Court of Appeal for Ontario

Citation: Boaden Catering Limited v. Real Food For Real Kids Inc., 2017 ONCA 248

Date: 2017-03-27

Docket: C62410

Judges: MacFarland, van Rensburg and Huscroft JJ.A.

Parties

Between

Boaden Catering Limited Plaintiff (Appellant)

and

Real Food For Real Kids Inc. and David Starbuck Farnell Defendants (Respondents)

and

Real Food For Real Kids Inc. Plaintiff by Counterclaim (Respondent)

and

Boaden Catering Limited Defendant by Counterclaim (Appellant)

Counsel

Adam Jarvis, for the appellant

John Simpson, for the respondents

Heard: February 15, 2017

Appeal Information

On appeal from the order of Justice John R. Sproat of the Superior Court of Justice, dated June 30, 2016, with reasons reported at 2016 ONSC 4098, and from the costs order, dated August 16, 2016.

Endorsement

[1] This is an appeal from a summary judgment dismissing the appellant's action and an order dismissing the appellant's motion to strike certain paragraphs of the respondents' statement of defence. The appellant also seeks leave to appeal the costs award.

A. History of the Proceedings

[2] The proceedings arise out of a dispute over website domain names. The appellant Boaden Catering Limited ("Boaden") and the respondent Real Food For Real Kids Inc. ("RFRK") are competitors in the market for healthy children's catering in the Greater Toronto Area. In July 2014 and December 2014, Boaden registered a ".com" domain name (realfoodforrealkidss.com) and three ".ca" domain names (realfoodforkids.ca, rfrk.ca and realfoodlunchclub.ca), which were identical or similar to names that RFRK claimed to have used in its business continuously since 2005. In December 2014, Boaden registered RFRK and RFRK.CA as business names under Ontario's Business Names Act, R.S.O. 1990, c. B.17. Boaden also embedded "RFRK", "Real Food for Real Kids" and other similar keywords as "meta-tags" on its website at organickidscatering.ca, which ensured that persons searching the internet using such keywords would be directed to Boaden's website.

[3] In March 2015, RFRK submitted a complaint under the Internet Corporation for Assigned Names and Numbers ("ICANN") Uniform Domain Name Dispute Resolution Policy ("UDRP") concerning Boaden's registration of the domain name "realfoodforrealkidss.com". On May 5, 2015, an arbitrator found that Boaden had no legitimate interest in this domain name, which it had registered in bad faith.

[4] On May 7, 2015, RFRK submitted a complaint under the Canadian Internet Registration Authority ("CIRA") Domain Name Dispute Resolution Policy concerning Boaden's registration of the three ".ca" domain names. On July 8, 2015, the CIRA arbitrator found that Boaden had no legitimate interest in the disputed ".ca" domain names, and that the domain names had been registered in bad faith. The arbitrator ordered that the registration of the ".ca" domain names be transferred from Boaden to RFRK.

[5] On June 2, 2015, Boaden commenced an action in the Superior Court against RFRK and its principal David Farnell for a variety of relief, including a declaration that Boaden is the lawful owner of the disputed domain names, and damages for passing off, defamation and theft of trade secrets. In accordance with CIRA policy, the order to transfer the registration of the ".ca" domain names to RFRK is suspended while court proceedings are pending.

[6] RFRK and Farnell defended the action and RFRK counterclaimed for injunctive and declaratory relief as well as compensatory and punitive damages for Boaden's conduct in registering and using the domain names, and for other conduct in relation to Boaden's business.

[7] On January 4, 2016, RFRK served a motion for summary dismissal of Boaden's action. The motion was originally returnable at the same time as an interlocutory injunction motion brought by Boaden, which had been adjourned on July 17, 2015 to the week of February 29, 2016. In the interim, Boaden had served a motion to strike certain paragraphs of the statement of defence, also returnable on February 29, 2016.

