Date: 20040511
Docket: T-1787-03
Citation: 2004 FC 689
BETWEEN:
MAXIMUM SEPARATION SYSTEMS INC.
Plaintiff
(Defendant by counterclaim)
- and -
SOLOMETEX, INC.,
GAREX INDUSTRIES LTD. and
E.G. PLUMBIMG CO. LTD.
Defendants
(Plaintiffs by counterclaim)
[1] At issue, for the most part on this motion, is the timing of examination for discovery of the Plaintiff's Dr. Chilibeck: the Plaintiff contends that he is to be discovered in May, 2004, before pending surgery. The Defendants respond that the intent was to exchange and consider documents before the surgery, with discovery to take place after convalescence. Each side relies on its own interpretation of a Consent Order of the Court.
CONSIDERATION
[2] The time and place for discoveries is usually negotiated by means of consultation between counsel. While various rules permit the Court to become involved in this process, that is usually not necessary, although from time to time the Court may formalize a discovery schedule with a Consent Order.
[3] In the present instance appropriate negotiation and consultation appear to have taken place, culminating in a draft order, prepared by a former counsel for the Plaintiff, to which the Defendants consented, resulting in the 5 April 2004 Consent Order put into effect by Mr. Justice Russell. The Order provided in part:
(3) The parties shall use their best efforts to schedule at least initial examinations for discovery as soon as reasonably possible following 30 April 2004, with due allowance for expected surgery and recuperation therefrom of Dr. Richard Chilibeck (to be examined as the representative of the Plaintiff).
This wording is identical to the consent prepared by former counsel for the Plaintiff and signed by him and by present counsel for the Defendants. The reference here is to pending surgery to be undergone by the Plaintiff's discovery witness and an allusion to some commercial urgency in getting on with the litigation, but I believe not the magnitude of urgency which would dictate interlocutory injunctive relief. Counsel for the Defendants has a schedule which does not permit him to examine Dr. Chilibeck between now and the date of the surgery.
[4] The portion of the Order set out above which is, as I say, a Consent Order arrived at after negotiating the objective, is viewed as ambiguous as to the time of the discovery, before or after the surgery. The result is the present motion.
[5] The Plaintiff's motion asks, among other things, that the Court set a discovery date for Dr. Chilibeck before surgery which is presently scheduled for 4 June 2004, because Dr. Chilibeck will, following surgery, require "at least about a one to two month post-operative recovery period" before he can undergo the discovery process.
[6] Neither side should necessarily be faulted for the present state of affairs, which arose out of negotiating the discovery process between present counsel for the Defendants and former counsel for the Plaintiff. Here I refer to a 30 March 2004 memo from Robert Barrigar, Q.C., for the Plaintiff, following a telephone conversation with Mr. McManus, for the Defendants, when the 5 April 2004 Order of Mr. Justice Russell was in the offing:
He [Mr. McManus] could not arrange to examine Dr. C before the end of the month but would undertake to examine him as soon as convenient following his convalescence.".
This concept, post-convalescence discovery, is reflected in a 1 April 2004 letter from Mr. McManus, for the Defendants, to Mr. Barrigar for the Plaintiff:
In respect of the oral discoveries, I indicated that these should be scheduled as soon after Dr. Chilibeck's recovery as is possible by which time we will have had an opportunity to analyze each other's productions.
[7] The consent, based on the earlier telephone conversation and the 1 April 2004 letter, which consent appears to have been drafted by Mr. Barrigar, contains the wording now set out in the 5 April 2004 Order requiring the parties to use their best efforts to schedule discoveries as soon as reasonably possible, after 30 April 2004, making due allowance for expected surgery and due recuperation of Dr. Chilibeck.
[8] Probably the officious bystander would have received short shrift from both sides if, when the consent was prepared, he or she had asked whether the discovery was to be before surgery, for then there would have been no need for the qualification following "with due allowance for expected surgery and recuperation therefrom". Although, at the very least, not only might Mr. Barrigar have drafted the consent with a little more thought, but also Mr. McManus might have read the consent, before signing, with a more discerning eye. But we now have the Consent Order, an Order which the parties submit might be read in two quite different ways.
[9] Had the Order been drafted by the Court, after full argument, it would be quite possible to go back to the presiding judge for clarification of the perceived ambiguity. As it is, the Court merely gave legal force to what was negotiated, agreed and drafted by or on behalf of counsel for the parties: in effect the parties said, to the Court, here is what we have mutually agreed and contracted to do.
[10] The Courts have, for many years, considered extrinsic evidence as an aid to interpret ambiguous contracts, at one time taking a fairly limited or restricted approach: see for example Shore v. Wilson (1892) 9 C.L. & Fin 355 at 565-566, 8 E.R. 415 at 532-533, a decision of Chief Justice Tindal. More currently, a Court is entitled to look at the facts about which the parties were negotiating, or the surrounding circumstances, background or context, as mentioned in part in Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 1 W.L.R. 989 at 995-996 (H.L.), where Lord Wilberforce observed that:
No contracts are made in a vacuum: there is always a setting in which they have to be placed. The nature of what is legitimate to have regard to is usually described as "the surrounding circumstances" but his phrase is imprecise: it can be illustrated but hardly defined. In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of th transaction, the background, the context, the market in which the parties are operating.
