Federal Court Decisions

                                 File: T-1096-95

BETWEEN:

     ANDERSEN CONSULTING

                                     Plaintiff

     - and -

     HER MAJESTY THE QUEEN

                                     Defendant

     REASONS FOR ORDER

GIBSON J.:

     By Notice of Motion filed the 11th of April, 1997, the Defendant sought leave to substantially amend her Statement of Defence in this matter which was filed on the 4th of August, 1995. The original Statement of Defence consists of 46 paragraphs. Of those 46 paragraphs, the Defendant proposed to amend or replace 28. Further, the Defendant proposed to add some 58 new paragraphs.

     By Order dated the 27th of February, 1997, the Plaintiff had been granted leave to file an Amended Statement of Claim. Some of the amendments and additions contained in the Amended Statement of Defence were simply responsive to the Amended Statement of Claim. Others were of a technical nature or for purposes of clarification. Others, however, were of a more controversial nature.

     The Defendant objected to the proposed amendments of 8 paragraphs of the original Statement of Claim. The Defendant further objected to the addition of 6 of the proposed new paragraphs. The bases of the Plaintiff's objections were in three categories: first, the Plaintiff alleged that in 10 paragraphs, the Defendant proposed to withdraw admissions contained in 6 paragraphs of the original Statement of Defence; secondly, the Plaintiff alleged that in 4 paragraphs, the Defendant alleged a secondary and improper motivation on the part of the Plaintiff in its conduct leading up to the litigation; and thirdly, the Plaintiff alleged that the Defendant in one paragraph made allegations which breached the solicitor-client privilege of the Plaintiff.

     In Canderel Ltd. v. Canada¹, Décary J.A. wrote at pages 8 and 9:

With respect to amendments, it may be stated, ...that while it is impossible to enumerate all the factors that a judge must take into consideration in determining whether it is just, in a given case, to authorize an amendment, the general rule is that an amendment should be allowed at any stage of an action for the purpose of determining the real questions in controversy between the parties, provided, notably, that the allowance would not result in an injustice to the other party not capable of being compensated by an award of costs and that it would serve the interests of justice. [citations omitted]

     As to amendments which would have the effect of withdrawing admissions, Mr. Justice Décary wrote at page 14:

The case-law is clear; an admission may be withdrawn, but with leave of the Court, and we simply cannot find in this instance that leave was implicitly sought, assuming for the sake of discussion that it could have been so.

     Here, it is beyond doubt that the Defendant was seeking to withdraw admissions. Leave was not sought to do so. I am not prepared to find an implied request for leave in the motion for leave to file the amended defence. Nor was affidavit evidence filed on the Defendant's motion to explain or justify withdrawal of admissions. Counsel simply advised the Court that, through the discovery process, the Defendant had become more familiar with its case and had determined that certain admissions on the face of its original Statement of Defence were not justified.

     To return to the general principles cited from Canderel that govern amendment of pleadings, I conclude that the proposed amendments withdrawing admissions, even at this relatively early stage of this litigation, would result in an injustice to the Plaintiff not capable of being compensated by an award of costs. Thus, proposed amendments to the Statement of Defence that would have the effect of withdrawing admissions contained in the original Statement of Defence must be rejected.

     It is of interest to note that the Federal Court Rules² do not deal directly with the withdrawal of admissions in pleadings or with the requirement of consent for any such withdrawal. However, Rule 411 provides:

411.(1)      A party shall not in any pleading make any allegation of fact inconsistent with the previous pleading of his or raise any new ground or claim as an alternative to, or a substitute for, a ground or claim in a previous pleading.

(2)      Paragraph (1) shall not be taken as prejudicing the right of a party to amend, or apply for leave to amend, his previous pleading so as to plead the allegations or claims in the alternative.

I am satisfied that an amendment to a pleading that purports to withdraw an admission previously made amounts to an attempt to make an allegation of fact that is inconsistent with the admission contained on the face of the earlier pleading.

     I turn then to those proposed amendments where the Plaintiff alleges that the Defendant is seeking leave to plead an improper motive or in a manner that negatively impacts on the Plaintiff's solicitor-client privilege. Examples of each follow:

12.2      The Plaintiff entered the competition and remained in the competition for the Implementation Contract purportedly with the objective of being selected to perform the Implementation Contract, but with a second, unstated objective of making a claim in damages if it was not so selected.

.....

25.      The Plaintiff expressly accepted amendment #1 and did not expressly accept amendments #2, #3 #4 on the advice of counsel that this would weaken its case, ...              [underlining added by me for emphasis]

In Amsted Industries Inc. v. Wire Rope Industries Ltd.³, the Federal Court of Appeal upheld a decision of the Trial Division striking out certain paragraphs of a Statement of Defence in an action for patent infringement. The Court quoted with approval from the decision of the motion's judge who in turn cited CAT Productions v. Macedo⁴ for the proposition that a pleading of intention is usually regarded as immaterial and a litigant's private motives are not generally enquired into. The motion's judge continued in the portion of his reasons quoted by the Federal Court of Appeal:

Also, the defendant pleads the "motive" of the plaintiff which is totally irrelevant. How does that help in any way or how is it determinative of the issues here...? ....

It would have the effect of unnecessarily lengthening the trial, and yet have little if any relevance.

I am satisfied that the same can be said here of the proposed amendments that would plead motive and that would potentially impact negatively on the Plaintiff's solicitor-client privilege. In the result, those portions of the proposed Amended Statement of Defence that plead motive or refer to the Plaintiff acting on advice of counsel will not be allowed.

     In all other respects, I am prepared to grant leave to the Defendant to file the Amended Statement of Defence proposed.

     It would be quite inappropriate for me to attempt to undertake a revision of the proposed Amended Statement of Defence to give effect to these reasons. Consequently, these reasons will be distributed and counsel for the Defendant, in consultation with counsel for the Plaintiff, will be invited to submit a revised Amended Statement of Defence that reflects these reasons. On receipt of such an Amended Statement of Defence, together with advice from counsel for the Plaintiff that it effectively reflects these reasons, an order will go. If agreement cannot be reached between counsel, the issue may be spoken to at the next case management conference in this matter.

                 ________________________

                         Judge

Ottawa, Ontario

April 21, 1997

__________________

     ¹      [1994] 1 F.C. 3 (F.C.A.)

     ²      C.R.C. 1978, c. 663

     ³      (1990), 32 C.P.R. (3d) 334 (F.C.A.)

     ⁴      (1985), 5 C.P.R. (3d) 71