Supreme Court of Canada
Chateau-Gai Wines Ltd. v. Institut National des Appellations d’Origine des Vins et Eaux-de-Vie et al., [1975] 1 S.C.R. 190
Date: 1974-04-02
Chateau-Gai Wines Limited (Defendant) Appellant;
and
Institut National des Appellations d’Origine des Vins et Eaux-de-Vie et al. (Plaintiffs) Respondents.
1973: November 30, December 4, 5, 6; 1974: April 2.
Present: Fauteux C.J. and Abbott, Martland, Judson, Ritchie, Spence, Pigeon, Laskin and Dickson JJ.
ON APPEAL FROM THE COURT OF QUEEN’S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC
Trade marks—Appellations of origin—Damages—Injunction—Trade treaty—Not ratified by both parties—Coming into force by agreement—Priority of implementing statute—Legal weight of certificate from the Minister—Registered word used as common noun—Prolonged inaction—Registered by competent services—Res judicata—The Unfair Competition Act, 1932, 1932 (Can.), c. 38, ss. 12 and 30—The Canada-France Trade Agreement Act, 1933, 1932-33 (Can.), c. 31—The Department of State Act, R.S.C. 1927, c. 189, s. 5—Code of Civil Procedure, art. 752.
Respondents and their trade association, the Institut National des Appellations d’origine des vins et eaux-de-vie, brought an action in the Superior Court of the Province of Quebec for an injunction and damages on the basis of a trade treaty between Canada and France, brought into force in Canada by The Canada-France Trade Agreement Act. Under art. 11 of the treaty respondents sought to have the word “Champagne”, as an appellation of origin of their wines, protected against use by the appellant to describe any of its sparkling wines produced in Canada. The Canada-France Trade Agreement Act was assented to on May 23, 1933 and came into force on June 10, 1933. On October 18, 1934 the Commissioner of Patents registered the trade mark “Champagne” for wines, in the name of the Government of the French Republic, in accordance with The Unfair Competition Act, 1932 and indicated June 10, 1933 as the date of registration.
Article 16 of the treaty provides that the “Agreement shall be ratified and the ratifications…
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exchanged… as soon as possible”, and that it shall come into force on a date agreed on by the parties. However, a certificate from the Secretary of State for External Affairs stated that the exchange of ratifications never took place, but that the date for the coming into force of the Agreement was fixed by joint agreement of both countries.
A decision of the Court of Appeal affirming a judgment of the Superior Court condemned appellant to pay damages and enjoined it to refrain from using the appellation “Champagne” at any time or in any place. An appeal was entered in this Court.
Held (Abbott, Judson, Spence and Laskin JJ. dissenting): The appeal should be allowed in part by way of reducing the award of damages.
Per Fauteux C.J. and Martland, Ritchie, Pigeon and Dickson JJ.: The treaty does not state that it will only come into force after ratification, it merely provides for ratifications and their exchange. There is no rule of law by which a promise stipulated in a treaty must be presumed a suspensive condition in the absence of any indication to that effect. The parties agreed the treaty would come into force on a date to be fixed by joint agreement. Lack of ratification cannot have a bearing on the validity of the Agreement, in the absence of any action by the public authority to terminate or rescind it. So far as the certificate from the appropriate Minister is concerned, it is conclusive proof as regards the value of the signatories’ powers and the authority of the government they represent. In the interpretation of treaties the approach of the government, though not conclusive, must be given great weight.
Appellant cannot be authorized to include in the record of this case an Exchequer Court judgment, rendered at its request against the Attorney General of Canada and ordering that the registration be deleted subject to certain reservations. The Exchequer Court proceedings were subsequent to the suit therein, and if appellant intended to set up the judgment against respondents it should have acted with reasonable diligence, so that those persons who were not parties to the application were not deprived of the opportunity to seek to intervene in the appeal to this Court, in case the right to rely on the decision as res judicata were recognized.
Concerning the validity of the registration, the Unfair Competition Act, 1932 departed from the traditional principles governing trade marks. Even
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though the requirements of this Act were not followed to the letter in the registration of the word “Champagne” as a trade mark intended to indicate the origin of wines, the provisions of The Canada-France Trade Agreement Act, 1933 have the force of law “notwithstanding the provisions of any law in force in Canada”. Article 11 of the Agreement gives the French government the right to request registration “without charge”, provided that the appellation in question has not become public property in France, which is the case here. Accordingly, art. 11 should prevail over the provisions of The Unfair Competition Act.
The principle barring the holder of a trade mark from claiming an exclusive right to it, when he has tolerated the use of the word registered as a common noun describing a product of a certain kind rather than a product manufactured by the holder, cannot apply to counter the stipulations of the Agreement and the Act. In undertaking to ensure respect for appellations of origin “which have not become public property” in France, Canada intended that the criterion to be used in deciding whether the appellation had lost its private character and become a common noun would be the situation prevailing in the country of origin. The obligation to respect appellations of origin has not been extinguished by the period of thirty years which has elapsed between the registration and the proceedings.
An administrative directive in which the word “Champagne” was used as a common noun describing sparkling wine cannot have any legal effect whatever on the 1933 Act. So far as the final paragraph of art. 11 of the Agreement is concerned, its sole purpose is to extend the prohibition of false appellations of origin to every form of competition contrary to honest usages in industrial and commercial matters and of such a nature as to create a confusion with the products of a competitor.
With regard to the injunction, the right to apply for it is recognized by art. 752 of the Code of Civil Procedure. It is the usual remedy against any trader using a commercial designation to which he is not entitled, and should be recognized under the general principles as a consequence of the Act which imposes a legally binding prohibition against using without right the appellations of origin registered under the 1933 Trade Agreement. Further, appellant Institute is an organization vested with legal personality by the executive enactment creating it, and is entitled to be a party to legal proceedings.
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With regard to the damages awarded plaintiffs other than the Institute, the quantity of genuine Champagne not sold in Quebec between April 1, 1962 and March 31, 1964 because appellant was marketing a sparkling wine designated “Canadian Champagne” could not be more than a rather small portion of the quantity sold by it under that designation, since sales of genuine Champagne were about ten per cent greater than the total sales of “Canadian Champagne” during the same period. The amount of damages awarded by the trial judge, amounting to $1.50 per bottle of “Canadian Champagne”, is much too high and must be reduced. These are not “moral damages” but pecuniary losses.
Per Abbott, Judson, Spence and Laskin JJ. dissenting: Article 16 is not a substantive provision affecting the operation of the implementing statute, but a procedural provision respecting the international force of the Treaty. The contracting states were entitled by mutual agreement to substitute a different method of arriving at a treaty arrangement and giving it force than the one originally agreed upon in the Treaty. The retention of art. 16 in the Schedule to the implementing Act added nothing to the effect of the Act in respect of the substantive terms of the Treaty. It was s. 5 of the Act implementing the Treaty that governed the domestic force of the Treaty when the latter had been made effective internationally between the contracting states.
