Seven years of delay invites dismissal

On April 25, 2017, Vermillion filed an application seeking expungement of Green Circle’s Green Circle Salons and Design mark. Seven years later, Green Circle brought a motion under Rule 167 of the Federal Courts Rules to have the application dismissed for delay.

Green Circle cited three periods of delay, which it argued were attributable to Vermillion, its counsel, or both:

• February 2018 – September 2019 (20 months): During this period, Vermillion filed a Notice of Change in Solicitor, appointing Clark and Associates. Over a year later, Aalto A.J. issued an Order removing Clark and Associates as solicitors of record and directing Vermillion to appoint new solicitors or bring a Rule 120 motion.
• October 2019 – January 2023 (39 months): During this period, Vermillion brought a Rule 120 motion to appoint a corporate representative. The Court did not release a decision on the motion.  
• January 19, 2023 – November 20, 2023 (9 months): During this period, Coughlan A.J. was assigned to replace Aalto A.J as Case Management Judge. On May 11, 2023, Vermillion’s principal advised that he was seeking to retain counsel and would not be pursuing the Rule 120 motion. On July 11, 2023, Miles Davison LLP filed a Notice of Appointment of Solicitor on behalf of Vermillion. On September 28, 2023, Coughlan A.J. directed Vermillion to provide a status update by October 30, 2023 and, failing receipt of a status update, the proceeding would be placed in status review. During a Case Management Conference convened on November 20, 2023, the Court scheduled the exchange of motion material leading up to the hearing of this Rule 167 motion.

Rule 167 empowers the Court to, on a motion, dismiss a proceeding or impose other sanctions for undue delay. Dismissal is not a presumptive remedy following a finding of undue delay. Rule 167 grants the Court wide discretion to craft an appropriate remedy. Coughlan A.J. applied the conjunctive three-step test articulated by the House of Lords in Allen v. Sir Alfred McAlpine & Sons Ltd., [1968] 1 All ER 543 (CA), later endorsed by the Federal Court of Appeal: (1) there has been undue delay; (2) the delay is excusable; and (3) the defendants/respondents are likely to be seriously prejudiced by the delay.

1. Undue Delay

Rule 167 does not specify a minimum period to trigger a determination of undue delay. It is left to the Court to assess the circumstances of the proceeding and conduct of the parties. Undue delay is measured from the commencement of a proceeding.

Coughlan A.J. held that undue delay had occurred, noting that the only substantive steps that had been taken to move the matter forward, service of Vermillion’s Rule 306 affidavit and unsuccessful settlement discussions, occurred in the first year following the filing of the application, with little of substance occurring thereafter.

2. Excusable Delay  

Between February 2018 and September 2019, Vermillion explained that its relationship with its second counsel, Clark and Associates, had suffered a breakdown leaving Vermillion unable to prepare and file documents. Clark and Associates had refused to release the file due to fee disputes. Coughlan A.J. held that the delay during this period was directly attributable to Vermillion and/or its counsel, noting that, in any proceeding, the applicant bears the obligation to move the litigation forward.

Vermillion argued that the period of delay between October 2019 and January 2023 was excusable because it was entitled to bring a Rule 120 motion. Coughlan A.J. noted that, on July 19, 2019, Aalto A.J. dismissed an identical Rule 120 motion in a separate proceeding involving Vermillion (T-553-19) mere weeks before Vermillion filed its Rule 120 motion in this case. Vermillion failed to demonstrate special circumstances for why it was unable to retain counsel. Likewise, on April 6, 2022, in a separate matter (T-1484-21) Coughlan A.J. dismissed yet another Rule 120 motion from Vermillion. In both T-553-19 and T-1484-21, Vermillion eventually appointed counsel. With these surrounding circumstances in mind, Coughlan A.J. concluded that, while the Court’s failure to address Vermillion’s motion excused part of the delay, the motion itself could fairly be regarded as an abuse of process or strategic delay tactic. Vermillion bore some inexcusable responsibility for this period of delay.

With respect to the period between January 19, 2023 and November 2023, Coughlan A.J. acknowledged that Vermillion was not served with the Order appointing her as Case Management Judge and any delay between January and May 2023 was excusable on that basis. However, it took Vermillion from May until July 2023 to appoint counsel and, during the remaining period, it was clear that Vermillion prioritized its other ongoing litigation. Coughlan A.J. held that this period of delay was inexcusable.

3. Prejudice

Green Circle argued that the Court should presume prejudice once undue and inexcusable delay is demonstrated, and that it suffered actual prejudice following the death of a potential witness. Coughlan A.J. held that Green Circle was not required to lead evidence of actual prejudice. Given the largely unexplained delay of 7 years, Coughlan A.J. inferred serious prejudice.

Coughlan A.J. held that the only appropriate sanction was dismissal. There was no fair prospect that Vermillion intended to bring the application to an end.

Coughlan A.J. dismissed the application. A copy of the decision is available here.