Toronto, Ontario, August 23rd, 2005
Present: THE HONOURABLE MR. JUSTICE KELEN
BETWEEN:
(Responding Party)
and
9038-3746 QUEBEC INC., 9014-5731 QUEBEC INC., MARIA PELLIZZI CERRELLI, ADAM CERRELLI, CARMELO CERRELLI and HER MAJESTY THE QUEEN IN RIGHT OF CANADA
(Moving party)
REASONS FOR ORDER AND ORDER
[1] This is a motion by the Defendants to appeal the parts of an Order of Prothonotary Lafrenière dated July 19, 2005 contained in the following paragraphs:
¶ 7 The Defendants shall answer the questions that were refused on their examinations for discovery described in Schedule "D" to this Order by category by no later than August 31, 2002.
¶ 8 The Defendants need not answer in whole or in part the questions refused on their examinations for discovery described in Schedule "E" to this Order by category. This is without prejudice to the Plaintiff seeking such information at a later point, or asking such questions on any further examinations for discovery of the Defendants.
¶ 10 The Defendant, Adam Cerrelli, shall re-attend to be examined for discovery to answer any proper questions arising from the answers to any of the Undertakings or any of the Refusals ordered answered;
¶ 13 Costs of this motion shall be paid by the Defendants to the Plaintiffs fixed in the amount of $10,000.000, plus disbursements of $1,611.25, to be paid forthwith in any event of the cause.
[2] The underlying action is a copyright and trade-mark infringement claim relating to software which the responding party, Microsoft, asserts is counterfeit.
[3] The Order of the Prothonotary under appeal is 42 pages consisting of 9 pages of narrative, and 33 pages of Schedules. Schedule "D", contains 26 categories of questions, made up of 211 questions which the Defendants refused to answer. The motion was argued before the Prothonotary for a full day.
[4] The Prothonotary set out his rationale for making an award of costs at pages 5 and 6 of the Order:
The Plaintiff established, in a fairly meticulous fashion, that the great majority of the refusals by the Defendants were excessive, unwarranted and unreasonable. Not only did the Defendants fail to produce their affidavits of documents in a timely manner, but they also refused to answer a number of questions that were clearly relevant to the issues raised in the pleadings (emphasis added by the Court).
The Defendants have, in my view, acted in an obstructive fashion and added substantially to the length and expense of these proceedings. They have frustrated the Plaintiff's valiant attempts to conduct an orderly and complete discovery of the Defendants. Taking into account the failure by the Defendants to deliver their affidavits of documents or answer undertakings within the time provided in the Order dated February 8, 2002, which can only be viewed as dismissive of the Court process, as well as the unreasonable position they took in refusing to answer the Plaintiff's questions that could directly or indirectly advance the Plaintiff's case or damage that of the defendants, I consider an award of costs in favour of the Plaintiff to be warranted.
As for the quantum of costs, I agree with the Plaintiff that the amount should be assessed at a higher level to reflect the Court's disapproval of the conduct of the Defendants. Being guided by the counsel fees and disbursements allowable under Tariff B, I consider the amount of $10,000, plus disbursements of $1,611.25, would fairly compensate the Plaintiff for its costs in bringing the present motion, taking into account the substantial volume of work by the Plaintiff in preparing the motion materials and its overwhelming success on the motion.
[5] The Defendants seek to have paragraphs 7, 8, 10 and 13 of the Order set aside on the grounds that the Prothonotary improperly granted the plaintiff "a substantive right to an over-extended discovery and unjustified costs."
[6] The motion for appeal by the Defendants was filed on July 29, 2005 for a hearing on August 22nd. The Defendant's Motion Record did not contain any details with respect to the basis for the appeal, and did not contain any transcripts of the examinations for discovery.
[7] The counsel filing the motion also filed his own affidavit in support of the motion. However, that counsel did not appear on the motion. Instead, another counsel appeared who said that he was acting as an agent for the law firm which filed the appeal. He requested an adjournment. There was no advance notice to the Court or to the responding party of this request for an adjournment, except for a telephone call on Sunday to counsel. The reason for the adjournment was that counsel was not available because he had traveled unexpectedly to the Orient and had now returned to Montreal, but was not able to come to Toronto.
[8] In view of the findings of the Prothonotary that the Defendants have acted in an "obstructive fashion and added substantially to the length and expense of these proceedings" it is unreasonable for the Court to grant this last minute Court adjournment. In addition, the Court has considered the merits of the motion as evidenced in the written representations filed with the motion. As can be seen from the Court's analysis below, the moving party has not demonstrated in its written representations that this motion has real merit.
