursuant to agreements by competitors to
seek an order of this Court to preclude ACCA and its members from any use in Canada of either their professional
accounting designations or the name of the association that granted them such
designations.
25.
The purpose and effect of said agreements
is to maintain, control, prevent or lessen the supply of professional
accounting services in Canada.
26.
In particular, prohibiting ACCA Canada from using or referring to
its name or professional designations, even in contexts permitted by provincial
accounting legislation, would effectively prevent ACCA Canada from operating in
Canada.
27.
Furthermore, prohibiting professional
accountants who are members of ACCA from using or referring to their
professional designations, or the name of the association that granted them,
even in contexts permitted by provincial accounting legislation, would
effectively prevent ACCA members from offering, providing, or seeking
employment to provide professional accounting services in Canada.
28.
Accordingly, said agreements are illegal
and contrary to section 45 of the Competition Act (Canada).
29.
The Court ought not issue a declaration
or grant an injunction that implements an illegal agreement or agreements among
competitors, contrary to section 45 of the Competition Act.
[5]
The provincial defendants moved before Prothonotary
Milczynski to strike these paragraphs. She declined to do so. In her Order, she
wrote, inter alia:
Whatever the merits of the ACCA’s claim may ultimately be determined
to be, at this juncture the Court’s discretion to strike any part of a pleading
is only exercised where it is “plain and obvious” that the allegation cannot be
supported and is certain to fail at trial. Where, as in this case, there is
some controversy or contentious legal issue of statutory interpretation or
arguable issues of mixed fact and law, the matter is better left for
determination through the hearing on its merits. The onus is on the moving
party to satisfy the Court on a motion to strike that the case or impugned
allegations are clearly hopeless, and in this regard the Defendants/Plaintiffs
by Counterclaim have not met the heavy burden. The allegations relating to the
section 45 of the Competition Act are directed at members of each of the
Defendant accounting associations, and that the members have not simply sought
to enforce their IP rights under the Trade-Marks Act, but have entered into
agreements and are acting through their associations in this proceeding by way
of Counterclaim (to seek to enforce the IP and obtain injunctive relief) to
lessen competition among those who would provide accounting services. Having
regard to the ACCA’s submissions and the authorities referred to (at paras.
37-38 of the written representations), I am not satisfied, at this juncture,
that however novel or tenuous the ACCA’s case may be, it can be concluded that
the ACCA’s section 45 claims against the Defendant accounting associations are
clearly and without doubt, doomed to fail.
[6]
No evidence was filed before Prothonotary
Milczynski or before me, the motion to strike being brought under Rule 221(1) (a)
as disclosing no reasonable defence.
[7]
On an appeal from a Prothonotary such as this
one, where a pleading has not been struck out, the Court should be reluctant to
interfere with the Order unless it is clearly wrong or involves an issue vital
to the case. I am particularly mindful of the recent decision of the Federal
Court of Appeal in United States Steel Corporation v Canada (Attorney
General), 2011 FCA 277, which relied upon the decision of the Supreme Court
of Canada in Z.I. Pompey Industrie v ECU-Line N.V., [2003] 1 SCR
450, particularly at paragraph 18 where Bastarache J for the Court wrote:
18
Discretionary orders of prothonotaries ought to be disturbed by a motions judge
only where (a) they are clearly wrong, in the sense that the exercise of
discretion was based upon a wrong principle or a misapprehension of the facts,
or (b) in making them, the prothonotary improperly exercised his or her
discretion on a question vital to the final issue of the case: Canada v.
Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.), per MacGuigan J.A., at pp.
462-63. An appellate court may interfere with the decision of a motions judge
where the motions judge had no grounds to interfere with the prothonotary's
decision or, in the event such grounds existed, if the decision of the motions
judge was arrived at on a wrong basis or was plainly wrong: Jian Sheng Co. v.
