The Backstory
In May 2019, Whirlpool partially succeeded in an application against Alliance Laundry relating to use of Whirlpool’s unregistered SPEED QUEEN trademark in Canada for washers and dryers. Alliance Laundry had brought a section 45 cancellation proceeding against Whirlpool for failure to use its SPEED QUEEN mark in Canada, and after succeeding, immediately introduced Alliance Laundry SPEED QUEEN washer and dryer products into the Canadian market. Both Alliance and Whirlpool released advertising claiming rights in the SPEED QUEEN mark, and both parties subsequently brought their own applications to the Federal Court claiming rights in the mark as well as violations of section 7(a) of the Trademarks Act, namely alleging that the other party had made false and misleading statements. Whirlpool also alleged common law passing off.
The Federal Court held that Whirlpool continued to own common law rights in the SPEED QUEEN mark despite its now-cancelled registration because Whirlpool had demonstrated use and goodwill sufficient to sustain common law rights, and that Whirlpool’s sales in Canada met the “licensed use” requirements of section 50 of the Act. Costs were ordered payable to Whirlpool, but only for those costs incurred before the parties’ applications were consolidated in 2017.
The SPEED QUEEN’s Delayed Motion
Two days after the Court’s judgment, Alliance issued a Notice of Appeal and sought a stay of the Court’s judgment pending appeal. In November 2019, shortly before the appeal hearing, Alliance filed a Notice of Discontinuance of its appeal, and thirty days later Whirlpool brought a motion for directions to obtain an elevated lump sum costs award of almost $145,000 CAD, pursuant to the May judgment.
Alliance opposed Whirlpool’s motion on the basis that it was filed late, that the matter did not warrant a lump sum award, and that awarding 50% of legal fees and disbursements was excessive in the circumstances. The Court held that Whirlpool failed to justify its seven-month delay in seeking costs and that its motion should therefore be dismissed. In so doing, the Court reviewed Rule 403(1) of the Federal Courts Rules, which requires parties bring a motion within thirty days of judgment to seek directions to an assessment officer regarding factors to be considered in awarding costs.
Although Whirlpool took the position that the period under Rule 403(1) should be considered stayed pending the outcome of an appeal, and that otherwise an extension of time should be ordered because Alliance had not been prejudiced, the Court observed that the thirty-day time limit is “not a formality that may be easily dispensed with absent very special reasons”, and that not wanting to influence an appeal is not a “special circumstance warranting an extension of time”.
The Court also held that Whirlpool had not shown that any of the criteria for an extension of time had been met, that it had failed to file affidavit evidence to seek the Court’s discretion nor an adequate explanation for the delay, nor had it shown a continuing intention to bring its motion for costs directions. Accordingly, Whirlpool’s motion was dismissed, and Alliance Laundry was awarded its costs of the motion.
The Takeaway
An appeal does not automatically stay a costs award – and parties who fail to bring a timely motion risk losing the ability to seek elevated costs that are closer to what was actually spent.
