Date: 20050428
Docket: T-1323-04
Citation: 2005 FC 571
BETWEEN:
BRILLIANT TRADING INC.
Plaintiff
and
TUNG WAI WONG AND ZHEN HING ENTERPRISE LTD.
Defendants
INTRODUCTION
[1] By motion filed the 16th of November, 2004, the defendants seek the following relief:
1. An order setting aside the default judgment granted against them herein dated the 20th of September, 2004;
2. An order staying generally the writ sequestration provided in favour of the plaintiff by Order made the 13th of October, 2004;
3. An order that all property seized from the defendants under the writ of sequestration, which is still in the possession or under the power or control of the plaintiff, be returned to the defendants;
4. An order in the alternative to the relief requested under paragraph 3, that all property seized from the defendants under the writ of sequestration which is still in the possession or under the power or control of the plaintiff be preserved by the plaintiff pending the resolution of the plaintiff's claim herein;
5. An order granting leave to the defendants to serve and file a statement of defence herein within ten days of the date of the order on this motion; and
6. An order that costs of this application be costs in the cause.
A copy of the Order of the 20th of September, 2004 herein granting default judgment in favour of the plaintiff and against the defendants is attached to these reasons as Annexe I. This judge heard and granted the default judgment and, in the result, heard the motion now at issue.
BACKGROUND
[2] According to the statement of claim herein, the plaintiff is a retailer and distributor of household appliances, including kitchen range hoods, rice cookers, slow cookers and kettles in Canada. The statement of claim alleges that since as early as May, 1996, the plaintiff has used in Canada a trademark consisting of three Chinese characters which transliterate as GAH GAH BOH (the "Trademark") in association with kitchen range hoods.
[3] Once again according to the statement of claim, the defendant Zhen Hing Enterprise Ltd. (the "corporate defendant") is a company incorporated pursuant to the laws of British Columbia with a registered place of business in Vancouver. The defendant Tung Wai Wong (the "individual defendant") is a former employee of the plaintiff who, at all material times, has been the president, secretary and sole director of the corporate defendant. Either the corporate defendant or the individual defendant, or both of them, are alleged to own and operate a retail houseware business in Vancouver. Prior to the 3rd of May, 2004, the plaintiff became aware of plans by the defendants to import kitchen range hoods bearing a trademark the use of which in Canada would allegedly infringe the plaintiff's trademark. On the 3rd of May, 2004 and again on the 26th of May, solicitors for the plaintiff wrote to the individual defendant demanding that the defendants desist from the planned importation and sale and warning of the consequences of failure to do so. No response to either of the letters was received. The defendants allegedly undertook and continued infringing activity. In the result, the statement of claim herein was issued on the 14th of July, 2004. It was personally served by a Process Server on the individual defendant "...by handing it to and leaving [it] with..." the individual defendant.
[4] An amended statement of claim was served on the defendants on the 21st of July, 2004. When no statement of defence was received from the defendants, solicitors for the plaintiff wrote to the defendants providing them with an opportunity to respond. No response was received. The motion for default judgment and default judgment followed.
[5] On the 23rd of September, 2004, copies of the default judgment were personally served on the individual defendant. At that time, the individual defendant was advised, both in Cantonese and English, that he had been given Court documents. Still no response was received.
[6] On the 13th of October, 2004, a writ of sequestration was issued against offending property in the hands of the corporate defendant with a direction to the Sheriff that property seized there under be delivered up to the plaintiff. The writ of sequestration was executed on the 14th and 20th of October, 2004. That action drew a response from the defendants. On the 16th of November, 2004, slightly more than a month after the first execution of the writ of sequestration, the motion giving rise to these reasons, together with supporting affidavits, was filed. Cross-examination on the defendants' affidavits followed and was completed by the 6th of January, 2005. Thereafter, the motion languished. It was only during a telephone conversation between Prothonotary Hargrave in Vancouver and counsel for the plaintiff and for the defendants that the question of this outstanding motion was raised. Thereafter, counsel for the defendants sought a hearing date. The motion was heard on the 19th of April, 2005 by video conference between Ottawa and Vancouver.
