Henni v. Food Network Canada Inc.

2019 BCSC 660 Henni v. Food Network Canada Inc.

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Henni v. Food Network Canada Inc., 2019 BCSC 660 Date: 20190429 Docket: S134233 Registry: Vancouver Between: Andrew John Henni, Jennifer Pearl Butcher, Raphael Cohen, Stephen Anthony Carney, and John Pearl Enterprises Ltd. Plaintiffs And Food Network Canada Inc., Cineflix Media Inc./Media Cineflix Inc., Cineflix (Food Factory) Inc., Cineflix (Food Factory 2) Inc., Cineflix (Food Factory 3) Inc., Cineflix (Food Factory 4) Inc., and Cineflix (Food Factory USA) Inc. Defendants Before: The Honourable Madam Justice W.A. Baker Reasons for Judgment Counsel for the Plaintiffs: J. Dives Counsel for Defendants: S. Foster E. Feil-Fraser Place and Date of Hearing: Vancouver, B.C. March 7, 2019 Place and Date of Judgment: Vancouver, B.C. April 29, 2019 Table of Contents I......... Introduction.. 3 II........ Issues on this application.. 4 A... Is the addition of the new parties necessary for the proper determination of the case?. 5 B... Has there been unreasonable delay by the plaintiffs in making these amendments?. 6 C... Are the proposed amendments barred by a limitation defence?. 7 D... Do the proposed amendments disclose reasonable causes of action?. 8 1. Do the proposed claims disclose a reasonable cause of action in breach of confidence?. 9 2. Do the proposed claims disclose a reasonable cause of action in relation to the derivative

claims and the relief sought in the nature of an accounting of profits?. 12 3. Do the proposed claims disclose a reasonable cause of action in unjust enrichment?. 13 4. Are the proposed claims bound to fail?. 14 E... Are the defendants prejudiced by the amendments?. 15 III....... Conclusion.. 16 I. Introduction [1] This is an application by the plaintiffs to add parties and amend the notice of civil claim pursuant to Rules 6-1(1)(b)(i) and 6-2(7) of the British Columbia Supreme Court Civil Rules, B.C. Reg. 168/2009. [2] In the existing action, a group of individuals and one corporation claim against several corporations for breach of copyright in relation to a television show concept which focused on the mass production of foods. The plaintiffs allege that they developed a concept for a TV program suitable for the Food Network Canada Inc. ("Food Network"), which the plaintiffs titled "Food Factories". The plaintiffs allege that the Food Network rejected their concept and then commissioned a new program called "Food Factory", which was virtually identical to their concept. [3] Food Factory first aired on the Food Network in August 2012. The Food Factory program is produced under a series of companies named Cineflix (Food Factory) Inc. Each season a new company is created for that season's programming in both Canada and the United States, i.e. Cineflix (Food Factory 2) Inc.,

Cineflix (Food Factory 3) Inc., Cineflix (Food Factory USA) Inc., Cineflix (Food Factory USA 2) Inc., etc. [4] In the existing action the plaintiffs claim that the Food Network knowingly appropriated to itself and to the Cineflix defendants their concept thereby generating for the Food Network and Cineflix defendants substantial profits and benefits. The plaintiffs seek an injunction, an accounting of profits, and damages for breach of copyright. [5] This action was commenced on June 5, 2013. In September 2015 the notice of civil claim was amended by consent. For a variety of reasons this action has moved very slowly. In 2016 the action appears to have gained some speed and a trial date was set for April 2018. In late 2017 the parties were preparing for a summary trial set for January 2018 and a number of documents and affidavits were provided at that time. In January 2018, the summary trial was dismissed. At a trial management conference held in February 2018, the April trial was adjourned generally due to the fact the time estimates exceeded the days set aside for hearing. No new trial date has been set. [6] In the early fall 2018 the plaintiffs advised they intended to further amend the notice of civil claim. On October 25, 2018 the plaintiffs provided a draft amended notice of civil claim to the defendants. The amendments proposed to add three new defendants, add further

