File No. CT 2005-006 COMPETITION TRIBUNAL IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34, as amended; IN THE MATTER OF an application by B-Filer Inc, B. Filer Inc. doing business as GPAY GuaranteedPayment and NPay Inc. for an order pursuant to section 103.l granting Jeave to make application under sections 75 and 77 of the Competition Act;
AND IN THE MATTER OF an application by B-Filer Inc., B-Filer Inc. doing business as GPAY GuaranteedPaymcnt and NPay Inc. for an interim order pursuant to section 104 of the Competition Act.
BETWEEN: B-FILER INC., B-FILER INC. doing business as GPAY GUARANTEED PAYMENT and NPA Y INC.
-and-
THE BANK OF NOVA SCOTIA Respondent MEMORANDUM OF FACT AND LAW OF THE BANK OF NOVA SCOTIA Motion to Amend Notice ofA pplication returnable April 27, 2006
McCarthy Tetrault LLP Suite 4700 Toronto Dominion Bank Tower Toronto ON M5K 1E6
F. Paul Morrison LSUC # l 7000P Tel: (416) 601-7887 Fax (4 16) 868-0673 Glen G. MacArthur LSUC # 13669A Tel: (416) 601-7888 Fax (416) 868-0673 Lisa M. Constantine LSUC # 35064B Tel: (416) 601-7652 Fax: (416) 868-0673 Solicitors for The Bank of Nova Scotia
Applicants
File No. 2005-006 COMPETITION TRIBUNAL IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34, as amended; IN THE MATTER OF an application by B-Filer Inc, B. Filer Inc. doing business as GPAY GuaranteedPayment and NPay Inc. for an order pursuant to section 103.1 granting leave to make application under sections 75 and 77 of the Competition Act;
AND IN THE MAT IER OF an application by B-Filer Inc., B-Filer Inc. doing business as GPAY GuaranteedPaymcnt and NPay Inc. for an interim order pursuant to section I 04 of the Competition Act.
BETWEEN: B-FILER INC., B-FILER INC. doing business as GPAY GUARANTEED PAYMENT and NPAY INC.
-and-THE BANK OF NOVA SCOTIA
MEMORANDUM OF FACT AND LAW OF THE BANK OF NOVA SCOTIA Motion to Amend Notice ofA pplication returnable April 27, 2006
PART I-OVERVIEW l. The Respondent, The Bank ofNova Scotia ("Scotiabank") opposes the Applicants' motion to amend their Notice of Application and Statement of Grounds and Material Facts (collectively referred to as the "Notice of Application"). The amendments proposed by the Applicants go well beyond mere housekeeping matters. They instead strike at the heart of the issues that were before the Competition Tribunal on the Leave Application.
Applicants Respondent
- 2 -2. The Tribunal granted Leave under Section 103 .1( 7) of the Competition Act on the basis of definitions of "product" and "market" put forward by the Applicants and adopted by the Tribunal in its Reasons. The Applicants now seek to amend the Notice of Application and to proceed under Section 75 on the basis of entirely different definitions of "product" and "market" for which leave has not been granted.
PART Il-FACTS (a) Procedural History 3. By Order dated November 4, 2005, the Competition Tribunal granted leave to the Applicants (collectively referred to herein as "GPay") to bring an Application under Section 75 of the Competition Act. 1 4. The Competition Tribunal released Reasons for the Order granting leave to apply under Section 75 of the Competition Act on November 14, 2005. 2 5. Pursuant to Section 111 of the Amended Practice Direction For The Competition Tribunal dated January I 0, 2005 (the "Practice Direction"), where leave is granted under Section 103.1(7) of the Competition Act, a Notice of Application filed with the Leave Application under Section I 05 of the Practice Direction shall be deemed to have been filed on the date upon which leave was granted, for the purpose only of calculating the time limit. As a result, because leave was granted by Order dated November 4, 2005, GPay's Notice of Application is deemed to have been filed on November 4, 2005. 3 1 Affidavit of Patti Ground, Motion Record, Tab 1, para. 2 2 Affidavit of Patti Ground, Motion Record, Tab I, para. 3 3 Affidavit of Patti Ground, Motion Record, Tab 1, para. 4
- 3 -6. Pursuant to Section 112( 1) of the Practice Direction: 4 "The applicant shall, within 5 days after a notice ofa pplication is filed, serve the notice on each person against whom an order is sought and on the Commissioner who may intervene pursuant to Section 103. 2 oft he Act. "