[8] During the week of February 29, 2016, Boaden's counsel was ill. As a result, on March 1, 2016, the parties appeared before Sproat J. and all three motions were adjourned to the week of April 11, 2016. Sproat J. made it clear that Boaden's pleadings motion would not be heard and determined in advance of the summary judgment motion.

B. Decision of the Motions Judge

[9] Accordingly three motions were before the court on April 13, 2016: the motion for summary dismissal of the action, the motion to strike paragraphs of the statement of defence, and the motion for an interlocutory injunction (which Boaden advised it was no longer pursuing). Boaden sought an adjournment of the summary judgment motion for the purpose of cross-examining RFRK's deponents. The motions judge refused to adjourn the motion. As the motions judge explained in his written reasons, having regard to the history of the proceedings, Boaden was in breach of the obligation under rule 39.02(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 to exercise its right to cross-examine with reasonable diligence.

[10] After hearing argument and reserving his decision, the motions judge decided to hear viva voce evidence on the summary judgment motion from Louie Tassone, Boaden's principal, in accordance with his powers under rule 20.04(2.1). The motions judge subsequently provided written reasons dismissing Boaden's action and the pleadings motion.

[11] The motions judge's reasons are comprehensive, clear and detailed, and need not be set out in any detail here. It is sufficient to note that the motions judge considered the evidence respecting each cause of action alleged and dismissed Boaden's action, concluding that there was no genuine issue requiring a trial. The motions judge found that Boaden registered the domain name rfrk.ca in bad faith with a view to denying RFRK the ability to use the name. He concluded that Boaden brought the litigation to intimidate a smaller business competitor and adopted a number of "dubious tactics to gain advantage". Boaden had acted in bad faith, attempting to appropriate RFRK's goodwill and to exploit the value of its trademarks for illegitimate financial gain, and engaged in conduct that was unethical and deceptive.

[12] As for the pleadings motion, the motions judge rejected Boaden's assertion that certain paragraphs of the statement of defence alleging bad faith acts by Boaden, should have been pleaded as part of the counterclaim rather than the defence. He concluded that bad faith conduct was relevant to the defence of a number of Boaden's claims in the action, in particular, to the claims for an interlocutory injunction, the declaration that it owned the contested domain names (as registering a name in bad faith is clearly relevant to the validity of the registration) and to the claim for damages. He dismissed the pleadings motion.

[13] The motions judge awarded costs in favour of the respondents in the sum of $98,959.82. He concluded that there was reprehensible conduct by Boaden, which justified a costs award on a higher scale than partial indemnity, and that the amount sought by the respondents was both reasonable and proportionate.

C. Issues and Analysis

[14] The appellant raises several grounds of appeal.

(1) Denial of an Adjournment

[15] The first ground, which was the appellant's main argument on appeal, is that Boaden was denied procedural fairness when the motions judge wrongly refused to adjourn the summary judgment motion.

[16] Boaden says an adjournment was warranted for the following reasons: first, Boaden needed time to cross-examine the deponents of RFRK's affidavits; second, its pleadings motion ought to have been heard and determined in advance of the summary judgment motion; third, the summary judgment motion ought to have been adjourned to be heard together with RFRK's intended motion for summary judgment on the counterclaim; and fourth, Boaden needed time to respond to new evidence and an amended factum RFRK delivered only days before the scheduled motion date.

[17] We reject this ground of appeal. There is limited scope for appellate intervention with respect to the denial of an adjournment. The decision to grant or refuse an adjournment is discretionary and will only be interfered with if the judge has failed to take account of relevant factors and has exercised his or her discretion unreasonably, such that the decision is contrary to the interests of justice: Khimji v. Dhanani (2004), 69 O.R. (3d) 790 (C.A.), at para. 14. There is no reason in this case to interfere with the exercise of discretion by the motions judge in refusing to adjourn the summary judgment motion.