facts to the existing claims, and add claims relating to "derivative programs", breach of confidence, and unjust enrichment. [7] The defendants oppose most of the amendments, although there are certain paragraphs to which they consent. [8] On March 4, 2019 the plaintiffs commenced a second action against two companies and one individual, who are related to the defendants in the within action. The facts and claims advanced in the second action are virtually identical to the proposed amended claims which are the subject of this application. The second action was commenced to facilitate service on the defendants in Ontario. Once counsel are appointed for the defendants in the second action, the plaintiffs anticipate bringing an application to have the existing and second actions joined for trial. II. Issues on this application [9] The defendants characterize the amendments sought by the plaintiffs as follows: a) adding additional Cineflix defendants, b) deleting the claim for breach of moral rights, c) adding a claim for breach of confidence, d) adding a claim for unjust enrichment, e) relating to ambiguous "derivative programs" and adding a claim for accounting of profits against unknown third parties, and f) addressing ownership of copyright and additional material facts. [10] The defendants consent to the deletion of the moral rights claim and certain housekeeping amendments

relating to the original breach of copyright claim. [11] This application gives rise to the following issues: a) Is the addition of the new parties necessary for the proper determination of the case? b) Has there been unreasonable delay by the plaintiffs in making these amendments? c) Are the proposed amendments barred by a limitation defence? d) Do the proposed amendments disclose reasonable causes of action? e) Are the defendants prejudiced by the proposed amendments? A. Is the addition of the new parties necessary for the proper determination of the case? [12] The three new defendants which the plaintiffs seek to add are: Cineflix (Food Factory 5) Inc., Cineflix (Food Factory 6) Inc., and Cineflix (Food Factory USA 2) Inc. These companies have all been created since the notice of civil claim was last amended, and are simply the current incarnations of the existing defendants. The alleged breaches of copyright continue each year with each successive incarnation of the Cineflix companies. The defendants concede that these three new companies are properly added to the action in relation to the original claims. [13] I am satisfied that the three new defendants are necessary for the proper determination of the issues raised in the existing action: Van De Perre v. Edwards, 2001 SCC 60. [14] The three new defendants are proper parties to this claim and will be added. [15] The

essence of the opposition by the existing defendants to the addition of the new parties is really in relation to the new claims which the plaintiffs seek to add. The suitability of these new claims will be discussed below. B. Has there been unreasonable delay by the plaintiffs in making these amendments? [16] The defendants argue that the plaintiffs have provided no explanation for why they did not make these claims in the original notice of civil claim filed in 2013. The defendants argue that the same facts supporting the breach confidence allegations were known to the plaintiffs in 2012. [17] The plaintiffs argue that while the claim was filed in 2013, the facts relating to the breach of confidence claim were not known until they received a list of documents from the defendants in June 2016 and, more particularly, when they received the affidavits from the defendants in 2017 in support of the defendants' summary trial application. The plaintiffs argue that only when the defendants disclosed that Ms. Merklinger, a key director of the Food Network at the material time, gave the Cineflix defendants specific details of the plaintiffs' show idea within weeks of rejecting the plaintiffs' submission, did the plaintiffs have sufficient evidence to support a pleading of breach of confidence. The plaintiffs say that before the defendants disclosed such information in 2016 and 2017

within the context of this action, these material facts were hidden from the plaintiffs. [18] The plaintiffs further explained that when they receive the materials in support of the defendants' position on the summary trial in late 2017, they were still hoping to proceed with the trial in April 2018. As such, they were prepared at that time to proceed to trial without making these new amendments. Now that the trial has been adjourned and a new trial date has not been set, the plaintiffs seek to advance all claims against the defendants in this action. [19] Following the adjournment of the trial at the trial management conference in February 2018, the parties were busy with a number of appeals of an interlocutory order, which were set for hearing in September 2018. [20] I accept the explanation given by the plaintiffs for the timing of this application to amend their claim, namely that they did not have sufficient evidence to plead the new claims until 2017, and that they did not want to jeopardize the April 2018 trial date by proposing amendments to the claim in early 2018. Only when the April 2018 trial date was adjourned did the plaintiffs consider amending their claim. [21] In the circumstances before me, I am satisfied that the plaintiffs have not unreasonably delayed in bringing this application to amend the notice of civil claim. C. Are the proposed amendments barred by a

