Biofert Manufacturing Inc. v. Agrisol Manufacturing Inc.

Biofert Manufacturing Inc. v. Agrisol Manufacturing Inc.
Court (s) Database
Federal Court Decisions
Date
2020-03-13
Neutral citation
2020 FC 379
File numbers
T-377-16
Decision Content
Date: 20200313
Docket: T-377-16
Citation: 2020 FC 379
Ottawa, Ontario, March 13, 2020
PRESENT: The Honourable Madam Justice McVeigh
BETWEEN:
BIOFERT MANUFACTURING INC.
Plaintiff/
Defendant by Counterclaim
and
AGRISOL MANUFACTURING INC. AND BIOFERT NA MANUFACTURING INC., COLLECTIVELY DBA BIOFERT, TAHIR MAHMOOD, AMARAN TYAB, SAIF MAHMOOD, AND FARRAH MAHMOOD
Defendants/
Plaintiffs by Counterclaim
JUDGMENT AND REASONS
I. Introduction 3
II. Background 3
A. The Parties 3
B. Pleadings 5
C. Legal representation 7
III. Preliminary Issues 8
A. Defendants’ admissions 8
B. New evidence from Dr. Tahir 10
C. Use of British Columbia Supreme Court (BCSC) transcript to impeach adverse witnesses 11
D. Testimony of Yasir Syed 13
IV. Issues 16
V. Evidence 17
A. Witnesses 17
(1) Plaintiff’s Witnesses 17
(2) Defendants’ Witnesses 21
B. Brief timeline of events 22
(1) Creation of old BioFert 22
(2) Old BioFert’s bankruptcy and transfer of assets 24
(3) Defendants’ business activities in late 2015 and early 2016 26
(4) 2016 Pacific Agriculture Show 28
(5) The effects of Agrisol’s activities 30
VI. Analysis 31
A. Did the Defendants breach one or more sections of the Trademarks Act? 31
(1) The law on trademark infringement 31
(2) Arguments on trademark infringement 33
(3) Analysis of trademark infringement 35
(4) Alleged infringements that were not proven on a balance of probabilities 52
B. Did the Defendants infringe the Plaintiff’s copyright contrary to sections 3 and 27 of the Copyright Act? 55
(1) Ownership of the logo 56
(2) Ownership of the About Us page 58
(3) The Defendants reproduced the two copyrighted works without authorization 59
C. Should the corporate Defendants be held jointly and severally liable? 60
D. Are any of the four individual Defendants personally liable for the infringing conduct of the corporate Defendants? 62
(1) Dr. Tahir 63
(2) Farrah 64
(3) Saif 66
(4) Amaran 68
E. Counterclaim: should the 894 mark be declared invalid because it is clearly descriptive, or deceptively misdescriptive, of the goods being sold by the Plaintiff? 69
VII. Damages & Remedies 71
A. Compensatory damages 72
(1) Plaintiff’s first proposed method 73
(2) Plaintiff’s second proposed method 84
(3) Compensatory damages awarded 86
B. Statutory damages for Copyright Act infringement 90
C. Punitive and exemplary damages 92
D. Declaratory and injunctive relief 99
VIII. Costs 100
I.
Introduction
[1] The Plaintiff BioFert Manufacturing Inc. brought this action for trademark and copyright infringement against two corporations and four individuals involved in the corporations. The dispute arose after a predecessor company called BioFert Manufacturing went bankrupt in 2015 and the trustee sold its assets to the Plaintiff.
[2] One of the directing minds of old BioFert, Dr. Tahir Mahmood was part of a group that placed a bid for the assets of the bankrupt company. When his group was unsuccessful, he along with others incorporated two new fertilizer companies: Agrisol Manufacturing Inc. (Agrisol) and BioFert NA Manufacturing Inc. (BNA). It is alleged that Agrisol and BNA and the four individual Defendants passed off their business for the Plaintiff’s business and infringed trademarks and copyrighted works owned by the Plaintiff.
II. Background
A. The Parties
[3] As three individual Defendants share the last name Mahmood, and because there were several corporations mentioned with the name “BioFert,” it is helpful to provide a short description of the parties.
[4] The Plaintiff BioFert Manufacturing Inc. (“new BioFert” or “the Plaintiff”) is a British Columbia corporation. It is a subsidiary of a larger agricultural company called Terralink Horticulture Inc. (“Terralink”). Terralink has a head office in Abbotsford and other locations in Delta, Chilliwack, and Calgary (Stan Loewen, page 180; all references to page numbers refer to the trial transcript unless otherwise noted).
