Date:
20061129
Docket: T-698-06
Citation: 2006 FC 1449
Toronto, Ontario, November 29,
2006
PRESENT: The Honourable Madam Justice Mactavish
BETWEEN:
CANADIAN
PRIVATE COPYING COLLECTIVE (CPCC)
Applicant
and
GOGH
WHOLESALE INC.
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
[1]
The
Canadian Private Copying Collective (“CPCC”) brings this application under the
provisions of subparagraph 34(4)(c)(i) and subsection 88(1) of the Copyright
Act, R.S.C. 1985
c. C-42. The CPCC seeks payment of
$97,382.25, plus interest, allegedly due from the respondent Gogh Wholesale
Inc. (“Gogh”) in accordance with the provisions of the Private Copying
Tariffs. The monies claimed relate to the importation and sale of blank
audio recording media by Gogh between January 1, 2002 and February 28, 2003.
[2]
The
CPCC further seeks an order directing Gogh to submit to an audit of its
business, financial and accounting books and records, and to pay any further
amounts owing as may be disclosed by the audit.
[3]
Finally,
the CPCC requests an order directing that Gogh comply with the reporting
requirements and the payment and reporting calendar set out in the applicable
copying tariffs, for as long as it remains a manufacturer or importer of blank
audio recording media.
[4]
Gogh
has not filed any materials on this application, and did not appear at the
hearing.
The Private Copying
Tariffs
[5]
In
Canadian Private Copying Collective v. Cano Tech Inc., [2006] F.C.J. No.
170, 2006 FC 28, 47 C.P.R. (4th) 350, I reviewed the history, nature and
purpose of the Private Copying Tariffs, and I repeat that summary here:
[4] Prior to March 19, 1998, the
unauthorized reproduction of musical works, performances and sound recordings
(referred to collectively as “recorded music”), for private use, constituted
copyright infringement.
[5] Because of the difficulty in
enforcing these rights, Parliament enacted Part VIII of the Copyright Act,
which provides that the copying of recorded music for private use no longer
amounts to copyright infringement.
[6] At the same time, the
legislation was amended to create a scheme to provide rightsholders with
equitable remuneration through the imposition of a tariff or levy on
manufacturers and importers of blank audio recording media sold in Canada. As the Federal Court of Appeal
noted in Canadian Private Copying Collective v. Canadian Storage Media
Alliance, [2004] F.C.J. No. 2115 (QL), 2004 FCA 424, 36 C.P.R. (4th) 289,
leave to appeal to the Supreme Court of Canada denied, [2005] S.C.C.A. No. 74
(QL), 235 D.L.R. (4th) vi, the levy was created to support creators and
cultural industries, by striking a balance between the rights of creators and
those of users. (at ¶ 51)
[7] The rate of the levy is fixed
each year through the certification of a Private Copying Tariff by the Copyright
Board of Canada, in accordance with Part VIII of the Act. Since December of
1999, the Board has certified four tariffs determining which blank audio
recording media are subject to levies, the amounts of those levies, and the
terms and conditions applicable to the payment of those levies.
[8] The CPCC is a non-share,
non-profit corporation, whose members are collective societies holding private
copying remuneration rights on behalf of rightsholders. The CPCC has been
designated by the Copyright Board of Canada as the collecting body, in
accordance with paragraph 83(8)(d) of the Act.
[9] Levies collected by the CPCC
are then distributed to eligible collective societies for redistribution to the
rightsholders themselves.
[10] Under the provisions of the Copyright
Act and the Private Copying Tariffs, manufacturers and importers of
blank audio recording media are obliged to track and report sales activity to
the CPCC. They must also keep records from which the CPCC can readily
ascertain, through an audit, the amounts payable. The Tariffs also
require that manufacturers and importers pay interest on overdue amounts owed
to CPCC.
Is the CPCC Entitled to
Recover Unpaid Levies of $97,382.25 Plus Interest from Gogh?
[6]
In
September of 2004, the CPCC became aware that Gogh might be importing and
selling blank audio recording media, without having reported those activities
to the CPCC, and without having remitted the levies associated with such
activities.
[7]
Following
an exchange of correspondence between the CPCC and Bernard Tan, the sole
director of Gogh, Gogh produced reports for the period between January 1, 2002
and February 28, 2003.
[8]
These
reports revealed that during this period, Gogh imported and sold 463,725 bulk
or generic recordable compact discs (CD-Rs) in Canada. Each CD-R
was subject to a levy in the amount of $0.21, in accordance with the Tariffs
in effect at the relevant times. To date, no levies have been paid by Gogh
with respect to these items.
[9]
As
a result, based upon the information provided by Gogh itself, I am satisfied
that Gogh owes the CPCC the sum of $97,382.25 for unpaid levies.
[10]
Indeed,
a review of the correspondence between Mr. Tan and the CPCC discloses that Gogh
does not dispute its indebtedness. Rather, Mr. Tan asserts that Gogh is a
dormant company, without any assets. Whether or not that is true, it does not
relieve the company of its obligations, although as a practical matter, it may
make collection on the judgment problematic.
