Date: 20010920
Docket: T-2680-97
Neutral Citation: 2001 FCT 1032
Ottawa, Ontario, this 20th day of September 2001
PRESENT: THE HONOURABLE MR. JUSTICE PELLETIER
BETWEEN:
MICROFIBRES, INC.
Plaintiff
(Respondent)
- and -
ANNABEL CANADA INC.
ALFONS DERUMEAUX and
ANNABEL N.V.
Defendants
(Applicants)
REASONS FOR ORDER AND ORDER
PELLETIER J.
[1] This is a motion to sever the issues of liability from the issues of quantum of damages in a copyright infringement action. To that extent, it is neither difficult nor remarkable. What is remarkable is that the Prothonotary who made the order pursuant to which the present motion is made had on two previous occasions rejected severance of the liability and damages portions of the trial. Prothonotary Lafrenière had before him an application to compel responses to undertakings, one of which had to do with production of certain documents. The Prothonotary held that the documents were to be produced unless "within 30 days of the signing of this Order the Defendant Annabel N.V. files a Notice of Motion to bifurcate this proceeding in accordance with Rule 107, to separate the issues of liability from issues of damages and profits, in which case this question shall not be ordered answered pending the final resolution of that motion."
[2] Rule 107 of the Federal Court Rules, 1998 deals with the separate determination of issues, which is commonly referred to as severance of issues. It allows the Court, among other things, to order trial of the issue of liability before issues of damages are addressed. That is what is being requested here.
107. (1) The Court may, at any time, order the trial of an issue or that issues in a proceeding be determined separately.
(2) In an order under subsection (1), the Court may give directions regarding the procedures to be followed, including those applicable to examinations for discovery and the discovery of documents.
107. (1) La Cour peut, à tout moment, ordonner l'instruction d'une question soulevée ou ordonner que les questions en litige dans une instance soient jugées séparément.
(2) La Cour peut assortir l'ordonnance visée au paragraphe (1) de directives concernant les procédures à suivre, notamment pour la tenue d'un interrogatoire préalable et la communication de documents.
[3] Rule 107 is drafted in such a way that the Court is entitled to make an order under the Rule on its own motion. This is so because of the effect of Rules 47(1) and (2).
47(1) Unless otherwise provided in these Rules, the discretionary powers of this court under these Rules may be exercised by the Court of its own initiative or on motion.
(2) Where these Rules provide that powers of the Court are to be exercised on motion, they may be exercised only on the bringing of a motion.
47(1) Sauf disposition contraire des présentes règles, la Cour exerce, sur requête ou de sa propre initiative, tout pouvoir discrétionnaire que lui confèrent les présentes règles.
(2) Dans les cas où les présentes règles prévoient l'exercice d'un pouvoir discrétionnaire sur requête, la Cour ne peut exercer ce pouvoir que sur requête.
[4] From these provisions, it would appear that the Prothonotary would have been entitled to order the severance of the issues of liability and damages (setting aside for a moment the issue of res judicata) on his own motion. But that is not what he did. He provided that certain documents were to be produced unless a motion under Rule 107 were presented within a limited time, and effectively stayed his order that the documents were to be produced pending the disposition of the motion.
[5] The first task is to clarify the nature of the order which was made. On the face of it, it is simply an order which provides a party the opportunity to bring a motion. It neither compels the bringing of the motion nor dictates the outcome if the motion is brought. It has the same effect as an order granting leave to bring a motion except that it is made at the instance of the Court rather than at the instance of a party.
[6] In this case, the motion contemplated in the order is one which was brought previously, in one case on behalf of Annabel Canada Inc. ("Annabel") and Alfons Derumeaux, and in another case, on behalf of Annabel N.V., Annabel and Alfons Derumeaux. However, in both cases, the motion was dismissed by Prothonotary Lafrenière whose order is in issue here. In these circumstances, the order that the documents must be produced unless a motion is made under Rule 107 was either made in error or must be taken as an order granting leave to bring a motion for severance, which the applicant has done.
