Value Village Market (1990) Ltd. v. Value Village Stores Co., docket T-2707-92

Date: 19991029

Docket: T-2707-92

REED, J.:

[1]      Counsel for the defendant brings a motion that has two parts: one seeks an order pursuant to Rules 107 and 153 of the Federal Court Rules, 1998 to allow this action to proceed to trial without requiring the parties to adduce evidence on the extent of alleged infringement and on questions relating to damages or to profits arising from the infringement; the other part is a request for an order pursuant to Rule 75 to allow the making of amendments to the Statement of Defence and Counterclaim.

[2]      Counsel for the plaintiff objects to both motions. She argues that insofar as the first is concerned: the jurisprudence establishes that a plaintiff should have the opportunity to make the whole of its case at trial, if it wishes to do so; the defendants have not demonstrated that a separation of the issues of extent of infringement, damages and profits from the rest of the case will lead to a significant saving in time or expense; full information arising from a full discovery will assist the settlement process; that severance of the issues will be prejudicial to the plaintiff.

[3]      Counsel for the defendant argues that: the issues should be separated because this would lead to a significant saving in time and expense in conducting the litigation, particularly if the plaintiff is not successful; the tight timetable to which the parties are being held can more easily be met if only the issue of liability is litigated at this stage; there is no strategy to limit the plaintiff's access to information so as to weaken its settlement negotiating position; the plaintiff will not be prejudiced by severing the issues.

[4]      While counsel have cited a number of decisions, I do not find it necessary to go beyond that of Mr. Justice Evans in Illva Saronno v. Privilegiata Fabrica Maraschino "Excelsior" T.D. (1998), 84 C.P.R. 1 (F.C.T.D.), a decision to which both counsel referred in support of their respective positions.

[5]      Mr. Justice Evans notes that section 3 of the recently amended Federal Court Rules requires that they be "applied so as to secure the just, most expeditious and least expensive determination of any proceeding on its merits". Thus, he concludes that issues in a case should be tried separately if the Court is satisfied, on the balance of probabilities, that in the light of the evidence and all the circumstances of the case (including the nature of the claim, the conduct of the litigation, the issues and the remedies sought), severance is more likely than not to result in the just, expeditious and least expensive determination of the proceeding on its merits.

[6]      He also notes that one starts with the premise that normally it is more efficient if all issues are determined together, rather than separately. Bifurcating a proceeding normally leads to a duplication of procedural steps and costs because there are two separate discovery procedures, two trials or trial type proceedings, and possibly two separate appeals. It is the moving party that has the burden of proof and persuasion that a departure from the general rule is justified.

[7]      The present action is a suit by the plaintiff to prevent the defendant using the plaintiff's registered trade-mark and for damages or an accounting of profits arising from the use that has already occurred. The defendant challenges the validity of that trade-mark and the extent of its use, and asserts that, in any event, there has been delay in commencing the suit. If the defendant is successful on these arguments, there would be a saving in time and cost in severing the issues as the defendant requests. The defendant's positions, however, at this point, depends upon assertions of fact that have not been adjudicated. It would be premature for me to assume that those facts have been established. If the defendant is successful, expenses incurred as a result of the plaintiff's refusal to agree to a bifurcation of the issues is of course, conduct that can be taken into account on the assessment of costs that would be payable by the plaintiff.

[8]      The plaintiff objects to a bifurcation of the issues because it foresees extra costs arising therefrom, costs which it as a small business can ill afford to bear. As noted, the plaintiff also considers the request for bifurcation to be a tactic to weaken its negotiating position in settlement discussions because access to information will be denied to it. Certainly, if the latter is the case, a bifurcation of the issues at this stage would not assist a just resolution of the dispute.

[9]      In any event, in my view, in this case the extent to which significant overall costs and savings of time would result from the bifurcation of the issues is the major consideration.

[10]      This is a trade-mark infringement case. The defendant uses the trade-mark Value Village in connection with the second hand clothing stores that it operates (clothing that is purchased from charities who collect it from donors). This is not a case similar to some of those cited to me, where a defendant's financial records encompass several different products and only one or two of those products are in issue in the litigation.