[11]
As
a consequence, an order will go directing Gogh to pay to the CPCC the sum of
$97,382.25 for unpaid levies for the period between January 1, 2002 and
February 28, 2003.
[12]
The
Tariffs also provide for the payment of interest on the late payment of
levies. As of November 29, 2006, the interest owing on the unpaid levies, as
calculated in accordance with the relevant Tariffs, is $17,642.01, and
Gogh is ordered to pay this additional amount to the CPCC.
Is the CPCC Entitled to Audit Gogh?
[13]
The
Private Copying Tariffs impose record-keeping obligations on the
manufacturers and importers of blank audio recording media. By way of example,
the 2003 Tariff states that:
|
9. (1) Every manufacturer or importer shall keep and
preserve for a period of six years, records from which CPCC can readily
ascertain the amounts payable and the information required under this tariff.
(2) CPCC may audit these records at any time on reasonable
notice and during normal business hours.
|
9. (1) Le fabricant ou importateur tient
et conserve pendant une période de six ans les registres permettant B la SCPCP de déterminer facilement les montants exigibles et les
renseignements qui doivent Ltre fournis en vertu du présent tarif.
(2) La SCPCP peut vérifier ces registres B tout moment durant les heures réguliPres de
bureau et moyennant un préavis raisonnable.
|
[14]
In
this case, it is clear that Gogh never complied with its reporting obligations
under the Tariffs, until pressured by the CPCC to do so. Moreover, the
information provided by Mr. Tan with respect to Gogh’s compliance with its
record-keeping obligations has been inconsistent. By way of example, Mr. Tan
initially referred to the need to seek out Gogh’s archived records in order to
prepare the necessary reports, and then later claimed that no such records
existed.
[15]
Moreover,
although Mr. Tan initially consented to an audit on behalf of Gogh, he later
refused to go ahead with the audit.
[16]
As I
observed in Canadian Private Copying Collective v. Cano Tech Inc.,
above, at ¶ 97:
[G]iven
that the levy scheme is based upon self-assessment and self-reporting of the
information required to calculate the levies due under the Tariff, the
effectiveness of the scheme requires that there be some means of verifying the
accuracy and completeness of the information provided.
[17]
I am
thus satisfied that the CPCC is entitled to audit the books and records of Gogh
in order to ascertain whether the company has fully complied with its
obligations under the Tariffs. Gogh is directed to take all reasonable
steps to facilitate the audit, and to provide any document, record or
information from which the CPCC can ascertain the amounts payable and
information required under the provisions of the Private Copying Tariffs.
Is the CPCC Entitled to a Declaration of
Entitlement?
[18]
The
CPCC also asks for an order declaring that it is entitled to any and all
amounts which might be found to be owing to it by Gogh through the audit
process, including the costs of the audit, if the conditions stipulated in the Tariffs
are met.
[19]
Justice
von Finckenstein was confronted with a similar request on the part of the CPCC
in Canadian Private Copying Collective v. Fuzion Technology Corp.,
[2006] F.C.J. No. 1598, 2006 FC 1284. In refusing the request as premature, he
stated that:
¶ 41 The legislation addresses the
collection issue. First, it provides that a person manufacturing or importing
blank audio recording medium must pay a levy (s. 82(1)). Second, it provides
for the designation of a collecting body (s. 83). Third, it allows the
designated collecting body to sue for unpaid levies (s. 88). Additionally, it
empowers the court to award penalties in appropriate cases (s. 88). However,
unlike other statutes that deal with statutorily imposed charges such as taxes
or duties (see for instance the Income Tax Act, R.S.C. 1985, c. 1
(5th Supp.) s. 222) there is no provision for an assessment or a provision that
the amount assessed is due upon receipt of the notice of assessment. Any
collection of levy under part VIII of the [Copyright] Act must
therefore, rely on the applicable principles of debtor-creditor law. Without
the debt being established, I am not prepared to order payment thereof, let
alone the cost of the audit or arrears of interest.
[20]
I am
of the view that these comments are equally applicable to the present
situation, and therefore decline to make the order requested by the CPCC.
Costs
[21]
Finally,
the CPCC has requested that costs be awarded in its favour at the top end of
Column V. In support of this submission, the CPCC points to the fact that Gogh
failed to comply with its obligations under the Tariffs, that it was
admittedly liable for $97,382.25 in unpaid levies, and that it forced the CPCC
to bring this application in order to ensure that the obligations under the Tariffs
were complied with.
[22]
I am
satisfied that such an award is warranted on the facts of this case, and order
accordingly.
JUDGMENT
THIS COURT ORDERS AND ADJUDGES
that:
1. This application is
allowed;
2. Gogh
shall pay to the CPCC the amount of $97,382.25 for unpaid levies, together with
pre-judgment interest in the amount of $17,642.01;
3. The
CPCC is entitled to audit the books and records of Gogh, upon providing Gogh
with five days written notice. Gogh is directed to take all reasonable steps
to facilitate the audit, and to provide any document, record or information
from which the CPCC can ascertain the amounts payable and information required
under the provisions of the Private Copying Tariffs; and
4. The CPCC is entitled to
its costs of this application at the top end of Column V.
“Anne Mactavish”
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