[5] Terralink incorporated its new subsidiary in June 2015 for the purpose of acquiring the assets of its bankrupt competitor BioFert Manufacturing Inc. (“old BioFert”) from old BioFert’s receiver in bankruptcy. After Terralink acquired the old BioFert assets in mid-2015, old BioFert changed its name to 6703551 Canada Inc. Old BioFert is not a party to this case.
[6] The Defendant Agrisol Manufacturing Inc. (“Agrisol”) is a British Columbia corporation which was incorporated in July 15, 2015.
[7] The other BioFert is the Defendant BioFert NA Manufacturing of which the individual Defendants are shareholders will be referred to as “BNA”. BNA is a British Columbia corporation with the same shareholders as Agrisol. BNA was incorporated on August 26, 2015. However, in 2016 it ceased operating and its name was changed to 1047090 B.C. Ltd. There are other BioFert corporations in other countries, and when referred to, these other companies will be explicitly described by the country of their corporate registry.
[8] Together Agrisol and BNA will be referred to as “the corporate Defendants.”
[9] The CEO of the corporate Defendants is Dr. Tahir Mahmood. His wife, Mrs. Farrah Mahmood, was a director and 50% shareholder for each of the corporate Defendants. Mr. Saif Mahmood eventually became the managing director and he held a 20% share in each corporation. Saif is not related to Farrah or Dr. Tahir. The third director Mr. Amaran Tyab has held the remaining 30% of shares in the two corporate Defendants since October 2015.
[10] For clarity and simplicity, without any disrespect to the individual Defendants, these reasons will refer to Mr. Saif Mahmood, Mrs. Farrah Mahmood, and Mr. Amaran Tyab by their first names. To avoid confusion, it is worth pointing out that there was testimony about Dr. Saif who was the Defendants’ co-worker from old BioFert. Dr. Saif is not a party to this action. Additionally, there is a second Dr. Mahmood. Dr. Tariq Mahmood was involved with the business and was referred to as Dr. Mahmood at times. Dr. Tariq Mahmood is Dr. Tahir Mahmood’s brother. To maintain clarity, Dr. Tahir Mahmood will be called “Dr. Tahir” in these reasons and Dr. Tariq Mahmood by his full name.
B. Pleadings
[11] The Plaintiff is the owner of Canadian trademark TMA 854,894 (“the 894 mark”). The Plaintiff says that in the 2015 purchase of assets from old BioFert’s receiver it acquired all intellectual property including: the 894 mark; copyright in the logo; the copyright in the “About Us” section on old BioFert’s website; the product trademarks; the BioFert name; and all domain names and associated email addresses.
[12] The Plaintiff says its trademark and copyright rights were infringed by the Defendants when the individual Defendants incorporated BNA and began to use the BioFert name and trademarks in conjunction with their Agrisol business. The Plaintiff points to use of the BioFert.net domain name by the Defendants, which had to be recovered through separate proceedings, along with statements made in marketing materials that created confusion. The Plaintiff argued these activities were contrary to the Trademarks Act, RSC 1985, c. T-13, the Copyright Act, RSC 1985, c. C-42 and the Competition Act, RSC 1985, c. C-34. They asked for declarations, injunctions, costs, and damages including statutory damages under the Copyright Act and punitive damages to remedy the situation.
[13] At trial, the Plaintiff abandoned its argument about section 7(c) of the Trademarks Act, which involves substitution of goods ordered or requested. The Plaintiff also abandoned its Competition Act claim which was focused on misleading statements in the marketplace. This leaves five remaining claims for this Court to consider: trademark infringement (Trademarks Act section 20), passing off (Trademarks Act subsection 7(b)), misleading description of goods (Trademarks Act subsection 7(d)), depreciation of goodwill (Trademarks Act, section 22), and copyright infringement (Copyright Act, sections 3 and 27).
[14] The Defendants deny the trademark and copyright infringement and specifically deny they ever had control of the BioFert.net domain name after it had expired. They also say as soon as they were served with the cease-and-desist letter they stopped all the actions referred to in the letter before the Pacific Agriculture Show opened to the public the following day. Their other positions include that the Plaintiff does not enjoy goodwill in the trademarks, the Plaintiff is not the owner of the copyrighted works, BNA never made any sales, and the Plaintiff did not suffer damages. The Defendants counterclaimed against the Plaintiff, alleging the registered mark should be expunged because it is clearly descriptive or deceptively misdescriptive of the Plaintiff’s goods.
