Date: 20001019
Docket: T-1634-99
Between:
SULLIVAN ENTERTAINMENT INC.,
Plaintiff
- and -
ANNE OF GREEN GABLES LICENSING AUTHORITY INC.,
DAVID MACDONALD and RUTH MACDONALD,
Defendants
REASONS ON APPEAL
Muldoon, J.
[1] This is a motion to set aside the order of Associate Senior Prothonotary Giles dismissing the defendants' application for an order, pursuant to Rule 221 of the Federal Court Rules 1998, striking paragraphs 1(a)(i), (ii), (iii) and (iv); 1(c)(i) and (ii) of the statement of claim, without leave to amend, as the defendants seek to have it.
Applicant/Defendant Position
[2] The applicants (respondents) Anne of Green Gables Licensing Authority (AGGLA), David Macdonald and Ruth Macdonald [(the Macdonalds)(collectively, the defendants)] assert that it is improper for a third party to challenge section 9 of the Trade-marks Act, R.S.C. 1970, c. T-10 (the Act) by way of an action. Because the plaintiff allegedly stands in the place of a third party, paragraphs 1(a) and 1(c) of the statement of claim disclose no cause of action. Furthermore, it is "plain and obvious" that this portion of the Claim cannot succeed and should, therefore, be struck without leave to amend.
[3] The applicants further maintain that the discretionary decision of the prothonotary must be set aside where:
| a) the decision is clearly wrong in that it was based upon a wrong principle or a misapprehension of the facts, or |
| b) it raises a question vital to the final issue of the case, |
thereby enabling the motions judge to exercise his/her own discretion de novo. Thus, it is asserted that the decision of the prothonotary addresses an issue which is a question vital to the final issue of the case and should be adjudicated de novo by the motions judge.
[4] Finally, the applicants claim that Associate Senior Prothonotary Giles erred in fact and law in dismissing the defendants' motion by failing properly to consider and apply the jurisprudence regarding this Court's jurisdiction to grant the relief sought, in accordance with section 9 of the Act.
[5] The applicants rely upon Federal Court Rules 1998, Rule 51 and 221, in addition to various jurisprudential authorities.
Applicant/Defendant Authorities
[6] The applicants rely heavily on the decision of the Federal Court of Appeal in Canada v. Aqua-Gem Investments Ltd. (1993), 149 N.R. 273. This decision established that a decision of a prothonotary ought not to be disturbed on appeal to a judge unless:
| a) it be clearly wrong in the sense that the exercise of discretion was based upon a wrong principle or upon a misapprehension of the facts, or |
| b) it raise questions vital to the final issue of the case. |
Where either one of these criteria be present, it was determined that a judge ought to exercise his or her own discretion de novo.
[7] In attempting to ascertain what constitutes an issue which is "vital to the final resolution of the case," the Court stated:
| It seems ... that a decision which can thus be either interlocutory or final depending on how it is decided, even if interlocutory because of the result, must nevertheless be considered vital to the final resolution of the case.(p. 296, para [97]) |
This view is adopted by Mr. Justice Lemieux, of this Court, in Pfizer Canada Inc. et al v. Apotex Inc. et al. (1999), 1 C.P.R. (4th) 358.
[8] In support of the assertion that the plaintiff lacks the requisite standing to bring this action, the defendants look to Canadian Olympic Association v. USA Hockey, Inc. et al. (1997), 74 C.P.R. (3d) 348 (F.C. T.D.). In this decision, Associate Chief Justice Jerome discussed the meaning of "person interested" and third parties, within the context of the Act.
| ... neither [the Act], the Federal Court Act, R.S.C. 1985, c. F-7, nor the Federal Court Rules accord this Court the jurisdiction to grant any of the relief sought by the plaintiff. Section 9 of the [Act] does not contain any provision for relief in the nature of revocation of an official mark, nor does it allow for a rescinding of the Registrar's decision to give public notice of the adoption and use of an official |
mark. Any remedy which the plaintiff might have had with respect to the Registrar's decision, assuming it had standing, was to launch an appeal. (p. 350)
Moreover, Canadian Olympic Association v. USA Hockey, Inc. et al. (1999), 3 C.P.R. (4th) 259 (F.C.A.), states that bringing an action to challenge the implicit decision of the Registrar of Trade-marks is not the correct procedure. If the plaintiff is going to challenge the decision, the proper method would be to launch an appeal. Not having done so, the appeal against the decision to strike the claim was dismissed.
Plaintiff/Respondent Position
[9] In this action, the plaintiff, Sullivan Entertainment Inc. (Sullivan), is seeking a declaration that the defendants are not entitled to, and cannot, assert the benefits conferred upon public authorities under section 9 of the Act as they do not possess the necessary attributes. Sullivan asserts that it is not seeking to challenge the correctness of the Registrar of Trademarks' decision to publish notice, but rather whether the defendants are entitled to section 9 protection.
