Peter Lee and Joyce Wendy Yung, doing business
as Fashion Accessories (Applicants)
v.
Segal's (Michael). Inc. (Respondent)
Trial Division, Heald J.—Ottawa, January 25
and 31, 1972.
Trade Marks—Expungement—Affidavits in support of
application—Enlargement of time for filing—Onus of
proof—Trade Marks Act, s. 17(2)—Federal Court Rule
3(1)(c).
In December 1964, respondent was registered as owner
of the trade mark "Dorce" in respect of certain wares. On
June 17, 1969, applicants applied by originating notice of
motion for expungement of the trade mark on the ground
that applicants had used the trade mark in Canada in associ
ation with similar wares since April 1962. Applicants did
not file affidavits in support of their application within the
time allowed by the relevant rule, and at the end of 1971
applied under Federal Court Rule 3(1)(c) for enlargement of
the time for filing affidavits. The affidavits had not been
filed in the time allowed because negotiations had been
proceeding between the parties with respect to the matter
until late in 1971 when they were broken off.
Section 17(2) of the Trade Marks Act provides that when
application for expungement of a trade mark is made more
than five years after its registration on the ground of prior
use, the applicant must establish that the person who adopt
ed the mark did so with knowledge of such prior use.
Held, the circumstances warranted an enlargement of
time for filing affidavits, but in view of the provisions of
section 17(2), the affidavits must be confined to evidence in
applicants' possession prior to expiry of five years from
registration of the mark.
APPLICATION.
J. C. Singlehurst and W. R. Meredith for
applicants.
R. G. McClenahan for respondent.
HEALD J.—This is an application by notice of
motion for an order, pursuant to Rules 3(1)(c)
and 704(3), enlarging the time for the applicants
herein to file and serve, pursuant to Rule
704(3), the affidavits which the applicants pro
pose to put before the Court at the trial of these
proceedings.
These proceedings were commenced under
the provisions of what are now sections 57 and
58 of the Trade Marks Act R.S.C. 1970, c.
T-10, by an originating notice of motion dated
and filed in the Court on June 17, 1969. The
statement of facts accompanying said originat
ing notice of motion sets out that the respond
ent is registered owner of the trade mark
"Dorce" under Canadian Trade Mark registra
tion number 138,403 dated December 11, 1964,
in respect of "sweaters, suits, slacks, shirts,
sport shirts, raincoats, rain hats, jackets,
blouses, pants, coats, knitted T-shirts, knitted
two piece suits, shorts." Said registration states
that the trade mark "Dorce" was used in
Canada by the respondent since January 2,
1964. Applicants allege that prior to that date,
they had used the trade mark "Dorce" in
Canada in association with like or similar wares,
specifically at least as early as April 17, 1962.
Applicants also allege that the use and adoption
of said trade mark by respondent was with full
knowledge of the prior trade mark rights of
applicants in said trade mark.
Applicants then ask for expungement of
respondent's registration on the basis of said
prior use in Canada by the applicants, presum
ably under the provisions of sections 16 and 18
of the Trade Marks Act.
Rule 704(3) provides as follows:
Rule 704. (3) Within 15 days after an originating notice
or notice of appeal is filed, the affidavits which the appli
cant or appellant proposes to put before the Court for the
hearing and determination of the proceedings shall be filed,
and copies thereof shall be served within 15 days after the
originating notice or notice of appeal is served.
The corresponding Exchequer Court Rule
covering the situation in 1969 was Rule 36(3)
which stated as follows:
Rule 36(3) Within fourteen days after an originating
notice or notice of appeal is filed, or within such further
time as the Court may allow (which further time may be
sought inter alia upon the ground that an application is to be
made for a direction that the proceedings may be heard and
determined otherwise than summarily on evidence adduced
by affidavit), the affidavits which the applicant or appellant
proposes to put before the Court for the hearing and deter
mination of the proceedings shall be filed, and copies there
of shall be served within fourteen days after the originating
notice or notice of appeal is served or within such further
time as the Court may allow.
The applicants did not comply with the
requirements of Exchequer Court Rule 36(3) by
filing the affidavits sought to be put before the
Court within fourteen days of the filing of the
originating notice of motion in the Court. As a
matter of fact, no such affidavits have ever
been filed in the Court, nor were they submitted
to me on the argument of the motion.
The applicants make this motion for exten
sion of time for filing such affidavits under the
provisions of Federal Court Rule 3(c) which
provides:
Rule 3. (1) .. .