[15] There was a previous confidentiality order of June 2, 2017 but both parties agreed at the outset of the hearing that it was no longer necessary (pages 24-25).
C. Legal representation
[16] Each of the Defendants relied on the Further Amended Statement of Defence and Counterclaim filed by their original lawyers. However, after a series of changes in counsel, in 2018 each of the four individual Defendants declared that they were representing themselves. The corporate Defendants remained represented by Usman Ghani.
[17] One month before trial, Saif brought an unsuccessful motion for leave to represent the two corporate Defendants under Rule 120. His motion was refused because, among other reasons, Saif did not provide clear and unambiguous evidence that the corporations could not afford to pay a lawyer as required by the case law (El Mocambo Rocks Inc. v Society of Composers, Authors & Music Publishers of Canada, 2012 FCA 98 at para 4) or that he had authorization to make decisions for the corporations.
[18] On the first day of trial, counsel for the two corporate Defendants asked for permission to be removed as counsel of record. He did not bring a formal motion even though he was aware of the decision a month prior refusing to allow Saif to represent the corporations. Counsel raised two factors: non-payment of fees and a lack of clear client instructions. Given that there was never a formal motion under Rule 120 to be removed or a notice of change of solicitor form filed under Rule 124 – and it was the first day of a four week trial – I did not find that non-payment of fees or unclear client instructions were sufficient reasons to be removed at the very last minute. Therefore Usman Ghani remained counsel of record for the corporate Defendants throughout trial. After my ruling he informed me that he would not be appearing for the rest of the trial and he did not and the corporations did not have representation.
III. Preliminary Issues
[19] Despite several case management conferences with a case management prothonotary, five motions, a pre-trial conference, and a trial management conference, there were several significant procedural and logistical issues raised at trial as well as countless objections.
A. Defendants’ admissions
[20] In preparation for trial the Plaintiff served each of the self-represented Defendants with requests to admit facts. None of the Defendants replied to the requests to admit facts within the 20-day window where a response is required in order to avoid a deemed admission under Rule 256. At the start of trial, the Defendants then attempted to withdraw the admissions of fact as they were not familiar with the law.
[21] The Defendants did not explain why they did not respond to the requests to admit facts, which were in the proper form and mentioned that a failure to respond would result in a deemed admission. The Defendants never suggested that withdrawal was required to raise a triable issue or that it would otherwise be in the interests of justice to withdraw the admission (Morin v Canada, 2002 FCT 1312 at para 109). For example Amaran and Farrah said they had no knowledge of some facts but they did not give a deeper reason why the deemed admissions had to be withdrawn. Of course it is acknowledged that none of the defendants have legal training.
[22] Consent is needed from the opposing party or leave of the Court is required to withdraw admissions of fact (Apotex Inc. v AstraZeneca Canada Inc., 2012 FC 559 at paras 20–22). While the Plaintiff by consent and the court’s agreement did allow Amaran and Saif to withdraw a few admissions (admissions 11, 81, 85, and 178-184), they did not consent to the withdrawal of the rest of the deemed admissions. The court did not agree to withdrawal of any of the remaining deemed admissions. The Plaintiff submitted a revised list of deemed admissions after these withdrawals, which removed any admissions that were still being disputed, even though some of the removed admissions were never formally withdrawn.
[23] In any event, as the trial progressed it was evident that the ruling not to allow the withdrawal of the admissions did not prejudice the Defendants. The parties entered in to an agreed statement of facts that mirrored most of the admissions. Any other deemed admissions were either not relevant to the ultimate issues or were confirmed by witnesses at trial. These developments confirmed that the Defendants in self-representing themselves and not responding in the end did not suffer prejudice through any of their deemed admissions of fact.
B. New evidence from Dr. Tahir
[24] In a letter ten days before the trial began, Dr. Tahir wrote to inform the court that he would like to bring new evidence about the Plaintiff’s sales. Then, on the third day of trial, Dr. Tahir announced that he would like to introduce three sets of documents which were not previously disclosed. I allowed Dr. Tahir to present the first two sets of documents which were import/export information for new BioFert in Pakistan and which appeared to be only a few pages in length.
[25] I ruled that this set of documents could be used at trial even though they were only now being produced. I allowed these documents because:
· Dr. Tahir had been trying for a long time to locate and obtain this data from an out of country third-party and only just received the document on November 10, 2019 which was two weeks before trial;
· When he obtained the documents he wrote to the Court regarding the late production;
· Being a self-represented litigant he does not understand the rules and legal process; and
· The Plaintiff would be able to cross-examine the Defendant(s) about the documents to mitigate any prejudice that might have resulted from the late production.
