Date: 19981014
Docket: T-935-98
BETWEEN:
B.B. BARGOON'S (1996) CORP.,
Plaintiff,
- and -
744776 ONTARIO INC. and
DIANNE SMITH,
Defendants.
REASONS FOR ORDER
MULDOON, J.
[1] This is the defendants' motion for:
| 1. An order striking paragraphs 3, 10, 11, 24, 25 and 26 of the amended statement of claim, and ordering that Dianne Smith cease to be a party to this action. |
| 2. Alternatively, an order requiring the plaintiff to serve and file particulars of the allegations made in paragraphs 3, 10, 11, 24, 25 and 26 of the amended statement of claim, and specifically, the material facts establishing the personal liability of the defendant Dianne Smith, within 10 days of the order. |
| 3. An order requiring the plaintiff to serve a copy of the alleged "settlement agreement" signed by Dianne Smith in her personal capacity, and by Dianne Smith on behalf of the corporate defendant, in early 1995. |
| 4. An order extending the period within which the defendants must serve and file a statement of defence until 7 days after the disposition of the motion, or service of the amended statement of claim or particulars, as the case may be. |
| 5. Costs of the motion. |
The defendants rely on 1998 rules 104(1)(a) and 221(1)(a) which permit this kind of motion.
[2] The defendants' motion is supported by Mark L. Robbins' affidavit, sworn on July 3, 1998. He is a member of the defendants' solicitors' firm, who has been in practice since February, 1994, "primarily in the area of trade mark law and related litigation". He swears that he does not believe that the above listed paragraphs of the amended statement of claim allege material facts establishing the personal liability of the defendant, Dianne Smith. This belief the deponent bases on his "experience". There is no need to invoke his "experience", even if the deponent had been in practice since 1974 or earlier, and especially since he makes no direct professional assertion, but seeks refuge in his "belief" which is hardly relevant: With respect, the deponent's belief is incorrect, a finding which necessitates a recital of the amended statement of claim's impugned paragraphs, thus:
| 3. The defendant, Dianne Smith, is an individual and business woman residing in Ontario and is, directly or indirectly, a principal, a shareholder and the guiding mind of the defendant, 744776 Ontario Inc. |
| 10. On or about June 14, 1989, the individual defendant, Dianne Smith, in her personal capacity, entered into a franchise relationship regarding the B.B. Bargoon's Property with B.B. Bargoon's or its predecessors by signing the agreement dated June 14, 1989 with B.B. Bargoon's Franchising Inc. (a related company of B.B. Bargoon's or its predecessors) dealing with the trade-mark B.B. BARGOON'S (the "Agreement"). Such Agreement dealt specifically with trade-marks and in particular at Section 13 with the ownership, validity and enforceability of the trade-mark B.B. BARGOON'S. The individual defendant, Dianne Smith, directly and or indirectly through the corporate defendant, 744776 Ontario Inc., carried on business under the B.B. Bargoon's Property under licence until 1995 pursuant to such Agreement. The extent to which the business was carried on directly by the individual defendant, Dianne Smith, or indirectly by or through or directly by the corporate defendant, 744776 Ontario Inc., is known to the defendants. B.B. Bargoon's or its predecessor authorized such licence and was and is aware of the standard of operations of the defendants. In order to settle the termination of that franchise relationship and to give the defendants a transition period solely, in early 1995, B.B. Bargoon's or its predecessor and each of the defendants (the defendant, Dianne Smith, in her personal capacity) entered into an agreement (the "Settlement Agreement") whereby the defendants were jointly or the defendant, 744776 Ontario Inc. was entitled to an exclusive licence to use the B.B. BARGOON'S name and trade-mark within Barrie for the period ending May 31, 1997. Both defendants were then to cease use of the B.B. Bargoon's name and trade mark although they or the defendant, 744776 Ontario Inc. could at their/its option, use the name "B.B.'s" or B.B.'s of _____________" within Barrie from June 1, 1997 to September 30, 1999. Any right which either defendant had to use the B.B. Bargoon's Property expired on May 31, 1997. |
| 11. The defendants have carried on their business under license under the trade-mark and trade name B.B. Bargoon's within the Barrie area, pursuant to the agreements discussed in paragraph 10. above. Instead of ceasing such use in May, 1997 the defendants jointly or individually have continued to use the B.B. Bargoon's name and trade-mark. Such use is causing confusion in the marketplace to the detriment of B.B. Bargoon's. |
| 24. The individual defendant, Dianne Smith, as officer, director, and directing mind of the corporate defendant, personally, ordered, authorized and directed all of the complained of acts of the corporate defendant, as set out above. She did so having signed the Agreement and entered the Settlement Agreement and having knowledge that the B.B. Bargoon's Property did not belong to her or to the corporate defendant, 744776 Ontario Inc. and that neither she nor the corporate defendant, 744776 Ontario Inc, was free to use the B.B. Bargoon's Property (other than under licence). |
