Cercast Inc. and Vestshell Inc. (Plaintiffs)
v.
Shellcast Foundries Inc., Bodo Morgenstern and
Vera Stibernik (Defendants)
Trial Division, Walsh J.—Montreal, P.Q., June
11; Ottawa, June 13, 1973.
Practice—Party refusing discovery pending disposition of
appeal from refusal to stay proceedings in action—Rule
447—Obligation to discover.
A previous motion by defendants to strike out portions of
the statement of claim in this action was dismissed and
defendants appealed. Pending the disposition of the appeal
defendants applied for a stay of proceedings in the action
and this being refused appealed from the refusal. Pending
disposition of that appeal defendants refused discovery of
documents under Rule 447 on the ground that to do other
wise would constitute acquiescence in the judgment and
jeopardize their appeal therefrom.
Held, their objection was ill-founded.
MOTION.
COUNSEL:
Kent Plumley for plaintiffs.
J. Clark, Q.C., and M. E. McLeod for
defendants.
SOLICITORS:
Gowling and Henderson, Ottawa, for
plaintiffs.
Ogilvy, Cope, Porteous, Hansard, Marler,
Montgomery and Renault, Montreal, for
defendants.
WALSH J.—This is a motion by plaintiff under
the provisions of Rule 460 of the Federal Court
Rules to strike out the statement of defence
filed on behalf of Shellcast Foundries Inc. and
Bodo Morgenstern on March 5, 1973 and enter
judgment for plaintiff Cercast Inc. in accord
ance with the statement of claim filed January
24, 1972 or, in the alternative, to require the
said defendants to file a list of documents in
accordance with Rule 447 on or before June 14,
1973 on the grounds that the said defendants
have failed to file such list of documents as
required by the said Rule and refuse to file such
a list. The motion also asks that defendants
Shellcast Foundries Inc. and Bodo Morgenstern
be required under Rule 448 and Rule 451 to file
and serve on the plaintiff by June 18, 1973 a list
of documents that are or have been in the
possession, custody or power of defendants
relating to any matter in question in the cause
and that the defendants be ordered to make and
file an affidavit verifying such list and in par
ticular to include any correspondence, memo
randa, writings, draft licences, licences, techni
cal information, manuals, drawings and
specifications which the defendants have had
with North American and European companies
as potential or prospective licensees and, in
particular, a licence agreement with the Dutch
company N.V. Aluminum Industrie Vaassen
and that the said documents be produced by the
defendants and deposited in Court for inspec
tion by plaintiff or that inspection be allowed in
accordance with Rules 453 and 455 including
the making of copies thereof by plaintiff. Plain
tiff further asks under Rule 456 that the licence
agreement with N.V. Aluminum Industrie
Vaassen of June 1972 and such like licence
agreements, correspondence, memoranda, writ
ings, draft licences, licences, technical informa
tion, manuals, drawings and specifications
which the defendants have had with North
American and European companies be pro
duced to the Court for inspection by the Court
and the plaintiff.
Defendants contest this motion and admit that
they have failed to file and, in fact, have refused
to file such list of documents and affidavit
within the legal delays in view of the fact that
they have appealed the judgment of this Court
of April 30, 1973 refusing to grant a stay of
proceedings until judgment has been rendered
by the Supreme Court of Canada in defendants'
appeal from the judgment of Pratte J. dated
March 14, 1972 dismissing defendants' motion
to strike out certain paragraphs and conclusion
from plaintiff's statement of claim on the
grounds that this Court does not have jurisdic-
tion over the subject-matter thereof as section 7
of the Trade Marks Act is unconstitutional.
Before the judgment of April 30, 1973, counsel
for defendants had written counsel for plaintiff
on March 26, 1973 stating in part as follows:
Further to the agreement which we reached following our
appearance before Chief Justice Jackett on February 28,
1973, I am in the course of preparing an application for a
stay of proceedings in the present matter so I do not expect
to be providing you with Defendants' list of documents in
the near future.
Following the judgment refusing to grant the
stay of proceedings, counsel for defendants
again wrote plaintiff's counsel on May 18, 1973
in part as follows:
We have received instructions from our clients with respect
to our future course of action in the present matter. We
intend to pursue the appeal from the decision of Mr. Justice
Walsh of April 30, 1973 before proceeding on the merits in
the present action. As you are aware from the remarks made
by the Chief Justice of the Federal Court of Appeal during
the hearing on February 28, 1973, if we were to proceed on
the merits while the appeal was pending, we would run the
risk of losing our right to appeal because we would have
acquiesced in the judgment of Mr. Justice Walsh from which
we have appealed. Consequently, we can neither obtain
copies of the documents listed in your List of Documents
nor can we proceed with Mr. Morgenstern's Examination on
Discovery.
While the motion now before me is not a
motion by defendants seeking a stay of proceed
ings pending the decision of the appeal from the
judgment of April 30, 1973 refusing to grant a
stay of proceedings pending the decision of the
appeal to the Supreme Court on the constitu
tional issue, defendants are seeking to obtain
the same results, namely obtaining further delay
before undertaking any further necessary and
useful proceedings enabling the case to be set
down as soon as possible for trial on the merits,
and in fact are taking the law into their own
hands by refusing to comply with the judgment
of April 30, 1973 refusing a stay of proceedings
and ordering the case to proceed, on the sole
ground that they have appealed this judgment.
