Date: 20080114
Docket: T-1236-07
Citation: 2008
FC 45
Vancouver, British
Columbia,
January 14, 2008
PRESENT: The Honourable Madam Justice Snider
BETWEEN:
LOUIS VUITTON MALLETIER S.A.
AND LOUIS VUITTON CANADA, INC.
Plaintiffs
and
LIN PI-CHU YANG
(also known as PI-CHU LIN, WAI YING,
MARTINA and COCO)
and TIM YANG WEI-KAI (also known as
WEI-KAI YANG),
both doing business as K2 FASHIONS
Defendants
REASONS FOR ORDER AND ORDER
[1]
On
November 14, 2007, this
Court granted the Plaintiffs’ motion for default judgment against two
Defendants (Louis Vuitton Malletier S.A. v. Lin, 2007 FC 1179 [Louis
Vuitton Malletier]). The Court found that the Defendants, through a
business known as K2 Fashions, were selling counterfeit Louis Vuitton
merchandise, in contravention of provisions of the Trade-marks Act,
R.S.C. 1985, c. T-13 and the Copyright Act, R.S.C. 1985, c. C-42. The
Plaintiffs were granted a permanent injunction, damages in the amount of
$227,000 and a lump sum of $36,699.14 in respect of solicitor-client
costs (the Default Judgment).
[2]
One of the
Defendants, Lin Pi-Chu Yang (also known as Pi-Chu Lin, Wai Ying, Martina and Coco), has now brought a motion to set aside the Default
Judgment. In brief, Ms. Lin argues that she was never served with the Statement
of Claim and that she has no interest whatsoever (other than as the lessor
of the premises) in the business known as K2 Fashions.
I. Issues
[3]
The key issue is
whether the Default Judgment should be set aside as against Ms. Lin. If I find
that it should be set aside, a subsidiary issue is whether a judgment
registered against Ms. Lin’s property should be discharged. Finally, the
issue of costs of this motion must be addressed.
II. Analysis
[4]
The test for setting aside a
default judgment is well-established (SEI Industries Ltd. v. Terratank
Environmental Group, 2006 FC 218 at para. 4; Brilliant Trading Inc. v.
Wong, 2005 FC 571 at para. 8; Taylor Made Golf Co. v. 1110314
Ontario Inc. (c.o.b. Selection Sales), [1998] F.C.J. No. 681 (T.D.) (QL); Contour
Optik Inc. v. E'lite Optik, Inc., 2001 FCT 1431 at para. 4) and is not
disputed. As established by this jurisprudence, both parties accept that Ms.
Lin must satisfy the Court that:
1. she has a reasonable explanation for her failure
to file a Statement of Defence;
2. she has a prima facie defence on the
merits to the Plaintiffs’ claim; and
3. she moved promptly to set aside the
Default Judgment.
[5]
The Plaintiffs concede that Ms. Lin brought
her motion to set aside the Default Judgment promptly. Thus, there is no need
to address the third element of the test (SEI Industries, above at para.
5).
[6]
I turn to a
consideration of the other two elements.
A. Explanation
for failure to file a Statement of Defence
[7]
Ms. Lin’s only
explanation for her failure to file a defence is that she was never served with
any documents and had no knowledge of the Plaintiffs’ motion for default
judgment against her. As noted in Louis Vuitton Malletier, above at
para. 5, the Court was satisfied on the evidence then before it that Ms. Lin
had been personally served. Other than a bald denial that she was ever served,
Ms. Lin has not provided any evidence or made any submissions that would
suggest that this finding was made in error.
[8]
The “bald denial” by
Ms. Lin must also be placed into the context of the cross-examination on her
affidavit. The transcript of the cross-examination reveals at least 20
contradictions or inconsistencies over the course of the examination. Ms. Lin
was also evasive or unresponsive on a number of occasions. These problems with
her testimony raise credibility concerns. Given that she was untruthful,
contradictory, evasive or inconsistent throughout her examination, I have
serious doubts about the truth of her statement that she was not personally
served with the Statement of Claim.
[9]
In contrast to Ms.