(c) the Court may enlarge or abridge the time appointed
by these Rules, or fixed by any order, for doing any act or
taking any proceeding upon such terms, if any, as seem
just, and any such enlargement may be ordered, although
the application for the same is not made until after the
expiration of the time appointed or fixed, ...
I agree with counsel for the applicants that
the Court has power to enlarge the time within
which they may file their supporting affidavits
provided the circumstances established warrant
such an enlargement. It thus becomes necessary
to look at these facts and circumstances.
The history of this matter begins on January
2, 1968, when counsel for the applicants wrote
to the respondent alleging that respondent's
registration of the trade mark "Dorce" in
Canada was invalid because of prior use in
Canada by the applicants. The letter then made
some suggestions as to how the conflict
between the parties could be resolved, that is,
by assignment of respondent's registration to
the applicants, thereafter the applicants to
license the respondent. Respondent's solicitor
replied to this letter under date of January 23,
1968 and in effect denied applicant's conten
tions, re-asserted respondent's entitlement to its
Canadian registration and concluded by sug
gesting that perhaps an arrangement could be
worked out whereby respondent might license
the applicants under respondent's registration.
These letters were the first of some forty-two
letters between counsel for the parties between
January of 1968 and December of 1971.
Counsel for both parties referred extensively
to this correspondence in support of their posi
tion. Counsel for the applicants argued forceful
ly that this correspondence indicated clearly
that throughout this entire period, negotiations
were being pursued with a view to settlement;
that at many times during the negotiations it
appeared that settlement would be reached and
therefore counsel did not concern himself with
breach of the rule concerning filing of the
affidavits, and that it was only after negotia
tions were broken off late in 1971, that he
found it necessary to proceed with this motion
for extension of time.
Counsel for the respondent argued just as
forcefully that the correspondence from his
firm, and earlier from the firm first representing
the respondent, should have made it clear to the
applicants and their counsel that respondent
was not retreating in any way from its registra
tion and its right to registration and that neither
of respondent's counsel made any representa
tions or acted in such a way as to lead appli
cants' counsel to believe that he did not need to
comply with the Rules of Court, and that appli
cants' counsel's present difficulty is of his own
making.
I have read the correspondence carefully and
there is some measure of support in it for the
contentions of both counsel. However, consid
ering the evidence in total, I am satisfied that
during the period in question, there was negotia
tion between the parties, and if not true negotia
tion, there was most certainly communication in
large measure. Counsel for the applicants may
have been unrealistically optimistic in expecting
that the conflict would be settled without the
necessity of continuing with his expungement
action. However, I am satisfied that he acted in
good faith throughout.
I agree with the statement of President Jack-
ett (as he then was) in the case of Smith, Kline
& French Inter-American Corp. v. Micro
Chemicals Ltd., 62 C.P.R. 245 when he said at
page 256:
... I think the day is almost past when the Courts are quite
so callous as to say that one litigant is "entitled" to take
advantage of the mistakes of another.
In my view, this is also a case like the Smith,
Kline and French case (supra) to the extent that
here also, the parties had never dropped their
cudgels. Here, as there, it seems that one of the
parties (here the applicants) chose a particular
line of battle strategy that now, in retrospect,
seems to have been unwise.
On page 259 of said judgment, President
Jackett said:
... There was a time when Courts would have taken a hard
line and would not have permitted litigants to go back on
such decisions. It is, however, in my view, more acceptable
today to allow such mistakes to be corrected if they can be
corrected without injustice to other parties and without
transgressing the rule of public policy that demands that
there be some finality to litigation.
I agree with that general view of the way in
which such a situation should be considered and
I would be inclined to grant applicants' motion
in the terms asked for if I could satisfy myself
that such a result would not inflict prejudice
and injustice on the respondent. However,
respondent's counsel submits prejudice on the
following basis: Respondent's trade mark regis
tration is dated December 11, 1964. By virtue
of subsection (2) of section 17 of the Trade
Marks Act' a difference is made between the
standard of proof required in expungement
actions according to whether said action is com
menced before or after the expiry of five years
from the date of trade mark registration.
In actions commenced more than five years
after registration, in addition to all other items
of proof required of the applicant under the
Act, the applicant must prove additionally that
the holder of a trade mark registration, in this
case, the respondent, adopted the registered
trade mark in Canada with knowledge of such
previous use by the applicants.
Put another way, in actions commenced
longer than five years after registration, the
applicant has "a higher hill to climb" than in
actions commenced before the five year period
has expired to the extent of the additional item
of proof above cited.