Article 11 read as a whole affords protection in Canada only to those products of France whose appellations of origin are registered with the “competent services” of Canada. In terms of what it purported to be, the word “Champagne” could not be validly registered as a trade mark. The registration on which respondents based their action was not one “with the competent services” of Canada. The appellation of origin should have been registered under s. 5 of The Department of State Act. Moreover, s. 4 of the Act implementing the Treaty envisaged Canadian governmental action to give effect to the Agreement for domestic purposes. If this has not been done, it cannot be laid at the door of the appellant so as to deprive it of a defence to an exceptional claim arising against it. Further, no additional force is given to the terms of the Treaty as domestic law, beyond what inheres in them, by reason of the inclusion in the implementing statute of the words “nothwithstanding the provisions of any law in force in Canada”. These
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words merely give the Treaty an ascendancy against any other legislation that might conflict with it, but do not dissolve any obligations of proof that arise under the terms of the Treaty itself.
On the question of a permanent injunction, by reason of the respondents’ long and unexplained delay when fully aware of their legal rights and of the invasion thereof by the appellant and others, it is inequitable to apply this drastic remedy against the appellant. There was not even the threat of legal proceedings over the thirty year period between implementation of the treaty by the Act and commencement of the action, merely an effort by the French government in 1956 and 1957 to exert diplomatic pressure. That is not enough, especially when the long delay has not been explained, to support respondents’ claim to equitable relief.
As to the matter of damages, to the degree that case law has assimilated the civil law concept of moral damages to the common law concept of general damages, proof of pecuniary loss must be offered if more than a nominal award is to be justified. Although moral damages may, inter alia, include a sum for damage to reputation, the award in this case cannot be so justified because the respondents based their claim for damages on pecuniary loss.
[Corporation of the Village of Deschenes v. Loveys, [1936] S.C.R. 351; National Starch Manufacturing Company v. Munn’s Patent Maizena and Starch Company, [1894] A.C. 275, distinguished; Schuler A.G. v. Wickman Tools, [1973] 2 W.L.R. 683; Charlton v. Kelly, (1913), 229 U.S. 447; Duff Development v. Government of Kelantan, [1924] A.C. 797; Terlinden v. Ames, (1902), 184 U.S. 270; Re The Blonde [1922] 1 A.C. 313; Chateau-Gai Wines Ltd. v. The Government of the French Republic, (1967), 61 D.L.R. (2d) 709; [1969] Que. Q.B. 445; Polai v. City of Toronto, [1973] S.C.R. 38; Bollinger and others v. The Costa Brava Wine Company Limited, [1961] R.P.C. 116; Minister of National Revenue v. Inland Industries, (1971), 23 D.L.R. (3d) 677; [1974] S.C.R. 514; L’Association des Propriétaires des Jardins Taché Inc. v. Entreprises Dasken Inc., [1974] S.C.R. 2; La Fraternité des Policiers v. City of Montreal, [1962] S.C. 458, referred to.]
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APPEAL from a judgment of the Court of Queen’s Bench, Appeal Side, Province of Quebec, affirming a judgment of the Superior Court. Appeal allowed in part, Abbott, Judson, Spence and Laskin JJ. dissenting.
J. Martineau, Q.C., and B. Lacombe, for the defendant, appellant.
C. Robinson, Q.C., and G. Emery, Q.C., for the plaintiffs, respondents.
The judgment of Fauteux C.J. and Martland, Ritchie, Pigeon and Dickson JJ. was delivered by
PIGEON J.—This appeal is against a decision of the Court of Appeal of Quebec, which with one dissent upheld a judgment of the Superior Court condemning appellant to pay damages in the amount of $75,000 and enjoining it to refrain from using the appellation “Champagne” at any time or in any place. This judgment was based on The Canada-France Trade Agreement Act, 1933 (23-24 Geo. V, c. 31) and the treaty contained in a Schedule thereto. The Act provides, inter alia:
1. This Act may be cited as The Canada-France Trade Agreement Act, 1933.
2. The Trade Agreement between Canada and France set out in the Schedule to this Act, is hereby approved, and shall have the force of law notwithstanding the provisions of any law in force in Canada.
…
4. The Governor in Council may, notwithstanding the provisions of any law in force in Canada, make such appointments, establish such offices, make such orders and regulations and do such acts and things as are deemed necessary to carry out the provisions and intent of the said Agreement.
5. This Act shall come into force on a day to be fixed by proclamation of the Governor in Council.
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A proclamation fixing June 10, 1933 as the day the Act came into force was duly published. The relevant provisions of the Trade Agreement are the following:
ARTICLE 11
Each of the High Contracting Parties agrees to protect within its territorial limits, the natural or manufactured products of the other Party against all forms of dishonest competition, particularly with regard to the use, for commercial purposes, of false indications relative to the place of origin, nature, kind or substantial qualities of goods.
Each of the High Contracting Parties agrees to insure within its territorial limits, respect for the appellations of origin of wine, agricultural or other products of the other Party, which shall have been registered by the latter with the competent services of the other Party.
There shall only be accepted for registration, under the conditions of the present Article, names which are recognized and protected as appellations of origin which have not become public property within the territory of the Party which gives notice thereof.
Appellations of origin shall be registered without charge by each of the High Contracting Parties with the competent services of the other Party.
Appellations of origin thus registered shall not, in any case, be used commercially for the purpose of describing goods other than those which have a definite right to such names.
This prohibition shall apply to every form of competition contrary to honest usages in industrial and commercial matters and of such a nature as to create a confusion with the products of a competitor.
…
ARTICLE 16
The present Agreement shall be ratified and the ratifications shall be exchanged at Ottawa as soon as possible.
It shall come into force on the date which the High Contracting Parties shall fix by joint agreement.
ARTICLE 17
The present agreement is concluded for one year from the date of its coming into force and may be rescinded by three months’ notice before the date of its termination.
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It may be extended by tacit consent, each of the High Contracting Parties reserving the right to rescind it at any time to take effect three months thereafter.
This Agreement is dated May 12, 1933. A certificate from the Secretary of State for External Affairs, dated April 19, 1967, states the following concerning it:
The exchange of Instruments of Ratification referred to in Article 16 in fact never took place. Nevertheless, in the series of exchanges which took place in May and early June of 1933 both countries fixed by joint agreement the date for the coming into force of the Agreement and, in their subsequent exchanges and practice, they have regarded the Agreement as having come into force as of June 10, 1933 and as having remained in force from that date.
Appellant contends that in the absence of ratification by both parties, the Agreement is not in force. This was the ground on which the dissenting opinion of Casey J.A. was based in the Court of Appeal. Casey J.A. saw in Art. 16 what he called “a condition precedent”, and refused to accept the aforementioned certificate as conclusive proof that the Agreement was in existence.
It should be noted, first, that the Agreement does not state that it will only come into force after ratification. The provision regarding its coming into force is a separate paragraph in art. 16, following merely on the provision for ratifications and their exchange. We were not referred to any principle by which a stipulation of this nature should be regarded as a suspensive condition. For my part, I know of no rule of law by which a promise stipulated in a treaty must be presumed a suspensive condition in the absence of any indication to that effect. It may be argued that in any synallagmatic contract all stipulations are mutually in consideration one of the other. That is true, but it does not make of them suspensive conditions. Here, on the contrary the fact that “ratification” is stipulated means that a suspensive condition is not involved. Indeed, the very nature of ratification is that it has a retroactive effect. In Planiol and
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Ripert, Traité pratique de droit français, Vol. XI, No. 1499 (p. 949), there is the following:
[TRANSLATION] Ratification has a retroactive effect: the document ratified is, from the start, proper and deemed to have been made in the name of a validly represented principal. This retroactivity is good against third parties, even though it injuriously affects rights acquired by the latter prior to ratification.
