Docket: T-1585-16
Citation:
2016 FC 1405
Ottawa, Ontario, December 21, 2016
PRESENT: The Honourable Mr. Justice Gleeson
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BETWEEN:
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CHARLES G.
REESE JR.
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Plaintiff
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and
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LES
INVESTISSEMENTS NOLINOR INC. D/B/A NORLINOR AVIATION
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Defendant
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ORDER AND REASONS
I.
Overview
A.
The Motion
[1]
This is a motion by the defendant seeking an:
A. extension of time for filing a Statement of Defence pursuant to Rule
8 of the Federal Court Rules, SOR/98-106 [Rules] pending determination of the
issues raised in this motion;
B. order requiring the plaintiffs to serve and file further and better
particulars pursuant to Rule 181(2)
C. order striking the claim of the plaintiff, Cabin Safety
International Ltd. [Cabin Safety], pursuant to Rule 208;
D. order that Cabin Safety give security for the defendant's costs
pursuant to Rule 416 and that Cabin Safety retain counsel to represent it in
this proceeding pursuant to Rule 120 if the claim of Cabin Safety is not
struck; and
E.
order requiring the individual plaintiff, Mr.
Reese, to give security for the defendant's costs pursuant to Rule 416.
[2]
The plaintiffs did not serve and file a motion
record.
[3]
The plaintiffs delivered to the defendant an
affidavit, sworn by Charles G. Reese Jr. on November 29, 2016, responding to
the request for further particulars. That affidavit was received by the
Registry but by the oral direction of Prothonotary Roger Lafrenière was not
accepted for filing in advance of the hearing of this motion.
[4]
The plaintiffs appeared for the hearing and
sought to place a further affidavit before the Court sworn by Charles G. Reese
Jr. on December 5, 2016. The affidavit was refused for filing on the basis of
non-compliance with the Rules.
B.
The Underlying Claim
[5]
In the underlying action the plaintiffs allege
the defendant has infringed their copyrights in “safety
features cards”, cards that are used in the air transport industry to
depict the safety features of passenger aircraft.
[6]
Mr. Reese contacted the defendant in August 2016
expressing concerns that it has infringed the plaintiffs’ copyright. Mr. Reese
claimed to represent himself and the corporate plaintiff, Cabin Safety. In
September 2016, the plaintiffs initiated this action, alleging that: (1) the
plaintiffs had produced and sold safety features cards to the defendant in
1996; (2) the plaintiffs had registered copyright in the safety feature cards
in Canada and the United States; (3) the plaintiffs continue to publish safety
feature cards to which the copyright registrations apply; and (4) in July 2016,
the plaintiffs became aware of copyright infringement by the defendant.
[7]
The Statement of Claim states that Cabin Safety
is “incorporated and subsisting under the laws of the
State of Delaware” and that Charles G. Reese Jr. is “a citizen of the United States of America”.
[8]
Mr. Marco Prud’homme, Vice-President of the
defendant Les Investissements Nolinor Inc., states, in an affidavit sworn in
support of this motion, that the defendant is investigating the allegations of
the plaintiffs. Mr. Prud’homme also notes that the alleged business dealings
occurred more than 20 years ago and that the plaintiffs “have refused to provide any records whatsoever regarding the
alleged dealings between Nolinor Aviation and the Plaintiffs, and the
contractual basis of any dealings, and specifically, the circumstances of any
creation of any design by the Plaintiffs … and we have not been able to locate
any records in this regard.”
II.
Extension of Time to File a Statement of Defence
[9]
Counsel for the defendant contacted the
plaintiffs by email in October 2016 enclosing a request for particulars and
advising that a Statement of Defence would be provided “promptly”
upon receipt of the requested particulars. The plaintiffs refused to provide
additional information “until compelled by the Court to
do so” and further advised the defendant that there would be no consent
to an extension of time for the filing of a Statement of Defence. It is within
this context that the defendant now seeks an extension of time pursuant to Rule
8 of the Rules.