limitation defence? [22] The defendants argue that section 6 of the Limitation Act, S.B.C. 2012, c.13, bars the new claims which the plaintiffs seek to add in this application. The plaintiff argues that the Limitation Act, R.S.B.C. 1996, c. 266 is the applicable Act and that the commencement of the limitation period under that Act was postponed due to the defendants' wilfully concealment of material facts relevant to the new cause of action. [23] It is not clear on the facts before me that this issue can be determined, or should be determined, on this application. The applicable Limitation Act, and the effect of such Act in relation to the new claims pleaded, are issues to be dealt with by the trial judge. At trial the court will have a full factual matrix upon which to determine the limitation issue. I am not satisfied that the evidence before me allows me to properly and fairly determine the limitation issues which have been raised by the parties on this application: Owners, Strata Plan LMS 1725 v. Star Masonry Ltd., 2007 BCCA 611. [24] I agree with the plaintiffs that it would be inappropriate for me to determine the issue of the expiration of a limitation period at this stage of the proceeding. As such, I find that no limitation defence bars the proposed claims from being pleaded, and the effect of any limitation defences will be a matter for the trial judge to decide. D.

Do the proposed amendments disclose reasonable causes of action? [25] The heart of the issues between the parties on this application is really whether the proposed amendments adequately set out the proposed claims. The defendants argue that the proposed new claims do not disclose a reasonable cause of action, and are bound to fail at trial. [26] On an application to amend pleadings, the court must apply the same considerations it would on an application to strike pleadings: British Columbia (Director of Civil Forfeiture) v. Violette, 2015 BCSC 1372 [Violette], para. 40. [27] In Violette, at paragraph 40, the Court of Appeal further confirmed that in considering whether a pleading amendment should be allowed, "the court must be generous and err on the side of permitting an arguable claim to proceed to trial. See: McMillan v. McMillan, 2014 BCSC 546 at paras. 13-14, and cases cited therein." Further, at paragraph 41 the Court stated: [41] In Peterson v. 446690 B.C. Ltd., 2014 BCSC 1531 at para.37, this Court summarized the general principles arising on an application to amend pleadings as follows: [37] Finally, the general principles arising on an application to amend pleading can be summarized as follows: (a) Amendment to pleadings ought to be allowed unless pleadings fail to disclose a cause of action or defence: McNaughton v. Baker, [1988] 24 B.C.L.R. (2nd) 17 [(C.A.)]. (b)

Amendments are usually permitted to determine the issues between the parties and ought to be allowed unless it would cause prejudice to party's ability to defend an action: Levi v. Petaquilla Minerals Ltd., 2012 BCSC 776. (c) The party resisting an amendment must prove prejudice to preclude an amendment, and mere, potential prejudice is insufficient to preclude an amendment: Jones v. Lululemon Athletica Inc., 2008 BCSC 719. (d) Costs are the general means of protecting against prejudice unless it would be a wholly inadequate remedy. (e) Courts should only disallow an amendment as a last resort: Jones, McNaughton, Innoventure S & K Holdings Ltd. et al. v. Innoventure (Tri-Cities) Holdings Ltd. et al., 2006 BCSC 1567. [28] In Homalco Indian Band v. British Columbia, [1998] B.C.J. No. 2703 [Homalco] the court confirmed the function of pleadings: 5 The ultimate function of pleadings is to clearly define the issues of fact and law to be determined by the court. The issues must be defined for each cause of action relied upon by the plaintiff. That process is begun by the plaintiff stating, for each cause, the material facts, that is, those facts necessary for the purpose of formulating a complete cause of action: Troup v. McPherson (1965), 53 W.W.R. 37 (B.C.S.C.) at 39. The defendant, upon seeing the case to be met, must then respond to the plaintiff's allegations in such a way that

the court will understand from the pleadings what issues of fact and law it will be called upon to decide. [29] In determining whether the pleadings disclose material facts sufficient to support the causes of action asserted, the court must look to the pleadings alone. In other words, it is not permissible for the court to weigh the evidence and assess whether a claim is bound to fail on the evidence before it.