…
It should also be noted, in any case, that even where the word “condition” is used, this does not necessarily mean a condition in the strict sense, whether suspensive or resolutory. On the contrary, the nature of the stipulation must be determined from the contract as a whole, as the House of Lords recently held in Schuler A.G. v. Wickman Tools. The stipulation was worded as follows:
It shall be [a] condition of this agreement that:—(i) Sales shall send its representatives to visit the six firms whose names are listed in the Schedule hereto at least once in every week …
It was held that an arbitrator had erred in deciding that this wording meant that the first breach of this undertaking terminated the contract.
In the agreement under consideration here the parties did not see fit to stipulate that the agreement would only become in force after the ratifications had been exchanged. What they did agree on was that it would become in force on a date to be fixed by joint agreement. Obviously, either party would have been free not to agree on a date before ratifications were exchanged, but they did consider it appropriate to agree upon June 10 without waiting for the promised ratification. Nothing in the document precluded this decision, which was made by the competent authority. This being the case, I fail to see on what legal principle lack of ratification could have a bearing on the validity of the Agreement, in the absence of any action by the public authority to terminate or rescind it. There is no
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provision to the effect that the agreement will lapse if it is not ratified, and I cannot accept that this can be implied.
If there were any doubt on this point, it should be borne in mind that in the interpretation of treaties the approach of the government, though not conclusive, must be given great weight, as the Supreme Court of the United States observed in Charlton v. Kelly, at p. 468:
… A construction of a treaty by the political department of the Government, while not conclusive upon a court called upon to construe such a treaty in a matter involving personal rights, is nevertheless of much weight.
In the case at bar, I do not consider it is necessary to decide whether one should go so far as to say that a certificate from the appropriate Minister is conslusive proof that an agreement exists. It is certain that such a certificate has this result as regards the value of the signatories’ powers and the authority of the government they represent (Duff Development Co. v. Government of Kelantan). I am inclined to the opinion that the question of whether the treaty is in force, as opposed to what its effect should be, is also wholly within the province of the public authority. This is what was held by the Supreme Court of the United States with respect to an extradition treaty in Terlinden v. Ames. In The Blonde, the Privy Council held that an international agreement which the British government had decided to honour, despite a provision by virtue of which the agreement was not obligatory since all the belligerents had not become parties to it, should be enforced, and observed (at p. 325): “the objection is one that can be waived”.
I see nothing in the 1933 Act that prevented the Canadian government from agreeing on a date of coming into force without waiting on the ratification promised by the French government. Moreover, I consider that the proclama-
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tion fixing June 10, 1933 as the date of coming into force of the Act had at the same time the effect of bringing into force the treaty provisions, so that it sufficed in obligating the courts to give them effect without any need for further evidence that the date in question was the agreed date.
However, to give effect to Art. 11 it was not enough that the Act and the agreement come into force. The French appellations of origin for which protection was sought had also to be registered “with the competent services of the other Party”. The record indicates that on February 27, 1934, there was sent on the part of the French government a letter to the Prime Minister of Canada, Secretary of State for External Affairs, asking for registration of a series of appellations of origin relating to wines, and among these was “Champagne”. On June 15, 1934 another letter was sent in the same manner on the subject of “Champagne”. It states:
[TRANSLATION] Under instructions from my Government, and further to my letter No. 3 of February 27, I have the honour to submit to your Excellency herewith the text of the Law of May 6, 1919, as amended by the Law of July 22, 1927, Art. 17 of which defines the appellation of origin “Champagne”.
My Government requests that I draw the attention of the Canadian Government to the fact that this appellation applies only to wines harvested and manipulated entirely within wine-growing Champagne. Accordingly, only sparkling wines bottled and shipped from France are entitled to the appellation of origin “Champagne”.
On September 14 both letters were forwarded to the Commissioner of Patents by the Under Secretary of State with a letter which read as follows:
You have already taken note of the communication from the French Minister at Ottawa, dated February 27th, 1934, concerning appellations of origin relating to French wines. I enclose two copies of this despatch. Under Article 11 of the Canada-France Trade Agreement Act 1933, 23-24 George V, Chapter 31, these appellations of origin are to be registered without charge with the competent Department of the other party.
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I also enclose two copies of a despatch from the French Minister, dated 5th June, 1934, concerning the appellation of origin of “Champagne”. Since we have only one copy of the text of the law enclosed with the French Minister’s despatch of the 5th June, I am able to send you only one copy of the text.
On September 29, 1934, an exchange of notes confirmed an agreement in which we find the following paragraph:
[TRANSLATION] With respect to the appellations of origin of French wine and agricultural products which have been or will be registered by the competent services of Canada under Article 11 of the Trade Agreement of May 12, 1933, the Canadian Government confirms the undertakings taken for their protection within its territory according to the terms of the aforesaid article.
Finally, on October 18, 1934, the Commissioner of Patents did register the trade mark “Champagne” for wines, listing the Government of the French Republic as “registrant” and June 10, 1933 as the registration date, with the following notation: “Registered under and in accordance with The Unfair Competition Act, 1932, 22-23 George V, Chapter 38, this 23rd day of October, 1934, at Ottawa”. In a blank space headed “Other actions affecting rights in Registration”, the document also bears the following notation:
[TRANSLATION] Registered in compliance with article 11 of the Trade Agreement between Canada and France, which came into force on June 10, 1933, by proclamation published on June 9, 1933.
Appellant contends that this registration is void because, it argues, an appellation of origin is not a trade mark within the meaning of the Act under which the registration was made. In support of this contention it relies heavily on a judgment delivered at its request on April 16, 1970, by Jackett P. of the Exchequer Court of Canada, reported at [1970] Ex. C.R. 366. Appellant’s application had first been directed against the Government of the French Republic. The
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Exchequer Court began by recognizing the immunity of a foreign state: Chateau-Gai Wines Ltd. v. The Government of the French Republic. However, it later agreed to rule on an application directed against the Attorney General of Canada.
Appellant now maintains that the judgment in question is res judicata, because it is a matter of public interest, and it refers to the principle stated in Corporation of the Village of Deschênes v. Loveys. On the record as it stands this argument cannot be accepted. The Exchequer Court proceedings were subsequent to the suit herein, which was instituted on April 9, 1964 and decided in the Superior Court on December 23, 1968. If appellant wished to claim that the judgment rendered by the Exchequer Court, and the deletion of registration ordered by it subject to certain reservations, be regarded as facts adverse to respondents’ case, it should have taken the necessary proceedings to allege and prove these facts, so as to make them part of the record which was then before the Court of Appeal. On the contrary, appellant simply referred to it as an authority. The judges of the Court of Appeal did not fail to consider the judgment on this basis, Rinfret J.A. stating:
[TRANSLATION] I am not saying that this judgment, rendered several years after the institution of the suit herein, binds our Court.
