Date: 20010928
Docket: T-1158-99
Neutral citation: 2001 FCT 1066
BETWEEN:
ANCHOR BREWING COMPANY
Plaintiff
- and -
THE SLEEMAN BREWING & MALTING CO. LTD.
Defendant
REASONS FOR ORDER
LEMIEUX J.:
INTRODUCTION
[1] This is an appeal by the plaintiff, Anchor Brewing Company from the August 15, 2001 decision of Associate Senior Prothonotary Peter K. Giles (the "Associate Senior Prothonotary" or the "ASP") who, without written reasons, refused the plaintiff's request that the second sentence of paragraph 19 of the defendant's statement of defence and counterclaim be struck without leave to amend.
[2] Paragraph 19 of the defendant's statement of defence and counterclaim reads:
19. Sleeman specifically denies the allegations contained in paragraph 4 of the Statement of Claim. In the United States, Anchor is named as the owner of Trade-Mark Registration No. 1,206,783 for STEAM BEER since August 31st, 1982. The trade-mark and brand name for the product is Anchor and the style of beer is steam style or steam beer. Anchor has no reputation or notoriety among the consuming public in the U.S. or Canada and therefore no goodwill in Canada or elsewhere relating to its Anchor name and styles of beer. [emphasis mine]
[3] For ease of reference, paragraph 4 of the plaintiff's statement of claim reads:
4) The Plaintiff is the owner of the trade-mark STEAM. For over 80 years, the Plaintiff and its predecessors have been engaged in brewing and marketing beer in the United States in association with the trade-mark STEAM. During this time period, the Plaintiff has enjoyed a substantial business and reputation with Canadian residents by means of direct sales to Canadians travelling in the United States, and by means of Canadian residents being exposed to advertisements appearing in American publications which circulate in Canada. In addition, since 1985, the Plaintiff has been promoting, advertising and selling its STEAM brand beer directly into Canada.
BACKGROUND
[4] On November 3, 1989, the plaintiff Anchor Brewing Company of San Francisco ("Anchor") obtained registration in Canada of its trade-mark STEAM in association with beer.
[5] On June 18, 1999, the defendant The Sleeman Brewing and Malting Co. Ltd. ("Sleeman") obtained, unopposed, the Canadian trade-mark registration for its mark SLEEMAN STEAM BEER in association with beer with disclaimer of the descriptive terms "steam" and "beer".
[6] On June 23, 1999, Anchor commenced this action against Sleeman for trade-mark infringement, passing-off and depreciation of goodwill.
[7] Before serving and filing a defence, Sleeman elected to proceed by oral examination for discovery as permitted by Rule 236(2) of the Federal Court Rules, 1998 (the "Rules").
[8] On discovery, several answers were refused by Anchor's representative and Sleeman sought an order from Prothonotary Roza Aronovitch to compel them to be answered which resulted in an appeal taken to Justice MacKay of this Court who, on September 14, 2000, dismissed the appeal in respect of questions unresolved during the hearing before him.
[9] On May 31, 2001, Sleeman filed its statement of defence and counterclaim raising several defences including the invalidity of Anchor's Canadian trade-mark STEAM because the word STEAM is and always was clearly descriptive or the generic name for the character of a brewing style, method or process, and was not properly registerable.
[10] Moreover, Sleeman alleges Anchor never steamed beer in Canada and has never used "steam", "Anchor steam", "beer" or "Anchor steam beer" in Canada as a trade-mark and that the trade-mark which is subject to registration was not in use in Canada as of August 14, 1985 or at any time. Sleeman alleges non-distinctiveness and Anchor's use, adoption and registration contrary to several sections of the Trade-Mark Act.
[11] In paragraph 18, Sleeman denied Anchor possessed any reputation in Canada in association with the trade-mark STEAM and stated Anchor has no rights or goodwill in Canada.
[12] In its counterclaim, Sleeman claims an order striking out Anchor's Canadian trade-mark registration and relied on the allegations set out in its statement of defence.
[13] Anchor then moved, pursuant to Rule 221 of the Rules, to strike certain pleadings from Sleeman's statement of defence and counterclaim.
[14] As noted, the Assistant Senior Prothonotary refused to strike the second sentence from paragraph 19 which reads:
In the United States, Anchor is named as the owner of Trade-Mark Registration No. 1,206,783 for STEAM BEER since August 31st, 1982.
[15] The Associate Senior Prothonotary did, however, strike from Sleeman's statement of defence and counterclaim, with leave to amend, the words "the U.S. and all throughout the world" in paragraph 16 and the words "the U.S." and "or elsewhere" in the last sentence of paragraph 19.
