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Half the Battle is Showing Up: Default Judgment Withstands Appeal

In David Michaels v Michaels of Canada, Justice Rennie of the Federal Court of Appeal dismissed the defendants’ appeal of the default judgment against them.

The plaintiffs operate hundreds of arts and crafts stores using trade-marks containing “Michaels”. More recently, the defendant David Michaels and his company began a similar business using the website michaels.ca. The plaintiffs commenced an action against the defendants for trade-mark infringement in April 2014.

The plaintiffs agreed to provide the defendants with additional time to serve a Statement of Defence. After the defendants failed to file their Statement of Defence, the plaintiffs moved for default judgment in March 2015. The defendants responded by seeking an adjournment of the motion days before it was to be heard. The Judge refused to grant an adjournment.

The Judge granted the motion for default judgement. The Judge found that the allegations in the Amended Statement of Claim had been established and concluded that the plaintiffs’ allegations, including that of trade-mark infringement, had been established. The Judge ordered that the defendants transfer ownership of michaels.ca to the plaintiffs.

The defendants appealed the default judgment decision to the Federal Court of Appeal. Regarding the refusal to grant an adjournment of the motion, the Federal Court of Appeal held that the Judge’s discretion was reasonably exercised given the defendants’ failure to file a Statement of Defence or Responding Motion Record.

The defendants took issue with the Judge’s application of the Federal Courts Rules requiring that counsel, not the personal defendant, represent the corporate defendant. The Court of Appeal held that this decision was unassailable because the defendant did not seek relief from compliance with the Federal Courts Rules.

The defendants also appealed on the basis that the Judge had no discretion to order delivery up of domain names. The Court of Appeal confirmed that both the Trade-marks Act and the Federal Courts Act granted the Federal Court such jurisdiction.

A copy of the decision may be found here. The default judgment decision may be found here.