Federal Court Decisions

Date: 20060920

Docket: T-898-05

Citation: 2006 FC 1127

Ottawa, Ontario, September 20, 2006

PRESENT:     The Honourable Mr. Justice Phelan

BETWEEN:

HYUNDAI AUTO CANADA,

a division of HYUNDAI MOTOR AMERICA

Plaintiff

and

CROSS CANADA AUTO BODY SUPPLY (WEST) LIMITED,

CROSS CANADA AUTO BODY SUPPLY (WINDSOR) LIMITED, and

AT PAC WEST AUTO BODY PARTS ENTERPRISE LTD.

Defendants

REASONS FOR ORDER AND ORDER

[1]               The Defendants appealed the Order of Prothonotary Milczynski and moved for alternate relief; the details of the relief are:

(i)         an Order setting aside the Order of the Honourable Madam Prothonotary Milczynski, dated March 6, 2006, insofar as the Order dismissed the Defendants’ motion requesting the striking of paragraph 4 from the Plaintiff’s Reply and Defence to Counterclaim, relief from divulging the source of the Defendants’ supplier of Hyundai parts, or, in the alternative, a “counsel’s eyes only” confidentiality order;

(ii)        an Order striking out paragraph 4 of the Plaintiff’s Reply and Defence to Counterclaim;

(iii)       an Order relieving the Defendants from the production of documents disclosing information as to the identity of the source from which it obtained Hyundai replacement parts and accessories;

(iv)       in the alternative, an Order that all documents produced by the Defendants which disclose, either directly or indirectly, the identity of the source of the Defendants’ Hyundai replacement parts and accessories, be designated as confidential and that access to the documents and the information contained in the documents be restricted to the Plaintiff’s external counsel only, in accordance with the Confidentiality Order attached to the notice of motion as Schedule “A”; and

(v)        an Order that costs be payable to the Defendants at all levels.

[2]               As to the issue of striking out paragraph 4 of the Reply and Defence to Counterclaim, Prothonotary Milczynski’s decision must be shown to be clearly wrong in that she exercised her discretion based upon a wrong principle. This is the standard on appeal as enunciated in Merck & Co. v. Apotex Inc., [2004] 2 F.C.R. 459 (F.C.A.).

[3]               Prothonotary Milczynski applied the proper legal test that it was not plain and obvious that the allegation is doomed to fail at trial.

[4]               With respect to the Defendants’ request to be relieved of divulging its source or supplier of parts or, alternatively, that the information be subject to a “counsel’s only” confidentiality order, the Defendants argued that Prothonotary Milczynski erred because the information is irrelevant to a “grey market” defence.

[5]               On the issue of relevance, again Prothonotary Milczynski has not been shown to be clearly wrong. The rule on production of documents is that the whole of the document is produced.

[6]               It would appear that the real concern that the Defendants have is that the Plaintiff would use the information disclosed in the production of documents and the discovery process to adversely affect its business or exact some form of retribution.

[7]               The Defendants have not made out a case for a confidentiality order under the test set down by the Supreme Court of Canada in Sierra Club of Canada v. Canada (Minister of Finance), [2002] 2 S.C.R. 522.

[8]               For these reasons the appeal of Prothonotary Milczynski’s Order of March 6, 2006 is dismissed subject to the following comment.

[9]               There is a common law implied undertaking that information/documents disclosed in the course of the production and discovery process is to be used only for the purposes of the relevant litigation. That undertaking is a term of the Order dismissing this appeal.

[10]           Therefore, this appeal is dismissed with costs.

ORDER

THIS COURT ORDERS THAT the appeal of Prothonotary Milczynski’s Order of March 6, 2006 is dismissed with costs on terms that the implied undertaking that information and documents disclosed in the course of litigation are to be used only for the purpose of the litigation is applicable to the parties.

“Michael L. Phelan”

FEDERAL COURT

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                          T-898-05

STYLE OF CAUSE:                          HYUNDAI AUTO CANADA, a division of HYUNDAI MOTOR AMERICA

                                                            and

                                                            CROSS CANADA AUTO BODY SUPPLY (WEST) LIMITED, CROSS CANADA AUTO BODY SUPPLY (WINDSOR) LIMITED, and AT PAC WEST AUTO BODY PARTS ENTERPRISE LTD.

PLACE OF HEARING:                    Toronto, Ontario

DATE OF HEARING:                      May 1, 2006

REASONS FOR JUDGMENT:       Phelan, J.

DATED:                                             September 20, 2006

APPEARANCES:

SOLICITORS OF RECORD: