IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Citation: Renshaw v. Parker, 2018 NSSM 7 REASONS FOR DECISION

Transcription

1 BETWEEN: Claim No: SCCH IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Citation: Renshaw v. Parker, 2018 NSSM 7 DAVE RENSHAW, LEE PERRIN, and ROBERT HOOD Claimant - and - DWIGHT PARKER Defendant REASONS FOR DECISION BEFORE Eric K. Slone, Adjudicator Hearing held at Halifax, Nova Scotia on November 15, 2017, December 7, 2017, January 24, 2018 and February 1, 2018 Decision rendered on March 23, 2018 APPEARANCES For the Claimants For the Defendant self-represented self-represented

2 -1- BY THE COURT: [1] The Claimants and the Defendant are all grown men who, in their spare time, dress-up as pirates for fun and profit. Inspired in part by the success of the Pirates of the Caribbean movie franchise, these pirate re-enactors are hired for parties or other functions where they entertain the guests with a combination of theatrics, and (usually) harmless mayhem. [2] This case is brought by three members of the original group of pirate reenactors known as Pirates of Halifax (hereafter either Pirates of Halifax or the group ) against another member and, indeed, the founder of the group. The claim is that the three Claimants expelled the Defendant from Pirates of Halifax in 2016, and that since that time the Defendant has been operating another group also using the name Pirates of Halifax, which the Claimants say has been confusing to the public and amounts to the tort of passing off. [3] The case was heard over the course of four lengthy evenings beginning on November 15, 2017, and concluding on February 1, The history of the group was brought out in excruciating detail, both through the testimony of witnesses and some dozens of documentary exhibits. Suffice it to say that what began as an enthusiastic hobby with the bonus of financial reward, descended into a relationship of considerable discord, mistrust and aggravation. [4] I made it clear to the parties many times during the course of this hearing that I would not give any weight to the many accusations, many of them hearsay statements, that were offered in an attempt to prove that one or the other of the parties have engaged in some form of personal misconduct that reflected poorly on the group. I am not inclined to venture into a determination of who was more

3 guilty of behaving badly thus bringing discredit to the group, because such a determination would not resolve the legal questions which the case raises. -2- [5] I believe it is sufficient to say that somewhere along the line in the history of this group, the actions of some of the members, including the Defendant and one or other of the Claimants, provoked complaints. The accusations were far from trivial, including allegedly unsafe use of a replica blunderbuss (musket) and alleged sexual harassment of clients or members of the audience, as well as lesser but also objectionable behaviours such as allegedly leaving gigs early or otherwise breaching contractual obligations. For my purposes, it does not matter whether any of these things occurred or whether complaints were justified. What matters is that the relationship between the parties soured and this resulted in a fracturing of the group. [6] As mentioned, the claim is framed as one of passing off. The three named Claimants plead that they expelled the Defendant, Mr. Parker, from the group on September 28, 2016, and that thereafter he set up a new troop under the same name, Pirates of Halifax, using the same logo and some promotional material belonging to the group as it had previous previously existed, including group photos that included some of the Claimants. They plead that he has unlawfully "passed off" his new troop as the old troop, creating confusion in the eyes of the public and diverting revenue from the Claimants. They seek to hold him to account for revenue earned over the last year plus while operating as Pirates of Halifax. The amount claimed is about $15, [7] The Defendant has counterclaimed for significant damages on several grounds, including also passing off (since he claims the exclusive right to use the name), and also compensation for many of the tasks he performed while the

4 -3- group was together, which he claims was disproportionate to his share of the financial rewards which he received; i.e. an equal share of the proceeds with no bonus for all of the extra time he says he spent. The central question [8] As I see it, the central question is who has the right to use the name Pirates of Halifax. If the Claimants have the exclusive right, the Defendant would be guilty of passing off. If the Defendant has the exclusive right, then the counterclaim would have some merit. If neither has the right to use the name Pirates of Halifax, or both of them do, then a case for liability would be hard for any of the parties to make. [9] Following the fracture of the relationship, both sides took steps to attempt to solidify their right to the name. The Claimants reserved the web address and have established a website to promote their troop. The Defendant, in the meanwhile, reserved the name Pirates of Halifax as a sole proprietorship with the Registry of Joint Stock Companies and has the ostensible exclusive right to carry on business under that name 1. [10] Both parties are active on FaceBook and have groups using one or another variation of the name Pirates of Halifax. There are also various other social media accounts being used by one or other of the parties. 1 I am mindful of the fact that he did so surreptitiously, initially using a surrogate to hold the name so that it could not easily be traced to him, which indicates to me that - rightly or not - he lacked confidence in his legal right to use the name. While he may have thought that this method of proceeding was clever or prudent, I believe that such a deceptive act does him no credit.

5 -4- [11] The Defendant does not deny that he has continued to operate as Pirates of Halifax, but claims he has a right to do so based on several factors. First of all, he claims that he originated the concept. He further claims that the Claimants were never partners in a legal sense, but were mere subcontractors. He bases this latter argument on the fact that for most of the time that the parties were operating, he used his personal company as the entity to bill the clients and obtain payment of the invoices. [12] The history is clear that, at least in Halifax, the Defendant was at the forefront of pirate re-enactment activity starting in about The name Pirates of Halifax was not originally used by him, but rather the names Real Pirates Alliance and Pirates RRR Us appear to have been early names under which they appeared. Pirates of Halifax came to be used in 2008 or 2009 when the Defendant was working with at one or two of the Claimants. The Defendant claims to have been the first one to utter the name, in the course of brainstorming, but this is disputed. On all of the evidence, and to the extent that it is relevant, I do not believe he solely originated the name Pirates of Halifax. [13] For most of the time that the group included both the Defendant and the Claimants, it was the Defendant who performed much of the drudge work. Specifically, he promoted the group, arranged bookings and collected the money after the events by billing the clients through his personal company (actually a proprietorship) Bron-y-Aur Holdings. The other troop members would get paid in cash. The Defendant took no extra compensation for these tasks, nor did he ever claim to be entitled to any until launching his counterclaim in this case. It is true that he expressed, from time to time, that he believed the others were not pulling their weight and he was willing to give up some of his duties to help spread the

6 -5- load. The Claimants were not unwilling to pitch in, though this never happened to any significant degree. [14] The composition of Pirates of Halifax or its predecessors varied at times, though the Defendant was a constant. After a couple of years, it can fairly be said that there was an A Team of pirates, with a B Team of replacements who could be called upon to perform at a gig if one of the A Team was unavailable. For the last several years, the A Team consisted of the three Claimants, the Defendant and Gary Hall, who is no longer active and is not associated with either faction in this dispute. [15] The legal relationship between the members is critical to being able to sort out where they stood after September 28, While the evidence was voluminous, I believe the following generalizations can be made. The Claimants were not subcontractors [16] The Defendant sought to characterize the Claimants as (mere) subcontractors, and himself as a sole proprietor of the entity Pirates of Halifax. He supported this view with the fact that he used his company to invoice the clients and, at least some of the time, had the Claimants and other members issue invoices to obtain their share. [17] Such an arrangement is consistent with a contractor/subcontractor relationship, but it is not inconsistent with other relationships. I believe that this invoicing arrangement was merely done as a convenience, and did not reflect the underlying legal relationship. Were the matter looked at only in the time frame of about 2008 to 2010, it would be more arguable that the Defendant was the

7 -6- primary contractor and holder of the title Pirates of Halifax, but the evidence is clear that something that can only be described as an implied partnership began to coalesce once the composition of the A Team became clearly established. [18] For the last several years that the parties worked together, they operated on the principle of one man, one vote. This was confirmed in s or text messages between the various members. The main item that they had to agree upon was whether or not to accept a gig; they only took gigs if the majority of the group agreed. There is no evidence that the Defendant had a greater voice than any of the other members of the group, although as the person doing most of the bookings (and submitting the invoices) he appeared to be a leader of sorts in the minds of clients. [19] In about 2015 the Defendant was actively promoting the creation of a legal partnership, and proposed that they sign a partnership agreement. He even went so far as to have one drafted by his lawyer, for consideration. His main motivation was to spread out legal liability. There had been some incidents at gigs where injury either could have or did result, including an injury to himself when a blunderbuss malfunctioned, and he wanted it to be clear that legal liability was not solely directed at him. [20] There was reluctance on the part of some of the others to document the relationship, so it never happened. That reluctance was particularly coming from Mr. Renshaw, based on his increasing unhappiness working with the Defendant. However, the failure to sign an agreement does not mean that the parties were not already partners in the legal sense. What a written agreement would have accomplished is that the parties could have written their own rules. Instead, in

