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Receivership Proceeding Cannot Be Passed Off As A Passing-Off Action

In Tangerine Financial Products Limited Partnerships v. The Revees Family Trust, 2015 BCCA 359, the Court of Appeal for British Columbia allowed Scotiabank’s and ING Bank’s appeal from the Order of Smith J. on the basis that RSP Generation Limited’s application seeking relief against Scotiabank was an abuse of process.

 Factual Background

In December 2012, RSP acquired assets of Tangerine LP, including Tangerine LP’s ownership rights to use the name “Tangerine Financial Products”, from a numbered company who had been previously purchased it as part of a receivership proceeding. Tangerine LP had originally acquired the rights to use “Tangerine Financial Products”, or any derivation or variation thereof, from Tangerine Financial Products Corp., an investment strategy firm. However, Tangerine LP only received consent to use the name until it was terminated or dissolved.

On November 8, 2013, Scotiabank announced its decision to change the name of ING Bank to Tangerine and applied to register words “Tangerine”, “Tangerine Bank”, and “Banque Tangerine”. Scotiabank had purchased ING Bank in August 2012.

Immediately, RSP’s solicitors wrote to Scotiabank advising that Scotiabank could not register the Tangerine trade marks as RSP had acquired the right to use Tangerine in the financial services industry by reason of its purchase of the assets of Tangerine LP.

In March 2014, RSP brought a notice of application in the receivership proceeding seeking an order and enjoining Scotiabank and ING Bank, non-parties in the receivership application, from using the trademarks and passing off or attempting to pass off their wares and services as and for the services and wares of RSP. RSP bought this proceeding relying on a provision in the vesting order, which stated that:

6. That every person having notice of this Order shall not take any steps to appropriate, interfere with, or use without the written permission of the Purchaser any part of the Assets, undertaking, goodwill, know how or intellectual property purchased hereby.

In response, Scotiabank and ING Bank brought a motion to strike out RSP’s application. Scotiabank contended, among other things, that RSP’s application was an abuse of process.

Smith J., the application judge, dismissed Scotiabank’s application to strike, finding that it was not ‘plain or obvious’ that RSP’s application was an abuse of process. Scotiabank appealed this decision.

The BCCA’s Decision

The BCCA ruled that Scotiabanks’s motion to strike should succeed, as it was plain and obvious on the facts that RSP’s application was an abuse of process. The Court noted that:

[51] It is evident RSP is attempting to use its application in the receivership proceedings as a Trojan Horse for a passing-off action. RSP seeks to obtain substantive relief against Scotiabank by means of a process that denies Scotiabank many of the procedural and substantive rights it would have as a defendant in a civil action. That, in my view, is an abuse of process and, for that reason alone, RSP’s application should be dismissed.

In coming to this finding, the Court relied on its recent decision in Equustek Solutions Inc. v. Google Inc. holding that it is improper for a superior court to grant injunctive relief against a non-party where the applicant has other, more proper, avenues to obtain relief:

[49] In his reasons for judgment in Equustek Solutions, Mr. Justice Groberman recognized that orders against non-parties will usually be inappropriate when the applicant has the ability to obtain the relief it seeks by means of an action. In that regard, he stated:

[60] It is important to recognize that the issue is not, or at least not wholly, one of jurisdiction. Common law courts have limited their exercise of remedial powers, not simply due to concerns about jurisdiction, but also as a matter of curial self-restraint.

[62] It is unusual for courts to grant remedies against persons who are not parties to an action. The reasons for this are obvious – most civil claims are concerned with the vindication of a right, and the remedial focus will be on that right. Further, notions of justice demand that procedural protections be afforded to a person against whom a remedy is sought. The usual method of providing such protections is to require the claimant to bring an action against the respondent, giving the respondent the rights of a party.

[63] A party claiming damages or equitable relief for a civil wrong, or a declaration of rights will normally be required to make the person against whom the claim is made a defendant in the action.

[50] In addition, Groberman J.A. stated (at para. 80) that the jurisdiction to make an order against a non-party “depend[s], in the final analysis, on the existence of a justiciable issue between the parties to the litigation”, i.e., when relief is sought as a means of preserving the rights of the one of those parties. There is presently no justiciable issue between the parties to the receivership proceeding that could support the granting of ancillary relief against Scotiabank.

A copy of the public Reasons for Judgment may be found here.