[10] Sullivan maintains that its claim is novel because it seeks only declaratory relief. Moreover, it claims that novel actions which raise substantial and difficult issues should not be struck out at the preliminary stage, and that they should be foreclosed only where it is "plain and obvious that the plaintiff cannot succeed." As this matter raises an important question of law regarding the ability of a third party to challenge the enforceability of section 9 marks, the plaintiff asserts that this claim should not be struck at this early stage.
[11] Sullivan maintains that Associate Senior Prothonotary Giles correctly determined that section 55 of the Act grants this Court the requisite jurisdiction to enforce rights under section 9, and that rule 64 permits the granting of declaratory relief in respect of section 9 marks.
[12] The plaintiff relies upon section 55 of the Act and rule 64, in addition to various jurisprudential authorities.
Plaintiff/Respondent Authorities
[13] In asserting its position, Sullivan relies on the establishment of jurisdiction in Achorner v. The Queen, [1977] 2 F.C. 344 (F.C. T.D.), where it is stated: "The jurisdiction is clear that if there is any doubt the decision should be left to the trial judge who should be given an opportunity to hear the evidence" (emphasis added).(p.347)
[14] In support of the claim that the defendants do not constitute a public authority and are, therefore, not entitled to section 9 protection, Sullivan cites the three-part test enunciated by the Federal Court of Appeal in Registrar of Trade Marks v. Canadian Olympic Association (1982), 67 C.P.R. (2d) 59. According to this decision, in order for an entity to be considered a "public authority":
| 1) there must be a duty owed to the public; |
| 2) there must be a significant degree of public control; and |
| 3) profit must not be earned for private benefit, but for the benefit of the public. |
[15] In Big Sisters Association of Ontario et al. v. Big Brothers of Canada (1997), 75 C.P.R. (3d) 177 (F.C. T.D.), the Court noted: "While the Court of Appeal does not appear to have specifically endorsed the ... three part test, it appears nonetheless to have adopted it."
[16] With regard to the mark over which the defendants seek section 9 protection, according to Canadian Olympic Association v. Donkirk International, Inc. (1987), 17 C.P.R. (3d) 299 (F.C. T.D.), the burden of proof falls on them.
| In order for [a party] to be the owner of such a mark, it must submit evidence that: |
| (a) it is a public authority |
| (b) that the mark it has adopted was adopted and used in Canada as an official mark before the registrar has given public notice of its adoption and use. |
[17] As was held in Techniquip Ltd. v. Canadian Olympic Association (1998), 80 C.P.R. (3d) 225 (F.C.T.D.), "I further interpret this provision [section 9] as imposing on a public authority the burden of providing evidence of adoption and use whenever a case of conflict occurs."
[18] With regard to the issue of jurisdiction, the plaintiff directs the Court to section 55 of the Act.
| 55. The Federal Court has jurisdiction to entertain any action or proceeding for the enforcement of any of the provisions of this Act or of any right or remedy conferred or defined thereby. (Emphasis added) |
Moreover, rule 64 states that "... the Court may make a binding declaration of right in a proceeding whether or not any consequential relief is or can be claimed." Thus, the Court is able to grant a declaration simpliciter in all proceedings should it be sought. The plaintiff argues that because this form of relief is well within the bounds of the Court's jurisdiction it should be permitted to proceed with the action.
Order of Giles, ASP.
[19] In providing reasons for the order, Giles, ASP. found that the previous jurisdiction held by the Court of Chivalry over matters of dignity had been transferred to the Federal Court in section 55 of the Act. From this, it was determined that if the Court be able to enforce rights which exist under section 9 of the Act, then it must also be able to refuse enforcement of alleged rights which it considers a party does not have. Thus, Giles, ASP. was not prepared to strike the claim for a declaration on the basis of lack of jurisdiction with regard to the paragraphs in question.
Analysis
[20] On the issue of jurisdiction, argument would be moot considering the authority vested in the Federal Court by section 55 of the Act. Furthermore, rule 64 makes it abundantly clear that should a binding declaration be sought, the Court has the power to grant such relief. Thus, one is left with the issues of whether to disregard the discretionary decision of the prothonotary and decide the matter de novo, and whether particular paragraphs of the statement of claim should be struck as disclosing no cause of action.
[21] The jurisprudence supports the proposition that the discretionary decision of a prothonotary ought only to be set aside where:
| 1) the decision is clearly wrong in that it was based upon a wrong principle or a misapprehension of the facts, or |
| 2) it raises a question vital the final issue of the case. |
If either one of these circumstances be present, the motions judge must determine the issue de novo. In the present matter, it does not appear that the decision was based on an incorrect principle or a misapprehension of the facts, but there may be an issue regarding a question vital to the final issue of the case. In considering the discussion of the Federal Court of Appeal in Aqua-Gem Investments, supra, "a decision which can thus be either interlocutory or final depending on how it is decided" is applicable in the current situation.
