Docket: T-1005-05
Toronto, Ontario, September 13, 2005
Present: THE HONOURABLE MR. JUSTICE VON FINCKENSTEIN
BETWEEN:
CROSS-CANADA AUTO BODY SUPPLY (WINDSOR) LIMITED, CROSS-CANADA AUTO BODY SUPPLY (WEST) LIMITED, and AT PAC WEST AUTO PARTS ENTERPRISE LTD.
and
HYUNDAI AUTO CANADA, a division of HYUNDAI MOTOR AMERICA
REASONS FOR ORDER AND ORDER
[1] The Applicants ( also referred to as "Cross Canada") on June 8, 2005 brought an application for the expungement of certain Trade marks held by the Respondent ( also referred to as"Hyundai").
[2] Theall Group LLP are solicitors for the Respondent and Sim Lowman Ashton and McKay ( "Sim Lowman") are solicitors for the Applicants.
[3] In support of Cross-Canada's application Sim Lowman filed an Affidavit of Nicholas J. Cartel sworn on July 8, 2005 who at the time was an articling student but has since joined Sim Lowman as an associate. Further Affidavit evidence of the Applicants was served on Hyundai's solicitors on August 8, 2005 consisting of Affidavits of Geraldine Theresa Lonergan, Anthony Benevides and Anil Bhole who are respectively senior law clerk, junior law clerk and summer student with Sim Lowman.
[4] Mr. Cartel's Affidavit, sworn July 8, 2005 contained a significant amount of substantive information with respect to matters at issue in the Application. Mr. Cartel described the searches he conducted in the Canadian Trade-Mark Office with respect to the ownership of the Hyundai trade-mark registrations, attaching as exhibits to his Affidavit copies of the Canadian trade-mark registration histories for the Hyundai trade-marks at issue.
[5] Mr. Cartel also described the trade-mark assignments of various Hyundai trade-marks, and questioned the validity of the Affidavit of Johng S. Choi which was the basis for the assignment of certain Hyundai trade-marks. Mr. Cartel proceeded to detail his electronic research efforts and results, alleging a notable lack of information, articles or public announcements available online with respect to the ownership or change of ownership of the Hyundai trade-marks.
[6] Mr. Cartel's Affidavit further detailed his visit to an Ontario Hyundai dealership, where he stated that "[a]ll advertising, promotional material and product at the dealership emphasized the Korean source of the products and Hyundai Motor Company of Korea". After describing his search of the NUANS database, Mr. Cartel concluded that "[a]s a member of the consuming public, I would have difficulty distinguishing between Hyundai Auto Canada Inc. and Hyundai Auto Canada."
[7] The Affidavits of Mr. Bhole, Mr. Benevides and Ms. Lonergan were all similar in form and content, and each described the respective affiant's visits to a number of Ontario Hyundai dealerships. The Affidavits described each affiant's findings with respect to any indication of, or reference to, a Hyundai part/vehicle being "Manufactured in Korea by Hyundai Motor Company, or "Manufactured by Hyundai Motor Manufacturing Alabama LLC". Furthermore, the Affidavits all commented on the lack of indication with the Hyundai dealerships as to the ownership of the Hyundai trade-marks at issue in the Application, and the fact that both Mr. Bhole and Ms. Lonergan held the belief that "Hyundai vehicles...were manufactured in Korea" and that Korea was the only source of Hyundai vehicles. Mr. Benevides stated that he had always associated the Hyundai Trade-Mark and the various Hyundai model names with a Korean source.
[8] The Respondents have now brought a motion asking for:
1. an order removing Sim Lowman, solicitors for the Applicants, as solicitors of
record for the Applicants;
2. in the alternative, an order requiring the Applicants to retain counsel to prepare written submissions for, and present oral argument at, the application;
3. an order fixing costs of the motion payable by the Applicants to the Respondent in accordance with column IV or V of Tariff B.
[9] The Respondents rely on Rule 82 which provides:
Except with leave of the court, a solicitor shall not both depose to an Affidavit and present argument to the court based on the Affidavit.
[10] The Respondents point out that all the key issues in dispute are set out in the Affidavits filed by the Applicant. Thus the central and contentious issues that will be brought before the court are from affiants who are in the employ of the solicitors of the Applicant. In short the same directing mind will be behind the pleadings and the evidence.
[11] The Applicant disputes this an in an admirably short pleadings stating:
There is nothing in the Federal Court Rules or the jurisprudence with preclude such evidence.
It is respectfully submitted that the Federal Court Rules Committee must have considered the issue of whether counsel or a member of counsel's firm can swear an Affidavit in a proceeding and argue orally on that Affidavit. The Federal Court Rules clearly state in Rule 82 that in the absence of leave, counsel is precluded from arguing on an Affidavit sworn by that same counsel.
The Affidavits are sworn by individuals who happen to be within the employ of Sim, Lowman, Ashton & McKay LLP, counsel for the Applicants, and each of the Affidavits clearly state the employment.
None of the Affidavits are sworn on information and belief and particularly not on
information and belief of counsel arguing the Motion.
There is no gap in the Rules and therefore Rule 4 does not apply.
The Federal Court Rules Committee has clearly stated that the only preclusion on the counsel is that counsel cannot argue on his or her own evidence.
There is nothing in the Rules or the case law which extends Rule 82 to include members of counsel's law firm and particularly employees of a law firm who are not lawyers.