In this case, the five year period expired on
December 11, 1969. The originating summons
and statement of facts were filed on June 17,
1969, but the supporting affidavits were not
filed and have not been filed to this day. Coun
sel for the respondent says that the applicants
in effect are seeking the best of two worlds. On
the one hand, they want their action, which was
commenced prior to the five year deadline to be
continued so they can retain the benefit of the
lesser burden of proof, while on the other hand,
they want the added advantage of an additional
two and one-half year period within which to
discover and file possible new evidence in sup
port of their action to expunge.
I find considerable substance in the argument
of respondent's counsel. Proceedings of this
kind are intended to be of a summary nature
and are to be heard on affidavit evidence except
in special cases where it may be desirable to
determine certain specific issues on oral evi
dence. Respondent was entitled to know the
case it had to meet and this could only be
accomplished after the applicants had filed and
served their supporting affidavits.
As I said earlier, none of the supporting
affidavits which the applicants seek to file were
before the Court on the hearing of the motion
before me. However, the material before me
established that there are apparently three
affidavits of Joyce Wendy Yung, one dated
May 8, 1969, one dated October 1, 1969 and
one dated March 13, 1971. Copies of these
three affidavits were not sent to respondent's
counsel until April 23, 1971. The applicants ask
for leave to file these three affidavits and poss
ibly another completely new affidavit, not yet in
existence, which applicants' counsel says will
be necessary to establish the new allegations
contained in applicants' amended statement of
claim (amended without leave on January 20,
1972 pursuant to Rule 421(1) because respond
ent has not yet pleaded to the original statement
of claim.)
It is my opinion .that if the applicants wish to
have the benefit of the lesser burden of proof
under section 17(2), they have to be expected to
go to trial on the basis of the evidence in their
possession prior to the expiry of the five year
period, that is to say, prior to December 11,
1969. This would mean that they would be
entitled to file the affidavits of Joyce Wendy
Yung dated May 8, 1969 and October 1, 1969
only.
President Jackett of the Exchequer Court (as
he then was) took what I consider to be the
proper view of Rule 36 which was the predeces
sor to the present Rule 704 in the case of Home
Juice Co. v. Orange Maison Ltée, 52 C.P.R.
175. At page 178, the learned President said:
What Rule 36 contemplates is the filing in advance of the
hearing of the affidavits that the respective parties "pro-
pose" to "put before the Court" for the hearing. In my
view, in the ordinary course of events each of the respec
tive parties, having complied with this condition precedent
to using such affidavits as evidence, should tender at the
hearing such of the affidavits that he has previously filed as
he then decides to make part of his case at the hearing. At
that time, the opposing party can make all proper objections
to their being admitted and the Court can, after hearing
anything that the parties may have to say, admit each
affidavit, in whole or in part, or reject it.
In the case at bar, for the reasons above
stated, I believe that applicants should only
have leave to file the affidavits of Joyce Wendy
Yung dated May 8, 1969 and October 1, 1969.
Because I have not seen these affidavits, I can
form no conclusions as to their relevance or
their admissibility. Respondent will accordingly
have full opportunity to make all proper objec
tions as he may be advised in the event appli
cants desire to put them before the Court at the
trial and the trial Judge will be able to rule on
their admissibility.
In making this disposition of the matter, I
have endeavoured to adhere to the principle
enunciated in the Smith case (supra) while at
the same time ensuring that the respondent is
not prejudiced - by applicants' failure to comply
with the rules over a protracted period of time.
The applicants will have to decide whether to
proceed to trial on the basis of the evidence
contained in the two earlier Yung affidavits or
whether to commence a new action and thus
embrace the higher burden imposed by virtue of
section 17(2) of the Trade Marks Act.
There will be an order enlarging the time until
February 15, 1972 for the applicants herein to
file the affidavit of Joyce Wendy Yung dated
May 8, 1969 and the further affidavit of Joyce
Wendy Yung dated October 1, 1969. It is fur
ther ordered that copies of said affidavits shall
be served on the respondent on or before
March 1, 1972. There will be a further order
allowing the filing of replies under subsection
(2) of section 58 of the Trade Marks Act until
March 15, 1972 and a further order allowing the
respondent until April 1, 1972 to file any affida
vits which it proposes to put before the Court
for the hearing and determination of these pro
ceedings. There will be a further order in favour
of the respondent for the costs of this motion in
any event of the cause. I fix those costs at one
hundred dollars.
17. (2) In proceedings commenced after the expiry of
five years from the date of registration of a trade mark or
from the 1st day of July 1954, whichever is the later, no
registration shall be expunged or amended or held invalid on
the ground of the previous use or making known referred to
in subsection (1), unless it is established that the person
who adopted the registered trade mark in Canada did so
with knowledge of such previous use or making known.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.