1. Do the proposed claims disclose a reasonable cause of action in breach of confidence? [30] In pleading a claim in breach of confidence, the plaintiffs must assert material facts which, if proven, would establish the following: a) The information was confidential in nature, i.e. It must have been otherwise inaccessible to the defendants; It must have a quality of "originality or novelty or ingenuity"; and (iii) It must not be in the nature of "know-how"; b) The plaintiffs must have conveyed the confidential information to the defendants in circumstances importing confidentiality; and c) The defendants must have used the confidential information to the detriment of the plaintiffs. Blue Line Hockey Acquisition Co., Inc. v. Orca Bay Hockey Limited Partnership, 2007 BCSC 143 [Blue Line Hockey], para 77. [31] While the proposed amendments do not track the language set out above exactly, I am satisfied that the concepts can be found in the material facts set out in the following paragraphs of the proposed amended claim: Part 1 a) Paragraph 11 in which the Food Factories concept is described in detail. This paragraph is found in the existing claim and supports the claim in breach of copyright as well as the claim in breach of confidence. b) Paragraph 11(a) in which the plaintiffs allege that they "exercised their skill and judgment to reduce their ideas into an original expression"

and "created a presentation or 'demo' reel expressing their ideas for the Food Factories concept". c) Paragraph 13 in which the plaintiffs allege that if the Food Network accepted the Food Factories concept, the copyright in the demo reel would be assigned from the personal plaintiffs to the corporate plaintiff and the corporate plaintiff would produce the show. This paragraph is found in the existing claim. To be protected by copyright, a work must be original. Therefore this paragraph also supports the claim in breach of confidence. d) Paragraphs 13 and 13(a) in which the plaintiffs allege that pursuant to an invitation from the Food Network they submitted their demo reel in confidence. e) Paragraph 14 in which the plaintiffs allege that the Food Network provided Cineflix with ideas from the plaintiffs' Food Factories demo reel. f) Paragraph 14(c) in which the plaintiffs allege that the Food Network provided substantive and specific information to Cineflix to allow it to create a concept virtually identical to the plaintiffs' demo reel. g) Paragraph 16 in which the plaintiffs allege that some or all of the defendants knew since April 2011 that plaintiffs' demo reel was submitted in confidence with the expectation that it not be used for activities detrimental to the plaintiffs, without the express consent of the plaintiffs. h) Paragraphs 18 and 18(a), in which the plaintiffs

allege that the defendants knowingly appropriated to themselves the concept, idea, and format of the plaintiffs' demo reel, using such material in a way detrimental to the plaintiffs, and generating profits and benefits through these wrongful acts. Part 3 i) Paragraph 2(a) in which the plaintiffs say the use and wrongful appropriation of the concept, idea or format of the demo reel without the consent of the plaintiffs is a breach of confidence. [32] In relation to the first element of a claim in breach of confidence, the demo reel is described as the work which was submitted in confidence, and it is described as being created as an original expression using skill and judgment. This meets the pleading requirement of the first element. [33] In relation to the second element of a claim in breach of confidence, the transfer of the demo reel in confidence to the Food Network is also pleaded, meeting the requirement of the second element as it relates to the Food Network. However, in relation to the claims against the Cineflix defendants, other than a bald statement that some or all of the defendants knew the demo reel was submitted in confidence by the plaintiffs, no material facts are pleaded to establish how the Cineflix defendants knew about the existence of the demo reel, let alone how they knew that it was submitted in confidence to the Food Network by the plaintiffs. There is