ANALYSIS
(1) The standard of review
[16] The well-known test guiding the review by a judge of a prothonotary's discretionary decisions was enunciated by Justice MacGuigan in Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 at 463 in the following terms:
... discretionary orders of prothonotaries ought not to be disturbed on appeal to a judge unless:
(a) they are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts, or
(b) they raise questions vital to the final issue of the case.
Where such discretionary orders are clearly wrong in that the prothonotary has fallen into error of law (a concept in which I include a discretion based upon a wrong principle or upon a misapprehension of the facts), or where they raise questions vital to the final issue of the case, a judge ought to exercise his own discretion de novo.
[17] Clearly, the order which the Associate Senior Prothonotary made in this case was discretionary and I adopt what Justice Reed said in James River Corp. of Virginia v. Hallmark Cards, Inc. (1997), 126 F.T.R. 1 (F.C.T.D.), where she said a type of a discretionary order is one that involves the management of the trial and the pre-trial process including the striking of the pleadings.
[18] Counsel for the plaintiff recognized that by not striking out the second sentence from paragraph 19 of the defendant's statement of defence and counterclaim, the Associate Senior Prothonotary was not making a decision vital to the result of the case. In these circumstances, according to Aqua-Gem, a case where written reasons had been provided by the prothonotary, I must not exercise my discretion de novo but must search whether the Associate Senior Prothonotary fell into an error of law (made his decision based on the wrong principle or upon a misapprehension of the facts).
[19] Counsel for the plaintiff raised an issue of how I can scrutinize the Associate Senior Prothonotary's order to determine the error when the Associate Senior Prothonotary provided no reason in his order as to what led him to his decision.
[20] Counsel for the plaintiff said, in the circumstances, I must exercise my discretion de novo relying on Justice Nadon's decision in ITT Hartford Life Insurance Co. of Canada v. American International Assurance Life Co. (1997), 79 C.P.R. (3d) 441 where he said this at page 444:
As I have already indicated, the Senior Prothonotary did not give any reasons for his orders. Consequently, I am of the view that this appeal must proceed de novo. I agree entirely with the reasons given by Hughes J. in Richmond v. Canadian National Exhibition Assn. (1979), 24 O.R. (2d) 781 (H.C.J.), where he states, at 782:
The learned Master made a decision which, in the normal course, would involve an exercise of his discretion and would, generally speaking, not be reviewable on appeal unless he acted unjudicially and contrary to principle and authority. As I have observed on former occasions where a judicial officer of this court makes an order without giving reasons in a matter involving the exercise of his discretion, he places an appellate court in a position where it has no access to his determination and so the court appealed to must of necessity proceed de novo.
[21] Counsel for the plaintiff, to his credit, brought to my attention two contra decisions of this Court, namely, DRG Inc. v. DataFile Ltd. et al. (1987), 16 C.P.R. (3d) 155, and Hayden Manufacturing Co. v. Canplas Industries Ltd. (1988), 86 C.P.R. (3d) 17.
[22] In DRG Inc., supra, Justice McNair was dealing with an appeal from a prothonotary who, without written reasons, refused to grant leave to the applicant for the late filing of an affidavit to reply to two affidavits filed by the respondent. The Richmond case was cited to him but he was faced with an argument by counsel for the respondent who contended the matter should not be reviewed de novo because of the well-established principle an appeal court will not lightly interfere with a discretionary order of a lower court unless it can be demonstrated the lower court took an erroneous view of the facts or proceeded upon a wrong principle, or unless the appellate court is convinced the decision represented a failure of justice, citing Teledyne Industries Inc. et al. v. Lido Industrial Products Ltd. (1978), 41 C.P.R. (2d) 60 (Ont. C.A.). Justice McNair ruled as follows:
I adopt the principle of Teledyne Industries as being the one properly applicable to the present case, notwithstanding the lack of written reasons.
[23] In doing so, Justice McNair looked at the grounds of appeal before him which alleged that the prothonotary erred in law in refusing to grant leave to file the affidavit contrary to a principle in established jurisprudence. He came to the conclusion the Associate Senior Prothonotary erred by attaching disproportionate weight to what he conceived to be the summary nature of the proceedings and by failing to give due or any weight to the discretionary provisions in the Rules; he was also of the opinion the Associate Senior Prothonotary also misconceived the principle enunciated in the governing jurisprudence.