[26] I informed Dr. Tahir that I was not ruling that the documents were admissible but only that he would be allowed to use them when he made his case (page 734).
[27] He ultimately did not rely on these two sets of documents while making his case at trial because apparently, as evidenced in his closing, he had forgot to question himself about them and have them entered as evidence.
[28] The third set of new documents was not allowed as they concerned criminal charges in Pakistan and were going to be used to challenge the credibility or character of one witness. I indicated to Dr. Tahir that the document was not in English and would be difficult to have translated and authenticated at this late stage. Another reason not to allow them was that there was no excuse for late disclosure given that these documents were available for a long time and yet not produced (pages 734–735).
C. Use of British Columbia Supreme Court (BCSC) transcript to impeach adverse witnesses
[29] The Plaintiff asked to put forward the discovery transcripts from Kamal Bahga and Imran Ahmad from the ongoing BCSC proceeding of BioFert Manufacturing Inc. v Agrisol Manufacturing Inc., BioFert NA Manufacturing Inc., Tahir Mahmood, Imran Ahmed and Kamal Preet Singh Bahga. They also requested the ability to treat Kamal and Imran as adverse. The reasoning for seeking them to be adverse witnesses was that both had been employees at old BioFert and were now at Agrisol working closely with Dr. Tahir. As well the Plaintiff outlined their concerns about the two witnesses’ credibility.
[30] The Plaintiff provided the Court with case law supporting their position that adverse witness rules from provincial statutes can be applied in Federal Court given that there is no similar rule including Justice Rothstein’s analysis in Fairford First Nation v Canada (Attorney General), [1997] FCJ No. 270 (FCTD). These witnesses were subpoenaed so Rule 12-5(22) of the BC Supreme Court Civil Rules, BC Reg. 168/2009 would have allowed them to be treated as adverse in a BC case.
[31] The Plaintiff filed a November 1, 2019 order from the BCSC granting the Plaintiff relief from the implied undertaking of confidentiality to use the transcript from the BC examination “for the purpose of impeaching credibility in the Federal Court Action T-377-16.”
[32] Dr. Tahir did not approve of the Plaintiff’s request to impeach their own witnesses:
Your honour, first of all I have no clue about what she’s talking because this come off the top of my head but one thing I understand because these two gentleman, they are involved in the B.C. Supreme Court case. They have nothing to do with Federal Court case in terms of trademark infringement, whatever.
[33] While Dr. Tahir said that Kamal Bahga and Imran Ahmed had nothing to do with the Federal Court action, they were on the Plaintiff’s witness list for this action. The Defendants said they had no idea that they could have viewed the BC transcripts (or for that matter the examination for discovery transcripts for this action) in advance and they requested time to read the transcripts before Kamal and Imran testified. To the credit of the Plaintiff’s counsel, they helpfully provided the Defendants with contact information for the court reporter who could provide them with the transcripts of these discoveries.
[34] I gave the Defendants time to review these BC transcripts before Kamal and Imran testified, and I later granted the Plaintiff permission to treat them as adverse witnesses and to use the BC transcripts. This was done for the narrow purpose of impeaching credibility and Dr. Tahir indicated that he understood this. The Plaintiff later filed the whole transcript from Kamal Bahga as Exhibit P36.
D. Testimony of Yasir Syed
[35] Yasir Syed had been put forward by the Plaintiff as the proper corporate representative of new BioFert and was examined by the Defendants’ legal counsel at an examination for discovery in 2017. He worked for old BioFert with Dr. Tahir before the two business partners had a falling-out and old BioFert went bankrupt in 2015. Mr. Syed then worked for the Plaintiff new BioFert until he left the Plaintiff on bad terms in November 2018. By the time trial began, Yasir Syed appeared on the witness list for the Defendants.
[36] The Plaintiff became concerned that Mr. Syed would reveal privileged information if allowed to testify. The Plaintiff suspected Mr. Syed had been in contact with Saif and had revealed privileged information shortly before the trial. After reaching out to Mr. Syed and receiving only a vague response, the Plaintiff asked the Defendants why they wanted to question Mr. Syed in hopes that Mr. Syed could be prevented from speaking about privileged information. The Defendants’ answers were broad and unsatisfactory (for example they wanted to ask about “BioFert Canada” and “question from his discovery”), so the Plaintiff brought a motion heard on December 4 asking that Mr. Syed be excluded from testifying. The Plaintiff cited Miele v Humber River Regional Hospital, 2007 CanLII 27757 (ONSC), aff’d 2009 ONCA 350 [Miele] but acknowledged there is “little law” with respect to the specific facts of this case.