no pleading that the plaintiffs submitted the demo reel to the Cineflix defendants in confidence. Nor have the plaintiffs pleaded facts which would establish liability on the part of the Cineflix defendants for any wrongful acts committed by the Food Network. As such, the second element of the claim in breach of confidence, as against the Cineflix defendants, has not been adequately pleaded. [34] With respect to the third element of the claim in breach of confidence, the plaintiffs have pleaded two different kinds of wrongs. In Part 1, paragraph 18, the plaintiffs allege that the Food Network knowingly appropriated to itself and the Cineflix defendants the concept, idea and/or format of the demo reel, used these for activities detrimental to the plaintiff, and generated profits and benefits for themselves. [35] I find that paragraph 18 minimally meets the pleadings requirement of the third element, as against the Food Network only. I am not satisfied that the proposed amendments adequately plead the third element as against the Cineflix defendants. While the Food Network could appropriate to itself confidential information it received from the plaintiffs, it is not clear from the pleading how the Food Network could appropriate to third parties, namely the Cineflix defendants, the plaintiffs' confidential information. [36] In Part 1, paragraph 19 the plaintiffs introduce a wrong arising from the defendants' use of the plaintiffs' concept in derivative programs. For the reasons I discuss below, I find that paragraph 19 fails to meet the requirement that pleadings state necessary material facts.

2. Do the proposed claims disclose a reasonable cause of action in relation to the derivative claims and the relief sought in the nature of an accounting of profits? [37] In Part 1, paragraph 19 the plaintiffs allege that the: "defendants, or some of them, have since further appropriated to themselves the concept, idea, and/or format of the plaintiffs' Food Factories Demo Reel and/or the ideas therein, for copying and use in a manner detrimental to the plaintiffs, more specifically in other derivative television shows and have generated substantial profits and benefits therefrom." [38] Paragraph 19 is wholly inadequate. The Food Network and the Cineflix defendants are quite different entities. It is impossible to know what elements of a television show must be present for the plaintiffs to consider it derivative of their demo reel, what television shows have in fact been produced which the plaintiffs consider to be derivative, and which defendants are responsible for which shows. [39] While it may not be possible for the plaintiffs to know all specific titles at the time of pleading, they must describe in some way the material elements of such shows which would allow the defendants to properly respond to this allegation. [40] A similar difficulty arises with respect to paragraph 15 in Part 1 of the proposed amendment. In paragraph 15 the plaintiffs also refer to "derivative

programs" which, along with the Food Factory, have generated profits for the defendants through producing, selling and licencing rights. While the allegations with respect to the Food Factory program are acceptable, the allegations with respect to the "derivative programs" are inadequate for the reasons described above. [41] Finally, in Part 2 the plaintiffs seek to amend paragraph 2 to extend the accounting of profits they seek beyond the defendants to "others". The "other" parties are not defined or described in any way. I find this proposed amendment to be unacceptable, as it purports to seek relief against unknown parties. The plaintiffs have not attempted to describe who these unknown parties are, or include any language which would allow these unknown parties to understand that relief was sought against them or, indeed, to even add these parties as defendants to the claim. An accounting for profits is a very invasive remedy and should not be sought against parties who are unidentifiable at the time of pleading and are not defendants to the claim.

