Date: 20010627
Docket: T-836-01
Neutral Citation: 2001 FCT 713
BETWEEN:
ERIC WHITE
Plaintiff
- and -
E.B.F. MANUFACTURING LIMITED, ELECTROBRAID
FENCE LIMITED, E. DAVID BRYSON, and
NOVATEC BRAIDS LIMITED
Defendants
[1] The defendants E.B.F. Manufacturing Limited ("EBF"), Electrobraid Fence Limited and E. David Bryson seek a stay of proceedings under subsection 50(1) of the Federal Court Act ("the Act"), R.S.C. 1995, c. F-7, on the ground that the plaintiff Eric White's claim, presently being proceeded with in the Supreme Court of Nova Scotia is now commenced in the Federal Court.
1. Proceedings
[2] On May 9, 2000, the plaintiff commenced proceedings in the Supreme Court of Nova Scotia against the first defendant ("EBF") claiming unpaid royalties in the amount of $73,966.00 as of May 3, 2000, pursuant to a license agreement dated January 29, 1998. A defence and counterclaim were filed by EBF in May 2000 with lists of documents exchanged in August.
[3] Discovery examinations took place in the Nova Scotia proceedings in March 2001 with further examinations scheduled for early July. Also in March 2001, the plaintiff amended his statement of claim in the Nova Scotia proceedings to allege that the license agreement was null and void by virtue of non-payment by EBF. An amended defence and counterclaim were filed by EBF on June 6, 2001.
[4] On May 17, 2001, the plaintiff commenced these instant proceedings in the Federal Court seeking the unpaid royalties, damages, a declaration that the license agreement between the plaintiff and EBF is null and void for non-payment, and an injunction restraining EBF and the other defendants from continuing to manufacture or sell the braided electrical fencing product. The plaintiff has also notified the Federal Court that he intends to bring a motion for an interlocutory injunction restraining the defendants from infringing his rights throughout Canada arising from his Letters Patent No. 2,267,771 issued on February 27, 2001. The plaintiff seeks the earliest possible date for the hearing of his application.
2. The law and jurisprudence
[5] Paragraph 50(1)(a) of the Act provides that the Court may in its discretion stay proceedings in any cause or matter on the ground that the claim is being proceeded within another Court or jurisdiction. The jurisprudence in the matter has established several useful criteria to determine whether such a stay should be granted. (Discreet Logic Inc. v. Canada (Registrar of Copyrights) 1993 CarswellNat 1930, 51 C.P.R. (3d) 191, affirmed (1994), 55 C.P.R. (3d) 167 (Fed. C.A.); Plibrico (Canada) Limited v. Combustion Engineering Canada Inc., 30 C.P.R. (3d) 312 at page 315; Ass'n of Parents Support Groups v. York, 14 C.P.R. (3d) 263; Compulife Software Inc. v. Compuoffice Software Inc., 1997 CarswellNat 2482, 77 C.P.R. (3d) 451, 143 F.T.R. 19; 94272 Canada Ltd. v. Moffatt, 31 C.P.R. (3d) 95 and General Foods v. Struthers, [1974] S.C.R. 98). They are abridged and assembled as follows for convenience.
1. Would the continuation of the action cause prejudice or injustice (not merely inconvenience or extra expense) to the defendant?
2. Would the stay work an injustice to the plaintiff?
3. The onus is on the party which seeks a stay to establish that these two conditions are met;
4. The grant or refusal of the stay is within the discretionary power of the judge;
5. The power to grant a stay may only be exercised sparingly and in the clearest of cases;
6. Are the facts alleged, the legal issues involved and the relief sought similar in both actions?
7. What are the possibilities of inconsistent findings in both Courts?
8. Until there is a risk of imminent adjudication in the two different forums, the Court should be very reluctant to interfere with any litigant's right of access to another jurisdiction;
9. Priority ought not necessarily be given to the first proceeding over the second one or, vice versa.
3. Submissions
[6] The first three defendants submit that there is a risk of an abuse of process and inconsistent findings when two different Courts render decisions on the same factual and legal issues. It is also obvious that the Nova Scotia proceedings are much further advanced than the proceedings before the Federal Court which have merely started. The latter consists only in the filing of the plaintiff's statement of claim. The time for filing a defence has yet to expire.
[7] The fourth defendant, Novatec Braids Limited ("Novatec"), represented separately at the hearing, filed an affidavit to the effect that in 1998 an agreement was entered between the plaintiff and the defendant E. David Bryson with Novatec whereby Novatec would manufacture electrobraid fencing, the invention presently patented. Novatec continued to manufacture electrobraid fencing pursuant to its contract with EBF until March 2001. At that time, Novatec acceded to EBF's demand, ceased manufacturing electrobraid and laid off six employees. Novatec also alleges that at all time relevant to this issue, the plaintiff knew of the ongoing contractual relations between EBF and Novatec and by its action has interfered with those relations causing Novatec ongoing damages and loss.
[8] Thus, Novatec would strongly be in favour of a stay of the Federal Court action.
[9] In his affidavit, the plaintiff states that he was issued Letters Patent for the invention in question after he had commenced his action in the Supreme Court of Nova Scotia. His Federal Court application for a national injunction will be based on the recently registered patent. He decided to commence the Federal Court action "due to the fact that EBF and Electrobraid Fence Limited were selling the product across Canada, in the United States and, indeed, worldwide". He felt that "an Order restraining the Defendants from so doing would be more easily enforced were it obtained from the Federal Court of Canada". He alleges that due to the Federal Court's expertise in dealing with patent issues, it would be the preferable forum. The plaintiff further claims that "it is imperative that his injunction motion proceed without delay as ... the prime production and sales period for Electrobraid Fence is during the summer and early fall".
[10] In the course of this hearing, it was disclosed by counsel for EBF that he had sent a cheque to plaintiff's counsel in the amount of $73,966.00 representing past royalties owing to the plaintiff as of May 3, 2000, and an indication that more cheques would follow.
4. Analysis
[11] In my view, the continuation of this action in the Federal Court would not cause prejudice to the defendants. Of course, it may result in extra expenses and further inconvenience to the defendants, but these matters can always be remedied by way of costs. The power to grant a stay may indeed only be exercised sparingly and in the clearest of cases: this is not an obvious case favouring a stay. There are two egregious differences between the Nova Scotia proceedings and the Federal Court proceedings: three defendants have been added to the federal case and the plaintiff now seeks injunctive relief on a national scale in his federal action. Even if the factual situation and some of the legal issues may be similar in both actions, the relief sought is different.
[12] As to the possibilities of inconsistent findings in the two Courts, it is to be expected that the plaintiff will concentrate on his federal injunctive relief before obtaining a judgment from the Nova Scotia Court. There is no risk of imminent adjudication in the two different forums and, in that sense, it would be premature for me to interfere with the plaintiff's right of access to the Federal Court. It is presumed that he is now more interested in seeking a national injunction and will conduct himself accordingly.
[13] In the end, if it turns out that the plaintiff was mistaken in pursuing two remedies, the defendants will be properly compensated by way of costs.
5. Disposition
[14] It follows that this application for stay is dismissed with costs in the cause.
OTTAWA, Ontario
June 27, 2001
Judge