In other words, they are taking the position that
they are entitled to an automatic stay of pro
ceedings whenever a judgment refusing to grant
such a stay has been appealed. Such a position
is clearly untenable since an appeal from a
judgment does not automatically stay proceed-
ings which can only be stayed as a result of an
order from the Court to this effect.
In fairness to defendants it must be pointed
out that when they appealed an earlier judgment
of January 30, 1973 refusing to grant a stay of
proceedings pending the outcome of the afore
mentioned appeal of the judgment of Pratte J.,
which judgment of January 30 directed defend
ants to plead to the action on the merits within
ten days of the filing of certain particulars
directed to be furnished by plaintiff, and
defendants did in due course file their plea
pursuant to the said judgment, it was pointed
out to them by the Chief Justice when they
appeared before him seeking directions in con
nection with that appeal and other appeals, that
by complying with the judgment and filing their
plea they may have been deemed to have
acquiesced in the judgment and hence lost their
right to appeal from same. They are now afraid
that the same situation will prevail if they
comply with the judgment of April 30, 1973 and
on plaintiff's insistence file a list of documents
and affidavit and subsequently permit defendant
Morgenstern to be examined for discovery, all
of which are admittedly necessary and useful
proceedings which should be done without
delay if proceedings in the action are not stayed.
There is admittedly good jurisprudence to the
effect that acquiescence in a judgment may
deprive the party acquiescing from continuing
with an appeal against same. When the judg
ment is not a final judgment, however, on the
merits of the matter but merely a procedural
judgment, as in this case a refusal to grant a
stay of proceedings, defendants' position would
lead of necessity to the conclusion that every
time such a stay is refused the same result can
nevertheless be obtained immediately and
automatically by the simple procedure of
launching an appeal against the judgment in
question. If proceedings were stayed every time
an appeal is launched against one of the many
interlocutory decisions which are rendered in a
case such as the present one, some of which
appeals could with leave proceed to the
Supreme Court, it would be possible for defend-
ants to obtain delays running into many years
before the proceedings could be brought to trial
on the merits and the ends of justice would thus
be frustrated. This would be an abuse of the
legal process.
Plaintiff's motion is therefore well-founded.
However, it was alleged by counsel for defend
ants that the appeal book has been prepared and
their memorandum of fact and law has been
filed and that they have been given some indica
tion that a hearing on the appeal against the
judgment of April 30, 1973 may take place
before the end of this month. This is speculative
however as plaintiff's memorandum of fact and
law has not yet been filed and no date has been
set for the hearing. Since I would be disposed to
grant defendants a delay of two weeks in any
event to provide the list of documents and
affidavit required, no prejudice will therefore be
caused to plaintiff if I fix June 26, 1973 as the
date of filing these documents. If the appeal has
been decided by that date in favour of defend
ants then they will, of course, have the stay of
proceedings they seek and will be relieved of
the obligation of filing such list of documents
and affidavit at that time. If, on the other hand,
the appeal is dismissed then they will have to
comply with the judgment which I will render.
If, however, it appears likely that it will be
impossible to have the appeal heard before the
autumn then defendants will be compelled to
file the said list of documents and affidavit by
June 26, 1973 as directed. Finally, if the appeal
has been heard but not disposed of by that date
or if a date for hearing of same immediately
thereafter has been fixed so that it appears that
no grave prejudice will be caused to plaintiff by
further delay, defendants can apply on June 26
or such other date as may be fixed by the Court,
for an extension of the delay.
With respect to the nature of the list of docu
ments to be provided it is evident that they
should be relevant to the issues before the
Court and not of a vague and generalized nature
dealing with the entire investment casting indus
try and the techniques used therein. If, after
examination for discovery of defendant Mor-
genstern, plaintiff finds that additional docu
ments brought to its attention as a result of this
examination are required an order can be sought
for the production of same. Plaintiff, however,
cannot use Rules 448 and 451 to require
defendants to refer to and produce documents
the nature of which plaintiff cannot specify and
of which plaintiff has no knowledge in order to
enlarge the scope of the litigation.
Judgment will therefore be rendered as
follows:
1. Defendants are required to file and serve on
plaintiff in accordance with the provisions of
Rule 447 a list of documents of which they have
knowledge which may be used in evidence
(a) to establish or to assist in establishing any
allegation of fact in any pleadings filed by
them, or
(b) to rebut or to assist in rebutting any alle
gations of fact in any pleadings filed by
plaintiff.
2. The said list shall include all documents that
are or have been in the possession, custody or
power of defendants relating to the matter in
question in this cause and shall be accompanied
by an affidavit verifying such list.
3. Such list shall include the licence agreement
made in June 1972 by defendants with N.V.
Aluminum Industrie Vaassen and any corre
spondence, memoranda, writings, draft licences,
licences, technical information, manuals, draw
ings and specifications which defendants may
have written to, made with or provided for the
use of any North American and European com
panies as potential or prospective licensees
whether in North America or Europe.
4. The documents in defendants' possession
referred to in the said list shall be produced by
the defendants and deposited in the Court for
inspection by plaintiff or that inspection of such
documents be allowed in accordance with Rule
453 and Rule 455 including the making of
copies thereof by plaintiff.
5. The said list and affidavit shall be served on
plaintiff and filed in Court by June 26, 1973
under reserve of the right of the Court to extend
said delay should it appear that the appeal by
defendants against the judgment of April 30,
1973 has been set down for hearing immediately
thereafter or has been heard and is under
advisement.
Costs of this motion shall be in the event of
the cause.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.