Needless to say this Court could not accede to the motion made by appellant at the close of the hearing, in its reply, to have the aforementioned judgment of the Exchequer Court and a certificate of discontinuance of the appeal brought against it by the Attorney General of Canada included in the record. If it wished to plead res judicata against persons who were not parties to the action, it should have acted with reasonable diligence so that the latter be not deprived of the opportunity to seek to intervene
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in the appeal before this Court in case the right to rely on the decision not as a precedent, but as res judicata, were recognized. It is difficult to see how this Court could use its discretionary powers to admit additional evidence so as to find itself bound by a decision rendered in the absence of one of the parties by a court other than that which was seized of the litigation. Still, it is not difficult to see why, to the very last minute, appellant refrained from instituting any proceedings to file the judgment of Jackett P. in the record. It does not entirely support appellant’s case. In particular, it holds the treaty to be in force, saying (at p. 383):
In my view, the certificate by Her Majesty’s Secretary of State for External Affairs for Canada that “it was agreed between the two countries that the Trade Agreement would enter into force on Saturay, June 10, 1933”, and that “the two countries have regarded the agreement as having come into force as of June 10, 1933” should be accepted by this Court as conclusive that the agreement did come into force as a binding international agreement at that time…
Turning now to the validity of the registration, the ratio of the decision is contained in the following three sentences (at p. 381):
Quite clearly, what the Government of France sought was the registration of an “appellation of origin” so that it would have the protection afforded by The Canada‑France Trade Agreement Act, 1933. It was not, at any time, seeking the registration of the word “Champagne” as a “trade mark” within the meaning of The Unfair Competition Act, 1932. No argument was addressed to me for regarding the entry as such a registration and I cannot myself envisage one that is worthy of being discussed.
There is no doubt that the traditional principles governing trade marks do not permit inclusion of appellations of origin in that category, but The Unfair Competition Act, 1932 departed from these principles. The definition of “trade mark” therein reads as follows [italics added]:
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(m) “Trade mark” means a symbol which has become adapted to distinguish particular wares falling within a general category from other wares falling within the same category, and is used by any person in association with wares entering into trade or commerce for the purpose of indicating to dealers in, and/or users of such wares that they have been manufactured, sold, leased or hired by him, or that they are of a defined standard or have been produced under defined working conditions, by a defined class of persons, or in a defined territorial area, and includes any distinguishing guise capable of constituting a trade mark.
Under the heading “Special Provisions” are the following enactments, in which I have italicized wording which clearly refers to appellations of origin:
12. (1) A trade mark the use of which is intended to indicate only that the wares in association with which it is used are of a defined standard, or have been produced under defined working conditions, by a defined class of persons or in a defined area, may be adopted for use only by a person who is not engaged in the manufacture, sale, leasing or hiring of such wares as those in association with which the mark is used.
(2) Subject as hereinafter provided, the registered owner of any such trade mark shall be entitled to license its use by such persons and in association with such wares as he may from time to time determine and to prevent its use by unauthorized persons or in association with any wares to which the licence does not extend.
(3) In addition to any rights otherwise conferred, any action or proceeding to prevent the use of any such trade mark by an unauthorized person or in association with wares to which the licence to use it does not extend may, if the registered owner of the mark is an unincorporated body, be brought by any member of such body on behalf of himself and all other members thereof.
It should also be noted that s. 30 contains, under the heading “Application for Registration”, the following subsection:
(3) If the mark is intended to indicate that the wares in association with which it is used are of a defined standard, or have been produced under
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defined working conditions, by a defined class of persons or in a defined area, the application shall so indicate and shall contain
(a) a statement that the applicant is not engaged in the manufacture, sale, leasing or hiring of wares similar to any wares in association with which the mark is used;
(b) an exact definition of what the use of the mark in association with wares is intended to indicate in respect of the standard which such wares have attained, or of the working conditions under which or the class of persons by whom they have been produced or of the area in which they have originated.
It is quite clear that the requirements of this latter enactment were not followed to the letter in the registration of the word “Champagne” as a trade mark intended to indicate the origin of wines. However, it must be borne in mind that under The Canada-France Trade Agreement Act, 1933, the provisions of that Act have the force of law “notwithstanding the provisions of any law in force in Canada”. Now, art. 11 of the Agreement gives the French government the right to request registration “without charge”, the only condition being:
There shall only be accepted for registration, under the conditions of the present Article, names which are recognized and protected as appellations of origin which have not become public property within the territory of the Party which gives notice thereof.
In my view this stipulation should prevail over those of The Unfair Competition Act. It follows that the entitlement of the French government to register an appellation of origin is subject to the condition that the appellation be one that has not become public property in France. The evidence clearly established that this is true of the appellation “Champagne” as applied to wines. It was established not only that French law rigorously limits the description “Champagne” to wine produced in Champagne, but also that this law is rigorously enforced and observed.
Against this appellant argued that in Canada and in certain other countries the word “Cham-
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pagne” is commonly used, not as an appellation of origin but to designate any sparkling wine. In particular it was argued that the word “champagne” had been used in this way in Canada for several years prior to signature of the Trade Agreement, and that it continued to be so used, especially after 1940. Appellant referred to the textbooks and case law that bar the holder of a trade mark from claiming an exclusive right to it, when he has tolerated that the word registered be used as a common noun describing a product of a certain kind rather than a product manufactured by the holder. In particular, the Court was referred to the decision of the Privy Council in National Starch Manufacturing Company v. Munn’s Patent Maizena and Starch Company.
Can this principle be applied to counter the stipulations of the Trade Agreement and the Act which makes them binding? In my view it cannot. It must not be forgotten that the Agreement is to have the force of law “notwithstanding the provisions of any law in force in Canada.” Canada has undertaken to ensure respect for appellations of origin “which have not become public property” in France. Accordingly, it intended that the criterion to be used in deciding whether the appellation had lost its private character and become a common noun would not be the situation existing here, but that prevailing in the country of origin. Certainly it was well known, when this commitment was made and a statute passed to implement it, that some designations, notably that of “champagne”, were used here to some extent as common nouns. The commitment was undoubtedly made to put an end to this abusive usage, not to enshrine it. The criterion accepted was thus not that of Canadian, but rather of French usage.
Appellant alleges that the Quebec courts applied French and not Canadian law. In my view, these courts did not go beyond what is required by Canadian law in ordering that appellations recognized and protected as appellations of origin which have not become public property in France should be respected here.
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Because this is federal legislation of an obviously public policy character, I do not see how it could be held that the obligation to respect appellations of origin has been extinguished by the period of thirty years which has elapsed between the registration and the proceedings. One of the consequences of this delay has clearly been to deprive respondents of any possibility of obtaining an interlocutory injunction, and to oblige them to suffer a suspension of the injunction issued at first instance pending the final decision. No other sanction is in my view applicable. The treaty being still in force, the obligation to respect appellations of origin remains a duty imposed by a public policy statute. Like any other statute, it does not cease to have effect because no proceedings have been taken to enforce it for a long time. Similarly, appellant cannot rely on the fact that other Canadian producers of sparkling wine use the designation “Champagne” or “Canadian Champagne”, and have not been prosecuted. As this Court recently held in Polai v. City of Toronto, no one who infringes a public policy statute can plead as a defence to an action for an injunction the fact that others who were in breach have not been prosecuted.
What must be said of the final paragraph of Art. 11 of the Agreement? Should the Court, as appellant contends, interpret this as a limitation on the rule that appellations of origin shall be respected? In my view it should not; far from limiting the prohibition of false appellations of origin, the sole purpose of this provision is to extend the prohibition to every form of competition contrary to honest usages in industrial and commercial matters and of such a nature as to create a confusion with the products of a competitor. In view of the principle that appellations of origin shall be respected, the use as a common noun of what is in itself an appellation of origin cannot be regarded as an honest usage.