Lin’s assertions, the Court has the detailed affidavit evidence of Mr. Gagnon,
a licensed private investigator and an individual uninterested in the outcome
of these proceedings. In his affidavits sworn in support of the motion for
default judgment, Mr. Gagnon stated that he personally presented Ms. Lin with
the Statement of Claim and left a copy of the document on the counter of K2
Fashions. In addition, the Court has a further affidavit wherein Mr. Gagnon
states as follows:
On
January 7, 2008 . . . I attended the cross-examination of Pi-Chu Lin… The
individual who presented herself as Pi-Chu Lin for the cross-examination on
January 7, 2008 is the same individual referred to in my affidavits [from the
earlier motion for default judgment] and as shown in the photographs attached
as Exhibit C, based both on her physical appearance and her voice.
[10]
Mr. Gagnon was not
cross-examined on his affidavit for this motion. Counsel for Ms. Lin asserts
that there would have been no purpose in examining Mr. Gagnon on his affidavit
evidence. I do not agree. Mr. Gagnon could have been questioned with a
purpose of establishing some doubt to his positive identification of Ms. Lin.
[11]
In my view, the
affidavit evidence of Mr. Gagnon is to be preferred to the brief affidavit
evidence of Ms. Lin, and is sufficient to demonstrate, on a balance of
probabilities, that Ms. Lin was personally served (Grinnell Supply Sales
Co., a Division of Tyco International of Canada Ltd./Tyco International du
Canada ltée v. Heger Contracting Ltd., 2001 BCSC 1105 at para. 12).
[12]
In sum, Ms. Lin has
not persuaded me that she has a reasonable explanation for her failure to file
a Statement of Defence.
B.
Prima facie defence
[13]
The second element
requires the Court to determine whether Ms. Lin has provided evidence in her
motion record to satisfy me that she has a prima facie defence on the
merits to the Plaintiffs’ claim. The threshold for finding that this element
has been satisfied is very low. Is Ms. Lin’s defence so without merit that it is not “worthy of investigation” (British Columbia v.
Ismail, 2007 BCCA 55 at para. 2)?
[14]
As noted in Louis Vuitton Malletier, above
at para. 3, the Court was satisfied that Ms. Lin was associated with K2
Fashions through her ownership in fee simple of the property occupied by K2
Fashions (the Premises) since June 4, 2001. Ms. Lin does not dispute this
finding but submits that, as a mere landlord, she has no involvement with or interest in K2
Fashions. In support of her argument, Ms. Lin has provided an affidavit, a copy
of a title search of the Premises, a copy of two lease agreements for the
Premises signed by herself and Mr. Yang (the other Defendant), and a copy of
her income tax returns for the years 2002, 2004-2006.
[15]
As a landlord to Mr. Yang and
not an owner of K2 Fashions, Ms.
Lin argues that
she should not be liable in respect of counterfeit stock of which she has no
knowledge or involvement.
[16]
I acknowledge that it is possible that a
landlord would not necessarily and always know about the business that is
taking place in their leased premises. Such an issue would likely be one that
is at least “worthy of investigation”. The problem with Ms. Lin’s alleged
defence in this case is that it does not hold up to any scrutiny.
[17]
Although Ms. Lin denies
that she has any knowledge of or interest in the business operations of K2
Fashions, the record indicates otherwise. Mr. Gagnon has identified Ms. Lin, on
more than one occasion, as being in the K2 Fashions store and taking actions
consistent with a person associated with the business. Indeed, she was
described by Mr. Gagnon as “the person in control of the business”. On two
occasions, Mr. Gagnon observed that Ms. Lin “was the only clerk present and I
observed her processing items at the cash register behind the front counter”.
[18]
Further evidence
shows that a woman named “Martina” is the owner of K2 Fashions. Such evidence
consists of business cards and correspondence with Parker Place Management.
Although Ms. Lin denies that she is known as “Martina”, the title search on Ms.
Lin’s properties links her to the name Martina.
[19]
Finally, I also point
once more to the serious credibility concerns with Ms. Lin’s evidence for this
motion.
[20]
Because of her lack
of credibility and because of the contradicting evidence before me, I accord
little weight to Ms. Lin’s statement that she is merely a landlord. I am not
persuaded that Ms. Lin has a prima facie defence on the merits to
the Plaintiffs’ claim. In other words, Ms. Lin’s defence is so without
merit that it is not “worthy
of investigation”.