8 -7- my view, they found themselves in a legal partnership by virtue of the operation of the Partnership Act, and were stuck with the implied terms created by the Act. A partnership came into existence [21] The Partnership Act is a Nova Scotia Statute that contains the following relevant provisions: Definition of partnership 4 Partnership is the relation which subsists between persons carrying on a business in common, with view of profit, but the relationship between members of any incorporated company or association is not a partnership within the meaning of this Act. Rules to determine existence of partnership 5 In determining whether a partnership does or does not exist, regard shall be had to the following rules: (a) joint tenancy, tenancy in common, joint property, common property or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof; (b) the sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which, or from the use of which, the returns are derived; (c) the receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but the receipt of such a share, or of a payment contingent on or varying with the profits of the business, does not of itself make him a partner in the business and, in particular, (i) the receipt by a person of a debt or other liquidated amount by instalments or otherwise out of the accruing profits of a business does not of itself make him a partner in the business or liable as such,

9 -8- (ii) a contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such, (iii) a person being the surviving spouse or a child of a deceased partner, and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner, is not by reason only of such receipt a partner in the business or liable as such, (iv) the advance of money by way of loan to a person engaged or about to engage in any business on a contract with that person that the lender shall receive a rate of interest varying with the profits, or shall receive a share of the profits arising from carrying on the business, does not of itself make the lender a partner with the person or persons carrying on the business or liable as such, provided that the contract is in writing and signed by or on behalf of all the parties thereto, (v) a person receiving by way of annuity or otherwise, a portion of the profits of a business in consideration of the sale by him of the goodwill of the business is not by reason only of such receipt a partner in the business or liable as such. [22] I believe that one can only characterize the relationship between the Claimants, the Defendants and Mr. Hall as a partnership. They were clearly carrying on a business with a view of profit. None of the rules which argue against the existence of a partnership are applicable. There is no other legal relationship that fits the facts. It was not, as I have found, a relationship between a contractor (the Defendant) and three or four sub-contractors. That option is inconsistent with how the group operated. The one man, one vote concept was consistent only with partnership. [23] When this partnership began is a bit unclear, but there is no doubt in my mind that they were partners by 2010 at the latest, and that up to September 28, 2016 (when the Claimants sought to expel the Defendant) they remained partners

10 -9- of one another. What the relationship became after that, and what the status was of partnership property, are separate questions. [24] The Partnership Act contains some provisions that bear upon these questions: Partnership property 23 (1) Subject to subsection (2), all property and rights and interest in property originally brought into the partnership stock or acquired whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement. Rules to determine interests or duties of partner 27 The interests of partners in the partnership property and their rights and duties in relation to the partnership shall be determined, subject to any agreement, express or implied, between the partners, by the following rules: (a) all the partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses, whether of capital or otherwise, sustained by the firm; (b) the firm must indemnify every partner in respect of payments made and personal liabilities incurred by him (i) in the ordinary and proper conduct of the business of the firm, or (ii) in or about anything necessarily done for the preservation of the business or property of the firm; (c) a partner making, for the purpose of the partnership, any actual payment or advance beyond the amount of capital which he has agreed to subscribe, is entitled to interest at the rate of five per cent per annum from the date of the payment or advance; (d) a partner is not entitled, before the ascertainment of profits, to interest on the capital subscribed by him;

11 -10- (e) every partner may take part in the management of the partnership business; (f) no partner shall be entitled to remuneration for acting in the partnership business; (g) no person may be introduced as a partner without the consent of all existing partners; (h) any difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the partners, but no change may be made in the nature of the partnership business without the consent of all existing partners; (i) the partnership books are to be kept at the place of business of the partnership, or the principal place, if there is more than one, and every partner may, when he thinks fit, have access to and inspect and copy any of them. Expulsion of partner 28 No majority of the partners can expel any partner unless a power to do so has been conferred by express agreement between the partners. [25] I find that these provisions of the Act are applicable to these parties, and in particular s.28 which expressly provides that, in the absence of an express agreement permitting such, no partner may be expelled by a majority of the partners. There is nothing in the evidence to suggest that the members of the group ever agreed, verbally or in writing, to create a power of expulsion. That would have been something that a written agreement might have provided, but no such written agreement ever materialized. [26] As such, the notice on September 28, 2016 by the Claimants purporting to expel the Defendant was ineffective to do so. [27] So what effect did the notice have? The only other legal effect would have been to terminate the partnership. It would be ludicrous to suggest that the

