Docket: A-422-15
Citation: 2017 FCA 126
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CORAM:
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PELLETIER J.A.
WEBB J.A.
NEAR J.A.
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BETWEEN:
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HEATHER RUTH
MCDOWELL
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Appellant
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and
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AUTOMATIC
PRINCESS HOLDINGS, LLC
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Respondent
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REASONS FOR
JUDGMENT
PELLETIER J.A.
I.
INTRODUCTION
[1]
This is an appeal from a decision of the Federal
Court, reported as 2015 FC 980, dismissing an application for judicial review
of an interlocutory decision of a member of the Trade-marks Opposition Board (the
Board) under the delegated authority of the Registrar of Trade-marks. The Board
dismissed the appellant Heather Ruth McDowell’s (McDowell) request to amend her
statement of opposition to the respondent Automatic Princess Holdings, LLC’s (Automatic
Princess) application to register a trade-mark. The Federal Court dismissed the
application for judicial review on the basis that there were no special circumstances
that would justify reviewing an interlocutory decision. In particular, the
Federal Court found that McDowell had an adequate alternate remedy in the form
of other proceedings under the Trade-marks Act, R.S.C. 1985 c. T-13 (the
Act).
[2]
There are conflicting decisions of the Federal
Court as to what constitutes an adequate alternate remedy in the context of
interlocutory decisions in trade-mark opposition proceedings. This appeal
provides an opportunity to resolve this conflict. For the reasons set out
below, I would allow the appeal.
II.
THE FACTS
[3]
In 2002, McDowell applied to register the HONEY
trade-mark; in 2003, she applied to register the HONEY & DESIGN trade-mark.
[4]
In 2003, Automatic Princess applied to register
the trade-mark HONEY B. FLY. In 2009, the trade-mark was approved and
advertised in the Trade-marks Journal.
[5]
On May 3, 2010, McDowell filed a statement of
opposition opposing Automatic Princess’ application. The statement of
opposition was based on non-entitlement and non-distinctiveness. It did not
plead or refer to paragraph 12(1)(d) of the Act, which provides that a
trade-mark is not registrable if it is confusing with a registered trade-mark.
[6]
On May 18, 2010, HONEY and HONEY & DESIGN
were registered as trade-marks.
[7]
In July 2010, Automatic Princess filed a counter-statement.
In November 2010, McDowell filed the affidavit of Elenita Anastacio, which
included the registrations for the HONEY and HONEY & DESIGN trade-marks. As
can be seen from the chronology above, the registration of the marks was issued
after McDowell filed her statement of opposition. Ms. Anastacio was
cross-examined on her affidavit but was not asked any questions about the
trade-mark registrations that were exhibits to her affidavit.
[8]
Automatic Princess filed its own affidavit in
2013. In March 2014, McDowell indicated that she would not file written
argument and asked for an oral hearing. Automatic Princess filed its written
argument in July 2014 and also requested an oral hearing.
[9]
This was the state of opposition proceedings
when McDowell realized that she had not pleaded the registration of her trade-marks
or paragraph 12(1)(d) of the Act. On August 14, 2014, counsel on her
behalf wrote to the Board requesting leave to file an amended statement of
opposition. That letter pointed out that:
The original statement of opposition
included copies of the pending applications for McDowell’s trade-marks and
indicated that both had been allowed and that registration was therefore
imminent.
Copies of the registrations of McDowell’s
trade-marks were attached as exhibits to the Anastacio affidavit.
Notwithstanding the fact that the
registrations were put into evidence, no questions about them were asked when
Anastacio was cross-examined on her affidavit.
In the circumstances, counsel of Automatic
Princess should be taken to have been aware of the existence of the
registrations and to have chosen not to cross-examine Anastacio with respect to
those registrations.
As a result, Automatic Princess would suffer
no prejudice if the amendment were allowed, but McDowell was prepared to consent
to reasonable measures to allow the former to amend its argument to reflect the
fact of the registrations and to respond to arguments based on paragraph 12(1)(d)
of the Act.