7. Pursuant to Section 112(2) of the Practice Direction, within 5 days of the service of the Notice of the Application, the Applicant shall file proof of service. 5 8. GPay has never served its Notice of Application in accordance with Section 112 of the Practice Direction. Nor did it ever file proof of service within 5 days thereafter. 6 9. Because the Applicants never served their Notice of Application, nor fi led proof of service, as required by Section 112 of the Practice Direction, Scotiabank was never required to serve a Response pursuant to Section 113 of the Practice Direction. 7 10. Shortly after Mr. Osborne assumed carriage of this matter on behalf of the Applicants, he advised Scotiabank' s counsel that he proposed to deliver an Amended Notice of Application. Scotiabank's counsel raised with Mr. Osborne the issue of filing a Response. Mr. Osborne advised Scotiabank's counsel that a Response was unnecessary until after he had provided the Applicants' proposed amended materials and counsel for Scotiabank had an opportunity to consider its position with respect thereto. 8 11 . As a result of: (a) the fact that the Applicant did not serve their Notice of Application in accordance with Section 112, and
4 Affidavit of Patti Ground, Motion Record, Tab I, para. 5 5 Affidavit of Patti Ground, Motion Record, Tab I, para. 6 6 Affidavit of Patti Ground, Motion Record, Tab I , para. 8 7 Affidavit of Patti Ground, Motion Record, Tab I, para. 9 8 Affidavit of Patti Ground, Motion Record, Tab I, para. l 0
- 4 -(b) Mr. Osborne's statement that it was not necessary for Scotiabank's counsel to prepare a Response until he had delivered his proposed amendment,
no Response was filed on behalf of Scotiabank, nor was one required. 9 12. It is submitted that the Applicants can have no recourse to Rule 200 of the Federal Court Rules. They are not entitled to amend their Notice of Application "as of right", in circumstances where they have failed to comply with the Practice Direction. Further, where they have specifically advised counsel for Scotiabank not to file a Response because they proposed to deliver an amended Notice of Application, they are estopped from seeking to rely on the "as of right" provisions of Rule 200. 10 (b) The Order Granting Leave is Under Appeal 13. The Competition Tribunal's Order granting leave to the Applicants to apply under Section 7 5 of the Competition Act is under appeal to the Federal Court of Appeal. Scotiab ank has filed a motion to have the appeal heard before the end of June, 2006, on an expedited basis. The Applicants have consented to Scotiabank's motion to obtain an expedited hearing date. 11 14. The Federal Court of Appeal does have the time available to hear the appeal in this matter before the Court breaks for its summer recess. The Court has provided dates acceptable to all counsel for the Appeal to be heard in June 2006. 12 9 Affidavit of Patti Ground, Motion Record, Tab I, para. 12 10 The principles of promissory estoppel are well settled. See Maracle v. Travellers indemnity Co. ofC anada, [1991) 2 S.C.R. 50. 11 Affidavit of Patti Ground, Motion Record, Tab I, para. 13 12 Affidavit of Patti Ground, Motion Record, Tab I, para. 14
- 5 -(c) The Amendments Go to the Heart of Issues in Dispute 15. The proposed changes to the Notice of Application go beyond simple housekeeping matters. The Applicants seek to fundamentally re-cast the case upon which leave was granted. In particular, the Applicants seek to alter the definition of"product" and of "market" after leave has been granted, and without any evidence to support those changes. 13 16. The proposed changes pervade the entire proposed Amended Notice of Application. They cannot be parsed in a manner which would permit the Applicants to proceed with non-controversial amendments. 14 PART III-SUBMISSIONS AND LAW (a) Introduction 17. This motion is without precedent. There is no decision of the Competition Tribunal in which the Applicants sought leave to amend the Notice of Application after leave to apply had been granted under s. 103.1(7) of the Competition Act. 18. The case of Canada (Commissioner ofC ompetition) v. Sears Canada Inc. 15 (relied on by the Applicants) is not germane to the motion presently before the Tribunal. There, the Respondent sought to amend its Response by delivering a "condensed" version of its original Response. There was no issue with respect to the Applicant fundamentally changing the nature of the case upon which leave had previously been granted. Nevertheless, because, inter alia, of the breadth of the changes sought, the Competition Tribunal refused to grant leave to the Respondent to amend its Response.
13 Proposed Amended Notice of Application and Statement of Grounds and Fact, Applicants' Motion Record, Tab 2 14 Proposed Amended Notice of Application and Statement of Grotmds and Fact, Applicants' Motion Record, Tab 2 15 (2003), 28 C.P.R. (4th) 395 (Comp. Trib.) affd [2004) F.C.J. No. 1452 (C.A.)