SETTING ASIDE DEFAULT JUDGMENT
[7] Rule 399(1) of the Federal Courts Rules, 1998[1] provides that, on motion, the Court may set aside an order that was made ex parte if the party against whom the order was made discloses a prima facie case why the order should not have been made.
[8] In Contour Optik Inc. v. E'lite Optik, Inc.[2], my colleague Justice Lemieux wrote at paragraph [4]:
The test for setting aside a default judgment obtained ex parte is set out by Lutfy J., as he then was, in Tailor Made Golf Co. v. 1110314 Ontario Inc., ... . It is a three-part test with the defendant being required to satisfy the Court all three parts have been met:
(1) First, the defendant must establish either "substantial reasons", a "satisfactory excuse" or a "reasonable explanation" for the failure to file its statement of defence;
(2) Second, the defendant must move the Court promptly to set aside the default judgment; and
(3) The defendant must establish a prima facie defence. [citation omitted]
[9] Here, the individual defendant alleges as the "substantial reason", "satisfactory excuse" or "reasonable explanation" for the failure to file a defence that none of he and the corporate defendants' employees speaks or reads English and that therefore none of them, most particularly himself, understood either iteration of the statement of claim or the default judgment. In the result, he apparently chose to disregard the documents, despite the personal service on him, and thus filed no defence.
[10] Counsel for the defendants relies on Direct Film Inc. v. Direct Film Processors Ltd.[3], where originating documents on behalf of the plaintiff, with its head office in Montreal and represented by a firm of Montreal solicitors, were prepared in the French language. They were served on the defendant in Penticton, British Columbia where apparently the defendant was unable to retain the services of a translator. The defendant pursued the matter through the Registry of this Court in Vancouver and eventually tendered responding documents. Then Associate Chief Justice Jerome expressed the view that "...the court should extend every consideration and leniency rather than foreclose the right of a party to defend." He therefore permitted a defence to be entered but only after the defendant had first paid the plaintiff's costs to date, including the costs of the motion that was before him.
[11] By contrast, counsel for the plaintiff cited Banks v. Sopko et al[4], where Justice Gordon, in separate reasons for a unanimous result, after citing a series of authorities, concluded:
...I do not think that we can safely establish one line of practice for the people who speak English and another for those who speak a foreign language, nor one set of rules for the astute and another for the obtuse. The defendant finds himself in a most unfortunate position but in my opinion he has no one to blame but himself. He appears to have made no move in the matter until his bank account was attached.
[12] I am satisfied that precisely the same could be said on the facts of this matter. The individual defendant essentially chose a course of "willful blindness". He received lawyers letters. He had Court documents personally served on him. According to uncontradicted evidence before the Court he had at least one telephone conversation and a face-to-face brief conversation with a representative of the plaintiff, his former employer. He chose not to seek advice. To paraphrase the words of Justice Gordon, he appears to have made no move in the matter until goods were seized from his business, and that following default judgment against him.
[13] I am satisfied that Direct Film can be distinguished. On the facts of that matter, the defendant, when served with a Court document in an official language that he did not understand, made reasonable efforts to find help. That is not the case here. While, at the level of principle, it is reasonable that this Court should extend every consideration and leniency rather than foreclose the right of a party to defend, I am satisfied that that principle is qualified by the "substantial reasons", "satisfactory excuse" or "reasonable explanation" element of the test. I conclude, on the facts of this matter, that the defendants have failed to demonstrate "substantial reasons", a "satisfactory excuse" or to provide a "reasonable explanation" for their failure to seek advice and, in the result, for their failure to file a defence.
[14] Against the second element of the three part test for setting aside default judgment, whether the defendant moved promptly to set aside the default judgment, I conclude that the defendants must once again fail. Goods were seized from their business on the 14th and 20th of October. While alarm bells were quickly sounded, this motion to set aside the default judgment was not filed until the 16th of November, more than a month after the first seizure. Thereafter, the motion was not pursued with reasonable diligence.
[15] On the final element of the test, establishment of a prima facie defence, once again, I am satisfied that the defendants must fail.
