Canadian Tire Corp. Ltd. v. P.S. Partsource Inc.

Canadian Tire Corp. Ltd. v. P.S. Partsource Inc. Court (s) Database Federal Court of Appeal Decisions Date 2001-02-08 Neutral citation 2001 FCA 8 File numbers A-434-00 Notes Digest Decision Content Date: 20000208 Docket: A-434-00 Neutral citation: 2001 FCA 8 CORAM: RICHARD C.J. ROTHSTEIN J.A. MALONE J.A. BETWEEN: CANADIAN TIRE CORPORATION, LIMITED Appellant - and - P.S. PARTSOURCE INC. Respondent Heard at Toronto, Ontario, on Thursday, February 1, 2001. JUDGMENT delivered at Ottawa, Ontario, on Thursday, February 8, 2001. REASONS FOR JUDGMENT BY: MALONE J.A. CONCURRED IN BY: RICHARD C.J. ROTHSTEIN J.A. Date: 20010208 Docket: A-434-00 Neutral citation: 2001 FCA 8 CORAM: RICHARD C.J. ROTHSTEIN J.A. MALONE J.A. BETWEEN: CANADIAN TIRE CORPORATION, LIMITED Appellant - and - P.S. PARTSOURCE INC. Respondent REASONS FOR JUDGMENT MALONE J.A. FACTS This is an appeal from an order of a Motions Judge of the Trial Division which dismissed an appeal from an order of a Prothonotary. The Prothonotary had dismissed a motion made by the Appellant, Canadian Tire Corporation Limited ("CTC"), to strike out a paragraph in an affidavit filed on behalf of the respondent, P.S. Partsource Inc. ("Partsource"), on the ground that it was not based on personal knowledge. The affidavit was filed in proceedings commenced by Partsource under section 57 of the Trade-marks Act to expunge certain of CTC's trade marks. Under subsection 59(3) of the Trade-marks Act, unless the Court otherwise directs, the matter is to proceed on the basis of evidence adduced by affidavit. Such proceedings are final, as opposed to interlocutory, as the eventual Court order will determine the substantive rights of the parties. Paragraph 9 of the affidavit of Philip Bish, sworn April 11, 2000, provides as follows: Within a few weeks of the respondent's announcement in the fall of 1999, the applicant received at least 60 to 70 inquiries about it from its customers. These were customers who expressed a belief, contrary to the fact, that the new business announced by Canadian Tire Corporation was part of the applicant's business, or was affiliated with the applicant. For example, some customers asked what parts they would now be able to get from the new stores. Some said they saw the announcement and looked up Partsource in the phone book and called us for information on what parts they could get. By notice of motion, CTC sought an order striking out paragraph 9 of the Bish affidavit on the basis that it was not based on personal knowledge as required by rule 81(1) of the Federal Court Rules, 1998. Rule 81(1) provides: 81. (1) Affidavits shall be confined to facts within the personal knowledge of the deponent, except on motions in which statements as to the deponent's belief, with the grounds therefor, may be included. 81. (1) Les affidavits se limitent aux faits don't le déclarant a une connaissance personnelle, sauf s'ils sont présentés à l'appui d'une requête, auquel cas ils peuvent contenir des déclarations fondées sur ce que le déclarant croit être les faits, avec motifs à l'appui. In dismissing CTC's motion, the Prothonotary gave no reasons. The Motions Judge dismissed the appeal from the decision of the Prothonotary for the following reasons: "(a) First, this paragraph is not said to be made on information and belief and the statements which it contains may or may not be hearsay. It depends upon the purpose for which they are introduced. If they are introduced simply to prove that the statements were made, no hearsay is involved. (b) Second, to rule on admissibility now deprives the trial judge to consider [sic] paragraph 9 in its entire context, whether the new principled approach on hearsay evidence has application with the appropriate weight to be give to such evidence. Justice Gibson adopted this view, to which I subscribe, in Eli Lilly and Co. v. Apotex Inc. (1997), 75 C.P.R. (3d) 312. (c) Third, it is an established principle that as a Court will not usually make an a priori ruling on admissibility; it takes an obvious case which is not the situation here." ANALYSIS Rule 81 of the Federal Court Rules, 1998 requires that, except on motions, affidavits be confined to facts within the personal knowledge of the deponent. This rule reflects the general rule of evidence relating to hearsay. The requirement for personal knowledge by the deponent means that the deponent has his own knowledge of the facts asserted and has not obtained that knowledge from others. It also means that he cannot recount out-of-court statements made by others. Paragraph 9 says that "the applicant received at least 60 to 70 inquiries ...". The applicant is Partsource Corporation, Limited. Mr. Bish does not say he took the calls himself, although he refers to himself in the first person in other parts of his affidavit. On its face, the facts in paragraph 9 are not stated to be facts of which Mr. Bish has firsthand knowledge. Counsel for Partsource argued that it may have been Mr. Bish who took the calls. If so, why didn't he say so? At best, for Partsource, the question of who took the calls is unclear. Partsource cannot take advantage of an ambiguity of its own making. As it is framed in paragraph 9, Mr. Bish's statement is hearsay being offered in a proceeding that is final in nature and contrary to rule 81. The first reason of the Motions Judge to dismiss the motion brought by CTC is that paragraph may have been offered only to establish that telephone calls were made. Accordingly, even if paragraph 9 was limited to an attempt to establish that statement were made, as opposed to proving the truth of the statements, it would still be hearsay in these circumstances, where it is not clearly established that the deponent personally received the telephone calls.. However, the information in paragraph 9 was not offered only to prove that statements were made. The paragraph recounts, in summary form, what the callers said. This is obviously an attempt to demonstrate actual confusion on the part of the