- 6 -19. Although there is no precedent in the Competition Tribunal for amendments sought after leave has been granted, cases decided in analogous circumstances are apposite. (b) Amendments Should Not be Permitted After Leave Has Been Granted 20. Amendments that change the nature of a proceeding upon which leave was previously granted will not be permitted. This issue has been considered in a number of contexts. The principle has been affirmed repeatedly. 21 . In Maxwell v. MLG Ventures Ltd., 16 the plaintiff sought to amend its statement of claim after the action had been certified as a class proceeding. The Court refused to allow the plaintiff to amend the pleading after certification as a class proceeding had! been granted: In my view, to permit the amendments sought in the proposed new paragraph 14 would fundamentally change the nature ofthe action and would require reconsideration ofa ll the matters considered on the first application. I think it not appropriate to have an action certified as a class proceeding and then, by motion to amend the statement ofc laim, reconstitute the action by adding serious new allegations which fu.ndamentally change the nature oft he action to one quite different from the action originally certified. I am accordingly not prepared to grant leave to permit the amendments contained in the proposed new paragraph 14 oft he statement ofc laim, ... because such amendments, in my view, fundamentally change the nature of'the action originally certified and would require reconsideration by the court ofa ll the issues examined on the original application to certify the action. (emphasis added)
22. Similarly, in Comite d'Environnement de la Baie Inc. v. Societe d'Electrolyse et de Chimie Alcan Ltee, 17 the Quebec Court of Appeal rejected an attempt by a representative plaintiff to augment its claims after the Court authorized the proceeding as a class action. The
16 ( 1995), 40 C.P.C. (3d) 304 at para. 20 (Ont. Gen. Div.); See also Endean v. Canadian Red Cross Society, [1998) B.C.J. No. 1542 (S.C.). In that case, the plaintiff sought to amend its statement of claim after the matter had been certified as a class proceeding. The Court dismissed the motion to amend and stated that such changes would have to pass scrutiny under the Class Proceedings Act, which sets out the criteria for certification, before they could be certified for a class-proceeding. 17 (1992), 95 D.L.R. (4m) 644 at 648 and 651-652 (Que. C.A.)
- 7 defendant argued that the claim could not be amended "without going back to square one of the process authorizing the class action". The Court of Appeal accepted this argument, and held that the defendants were entitled to the opportunity to contest the proposed amendments based on the certification criteria. 23. Courts have also considered requests to amend pleadings after leave has been granted to bring a derivative action within the context of business corporations legislation. 24. In Ebco Industries Ltd. v. Eppich, 18 the plaintiff sought to amend its statement of claim after the Court had granted leave to bring the derivative action. The Court held: Without further application oft he kind contemplated bys. 201 oft he Act [i.e. an application for leave to bring a derivative action] the proceeding which has been commenced by writ must be restricted to the causes ofa ction as it was framed from the outset.
Accordingly, the new claim for which leave had not initially been granted was struck by the Court. 25. The same result obtained in Northwest Sports Enterprises Ltd. v. Griffiths. 19 There, the Applicant had been granted leave to bring a derivative action, and afterwards sought leave to amend the Statement of Claim. The court noted that the proposed changes were "fundamental". Accordingly, the court concluded that a fresh application for leave to bring a derivative action was required, so that the court could consider the statutory factors afresh.
18 [2000] B.C.J. No. 1437 at para. 27 (S.C.); 19 [ 1999] B.C.J. No. 3150 (S.C.).
- 8 -26. Courts have also refused to grant amendments after leave has been granted to serve a statement of claim exJ uris. 20 In those cases, courts have held that the new claims may not be able to satisfy the test for service exJ uris. (c) The Same Principle Applies in the Supreme Court of Canada 27. This fundamental principle has been applied on a consistent basis even at the level of the Supreme Court of Canada. Indeed, the Supreme Court treats the issue as a matter of jurisdiction. 28. For example, in Chan v. Canada (Minister ofE mployment and Immigration), Major J. stated: "It is not open to this Court to decide the Ap,gellant 's case on the basis ofa n issue on which leave to appeal was not granted." 1 29. Likewise, in R. v. Wigman, the Court stated: "Jn such cases, the Supreme Court is without jurisdiction to hear arguments dealing with issues other than the ones enumerated on the order granting leave to appeal." 22 (d) The Amendment is Sought After an Appeal Has Been Commenced 30. The Competition Tribunal released its Order granting leave pursuant to Section 103 .1 of the Competition Act on November 4, 2005. On November 14, 2005, a Notice of Appeal to the Federal Court of Appeal was delivered. The Applicants have consented to the Respondent's request for an expedited hearing of the Appeal. The Appeal will likely be argued in June, 2006.