[7] The respondent, Microfibres, Inc. ("respondent"), argues that since the Prothonotary dismissed the two previous motions for severance, the order must be taken to have been made in error. There has been no material change in circumstances since the last motion for severance was dismissed, so there is no reason for another motion seeking the same relief. The applicant, Annabel N.V., takes the position that the Prothonotary has comprehensive knowledge of this file as a result of being the case manager and must be taken to have acted in full knowledge of the facts. I am inclined to this view. I am not prepared to accept that the order was made in error. If it were, the proper remedy is a motion for reconsideration. If it was made in full knowledge of the facts, then an order permitting the bringing of a motion which had previously been dismissed must be taken as granting leave to bring that motion.
[8] As a result, I conclude that the Prothonotary's order is an order granting leave to bring the motion which is presently before the Court. I also conclude that the order granting leave was made in the knowledge of the prior dismissal of motions seeking the same relief.
[9] The respondent argues that even if the order was made knowingly, the motion is still caught by the doctrine of res judicata whose effect, the respondent says, is well described in the following quotation:
The provision of the Indian Code of Civil Procedure as to bar by judgment is: "No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court of jurisdiction competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court:" and that is substantially the rule of the common law.
Re Ontario Sugar Co. (1910), 22 O.L.R. 621(Ont. H.C.) at p. 623.
[10] In fact, the nature and operation of res judicata is somewhat more nuanced.
[11] In The Doctrine of Res Judicata (3rd Ed) Spencer Bower, Turner and Handley, Butterworths, London 1996, res judicata is described as follows:
Every res judicata operates as an estoppel. (p. 5)
The rule of estoppel by res judicata was formerly said to be a rule of evidence but has recently been considered to be a rule of public policy. ...It may thus be stated: Where a final judicial decision has been pronounced on the merits by an English or (with certain exceptions) a foreign judicial tribunal with jurisdiction over the parties and the subject matter, any party to such litigation, as against any other party (and in a case of a decision in rem, any person whatsoever, as against any other person) is estopped in any subsequent litigation from disputing such decision on the merits, whether it be bused as the foundation of an action, or as a bar to any claim, indictment, affirmative defence or allegation, provided the party entitled raises the point at the proper time. (pp. 9-10)
[12] The significance of the fact that res judicata operates as an estoppel is that it goes to the equities between the parties. In fact, where the Court is acting in a capacity outside the adversarial system, the doctrine does not apply, according to the The Doctrine of Res Judicata, supra at p.14:
The doctrine [of res judicata] in English law has been influenced by the adversary system. Its essence is that as between opposed parties, an issue, once litigated, should be regarded as forever decided. The doctrine was recognized in Roman law and is a feature of every civilised legal system. Nevertheless, where by statute an English court exercises an inquisitorial function, it is not impeded by res judicata ...
The doctrine that the decision is binding only on the parties is subject to an exception in the case of judgments in rem."
[13] In this case, the Prothonotary was acting in the capacity of case manager, having heard a considerable number of other motions between these parties. In doing so he was exercising the authority conferred on case managers (judges or prothonotaries) by Rule 385:
385. (1) A case management judge or a prothonotary assigned under paragraph 3 8 3(c) shall deal with all matters that arise prior to the trial or hearing of a specially managed proceeding and may
(a) give any directions that are necessary for the just, most expeditious and least expensive determination of the proceeding on its merits;
(b) notwithstanding any period provided for in these Rules, fix the period for completion of subsequent steps in the proceeding;
(c) fix and conduct any dispute resolution or pretrial conferences that he or she considers necessary;and
(d) subject to subsection 5 0(1), hear and determine all motions arising prior to the assignment of a hearing date.
385. (1) Le juge responsable de la gestion de l'instance ou le protonotaire visé à l'alinéa 3 8 3c) tranche toutes les questions qui sont soulevées avant l'instruction de l'instance à gestion spéciale et peut :
a) donner toute directive nécessaire pour permettre d'apporter une solution au litige qui soit juste et la plus expéditive et économique possible;
b) sans égard aux délais prévus par les présentes règles, fixer les délais applicables aux mesures à entreprendre subséquemment dans l'instance;
c) organiser et tenir les conférences de règlement des litiges et les conférences préparatoires à l'instruction qu'il estime nécessaires;
d) sous réserve du paragraphe 5 0(1), entendre les requêtes présentées avant que la date d'instruction soit fixée et statuer sur celles-ci.
[14] The Prothonotary is the designated case manager for this file and has been hearing various motions in that capacity. In making the order granting leave, the Prothonotary was, once again, acting in the capacity of case manager. Given the mandate of the case manager to give such directions as may lead to the most just and expeditious and least expensive resolution of the dispute between the parties, one can conclude that in those circumstances, the case manager is acting outside the adversarial system. This is so because he is entitled to act on his own motion. In my view, Rule 385 gave him the authority to grant leave to bring a motion which would otherwise be caught by the doctrine of res judicata and, in so doing, to set aside the application of res judicata as it would apply to that motion.
[15] However, the policy behind the doctrine of res judicata remains sound: there should be a finality to decisions so that parties are not constantly relitigating the same question. The power of a case manager to revisit a question which has already been decided once is not to be exercised capriciously. In deciding whether the case manager has acted capriciously, the test to be met is not whether the circumstances have changed sufficiently that res judicata does not apply. The test is whether there exist facts from which the case manager could conclude that the process of bringing the case to a fair trial could be assisted by revisiting a particular question. The case manager's views on this question would, in my view, be entitled to considerable deference.
[16] Consequently, the motion for an order under Rule 107 is not barred by the failure of the previous motion seeking the same relief.
[17] I now turn to the merits of the motion. The applicant seeks severance of the issues of quantum and liability on the ground that there are grounds for believing that the claims of Annabel N.V. will fail. If that is so, the effort required to prove damages at the trial of this matter will have been wasted. Better to decide the issues of liability and then wade into damages only if it is necessary. The respondent (plaintiff) resists the idea of severance on the ground that since almost all of the infringement has ceased, the whole thrust of the case is damages and profits. If the respondent must first have a trial on liability and then some years later have a trial on damages, the applicants will have managed to delay the day of reckoning for a considerable time.
[18] As is so often the case, each of the parties makes unwarranted assumptions. Annabel N.V. assumes that the respondent's case turns on the case against it. In fact, the case against the two original applicants is not affected by the arguments raised by Annabel N.V. such as limitations and jurisdiction. To that extent, there is no more reason to assume the case will fail than there is to assume it will succeed. On the other hand, the respondent takes it as a given that it will succeed. The applicants have raised a substantial defence i.e. that the patterns in question were created by independent third parties and were purchased by the applicants. Once again there is no more reason to assume that the claim will succeed than there is to assume it will fail.
[19] In the end, the issue is one of making the best use of the time which has been allocated for the trial of this matter. If one were confident that the parties could get through all the evidence as to liability and damages in one sitting, then there would be little reason to sever the issue of damages. There are potent reasons for concluding this entire matter in one sitting. On the other hand, if the time allocated is insufficient and a further sitting will be required in any event, why not deal with liability and determine whether the subsequent sitting will in fact be required. This is a question which the case manager is uniquely qualified to answer.
[20] In the ordinary course, this motion would have gone to the Prothonotary for a decision. But, as a matter of convenience, it was made returnable the same day as a number of appeals from decisions of the Prothonotary. As a result, it came before a judge. Having disposed of the substantive legal argument as to the application of res judicata to this motion, there is no reason why it cannot be returned to the Prothonotary for a decision on the merits. There will therefore be an order confirming that the applicants' motion is not subject to the application of res judicata and remitting the motion to the Prothonotary for a decision on the merits of the motion.
ORDER
For the reasons stated above, the applicants' motion is not subject to the application of res judicata and the motion is remitted to the Prothonotary for a decision on the merits of the motion.
"J.D. Denis Pelletier"
Judge