Date: 20060501
Docket: T-1034-04
Citation: 2006 FC 546
Ottawa, Ontario, May 1, 2006
PRESENT: The Honourable Mr. Justice Russell
BETWEEN:
VIDEO BOX ENTERPRISES INC.,
TELEVISION BROADCASTS LIMITED,
TVBO PRODUCTION LIMITED,
TVBI COMPANY LIMITED
and CONDOR ENTERTAINMENT B.V.
Plaintiffs
and
KIEN PHAC LAM and LE QUAN LAM
Defendants
REASONS FOR ORDER AND ORDER
THE MOTIONS
[1] I have before me two motions in these proceedings. In one of them the Defendants are seeking an order to file an Amended Statement of Defence and Counterclaim. In the other, the Plaintiffs are seeking Summary Judgment against Mr. Lam, one of the Defendants.
BACKGROUND
[2] In the main action the Plaintiffs allege that Mr. Lam carries on a pirate video business from his residence in Toronto's Chinatown.
[3] They say that Mr. Lam sells and distributes pirate copies of new titles of the Plaintiffs' Chinese-language movies (the TVB Programs) burned onto blank CDs with hand-written labels.
[4] The Plaintiffs say that such activities by Mr. Lam are causing damage to their rental and sell-through businesses for TVB Programs, which are being conducted in Canada by Video Box and Condor.
[5] After the Plaintiffs brought their motion for Summary Judgment, the Defendants applied to amend their pleadings and to assert a counterclaim. The two motions are connected because, if the proposed amendments to the Statement of Defence and Counterclaim are allowed, it may be more difficult for the Plaintiffs to make a case for summary judgment.
THE DEFENDANTS' MOTION TO AMEND
[6] Amendments requiring leave under Rule 75(1) of the Federal Court Rules, 1998, should be allowed at any stage of an action for determining the real questions of controversy. See Canderel Ltd. v. Canada(C.A.), [1994] 1 F.C. 3, [1993] 2 C.T.C. 213, 157 N.R. 380, 93 D.T.C. 5357 (C.A.).
[7] The general rule is that an amendment should be allowed in the absence of prejudice to the opposing party and that, on a motion to amend, the Court should assume that the facts pleaded in the amendment are true. See Rolls-Royce plc v. Fitzwilliam (2002), 19 C.P.R. (4th) 1, 2000 CarswellNat 2973 (Fed. T.D.)
[8] It is also clear from the authorities (see Canderel) that any injustice to the other party required to resist an amendment should be one that is not capable of being compensated through an award of costs.
[9] On the other hand, leave to amend should be refused where it is plain and obvious that the party proposing the amendment could not succeed on it. See Apotex Inc. v. Eli Lilly and Co. (2001), 15 C.P.R. (4th) 129, 212 F.T.R. 300, 2001 CarswellNat 2390, 2001 FCT 1144; affirmed (2002), 22 C.P.R. (4th) 19, 2002 CarswellNat 2929, 2002 FCA 411.
[10] In the present case, the Defendants propose a series of amendments which, among other things, make the following allegations:
(a) The Plaintiffs have implemented an illegal scheme to coerce businesses in the Chinese community into signing unfair contracts and have generally conducted themselves illegally and have caused enormous damage to the Defendants and other businesses in the Chinese community;
(b) The Plaintiffs allow their dealers to make copies of TVB Programs and those dealers are making and renting their own copies with the full knowledge and consent of the Plaintiffs;
(c) The Plaintiffs have adopted a practice of launching law suits against people such as Mr. Lam who do not speak English, have few resources, and who are very vulnerable, in order to force them to do business with the Plaintiffs;
(d) During the litigation process, Video Box has contacted Mr. Lam and threatened to continue the law suit unless he agrees to do business with Video Box.
[11] In the Counterclaim, the Defendants claim damages in the amount of $1,000,000 for "coercion, extortions, forging documents, perjury, conspiracy, manipulation of and abusing legal process." They also claim punitive damages in the amount of $1,000,000. What the Defendants appear to mean by their recent assertions is that the allegations and evidence offered by the Plaintiffs for copyright infringement by the Defendants are concocted and false. They offer no indication of what damage they have suffered other than the general and vague allegation that the Plaintiffs' "illegal scheme" for coercing businesses into signing unfair contracts has "caused enormous damages to the Defendants and other business individuals in the Chinese community."