[24] In Hayden Manufacturing, supra, Justice Wetston was dealing with an appeal from the Associate Senior Prothonotary who refused to compel answers to certain questions not answered by a representative of the plaintiff. He ruled as follows at paragraph 6:
[6] The A.S.P. did not provide any reasons for his order dated November 24, 1998 with respect to this matter. The lack of written reasons by the Prothonotary does not automatically mean that the proceeding before the Court should proceed as a hearing de novo. It is clear that a discretionary order of a Prothonotary should not be disturbed on appeal unless it is clearly wrong in the sense that the exercise of discretion by the Pothonotary was based upon a wrong principle or upon a misapprehension of the facts, or it raises a question which is vital to the issue of the case. It would appear that only where such discretionary orders are clearly wrong in that the Pothonotary has fallen into an error of law (including discretion based upon a wrong principle or upon a misapprehension of the facts or where it raises a question vital to the final issue in the case should the Court exercise its own discretion de novo: Canada v. Aqua-Gem, supra). [emphasis mine]
[25] Justice Wetston cited with approval Justice Reed in James River Corp. of Virginia, supra, to the effect that her understanding of the Aqua-Gem decision was a judge of this Court should show deference to a prothonotary's decision, in a manner similar to that exercised by courts of appeal in the case of discretionary decisions by trial judges. He concluded that the order appealed from was discretionary and added at paragraph 8 of the reported case:
[8] I agree that relevance is the test, but I am also of the opinion that the order id discretionary in that the Court must consider whether the Prothonotary had fallen into legal error of law which prevented him from exercising his discretion properly. If so the Court must exercise its own discretion de novo. In other words, even if I would have made a different order, unless the Prothonotary erred in the manner described previously, this Court should not interfere. [emphasis mine]
[26] Justice Wetston dismissed the appeal not being satisfied the Associate Senior Prothonotary had fallen into any error of law or principle which prevented him from exercising his discretion in the proper manner and, as a result, declined to exercise his discretion de novo. He acknowledged, with respect to certain questions, if he had ruled de novo, he might have answered differently than the Associate Senior Prothonotary did.
[27] Counsel for the plaintiff submitted several Ontario cases which he argued showed the governing principle in Ontario, on an appeal from a Master's order, was the one stated by Justice Hughes in Richmond, supra. The cases he submitted show, in my view, a more flexible approach and I refer to three of them. Machado v. Pratt and Whitney Canada Inc. (1992), 17 C.P.C. (3d) 189 (Ont. Gen.Div.), Swan (Committee of) v. Stroud (1993), 12 O.R. (3d) 378 (Ont. Gen.Div.) and Meneses v. Da-Silva (1997), 37 O.R. (3d) 499 (Ont. Gen.Div.).
[28] In Machado, supra, Justice J. MacDonald was dealing with an appeal from a Master's order that evidence of a potential witness be videotaped so it may be available at trial. The Master did not deliver reasons for decision. Justice MacDonald was referred to Richmond, supra, and he ruled as follows at paragraph 5:
[5] In my opinion, these decisions apply only to cases where the learned Master's discretion has been exercised in a manner not apparent to the appellate court. In this case, the nature of the order and the evidence establish the way in which the master exercised his discretion. Quite simply, he accepted uncontradicted evidence as meeting the requirement of the rule. Since the mMaster's discretion has been exercised in a fashion which is apparent, there is no need to proceed de novo. Written reasons are not required in simple, straightforward motions. To hold otherwise would be to turn form into substance and to make substance secondary. [emphasis mine]
Justice MacDonald said the test to be applied was whether the Master exercised his judicial discretion in a manner which was clearly wrong. He concluded the Master clearly exercised his discretion properly by reference to the appropriate rule and the factual basis for the order.
[29] In Swan (Committee of), supra, Justice Anderson had under appeal a Master's order who gave no written reasons for his order relating to an examination for discovery dealing with 180 questions. Justice Anderson looked at the Master's endorsement and the order he made, and reached the conclusion that both "leaves no doubt that the Master gave careful and detailed attention to the issues raised before him". He said there may be cases where a question or line of inquiry on examination for discovery may ultimately prove to be vital in the disposition of the action but he suspected they are few in nature. He then reasoned at paragraphs 7 and 9:
[7] For that reason alone, I think the Court should be hesitant to interfere with an order of the Master pertaining to such matters. There is a further consideration of a purely practical matter. I have given an outline of the nature of the motion before the Master in the instant case. To require of the Master written reasons for his disposition of each question would be a counsel of perfection to which effect could not possibly be given in this imperfect world... . I have already observed that the notes to his endorsement and his order leave no doubt that he gave careful and detailed attention to the issues raised before him. I am prepared to conclude that his disposition of those issues was made in the exercise of his discretion, was in no way whimsical or arbitrary, and should not be disturbed unless something in the result he produced was clearly wrong. I do not propose to deal with the matter de novo.
,. . .