[10]
Rule 8(1) and (2) of the Federal Courts
Rules, SOR/98-106 provides that:
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8(1) On motion,
the Court may extend or abridge a period provided by these Rules or fixed by
an order.
(2) A motion for an extension of time may be brought before or
after the end of the period sought to be extended.
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8 (1) La Cour
peut, sur requête, proroger ou abréger tout délai prévu par les présentes
règles ou fixé par ordonnance.
(2) La requête visant la prorogation d’un délai peut être
présentée avant ou après l’expiration du délai.
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[11]
A party seeking an extension of time must
demonstrate (1) a continuing intention to pursue the matter; (2) that there is
some merit in the position to be advanced; (3) that no prejudice arises from
the delay; and (4) that there is a reasonable explanation for the delay (Canada
(Attorney General) v Hennelly, [1999] FCJ No 846 at para 3).
[12]
In this case, the defendant has been diligent in
retaining counsel and inquiring into the allegations set out in the Statement
of Claim. The defendant has identified the difficulties the passage of time
presents in determining the nature of any contractual relationship the parties
may have entered into more than 20 years ago. The defendant has sought
information from the plaintiffs, information the plaintiffs refused to provide
until November 29, 2016. There is no evidence of prejudice to the plaintiffs in
granting an extension of time.
[13]
The defendant is granted an extension to time to
serve and file a Statement of Defence in this matter.
III.
Further and Better Particulars
[14]
The defendant’s counsel indicated in oral
submissions that the defendant was satisfied with the additional particulars
disclosed in the Reese affidavit dated November 29, 2016. I need not address
this issue.
IV.
Strike the Claim of the Plaintiff, Cabin Safety
[15]
The plaintiffs allege in the Statement of Claim
that Cabin Safety is incorporated and subsisting under the laws of the State of
Delaware. It is trite law that Mr. Reese has no standing to assert a cause of
action on behalf of Cabin Safety; a corporation is separate and distinct from its
shareholders, partners, or principals (Bouchard v Canada, 2016 FC 983 at
paras 19 and 20 and Salomon v Solomon & Co. Ltd., [1897] AC22 (HL)).
[16]
In regard to the status of Cabin Safety as a
separate and distinct legal entity, the defendant produced a certificate signed
by the Secretary of State for the State of Delaware dated September 13, 2016
[Certificate] stating that Cabin Safety “is no longer
in existence and good standing under the laws of the State of Delaware having
become inoperative and void the first day of March, A.D. 1996 for non-payment
of taxes.”
[17]
Mr. Reese argued in oral submissions that, at
the time of filing, Cabin Safety was understood to be an active entity. The
plaintiffs however do not dispute that Cabin Safety was not, at the time the Statement
of Claim was filed, and is not currently an existing corporate entity. The
Certificate directly contradicts the representations made in the Statement of
Claim.
[18]
In Tomchin v Canada, 2015 FC 402, Justice
Michael Manson set out the principles applicable to a motion to strike a
pleading at paragraphs 21 through 23. Justice Manson stated at paragraph 23
that “Rule 221(2) of the Federal Court Rules provides
that no evidence shall be heard on a motion for an order under subparagraph
(1)(a). However, evidence may be admitted in support of a motion to strike
based on the other subparagraphs of Rule 221.”
[19]
In this case, the defendant relies on the
Certificate, Rule 208 and Rule 221(1)(f) to argue that Cabin Safety does not
exist as a legal entity, has not existed for more than a decade and that the
assertions made at paragraph 2 of the Statement of Claim amounts to an abuse of
the Court’s process. The defendant submits that Cabin Safety should be struck
as a party to the action. I agree.
[20]
Mr. Reese asserts that he had no knowledge that
Cabin Safety was no longer in existence and in good standing under the laws of
the State of Delaware. While this may be so, it is evident that such
information was readily available. This, however, is of little relevance. The
undisputed evidence is that Cabin Safety “is no longer
in existence… under the laws of the State of Delaware” and therefore has
no legal standing to commence the action.
