Date: 19990810
Docket: T-215-99
BETWEEN:
PC CONNECTION, INC.,
Plaintiff,
- and -
MPC TECHNOLOGIES INC.,
Defendant.
REASON FOR ORDER
MR. JOHN A. HARGRAVE,
PROTHONOTARY
[1] These reasons arise out of the Plaintiff"s successful motion to have an amended defence, containing a new pleading, a counterclaim, removed from the Court"s file pursuant to Rules 74(1) as a document improperly filed. In this instance the Defendant believed it might file an amended defence and counterclaim as a right and without leave of the Court because, while pleadings were deemed closed, the Plaintiff had not thought it necessary to plead to the defence with a reply. I have decided that on close of pleadings there is no longer a right to amend without leave.
BACKGROUND
[2] The Plaintiff"s claim is for infringement of its registered trademark, PC Connections. The Defendant filed a pro forma defence in this infringement action on 25 March 1999. The Plaintiff did not file a reply. The parties proceeded with production of documents.
[3] On 26 July 1999 the Defendant filed an amended defence. The amended defence contained a new pleading, a counterclaim, seeking to have both the trademark at issue and a second trademark used by the Plaintiff, MACConnection, modified pursuant to section 57 of the Trademark Act, to delete any reference to retail store service. The Plaintiff objects to the amended defence and counterclaim on the grounds that the time for amendment without leave has long since run out. Nor is the Plaintiff prepared to consent to the amendment or to the counterclaim. I am persuaded this denial of consent is not mere caprice, but based, at least in part, on the legitimacy of the counterclaim in view of the Defendant"s concurrent proceedings under section 45 of the Trademark Act , by which a trademark may be expunged for lack of use.
ANALYSIS
[4] There are two distinct issues, being whether a defence may be amended to add, for the first time, a counterclaim and whether a party may amend without leave, under Rule 200, after pleadings have automatically closed by application of Rule 202.
THE COUNTERCLAIM
[5] The propriety of the counterclaim is the simpler issue of the two to decide. A counterclaim embodies a separate stand-alone action. It is a claim which a defendant in an initial action might bring by statement of claim and, conceivably, have heard at the same time as the initial action. However, the Court"s Rules allow such a separate stand-alone action to be grafted onto an existing action by means of a counterclaim.
[6] The Rules are specific as to the bringing of a counterclaim. Rule 189(2) requires, in the case of a claim against a plaintiff, that it "... shall be included in the same document as the statement of defence". In effect this is a counterclaim as a right, but on a schedule so as not to unduly delay a plaintiff"s initial action.
[7] Rule 207(1) requires, in the instance of a counterclaim against a plaintiff, that the statement of defence and counterclaim be served and filed within the time required by Rule 204. Rule 204 requires service and filing, in Canada, of the defence and counterclaim within 30 days of service of the statement of claim.
[8] The Defendant, having missed the opportunity to graft its counterclaim onto the defence, as a right, must now apply to the Court for leave to add a counterclaim.
[9] Removing the counterclaim of MPC Technologies Inc. is consistent with Madame Justice Reed"s assertion, in Faulding Canada Inc. v. Pharmacia S.p.A. (1998), 154 F.T.R. 209 at 210, that a right to amend a defence, to take into account an amendment to the statement of claim, "... did not encompass the right to add a whole new cause of action to the proceedings.". Madame Justice Reed struck out the counterclaim because leave had not been sought.
THE AMENDED DEFENCE
[10] The Defendant"s position is that it was able to take proper advantage of Rule 200 granting amendment as a right because the Plaintiff had not pleaded to its pro forma defence. Rule 200 provides in part:
| ... a party may, without leave, amend any of its pleadings at any time before another party has pleaded thereto... [emphasis added] |
The Defendant relies on the apparent plain wording of the Rule and goes on to point out that if amendment under Rule 200 was not intended to be an open-ended and ongoing right, the Rule ought to have contained an additional provision so that it would allow amendment:
| ... at any time before another party has pleaded thereto, or until pleadings are closed, which ever comes first... |
[11] The difficulty that I have with the Defendant"s argument is that where a Plaintiff decides not to file a reply, here a pro forma reply to pro forma defence, the substance of the defence would be open to change even to the eve of trial. To accept that Rule 200 allows amendments at any late date would also lessen the usefulness of parts of Rule 202 which automatically closes pleadings in the following circumstances:
| 202. Close of pleadings - Pleadings are closed |
| (a) where a statement of defence has not been filed within the period set out in rule 204, on the expiration of that period; |
| (b) on the filing of a reply; or |
| (c) on the expiration of the time for filing a reply. |
The deemed close of proceedings is vital in that it creates, by implication, a joinder of issue, but equally important it provides a reference date for other procedures. Rule 202 either starts time running or is a precondition for production of documents, settlement discussions, discovery, admissions of fact and the pre-trial conference. The close of pleadings provision puts some certainty into the scheduling of these steps. The alternative, ongoing amendment to the last document filed, be it a defence or a reply, would create intolerable uncertainty and lack of finality.1 To leave all of these procedural steps in a state of flux is unreasonable.
[12] To have an open-ended right to amend the last pleading filed, at any time during a proceeding, would, in addition to confusion, result in amendment without the protection to the rights of other parties that is afforded by Rule 75.
CONCLUSION
[13] It is perhaps unfortunate that Rule 200 is seemingly open-ended as to time. I would contrast Rule 200 with English Orders 20/1 and 20/3, which allow amendment to a writ and to a statement of claim at any time before pleadings are closed and with British Columbia Rule 24(1) which allows an amendment, as a right, at any time before notice of trial has been given. However, Rule 200 must be read in conjunction with the other Federal Court Rules which limit it and which govern the timing for the litigation process. Rule 200 must be interpreted in a way that will allow the Court"s process to work effectively. Indeed, the Court always has the implied jurisdiction to make its procedure work: see for example, Margem Chartering Co. Inc. v. The Bocsa , [1997] 2 F.C. 1001 at 1014-15. There must therefore be some point at which amendment as a right is terminated. Close of pleadings is a sensible point, otherwise discoveries and particulars would be in terms of a moving target. Thus, once pleadings are closed the right to amend without leave must be foreclosed.
(Sgd.) "John A. Hargrave"
Prothonotary
August 10, 1999
Vancouver, British Columbia
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS ON THE RECORD
COURT FILE NO.: T-215-99
STYLE OF CAUSE: PC CONNECTION, INC.
v.
MPC TECHNOLOGIES INC.
PLACE OF HEARING: VANCOUVER, B.C.
DATE OF HEARING: August 9, 1999
REASONS FOR ORDER OF MR. JOHN A. HARGRAVE,
PROTHONOTARY
DATED: August 10, 1999
APPEARANCES:
| Mr. Paul Smith for Plaintiff |
| Mr. Clark Ledingham for Defendant |
SOLICITORS OF RECORD:
Paul Smith Intellectual
| Vancouver, BC for Plaintiff |
Russell & DuMoulin
| Vancouver, BC for Defendant |
1 Mr. Justice Noel, as he then was, used this idea of finality when commenting on the effect of Rule 431 predecessor to the present Close of Proceedings Rule 202, in Samsonite Canada v. Costco Wholesale Corp. (1993), 62 F.T.R. 278 at 283.