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In this regard it seems appropriate to refer, as did the Court of Appeal, to the decision of Danckwerts J. in Bollinger and others v. The Costa Brava Wine Company Limited. On an application by the French producers of Champagne, he granted an injunction prohibiting the description “Spanish Champagne” applied to a sparkling wine produced in Spain. Naturally, appellant did not fail to point out that the word “Champagne” had not been used with impunity in England for a long period, as it had been in Canada. All the same, the decision, based solely on the general principles of English law, shows that the use of the word “Champagne” qualified by a reference to a country of origin other than France was held to be contrary to honest usages and of such a nature as to create a confusion with the true product.
This leads me to consider the directive issued by the Food and Drugs Directorate on January 3, 1956, which stated the following: -
To: ALL WINERIES
Re: La belling of Canadian Wines.
The manner in which the origin of domestic wines, such as Canadian Port, Canadian Sherry, Canadian Champagne, Canadian Tokay, Canadian Claret and Canadian Sauterne is indicated on the label has been under review due to receipt of complaint by this Directorate.
It has been decided that in the interests of informative labelling, and to prevent the creation of an erroneous impression, the word “Canadian” shall be an integral part of the name of such wine and shall be in identical type and identically displayed with such name…
This document required Canadian producers to treat the word “Canadian” as a part of the designation of certain wines, by printing it in the same type on the label. The author of the document clearly regarded the word “Champagne” as a common noun describing sparkling wine, and not as an appellation of origin. I do not see
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how this administrative decision could have any legal effect whatever on the 1933 Act. In my view, the principle to be applied here is the same as in Minister of National Revenue v. Inland Industries. So soon as one concludes that the effect of the Agreement approved by that Act is to require that appellations of origin registered be protected in Canada, no administrative authority may validly direct otherwise. It is difficult to see how a government official can claim to act contrary to undertakings of the Canadian government which the latter has decided to maintain in force.
The extent of the remedies allowed by the Quebec courts must now be considered. So far as the injunction is concerned, it seems clear that this was an appropriate remedy in the circumstances. The right to apply for it is recognized by art. 752 of the Code of Civil Procedure. It is the usual remedy against any trader using a commercial designation to which he is not entitled, regardless of whether he does so in violation of general principles or of a particular statute dealing with trade marks. It is therefore immaterial that the Unfair Competition Act under which the registration was effected and periodically renewed was repealed by the Trade Marks Act of 1953(1-2 Eliz. II, c. 49). In this Act (now c. T-10 of the Revised Statutes), a mark used to distinguish “the area within which the wares have been produced” is a “certification mark”, and s. 52 provides for injunctions, damages, etc. as remedies that may be granted by a court of competent jurisdiction.
I do not find it necessary to consider whether these provisions apply here, for it seems clear that these remedies should be recognized under the general principles, as a consequence of the Act which imposes a legally binding prohibition against using without right the appellations of origin registered under the 1933 Trade Agree-
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ment. There is nothing limiting the application of these remedies to the holder of the registered mark or to a contracting party. Accordingly, I am of the opinion that the Quebec courts’ decision to the effect that the producers of Champagne who were entitled to the controlled appellation were also entitled to a remedy by way of injunction and damages was correct. They had joined themselves to the suit of the Institut National des Appellations d’origine des vins et eaux-de-vie. The latter is an organization vested with legal personality by the executive enactment (décret-Loi) creating it. Evidence of its right to be a party to legal proceedings, and its powers, was provided by a jurist heard by the Court as a witness, and the text of the executive enactment was submitted. It contains the following provision:
[TRANSLATION] Art. 23. The National Committee may, on the same conditions as professional associations established in accordance with the provisions of the Labour Code, Chap. I, Art. 3, contribute to the defence of appellations of origin in France and abroad, cooperate for this purpose with associations formed for the defence of such appellations, and institute legal proceedings for such defence.
A subsequent provision gave the National Committee the name under which it is now proceeding.
In L’Association des Propriétaires des Jardins Taché Inc. v. Enterprises Dasken Inc., this Court refused, as did the Court of Appeal of Quebec, to recognize to a property owners’ association the right to an injunction restraining the violation of a building by-law covering the area occupied by the owners. However, reference was made to the decision of the Superior Court of Quebec in La Fraternité des Policiers v. City of Montreal, in which the right to claim a declaration that a municipal decision was invalid was recognized in favour of the professional association of policemen affected by the decision. It does not appear to me that it was incorrect in the present case to apply this principle to an Institute vested with the right to insti-
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tute legal proceedings under the same conditions as professional associations established in accordance with French law.
With regard to the damages awarded plaintiffs other than the Institute, the trial judge simply allowed the sum of $5,000 claimed for each plaintiff, after saying:
[TRANSLATION] … the plaintiffs can only claim for the prejudice suffered within the two years preceding the service of the action. See Eagle Shoe Co. Ltd. v. Slater Shoe Co. Ltd. [1929] Que. K.B. 121, and the Court thinks that it must order that this prejudice be righted, as hereinafter determined. See Bergeron v. City of Sherbrooke, [1946] Que. K.B. 498, which contains the following considérant (p. 499):
“Considering that while it is difficult to assess and estimate the quantum of such loss and damage, the Court is none the less constrained so to do.”
In the Supreme Court case of Roncarelli v. Duplessis, [1959] S.C.R. 121, the Honourable Mr. Justice Rand expresses himself as follows at p. 144:
“The damages suffered involved the vocation of the Appellant within the Province. Any attempt at a precise computation or estimate must assume probabilities in a area of uncertainty and risk. The situation is one which the Court should approach as a jury would, in a view of its broad features; and in the best consideration I can give to them, the damages should be fixed at the sum of $25,000.00, plus that allowed by the trial Court.
I would therefore allow the Appeals, set aside the judgment of the Court of Queen’s Bench and restore the judgment at trial modified by increasing the damages to the sum of $33,123.53. The Appellant should have his costs in the Court of Queen’s Bench and in this Court.”
The case law in Quebec is to the effect that in circumstances similar to the present ones, the courts are entitled to allow moral damages (dommages moraux).
On appeal, Rinfret J.A. observed:
[TRANSLATION] On the matter of quantum, I do not think it is necessary to interfere; it is a matter, it is true, of moral damages, for which no evidence was given.
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The judgment of the Supreme Court of Canada, in Roncarelli v. Duplessis [1959] S.C.R. 121, is, in my opinion, sufficient authority to award moral damages, even without evidence.
Brossard J.A., on his part, was of the following opinion:
[TRANSLATION] AS to the amount of moral damages granted by the trial judge, it is possible that they might fall quite short of the real damages suffered over the years by the respondents as by all those who have exclusive right to the appellation of origin “Champagne”. Having regard, on the other hand, to the amount of sales of the products of the appellant under the appellation “Champagne”, and of the champagnes manufactured by the respondents during the last years, it seems to me hardly conceivable that this amount of damages might be excessive to the point of being the object of a review by this Court.