[10]
The Board rejected McDowell’s application for
leave to amend her statement of opposition. It noted that the application was
made at a very late stage in the proceedings, probably after having read Automatic
Princess’ written argument. The Board also noted the absence of an explanation
for the failure to plead the registrations other than inadvertence.
Furthermore, the amendment was of some importance since it added a ground of
opposition that does not require McDowell to lead evidence of use of her
trade-marks.
[11]
The Board was of the view that Automatic
Princess would be prejudiced by the amendment as it would allow McDowell to
split her case, which was not in the interests of justice. With that in mind,
and having regard to the factors set out in Part VII of Practice in Trade-mark
Opposition Proceedings (the Board’s procedure manual), the application to amend
the statement of opposition was dismissed. The factors in Part VII are the ones
to which the Board had already referred in its decision.
[12]
An application to have the Board reconsider its
decision was also dismissed.
III.
THE FEDERAL COURT DECISION
[13]
After setting out the facts, the Federal Court
turned to the threshold issue of whether it should entertain a judicial review
of an interlocutory decision. Citing this Court’s decisions in Szczecka v.
Canada (Minister of Employment and Immigration), 116 D.L.R. (4th) 333, 25
Imm. L.R. (2d) 70 (F.C.A.)[Szczecka] and C.B. Powell Ltd. v. Canada
(Border Services Agency), 2010 FCA 61, [2011] 2 F.C.R. 332 [C.B. Powell],
the Federal Court held that, in the absence of special circumstances, a
reviewing court should not judicially review interlocutory decisions. One
special circumstance among others is the absence of an adequate alternative
remedy. This led to a consideration of the conflicting jurisprudence in the
Federal Court. While the Federal Court cases are consistent on the need for
special circumstances, they differ on whether there is an adequate alternate
remedy in the case of a refusal to permit an amendment to a statement of
opposition.
[14]
In Parmalat Canada Inc. v. Sysco Corporations,
2008 FC 1104, 69 C.P.R. (4th) 349 [Parmalat] the Federal Court noted
that, on the authority of McDonald’s Corp. v. Coffee Hut Stores Ltd., 55
C.P.R. (3d) 463, 76 F.T.R. 281 (F.C.) [McDonald’s], there is no right of
appeal from the dismissal of an application to amend a statement of opposition.
As a result, there is no remedy for an aggrieved party within the
administrative proceedings before the Board or at their conclusion. This was
found to be a special circumstance that justified judicial review of an
interlocutory decision dismissing an application to amend a statement of
opposition.
[15]
I might add that it appears to me that McDonald’s
is a doubtful authority. However, given that it was not challenged, I leave the
question of its correctness to be determined when it arises.
[16]
In the decision below, the Federal Court noted
that in Dairy Processors Association of Canada v. Dairy Farmers of Canada,
2014 FC 1054, 128 C.P.R. (4th) 393 [Dairy Processors], the Court found
that the availability of remedies other than in administrative proceedings
before the Registrar was not an adequate alternative remedy as contemplated by Szczecka
and C.B. Powell because those procedures occurred outside the framework
of the original proceedings.
[17]
On the other hand, in Indigo Books &
Music Inc. v. C. & J. Clark International Ltd., 2010 FC 859, 86 C.P.R.
(4th) 349 [Indigo], the Federal Court held that there was an adequate
alternate remedy due to the fact that the aggrieved party could commence other
proceedings, outside the framework of the opposition proceedings, seeking a
remedy such as expungement. As a result, there were no special circumstances
justifying the Federal Court’s intervention.
[18]
Citing C.B. Powell, the Federal Court commented
that its disinclination to intervene in interlocutory proceedings avoids fragmenting
the administrative process and eliminates the costs and delays associated with
interlocutory judicial review, particularly when the applicant for judicial
review may be successful in the underlying proceeding in any event.
[19]
The Federal Court distinguished Parmalat and
Dairy Processors, saying that the amendments sought to be introduced in
those cases raised issues that were not properly the subject of opposition
proceedings. The Federal Court also expressed its concern with respect to
parties splitting their cases. It found the reasoning in Indigo more
persuasive than that in Parmalat or Dairy Processors.
