Date: 20070205
Docket: T-898-05
Citation: 2007 FC 120
Ottawa, Ontario, February 5,
2007
PRESENT: THE HONOURABLE MADAM JUSTICE DAWSON
BETWEEN:
HYUNDAI AUTO CANADA, a
division of
HYUNDAI MOTOR AMERICA
Plaintiff
and
CROSS CANADA AUTO BODY SUPPLY (WEST) LIMITED,
CROSS CANADA AUTO BODY SUPPLY (WINDSOR) LIMITED and
AT PAC WEST AUTO PARTS ENTERPRISE LTD.
Defendants
REASONS FOR ORDER AND ORDER
[1] To a person with a hammer, everything looks
like a nail. The relevance of this aphorism to the motion before the Court is
that the Court's contempt powers should not be engaged prematurely or for some
collateral purpose.
[2] The
facts before the Court are not in contention. The plaintiff sued the
defendants alleging that they are importing and selling automobile parts in Canada
that bear the plaintiff's trade-marks but do not originate from the plaintiff.
The defendants say that they are "grey marketers" who obtain their
parts from the same manufacturing sources as the plaintiff. Thus, they say,
they cannot be liable for infringement or passing off because there is no
deception as to the source of the parts.
[3] The
defendants served their affidavit as to documents. The plaintiff, as it was
entitled to do pursuant to Rule 228(2) of the Federal Courts Rules,
SOR/98-106 (Rules), requested copies of the defendants' productions listed in Schedule
1 of the defendants' affidavit as to documents. In response, the defendants
forwarded to the plaintiff copies of its productions on February 28, 2006.
However, the defendants redacted the name of its supplier of the relevant
parts. Meanwhile, the defendants moved for an order returnable on February 27,
2006 relieving them from the obligation to produce documents disclosing the
identity of the source of the parts on the ground that the information is not
relevant. In the alternative, the defendants sought an order designating the
identity of the parts supplier to be confidential, with access restricted to “counsel’s
eyes only”.
[4] By
order dated March 6, 2006, Prothonotary Milczynski dismissed the defendants'
motion, finding the identity of the source of the parts to be relevant and
finding there to be no basis in law for the confidentiality order sought by the
defendants.
[5] The
appeal of that order was dismissed by Mr. Justice Phelan, by order dated
September 20, 2006.
[6] An
appeal of that order to the Federal Court of Appeal was filed on September 29,
2006. On January 9, 2007 Mr. Justice Malone of the Federal Court of Appeal
dismissed the defendants' motion for an order staying the order of Justice
Phelan. Justice Malone was of the view that the evidence adduced by the
defendants did not demonstrate irreparable harm.
[7] During
this time two notable things did not happen. The defendants did not produce
unredacted copies of the documents at issue. The plaintiff did not request
such production. Instead on December 1, 2006, plaintiff's counsel wrote to the
defendant's counsel stating as follows:
We are writing to put you on
notice that we will be bringing a motion to find your clients in contempt of
the order of Justice Phelan, dated September 20, 2006, as your clients have
failed to disclose the identity of the source from which your clients obtain
parts marked with the plaintiff’s trade-mark. That motion shall be returnable
Monday, December 11, 2006.
We are also putting you on notice
that we intend to advise the Judge hearing our motion for an interlocutory
injunction that your clients have failed to comply with Justice Phelan’s
order. We will request that the Judge draw an adverse inference from your
clients’ failure to comply with the order, and request that it be taken into
account in determining an equitable order.
[8] The
motion referred to for an injunction was heard on December 5, 2006 and
dismissed by reasons dated December 18, 2006.
[9] Contempt
proceedings were commenced by the plaintiff. A motion was filed on December 4,
2006, returnable on December 11, 2006, seeking an order under Rule 467(1) of
the Rules. That Rule provides:
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467.(1) Subject to rule 468, before a person may be found in
contempt of Court, the person alleged to be in contempt shall be served with
an order, made on the motion of a person who has an interest in the
proceeding or at the Court's own initiative, requiring the person alleged to
be in contempt
(a) to appear before a judge at a time and place
stipulated in the order;
(b) to be prepared to hear proof of the act with which
the person is charged, which shall be described in the order with sufficient
particularity to enable the person to know the nature of the case against the
person; and
(c) to be prepared to present any defence that the person
may have.
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467.(1) Sous
réserve de la règle 468, avant qu’une personne puisse être reconnue coupable
d’outrage au tribunal, une ordonnance, rendue sur requête d’une personne
ayant un intérêt dans l’instance ou sur l’initiative de la Cour, doit lui
être signifiée. Cette ordonnance lui enjoint :
a) de comparaître devant un juge aux date, heure et lieu
précisés;
b) d’être prête à entendre la preuve de l’acte qui lui est
reproché, dont une description suffisamment détaillée est donnée pour lui
permettre de connaître la nature des accusations portées contre elle;
c) d’être prête à présenter une défense.
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[10] The
plaintiff’s motion was, for reasons that are not wholly clear, adjourned to the
first general sitting of the Court following the decision of the Court of
Appeal with respect to the defendants' motion for a stay. Ultimately, the
motion for an order under Rule 467(1) was returned on Monday, January 15, 2007.
[11] It
is, with respect, not obvious to me why contempt proceedings were commenced in
these circumstances.