[37] On December 5, I dismissed the motion and allowed Mr. Syed to be called as a witness. In Miele, above, a nurse provided an expert report to the plaintiff after previously working for the defendant hospital during the litigation. The Court removed the plaintiff’s counsel from the case, finding it could be inferred that privileged information had flown from the nurse to the plaintiff which could only be remedied with the withdrawal of counsel. The Plaintiff suggested that allowing Mr. Syed to testify would similarly amount to a waiver of solicitor-client privilege, which is the highest privilege known to law and should not be waived in such circumstances.
[38] However the facts of this case are quite different from Miele. Given that the Defendants are self-represented, I could not withdraw counsel and was asked to withdraw the “tainted” witness instead. He had already been examined in this action when he was the Plaintiff’s representative. I found that allowing Mr. Syed to testify did not in itself violate solicitor-client privilege as Mr. Syed would be warned about privilege and the Plaintiff could object to any questions that asked Mr. Syed to reveal privileged information.
[39] There is no property in a witness, and the Plaintiff had initially intended to call Mr. Syed as a witness before he left their company. The Defendants had already put in evidence Exhibit D3 as a read-in the entire transcript of Mr. Syed from his examination when he was the Plaintiff’s representative. With the entire transcript in as evidence the Court was already going to hear Mr. Syed’s version of events. When this was all balanced with the need to try and arrive at the truth of the matter and the witness’ obvious relevance to the matters at issue I dismissed the Plaintiff’s motion. As a safeguard the Court limited his testimony to areas that the Defendants had previously asked him to testify about: old BioFert sales, new BioFert sales, the 2016 Pacific Agriculture Show and BioFert activities in Pakistan.
[40] There was a fresh dispute about the issue when Saif mentioned that he had been in contact with Mr. Syed recently, but I still allowed Mr. Syed to testify with safeguards in place. Mr. Syed had previously been in contact with Saif to attempt to settle in 2017 and everyone including counsel was well aware that there had been settlement meetings between the two parties (Yasir Syed discovery read-ins at pages 273-274).
[41] The safeguards that were implemented included that all parties were ordered not to contact Mr. Syed again before he testified due to concerns that solicitor client privileged information may be shared. I also granted the Plaintiff permission to re-call their CEO Stan Loewen as a witness to indicate the timeline and nature of the privileged information Mr. Syed would have known from his time working for the Plaintiff.
[42] As soon as I ruled Mr. Syed was going to testify, Saif had him served with a subpoena. When he arrived at Court I had Mr. Syed sworn in so that he would be under oath and admonished the parties that none of the parties would be able to discuss this case with him or even communicate with him until his testimony was finished (page 1236). When he testified, Mr. Syed was told not to answer the question until the Plaintiff decided whether or not to object the question and I ruled on any objection, so that no privileged information would be revealed.
[43] When Mr. Syed was on the stand, the Plaintiff objected to several questions that asked about Mr. Syed’s time at new BioFert, and some objections were allowed. The Plaintiff then cross-examined Mr. Syed and later called two other reply witnesses to clarify or contradict some assertions made by Mr. Syed. These measures allowed the Defendants to make full answer and defence to the allegations made by the Plaintiff while still ensuring trial fairness.
IV. Issues
A. Did the Defendants breach one or more sections of the Trademarks Act?
B. Did the Defendants infringe the Plaintiff’s copyright contrary to sections 3 and 27 of the Copyright Act?
C. Should both corporate Defendants be held liable?
D. Are any of the four individual Defendants personally liable for the infringing conduct of the corporate Defendants?
E. Counterclaim: should the 894 mark be declared invalid because it is clearly descriptive, or deceptively misdescriptive, of the goods being sold by the Plaintiff?
