Universal Foods Inc. v. Hermes Food Importers Ltd.

A-960-02

2003 FCA 49, Sexton J.A.

29/1/03

Appellant's (plaintiff) business involves manufacture and sale of food products bearing trademark "BADR"-- Commenced trade-marks infringement action--Obtained Anton Piller order--Later set aside on consent--Plaintiff ordered security of $100,000 for defendants' costs, damages-- Motion for stay of that order--Three-part test to determine whether stay should be granted established in RJR--MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311--(1) No serious issue to be tried--Motions Judge purported to justify order for security for damages and costs with reference to Federal Court Rules, 1998, r. 416(1)(g) --However, rule only refers to security for costs and not to security for damages--Two elements to r. 416(1)(g)--(i) Must be reason to believe action frivolous and vexatious--Action for trade-mark infringement not frivolous or vexatious as plaintiff holds registered trade-mark which is presumed valid--(ii) Must be reason to believe plaintiff would have insufficient assets in Canada available to pay costs of defendants--Plaintiff does have sufficient assets in Canada to pay costs of defendants--R. 416(1)(g) not providing sufficient authority to support order granted--(2) Regarding irreparable harm, no evidence suggesting plaintiff attempting to dispose of assets in order to avoid payment of any judgment--If stay not granted, plaintiff must post security--If posts security, plaintiff will be in difficulty and appeal will become moot i.e. will have lost right to appeal--In circumstances, plaintiff satisfied second branch of test--(3) Regarding balance of convenience, evidence adduced by defendants not establishing claim for damages and costs will exceed amount of plaintiff's assets--Issue of claim for damages and costs to be decided shortly--Consequently, little risk defendants will not be able to obtain from plaintiff payment of any award made--Balance of convenience favours plaintiff--Stay of order for security warranted, but should not be lengthy--Federal Court Rules, 1998, SOR/98-106, r. 416(1)(g).