Great Tempo S.A., [1998] 3 F.C. 418 (C.A.), per Décary J.A., at pp. 427-28, leave to appeal refused, [1998] 3
S.C.R. vi. For the reasons below, I conclude that the decisions of the
prothonotary, the motions judge and the Court of Appeal are clearly wrong.
[8]
The provincial defendants, the appellants here,
argue that the decision of the Prothonotary was “clearly wrong”. First, they
argue that the Supreme Court of Canada in R v Imperial Tobacco Canada Ltd,
2011 SCC 42, has changed the standard for striking out a pleading from “plain
and obvious” to that of “no reasonable prospect of success”. Therefore, they
argue, any pleading that does not have at least a reasonable prospect of
success should be struck out.
[9]
I do not view Imperial Tobacco as
changing the standard for striking out to the extent urged. Paragraphs 17 to 25
of that decision provide an extensive review of the law on that subject. I
emphasize, as the Chief Justice wrote at paragraphs 21 and 22, that a motion to
strike is a tool that is to be used with care; that the Court must be generous and
err on the side of permitting a novel but arguable claim to proceed, and that
the facts as pleaded must be accepted as true unless they are manifestly
incapable of proof.
[10]
Second, the provincial defendants argue that the
pleadings at issue, particularly paragraphs 24 and 25, fail to set forth
sufficient facts so as to support a plea under section 45 of the Competition
Act, RSC 1985, c C-34. In particular, the simple plea as to “competitors”
and “agreements” fails to set forth sufficient facts to engage that section. I
note in this regard that the Plaintiffs did, in their Memoranda of Argument,
and apparently in oral argument before Prothonotary Milczyncki, offer to amend
their pleadings at least to a limited extent, so as to address this argument.
[11]
The provincial defendants argue that the
pleadings as they stand would simply serve as a vehicle for a fishing
expedition on discovery, which would possibly include several questions; the
answers to which would be subject to privilege of one kind or another. The plaintiffs
argue that pleadings of this kind are, of necessity, vague and bare-boned, as
the relevant facts are exclusively in the possession of these defendants. They
cite as an example the Reasons for Judgment of Belobaba J of the Ontario
Superior Court in Apotex Inc v Laboratoires Fournier SA, (2006), 54 CPR
(4th) 241. I repeat what he wrote at paragraphs 46 and 50 to 52:
46 Both
sides agree that in pleading conspiracy Apotex must identify the alleged
conspirators, the agreement to conspire, the improper purpose, the actions
taken and the damage that resulted: Normart Management Ltd. v. Westhill Redevelopment
Co. (1998), 37 O.R. (3d) 97 (C.A.) at 104.
. . .
50 Solvay
argues that more factual detail is required, particularly in a conspiracy
pleading, about which defendant did what when. In my view, the pleading
requirements do not oblige a plaintiff to provide such a detailed level of
specificity at this stage of the proceeding. As this court noted in North York
Branson Hospital v. Praxair Canada Inc. (1998), 84 C.P.R. (3d) 12, at para. 22,
leave to appeal refused, [1999] O.J. No. 399 (Div. Ct.), "the very nature
of a claim of conspiracy is that the tort resists detailed particularization at
early stages ... such details would not usually be available to a plaintiff
until discoveries. These considerations...militate against holding pleadings in
civil conspiracy to an extraordinary standard."
51 In any
event, in my opinion, the conspiracy pleading, at least on the basis of the
common law tort, provides a sufficient level of detail to allow the defendants
to reasonably draft, serve and file a statement of defence and then, if needed,
to move for further particulars in the normal course.
52 As for
the pleading based on ss. 36 and 45 of the Competition Act, here as well, in my
view, there is a sufficient level of factual disclosure to allow Solvay to
prepare their statement of defence. I do not agree that the failure to plead a
specific sub-section of the s. 45 conspiracy provision is fatal. The various
sub-sections of s. 45 are not so distinct as to alter the nature of the
allegation. Indeed, in Eli Lilly and Co. v. Apotex, [2005] F.C.J. No. 1818, the
Federal Court of Appeal, on a motion to strike, dealt with s. 45 as a whole
throughout their reasons for judgment.