With respect, I must say that it does not seem correct to describe the damages awarded by this Court in the Roncarelli case as “moral damages”. That case concerned a restaurant operator whose liquor licence had been unlawfully revoked. On the question of estimating the loss, Martland J. concluded (at p. 160) as follows:
The evidence establishes that there was a substantial reduction in the value of the good will of the appellant’s restaurant business as a result of what occurred, apart from the matter of any loss which might have resulted on the sale of the physical assets. It is difficult to assess this loss and there is not a great deal of evidence to assist in so doing. The appellant did file, as exhibits, income tax returns for the three years prior to 1946, which showed in those years a total net income from the business of $23,578.88. The profit-making possibilities of the business are certainly an item to be considered in determining the value of the good will.
However, in all the circumstances, the amount of these damages must be determined in a somewhat arbitrary fashion. I consider that $25,000 should be allowed as damages for the diminution of the value of the good will and for the loss of future profits.
The foregoing indicates clearly that what this Court awarded in that case was an estimate of the pecuniary loss suffered by the plaintiff. Moreover, it is on this basis that plaintiffs
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herein presented their claim. Following a motion for particulars, they stated:
[TRANSLATION] The sum of $5,000.00 which is claimed by each of the Maisons de Champagne by reason of the facts alleged in the preceding paragraphs, represents a minimum indemnity which is warranted by the loss suffered and the profit which the Maisons de Champagne have been deprived of as a result of the sale of sparkling wines by Defendant-Respondent to its benefit and advantage, which wines had it not been for the appellation given to them would have been sold by and for the benefit of Plaintiffs‑Petitioners. Plaintiffs-Petitioners do not have the particulars concerning the sales in the Province of Quebec of these sparkling wines which have been referred to in paragraphs 28 and 29 of their declaration, and therefore, they are not in a position to furnish more details.
The particulars of sales of sparkling wines by appellant in Quebec under the designation “Canadian Champagne” were presented in evidence. They indicated that in the two years beginning April 1, 1962 and ending March 31, 1964, appellant sold 3,794 cases of white and 787 of rosé, for a total of 4,681 cases of twelve bottles each. This was only about 25 per cent of the total quantity of “Canadian Champagne” sold in Quebec in that period. Sales there of genuine Champagne were about ten per cent greater than this latter total. It is obvious that the quantity of genuine Champagne not sold in Quebec in that period because appellant was marketing a sparkling wine designated “Canadian Champagne” could not be more than a rather small portion of the quantity sold by it under that designation. It must be remembered that the price of its “Canadian Champagne” was about $4, as against $7 or $8 for the genuine article.
The amount awarded by the trial judge as damages sustained by the producers of Champagne amounts to nearly $1.50 per bottle of “Canadian Champagne” sold by appellant in the two years preceding the suit. Clearly this is too much by far, both in terms of the amount per bottle and in terms of the quantity that may represent sales lost by the French producers.
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No attempt was made to show that these relatively small quantities unfavourably affected the market price. Accordingly I must conclude that the trial judge’s estimate is so excessive that it must be considered wholly erroneous. If it represented the loss caused by all sales of “Canadian Champagne”, it would not seem unreasonable. However, it is surely out of proportion to the actual loss caused by a quarter of such sales, which is all appellant is responsible for.
For these reasons I feel the damages awarded should be reduced to $1,000 for each plaintiff other than the Institute, i.e. to a total of $ 15,000. As the main purpose of the appeal was to deny plaintiff’s right to have the appellation of origin respected, the lowering of the quantum of damages must be considered as of secondary importance, and in my view it does not justify an award of costs in this Court or any modification of the awards made by the Quebec courts.
Accordingly, I would allow the appeal without costs to the extent of varying, by lowering the amount of the condemnation to $ 1,000 for each plaintiff other than the Institute, i.e. to a total of $15,000, the Superior Court judgment upheld by the Court of Appeal. Further, it seems fair to order that the injunction order should not take effect until three months from this date.
The judgment of Abbott, Judson, Spence and Laskin JJ. was delivered by
LASKIN J. (dissenting)—The claim in this case for an injunction and for damages is based on a stated cause of action which is unknown either to the common law or to the civil law in Canada, and which is equally outside of Canadian trade mark or unfair competition legislation. It is made on the basis of a statutory implementation of a trade treaty between Canada and France, executed on May 12, 1933, and brought into domestic force by The Canada-France Trade
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Agreement Act, 1933, 1932-33 (Can.), c. 31. The basic contention of the plaintiffs, respondents in this Court, being a number of champagne houses which are legal entities in France, is that by virtue of the Treaty and the implementing statute, they are entitled to have the word “Champagne”, as an appellation of origin of their wine products, protected against its use by the defendant to describe any of its sparkling wines produced in Canada and marketed in Canada, in Quebec as well as in Ontario and elsewhere in this country.
The statute under which the respondents (and their trade association, Institut National des Appellations d’origine des vins et eaux-de-vie) brought their action in the Superior Court of Quebec was assented to on May 23, 1933 and came into force on June 10, 1933. The action was instituted on April 9, 1964, the trial before Prevost J. began on April 17, 1967 and judgment was delivered by him on December 23, 1968. By that judgment Prevost J. awarded each of the fifteen champagne houses which were plaintiffs in the action the sum of $5,000 with interest from the commencement of the action, and enjoined the defendant, its servants, agents, or others under its control or acting for its benefit, en tout temps et en tout lieu, from using the appellation “Champagne” to advertise, offer for sale or market its products, and from using the word “Champagne”, either alone or in any qualified way, on its bottles of wine or in any direct or indirect marketing or sale of its wine.
The Quebec Court of Appeal, in a judgment of November 1, 1972 affirmed the trial judge in his award of damages and an injunction, with Casey J.A. alone of the five-judge panel in dissent. No relief in damages was given at trial to the Institut National des Appellations d’origine, and that body did not appeal from
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the judgment of Prevost J. nor was any claim for such relief made on its behalf in this Court.
There are four issues in this appeal which are as follows: First, did the Treaty of 1933 become effective internationally, and, even if it did, was it effective for domestic purposes under the implementing statute? Second, if the statute effectively incorporated the terms of the Treaty so as to make them part of the law of the land, was the appellant in breach of any of those terms? Third, if the appellant was in breach, were the respondents entitled to an injunction? And, fourth, did the respondents prove any damages or were they entitled in any event to substantial damages against the appellant if it was in breach of the statute?
The Canada-France Trade Agreement Act, 1933 consists of five sections and a Schedule, which is the text of the Treaty. Section 1 is the short title provision and s. 5 concerns the in force date of the statute to be declared by proclamation. The in force date was fixed by proclamation as June 10, 1933. Sections 2, 3 and 4 of the English text are as follows:
2. The Trade Agreement between Canada and France set out in the Schedule to this Act, is hereby approved, and shall have the force of law notwithstanding the provisions of any law in force in Canada.
3. After the said Agreement is brought into force and so long as it remains in force, the natural and manufactured products mentioned in the said Agreement, originating in and coming from the French customs territory, the French colonies and countries under French protectorates and territories under French mandate, imported into the Dominion of Canada in the manner provided in the said Agreement, shall be admitted to the Dominion of Canada at the rates of duties provided in the said Agreement.
4. The Governor in Council may, notwithstanding the provisions of any law in force in Canada, make such appointments, establish such offices, make such
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orders and regulations and do such acts and things as are deemed necessary to carry out the provisions and intent of the said Agreement.
