Date: 19980526
Docket: T-280-97
BETWEEN:
CLEAR SKY ENTERPRISES LIMITED,
Plaintiff,
- and -
564649 ALBERTA LTD.,
Defendant.
REASONS FOR JUDGMENT
MR. JOHN A. HARGRAVE,
PROTHONOTARY
[1] The Plaintiff is the operator of the Red Bull Restaurant, which goes back to about 1973 or possibly earlier, on the Yellowhead Highway in Radisson, Saskatchewan. The Plaintiff, in its Statement of Claim, claims both a common law trademark and a pending trademark under section 19 of the Trademarks Act and alleges infringement against a recent entry in the restaurant business on the Yellowhead Highway at Lloydminster, the Defendant 564649 Alberta Ltd., which uses the trade-name Red Bull Steak & Grill.
[2] The Plaintiff, which had its solicitors send a cease and desist letter to which there was no response, commenced this action in February 1997 and served a Statement of Claim on Arisdidis Zannis, President of 564469 Alberta Ltd., on 8 April 1997. The Plaintiff now seeks default judgment, specifically injunctive relief, exemplary damages and costs.
[3] The Plaintiff has not taken any steps in this proceeding during the course of about 13 months, between the service of the Statement of Claim and the filing of this motion. Under the Federal Court Rules that were in effect until 25 April 1998 the Plaintiff would have been required to serve, on the Defendant, a notice of intention to proceed, under Rule 331(A), as explained in Canada v. Kulyk (1995) 88 F.T.R. 211. The new Federal Court Rules do not contain an equivalent provision. Thus the Plaintiff is entitled to a remedy. The injunctive relief is clear. I now turn to damages.
[4] The Plaintiff has, by persuasive independent affidavit evidence, established a loss of long established good will, both as a result of confusion between the operations of the Plaintiff and the Defendant and by reason of the Defendant's less attractive service to customers. Counsel suggests exemplary damages of $12,500.00. In awarding damages there are, in this instance, two issues: first, there is the applicability of exemplary damages; and second, the quantification of damages for the loss of goodwill.
[5] Exemplary damages are not compensatory in nature, but are rather a punishment or a deterrent: see for example Lubrizol Corporation v. Imperial Oil Ltd. (1996) 197 N.R. 241 at 253 and following. Such deterrent or punishment is triggered by oppressive, high-handed or callous behaviour which offends the sense of decency of the Court: see for example Hill v. Church of Scientology of Toronto (1995) 2 S.C.R. 1130 at 1208, a case referred to by Justices of Appeal Stone and Linden in Lubrizol.
[6] While the standard of proof in exemplary damages is a civil standard such an award "... should always receive the most careful consideration and the discretion to award them should be most cautiously exercised.": Vorvis v. Insurance Corporation of British Columbia (1989) 1 S.C.R. 1085 at 1104-1105. Such awards should be reasonable for Canadian courts have, in general, awarded relatively modest amounts as punitive damages: see Lubrizol (supra) at p. 255 and Vorvis (supra) at page 1131. However, before dealing with exemplary damages, general damages must first be assessed so the court may determine whether general damages are sufficient: Lubrizol (supra) at p. 255 and Lishman v. Erom Roche Inc. (1986) 111 F.T.R. 44 at 56, a decision of Mr. Justice Rothstein of the Trial Division.
[7] In Lubrizol the Court noted that the Federal Court Rules did not require exemplary damages to be specifically pleaded (p. 249). Similarly, general damages need not be specifically pleaded: Canadian Olympic Association v. National Gym Clothing Ltd. (1985) 2 C.P.R. (3d) 145 at 150 (FCTD). In the present instance, while general damages are not specifically sought in the relief claimed, the Plaintiff sets out, in the body of the Statement of Claim, essential allegations of damage and loss. Thus I will first consider an award of general damages.
[8] The amount of damages is difficult to determine. However the Court must do the best it can with the information available: Public Service Alliance of Canada v. The Staff of the Non-Public Funds, Canadian Forces (1996) 199 N.R. 81 at 97, a decision of Mr. Justice Huggesen of the Federal Court of Appeal.
[9] I might be tempted to accept counsel's suggested damage figure of $12,500.00, for in all probability the Plaintiff has suffered damage to its custom and goodwill. However the Plaintiff has also delayed for a year past the time when it might first have taken default judgment. This delay seems to me an indication that damage to custom and goodwill was not as great as expected when the Plaintiff first discovered that the Defendant was trading on its name and goodwill. Exercising my discretion I set general damages at $10,000.00.
[10] I do not see the oppressive, high-handed or callous behaviour necessary to found exemplary damages. Certainly the Defendant carried on with its infringing activities after receiving counsel's cease and desist letter and has ignored these proceedings. That may have been foolhardy. But it does not offend the sense of decency of the Court. However the Defendant's actions warrant consideration when assessing costs.
[11] Counsel for the Plaintiff, in written submissions, seeks costs on a solicitor-client basis. The Statement of Claim merely refers to an award of costs, as does the Notice of Motion. Solicitor and client costs are generally awarded where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties: see for example Young v. Young (1994) 108 D.L.R. (4th) 193 at 283 (SCC). Does the Defendant's action of ignoring the cease and desist letter from the lawyer for the Plaintiff or the Defendant's ignoring of this action constitute some form of reprehensible, scandalous or outrageous conduct? It does not, however costs pursuant to Tariff B should be awarded not on the basis of an average case, but under one of the higher columns. It is in this instance in no one's interest to spend additional time and money taxing costs and dispersements. Costs and dispersement are therefore set at $2,000.00.
"John Hargrave"
PROTHONOTARY
Vancouver, British Columbia
26 May 1998
Date: 19980526
Docket: T-280-97
BETWEEN:
CLEAR SKY ENTERPRISES LIMITED,
Plaintiff,
- and -
564649 ALBERTA LTD.,
Defendant.
Heard in writing pursuant to Rule 369 on May 26, 1998
Judgment delivered at Vancouver, British Columbia, on May 26, 1998
REASONS FOR JUDGMENT BY: MR. JOHN A. HARGRAVE
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
COURT NO.: T-280-97
| STYLE OF CAUSE: CLEAR SKY ENTERPRISES LIMITED v. 564649 ALBERTA LTD. |
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: May 26, 1998
Heard in writing pursuant to Rule 369
REASONS FOR JUDGMENT
OF THE COURT: Mr. John A. Hargrave - Prothonotary
DATED: May 26, 1998
APPEARANCES:
Randy T. Klein for the Plaintiff
SOLICITORS OF RECORD:
MacDermid Lamarsh
Barristers & Solicitors
#905, 201 - 21st Street East
Saskatoon, Saskatchewan
S7K 0B8 for the Plaintiff
FEDERAL COURT OF TRIAL
Date: 19980526
Docket: T-280-97
BETWEEN:
CLEAR SKY ENTERPRISES LIMITED
Plaintiff
- and -
564649 ALBERTA LTD.
Defendant
REASONS FOR JUDGMENT