[11]      Counsel argues that since the defendant's business is conducted in both the United States and Canada, and its financial records are integrated, there would be difficulty in separating out the information pertaining to the stores in Canada. I do not find this persuasive. I am not convinced that there would be difficulty in ascertaining the profits attributable to the Canadian business locations. Counsel for the plaintiff referred to another occasion on which the defendant appears to have had little difficulty in producing the kind of information that is in issue.

[12]      Insofar as adding to the length of the discovery proceedings is concerned, it seems to me that the financial information will be largely a matter of documentary discovery, which should probably have already been provided, but, if it has not, the requirement that it now be produced is not likely to lengthen appreciably the oral discovery process.

[13]      I have not been persuaded that the defendant has met the burden of showing that a separation of the issues requested in the motion is more likely than not to result in a more just, expeditious and less expensive determination of the proceeding on its merits than will the continuation of a unified proceeding.

[14]      I turn then to the request for leave to amend the Statement of Defence and Counterclaim. Many of the amendments sought are editorial in nature. I did not understand there to be any objection to those amendments. The proposed amendments to which objection is made are: the addition of an alternative claim seeking to have the scope and effect of the plaintiff's registered trade-mark limited to Lethbridge, Alberta (paragraph 18 and subparagraph 19 (ii) of the proposed amended Defence and Counterclaim); and, the addition of a claim pursuant to section 7(a) of the Trade Marks Act, (subparagraphs 19 (iii) and (iv) and paragraphs 23 of the proposed amended Defence and Counterclaim).

[15]      Counsel for the defendant referred to the jurisprudence, which states that normally an amendment of pleadings should be allowed, no matter how late in the proceedings it is proposed, providing that amendment will not result in prejudice to the other side; see, for example, Scottish & York Insurance Co. v. Canada, [1999] F.C.J. No. 277, Court File No. A-34-98 (F.C.A.) and Visx Inc. v. Nidek Co., [1998] F.C.J. No. 1766, Court File No. A-313-98 (F.C.A.).

[16]      There is an additional consideration in this case beyond those normally applicable. Case management rules are now being applied by this Court, particularly when an action has been lingering in the Court for many years. This action was commenced in 1992. On July 30, 1998 a Notice of Status Review was issued asking the plaintiff why the action should not be dismissed because it had not been proceeded with in a timely manner. On November 26, 1998, Mr. Justice Pinard allowed the action to continue on the subsequent provision by the parties of an agreed upon timetable, which required all motions regarding pleadings to be filed by February 22, 1999. Motions for this purpose were filed and pleadings were amended. A second Notice of Status Review was issued on September 2, 1999, because the parties again appeared to be bogged down. Consequent thereon, discoveries were ordered to commence on November 15, 1999.

[17]      The subsection 7(a) pleading that it is now sought to add arises out of a letter sent by the plaintiff to one of the defendant's charitable vendors, the Cerebral Palsy Association, on December 8, 1998. The letter complains about the defendant's use of the trade-mark Value Village. In the affidavit filed in support of the request to amend the Statement of Defence and Counterclaim, the vice-president of the defendant, located in Washington, U.S.A., states that he did not become aware of the December 1998 letter or its legal significance until the summer of 1999. When an action has been allowed to proceed on the basis of a timetable that sets out a date for the completion of the filing of motions respecting pleadings, I do not think an amendment that rests on facts reasonably knowable by a party before the 3cutoff date3 should be allowed after that date. I am not prepared to interpret the vice-president's lack of knowledge as evidence that the defendant was not aware of the December 8, 1998 letter as of February 22, 1999. In these circumstances, I do not think that amendment should be allowed at this stage of the proceeding.

[18]      An amendment that does not involve the adducing of factual information additional to that already in issue, for example, the addition of a legal characterization of the facts, is a different matter. That type of amendment is not likely to involve a lengthening of the pre-trial proceedings. The change will result in a lengthening of legal argument only.

[19]      Accordingly, I have reached the conclusion that allowing the 7(a) amendment would prejudice the plaintiff and lengthen the timetable that has been imposed, and therefore should not be allowed. The amendment to allow for argument on the additional remedy limiting the geographic scope of the plaintiff's trade-mark rights will, however, be allowed, as will all of the editorial changes that are proposed to the pleading.

                                 Judge

OTTAWA, ONTARIO

October 29, 1999