[20]
In the end, the Federal Court found that there
were no special factors justifying the Court’s intervention with respect to the
Board’s interlocutory decision and dismissed the application for judicial
review.
IV.
ISSUES
[21]
I would frame the issues in this appeal as
follows:
A. Does McDowell have an adequate alternate remedy such that her
application for judicial review should be dismissed?
B. If not, is the Board’s decision reasonable?
V.
ANALYSIS
A.
Does McDowell have an adequate alternate remedy
such that her application for judicial review should be dismissed?
[22]
The debate in the Federal Court jurisprudence
centres on the question of what constitutes an adequate alternate remedy. In Dairy
Producers and Parmalat, the Federal Court held that an adequate
alternate remedy must be one that is available within the administrative
process itself, while in Indigo, it found that another proceeding that could
lead to the same result was an adequate alternate remedy.
[23]
This Court dealt with the issue of adequate
alternate remedy in C.B. Powell. The Court began its analysis of this
issue as follows:
Under the Act, Parliament has established an
administrative process of adjudications and appeals in this area. This
administrative process consists of initial CBSA decisions or deemed assessments
under section 58, further determinations by CBSA officials under section 59,
additional determinations by the President of the CBSA under section 60 and
appeals to the CITT under subsection 67(1). The courts are no part of this.
Allowing the courts to become involved in this administrative process before it
is completed would inject an alien element into Parliament’s design.
C.B. Powell
at para. 28
[24]
The Court then concisely stated the legal basis
for its view that “[t]he Courts are no part of this”:
The normal rule is that parties can proceed
to the court system only after all adequate remedial recourses in the
administrative process have been exhausted. The importance of this rule in
Canadian administrative law is well-demonstrated by the large number of
decisions of the Supreme Court of Canada on point: [citations omitted].
C.B. Powell at para. 30 (my emphasis)
[25]
It is clear from these passages that recourse to
the courts before the remedies provided in the administrative process
have been exhausted is not justified. There is no ambiguity on this point. The
fact that a different proceeding, pursuant to a different statutory provision,
might produce the same result does not engage the doctrine of adequate
alternate remedy. The objective is to avoid fragmenting administrative
processes that already provide for a form of review. It is not to force
litigants into different proceedings to obtain redress. As a result, it is my
view that Indigo was wrongly decided and ought not to be followed.
[26]
The Federal Court appears to have confused
adequate alternate remedy and prematurity. The doctrine of adequate alternate
remedy comes within the broader doctrine of prematurity, but they are not the
same. While both address the issue of fragmentation of administrative
proceedings by untimely recourse to the courts, each addresses a slightly
different issue. Adequate alternate remedy deals with the case of respecting
the administrative scheme created by Parliament, as in C.B. Powell.
Prematurity deals with preventing parties from delaying proceedings by coming
to court for a remedy that may prove to be moot or overtaken when the tribunal
renders its final decision. Prematurity is best understood in the context of
interlocutory decisions.
[27]
In this case, neither the doctrine of adequate
alternate remedy nor that of prematurity is applicable. This is not a case
where the legislation provides for an administrative review of the Board’s
decision. For that reason, the doctrine of adequate alternate remedy is not a
ground for refusing to intervene. As for prematurity, the dismissal of the
application to amend the statement of opposition means that the Board will not
deal with the issue of paragraph 12(1)(d) in its final decision. As a
result, there is no possibility that McDowell will obtain the relief she seeks
from the Board. Therefore, the application for judicial review is not
premature.
[28]
As a result, I am of the view that the Federal
Court erred in law when it dismissed the application for judicial review on the
basis that McDowell had an adequate alternate remedy.
B.
If not, is the Board’s decision reasonable?
[29]
The first step in appellate review is the
determination of the standard of review. When this Court hears an appeal from
the Federal Court sitting as a court of review, it must decide if the Federal
Court chose the appropriate standard of review and applied it correctly: Dr.
Q. v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19
at para. 43, [2003] 1 S.C.R. 226. In practical terms, this means that this
Court steps into the shoes of the Federal Court and focuses on the underlying
administrative decision: Agraira v. Canada (Public Safety and Emergency
Preparedness), 2013 SCC 36 at para. 46, [2013] 2 S.C.R. 559.
