Date: 19971113
Docket: T-1636-97
BETWEEN:
TAYLOR MADE GOLF COMPANY, INC.
and
SALOMON CANADA SPORTS LTD.
Plaintiffs
AND
DAVID HANCOCK and DAVID STOROSCHUK
doing business as "D.H. ENTERPRISES"
and/or "GOLF LIQUIDATORS"
and/or "AMERICAN GOLF LIQUIDATORS"
Defendants
REASONS FOR ORDER
RICHARD MORNEAU, ESQ., PROTHONOTARY
Facts
[1] This is a motion by the Defendants for the striking out of the Amended Statement of Claim in a matter involving a claim of trade-mark and copyright infringement.
[2] The original Statement of Claim was filed on July 30, 1997 and an Amended Statement of Claim was filed on August 20, 1997.
[3] By letter of October 2, 1997 from the solicitors for the Defendants to the solicitors for the Plaintiffs, the Defendants requested that the Plaintiffs amend the Amended Statement of Claim to remove paragraphs 25 to 28 on the basis that these paragraphs are inappropriate and contrary to law in that they allegedly refer to privileged settlement negotiations and an alleged settlement agreement between the Plaintiffs and the Defendants.
[4] On October 6, 1997, the Plaintiffs, through their solicitors, responded in the negative to the Defendants' request and to date have failed to remove the offending paragraphs.
[5] The Defendants are now seeking an order, pursuant to Rules 419(1)(d) and (f) and 359 of the Federal Court Rules (the Rules), for the removal of the entire Statement of Claim and Amended Statement of Claim from the Court file, or in the alternative, for an order striking paragraphs 25 to 28 of the Amended Statement of Claim as being prejudicial and embarrassing to the Defendants and potentially delaying the fair trial of the action.
[6] Paragraphs 25 to 28 of the Amended Statement of Claim read as follows:
| 25. On or about April 15, 1997, following numerous exchanges of communication between their respective solicitors, the Plaintiffs and the Defendant David Hancock agreed to a settlement (the "Agreement") the terms of which included that David Hancock, his employees, and his companies and their affiliates, employees, officers, directors and agents would: |
| "(a) permanently cease and desist from (i) any and all use, advertising, sale, or offering for sale of TAURUS golf clubs, BOMBER TOUR PLUS shafts and BUBBLE shafts or (ii) any other activities infringing the rights of Taylor Made U.S. and Taylor Made Canada in the Trade Marks [also referred to herein as the "Trade Marks"] and Copyrights [referred to herein as the "Logos"]; |
| (b) not in the future adopt or use any trade mark, trade name or corporate name which is confusing with or otherwise infringes the Trade Marks or Copyrights". |
| 26. On or about April 17, 1997, David Hancock signed the Agreement and delivered a photocopy to his counsel. Owing to the failure of David Hancock to provide the original of the signed Agreement to his counsel, the Agreement has not, to date, been executed by the Plaintiffs. |
| 27. On or about Friday, July 18, 1997, the Plaintiffs learned that the Defendants were continuing to sell Infringing Golf Wares. The Defendants, acting under the name "Golf Liquidators", advertised a "4-day Clearance Sale" from July 18-21, 1997 (the "Sale"), at the Best Western Baron's Hotel, 3700 Richmond Road, Bells Corners, Nepean, Ontario. Among the articles sold by the Defendants during the Sale were golf clubs bearing the TAURUS trade mark. |
| 28. The Defendants have failed to comply with the Plaintiffs' requests referred to in paragraph 24 and have breached the Agreement referred to in paragraph 25. The Defendants have deliberately misled the Plaintiffs by entering into the Agreement, then breaching its terms. |
Analysis
[7] The Defendants allege that the only purpose for the Plaintiffs to have included impugned paragraphs 25 to 28 in their Amended Statement of Claim is to embarrass the Defendants by demonstrating the weakness of their position by pointing to a settlement agreement in which they have acknowledged certain activities and agreed to certain facts.
[8] For their part, the Plaintiffs stress the fact that none of the impugned paragraphs refer to the contents of the negotiations and that impugned paragraph 25 merely cites the contents of the settlement agreement.
[9] They contend that under the motion at bar, the facts recited in impugned paragraphs 25 to 28 must be taken at this stage to be proven and, therefore, in accordance with paragraph 25 one must conclude that a settlement agreement was reached. Once a settlement is reached, no settlement negotiation privilege can stand to preclude a reference to the terms of the settlement. In that regard, the Court was referred to the case of Director of Assessment v. Begg (1986), 33 D.L.R. (4th) 239 (N.S.S.C.) where at page 242, the Court stated:
| Communications exchanged between solicitors on a without prejudice basis permit parties, through their solicitors, to conduct genuine and serious negotiations toward settlement. If a settlement is not achieved, then the parties can be confident that they will not be prejudiced by their exchanges being introduced as evidence at trial. However, once an unconditional and complete settlement is reached the privilege which hitherto existed is removed. |
[10] The Plaintiffs further submit that the chain of events described in paragraphs 25 to 28 of the Amended Statement of Claim leads to the conclusion found at the end of impugned paragraph 28 wherein the Plaintiffs allege that the Defendants have deliberately misled the Plaintiffs by entering into the Agreement, then breaching its terms. On the strength of this conclusion, the Plaintiffs claim punitive damages. This allegation of deliberate breach of contract might prove to be by itself insufficient at trial to entitle the Plaintiffs to punitive damages. However, I agree with the Plaintiffs that at this stage such a claim is not obviously so forlorn and futile that it should succumb to a motion to strike. (See Copperhead Brewing Co. v. John Labatt Ltd. (1995), 61 C.P.R. (3d) 317 (F.C.T.D.), at 322.)
[11] I am ready to adopt the Plaintiffs' approach to this motion. Therefore, I shall not order that impugned paragraphs 25 to 28 be struck out. Consequently, there is no reason to consider whether the entire Amended Statement of Claim shall be struck out; the Defendants requested this remedy to ensure that, had the impugned paragraphs been struck out, they would not remain on file and, therefore, would not come to the attention of the judge hearing the case on the merits.
[12] Finally, there is no justification for the Court to order the return to Defendants' counsel of the affidavit of Kevin Carton dated October 6, 1997 since this affidavit or the exhibits attached thereto make no reference to the contents of the negotiations which led to the settlement agreement.
[13] This motion will therefore be denied, with costs in the cause.
Richard MorneauProthonotary
MONTREAL, QUEBEC
November 13, 1997
FEDERAL COURT OF CANADA
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT NO.:
STYLE OF CAUSE:
T-1636-97
TAYLOR MADE GOLF COMPANY, INC. and
SALOMON CANADA SPORTS LTD.
Plaintiffs
AND
DAVID HANCOCK and DAVID STOROSCHUK doing business as "D.H. ENTERPRISES"
and/or "GOLF LIQUIDATORS"
and/or "AMERICAN GOLF LIQUIDATORS"
Defendants
PLACE OF HEARING:Ottawa, Ontario
DATE OF HEARING:October 16, 1997
REASONS FOR ORDER BY:Richard Morneau, Esq.,
Prothonotary
DATE OF REASONS FOR ORDER:November 13, 1997
APPEARANCES:
Mr. Mirko Bibic for the Plaintiffs
Mr. Barry E. Hutsel for the Defendants
SOLICITORS OF RECORD:
Stikeman, Elliott for the Plaintiffs
Mr. Mirko Bibic
Ottawa, Ontario
Macera & Jarzyna for the Defendants
Mr. Barry E. Hutsel
Ottawa, Ontario