[9] The responding party objected to the adjournment. The Court agrees that it is not proper to grant an adjournment in these circumstances. On this basis, counsel for the moving party proceeded to argue the motion. The Court advised the moving party that it is not proper to make arguments not raised in the written representations. In any event, the Court allowed the moving party to orally make its strongest arguments.
STANDARD OF REVIEW
[10] The standard of review to be applied on an appeal from a Prothonotary=s order was set out in The Queen v. Aqua-Gem Investments [1993] 2 F.C. 425 (F.C.A.). This test was modified by the Court of Appeal in Merck & Co. V. Apotex Inc., (2003), 315 N.R. 175 per Decary J.A. at paragraph 19:
Discretionary orders of Prothonotaries ought not to be disturbed on appeal to a judge unless:
(a) the questions raised in the motion are vital to the final issue of the case, or
(b) the orders are clearly wrong, in the sense that the exercise of discretion by the Prothonotary was based upon a wrong principle or upon a misapprehension of facts.
[11] Consequently, the Court should not intervene with the Prothonotary=s decision simply because it would have come to a different conclusion. If, however, the decision is clearly wrong or the questions are vital to the final issue of the case, then the Court must consider the issues de novo.
ANALYSIS
[12] The questions raised in the present motion (i.e., the extension of a discovery period and costs) are not vital to the final issue of the case. The Defendants argue, however, that the decision is clearly wrong because the Prothonotary improperly exercised his discretion. The test of relevancy governs the propriety of a question on discovery. The moving party in this case does not allege or demonstrate in their written representations that the questions contained in the 26 categories of questions listed in Schedule D are not relevant.
[13] With respect to the sale of any goods in 2004 and 2005, this argument was made before the Prothonotary. The Plaintiff points to pleadings which deal with the sale of allegedly counterfeit goods returned by the Montreal police which may have been sold by the Defendants. Such sales could have taken place in 2004 and 2005. Since the test of relevancy is to be broadly interpreted, and since it is the discretion of the Prothonotary to decide whether a question falls within that broad definition of relevancy, the Prothonotary's decision must stand. The Court is not satisfied that the Prothonotary was "clearly wrong" in his conclusion that these questions must be answered.
[14] The moving party also argued that certain persons and corporations who are not parties to the litigation cannot be required to produce information. The Plaintiff submitted that these are affiliated with the named Defendants and the pleadings make allegations regarding "affiliated" corporations and persons. Again it is of the discretion of the Prothonotary. This matter was argued before the Prothonotary. The Court is not satisfied that the Prothonotary was clearly wrong on this matter.
[15] With respect to whether the Prothonotary was clearly wrong in the award of costs, the moving party submits in their written representations that the costs are not justified. This written representation does not address the Prothonotary's finding that the Defendants have acted in an "obstructive fashion and added substantially to the length and expense of these proceedings". Since the moving party has not demonstrated that the Prothonotary's decision in regard to costs was clearly wrong, the Court has no basis to intervene.
[16] If this appeal had been presented properly to the Court, the moving party would have detailed in advance the arguments with respect to each of the questions in terms of relevancy. With this detail, the Defendants should have asked the Court to set aside a half day for the hearing of the appeal since such a hearing would necessitate more than two hours.
[17] For these reasons, this motion is dismissed with costs to the plaintiff.
[18] With respect to costs, costs will be awarded on the same basis as the Prothonotary awarded costs to the Plaintiff against the Defendants. The disbursements for this appeal are fixed at $2,943.75 for the production of the Respondent's Motion Record. Counsel fees are according to the Tariff. Under Column 3 of Tariff "B", items 5 and 6, the Court will fix counsel fee in the amount of $500 for the filing the response to the Motion, and $500 for appearing on the motion. Accordingly, the total counsel fee will be $1000, plus disbursements in the amount of $2,943.75, payable to the Plaintiff forthwith by the Defendants in any event of the cause.
ORDER
THIS COURT ORDERS THAT:
This motion by the defendants Defendants to appeal the Order of Prothonotary LafreniPre dated July
19th, 2005 is dismissed with costs in the amount of $3,943.75 to the Plaintiff in any event of the cause.
JUDGE
FEDERAL COURT
NAME OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1502-00
STYLE OF CAUSE: MICROSOFT CORPORATION
Plaintiff
(Responding Party)
and
9038-3746 QUEBEC INC., 9014-5731 QUEBEC INC.,
MARIA PELLIZZI CERRELLI, ADAM CERRELLI,
CARMELO CERRELLI and HER MAJESTY THE
QUEEN IN RIGHT OF CANADA
Defendants
(Moving party)
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: AUGUST 22, 2005
APPEARANCES:
John C. Cotter
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SOLICITORS OF RECORD:
Osler, Hoskin & Harcourt LLP
Barristers and Solicitors
Toronto, Ontario FOR PLAINTIFF
Michelin & Associates