A. INTRODUCTION

[1] In an action commenced in the Federal Court in 2012, Canadian Standards Association (“CSA”) sues Gordon Knight and his corporation P.S. Knight Co. Ltd. for copyright infringement and for breach of s. 7(a) of the Trade-marks Act, R.S.C. 1985, c. T-13, and s. 52 of the Competition Act, R.S.C. 1985, c. C-34. In this action in the Superior Court of Justice, CSA sues Mr. Knight and his corporation for defamation.

[2] Pursuant to rule 21.01(3)(c) of the Rules of Civil Procedure, Mr. Knight and his corporation move for a temporary stay of the defamation action until the completion of the Federal Court action.

[3] For the reasons that follow, I dismiss the motion.

B. FACTUAL AND PROCEDURAL BACKGROUND

[4] CSA is a development, testing and certification organization that sets standards for goods and services. It is accredited in Canada by the Standards Council of Canada as a Standards Development Organization. As part of its standards development mandate, CSA produces the Canadian Electrical Code.

[5] On June 19, 2012, CSA sued P.S. Knight Co. Ltd., which is an Alberta corporation, and its president and director, for copyright infringement. The CSA alleged that P.S. Knight Co. Ltd.’s publication, the Electrical Code Simplified Book 2, infringed CSA’s copyright in the Canadian Electrical Code.

[6] After the action was commenced against them, Mr. Knight and his corporation began to operate a website under the name “RestoreCSA,” which, among other things, discussed the copyright litigation in the Federal Court between CSA and Mr. Knight and his corporation. The CSA alleges that the commentary was false and defamatory.

[7] In response to the publications on the RestoreCSA website, CSA served several libel notices on Mr. Knight and his corporation. Without prejudice to commencing a defamation action, CSA demanded the removal of the allegedly false and defamatory statements from the website. There were also publications outside of the website, and CSA served a notice of libel on October 21, 2013 demanding a full retraction of the false and defamatory communications made in a publication entitled “RestoreCSA Issues Summary Re: Canadian Standards Association”.

[8] CSA did not, however, immediately follow up with a defamation action; rather, in July 2013, CSA issued an Amended Statement of Claim alleging that Mr. Knight and his corporation were knowingly or recklessly making false and misleading statements that tended to discredit the wares, services or business of CSA contrary to s. 7(a) of the Trade-marks Act and were knowingly or recklessly making false and misleading representations to the public contrary to s.52 of the Competition Act.

[9] The amended pleading in the Federal Court action alleged that Mr. Knight and his corporation made numerous false and misleading statements about CSA with the intention of waging a media campaign to discredit CSA in the eyes of the public and with the further intention of promoting the Defendants’ business interests while disparaging CSA, its services and efforts.

[10] Section 7(a) of the Trade-marks Act states:

No person shall

(a) make a false or misleading statement tending to discredit the business, goods or services of a competitor ….

[11] Section 52 of the Competition Act states:

52(1) No person shall, for the purposes of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading in a material respect.

(1.1) For greater certainty, in establishing that subsection (1) was contravened, it is not necessary to prove that

(a) any person was deceived or mislead;

(b) any member of the public to whom the representation was made was within Canada; or

[12] In amending its Statement of Claim, it is to be noted that CSA did not at the same time join a common law defamation claim to the Federal Court action. The explanation is that such a joinder would not have been possible because a common law claim for defamation is outside the jurisdiction of the Federal Court, which is a statutory court. See: Gracey v. Canadian Broadcasting Corp. (CBC), 1990 CanLII 13051 (FC), [1990] F.C.J. No. 1155 (T.D.); Ochiichagwe’babig’ining First Nation v. Beardy, [1995] F.C.J. No. 1268 (T.D.).

[13] No defamation claim was commenced in a provincial court, and the Federal Court action continued. An initial round of examinations for discovery by oral examination (four days) and by written interrogatories was completed, and a refusals motion, which was scheduled for September 9 and 11, 2015, was adjourned sine die. During his discovery, Mr. Knight was examined extensively about the RestoreCSA website (562 questions). In the Federal Court action, both parties brought summary judgment motions, which have also been adjourned sine die.

[14] CSA states that Mr. Knight’s and his corporation’s libels and slanders continued, and on April 23, 2015, CSA commenced a defamation action in this court against P.S. Knight Co. Ltd. and Mr. Knight with respect to the alleged to be defamatory statements posted on the RestoreCSA website and in RestoreCSA Issues Summary Re: Canadian Standards Association, a publication. CSA alleges that the defamatory material was circulated to government departments, senior cabinet ministers, and government committees.

[15] In the defamation action, similar to the allegations in the Federal Court action, CSA alleges that the RestoreCSA website is replete with false, misleading, defamatory and offensive statements made with the intention of waging a media campaign to discredit CSA in the eyes of the public and with the further intention of promoting the Mr. Knight’s and his corporation’s business interests while disparaging CSA Group, its services, and efforts. CSA claims general damages of $500,000 for the harm to its reputation, punitive damages of $250,000 and a permanent injunction to restrain the Defendants from any further publication of the defamatory statements.