[12] The
legal profession is based upon a long tradition of professional courtesy and
etiquette. While I accept the explanation of counsel for the plaintiff that he
believed that such a letter would not have had any effect, at the least such a
letter would provide comfort to the Court that the defendants’ counsel were on
clear notice that the plaintiff was not prepared to put the matter on hold
while the defendants continued to seek a decision favorable to them. It would
also have been, in my respectful view, consistent with professional courtesy.
[13] Further,
if the plaintiff’s goal is to obtain unredacted copies of the documents, the
more direct, expeditious and cost-effective way of achieving that result would
be by way of a motion seeking production of the documents and a significant
award of costs.
[14] Instead,
pursuit of a contempt remedy requires an initial motion for an order under Rule 467(1).
If obtained, it is followed by a second attendance, in all probability at a
special sitting of the Court. There, the moving party must prove all of the
constituent elements of contempt by way of oral evidence (unless otherwise
ordered by the Court) that establishes proof of contempt beyond a reasonable
doubt.
[15] The
Court's powers in respect of contempt are significant, reflecting the need to
preserve respect for the proceedings, processes and orders of the Court. That
said, those powers are tools, and like a hammer, contempt powers should not be
trivialized or invoked when they are premature or not required.
[16] As
for the defendants, their position does not, in my respectful view, seem
to reflect a proper appreciation of their obligations. Their response to the
threatened contempt proceeding was to advise that there was no merit in the
motion because they had filed a motion seeking a stay of Justice Phelan's order
and that there was no "positive" order compelling them "to
produce the documents in question or by [a] specific deadline". These
responses are not, in my view, well-founded for the following reasons.
[17] First,
even if the orders of this Court were made in error, and I certainly do not say
that they were, unless stayed, those orders must be obeyed. It is well settled
law that the ultimate invalidity of an order is no defense to an allegation of
contempt (see, for example, Canada (Human Rights Commission) v. Taylor,
[1990] 3 S.C.R. 892 at page 974.
[18] Second,
the defendants overlook their obligations under Rule 228(2) which reads as
follows:
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228(2)
A party who has
served an affidavit of documents on another party shall, at the request of
the other party, deliver to the other party a copy of any document referred
to in subsection (1), if the other party pays the cost of the copies and of
their delivery.
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228(2) La partie qui a signifié son affidavit de documents à une autre
partie lui remet des copies de tout document visé au paragraphe (1) si
celle-ci lui en fait la demande et paie le coût de reproduction et de
livraison des copies.
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[19] As
Justice Phelan noted at paragraph 5 of his reasons, cited as 2006 FC 1127,
"[t]he rule on production of documents is that the whole of the document
is produced". From the time the plaintiff requested delivery of the
documents at issue, the defendants were obliged to comply, and their failure to
obtain relief from that obligation alters nothing.
[20] During
oral argument, I inquired of counsel why an order should not issue requiring
the defendants to disclose unredacted copies of their productions within a
specified period of time, failing which, a show cause order would issue.
Counsel for the defendants was not prepared to deal with that issue. Because I
had previously refused the defendants’ request for an adjournment on the ground
that lead counsel was otherwise engaged, I considered it fair to allow the
defendants a short period of time in which to provide written submissions on
the point. Parenthetically, I note that the adjournment was refused because
the matter had already been adjourned once, further delay could well be
prejudicial to the plaintiff, the facts and law raised are not in my view
difficult, and the fact that senior counsel was otherwise engaged did not
strike me, in the circumstances, as a reason which justified an adjournment.
[21] In
the supplementary written submissions that were later filed, the defendants
submit that such an order should not issue because:
1. It "is not in the interests of justice to compel [the
defendants] to produce confidential and commercially-sensitive information and
where such information may not be ultimately relevant. This is especially the
case where the outcome will result in grave prejudice and irreparable
harm" to the defendants.
2. It would be "inappropriate" to grant to the
requested production before the appeal of Justice Phelan's order is heard and
determined.
3. The disclosure of the identity of the source of the parts is
"the very subject of the Appeal. If this Court grants the Request for Production
at this juncture, the authority of the Federal Court[s] will be usurped"
and the appeal "will be predetermined without an assessment of the merits
by the Federal Court of Appeal".
4. The appeal is "nearing the final stages" and the
plaintiff will not be prejudiced if production of the documents is considered
following the determination of the appeal, given that “the Plaintiff by its own
conduct demonstrates that this matter is not urgent.”
[22] With
respect, these arguments are not new. They are the very arguments dismissed
variously by Prothonotary Milczynski, Justice Phelan, and Justice Malone.
Therefore, an order will issue compelling disclosure by a fixed period of
time. On proof of any failure to comply with this order, an order will issue
under Rule 467(1).
[23] In
the light of the above reasons, I believe each party should bear their own
costs.
ORDER
THEREFORE,
THIS
COURT ORDERS THAT:
1. The defendants are to deliver unredacted copies of the
documents listed in Schedule 1 of their affidavit as to documents to counsel
for the plaintiff on or before February 12, 2007.
2. Failing which, on proof by affidavit evidence of such a
failure to comply, an order will issue under Rule 467(1) in respect of
non-compliance with both the order of Mr. Justice Phelan and this order.
3. No costs are awarded.
“Eleanor
R. Dawson”
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