Article 16 of the Treaty, annexed as a Schedule to the implementing Act, was in these terms:
The present Agreement shall be ratified and the ratifications shall be exchanged at Ottawa as soon as possible.
It shall come into force on the date which the High Contracting Parties shall fix by joint agreement.
A major contention of the appellant was that the Treaty never became effective domestically even if it did so internationally (and this the appellant also challenged) because there never was an exchange of ratifications between Canada and France. Instead, as appears from a certificate of the Canadian Acting Secretary of State for External Affairs dated April 19, 1967, Canada and France purported to bring the Treaty or Agreement into force as of June 10, 1933 by an exchange of notes. There was a ratification by Canada but not by France. Instead, France gave the Treaty the force of law in that country by a decree of its Council of Ministers dated June 8, 1933 and Canada passed an order-in-council on June 6, 1933 to bring the Treaty into force on June 10, 1933. A further certificate from the then Secretary of State for External Affairs dated December 19, 1969, stated that “the Treaty was ratified by the exchange of notes and the conduct of the parties”.
It was the opinion of Casey J.A. in dissent that art. 16 of the Treaty had to be satisfied before its terms could have domestic force under the implementing statute; he construed the Article as establishing a condition precedent which could not be set aside by mere say-so. This view has attraction because of the unusual nature of the rights which the Treaty conferred against Canadian producers of wine and other products in favour of their French counterparts. However attractive, I do not think it can prevail because it would turn art. 16 into a substantive provision affecting the operation of the imple-
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menting statute instead of continuing as merely a procedural provision respecting the international force of the Treaty.
The contracting states were entitled by mutual agreement to substitute a different method of arriving at a treaty arrangement for the one originally agreed upon in the Treaty. The retention of art. 16 in the Schedule to the implementing Act added nothing in my opinion to the effect of the Act in respect of the substantive terms of the Treaty. In my opinion, it was s.5 of the implementing Act and not art. 16 of the Treaty that governed the domestic force of the Treaty when it could be shown, as it was shown here, that the Treaty had been made effective internationally between the contracting states.
I turn to the second issue and to the terms of the Treaty bearing on it. The Treaty is substantially a customs tariff agreement between Canada and France and it is only art. 11 which has any bearing on the issues raised in this litigation. It reads as follows:
(a) Each of the High Contracting Parties agrees to protect within its territorial limits, the natural or manufactured products of the other Party against all forms of dishonest competition, particularly with regard to the use, for commercial purposes, of false indications relative to the place of origin, nature, kind or substantial qualities of goods.
(b) Each of the High Contracting Parties agrees to insure within its territorial limits, respect for the appellations of origin of wine, agricultural or other products of the other Party, which shall have been registered by the latter with the competent services of the other Party.
(c) There shall only be accepted for registration, under the conditions of the present Article, names which are recognized and protected as appellations of origin which have not become public property within the territory of the Party which gives notice thereof.
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(d) Appellations of origin shall be registered without charge by each of the High Contracting Parties with the competent services of the other Party.
(e) Appellations of origin thus registered shall not, in any case, be used commercially for the purpose of describing goods other than those which have a definite right to such names.
(f) This prohibition shall apply to every form of competition contrary to honest usages in industrial and commercial matters and of such a nature as to create a confusion with the products of a competitor.
I should point out here that art. 11 as set out in the Treaty and in the Schedule to the Act of 1933 does not have any numbered or lettered paragraphs and the letters have been inserted merely as a convenience.
In my opinion, art. 11 must be read as a whole and not disjunctively, and, so read, it affords protection in Canada, according to its terms, only to those products of France including wine, whose appellations of origin are registered with “the competent services” of Canada. On October 30, 1934, the word “Champagne” as an appellation of origin was registered in the Canadian Trade Mark Register and this registration was renewed in 1948 and again in 1963. The register contained a notation that the registration was in execution of art. 11 of the Treaty between Canada and France. Of course, in terms of what it purported to be the word “Champagne” could not be validly registered as a trade mark and a judicial declaration to this effect was made by Jackett P. (as he then was) in Chateau-Gai Wines Ltd. v. Attorney General of Canada. By his order in that case it was declared that the registration “to the extent that it purports to be a registration of a trade mark … is hereby struck out”. The order, which remained unchallenged (an appeal and cross-appeal were abandoned), concluded that “this order does not in any way affect the validity of the said registration to the extent that it may have been registered as an appellation of origin
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under the provisions of The Canada-France Trade Agreement Act … or the manner in which the aforesaid entry may be maintained after its removal from the Trade Mark Register”.
Counsel for the respondents did not contend in this Court that “Champagne” as an appellation of origin was registrable as a trade mark, but, rather, that it was enough for the purposes of the Act of 1933 that it was registered in an official register, regardless of the nature of that register. I do not follow this submission which amounts to saying that even if the appellation of origin, by some chance, got on an official ship registry it would satisfy the requirements of the Act of 1933. It is true that the Canadian Government played a role in connection with the registration on the Trade Mark Register, but, if that was not a competent registration within the meaning of art. 11, I do not see how the respondents can draw any support for their claim from the intercession of the Canadian Government. It is not for the Canadian Government or any executive authority thereof to determine the propriety of a condition precedent to a cause of action founded upon a statute, unless there is clear language to give the Government or executive authority the right to make the necessary determination. It is otherwise the Courts’ right and duty to do so. That is this case. Article 11 provides protection under its terms only if the word “Champagne” as an appellation of origin, which has not become public property in France (and that is conceded here), has been registered with “the competent services” of Canada. I regard it as of more than ephemeral significance that there be strict compliance with a statutory requirement that is a condition of exercising an exceptional right in Canada against Canadian producers or manufacturers.
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Certainly, no force was given by Jackett P. to the registration on the Trade Mark Register as being effective for the purposes of art. 11. This was not for him to determine and he expressly disavowed doing so. Moreover, s. 4 of the implementing statute envisaged Canadian governmental action to give effect to the Treaty for domestic purposes. If this has not been done, it cannot be laid at the door of the appellant so as to deprive it of a defence to an exceptional claim against it. The respondents, in basing their action on a registration in the Trade Mark Register, were putting forward a registration that was not one “with the competent services” of Canada. They might have invoked and had their appellation of origin registered under s. 5 of The Department of State Act, R.S.C. 1927, c. 189, which reads as follows:
The Secretary of State shall be the Registrar General of Canada, and as such shall register all instruments of summons, proclamations, commissions, letters patent, letters patent of land, writs and other instruments and documents issued under the Great Seal, and all bonds, warrants of extradition, warrants for removal of prisoners, leases, releases, deeds of sale, surrenders, and all other instruments requiring registration.
Whether the failure to do this be the fault of the Canadian Government or that of the respondents, they are left in the position where there has been no competent registration, and this is enough to defeat their action.
In these circumstances, I find it unnecessary to determine whether the respondents could have founded a claim against the appellant under the substantive provisions of art. 11, assuming that their appellation of origin, “Champagne”, was properly registered. I am far from satisfied, on the evidence in this case, that the respondents established any confusion between
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their sparkling wines and the sparkling wine of the appellant under the principles of law applicable in Canada; proof of liability under this head according to the law of France is, of course, irrelevant. I do not decide, however, whether proof of such confusion is necessary to found a claim under art. 11, or whether such a claim can be established otherwise under paragraphs (a) and (b) of the article.
