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What to do about the Zax

What to do about the Zax

There is a 1961 Dr. Seuss story called the Zax, where a north-going Zax crosses a south-going Zax, and rather than either give way (there is lots of room to give) they each insist that they are entitled to move forward on their path and that the other must give way. So they are at a standstill. In the interim, the world moves on and eventually a highway is built over them.

Those who practice or adjudicate in litigation, particularly in family law, or in shareholder oppression cases, (which I call “corporate family law”) will recognize this scenario. An inch can never be given, and while all the parties know that eventually there should be a settlement, it always involves the other party being required to make the first move. The judges, (and sometimes even the lawyers), plead with the parties to consider settlement and compromise, but it is never the right time, because the other party has to be softened up before settlement discussion is appropriate.

In the meantime, proceedings multiply, fortunes are lost by the clients and made by what is often a series of lawyers, the already over-burdened courts are monopolised by fights on inconsequential matters. The world moves on and opportunities are missed. No-one is happy.

Unfortunately, short of declaring someone a vexatious pleader, which is meant for truly exceptional situations, there is little the courts can do to restrain the conduct or end the proceedings. The system is based on giving everyone their day in court. Unfortunately, in some cases, it turns into a lifetime in court, and it seems that there is nothing to be done other than go through the process.

The recent decision of Mr. Justice Benoît Moore of the Quebec Superior Court in the case of 9248-9533 Québec inc. c. Industries Désormeau, inc. (2017 QCCS 3837) provides an example of what the courts can and cannot do.

The case involves a fairly generic situation of the transfer of a family business from the father to the two sons by way of an estate freeze in 2002. By 2005, the lawsuits have started. They are still going at it in other lawsuits in 2017, arising out of numerous concluded and attempted settlements. This one involves one brother creating confusion by an improper trademark use, seeking damages of $130,000 (of which $75,000 are punitive damages). There is of course a defense and a counter-claim for abuse of procedure. A four-day hearing was required for this skirmish alone, no doubt with thick books of authorities and written detailed argument plans.

The opening paragraphs of the judgment are auspicious:

[1]      La présente demande en injonction permanente et en dommages constitue un autre chapitre d’une saga judiciaire opposant les frères Simon et Louis Désormeau, laquelle découle de la transmission de l’entreprise familiale, Industries Désormeau inc., créée par Robert Désormeau, père de ces derniers. Il porte sur une éventuelle violation par Simon des droits de la demanderesse sur des marques de commerce.

[2]      Il faut souhaiter que ce nouveau chapitre de cette malheureuse saga en soit le dernier. Bien que le Tribunal ne souhaite pas nourrir ce conflit en exposant son historique, ce que les parties ont abondamment fait tout au long de l’audition, il demeure nécessaire d’exposer l’essentiel de la trame factuelle afin de bien saisir le contexte.

He then reviews the history of the proceedings, which include a reference to a 2016 decision involving the same parties where Mr. Justice Pinsonnault stated:

[21]    Avec sa défense et demande reconventionnelle, il [Louis] a choisi d’alimenter abusivement le litige qui l’oppose à son frère plutôt que de favoriser un retour aux relations normales et harmonieuses.

[22]    Simon n’a pas à faire les frais de la demande reconventionnelle clairement abusive de 4 598,51 $ (à parfaire) de son frère, qui manifestement cherche toute occasion d’alimenter la discorde envers son frère Simon.

[23]    Il est tout autant déraisonnable et abusif d’exiger que les ressources judiciaires déjà grandement taxées soient allouées pour une journée complète pour alimenter un litige sans fin et insensé entre deux frères.

Moving on to the merits of the case, he reviews all the evidence, including expert evidence dealing with “mise en ligne de site web et référencement organique”, analyses the law applicable to the situation, and in what is ultimately a 23 page judgment with 103 paragraphs and 59 references. Judge Moore had to work hard!

Ultimately, he finds that the claim for confusion cannot be made out, and that the plaintiff suffered no damages, in spite of the fact that he does find the defendant Simon committed a fault by “cybersquatting”. As for the counter-claim for the legal fees (no doubt close to the amount of the Plaintiff’s claim) he says:

Encore une fois, le Tribunal fait siens les mots de l’honorable Michel A. Pinsonnault dans une des nombreuses décisions issues de ce conflit, il est plus que temps que cesse « un litige sans fin et insensé entre deux frères ».

Il s’impose maintenant, pour Louis et Simon, s’ils ne peuvent parvenir à une réconciliation, ce que le Tribunal ne peut que souhaiter, qu’ils cessent, à tout le moins, la judiciarisation de leur conflit. S’il apparaît, qu’en l’espèce, la demanderesse a agi de manière intempestive et excessive et que ses gestes frôlent l’abus de procédures, cela n’est que le résultat de ce conflit perpétuellement alimenté par les parties et notamment par la faute qu’a retenue le Tribunal à l’encontre de Simon.

Pour cette raison, non seulement le Tribunal rejette l’action reconventionnelle pour abus de procédures, mais, afin de tenter de ramener les parties à leur responsabilité respective, n’accordera pas de frais de justice.

Unfortunately, we have not yet figured out a way to build a highway around litigation Zax, as they did in the Dr. Seuss poem. The efforts of Justices Moore and Pinsonnault and their admonitions that the insanity stop seem to be as much as can be done. Occasionally one wishes they could do a little more, and a little earlier in the process. Everyone, including the parties, would probably be better off.

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