[12] The Defendants also say, however, that they have not been in the video store business for some time, so it is difficult to see how they can have suffered "enormous damages."
[13] The difficulty for the Defendants is that their proposed amendments do not comply with Rule 174 and do not contain a concise statement of the material facts upon which they rely. The Defendants simply do not address the facts pleaded by the Plaintiffs and their approach is to try and deflect the Court's attention away from the issue of copyright infringement by making vague accusations of "extortion" on the part of the Plaintiffs.
[14] It is well established that a bare assertion or conclusion is not an assertion of material fact. See, for example, Sunsolar Energy Technologies (S.E.T.) Inc. v. Flexible Solutions International, Inc. et. al. (2004), 34 C.P.R. (4th) 507, 2004 CarswellNat 3114, 2004 FC 1205.
[15] The proposed amendments would not allow the Plaintiffs to know the case they have to meet and would not give them fair and adequate notice of the Defendants' position. Counsel for the Defendants says that they will later provide the evidence and the details to support their broad and general assertions. But this does not remedy the situation. The Defendants general assertions are vague and speculative. In the same way that an action is not a fishing expedition and a plaintiff should not start an action in the hope that something will turn up, a defendant should not respond with vague and general defences in the hope that something will turn up. Also, settlement negotiations are privileged and should not be pleaded. See Canadian Media Corp. v. Canada (1991), 48 F.T.R. 68 (T.D.), affirmed (May 20, 1992), Doc. A-690-91 (Fed. C.A.).
[16] The Defendants' reliance upon vague and general assertions and conclusions, and their failure to provide the material facts to support their position, reveals the proposed amendments to be a desperate attempt to avoid responsibility for the specific acts alleged against them in the Statement of Claim. In addition, much of what they propose by way of amendment has dubious relevance for the material facts pleaded by the Plaintiffs.
[17] This being the case, to allow the amendments to the Statement of Defence and to permit the Counterclaim as proposed would severely prejudice the Plaintiffs because they would not know the material facts of the case they have to meet.
[18] Defendants' counsel requested at the hearing that, if the proposed amendments were not adequate or compliant, the Defendants be allowed to file further amendments.
[19] The difficulty with this request is that the Motion to Amend is really the Defendants' response to the Plaintiffs' motion for Summary Judgment. Without the amendments, the Defendants cannot begin to satisfy Rule 215, which says that a response to a motion for Summary Judgment shall not rest merely on allegations or denials of the pleadings but must set out specific facts showing that there is a genuine issue for trial. If the Defendants have any kind of case, this was the time to place it before the Court and substantiate it with material facts. The Defendants have failed to do this and, despite vague suggestions that they need more time, they have offered no reason for their failure that the Court can accept.
[20] In fact, even with the proposed amendments it could not be said that the Defendants have set out sufficient material facts showing that there is a genuine issue for trial. The general principles for the disposition of summary judgment motions in this Court were summarized by Madam Justice Tremblay-Lamer in Granville Shipping Co. v. Pegasus Lines Ltd., [1996] 2 F.C. 853, [1989] F.C.J. No. 481 (QL) (T.D.). Parties responding to a summary judgment do not, of course, have to prove all the facts of their case, but they have to put their best foot forward so that the Court can see if there is an issue that needs to go to trial. See MacNeil Estate v. Canada(Department of Indian and Northern Affairs), [2004] 3 F.C.R. 3, 2004 FCA 50. The Defendants have not done this and they have not complied with Rules 75 or 215.
[21] When I review what the Defendants have produced or said to date (Statement of Defence, Affidavits, Cross-Examination and Amended Defence and Counterclaim) I have to conclude that it amounts to little more than denials, protestations of lack of knowledge, vague and unsubstantiated counter accusations and, where the Plaintiffs present material facts that are difficult for the Defendants to explain, allegations that the Plaintiffs must be lying and committing perjury. None of this has the ring of authenticity about it that can only be established by bringing forward the material facts upon which they base their defence and counterclaim. Indeed, much of what the Defendants say cannot be reconciled with other things they say. For example, the Defendants allege that the Plaintiffs have consented to putting infringing copies of the movies in the market through their dealers. But the Defendants also produce a dealer contract which says precisely the opposite and which forbids copying. The Defendants also claim damages in the amount of $1,000,000 in their Counterclaim. But all they base this on is a vague allegation that the Plaintiffs have caused "enormous" losses to them and other businesses. This is hard to reconcile with some of the few material facts that the Defendants bring forward to the effect that they have not been in the video business for some time.