[30]
The standard of review of specialized
administrative tribunals is presumed to be reasonableness, subject to certain
exceptions that are not relevant to this case: McLean v. British Columbia (Securities
Commission), 2013 SCC 67 at paras. 21-22, [2013] 3 S.C.R. 895. The
presumption of reasonableness has not been rebutted here, nor could it be.
[31]
The reasons given by the Board for its refusal
to allow McDowell to amend her statement of opposition do not, with respect,
withstand critical scrutiny. The Board noted that the application to amend was
made late in the proceedings, probably after having read Automatic Princess’
written argument. The Board was also concerned that allowing the amendment would
allow McDowell to split her case, to Automatic Princess’ prejudice.
[32]
It is true that the amendment was sought late in
the proceeding; in particular, it was sought after Automatic Princess had filed
its written argument. This is a factor to be considered but where any prejudice
caused by the delay can be remedied by allowing the other party additional
time, it ought not be a determinative factor.
[33]
It is difficult to understand how permitting the
amendment would allow McDowell to split her case. The purpose of the amendment
was to allow the Board to consider all the issues. McDowell was not seeking to
gain some advantage by forcing Automatic Princess to commit itself to a
position without knowledge of all the material facts. The registrations were
included as exhibits to the Anastacio affidavit. Automatic Princess had notice
of the registrations and was likely aware of McDowell’s omission before she
was. Any prejudice to Automatic Princess can be remedied by giving it time to
take such steps as the Board deems necessary to achieve fairness.
[34]
It is also difficult to understand the Board’s statement
that no explanation other than inadvertence was offered for the failure to
plead the registrations and paragraph 12(1)(d) of the Act. This suggests
that inadvertence in and of itself is not an explanation. I am unable to
understand why the Board would have that opinion. Inadvertence is a fact of
life and while we all hope to avoid missteps due to inadvertence, we are not
always successful. McDowell’s counsel explained the circumstances leading to
the application. There was no reason to disbelieve the explanation he gave.
[35]
A further consideration in assessing the
reasonableness of the Board’s decision is the fact that it failed to consider a
significant factor that ought to have led it to allow the amendment, namely the
long delay in dealing with Automatic Princess’ application for registration.
[36]
Automatic Princess applied to register its
trade-mark in 2003. For reasons that are not apparent, it was not approved and
advertised until 2009. McDowell filed her statement of opposition in 2010 and
her supporting affidavit later that year. Automatic Princess filed its
affidavit in 2013. The inadvertent failure to plead the registration of
McDowell’s trade-marks was discovered in 2014. On the record before us, it
appears that matters have not proceeded any further since then.
[37]
We are now in 2017 and Automatic Princess’
application for registration is still pending, as far as I can tell on the
record before us. A 14-year delay calls for out-of-the-ordinary measures. It
may be that McDowell could succeed in her opposition without having to rely on
her registrations and paragraph 12(1)(d) of the Act; but she may not. In
that case, McDowell would have an incentive to continue to oppose Automatic
Princess’ use of its mark, perhaps by launching expungement proceedings. This
would simply prolong the uncertainty over Automatic Princess’ marks and their
registrability. This is not in the interests of justice.
[38]
Given the extraordinary delays in this case, it
was incumbent on the Board to assist the parties in moving this matter forward.
In my view, the Board’s failure to do so is another factor that made its
decision unreasonable.
[39]
For these reasons, I am of the view that the
Board’s reasons for refusing McDowell’s application for an amendment do not
satisfy the criteria of transparency and intelligibility: Dunsmuir v. New
Brunswick, 2008 SCC 9 at paras. 47-48, [2008] 1 S.C.R. 190.
VI.
CONCLUSION
[40]
I would therefore set aside the Federal Court’s
judgment with costs here and below. I would return the matter to the Trade-marks
Opposition Board with a direction that McDowell’s application to amend her statement
of opposition is to be allowed on such terms as are necessary to do justice
between the parties.
"J.D. Denis Pelletier"
“I agree
Wyman W. Webb
J.A.”
“I agree
D.G. Near J.A.”
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