callers. This evidence is clearly hearsay. As to his second reason, the Motions Judge left for the Trial Judge the issue of whether the new "principled" approach for admitting hearsay evidence might justify an exception to rule 81. In R. v. Khan, [1990] 2 S.C.R. 531; R. v. Smith, [1992] 2 S.C.R. 915, the Supreme Court has recognized that hearsay evidence may be admitted if it is demonstrated that the evidence is reliable and that its admission is necessary. Before dealing with whether the question should have been left to the Trial Judge, I would observe that as worded, except on motions, rule 81(1) admits of no exceptions to the requirement that affidavits shall be confined to facts within the personal knowledge of the deponent. Nonetheless, prior decisions indicate that hearsay evidence may be admitted according to the "principled" approach. (See Ethier v. Canada (R.C.M.P. Commissioner), [1993] 2 F.C. 659 (C.A.)). Rule 81(1) is a rule of practice and procedure in the Court. It is made under the authority of paragraph 46(1)(a) of the Federal Court Act which provides, in part: 46. (1) Subject to the approval of the Governor in Council and subject also to subsection (4), the rules committee may make general rules and orders (a) for regulating the practice and procedure in the Trial Division and in the Court of Appeal, [...] 46. (1) Sous réserve de l'approbation du gouverneur en conseil et, en outre, du paragraphe (4), le comité peut, par règles ou ordonnances générales_: a) réglementer la pratique et la procédure à la Section de première instance et à la Cour d'appel, et notamment_: As a rule of practice and procedure, rule 81(1) reflects the general rule against hearsay. However, it does not displace longstanding common law exceptions to the hearsay rule, nor the reliability and necessity exception of more recent vintage.[1] In any event, under rule 55, the Court may dispense with compliance with any rule. Rule 55 provides: 55. In special circumstances, on motion, the Court may dispense with compliance with any of these Rules. 55. Dans des circonstances particulières, la Cour peut, sur requête, dispenser de l'observation d'une disposition des présentes règles. In appropriate circumstances, a party desiring to introduce hearsay evidence on the basis of an exception to rule 81 may consider bringing a motion under rule 55 to have the matter resolved in advance of trial. In the circumstances here, if Partsource intended to rely on exceptions to the hearsay rule, it was for Partsource, in response to the motion to strike, to put forward evidence and/or arguments before the Prothonotary or Motions Judge as to admissibility. It was for the Prothonotary or Motions Judge to conduct their own analysis as to the reliability and necessity of such evidence. As Partsource took the position that the evidence was not hearsay, no evidence or argument was submitted justifying admissibility on the grounds of necessity and reliability. Indeed, it is difficult to conceive of why it should be necessary to rely on hearsay evidence in these circumstances and why such evidence should be considered reliable. In any event, without such evidence or argument, questions of the admissibility of evidence on the basis of necessity and reliability did not arise and should not have been considered by the Motions Judge as a reason to defer the matter to the Trial Judge. In leaving the matter to the Trial Judge, the approach of the Motions Judge would deny to CTC the right to know the evidence it has to refute until such time as the Trial Judge has made his or her ruling on admissibility. However, CTC cannot be certain that the Trial Judge will exclude paragraph 9. It is, therefore, in the position of having to cross-examine on it. CTC cannot effectively cross-examine in respect of hearsay statements made by unidentified sources. Notwithstanding that the onus is on Partsource to demonstrate its entitlement to the relief it seeks, in order to respond to the allegation in paragraph 9 of the Bish affidavit, CTC would be required to explore, through cross-examination on the affidavit, the identity of the customers to whom reference is made and, if they are identified, to interview them or otherwise conduct an investigation for the purpose of ascertaining the veracity of the statements attributed to them. This would effectively reverse the onus in the expungement application. This is clearly prejudicial to CTC. The third reason given by the Motions Judge for dismissing the motion to strike was that the Court will usually not make an a priori ruling on admissibility unless the case is obvious. As I have indicated, this case is obvious. The words of paragraph 9, on their face, show that the evidence is hearsay. It is clearly proffered for its truth. There is no suggestion that the necessity and reliability exception applies. This is a case in which, prior to the hearing, it is appropriate to strike the offending paragraph. Nonetheless, I would emphasize that motions to strike all or parts of affidavits are not to become routine at any level of this Court. This is especially the case where the question is one of relevancy. Only in exceptional cases where prejudice is demonstrated and the evidence is obviously irrelevant will such motions be justified. In the case of motions to strike based on hearsay, the motion should only be brought where the hearsay goes to a controversial issue, where the hearsay can be clearly shown and where prejudice by leaving the matter for disposition at trial can be demonstrated. The appeal will be allowed with costs and paragraph 9 of the Bish affidavit will be struck out. (B. Malone) J.A. I agree J. Richard C.J. I agree Marshall Rothstein [1] There is some debate as to whether the reliability and necessity exception to the hearsay rule is now the only test for admissibility or whether it is an additional exception to the long list of exceptions that have hitherto been part of the common law. (See Sopinka, Lederman, and Bryant, The Law of Evidence in Canada (2d ed., 1999), para. 6.64).