[16] The day following the commencement of the Superior Court action, April 24, 2015, CSA filed complaints against Mr. Knight and his corporation with: (a) the Canadian Internet Registration Authority (“CIRA”) alleging that the RestoreCSA website contains untrue and incendiary statements about CSA; and (b) with the World Intellectual Property Organization (“WIPO”) alleging that the RestoreCSA website contains untrue and incendiary allegations about CSA.

[17] CSA alleges that following the service of the defamation Statement of Claim, Mr. Knight and has corporation have continued to publish website posts making defamatory statements. For example, in a June 15, 2015 post entitled: “The Collusion Committee”, Mr. Knight and his corporation assert that CSA is “influence peddling” and stated that: “in democratic societies, the rule of law cannot be for sale, nor can it be owned, nor can it be manipulated by legislators for private profit. Yet we have each of these problems in the CSA”.

[18] On June 25, 2015, the CIRA panel terminated CSA’s complaint because it had not given notice of the parallel court proceedings as required by the CIRA’s complaint proceedings rules and because the Federal Court was the preferable forum to address these issues.

[19] On July 6, 2015, the WIPO panel terminated CSA’s complaint, finding that the proceeding was part and ancillary to a larger dispute between the parties, before the Federal Court of Canada and that the Federal Court was better placed to resolve the dispute.

[20] On October 6, 2015, Mr. Knight and his corporation brought a motion to have the defamation action dismissed or permanently stayed or in the alternative temporarily stayed until the conclusion of the Federal Court action.

C. DISCUSSION AND ANALYSIS

[21] The discussion may begin by noting that nothing substantive has yet been decided in the Federal Court intellectual property action or in the Superior Court defamation action, and so the controversy about whether the court should grant a stay does not concern the principles of res judicata, issue estoppel, or abuse of process associated with already decided issues. Rather, the controversy about a stay concerns the circumstance that proceedings with similar factual footprints and some overlapping legal issues are pending in the Superior Court and in the Federal Court.

[22] Rule 21.01(3)(c) provides that a defendant may move before a judge to have an action stayed or dismissed on the ground that another proceeding is pending in Ontario or another jurisdiction between the same parties in respect of the same subject matter.

[23] The case law about rule 21.01(3)(c) establishes that the court’s discretion to grant a stay is to be exercised sparingly, and the test for determining whether an action should be dismissed or stayed is that a stay or dismissal should only be ordered in the clearest of cases, and: (a) where the continuation of the action would cause the party seeking a stay prejudice or injustice, not merely inconvenience or additional expense; and (b) where the stay or dismissal would not be unjust to the other party. Thus, the onus is on the party seeking a stay to show both: (1) that it would be oppressive or vexatious or in some other way an abuse of process to have to be involved in more than one proceeding; and, also (2) that the stay would not cause an injustice or prejudice to the other party: Empire-Universal Films Limited v. Rank, 1947 CanLII 77 (ON SC), [1947] O.R. 775 (H.C.J.); Imperial Oil v Schmidt Mouldings Ltd., [1981] O.J. No. 711 (H.C.J.); Polar Hardware Mfg. Co. v. Zafir, [1983] O.J. No. 1357 (H.C.J.); Varnam v. Canada (Minister of National Health and Welfare), [1987] F.C.J. No. 511 (T.D.); Sportmart, Inc. v. Toronto Hospital Foundation, [1995] O.J. No. 2058 (Gen. Div.); Farris v. Staubach Ontario Inc.. 2004 CanLII 11325 (ON SC), [2004] O.J. No. 1227 (S.C.J.); Navionics Inc. v. Nautical Data International Inc., [2006] O.J. No. 5397 (S.C.J.); Areva NPGmbH v. Atomic Energy of Canada Ltd., [2009] O.J. No. 861 (S.C.J.); Sun Life Assurance Co. of Canada v. Yellow Pages Group Inc., 2010 ONSC 2780.

[24] Factors to be considered in determining whether a permanent or temporary stay should be granted include: (a) differences in the substantive scope and remedial jurisdiction of the two courts; (b) any juridical advantages associated with the plaintiff’s choice of jurisdiction; (c) the comparative progress of the two proceedings, including which proceeding starting first; (d) whether the proceedings will proceed sequentially or in tandem; (e) the effect of two proceedings about the same subject matter proceeding in tandem; (f) the ability of the defendant to adequately respond to both matters apart from just the financial burden or inconvenience of having to do so; (g) the possibility of inconsistent results; (h) the potential for double recovery; and (i) the effect of a stay in delaying or prejudicing access to justice; for example, by degradation in the evidentiary record for one or other of the proceedings: Farris v. Staubach Ontario Inc., supra; Areva NPGmbH v. Atomic Energy of Canada Ltd., supra; Hollinger International Inc. v. Hollinger Inc., [2004] O.J. No. 3464 (S.C.J.), leave to appeal to Div. Ct. refused, [2005] O.J. No. 708 (Div. Ct.); Catalyst Fund Ltd. Partnership II v. Imax Corporation, [2008] O.J. No. 3776 (S.C.J.); Sportmart, Inc. v. Toronto Hospital Foundation, supra; Sun Life Assurance Co. of Canada v. Yellow Pages Group Inc., supra; Polar Hardware Mfg. Co. v. Zafir, supra.