I would add that no additional force is given to the terms of the Treaty as domestic law, beyond what inheres in them, by reason of the inclusion in the implementing statute of the words “notwithstanding the provisions of any law in force in Canada”. These words, found in ss. 2 and 4 of the implementing Act of 1933, merely give the Treaty an ascendancy against any other legislation that might conflict with it; they do not dissolve any obligations of proof that arise under the terms of the Treaty itself.
Even on the assumption of proper registration and of proof of a breach of the substantive terms of art. 11, I am of the opinion that the respondents are not entitled to injunctive relief. There are three matters that have a bearing on this form of relief, and the third is, for me, decisive against it. In the first place, the respondents at no time, after the Treaty was implemented by the Act of 1933 and until action brought in 1964, made any protest to the appellant about the latter’s use of the word “Champagne” in its labelling or advertising of its sparkling wine. The respondents were quite aware that Canadian wine producers were using the word “Champagne” in 1933, an awareness indicated by a letter of February 27, 1934, from the French Ambassador to the Canadian Prime Minister. The appellant was incorporated in 1928, taking over a number of wine making concerns in Ontario which had been selling “Champagne” for some years before that. The appellant itself (which took its present name in 1942) began to market “Champagne” in 1934
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and continued to do so, observing in its marketing the applicable directives of the Department of National Health and Welfare, which, from 1947 on, required the Canadian origin of wines to be shown on all labels.
Second, the appellant has Canadian competitors in the sparkling wine market in Canada, the major ones being Jordan Wines Limited and T.G. Bright & Co. Limited. The fact that they were not sued by the respondents is not, of course, a defence to the appellant, but it is notable that (1) the appellant was sued in the courts of Quebec where its share of the sparkling wine market was smaller than that of its competitors; (2) Jordan Wines Limited is a subsidiary of Distillers Corporation Seagrams Limited which is a substantial shareholder of one of the respondents and a distributor in Canada and the United States, through other affiliates, of the champagnes of two of the respondents. As to point (2), I should note that the evidence does not indicate when Distillers acquired its interest in one of the respondents or that the distributorship began before action brought.
Third, and as I indicated, decisive for me on the issue of injunctive relief, is the fact that the respondents did absolutely nothing for some thirty years to enforce their legal rights against the appellant, or against any other Canadian producer of sparkling wines which used the word “Champagne” in its labelling and advertising. It was not only the appellant which used the word “Champagne” after the Treaty was implemented by the Act of 1933. Jordan Wines, directly or through subsidiaries, had been using the word “Champagne” since 1920, and the T.G. Bright company, as the largest Canadian producer of “Champagne” in Quebec has used that word since 1947 in marketing its products in Quebec and elsewhere in Canada. It was not as if the respondents could have been unaware
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of these facts. Provincial Liquor Board listings in Quebec and in Ontario, and in other Canadian provinces, showed the products of the appellant and of other Canadian wine producers under such headings as “Champagne”, “Champagne type” and “Canadian Champagne”, and this over the thirty year period.
The respondents contest that there had been a thirty year delay in enforcing their alleged rights, contending rather that it was only fifteen or sixteen years in the case of the appellant, which did not begin to use the word “Champagne” on its labels in the Quebec market until 1948 or 1949. This submission suggests that the respondents can, for the purpose of injunctive relief under a statute of Canada-wide application, hive off Quebec as a separate jurisdiction for the purpose of that form of relief. The cause of action which is being asserted is one that it was open to the respondents to pursue in any provincial superior court in Canada within whose territorial jurisdiction a breach of art. 11 was alleged to have occurred. It is not as if the alleged breach by the appellant was unique as among Canadian producers of sparkling wines or that it raised particular problems for the respondents in Quebec alone. In Quebec itself there were “Champagne Type” listings in the government liquor stores in 1939 and 1940; the appellant’s sparkling wine was listed as champagne type in 1941. In my view, it is entirely appropriate, in determining whether an injunction should go against the appellant in the suit brought in Quebec, to consider the delay of the respondents in seeking to vindicate their legal rights under art. 11 in other parts of Canada and against other alleged violators, and letting them continue for some thirty years to believe that they could lawfully market their sparkling wines as “Champagne”.
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The injunction is a discretionary remedy; and although the discretion has been reduced to rule in various classes of cases, I am of the opinion that it is open to the Courts to act upon it where such a unique cause of action as that asserted here is the basis of the claim for injunctive relief. In considering whether to exercise its discretion in favour of such relief, it is highly relevant that the respondents took no action against any Canadian producer anywhere in Canada from 1933 until the Quebec suit in 1964, although knowing such producers to be marketing sparkling wines over that thirty year period under the name of “Champagne”, involving in that respect a continuing outlay of money for labelling and advertising.
I do not think it necessary to find, in order to refuse an injunction, that the respondents have by their conduct renounced their legal rights. It is enough if, by reason of the respondents’ long and unexplained delay when fully aware of their legal rights and of the invasion thereof by the appellant and others, it would be inequitable to apply the drastic remedy of a permanent injunction against the appellant. In such case, the respondents should be left to their remedy at law in damages.
That, in my opinion, is the situation here. The delay, the slumbering on their rights by the respondents, has been for an unconscionably long time. There was not even the threat of legal proceedings over the thirty year period, but merely an effort by the French Government in 1956 and 1957 to exert diplomatic pressure. That is not enough, especially when the long delay has not been explained, to support the respondents’ claim to equitable relief. I need not multiply case references. I adopt the proposition in Kerr on Injunctions (6th ed. 1927), at p. 34, as follows:
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A man who, possessing a full knowledge of his rights, has lain by and has by his conduct encouraged others to expend moneys in contravention of the rights for which he afterwards contends, cannot come to the court for relief by perpetual injunction, however clear his right or whatever may be the value of the right, but must rest satisfied with … damages …
I wish to add a word about the respondents’ claim for damages. The pleading of the respondents, as amplified by an order for particulars, shows that each of the fifteen respondents claimed $5000 as the minimum indemnity to compensate them for the loss of sales and the profit of which they had been deprived as a result of the appellant’s sales in Quebec. The trial judge awarded this sum as moral damages although, as was pointed out on appeal, no proof was offered of the loss alleged. To the degree that case law has assimilated the civil law concept of moral damages to the common law concept of general damages (see Chaput v. Romain), proof of pecuniary loss must be offered if more than a nominal award is to be justified. Although moral damages may, inter alia, include a sum for damage to reputation, the award in this case cannot be so justified because the respondents based their claim for damages on pecuniary loss.
I have had the advantage of reading the reasons of my brother Pigeon before preparing my own, and I agree with him that the award of $5000 (assuming that the respondents have established their cause of action) cannot stand. In my opinion, the respondents would not be
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entitled to anything more than nominal damages: see Cloutier v. Thetford Mines. Had I concluded that they had established a claim at least to nominal relief, I would have awarded $100 to each of them.
In the result, I would allow the appeal and dismiss the action with costs against the respondents throughout.
Appeal allowed in part without costs, ABBOTT, JUDSON, SPENCE and LASKIN JJ. dissenting.
Solicitors for the defendant, appellant: Martineau, Walker, Allison, Beaulieu, Phelan & MacKell, Montreal.
Solicitors for the plaintiffs, respondents: Blain, Piché, Bergeron, Godbout & Emery, Montreal.
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