3. Do the proposed claims disclose a reasonable cause of action in unjust enrichment? [42] In pleading a claim in unjust enrichment, the plaintiffs must assert material facts which, if proven, would establish the following: a) enrichment of the defendant; b) a corresponding deprivation to the plaintiff; and c) the absence of any juristic reason for the enrichment. Colter Developments Ltd. v. Squamish LJ Ltd., 2015 BCSC 415, para. 41, citing Garland v. Consumers' Gas Co., 2004 SCC 25. [43] In Part 3, paragraph 2(b), the plaintiffs propose the following amendment: The defendants, or some of them, have been unjustly enriched by the use and wrongful appropriation of the concept, idea, and/or format of the plaintiffs' Food Factories Demo Reel and/or the ideas therein and their expression created by the plaintiffs without the consent of the plaintiffs. [44] This proposed amendment must be read in the context of the wrongful acts pleaded, including the breach of copyright and the breach of confidence claims. [45] The pleading of the claim in unjust enrichment is sparsely pleaded, at best. However, I am satisfied that in the context of the entire claim the defendants are not prejudiced and can extrapolate the essence of the claim. The plaintiffs have pleaded that the defendants have benefited from wrongful acts. While more detail would be preferable, I am satisfied that the claim is arguable and should be allowed to proceed.

4. Are the proposed claims bound to fail? [46] The defendants invited me to review the evidence and consider whether the claims asserted are contradicted by the evidence. The defendants argue that the claims are inconsistent with the evidence and are therefore bound to fail, frivolous and vexatious. [47] I have reviewed the evidence before me, but not with a view to determining which party's evidence is determinative of the issues. I have simply reviewed the evidence to confirm that the plaintiffs have some evidence which appears to support the amendments they seek to make. This evidence includes the documents produced in 2016 and 2017, and the affidavits produced in late 2017, all of which appear on their face to support the plaintiff's claim in breach of confidence against the Food Network. [48] I am satisfied that the proposed amendments are not frivolous and vexatious because they appear to have some support in the documents produced by the plaintiffs in support of this application. [49] I am not prepared to weigh this evidence against the evidence submitted by the defendants on this application. Whether the evidence at trial will prove or disprove the plaintiff's claim, is a matter for the trial judge to assess and not for the court on an interrogatory pleadings motion. E. Are the defendants prejudiced by the amendments? [50] In Homalco, at paragraph 11, the court

concluded that a pleading which is confusing and extremely difficult to answer is prejudicial. [51] As discussed above, I find that the breach of confidence claim as against the Cineflix defendants is inadequately pleaded. I find that the Cineflix defendants are prejudiced in their ability to respond to the claim as pleaded. [52] Similarly, I find that the pleadings in relation to the derivative programs to be inadequately pleaded, confusing, and extremely difficult to answer. As such, I find that all defendants are prejudiced by the pleadings in relation to the derivative programs. [53] The amendment sought to paragraph 2 of Part 2, which inserts the words "or others" to the relief sought in the nature of an accounting of profits is also confusing and extremely difficult to answer and, as such, I find that all defendants are prejudiced by this proposed amendment. [54] The defendants also argue that they are prejudiced because the events occurred many years ago, many of the employees involved in the events no longer work at Food Network, in-house processes and systems with respect to storage of electronic documents have changed, and the corporation has been reorganized following a corporate acquisition in 2016. All of these factors arise from the passage of time which has occurred since 2013 when the action was first commenced. In making this argument the defendants rely

heavily on the affidavits they filed in late 2017 in support of the summary trial application, in which the affiants describe some difficulties in their recollections of events, and confirm that many key witnesses no longer are associated with the defendants. [55] I note that the affidavits sworn in 2017 predate this application to amend the pleadings. I find any difficulties which the defendants may experience in relation to the passage of time are difficulties which the defendants will experience whether or not the amendments are granted. As such, I am not satisfied that the proposed amendments will cause any identifiable prejudice to the defendants, beyond the prejudice I have identified which arises from the inadequacy of the pleading itself. III. Conclusion [56] The plaintiffs are granted leave to further amend their notice of civil claim in the form attached to their notice of application, with the exception of the following claims for which leave is not granted: a) the claim in breach of confidence against the Cineflix defendants, b) all claims relating to "derivative programs", and c) the claim for relief in the nature of an accounting for profits against "others". [57] The defendants may file a further amended response to civil claim within seven days of service of the further amended notice of civil claim. [58] As success on this application was divided, I make no order as to costs. "Baker J."