20 See for example Hitchin v. Hitchin, [1946] O.W.N. 913; and Empire-Universal Films Ltd. v. Rank, [1938] O.W.N. 704 21 [1995) 3 S.C.R. 593, at para. 147. 22 [ 1987) I S.C.R. 246, at p. 258. See also R. v. Kienapp/e, [ 1975] l S.C.R. 729, at p. 732.
- 9 -31. In Operation Dismantle v. The Queen, 23 , the Supreme Court of Canada (per Wilson J.) stated: Counsel for the appellants submit that prior to the .filing ofa statement ofd efence they were entitled to amend as ofr ight under Rule 421 [the predecessor to Rule 200] and that they should not be prejudiced with respect to this right because they invoked the discretion oft he Court under Rule 1104. it may, however, be of significance in this connection that their application for amendment to the statement ofc laim was filed after the Crown had instituted its appeal to the Federal Court ofA ppeal. In my view. their application was therefore one made "during the pende ncy ofa n appeal" to which the Rules ofth e Federal Court of Appeal would apply. This means, in my view, that the appellants ' right under Rule 421 had expired and their only recourse was to proceed under Rule 1104.
32. It is submitted that any right the Applicants may have had to amend without leave expired upon delivery of the Notice of Appeal on November 14, 2005. (e) Conclusion 33. The Applicants did not comply with the Practice Direction. They failed to serve their Notice of Application within five days of Leave having been granted. As a result, there was never an obligation on the part of Scotiabank to deliver a Response. 34. The Practice Direction only contemplates that the Notice of Application to be served and filed follov.7ing the granting of Leave will be that which was filed as part of the Application for Leave. An amendment thereto is not contemplated by the Practice Direction. The Notice of Application must comply with the Leave which was granted. Otherwise, the Applicants must make a fresh application for Leave.
23 [ 1985] I S.C.R. 441 at 492. See also Milliken & Co. v. Interface Flooring Systems (Canada) Inc. ( 1993), 53 C.P .R. (3d) 71 (Fed.T.D.) at p. 75, in which the Court affirmed that when amendments sought to be made pertain to matters under consideration in the Appeal, the amendments should not be made without leave.
- 10 -35. In any event, any right to amend the Notice of Application which the Applicants might have otherwise had (had they complied with the Practice Direction) expired by reason of the Appeal launched on November 14, 2005. As such, the Applicants must be granted leave of the Competition Tribunal to amend the Notice of Application. 36. The changes proposed by the Applicants go to the core of the issues that were before the Tribunal on the Leave Application, including the definition of "market" and the definition of "product". The Applicants' proposed changes in this regard pervade the entirety of the proposed Amended Notice of Application. Moreover, most of the proposed changes to the Notice of Application are put forth without any evidence to support them. 37. The Applicants should not be permitted to amend their Notice of Application in the absence of a full consideration of a fresh Leave Application under Section I 03. I. The Respondent is entitled to review the evidence in support of the case that it must meet on a Leave Application and to respond to it. The Tribunal must subject the evidence to the test articulated under Section 103.1 of the Competition Act.
PART IV-ORDER SOUGHT 38. That the Applicants' Motion to amend the Notice of Application and Statement of Grounds and Material Facts be dismissed, with costs payable to the Respondent.
- 11 -ALL OF WHICH IS RESPECTFULLY \M~~~-- F. Paul Morrison I~,- L~
Glen G. MacArthur of counsel for The Bank of Nova Scotia
IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34, as amended; IN THE MATTER OF an application by B-Filer Inc, B. Filer Inc. doing business as GPA Y GuaranteedPayment and NPay Inc. for an order pursuant to section 103. l granting leave to make application under sections 75 and 77 of the Competition Act;
AND IN THE MATTER OF an application by B-Filer Inc., B-Filer Inc. doing business as GPAY GuaranteedPayment and NPay Inc. for an interim order pursuant to section 104 of the Competition Act.
BETWEE N: B-FILER INC. - and - THE BANK OF NOV A SCOTIA Applicants
McCarthy Tetrault LLP Suite 4700 Toronto Dominion Bank Tower Toronto ON M5K 1E6
F. Paul Morrison LSUC # I 7000P Tel: (416) 601-7887 Fax ( 416) 868-0673 Glen G. MacArthur LSUC # 13669A Tel: (416) 601-7888 Fax (416) 868-0673 Lisa M. Constantine LSUC # 35064B Tel: (416) 601-7652 Fax: (416) 868-0673 Solicitors for The Bank of Nova Scotia 4080014
Appellant (Respondent) File No. CT 2005-006 COMPETITION TRIBUNAL THE BANK OF NOVA SCOTIA'S MEMORANDUM OF FACT AND LAW