12 -11- partnership continued in any practical sense, given the express intent to exclude the Defendant, but had they been aware of s.28 at the time, legally speaking the only option open to the Claimants would have been to terminate the partnership and start up a new one, without the Defendant. The Act recognizes this: Notice to end partnership 29 (1) Where no fixed term has been agreed upon for the duration of the partnership, any partner may determine the partnership at any time on giving notice of his intention so to do to all other partners. Dissolution of partnership 35 Subject to any agreement between the partners, a partnership is dissolved... (c) if entered into for an undefined time, by any partner giving notice to the other or others of his intention to dissolve the partnership; (d) in the last mentioned case, the partnership is dissolved as from the date mentioned in the notice as the date of dissolution, or, if no date is mentioned, as from the date of the communication of the notice. [28] Upon the termination of the former partnership (rather than the expulsion that the Claimants had hoped to accomplish) the messy question arose as to the status of partnership property, and most specifically of the trade name Pirates of Halifax. A trade name is property, specifically a type of intellectual property. People pay good money to acquire or develop trade names, and also go to great lengths to protect the exclusive right to use such name. [29] It is inescapable that the trade name was partnership property. Even if the Defendant owned the name at one time, which is arguable at best, as he took on partners the name became central to the business of the partnership. So what happened to that name on September 28, 2016?

13 -12- [30] As set out above, this is where s.23(1) of the Act applies: Partnership property 23 (1) Subject to subsection (2), all property and rights and interest in property originally brought into the partnership stock or acquired whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement. [31] This is where a written partnership agreement would have been useful. It could have made express provision for this very eventuality. But in the absence of such an agreement, I believe the name Pirates of Halifax remained property of the former partnership, and nothing has been done to transfer that name to any of the partners. [32] In theory, upon a winding up of the partnership in the Supreme Court, the name could have been sold (most likely to the highest bidder among the former partners) and the proceeds distributed to the partners: Payment of debts and surplus 42 On the dissolution of a partnership, every partner is entitled as against the other partners in the firm, and all persons claiming through them in respect of their interests as partners, to have the property of the partnership applied in payment of the debts and liabilities of the firm, and to have the surplus assets after such payment applied in payment of what may be due to the partners respectively, after deducting what may be due from them as partners to the firm, and for that purpose any partner or his representatives may, on the termination of the partnership, apply to the court to wind up the business and affairs of the firm.

14 -13- [33] Of course, this did not happen. Instead, each of the two factions has attempted to use the name and claims the legal right to do so. Neither of them is correct. [34] The Defendant cannot take the name Pirates of Halifax simply because he believes he originated it. Nor did the registration of the name with the Registry of Joint Stock Companies confer any legitimacy to his continued use of the name. Registration cannot be used as an instrument of fraud or deception. [35] The Claimants cannot take the name on a theory that they expelled the Defendant as a partner. They had no right to expel a partner. The effect of their attempt to do so, combined with the clear rift that it exposed, simply terminated the partnership and left partnership property to be disposed of in a winding up of the partnership affairs. Obtaining the web address and operating the website did not confer any rights, as that also cannot be used to perpetrate fraud or deception. Where does this leave the parties? [36] In my humble opinion, the conclusion is inescapable that none of the parties has the right to use the name Pirates of Halifax, which remains an item of partnership property that continues to be owned by all of the former partners, until one or more of them releases their interest in the name. Whether Mr. Hall retains any right as a former partner is an open question which I cannot answer. [37] It cannot be said that the Defendant is illegally passing himself off as Pirates of Halifax any more than it can be said that the Claimants are doing so.

15 -14- [38] While I would have preferred to find a comprehensive solution to this problem, there are limitations to my jurisdiction to do so. The Small Claims Court does not have jurisdiction to wind up the affairs of this partnership. As a practical matter, the parties would be well-advised to work together (outside of court) to come to an arrangement that would avoid the confusion that has been created by their respective attempts to use a name to which they have no exclusive right. This is only a suggestion. Their alternative would be to take the matter to Supreme Court and wind up their partnership legally. [39] In the result, it cannot be said that the Defendant is unlawfully passing himself (and his new troop) off as Pirates of Halifax, because the Claimants do not have any exclusive right to the name. Nor are the Claimants passing themselves off unlawfully. [40] The other aspects of the counterclaim are unsustainable, in my opinion, because the Defendant did not establish any express or implied entitlement to be paid for his work or to be reimbursed for expenses that he did not, at the relevant time, seek to recover. All of the parties were incurring and claiming expenses, from time to time, and it would have been inconsistent with their established practice for someone (i.e. the Defendant) to be accumulating expenses or compensable time to be recovered at a later date. Section 27(f) of the Act also provides that a partner has no right to be remunerated for acting in the partnership business. [41] As such, with some regret that this result may not resolve much, I find that the claim and counterclaim must both be dismissed. Eric K. Slone, Adjudicator