Pro-Sys Consultants Ltd. et al. v. Microsoft Corp. et al., (2011) 304 B.C.A.C. 90 (CA)

• Judge: Donald, Lowry and Frankel, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: April 15, 2011
• Jurisdiction: British Columbia
• Citations: (2011), 304 B.C.A.C. 90 (CA);2011 BCCA 186

Pro-Sys Consultants v. Microsoft (2011), 304 B.C.A.C. 90 (CA);

    513 W.A.C. 90

MLB headnote and full text

Temp. Cite: [2011] B.C.A.C. TBEd. AP.052

Pro-Sys Consultants Ltd. and Neil Godfrey (respondents/plaintiffs) v. Microsoft Corporation and Microsoft Canada Co./Microsoft Canada CIE (appellants/defendants)

(CA034325; CA037968; 2011 BCCA 186)

Indexed As: Pro-Sys Consultants Ltd. et al. v. Microsoft Corp. et al.

British Columbia Court of Appeal

Donald, Lowry and Frankel, JJ.A.

April 15, 2011.

Summary:

The plaintiffs were retail purchasers of computers installed with Microsoft operating systems and applications software (indirect purchasers). Direct purchasers were computer manufacturers who incorporated Microsoft products into their computers. The plaintiffs alleged that Microsoft engaged in various kinds of anti-competitive behaviour which allowed it to overcharge for its products. They further alleged that the overcharge at the direct purchaser level passed through to them and they claimed redress in tort and restitution. Microsoft appealed from decisions by Justice Tysoe on the defendants' application to strike the statement of claim under rule 19(24) and the plaintiffs' application to amend the statement of claim. Microsoft also appealed from the decision of Justice Myers certifying the action as a class proceeding.

The British Columbia Court of Appeal, Donald, J.A., dissenting, allowed the appeal. The court held that it was plain and obvious that the representative plaintiffs had no cause of action maintainable in law.

Editor's Note: The decisions appealed from are reported at [2006] B.C.T.C. Uned. C96; [2006] B.C.T.C. Uned. A69 and [2010] B.C.T.C. Uned. 285. This appeal was heard consecutively with Sun-Rype Products Ltd. et al. v. Archer Daniels Midland Co. et al. (2011), 305 B.C.A.C. 55; 515 W.A.C. 55 which was released at the same time.

Damages - Topic 510

Limits of compensatory damages - General - Prohibition against double recovery - [See Restitution - Topic 8005 ].

Damages - Topic 513

Limits of compensatory damages - General - Defence of passing on - [See Restitution - Topic 8005 ].

Restitution - Topic 8005

Defences - General - Passing-on - The plaintiffs were retail purchasers of computers installed with Microsoft operating systems and applications software (indirect purchasers) - Direct purchasers were computer manufacturers who incorporated Microsoft products into their computers - The plaintiffs alleged that Microsoft engaged in anti-competitive behaviour which allowed it to overcharge for its products - They further alleged that the overcharge at the direct purchaser level passed through to them and they claimed redress in tort and restitution - Microsoft appealed from decisions by Justice Tysoe on the defendants' application to strike the statement of claim under rule 19(24) and the plaintiffs' application to amend the statement of claim - Microsoft also appealed from the decision of Justice Myers certifying the action as a class proceeding - The British Columbia Court of Appeal allowed the appeal - It was plain and obvious that the representative plaintiffs had no cause of action maintainable in law - In rejecting the passing-on defence, the Supreme Court of Canada conclusively determined in Kingstreet Investments Ltd. that a defendant could not reduce its liability to those who paid an unlawful charge by establishing that some or all of it was passed on to others - It followed that any passing on of the charge it was said there may have been was not recognized in law and so could not give rise to a cause of action for its recovery by those to whom the charge was in whole or in part said to have been passed on - Were it to be otherwise, a defendant would be liable for both the whole of the charge paid to it directly (liability to the direct purchasers) and for all or any portion of the charge passed on (liability to the indirect purchasers) - That would result in liability for double recovery - The court set aside the certification order and dismissed the action - See paragraphs 72 to 78.

Cases Noticed:

Sun-Rype Products Ltd. et al. v. Archer Daniels Midland Co. et al. (2011), 305 B.C.A.C. 55; 515 W.A.C. 55; 2011 BCCA 187, refd to. [paras. 2, 72].