[22] In the motion presented before Associate Senior Prothonotary Giles, a situation was created which left only two potential outcomes: allow the motion and strike the paragraphs or dismiss the motion and let the matter proceed. As it happens, the paragraphs in the statement of claim which the defendants are seeking to have struck are those alleging that they do not meet the requisite criteria to be a public authority and are, therefore, not entitled to the benefits conferred under section 9 of the Act. This issue is central to the present action.
[23] In applying the three-part test, the plaintiff asserts that there is no duty owed to the public by the AGGLA as it serves the interests of the Macdonalds primarily in Canada, and only those of the Macdonalds outside the country. Moreover, since the AGGLA is controlled mainly by the Macdonalds and their designates, they fail to meet the second requirement. Furthermore, the profits earned by the AGGLA are essentially for the benefit of the Macdonalds and are not turned over for the public good of Prince Edward Island. Thus, it is on this basis that Sullivan contends that the defendants do not constitute a public authority and that their claim to section 9 protection must be challenged.
[24] Had Prothonotary Giles determined to allow the motion and strike the paragraphs, the matter would have essentially been endes because the allegations that the defendants do not constitute a public authority would have been removed from the statement of claim. Without those paragraphs, what remains are allegations that the defendants should not be entitled to the benefits under section 9 of the Act and the only recourse, according to the case-law, would be to launch an appeal of the registrar's decision.
[25] Moreover, by dismissing the motion and allowing the paragraphs to remain, the prothonotary has essentially determined that this novel action ought to be permitted to go forward as it raises the difficult issue of who constitutes a third party, what makes a public authority and who ought to be allowed the benefits under section 9. Thus, no matter how one examines it, Associate Senior Prothonotary Giles has made a determination which is potentially vital to the issue at hand. Therefore, in accordance with Aqua-Gem, supra and the Federal Court of Appeal, because this decision could have meant the finalization of the issue at hand, a judge on appeal must be permitted to exercise personal discretion de novo in determining the issue.
[26] Without considering the findings of Associate Senior Prothonotary Giles, the issue of whether the paragraphs in question should be struck from the statement of claim remains to be examined. As was previously noted, the plaintiff, Sullivan, is not challenging the decision of the registrar to publish notice of the marks claimed. What is being challenged is the ability of the defendants to benefit from the protection under section 9 of the Act when they apparently fail to meet the criteria of a public authority.
[27] The defendants maintain that they constitute a public authority due to the involvement of the Prince Edward Island government in the development and maintenance of the AGGLA. However, Sullivan counters this argument by applying the three-part test enumerated by the Federal Court of Appeal in Registrar of Trade Marks v. Canadian Olympic Association, supra. In applying this test to the constitution of the defendants, particularly the AGGLA, one cannot agree that it is "plain and obvious that this portion cannot succeed." While it is a novel claim as admitted by Sullivan, it is one which raises important questions regarding the definition of a public authority, and regarding who can rightly assert a claim to the section 9 benefits.
[28] As the plaintiff is not seeking the revocation of an official mark nor to challenge the implicit decision of the registrar, there is no jurisprudence provided to undermine its ability to bring an action for declaratory relief.
Decision of the prothonotary
[29] The associate senior prothonotary's decision addressed matters which are vital to the final issue in the parties' lawsuit. Were there no appeal permitted, his decision could have been dispositive of the whole case. In accordance with the standard of review in Aqua-Gem, the appeal against the prothonotarial decision is dismissed in this judge's overriding discretion, because that decision is correct and, (to repeat) because it directly addressed matters vital to the final issues in the claim.
Decision de novo
[30] On evaluation of the relevant facts, submissions and jurisprudence, this Court finds that since the AGGLA has yet to demonstrate sufficiently that it constitutes a public authority and is entitled to section 9 protection, one cannot find that it is "clear and obvious" that the claim will not succeed. Therefore, the motion to strike paragraphs 1(a) and 1(c) from the statement of claim is dismissed. Further, this appeal is dismissed.
Costs
[31] Costs, on a party-and-party basis under rule 407, will be awarded to the respondent herein, Sullivan Entertainment Inc., in any event of the cause, payable by AGGLA and the Macdonalds equally, or in any manner and proportion upon which the contending parties may agree.
Judge
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1634-99
STYLE OF CAUSE: SULLIVAN ENTERTAINMENT INC.
v. ANNE OF GREEN GABLES LICENSING
AUTHORITY INC. ET AL.
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: JULY 10, 2000
REASONS FOR ORDER OF JUSTICE MULDOON
DATED: OCTOBER 19, 2000
APPEARANCES:
| RANDY PEPPER REPRESENTING THE PLAINTIFF |
| ROGER HUGHES, Q.C. REPRESENTING THE DEFENDANTS |
SOLICITORS OF RECORD:
| OSLER HOSKIN FOR THE PLAINTIFF |
& HARCOURT
TORONTO, ONTARIO
| SIM, HUGHES, ASHTON FOR THE DEFENDANTS |
& McKAY
TORONTO, ONTARIO