Date: 20030910
Docket: T-778-01
Citation: 2003 FC 1052
Ottawa, Ontario, this 10th day of September, 2003
Present: The Honourable Mr. Justice Russell
BETWEEN:
TERRA NOVA SHOES LTD. and
TERRA NOVA FOOTWEAR LIMITED
Plaintiffs
and
NIKE INC. and NIKE CANADA LTD.
Defendants
REASONS FOR ORDER AND ORDER
APPEAL ON MOTION TO COMPEL ANSWERS
ORDER SOUGHT
[1] This motion is for an Order reversing, in part, the Order of Prothonotary Lafrenière dated May 21, 2003.
THE GROUNDS FOR THE MOTION ARE:
[2] The underlying action was commenced by way of Statement of Claim on May 9, 2001. The Plaintiffs alleged trade-mark infringement and passing off by the Defendants, the central allegation being that there is a likelihood of confusion between the Plaintiffs' TERRA trade-marks, which are used primarily for safety boots, and the Defendants' use of model names incorporating the word "terra" for its athletic shoes.
[3] The Defendants filed a Statement of Defence and Counterclaim on July 18, 2001, denying all of the allegations contained in the Statement of Claim, and alleging, inter alia, that there has been no actual confusion between the parties' products, nor is confusion likely.
[4] In assessing the likelihood of confusion, evidence of the parties' channels of trade and the nature of the wares on which the trade-marks in question are used will be examined by the court, as these factors are specifically identified as relevant to this issue in s. 6(5) of the Trade-marks Act, R.S.C. 1985, c. T-13.
[5] Examinations for discovery of the Plaintiffs' representative, Mr. Robert Worrall, were held on several days between August 2002 and February 2003.
[6] During the course of these discoveries it became clear that virtually all of the respective sales of the Plaintiffs and Defendants in Canada are made through different channels of trade, for safety footwear on the one hand, and athletic footwear on the other. However, on September 13, 2002, during discoveries, the Plaintiffs identified a category of retailers that sell both types of footwear. These stores were called the Family Shoe Stores. The witness, Mr. Worrall, was unable to precisely identify which of the stores from the Plaintiffs' customer list fit within this category, but the Plaintiffs undertook to consider the production requested.
[7] A written answer was provided to the Defendants on November 22, 2002, which identified a number of retailers categorized as Family Shoe Stores and which were also identified by the Defendants as selling their athletic products.
[8] As the Family Shoe Stores represent the only common channel of trade, the Defendants requested further information regarding them in subsequent discovery examinations on February 20, 2003. Specifically, the Defendants attempted to determine what products have been sold by the Plaintiffs in these identified locations, and how the Plaintiffs' products had been marketed and sold in these locations. These questions are numbered 129-154 (the "Subject Questions") in Schedule "B" attached to the Notice of Motion.
[9] The Plaintiffs refused to answer the Subject Questions, not on the grounds of relevance, but on the technical ground that the Subject Questions should properly have been asked earlier, during the "first round" of discoveries.
[10] On April 1, 2003, the Defendants brought a motion to compel answers to certain questions improperly refused by the Plaintiffs at Mr. Worrall's examination, including the Subject Questions.
[11] By Order dated May 21, 2003, Prothonotary Lafrenière granted the motion in part but dismissed the motion in respect of the questions listed in Schedule "D" of the Order, including the Subject Questions which are now the subject of this appeal.
STANDARD OF REVIEW:
[12] The standard of review to be applied in this Appeal is the standard set out in the Federal Court of Appeal Decision in Canada v. Aqua-Gem Investments Ltd., [1993] F.C.J. No. 103, namely, that the Prothonotary's discretionary order should not be disturbed on appeal unless it is clearly wrong, in the sense that his exercise of discretion was based on a wrong principle of law or a misapprehension of the facts. As the Case Management Prothonotary for the underlying action, Prothonotary Lafrenière is to be given latitude to manage cases and his exercise of discretion is only to be interfered with in clear cases.
Microfibres Inc. v. Annabel Canada Inc. (2001), 16 C.P.R. (4th) 12 (F.C.T.D.)
[13] The Defendants argue that the Prothonotary clearly erred in law by failing to order that the Subject Questions be answered as they were relevant, improperly refused as being part of a "first round of discoveries", and were proper follow-up questions to information produced by the Plaintiffs during discoveries.