Chrysler Canada Ltd. v. Competition Tribunal (Can.) et al., [1992] 2 S.C.R. 394; 138 N.R. 321; 92 D.L.R.(4th) 609, refd to. [para. 23].

Kingstreet Investments Ltd. et al. v. New Brunswick (Minister of Finance) et al., [2007] 1 S.C.R. 3; 355 N.R. 336; 309 N.B.R.(2d) 255; 799 A.P.R. 255; 2007 SCC 1, refd to. [paras. 27, 73].

British Columbia v. Canadian Forest Products Ltd., [2004] 2 S.C.R. 74; 321 N.R. 1; 198 B.C.A.C. 1; 324 W.A.C. 1; 2004 SCC 38, refd to. [para. 27].

Hanover Shoe Inc. v. United Shoe Machinery Corp. (1968), 392 U.S. 481, refd to. [paras. 28, 74].

Illinois Brick Co. v. Illinois (1977), 431 U.S. 720; 97 S. Ct. 2061, refd to. [paras. 28, 74].

Mogul Steamship Co. v. McGregor, Gow & Co., [1892] A.C. 25 (H.L.), refd to. [para. 33].

No. 1 Collision Repair & Painting (1982) Ltd. v. Insurance Corp. of British Columbia et al. (2000), 141 B.C.A.C. 1; 231 W.A.C. 1; 2000 BCCA 463, leave to appeal denied (2001), 269 N.R. 399; 155 B.C.A.C. 320; 254 W.A.C. 320 (S.C.C.), refd to. [para. 34].

Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada et al. (2003), 172 O.A.C. 202; 65 O.R.(3d) 30 (C.A.), refd to. [para. 36].

Barber et al. v. Vrozos et al. (2010), 269 O.A.C. 108; 322 D.L.R.(4th) 577; 2010 ONCA 570, refd to. [para. 36].

Hunt v. Carey Canada Inc. - see Hunt v. T & N plc et al.

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321; 74 D.L.R.(4th) 321, refd to. [para. 37].

Poirier v. Community Futures Development Corp. of Mt. Waddington, [2005] B.C.A.C. Uned. 59; 2005 BCCA 169, refd to. [para. 39].

Canada Cement LaFarge Ltd. et al. v. British Columbia Lightweight Aggregate Ltd. et al., [1983] 1 S.C.R. 452; 47 N.R. 191; 145 D.L.R.(3d) 385, refd to. [para. 42].

Peel (Regional Municipality) v. Ontario, [1992] 3 S.C.R. 762; 144 N.R. 1; 59 O.A.C. 81; 98 D.L.R.(4th) 140, refd to. [para. 47].

Boulanger v. Johnson & Johnson Corp. et al. (2003), 174 O.A.C. 44 (C.A.), refd to. [para. 49].

Innovex Foods 2001 Inc. v. Harnett et al., [2004] B.C.T.C. Uned. 422; 2004 BCSC 928, refd to. [para. 49].

Serhan et al. v. Johnson & Johnson et al. (2006), 213 O.A.C. 298; 85 O.R.(3d) 665; 269 D.L.R.(4th) 279 (Div. Ct.), refd to. [para. 50].

Pro-Sys Consultants Ltd. v. Infineon Technologies AG et al. (2009), 277 B.C.A.C. 271; 469 W.A.C. 271; 312 D.L.R.(4th) 419; 2009 BCCA 503, and [2010] B.C.A.C. Uned. 4; 317 D.L.R.(4th) 122; 2010 BCCA 91, leave to appeal denied (2010), 409 N.R. 385 (S.C.C.), refd to. [para. 52].

Authors and Works Noticed:

Osborne, P.H., The Law of Torts (3rd Ed. 2007), pp. 297, 298 [para. 32].

Counsel:

N. Finkelstein, J.M. Sullivan and S.L. Knowles, for the appellants;

J.J. Camp, Q.C., R.M. Mogerman and M.L. Buckley, for the respondent.

This appeal was heard on November 29 and 30, 2010, at Vancouver, B.C., before Donald, Lowry and Frankel, JJ.A., of the British Columbia Court of Appeal. The judgment of the Court of Appeal was delivered on April 15, 2011, including the following opinions:

Donald, J.A., dissenting - see paragraphs 1 to 71;

Lowry, J.A. (Frankel, J.A., concurring) - see paragraphs 72 to 78.