V. Evidence
A. Witnesses
(1) Plaintiff’s Witnesses
[44] The Plaintiff called the 13 witnesses in the following order:
a) Amy Jobson (November 25, beginning at page 101): A paralegal at Norton Rose Fulbright who printed the website documents in the Plaintiff’s book of documents. The Defendants did not cross-examine her;
b) Stan Loewen (November 26, page 138): The CEO of both Terralink and the Plaintiff. Mr. Loewen has worked for Terralink since 1979. He was familiar with old BioFert because they were a competitor in the fertilizer industry before their bankruptcy. His evidence was related to: Terralink’s operations; Terralink sales of old Biofert product before they were successful in their bid to buy old Biofert; the acquisition of old BioFert assets from the receiver Bowra Group in 2015; subsequent purchase from the Business Development of the Bank of Canada in November 2015 of further assets and property of old Biofert; steps taken to obtain the corporate name and the domain name; and the Pacific Agriculture Show booth of the Defendants. Mr. Loewen was briefly recalled as a witness on December 10 to prepare the Court for potential issues of privilege relating to the testimony of Yasir Syed;
c) Gordon Brown (November 26, page 215): Vice-President of Bowra Group which was the court-appointed receiver. His evidence was with regards to the management of old BioFert’s assets beginning in May 2015. He was at first not licensed to act as trustee but later obtained his licence (page 217). His role was to administer Old BioFert’s assets. He discussed the bidding process; the bids submitted; the successful bid; the inventory sales before the sale; and the transfer of assets including the corporate name change.
d) Julia Schmidt (November 26, page 264): The CFO of both Terralink and new BioFert. She is a CPA and she joined the companies in September 2015. Ms. Schmidt testified how she obtained the master data from old Biofert and then created the yearly spreadsheets provided in the Plaintiff’s book of documents;
e) Gurtharan (“Gary”) Tiwana (November 27, page 308): He is full time realtor who also is a silent partner in a farm called B&B Bradner Farms Limited. Mr. Tiwana does not do the actual farming but said he looks after the paperwork (page 312). Mr. Tiwana testified that he had bought product from both Old BioFert and Terralink but had not ordered product for 5 or 6 years. He said that in 2015 he was mailed a flyer saying “employees of BioFert were launching Agrisol” (Exhibit P5, Tab 167). Mr. Tiwana said he reached out to Shahzad Nazir at Terralink who clarified which company was which;
f) Esther Quinlan (November 27, page 317): She works as the inside sales desk representative at Terralink. Prior to this she worked at old BioFert from April 2013 until May 2015 when it went into receivership. At old BioFert she entered sales orders and pulled reports from the accounting system (Citrix). She then worked with Bowra Group from June 2015 to August 2015 during the receivership where she entered orders and did collections. She later joined Terralink in August 2015 and while at Terralink she pulled reports for Julia Schmidt showing old BioFert sales.
g) Shahzad Nazir Khan (November 27, page 340): Currently works in sales and marketing at Terralink. He came to Canada in 2006 and worked for Old BioFert from February 2007 until Old BioFert went bankrupt in 2015. He then worked for the receiver Bowra Group for about two months in 2015 and then on to new Biofert. With each company he worked in a similar sales and marketing role. He spoke about sales of each company, the transition to New BioFert and the way he had to address confusion in the marketplace, as well as sales strategies;
h) Naim Mirza (November 28, page 422): Works in marketing for Terralink. Like the previous witness, Mr. Mirza worked at old BioFert from 2007 until the May 2015 bankruptcy when he then was hired by Terralink. He was the marketing manager at old BioFert. He spoke about the sales and division of labour at old BioFert along with the company’s marketing efforts;
i) Gurtaj Sandhu (December 2, page 610): Worked for Terralink from January 2013 to May 2017 as an inside sales representative but now drives a dump truck. At Terralink he said he dealt with customers saying they were getting a cheaper price for BioStix at Agrisol than Terralink. So he posed as a customer and phoned Agrisol where he spoke to a man named Steven to see if he could buy some;
j) Toby Woo (December 2, page 620): Graphic designer who was the sole owner of a design company called Blue Bananas from 2005 until 2012. He said his partner Ryan George created the logo for old BioFert. In 2016, Toby Woo signed a retroactive copyright assignment to new BioFert. His evidence was that Blue Bananas did not own the logo as it was always his intention for old BioFert to own that logo though they did not assign the IP rights until 2016;
k) Imran Ahmad (December 2 & 3, page 633): I allowed the Plaintiff to treat this witness as an adverse witness (see above). He testified via an interpreter as he only spoke Punjabi. He was previously examined in the separate BCSC action. He worked in shipping and receiving at old BioFert and now works in sales at Agrisol. Through an interpreter he was asked questions about Agrisol sales and strategy in the lead up to the 2016 Pacific Agriculture Show;
l) Kamalpreet (“Kamal”) Singh Bahga (December 3, page 792): I allowed the Plaintiff to treat this witness as an adverse witness. He testified through an interpreter. He was an employee of old BioFert from 2007 to 2015. He was then hired by Bowra Group during the receivership period until September 2015 when another trustee for the remaining assets was appointed. (Kamal Bahga discovery transcript, page 63). Kamal later joined Agrisol in February 2016 (Kamal Bahga discovery transcript, page 76) and currently works in production at Agrisol.