ANALYSIS:
[14] The Defendants argue that it is established by the Rules and case law that relevant and proper questions must be answered during examinations for discovery. They point to Rule 240(a) which reads as follows:
| 240. A person being examined for discovery shall answer, to the best of the person's knowledge, information and belief, any question that (a) is relevant to any unadmitted allegation of fact in a pleading filed by the party being examined or by the examining party; or |
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240. La personne soumise à un interrogatoire préalable répond, au mieux de sa connaissance et de sa croyance, à toute question qui : a) soit se rapporte à un fait allégué et non admis dans un acte de procédure déposé par la partie soumise à l'interrogatoire préalable ou par la partie qui interroge; |
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Reading & Bates Construction Co. v. Baker Energy Resources Corp. (1988), 24 CPR (3d) 66 (FCTD) at 70.
Samson Indian Nation and Band v. Canada, [2001] FCJ No. 1116 (TD) at paras. 7, 20
[15] The Defendants also point out that, in assessing relevance, the Court should err on the side of disclosure. Documents should be produced and questions answered where they could lead to a train of inquiry that may directly or indirectly advance that party's case or damage the case of the opponent, even if such documents or questions are later held to be irrelevant. The issue of relevance and the weight to be attached to documents and questions will ultimately be a matter for the trial judge:
". . . any error on the side of allowing questions may always be corrected by the trial judge who retains the ultimate mastery over all matters relating to admissibility of evidence; on the other hand any error which unduly restricts the scope of discovery may lead to serious problems or even injustice at trial."
Montana Band v. Canada, [1999] F.C.J. No. 1088 (T.D.) at para. 5.
(See also, Everest & Jennings Canadian Ltd. v. Invacare Corporation (1984), 79 CPR (2d) 138 (FCA) at 139).
[16] The Defendants say that Prothonotary Lafrenière clearly erred in dismissing the request that the Subject Questions be answered for the following reasons:
a. the questions were relevant to the central issue of likelihood of confusion;
b. the questions were improperly refused on the basis that they should have been asked in a "first round" of discoveries. This refusal was clearly improper in that:
I. there was no clear distinction on the transcript between a "first" and "second" round of discoveries; and
ii. where a relevant factual issue is raised, it is improper to deny access to discovery on technical grounds, relating to an uncertain distinction between "rounds" of discovery; and
c. in any event, the questions were proper follow-up questions arising from information produced by the Plaintiffs during discoveries.
[17] The information sought by the Defendants is entirely within the Plaintiffs' knowledge and is not otherwise available to the Defendants.
[18] The Defendants say they will be irreparably prejudiced in the preparation of their defence if they are not permitted to obtain answers to the Subject Questions. Granting the Order sought in the appeal will secure the just, most expeditious and least expensive determination of the proceeding on their merits.
[19] The Plaintiff's argument in reply is, essentially, that the Subject Questions arise from a customer list provided to the Defendants before the first round of discoveries of the Plaintiffs began. In other words, the questions relate to subject-matter that was already canvassed during the first round of discoveries.
[20] While the Defendants draw my attention to Rule 240(a), and the importance of relevance, the Plaintiffs emphasize Rule 243 and the need to impose some kind of limit on the discovery process.
[21] The Plaintiffs point out that discovery is not a never-ending process that knows no boundaries. The Court may limit an examination for discovery that it considers to be oppressive, vexatious or unnecessary. The Court may also refuse further discovery where it finds that the discovery is closed or that a party has waived its rights to ask further questions.
John Labatt Ltd. v. Molson Breweries, A Partnership (1996), 69 C.P.R. (3d) 126 (F.C.T.D.), Rule 243 Federal Court Rules 1998
[22] The history of the discovery process in this case is clear from the transcript. The Plaintiffs say that the Defendants reserved only one area of discovery (questions relating to the pleadings) for additional first round discovery. The parties agreed that the remaining questions from the first round would be completed on December 18, 2002 before the second round commenced.
[23] Pursuant to this agreement, on December 18, 2002, the Defendants began the discovery by asking questions arising from the Plaintiffs' original productions. The Defendants then went on to the second round of discovery, asking questions about the answers that the Plaintiffs had provided in the first round.
