Federal Court Awards Costs “In Any Event of the Cause”
Underwriters Laboratories Inc. v. San Francisco Gifts Ltd. et al. 2009 FC 909 (Hugessen, J.)

September 16, 2009

Brian Isaac for the Plaintiff, Underwriters Laboratories Inc. (“UL”)
Michael D. Andrews and Nyall Engfield for the Defendants, San Francisco Gifts Ltd. and Barry Slawsky et al. (“San Francisco”)

The Defendants, San Francisco, brought two motions by way of an appeal from two orders of the case management Prothonotary. The first motion sought dismissal of the Plaintiff’s action for delay, while the second motion sought to strike parts of the Plaintiff’s statement of claim. Both motions in appeal were heard together and dismissed in this decision. 

In the first motion, seeking dismissal for delay by the Plaintiff, UL, the Court upheld the Prothonotary’s finding that a substantial portion of the delay had been caused by several stays of action granted at the request of both parties, that only four months of delay could be attributed to UL in a case which had been pending for over three years, and that, under the circumstances, this delay was neither inordinate nor inexcusable.  Also, the Court agreed with the Prothonotary’s refusal to hear evidence of prejudice to San Francisco caused by the delay, as such evidence of prejudice is relevant but not essential to such an order.  Finally, the Court specifically rejected San Francisco’s argument that the Court should look behind the various delays caused by San Francisco and dismiss the action simply because the Plaintiff had an obligation to move the case forward.

In the second motion, San Francisco sought to strike from the Statement of Claim both the allegations raising the personal liability of Mr. Slawsky, owner of all the Defendant corporations, and allegation of a prior criminal conviction under the Copyright Act of one of the corporate Defendants.

In seeking to strike the allegations of personal liability against Mr. Slawsky on the basis of disclosing no reasonable cause of action under Rule 221(1)(a), the Defendants attempted to read into the record affidavit evidence of the extent of Mr. Slawsky’s involvement, which the Court held to be a direct violation of Rule 221(2), which prohibits evidence on a motion for an order under Rule 221(1)(a). The allegations of personal liability in the Statement of Claim were found to be adequate, as they alleged Mr. Slawsky had personal knowledge of the alleged infringements by San Francisco of the UL Certification Mark, by virtue of having personally signed Minutes of Settlement and Undertakings on behalf of San Francisco in the previous copyright infringement proceeding, and that despite this personal knowledge, Mr. Slawsky, through San Francisco, continued to offer for sale electrical products bearing unauthorized and counterfeit reproductions of the UL Certification Mark.

With respect to striking the allegation of prior criminal conviction of one of the corporate Defendants, it was argued that the allegation was both irrelevant and highly prejudicial because the alleged prior conviction was in relation to charges under the Copyright Act while the present claim was for trademark infringement. The Court disagreed, holding that the prior criminal conviction was highly relevant because the prior acts were identical to the acts alleged in the case before the Court, involving the sale of electrical products bearing counterfeit versions of the Plaintiff’s UL Certification Mark. While recognizing the allegations were prejudicial to the Defendant, the Court found there was no rule of evidence that would apply to exclude the prior criminal conviction from the Statement of Claim.

The Court expressed that neither motion should have been brought by the Defendants, considering that the case management Prothonotary had carriage of the case for over two years and was intimately familiar with the details, that the orders under appeal dealt with relatively routine matters of procedure, and that there was an overall lack of any legal basis for the motions brought.  In conclusion, the Court ordered the Defendants to pay Plaintiff’s costs forthwith and in any event of the cause.

By: Charlene Lipchen, Heenan Blaikie LLP