[12]
It is difficult to understand this reasoning properly
without seeing the pleadings at issue.
[13]
The provincial defendants further argue that,
being authorized by provincial statute, their activities are a complete defence
to any assertion of section 45 of the Competition Act, relying in
particular on subsection 45(7), which reads:
|
45 (7) The rules and principles of the common law that render a
requirement or authorization by or under another Act of Parliament or the
legislature of a province a defence to a prosecution under subsection 45(1)
of this Act, as it read immediately before the coming into force of this
section, continue in force and apply in respect of a prosecution under
subsection (1).
|
(7) Les règles et principes de la
common law qui font d’une exigence ou d’une autorisation prévue par une autre
loi fédérale ou une loi provinciale, ou par l’un de ses règlements, un moyen
de défense contre des poursuites intentées en vertu du paragraphe 45(1) de la
présente loi, dans sa version antérieure à l’entrée en vigueur du présent
article, demeurent en vigueur et s’appliquent à l’égard des poursuites
intentées en vertu du paragraphe (1).
|
[14]
These defendants argue that the plaintiffs’
pleadings amount to nothing more than a collateral attack on the validity of their
respective provincial statues.
[15]
Further, the provincial defendants argue that to
make a substantive assertion based on section 45 of the Competition Act
where the activity complained of is apparently an exercise of an intellectual
property right provided for in the Trade-Marks Act, RSC 1985, c. T-13;
that there must be “something more” than simply the exercise of those rights
before section 45 is engaged. There is no plea directed to the “something more”
in the pleadings at issue.
[16]
In this situation, the Court must strike a
balance. A pleading should not be struck out simply because a defence, which is
anticipated might be raised, could well be a good defence to the matter.
However, a party should not be permitted to plead in a minimalist fashion
hoping to find sufficient facts on discovery that may support a more robust
cause of action or defence. The Court must guard against opening the door to a
discovery that may be a fishing expedition or far too broad or may inevitably
impinge on areas of privilege.
[17]
In the present case, and being mindful as to how
cautious one must be in reversing a Prothonotary in matters of this kind, it is
my opinion that paragraphs 24 to 29 of the current Defence to Counterclaim are
too minimalist and do not set out sufficient facts so as to raise a proper plea,
nor to enable the opposite party to provide a meaningful pleading over. In
particular, the pleading is insufficient in respect of “competitors”, “agreements”,
and does not address whether “something more” was done or, if the plaintiffs
say that the law does not require something more then the plaintiffs should say
that is their position. For these reasons, I find that, notwithstanding the
Prothonotary’s disposition, that the most appropriate way to deal with the
matter is to Order that paragraphs 24 to 29 be struck out with leave to amend.
[18]
In amending the pleadings I ask that the
plaintiffs go beyond the proposals made in the arguments before Prothonotary
Milczynski and address clearly and fully the allegations respecting
“competitors” and the “agreements” and state whether or not they are relying on
“something more” and, if so, state what that “something more” is. It is my hope
that the pleadings may be sufficiently detailed so as to enable the provincial
defendants to provide a detailed and meaningful defence. While counsel before
me all gave lip service to the hope that this issue could be swiftly and
efficiently resolved, I expect Counsel to work hard in fact to see that this
hope is realized. It should be possible to eliminate or minimize the need for
discovery on this issue. It should be possible to have a summary trial of this
issue. This action is being competently case managed. Counsel should work with
the case manager to ensure that this can be done.
[19]
Costs of this motion will be in the cause.
ORDER
FOR THE REASONS PROVIDED:
THIS COURT ORDERS that:
1.
The appeal is allowed, in part;
2.
Paragraphs 24 and 25 of the Defence to
Counterclaim are struck out with leave to amend, provided such amendments are
consistent with the Reasons provided; and
3.
Costs shall be in the cause.
“Roger T. Hughes”
Email this Content