[25] Where the moving party seeks only a temporary stay, although the onus on the party seeking the stay to justify the stay does not change, the court may be more prepared to grant the temporary stay where: there is a substantial overlap in the factual background and of the legal issues in the two proceedings; the determination of the issues in one proceeding will have a substantive effect on the determination of the issues in the other; and issuing a temporary stay will avoid unnecessary and costly duplication of judicial resources: Hollinger International Inc. v. Hollinger Inc., supra; Catalyst Fund Ltd. Partnership II v. Imax Corporation, supra; Areva NPGmbH v. Atomic Energy of Canada Ltd., supra; Bank of Montreal v. Ken Kat Corp., 2010 ONSC 1990.

[26] While a multiplicity of proceedings should be avoided, courts should not be quick to stay a civil action simply to avoid a multiplicity of proceedings and the moving party must satisfy the test for a stay with clear and specific evidence: Farris v. Staubach Ontario Inc., supra, at para. 27.

[27] Applying the various factors identified by the case law and remembering the heavy onus is on Mr. Knight and his corporation to justify a temporary stay of the Superior Court action, in my opinion, the case at bar is not an appropriate case for a temporary stay.

[28] The factors that featured most prominently in Mr. Knight’s and his corporation’s argument to justify a stay were that: the factual footprint of the two actions was the same; the action in the Federal Court was well advanced; substantial issues, including a defence that the statements about CSA’s conduct are true statements, would be resolved in the Federal Court and would substantially reduce the issues that would need to be determined in the defamation action; and it was oppressive and unfair that Mr. Knight and his corporation were put to the task of simultaneously defending two actions because being forced to do so might lead to their inability to adequately respond to both matters.

[29] In my opinion, however, there is no unfairness in having the proceedings proceed in tandem. The defamation action has different substantive elements and different remedies available to CSA assuming it were successful. The Superior Court action is at early stages, and at the moment, all that is demanded of Mr. Knight and his corporation is to plead a defence and begin the discovery process by establishing a discovery plan. Having regard to the legal work already done in the Federal Court action this should be readily achievable and perhaps, with the court’s assistance, if necessary, the parties should be able to agree to a timetable for the Superior Court action that does not operate unfairly for either party and that does not impact adversely on the proceeding in the Federal Court.

[30] The pending summary judgment motions in the Federal Court action are obviously a first order of procedural business, but the imminence of those motions does not necessitate that the Superior Court action be temporarily stayed; rather, it necessitates, at most, that the Ontario proceedings be fairly managed to continue to make progress in tandem with the further advanced Federal Court proceedings.

[31] CSA makes substantive claims in the Ontario action that are different and that have different remedial resources than what is available in the Federal Court. For instance, general damages and punitive damages are available for defamation but these remedies are not available for the statutory claims in the Federal Court, which claims require CSA to establish actual economic losses in order to achieve any judgment. CSA has a right to have these claims adjudicated regardless of the outcome of the Federal Court action.

[32] Mr. Knight and his corporation submit that in 2012, CSA made a tactical decision to amend the copyright action in the Federal Court and to add claims for breaches of s. 7(a) of the Trade-marks Act and s. 52 of the Competition Act rather than commencing an action in the Superior Court, which has the jurisdiction to decide all the claims and also the tort claim in defamation. They submit that CSA should be bound by its tactical decision.

[33] I disagree with this argument. It was reasonable and sensible to augment the claims within the existing Federal Court action and to give Mr. Knight and his corporation notice that CSA might bring a defamation claim if Mr. Knight and his corporation did not cease and desist from commenting about the Federal Court action on the website and in published material. Had Mr. Knight and his corporation relented, then it might be arguable that the Superior Court action should be temporarily stayed because its major work of stopping the alleged defamatory utterances and advancing the claims for general damages and punitive damages would not be pressing matters pending the resolution of the statutory claims in the Federal Court.

[34] Mr. Knight and his corporation have not shown that the continuation of the Ontario action would cause them prejudice or injustice and they have not shown that a temporary stay would not be prejudicial to CSA.

D. CONCLUSION

[35] For the above reasons, the motion for a stay is dismissed.

[36] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with CSA’s submissions within 20 days of the release of these Reasons for Decision followed by Mr. Knight’s and his corporation’s submissions within a further 20 days.

Perell, J.

Released: December 22, 2015

COURT FILE NO.: CV-15-526680

DATE: 20151222

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

CANADIAN STANDARDS ASSOCIATION

Plaintiff

– and –

P.S. KNIGHT CO. LTD. and GORDON KNIGHT

Defendants

REASONS FOR DECISION

PERELL J.

Released: December 22, 2015

Canadian Standards Association v. P.S. Knight Co. Ltd., 2015 ONSC 7980

Case Summary

A. INTRODUCTION

B. FACTUAL AND PROCEDURAL BACKGROUND

C. DISCUSSION AND ANALYSIS

D. CONCLUSION

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Issues

Statutory Provisions 3

Legal Tests 1

Legislation 2