III. Conclusion
[21]
In conclusion, I am
not persuaded that Ms. Lin has a reasonable explanation for failing to file a
defence or that she has a prima facie defence to the Plaintiffs'
Statement of Claim. The Default Judgment will not be set aside. It follows that
Ms. Lin will not be granted leave to file a Statement of Defence and that the
execution judgment against her will not be stayed.
[22]
The only issue
remaining is that of costs of this motion. As the successful party, the Plaintiffs
are entitled to their costs. The Plaintiffs seek costs on a solicitor-client
basis.
[23]
Rule 400(1) of the Federal
Courts Rules gives the Court the discretionary power to award
solicitor-client costs. However, the awarding of solicitor-client costs should
only be made where a party has displayed reprehensible, scandalous or
outrageous conduct (Young v. Young, [1993] 4 S.C.R. 3 at 134; Mackin
v. New Brunswick (Minister of Finance); Rice v. New Brunswick, [2002] 1 S.C.R. 405 at para. 86; Apotex
Inc. v. Canada (Minister of National Health and
Welfare) (2000), 9 C.P.R.
(4th) 289 at para. 7 (F.C.A.)). Reasons of public interest may also justify
making an award of solicitor-client costs (Friends of the Oldman River
Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3 at 80).
[24]
In the case at bar, the Court
has already awarded solicitor-client costs against all the Defendants,
including Ms. Lin. In doing so, the Court considered the Defendants’
“dismissive attitude towards this proceeding and past judgments of this Court”
and their “flagrant infringement of the Plaintiffs’ intellectual property
rights” (Louis Vuitton
Malletier, above at
para. 59). As Ms. Lin’s behaviour up to the Court’s judgment in Louis
Vuitton Malletier has already been censured, it would not be just to count
that behaviour against her again in determining whether to award
solicitor-client costs in respect of the present motion. Indeed, to do so would
discourage legitimate proceedings by a party who had been previously sanctioned
by the Court and improperly shift the focus away from the conduct of the
parties with respect to the motion before the Court.
[25]
Having determined the
time frame in which to examine whether solicitor-client costs should be awarded
in the case at bar in the time since the Default Judgment was granted, I do not
find Ms. Lin’s behaviour in the relevant period to be so reprehensible
that it is deserving of rebuke. To begin, I note there is no evidence that
either Ms. Lin or K2 Fashions has continued to infringe the Plaintiffs’
trade-marks or copyright since the Default Judgment was granted. Moreover, as
conceded by the Plaintiffs, Ms. Lin brought this motion in a timely manner.
With respect to the argument that Ms. Lin’s motion unnecessarily lengthened the
proceedings, I note that this will be true whenever a motion to set aside a
default judgment is unsuccessful. A failed motion to set aside a default
judgment in itself does not warrant the awarding of solicitor-client costs –
something more is required (see, for example, Brilliant Trading, above
at para. 24). Finally, the Court has repeatedly held that the weakness of a
motion is not a reason to award solicitor-client costs (see, for example, Roberts
v. Canada, [1999] F.C.J. No. 1529 at para. 142 (C.A.) (QL), [2002] 4 S.C.R.
245; Sedpex, Inc. v. Canada (Adjudicator appointed under the Canada Labour
Code), [1989] 2 F.C. 289 at 302).
[26]
In seeking
solicitor-client costs, the Plaintiffs rely on the decision of Fibremann
Inc. v. Rocky Mountain Spring (Icewater 02) Inc., 2005 FC 1377, where this
Court awarded a lump sum of $15,000 in respect of a failed motion to set aside
a default judgment. In that decision, at para. 14, the Court stated that:
“Given the exceptional circumstances of this case, solicitor-client costs are
appropriate”. In my view, the facts in Fibremann were quite different
from those before me. Further, I observe that, despite the fact that the Plaintiff,
in that case, was seeking recovery of over $40,000 in legal fees, a lump sum
award of $15,000 plus disbursements and GST was made. Thus, it is
difficult to accept Fibremann as authority for an award of
solicitor-client costs in the case now before me.
[27]
In sum, I do not find
this case to be an appropriate one in which to award solicitor-client costs.
Costs will be awarded, to be assessed in accordance with column III of Tariff
B.
ORDER
THIS COURT ORDERS that:
1. The motion to set aside the
Default Judgment is dismissed; and
2. Costs are awarded to the
Plaintiffs, to be assessed in accordance with column III of Tariff B.
"Judith
A. Snider"
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