[16] The defendants' evidence to establish a prima facie defence consists of affidavits of two secretaries in the office of the defendants' then counsel who attest that they do not find the plaintiff's trademark and the defendants' allegedly confusing mark to be confusing. They engage in rather sophisticated analyses, both remarkably similar, to arrive at their conclusions. In Miss Universe, Inc. v. Bohna[5], Justice Décary wrote at paragraph [9]:
To decide whether the use of a trade-mark or of a trade-name causes confusion with another trade-mark or another trade-name, the Court must ask itself whether, as a matter of first impression on the minds of an ordinary person having a vague recollection of that other mark or name, the use of both marks or names in the same area in the same manner is likely to lead to the inference that the services associated with those marks or names are performed by the same person, whether or not the services are of the same general class. [emphasis added]
[17] The defendants' affiants simply apply the wrong test. The defendants' affiants did not respond as a "matter of first impression" and as "ordinary persons" having a "vague recollection". Rather, they analysed the marks at issue in substantial detail.
[18] In the circumstances, I conclude that the only evidence relied on by the defendants to establish a "prima facie defence" to the plaintiff's action cannot be relied on for that purpose.
[19] The defendants' motion to set aside the default judgment herein must, I conclude for the foregoing reasons, be dismissed.
OTHER RELIEFS
[20] Counsel for the defendants did not pursue in oral argument before the Court the issues of a stay of the writ of sequestration, return or preservation of the property seized and an extension of time to file a statement of defence.
[21] In order to have obtained a stay of the writ of sequestration, the defendants would have had to establish the classic three part tests of serious issue to be tried, irreparable harm in the event of failure to grant the stay and balance of convenience in their favour. The defendants' conduct in the pursuit of the motion now before the Court has simply not been consistent with an allegation that the defendants will suffer, or have suffered, irreparable harm by the seizures at issue. In fact, the defendants put forward no evidence in support of a claim to irreparable harm. Since the three part test is conjunctive, and there is no evidence to support a conclusion of irreparable harm, the defendants could not have succeeded on their request for a stay, even if it had been diligently pursued.
[22] In light of my conclusions to this point, I cannot discern a case on behalf of the defendants for return of property seized or an order of preservation.
[23] In light of my conclusion that the default judgment herein should not be set aside, an extension of time to file a defence becomes irrelevant.
COSTS
[24] Counsel on behalf of the plaintiff seeks costs of this action to date, on a solicitor-client basis, in any event and payable forthwith. The order for default judgment herein provided costs to the plaintiff both of the motion for default judgment and of the action to the date of that judgment, such costs being fixed at $2,000.00. I am satisfied that it is inappropriate at this stage to revisit that order of costs. Further, I am not satisfied that a case has been made out on behalf of the plaintiff for costs of this motion on an elevated basis. The Court is aware that there are allegations in this matter of contempt of Court. Those allegations remain to be heard and determined; they are no basis for an order of elevated costs. The plaintiff having been entirely successful in defending this motion, it is entitled to an order of costs. However, those costs will be ordered in the plaintiff's favour on the ordinary scale.
________________________________
J.F.C.
Ottawa, Ontario
April 28, 2005
ANNEXE I
Date: 20040920 Docket: T-1323-04
Vancouver, British Columbia, Monday, the 20th day of September, 2004
Present: THE HONOURABLE MR. JUSTICE GIBSON
BETWEEN:
BRILLIANT TRADING INC.
Plaintiff
- and -
TUNG WAI WONG and
ZHEN HING ENTERPRISE LTD.