m) Manjinder Gill (December 3 & 4, page 849): Mr. Gill testified with an interpreter as he speaks Punjabi. He came to Canada from India in 2011 and then worked for old BioFert for “five years” filling fertilizer bags. He then had two years where he was doing pressure washing jobs before he joined Agrisol. He is currently employed by Terralink at a higher wage. He was questioned on a statement he had given as an employee of Agrisol before he had been hired by Terralink that would appear to be obtained for possibly the BCSC action. He testified that he had been told by Kamal at Agrisol to take back the statement and that he had heard Dr. Tahir telling other witnesses what to say during their discoveries (pages 879-880) as well as other events that he said occurred.
(2) Defendants’ Witnesses
[45] The individual Defendants each testified on their own behalf without the benefit of legal counsel. Exercising my discretion as set out in Rule 274(2) of the Federal Courts Rules, I determined the order that the Defendants would testify in. Then I directed that it would be in the best interests of justice that each Defendant would state the question they were asking first and then answer the question (page 1073). This approach was necessary in case there was an objection to the question, so the objection could be dealt with before the question was answered (page 1080). This method made the testimony more orderly and it focused the Defendants rather than just having them do a long dialogue on the stand. The Defendants were allowed to bring their questions to the witness stand but not the answers. Following the examination-in-chief, the Defendants in the same order as they testified could then cross-examine each other before the Plaintiff did their cross-examination (page 1072).
[46] The only other witness called by any of the Defendants was Yasir Syed who was called by Saif (see Preliminary Issues section (d) at paras 35–43 above). This witness had worked with Dr. Tahir at Grotek Manufacturing before they started as partners at old BioFert. After the old BioFert bankruptcy, Yasir was hired by Stan Loewen and became the CEO of new BioFert. As mentioned above, he had been the Plaintiff’s representative at examinations for discovery and was cross-examined by the corporate Defendants’ counsel at the time. He later left the employ of the Plaintiff in November 2018. Yasir Syed’s entire examination for discovery was read in by the Defendant Dr. Tahir. He was examined in-chief by the Defendants, and then cross-examined by the Plaintiff.
B. Brief timeline of events
(1) Creation of old BioFert
[47] Dr. Tahir testified that he worked at Grotek Manufacturing as the Director of Research and Development from 2001 until 2006. In 2006, Dr. Tahir said that he and Yasir Syed left Grotek to create old BioFert which began operating early in 2007 (page 1262). Old BioFert began selling primarily liquid fertilizer products, but later moved towards selling a greater variety of products (page 1268). Dr. Tahir estimated 40 to 50 percent of old BioFert sales went overseas to Pakistan (page 1268). As Dr. Tahir and Yasir continued to grow the old BioFert business, its sales increased each year from 2009 to 2012 (Exhibit P4, Tab 54).
[48] On July 10, 2013, old BioFert registered trademark the 894 mark.
“Figure 1”
[49] The 894 mark application listed January 1, 2007 as the date the company began using the mark (Exhibit P2, Tab 14).
[50] Dr. Tahir testified that there were production issues and customer concerns from 2012 onwards which led to a downturn in sales (page 1292). From 2012 to 2013, there was a drop in over $1 million in sales (Exhibit P4, Tab 54). By late 2014, there were internal issues between the partners at old BioFert which Farrah described as a “cold war” (page 1096).
[51] Yasir Syed confirmed there were severe concerns with product quality in his examination for discovery, saying the reputation of old BioFert had been damaged in 2013 and was further diminished in 2014 (Yasir Syed discovery read-ins at pages 99-101). These quality issues were confirmed by Stan Loewen who said “I heard some things in the market place that were strange” regarding old BioFert products (page 187).
[52] In October 2014, Yasir indicated there was a “tussle” between him and Dr. Tahir and there was a breakdown in relationship between the sales and the production departments (Yasir Syed discovery read-ins at pages 77 and 101). Yasir Syed was the Plaintiff’s representative during the examinations for discovery and explained the breakdown in his relationship with Dr. Tahir (page 175):
I tried numerous times to resolve this. But I did not want to go back to the status quo. My only requirement was that things must be put in black and white…requirements of the system must be fulfilled, and things must be made visible in the system. I will not agree to running the company or being part of the company where one person in his mind and in his diary runs a $7 million speciality fertilizer company like a ghetto or a sweat shop. I wasn’t willing to do that. That would have been a complete contradiction to my core values, my educational background, and my philosophy to where to take this company in the future.