| 25. B.B. Bargoon's states that the individual defendant, therefore, knowingly and without colour of right caused the corporate defendant to conduct itself in such a way as to contravene the rights of B.B. Bargoon's in the B.B. Bargoon's Property. The individual defendant so conducted herself with the intention of profiting at the expense of B.B. Bargoon's and its authorized licensees. The individual defendant is attempting to use the corporate defendant to shield herself from liability for any unlawful and infringing act herein alleged. |
| 26. By reasons of her actions, as set out above, the individual defendant, Dianne Smith, has induced and procured the actions of the corporate defendant, 744776 Ontario Inc. herein complained of. |
[3] Although the plaintiff's allegations could be drawn more elegantly and grammatically, they leave no doubt of the material facts upon which the plaintiff asserts, and without a statement of defence, could establish the personal liability of Dianne Smith. Indeed, in response to this judge's June 15 order permitting the plaintiff to amend in order to meet the defendants' complaint, one might say that paragraph 24 goes a little far in pleading evidence beyond material facts. Paragraph 24 is not to be struck out on that account, for that is not the thrust of the defendants' objections.
[4] What ties Dianne Smith to the plaintiff's allegations of personal liability are her alleged participations in negotiating the end of the defendants' licence(s) to use the plaintiff's mark, and her signature thereon. It is this factor which distinguishes the present case from Painblanc v. Kastner (1994) 58 C.P.R. (3d) 502 (F.C/A).
[5] Of interest here is the decision of Madam Justice Proudfoot, in the Supreme Court of British Columbia, unanimously upheld without comment by the Court of Appeal, in Visa International Service Association v. Visa Motel Corporation (1985) 1 C.P.R. (3d) 109 at p. 119. The criteria which Proudfoot, J. applied in finding the two officers and directors of the defendant liable for trade mark infringement and passing off, illustrate this Court's present finding that the impugned paragraphs of the amended statement of claim ought not to be struck out. Citing 29 Hals., 3rd ed., p. 90, para. 192, and the Federal Court of Appeal in Mentmore Mfg. Co. Ltd. et al. v. Nat'l. Merchandising Mfg. Co. Inc. et al. (1978) 40 C.P.R. (2nd) 164 at pp. 173-74, 89 D.L.R. (3d) 195 and 22 N.R. 161, found considerable support for fixing the two directors with personal liability in the circumstances of the case which she adjudicated.
[6] It is, of course, not time for substantive adjudication of the case now interlocutorily before this Court. It is, however, time for the defendants to file their joint or separate statement(s) of defence. In particular, the amended statement of claim sets out sufficient material facts to enable Dianne Smith either to confess, or to deny, liability. If she denies, she will have an opportunity to examine the plaintiff's instructing officer, for discovery of the details of the evidence which the plaintiff has marshalled for its case against her.
[7] In light of the above expressed finding, the plaintiff now has,or can obtain through discovery, all of the particulars sought in its demand for particulars dated June 30, 1998, tab 2A of its motion record. It is obvious that the plaintiff, which pleads that Dianne Smith was the "guiding mind" and the "directing mind" of the corporate defendant at all material times, ipso facto pleads that she personally ordered, authorized, directed, procured or induced all the alleged trade mark infringements and passing off of which it complains in its amended statement of claim. This request should be dismissed.
[8] Furthermore, as the plaintiff's motion record shows, the plaintiff has already responded to a defendants' demand for particulars, but the defendants keep demanding. They must now plead to the claim, or confess.
[9] In regard to the defendants' demand to produce a copy of the "settlement agreement", their counsel at the hearing informed the Court that he and they are no longer seeking a copy of it. The defendants' motion in that regard is therefore disposed of at the hearing.
[10] The above noted disposition finally disposes of the defendants' motion of July 6, 1998, except for time to file a defence, if so advised. The defendants are to be accorded seven juridical days after the order herein of even date within which to file a defence.
[11] The defendants' motion is largely decimated, and the time which they are accorded was necessitated by their motions and notices. The defendants should bear the costs, which are hereby fixed in the amount of $600.00 including disbursements payable in any event of the cause.
[12] No appeal having been taken against this judge's order dated June 15, 1998, any reasons expected, over and above the oral reasons given at the earlier hearing, are subsumed herein.
Judge
Ottawa, Ontario
October 14, 1998