[21]
It has been held by the Federal Court of Appeal
that bald conclusory allegations, absent an evidentiary basis in a Statement of
Claim amount to an abuse of process (Merchant Law Group v Canada Revenue
Agency, 2010 FCA 184 at para 34 [Merchant Law Group] citing AstraZeneca
Canada Inc. v Novopharm Limited, 2010 FCA 112 at para 5). I am of the opinion
that the principle expressed in Merchant Law Group is equally applicable
to a situation where an entity lacking any legal status is represented as a
valid and subsisting legal entity for the purposes of commencing a proceeding
before the Court.
[22]
The Corporate plaintiff, Cabin Safety, is struck
as a plaintiff in this proceeding. In light of my conclusion, I need not
address security for costs or the retention of counsel matters as they relate
to Cabin Safety.
V.
Security for Costs – Mr. Reese
[23]
The defendant seeks an order for security for
costs against Mr. Reese. The defendant initially submitted that Mr. Reese is an
American citizen who claims to reside in Canada but has not demonstrated that
he has any assets in the jurisdiction. In the supplementary affidavit of Mr.
Prud’homme, dated November 29, 2016, the defendant acknowledges that Mr. Reese
had asserted proof of residence but “refused to put any
such evidence in Affidavit form, and suggests to our counsel an intention to do
so at the last minute.”
[24]
Mr. Reese has, subsequent to the hearing of this
matter, filed an affidavit establishing his ownership of a property in
Kamloops, British Columbia. The affidavit attests to a 1999 declared value of
$250,000 and that the property is held, free and clear, of any mortgage or
lien.
[25]
In light of this evidence, it is clear that Mr.
Reese owns assets in the jurisdiction and those assets are available to the
defendant to satisfy any award of costs that might be made against the
plaintiff as he pursues this claim. No order will be made for security for
costs.
VI.
Costs on this Motion
[26]
The defendant, relying on Column III, Tariff B
of the Rules, seeks costs in the amount of $1200 inclusive of disbursements.
Mr. Reese submits that in considering the question of costs, the Court should
take note of the fact that he is semi-retired, that his access to liquid assets
is limited and that it is because of limited financial resources that he is
representing himself in this matter.
[27]
Pursuant to Rule 400, an award of cost is a
matter that falls within the “full discretionary power”
of the Court. That same Rule identifies a number of factors the Court may
consider in the exercise of its discretion including a party’s conduct, the
failure to admit anything that should have been admitted and the necessity for
steps taken in a proceeding.
[28]
The fact that a party choses to represent him or
herself does not excuse that party from compliance with the Rules nor
does it excuse disrespectful or discourteous conduct in dealings with the other
party, counsel and the Court. In this case, defendant’s counsel advised Mr.
Reese of the process involved in responding to this motion and offered to
review any evidence Mr. Reese might advance. Mr. Reese rejected the courtesy
extended by defendant’s counsel stating “I am aware of
the procedure”. In subsequent correspondence he indicates that “I will likely respond to you in 24 hours prior to the
hearing, allowing you to scramble to amend your motion.”
[29]
Mr. Reese represented that he understood the
motion process in his communications with defendant’s counsel. The evidence
indicates that he chose to withhold information until the last possible moment
as a tactic aimed at inconveniencing the defendant. Of course, in doing so, he
has also inconvenienced the Court and significantly extended the time required
to hear this motion. Mr. Reese apologized to the Court and defendant’s counsel
in the course of his oral submissions, but the fact remains his conduct has
required this Court to address issues that might well have been resolved
amicably between the parties, or by way of a consent order.
[30]
I recognize that the defendant has not had
complete success on this motion as I have denied the request for security of
costs. However, the fact is that security for costs were pursued as a direct
consequence of Mr. Reese’s decision not to provide relevant and readily
available information to the defendant. I also recognize that Mr. Reese has
complied with the request for further particulars, albeit very late in the
process. Considering all of the circumstances, the defendant is awarded costs
in the amount of $1200 payable forthwith.
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