In Chanel Limited et al v Lam Chan Kee Company Ltd et al,
2015 FC 1091, the Federal Court of Canada recently dealt
traders in counterfeit goods another blow, granting a judgment of
$380,000 – including $250,000 in punitive and exemplary
damages – against two corporations and an individual
defendant, Annie Lam, relating to their retail store business
"Lam Chan Kee".
Of particular note, the Court rejected Ms. Lam's submission
that the matter must go to trial because of a credibility issue
raised by contradictory affidavit evidence. Instead, the
Court found it had sufficient basis to grant judgment under the
Court's summary trial procedure, which allows for a proceeding
to be adjudicated in a summary manner on affidavit evidence and
out-of-court cross-examinations. Judgment was also granted in
default against the two corporations, though the Court dismissed
the action against Ms. Lam's husband, absent evidence of his
personal involvement in the business.
Summary trial – self-serving evidence is not enough
to force a trial
Using the summary trial rules, still somewhat in their infancy
with the Federal Court, Justice Martineau explicitly considered and
weighed the affidavit evidence of three witnesses filed on behalf
Ms. Lam, including from Ms. Lam herself. This evidence
alleged a transfer of the Lam Chan Kee business from one corporate
defendant to another and from Ms. Lam to her adult children, which
Ms. Lam argued relieved her of liability. When this evidence
did not align with evidence provided by the plaintiff, Ms. Lam
claimed a full trial was required.
The Court disagreed, finding that simply raising the issue of
credibility is not sufficient to make the matter unsuitable for
summary trial. Describing the evidence put forward by the
individual defendants as "self-serving and inconclusive",
pointing to inconsistencies that arose during cross-examinations
and noting the lack of persuasive corroborative documentation
relating to the alleged transfer, the Court determined that on a
balance of probabilities Ms. Lam continued to operate the Lam Chan
Kee business through the corporations, and was therefore
While the Federal Court has granted judgment under its summary
trial rules on several occasions previously, and has affirmed its
ability to weight conflicting evidence under such summary
procedure, this is believed to be the first time that the Court has
actually weighed conflicting evidence and assessed credibility
while still coming to a final judgment under the summary trial
The Court's willingness to assess credibility under summary
trial stands in contrast to the old summary judgment rules, where
any whiff of credibility would send the matter to a full
trial. The result in this case, which is consistent with the
Supreme Court of Canada's recent endorsement of summary
procedures in Hryniak v. Mauldin, 2014 SCC 7, is therefore to be
applauded as increasing access to affordable justice and
proportionality for disputes with purveyors of counterfeit
Also of potential interest is whether the Court in this case has
opened the door – albeit just a crack – for landlord
liability resulting from the sale of counterfeiting goods in
Canada. While declining to rule with respect to Chanel's
argument that Ms. Lam was in any event liable for the activities
taking place at the Lam Chan Kee business as the owner and landlord
of the premises, the Court did appear to factor in that
"Madame Lam continued to be the owner and landlord of the
Premises" as part of its analysis relating to Ms. Lam's
personal liability. It will be interesting to see if this
statement gives room for arguing the broader concept of landlord
liability in counterfeiting cases under Canadian jurisprudence.
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guide to the subject matter. Specialist advice should be sought
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