[18] First, consistent with the pattern of delay by Boaden in the litigation, Boaden did not act reasonably to cross-examine RFRK's deponents. As early as July 2015 RFRK indicated its intention to move for summary judgment and proposed that the parties agree to a schedule for the litigation, without co-operation from Boaden. As the motions judge noted, Boaden took no steps to cross-examine RFRK's deponents between January 6, 2016, when RFRK served its motion record for summary judgment, and March 1, 2016, when the motion was adjourned because of the illness of Boaden's counsel. Even after the adjournment, Boaden's first and only request to cross-examine RFRK's deponents was on March 30 (before Boaden had delivered any responding material). RFRK's counsel responded that the deponents were not available on the date Boaden had proposed, April 5, but were available on April 8. Boaden refused the offer to examine on April 8, saying it was too close to the motion date. The motions judge was justified in concluding that Boaden did not exercise its right to cross-examine with reasonable diligence and that an adjournment for cross-examination was not warranted.

[19] Second, the fact the appellants brought a motion to strike paragraphs of the statement of defence did not warrant an adjournment of the summary judgment motion. At the March 1 attendance, Sproat J. made it clear that the pleadings motion would not be heard first and that he was prepared to hear the summary judgment motion on the matters' return. There was no reason for Boaden to expect an adjournment of the summary judgment motion on the same basis that had already been canvassed and for reasons that had been rejected by the court.

[20] Third, Boaden's assertion that the motion for summary dismissal of its claim ought to have been adjourned so it could be heard with RFRK's motion for summary judgment on the counterclaim has no merit. Although there was some indication that RFRK would bring such a motion in the future, there was no such motion pending and no direction from the court that the two motions would need to proceed together. In any event, as Boaden had not yet delivered a defence to the counterclaim, any motion for judgment on the counterclaim would have been premature: rr. 20.01, and 20.09. As such, RFRK's intention to move for summary judgment on the counterclaim was irrelevant to any request for an adjournment of the motion for summary dismissal of Boaden's action.

[21] Finally, we reject the argument that an adjournment was warranted because RFRK had put forward "new evidence" and served an amended factum. The alleged "new evidence" consisted of print-outs from the Canadian Intellectual Property Office's public database showing that RFRK's applications to register two trademarks had matured to registration. Boaden was aware of the applications, pleading the February 25, 2015 trademark registration application and its intention to contest same at paras. 22 and 23 of its amended statement of claim. In any event, the motions judge determined the action based on common law principles, and not based on RFRK's registered trademarks. As for the late delivery of an amended factum, this was necessitated by the need to incorporate evidence from Boaden's affidavits (served only days before the motion) and cross-examination, and would not justify an adjournment.

[22] Accordingly, there is no error in the motions judge's exercise of discretion in refusing an adjournment, and we do not give effect to this ground of appeal.

(2) Dismissal of Motion to Strike

[23] Boaden's next argument is that the motions judge should have granted its motion to strike certain paragraphs of RFRK's statement of defence. The assertion is that certain allegations of bad faith conduct were not relevant to the respondents' defence, and should only have been pleaded in the counterclaim. From this Boaden says that, in dismissing the action, the motions judge ought not to have taken into consideration matters it says were irrelevant to the defence of the claim (as opposed to its counterclaim), such as Boaden's registration of RFRK as a business name, the use of meta-tags and the procedural history of the parties' dealings.

[24] We do not give effect to this argument. There was no error in the refusal of the motion to strike paragraphs of the respondent's defence. The motions judge was entitled to find that the impugned paragraphs were relevant to the appellant's alleged bad faith, which in turn was clearly relevant to the validity of its domain name registrations. The motions judge was entitled to consider all of the evidence of Boaden's use of the disputed marks and Boaden's course of conduct in deciding, among other things, whether Boaden was entitled to a declaration that it owned the contested domain names.

(3) Denial of Procedural Fairness

[25] Boaden also asserted in oral argument that the denial of its adjournment request had a "snowballing" effect and that it was denied procedural fairness. Although this part of Boaden's argument was difficult to follow, Boaden seems to say that it was prevented from responding properly to the motion for summary judgment and that the motions judge relied on the previous arbitration decisions in which Boaden had not participated to grant summary judgment dismissing Boaden's action.