[12] I cannot agree with the Applicants. It is always problematic if a solicitor deposes an Affidavit. As O'Keefe J. stated in Shipdock Amsterdam B.V. v. Cast group Inc. 2000 F.C.J. No. 295 at para 11
There is always a danger in a solicitor deposing to an Affidavit and then using the Affidavit on a motion which the solicitor argues or members of his firm argues. The solicitor could be cross examined, privilege issues may arise on cross-examination and the Court would have to comment and weigh the allegations made by the solicitor in the Affidavit. As well the solicitor's law firm could not continue to appear for the defendant in the motion in which the Affidavit was used (see IBM. Corp. v. Printech Ribbons Inc. [1994] 1 FC 692 (FCTD)).
[13] Furthermore the issue of members of the same firm swearing Affidavits in a trade mark action was squarely addressed in IBM v. Printech Ribbons Inc [1994] 1 F.C. 692 where Nadon J. as he then was, discussed the Ontario case of Heck v. Royal Bank of Canada (1993) 12 O.R. (3d) 111 and went on to state at para 34:
¶ 34 On the other hand, Mr. Linteau urges me to accept the policy enunciated by Ferguson J. in Heck, where, at pages 129 and 130, he writes:
I conclude that this practice should generally not be permitted because it may create an impression of impropriety and unfairness in the mind of the public and because it places counsel in an unacceptable conflict of interest where counsel's duty to the court conflicts with counsel's duty of loyalty and protection to the witness who is a business associate and counsel's duty to provide objective advice and representation to the client. When any counsel's business associate's skill, judgment, veracity or integrity is
challenged that counsel would have difficulty being objective.
Where counsel has a connection to a witness who will testify on issues where factual or expert credibility is at issue there is a risk and a possible perception that counsel may be inappropriately influenced by that relationship to the detriment of counsel's duties to the court and the client.
The role of counsel of record in our system requires the assumption of an independent position from which the counsel can represent the client with objectivity and fulfil counsel's duties to the court from a position of detachment. When a counsel calls as a witness a close relative or someone with whom counsel has an employment relationship, the client, the public and the presiding judge will not be assured that counsel will act with that degree of objectivity required by our adversary system.
This is not an issue which should turn on the wishes of the client or the witness because their acceptance of the practice could not eliminate the conflict with the duty of counsel to the court and could not eliminate any appearance of impropriety in the eyes of the public.
Indeed, I am doubtful that counsel could properly advise a client as to whether it should consent to counsel's calling a business associate as a witness. Could counsel be relied upon to give an objective assessment of that witness's evidence and of the impact of such a step on the court and the public? Would counsel not be susceptible to being influenced by the risk that the counsel would be removed from the case, and even perhaps lose future business from that client, if the client decides it did not want counsel to act?
It is of great value to the court to have independent counsel. When a party appears in person or a counsel becomes emotionally involved because he or she identifies too closely with a party or a witness, the party and counsel tend to "enter the fray" and make it difficult for the court to conduct its process and to receive the assistance it expects from counsel or officers of the court.
¶ 35 Notwithstanding the Ontario rules, I believe that the policy as enunciated by Ferguson J. should be followed by this Court even where Ontario lawyers are involved.
[14] The logic of Nadon, J.'s and Ferguson J.'s is unimpeachable. Although the IBM decision predates Rule 83, I see nothing in that rule that directly or implicitly overrules it or can be considered to be in conflict with it. Accordingly I shall apply it to this case.
[15] While I appreciate that the practice of law could not be carried on without solicitors using the affidavits of their colleagues, such practice is usually restricted to non-controversial or non- central matters. Here the entire evidence of the Applicants on the main and highly contested issue will be based on affidavits of members of Sim Lowman. In such a situation there is in the words of Heck supra " a risk and a possible perception that counsel may be inappropriately influenced by that relationship to the detriment of counsel's duties to the court and the client" This court will take all necessary step to avoid such risk or possible perception.
[16] However it seems to be an unnecessarily drastic remedy to remove the entire law firm from the record. The alternate remedy requested by Respondents should deal with all the issues so eloquently described in Heck and IBM supra..
[17] I also see no reason why the Respondents being successful in this motion should not have their costs. However I am not convinced that the actions of the Applicants fall under section 3(k) of rule 400 so as to demand a departure from Column III of the table to Tariff B.
ORDER
THIS COURT ORDERS that:
1. This application be allowed.
2. The Applicants have 15 days from the date of this order to appoint solicitors (other than Sim Lowman) to prepare written submissions for, and present oral argument at, the hearing of the application to expunge the trade marks of the Respondents.
3. Costs shall be in favour of the Respondents in any event.
"K. von Finckenstein"
JUDGE
FEDERAL COURT
NAME OF COUNSEL AND SOLICITORS OF RECORD
STYLE OF CAUSE: CROSS-CANADA AUTO BODY SUPPLY (WINDSOR) LIMITED, CROSS-CANADA AUTO BODY SUPPLY (WEST) LIMITED, and AT PAC WEST AUTO PARTS ENTERPRISE LTD.
Applicants
and
HYUNDAI AUTO CANADA, a division of HYUNDAI MOTOR AMERICA
Respondent
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: SEPTEMBER 12, 2005
AND ORDER BY: VON FINCKENSTEIN J.
APPEARANCES:
Kenneth D. McKay For the Applicants
Jeffrey Brown For the Respondent
Scott Fairley
SOLICITORS OF RECORD:
Sim, Lowman, Ashton & For the Applicants
McKay LLP
Barristers and Solicitors
Toronto, Ontario
Theal & Associates
Barristers and Solicitors
Toronto, Ontario For the Respondent