[53] Yasir contacted old BioFert’s creditors HSBC Bank of Canada (formerly the Hongkong and Shanghai Banking Corporation) and BDC (Business Development Bank of Canada) to alert them about what he saw as financial irregularities. The banks went to great lengths to assist old BioFert to resolve the issues and to the settle the internal disputes. This continued from November or December 2014 for a period of four to five months (Yasir Syed discovery read-ins at pages 172-174). Finally it was determined that the issues could not be resolved and the banks called in their loans of $1 million to $1.5 million which ultimately led to the bankruptcy of old BioFert (Yasir Syed discovery read-ins at pages 174).
(2) Old BioFert’s bankruptcy and transfer of assets
[54] By early 2015, old BioFert was unable to meet its financial obligations (agreed statement of facts, para 10). Bowra Group was appointed as receiver in May 2015 (Exhibit P3, Tab 35). Old BioFert was declared bankrupt on June 9, 2015 (agreed statement of facts, para 10).
[55] On June 15, 2015, Bowra Group sent a request for offers to purchase (Exhibit P2, Tab 1). Dr. Tahir had a meeting with Saif and Liaqat Ali Khan to talk about making a bid sometime in June 2015 (Dr. Tahir, pages 1359-1360). On July 15, 2015, Dr. Tahir incorporated Agrisol Manufacturing Inc. with Saif, Farrah, and Liaqat as shareholders (agreed statement of facts at para 14).
[56] As Dr. Tahir and his group were preparing a bid on the assets, old BioFert’s competitor Terralink incorporated TL Acquisition Corp. with a view to purchasing the assets of old BioFert (Stan Loewen, pages 142-143). Terralink sells “fertilizers, chemicals which would be pesticides or related, and seed products, as well as plastics and sundry other things that growers use” (Stan Loewen, page 181). Terralink is not a party to this action and their financial statements are not in evidence.
[57] TL Acquisition Corp. placed a formal bid on July 18, 2015 (Exhibit P2, Tab 3). After being told to formalize their expression of interest, Dr. Tahir, Liaqat and Saif placed their own formalbid in July. Saif later met with the receiver Gordon Brown with the deposit cheque at Saif’s Asian Rugs business (Saif, pages 1185–1186; see also Gordon Brown, pages 223–224). Saif’s deposit cheque satisfied the requirements on the Requests for Offers to Purchase and the group. Saif also met with Gordon Brown at the Bentall Tower on a separate occasion (page 1186). However, on July 22, 2015, Liaqat told Gordon Brown that their offer was being withdrawn (book of read-ins at page 216; Dr. Tahir, page 1485).
[58] By late-July 2015, it was clear that the TL Acquisition Corp bid was successful. On July 21, 2015, Gordon Brown asked Dr. Tahir to execute a name change of old BioFert (Exhibit P3, Tab 40). Since Dr. Tahir did not consent to the name change, the Plaintiff was unable to acquire the name and there was a reduction in the purchase price from $600,000 to $575,000 (Exhibit P2, Tab 7).
[59] On July 31, 2015, the contract of purchase and sale was executed as well as an Intellectual Property Assignment and a Trademark Assignment (Exhibit P2, Tabs 4, 8 and 9). This meant all of old BioFert’s intellectual property was transferred to the Plaintiff. However, since old BioFert continued to hold onto its old name, the Plaintiff had to choose a different name and became BioFert Manufacturing Canada Inc. on August 4, 2015 (Exhibit P2, Tab 11).
[60] After a BCSC order on August 27, 2015 ordered old BioFert’s name to be changed, old BioFert’s name was changed to a numbered company on September 1, 2015 (Exhibit P3, Tabs 43 and 44). Then on September 17, 2015, the Plaintiff changed its name to its current form: BioFert Manufacturing Inc. (Exhibit P2, Tab 12).
[61] On November 26, 2015, Terralink acquired all the other assets of old BioFert from BDC, particularly the premises and production equipment (Exhibit P2, Tab 13).
(3) Defendants’ business activities in late 2015 and early 2016
[62] After Dr. Tahir’s group’s bid was unsuccessful, he nonetheless continued on with his plan to re-enter the fertilizer business. Agrisol had already been incorporated, and on August 26, 2015 he instructed Saif to incorporate a second corporation called BioFert NA Manufacturing Inc. (“BNA”). Dr. Tahir was the CEO and the BNA corporation had the same shareholders and directors as Agrisol: Farrah, Saif, and Liaqat (agreed statement of facts at para 15; see also exhibit P51).
[63] From August to