Bayo Odutola

The appellant, a non-party third party and sole shareholder, president and director of a plaintiff corporation, appealed a costs award made against him personally by the motion judge.

The motion judge had awarded costs on two grounds: (1) that the plaintiffs' action constituted an abuse of process, and (2) that the undertaking to damages provided on the application for an interlocutory injunction was fraudulent.

The Court of Appeal allowed the appeal and set aside the costs award, finding that there was insufficient evidence of exceptional circumstances (fraud or gross misconduct) required to justify costs against a non-party principal, and that costs should not be awarded merely because the principal directed the corporation's operations.

The defendants sought to vary previous cost orders to include Peter Merrill, a non-party and owner of the plaintiff corporations, on grounds of fraud and abuse of process.

The court found that the plaintiffs' underlying action was frivolous, vexatious, and an abuse of process, and that a fraudulent undertaking regarding financial capacity was given to the court during an interlocutory injunction motion.

The court granted the defendants' motion, amending the cost orders to include Peter Merrill personally, finding that the due diligence requirement for new evidence was dispensed with due to allegations of fraud.

In a trademark and passing off dispute between competing consulting businesses using similar trade names, the defendants brought a motion to strike portions of the statement of claim and sought particulars.

The plaintiffs also sought an adjournment of their injunction motion and leave to amend their pleading.

The court held that several paragraphs of the statement of claim failed to plead material facts necessary to support claims for passing off and unlawful interference with economic interests, and improperly asserted trademark infringement despite the mark being unregistered.

Multiple paragraphs were struck, and certain pleadings were ordered corrected or clarified.

The court refused to permit the plaintiffs to withdraw admissions made in an affidavit but granted limited leave to amend the statement of claim provided the amendments were not inconsistent with those admissions.