[26] There is no merit to this argument. First, Boaden was not prevented from responding properly to the motion. Although only delivered on the eve of the summary judgment motion, Boaden's materials seeking to substantiate the claims asserted in the action were before the court, as were the materials previously filed in respect of the interlocutory injunction motion.

[27] Whether or not Boaden had an excuse for not participating in the CIRA arbitration proceedings, the motions judge did not base his findings on the results of those proceedings, but simply referred to them at paras. 24 and 25 of his reasons. Instead, the motions judge noted, at para. 27, that "Boaden obviously had the opportunity to file evidence in this court action to establish the basis for its claim to [the] domain names" and he went on to determine the issues based on the evidence that was presented to the court, including the additional oral evidence of Tassone. The motions judge concluded that, on the evidence, the respondent had used three marks, including RFRK, and that the respondent operated an internet website at rfrk.com featuring such marks. The motions judge did not err in concluding, after giving Boaden's principal the opportunity to provide viva voce evidence, that Boaden's registration of the domain names was in bad faith with a view to denying RFRK the ability to use the names.

(4) Failure to Apply the Right Test

[28] The only alleged error of law pressed in oral argument was that the motions judge erred in failing to expressly apply the "test" in Black v. Molson Canada (2002), 60 O.R. (3d) 457 (S.C.), which Boaden characterizes as the proper authority relating to domain name registrations. Boaden refers to the test, as cited in Black, as requiring a complainant to establish (i) that the domain name is identical to a trademark or service mark in which the complainant has rights; (ii) the respondent has no rights or legitimate interests in respect of the domain name; and (iii) the domain name has been registered or is being used in bad faith. Boaden says that the motions judge did not consider whether the domain names it registered were identical with a mark in which RFRK had rights, and did not consider evidence demonstrating that Boaden had rights and legitimate interests in respect of the domain name.

[29] Again, there is no merit to this submission. In Black, the court referred to the criteria for directing the transfer of a .com domain name, as articulated in the ICANN policies at the time, which required that a domain name be "identical" to the complainant's mark. The current criteria are substantially the same under both the ICANN policies and the CIRA Dispute Resolution Policy governing disputes over .ca domain names, except that it is sufficient if the disputed domain name is "confusingly similar" to a mark in which the complainant had and continues to have rights. The motions judge applied the same "test" in his reasons: see, in particular, para. 37. And, contrary to Boaden's assertion, the motions judge considered all of the relevant evidence put forward by Boaden seeking to explain why it had rights and legitimate interests in respect of the domain name. The evidence was proffered by Tassone, who claimed that Boaden had registered the domain names as part of a public education initiative it started in 2014 called "Real Food Real Knowledge", and that it never occurred to him that this bore a resemblance to the name of his completion. The motions judge explained why he soundly rejected that evidence at paras. 29 to 38 of his reasons. We find no merit to this ground of appeal.

(5) Costs

[30] Finally, Boaden seeks leave to appeal the costs award of $98,959.82. Boaden says that the motions judge erred in failing to consider its offer to settle, and in awarding costs in respect of the summary judgment motion that included RFRK's costs in its counterclaim.

[31] There is no merit to this argument. The offer to settle would have required RFRK to consent to a dismissal of its counterclaim in exchange for a dismissal of the action on a without costs basis, and would have no bearing on the respondents' costs entitlement for their success on all three motions that were before the court. The respondents' bill of costs properly noted that it did not claim any costs for attendances that were exclusively in relation to the counterclaim. The claim and counterclaim arose out of the same dispute between the parties. The motions judge was satisfied that the attendances set out in the bill of costs were reasonable, and, noting that Boaden had not filed its own accounts, he concluded the amount claimed was proportionate. There is no basis to interfere with the motions judge's determination of costs in this matter.

D. Disposition

[32] The appeal is therefore dismissed in its entirety. The respondents shall have their costs of the appeal fixed at $7,500, inclusive of HST and disbursements.

J. MacFarland J.A.

K. van Rensburg J.A.

Grant Huscroft J.A.