[11] Fridman on the Law of Contract, 14th Edition, 1994, Carswell, at pages 487 and 488, takes a slightly broader view, noting that a Court, in interpreting ambiguous wording, may look at the conduct of the parties, including statements made before the written agreement, at the circumstances when the agreement is made and at the subsequent conduct of the parties, relying upon C.N.R. v. C.P. Ltd. [1979] 1 W.W.R. 358 at 372-373 (B.C.C.A.):
The types of extrinsic evidence that will be admitted, if they meet the test of relevance and are not excluded by other evidentiary tests, include evidence of the facts leading up to the making of the agreement, evidence of the circumstances as they exist at the time the agreement is made and, in Canada, evidence of subsequent conduct of the parties to the agreement. However, to say that these types of evidence become admissible where two reasonable interpretations exist is not to say that the evidence, if tendered, must be given weight. In the case of evidence of subsequent conduct the evidence is likely to be most cogent where the parties to the agreement are individuals, the acts considered are the acts of both parties, the acts can relate only to the agreement, the acts are intentional and the acts are consistent only with one of the alternative interpretations. Where the parties to the agreement are corporations and the acts are the acts of employees of the corporations, then evidence of subsequent conduct is much less likely to carry weight. In no case is it necessary that weight be given to evidence of subsequent conduct. In some cases it may be most misleading to do so and it is to this danger that allusions are made throughout the recent English cases ... In England the risks have been considered sufficiently grave that the possibility of illumination from the use of subsequent conduct has been ruled out. In Canada, they have not, but those risks must be carefully assessed in each individual case before determining to give weight to subsequent conduct.
On the basis of the C.N.R. case I may look at the facts leading up to the making of the consent agreement, the circumstances when the agreement was made and the subsequent conduct of the parties, but I ought to be careful in assessing the weight to be given to subsequent conduct.
[12] In the present instance, the Consent Order on its face perhaps, to some degree, being ambiguous, or at least the parties reading it as such, I may look at documentary evidence leading up to the drafting and including the signing of the consent and, to a lesser degree, at what has occurred since.
[13] To begin, Mr. Barrigar's understanding of the arrangement, from the Plaintiff's point of view, as set out in his memo of 30 March 2004, was that discovery would take place "as soon as convenient following his convalescence", referring to Dr. Chilibeck's convalescence after surgery. This is reflected in the 1 April 2004 letter, confirmation of that conversation from Mr. McManus, on behalf of the Defendants, to Mr. Barrigar, that all discoveries "should be scheduled as soon after Dr. Chilibeck's recovery as is possible", pointing out that by then each party would have had an opportunity to analyse the other side's production of documents.
[14] I have also considered and I think it likely, that Mr. McManus gave only cursory thought to putting his signature on the consent, relying upon the other side to draft an agreement which would clearly reflect what was set out in the 31 March telephone call and the 1 April letter.
[15] I put little weight in the 22 April 2004 letter from Mr. Cooper, of the solicitors for the Plaintiff, this letter post dating the Consent Order. There Mr. Cooper merely refers to the Consent Order and requests discovery dates for Dr. Chilibeck in May. One might also take it, by implication and from Mr. Cooper's email of 30 April 2004, that he had no direct knowledge of what was discussed among the senior counsel on the file, Messrs. Sharpe, McManus, Urbanek and Barrigar.
[16] Taking all of this information into consideration the consent and therefore the 5 April 2004 Order should be read in the sense that examination for discovery will take place as soon as is reasonably possible after the surgery and after the recuperation by Dr. Chilibeck. This may put the discovery into late summer or even early fall. However that is not inconsistent with the fact that the Plaintiff has not been concerned enough, from a commercial urgency point of view, to request any interim injunctive assistance from the Court.
[17] The Plaintiff's motion also seeks that the Court set a time, place, manner and the conduct money as to the discovery of the Defendants' witness who will now be not Mr. Owen Boyd, within this jurisdiction, but rather Mr. Ted Shields, of Northborough, Massachusetts. The Defendants advise that discovery must be in Northborough, Massachusetts. This raises a number of problems, including the ability of Canadian lawyers to practise law in the United States, outside of the use of a commission and American attorneys as agents, an expensive undertaking. However I am adjourning this portion of the motion in the expectation that by late summer or early fall the parties may be able to come to an arrangement for the examination of Mr. Shields, for as Mr. McManus puts it, in his 6 May 2004 letter, the Defendants are willing to discuss reasonable terms for joint discoveries in September. If required the Plaintiff may reset the adjourned portion of this motion after they have had discussions as to joint discoveries in late summer or fall.
[18] In the event that costs are not dealt with, for this motion as a whole, if and when it is reset and heard in the fall, costs for the present portion of the motion shall be to the Defendants, payable at the end of the day.
(Sgd.) "John A. Hargrave"
Prothonotary
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1787-03
STYLE OF CAUSE: Maximum Separation Systems, Inc.
- and -
Solmetex, Inc., Garex Industries Ltd. and
E.G. Plumbing Co. Ltd.
PLACE OF HEARING: Vancouver
DATE OF HEARING: May 10, 2004
REASONS FOR ORDER : HARGRAVE, P.
DATED: May 11, 2004
APPEARANCES:
Mr. Ted Urbanek FOR PLAINTIFF
Mr. Terrance McManus FOR DEFENDANTS
SOLICITORS OF RECORD:
Barrigar Intellectual Property Law FOR PLAINTIFF
(Vancouver)
Ogilvy Renault FOR DEFENDANTS
(Ottawa)