Defendants
ORDER
UPON motion on behalf of the Plaintiff Brilliant Trading Inc. heard ex parte on this day for default judgment against the Defendants Tung Wai Wong and Zhen Hing Enterprise Ltd.;
AND UPON the Plaintiff having served a Statement of Claim and an Amended Statement of Claim on the Defendants;
AND UPON the failure of the Defendants to serve and file a Statement of Defence within the time set out under Rule 204;
AND UPON hearing the submissions of counsel for the Plaintiff and reading the Affidavit of Christine Sharik sworn September 9, 2004, and the Affidavit of Peter Yeung sworn September 9, 2004;
IT IS HEREBY ORDERED that:
1. The Defendants Tung Wai Wong and Zhen Hing Enterprise Ltd. have infringed the Plaintiff's trademark registration TMA463981, contrary to Section 20 of the Trade-Marks Act, R.S.C. 1985, c. T-13;
2. The Defendants Tung Wai Wong and Zhen Hing Enterprise Ltd. have directed public attention to their wares and business in such a way as to cause or be likely to cause confusion in Canada, at the time they commenced so to direct attention to them, between the wares and business of the Plaintiff and that of the Defendants, contrary to Section 7(b) of the Trade-Marks Act, R.S.C. 1985, c. T-13;
3. The Defendant Tung Wai Wong is enjoined from using, advertising, marketing, or selling wares associated with the trademark consisting of the Chinese characters design transliterated as "GAH GAH BOH" or any other trademark or trade name that is confusingly similar to the Plaintiff's registered trademark, including but not limited to the trademark consisting of the Chinese characters design transliterated as "GAH BOH", and from further directing public attention to his wares and business in a manner likely to cause confusion between his wares and business and that of the Plaintiff;
4. The Defendant Tung Wai Wong is enjoined from, directly or indirectly, participating in, giving authorization to, managing, or directing any entity that uses, advertises, markets, or sells wares associated with the trademark consisting of the Chinese characters design transliterated as "GAH GAH BOH" or any other trademark or trade name that is confusingly similar to the Plaintiff's registered trademark, including but not limited to the trademark consisting of the Chinese characters design transliterated as "GAH BOH", and from further directing public attention to its wares and business in a manner likely to cause confusion between its wares and business and that of the Plaintiff;
5. The Defendant Zhen Hing Enterprise Ltd., its officers, directors, employees, agents, and all those over whom it exercises control is enjoined from using, advertising, marketing, or selling wares associated with the trademark consisting of the Chinese characters design transliterated as "GAH GAH BOH" or any other trademark or trade name that is confusingly similar to the Plaintiff's registered trademark, including but not limited to the trademark consisting of the Chinese characters design transliterated as "GAH BOH", and from further directing public attention to their wares and business in a manner likely to cause confusion between their wares and business and that of the Plaintiff;
6. The Defendants shall, within 20 days of the date of service on them of this Order, deliver up to the Plaintiff any kitchen range hoods, rice cookers, slow cookers, kettles, and any packaging, promotional material, documents (in any medium), or other material as may offend the injunctions in paragraphs 3 to 5 hereof and that are in the possession, custody, or control of the Defendants;
7. The Defendants are enjoined, pursuant to Section 53(4) of the Trade-Marks Act, R.S.C. 1985, c. T-13, from importing any of their wares associated with the Plaintiff's registered trademark or any other trademark confusingly similar thereto;
8. A separate reference will be held pursuant to Rule 153 to assess the Plaintiff's damages, the Defendants' profits, and the monetary compensation due to the Plaintiff;
9. The Plaintiff is entitled to costs of this motion and costs of this action, fixed at $2,000 and payable forthwith.
(Sgd.) "Frederick E. Gibson"
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1323-04
STYLE OF CAUSE: BRILLIANT TRADING INC. v. TUNG WAI WONG
AND ZHEN HING ENTERPRISE LTD
PLACE OF HEARING: Ottawa and Vancouver (via video conference)
DATE OF HEARING: April 19, 2005
REASONS FOR Order : The Honourable Mr. Justice Gibson
APPEARANCES:
Mr. Lawrence Chan FOR PLAINTIFF
Mr. Paul Smith
Mr. Stanley Foo FOR DEFENDANTS
SOLICITORS OF RECORD:
Paul Smith Intellectual Property Law FOR PLAINTIFF
Vancouver, British, Columbia
Mr. Stanley Foo FOR DEFENDANTS
Vancouver, British Columbia
[1] SOR/98-106.
[2] (2001), 17 C.P.R. (4th) 40 (F.C.T.D.).
[3] (1982), 68 C.P.R. (2d) 99 (F.C.T.D.).
[4] [1940] 1 D.L.R. 409 (Sask. C.A.).
[5] [1995] 1 F.C. 614 (F.C.A.).