[22] The overall impression created by the Defendants materials is not that they have an answer to the Plaintiffs' claim but that their purpose is to drag these proceedings out through denial and obfuscation in the hope of discouraging the Plaintiffs and avoiding liability, or in the hope that some defence may present itself if they can only keep this matter going.
[23] It is tritelaw that a response to a motion for Summary Judgment must set out specific facts showing that there is a genuine issue for trial. Mere denials and vague counter accusations are not sufficient. Taking a "hard look" at the evidence, the facts adduced, and the Defendants' approach to this matter, I cannot see that there is a genuine issue for trial, and I believe the Plaintiffs have satisfied the burden imposed upon them by Rule 213 and the relevant case law, and this means, in accordance with Rule 216, that I must grant Summary Judgment accordingly.
[24] As part of the relief sought against Mr. Lam, the Plaintiffs are asking for $24,000 by way of statutory damages under section 38.1 of The Copyright Act. Where a plaintiff makes such an election the Court is directed by section 38.1(5) to consider "all relevant factors" including:
a) the good faith or bad faith of the defendant;
b) the conduct of the parties before and during the proceedings; and
c) the need to deter other infringements of the copyright in question.
[25] While the Court is satisfied that the Plaintiffs have established their case for infringement, there is still a significant amount that is not clear. I see some elements of bad faith in the way the Defendants have conducted themselves and the allegations they have made, and the Defendants have certainly not come forward and explained the material facts in the way they should have done. The really important issue in this case, however, is the need for deterrence, and this must be a significant factor given the nature of the films in issue and the nature of the video rental business. Consequently, I will set the statutory damage amount at $10,000.
ORDER
THIS COURT ORDERS that
1. The Defendants motion for an Amended Defence and Counterclaim is dismissed in that the proposed amendments and counterclaim do not comply with the Federal Court Rules, 1998, fail to provide the necessary material facts, and would seriously prejudice the Plaintiffs' right to know the case they have to meet; and
2. The Plaintiffs motion for Summary Judgment is allowed and the Court orders and adjudges as follows:
(a) The defendant Mr. Kien Phac Lam and his servants, agents, employees and anyone else under his control with knowledge of this order (the "Enjoined Persons") are hereby enjoined from, directly or indirectly:
(i) Reproducing the Plaintiffs' cinematographic works listed by title on Schedules "A" and "B" referred to in the Plaintiffs' Supplementary Motion Record (the "TVB Programs") or any substantial part thereof, in any material form whatever;
(ii) Selling, renting, distributing, exposing or offering for sale or rental, or exhibiting in public, any of the TVB Programs or any substantial part thereof, in any material form whatever;
(iii) Possessing any copies of the TVB Programs for the purpose of doing any of those acts listed in paragraph 2(a)(ii);
(iv) Importing any TVB Programs into Canada for the purpose of doing any of those acts listed in paragraph 2(a)(ii); and
(v) Otherwise infringing the Plaintiffs' copyright in the TVB Programs, or inducing infringement by others.
(b) The Enjoined Persons are hereby ordered to deliver-up to the Plaintiffs all infringing copies of the TVB Programs in their possession, concurrently upon being served with a copy of this Judgment.
(c) The Plaintiffs are granted leave to have a Writ of Delivery issued to the Sheriff or a Private Bailiff, directing the Sheriff or Private Bailiff to seize from the Enjoined Persons and to deliver without delay to Video Box Enterprises Inc. on behalf of the Plaintiffs, all infringing copies of the TVB Programs in the possession of the Enjoined Persons.
(d) The Sheriff or Private Bailiff may ask for the assistance of the local police in keeping the peace during the enforcement of the Writ of Delivery.
(e) The Plaintiffs shall recover from the Defendant Mr. Kien Phac Lam $10,000 in statutory damages and the costs of this motion at the usual rate because there was nothing complex about the motion.
(f) All amounts ordered payable under this order shall bear interest at the established rate until paid in full.
"James Russell"
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