[24] The Plaintiffs contend that, in accordance with representations made to the court and the scheduling order then in place, the discovery scheduled for February 20 and 21, 2003 was for the Defendants to complete all remaining second round discovery in the action.
[25] The Plaintiffs take the position that the Defendants had ample opportunity to ask questions about the products which were sold by the Plaintiffs' family shoe store customers and did pursue this line of questioning on August 22, 2002. At the outset of discovery, the Defendants were provided with a list of the Plaintiffs' customers and were advised that a subset of these customers fell within the class of Family Shoe Stores.
[26] During the first round of discovery, the Defendants asked the Plaintiffs to create a sub-list of the Family Shoe Stores from its list of customers provided. The Defendants did not ask for any further information relating to the product offerings for each of the Family Shoe Stores that would be identified from this list. Nor did the Defendants reserve the right to ask such questions once the list was provided.
[27] The Plaintiffs position is that the Defendants' failure to ask all of its desired questions should not now countenance further first round discovery questions. To allow this will result in endless questioning on areas that have already been covered. The Defendants examined Mr. Worrall for five days on the first round of discovery and received over 43 pages of written answers from the Plaintiffs along with numerous productions. For the Court to hold that the Defendants can ask further first round discovery questions once second round discovery has already begun is not only contrary to the agreement between the parties, it is also contrary to the principles of discovery.
[28] In conclusion, the Plaintiffs say that Prothonotary Lafrenière exercised his discretion properly after careful consideration of the transcripts and the evidence and based on his experience as Case Management Prothonotary for this action with an intimate knowledge of the history of the action and the discovery. He correctly concluded that requests 129-154 were improper questions for the second round of discovery that was at the time underway.
[29] So this appeal motion brings into play the competing interests embodied in Rules 240(a) and 243. It seems clear to me that Rule 243 allows the Court to limit the discovery process where it considers the examination to be appresive, vexatious or unnecessary. In John Labatt Ltd., supra, Rouleau J. had the following say on these matters at p. 128.
Discovery is not a never ending process that knows no boundaries. Rather, it is a tool enabling a party to better prepare for trial. However, like any other tool, it has to be properly used in order to give the best results. In this case, allowing the Defendant to continue with the discovery of the Plaintiffs would unduly delay this action. As such, the interest of justice, as well as the interest of both parties, do not favour granting this motion.
[30] While I agree with the Defendants that the Subject Questions are relevant, I cannot say that the decision of Prothonotary Lafrenière was "clearly wrong" to limit the discovery process in the way he did as regards the questions at issue when the purpose of Rule 243 and the words of Rouleau J. in John Labatt, supra, are taken into account. As the Case Management Prothonotary, he was in the best position to direct and control the discovery process. The Defendants have not convinced me that he was "clearly wrong" to exercise his discretion in the way that he did or that such exercise was based upon a wrong principle of law or a misapprehension of the facts.
ORDER
THE COURT HEREBY ORDERS THAT:
1. The Appeal is dismissed.
2. The Plaintiffs shall have costs of this Appeal, irrespective of the event.
"James Russell"
J.F.C.C.
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-778-01
STYLE OF CAUSE: TERRA NOVA SHOES LTD. and TERRA FOOTWEAR
LIMITED
Plaintiffs
- and -
NIKE INC. and NIKE CANADA LTD.
Defendants
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: MONDAY, JULY 21, 2003
REASONS FOR ORDER
AND ORDER BY: RUSSELL J.
DATED: SEPTEMBER 10, 2003
APPEARANCES:
Mr. David Reive
Ms. Angela M. Furlanetto
For the Plaintiffs
Mr. Christopher J. Pibus
Mr. James H. Buchan
For the Defendants
SOLICITORS OF RECORD:
Mr. David M. Reive
Ms. Angela M. Furlanetto
Barristers and Solicitors
Toronto, Ontario
For the Plaintiffs
Mr. Christopher J. Pibus
Mr. James H. Buchan
Barristers and Solicitors
Toronto, Ontario
For the Defendants
FEDERAL COURT OF CANADA
Date:
Docket: T-778-01
BETWEEN:
TERRA NOVA SHOES LTD. and TERRA FOOTWEAR LIMITED
Plaintiffs
and
NIKE INC. and NIKE CANADA LTD.
Defendants
REASONS FOR ORDER
AND ORDER