[9] I have reviewed the questions and the rulings made by the Master. In most instances, I agree with his conclusions. In some instances I might have defined the areas more narrowly than he, but I do not consider it appropriate to interfere. In the instances which follow and for the reasons indicated, I think the conclusion of the Master was in error. [emphasis mine]
[30] In Menenes, supra, Justice Chapnik was dealing with an order of a Master requiring the plaintiff in a personal injury suit to deliver a calculation of his claim for past loss of income. Justice Chapnik concluded the matter relating to the production of an income loss schedule was more properly characterized as an issue of law rather than an issue of discretion but added that if it was discretionary and if the Master's discretion had been exercised in a manner apparent to the appeal court, even without written reasons, it may be unnecessary to proceed de novo.
[31] The case law review, which I accept, shows a prothonotary's order given without written reasons does not automatically give rise to a hearing de novo on appeal before a judge of this court.
[32] De novo intervention is not justified when, examining all of the circumstances, including the nature of the order made, the evidence before the prothonotary, whether the exercise of discretion involves essentially a consideration of legal principles, reasonably demonstrate the manner in which the prothonotary exercised his/her discretion.
[33] The issue before the Associate Senior Prothonotary was whether he should exercise his discretion by striking out the second sentence from paragraph 19 of the defendant's statement of defence and counterclaim. The principle he had to apply was whether it was plain and obvious the pleadings disclosed no reasonable cause of action or were frivolous or redundant. The considerations before him guiding the exercise of his discretion were essentially legal ones involving the examination of case law on the effect of a foreign trade-mark registration on the plaintiff's trade-mark rights in Canada, the interpretation of the pleadings and the interpretation of the order made by Justice MacKay. Moreover, in the order he made, the ASP denied that part of the plaintiff's motion before him which requested the striking out of pleadings without leave to amend indicated he was not satisfied the plaintiff had met the stringent standard governing the striking out of pleadings.
[34] Taking into account all of these factors, I conclude that I can reasonably discern the way in which the Associate Senior Prothonotary exercised his discretion. He was not satisfied the plain and obvious test had been met, he was not persuaded this sentence was irrelevant and had been decided by Justice MacKay. In the circumstances, reviewing the exercise of the ASP's discretion de novo is not appropriate; the plaintiff/appellant must persuade me the ASP in the exercise of his discretion was clearly wrong or misapprehended the facts.
(2) Conclusions
[35] The plaintiff first argued the ASP's refusal to strike ignored settled law that trade-mark registration in the United States raises no reasonable defence and is immaterial to its action in Canada which is based on trade-mark rights in Canada.
[36] I am not persuaded by this argument. The sentence sought to be struck is simply a statement of fact and is, along with the other sentences in paragraph 19, an answer to the plaintiff's claim in relation to the trade-mark STEAM which it holds in Canada and the goodwill it is said is associated with that trade-mark in Canada. Counsel for Sleeman points out case law to the effect a trade-mark use in the United States can be the basis for goodwill in Canada and is relevant to distinctiveness. He argues the second sentence of paragraph 19 of Sleeman's statement of defence and counterclaim is to show different trade-mark use in the U.S. (and consequently in Canada because all of Anchor's beer sold in Canada is imported from the U.S.) and this in contrast to the Canadian registration. In these circumstances, I do not find, in respect of this ground, the prothonotary's exercise of discretion was clearly wrong.
[37] The plaintiff then argued the ASP erred in not finding the second sentence of paragraph 19 irrelevant on the basis of Justice MacKay's decision. Counsel for Sleeman argued Justice MacKay's decision was made in a totally different context, that of compelling answers on pre-trial discovery before Sleeman's statement of defence and counterclaim had been filed. I accept that submission and note Justice MacKay concluded he was not persuaded the questions at issue were relevant to the facts and issues pleaded in the statement of claim. I also note, as did both Prothonotary Aronovitch and Justice MacKay, the questions challenged there were aimed at the plaintiff's trade-mark applications, registrations, litigation and enforcement activities in the United States and not in relation to a simple statement of when Anchor obtained its U.S. registration and what that U.S. registration was for.
[38] Finally, the plaintiff argued the ASP was inconsistent when he refused to strike the second sentence of paragraph 19, yet struck out the words "the U.S." and "or elsewhere" in other sentences of that paragraph. This argument must fail because it ignores the context of the words struck out in the sentence in which they appeared. It is obvious what troubled the ASP was that these words were aimed at Anchor's reputation or notoriety in the U.S. or elsewhere as well as in Canada but he also gave leave to amend. Again, I cannot conclude the ASP was clearly wrong or misapprehended any facts when he did so and find no inconsistency in his decision-making.
DISPOSITION
[39] For all of these reasons, this appeal is dismissed with costs in any event of the cause.
"François Lemieux"
J U D G E
OTTAWA, ONTARIO
SEPTEMBER 28, 2001
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