Date: 20100610
Docket: A-627-08
Citation: 2010 FCA 151
CORAM: LÉTOURNEAU
J.A.
NOËL
J.A.
TRUDEL
J.A.
BETWEEN:
9038-3746 QUEBEC INC., 9014-5731 QUEBEC
INC.,
ADAM CERRELLI, CARMELO
CERRELLI
Appellants
and
MICROSOFT CORPORATION
Respondent
REASONS FOR JUDGMENT
LÉTOURNEAU J.A.
The questions on appeal
[1]
Carmelo Cerrelli
(the appellant) pleaded guilty to two charges of contempt of court arising at
two different dates out of different acts. The violations for the first date
occurred between October 31, 2006 and May 11, 2007 and on October 31, 2007 for
the second date. The impugned acts consisted of a breach of a permanent
injunction issued against the appellant, his corporations and Adam Cerrelli.
The charges read:
a. disobeying
paragraph 13 of Harrington J.’s Judgment by:
(i) selling 7
counterfeit copies of software bearing the trade-mark MICROSOFT; and
(ii) possessing
for the purpose of selling and distributing 545 counterfeit units of software
bearing the trade-mark MICROSOFT;
amounting to
passing-off, trade-mark infringement, and depreciation of goodwill contrary to
sections 7(b), 7(c), 19, 20 and 22 of the Trade-marks Act; and
(b) disobeying
paragraph 12 of Harrington J.’s Judgment by possessing for the purpose of
selling and distributing 88 counterfeit units of software amounting to a breach
of section 27(2)(d) of the Copyright Act.
[2]
He appeals
against the legality and the severity of the sentence imposed by Beaudry J. of
the Federal Court (judge). The judge ordered that the appellant pay a fine of
$50,000 for each offence, within 120 days from the date of his order, failing
which the appellant would have to serve a term of imprisonment of sixty (60)
days.
The appellant’s grounds of appeal
[3]
In his
written submissions, the appellant submits that the judge:
a) exercised his
discretion in a vacuum, omitting to consider the facts that were presented to
him during the hearing;
b) erred in fact
by failing to appreciate the appellant’s financial circumstances;
c) determined
the sentence in total absence of proof of the appellant’s mens rea;
d) misinterpreted
and misapplied the law and jurisprudence jointly submitted by him and the
respondent;
e) erred in
principle when considering similar facts and situations in his determination of
the sentence; and
f) issued a
decision which violates the appellant’s right to liberty under section 7 of the
Canadian Charter of Rights and Freedoms (Charter).
The standard of review applicable
[4]
The
standard of review is not in dispute. It was established by the Supreme Court
of Canada in R. v. M. (C.A.)., [1996] 1 S.C.R. 500. At
paragraph 90, the standard is thus summarized:
Put simply,
absent an error in principle, failure to consider a relevant factor or an
overemphasis of the appropriate factors, a court of appeal should only
intervene to vary a sentence imposed at trial if the sentence is demonstrably
unfit.
[5]
This
standard is applicable in the present instance because, “in contempt cases, the
usual principles of sentencing apply”: see Canada v. Canadian Liberty Net,
[1996] 1 F.C. 787, at page 801 (F.C.A.).
Whether the judge determined the sentence
in total absence of the appellant’s mens rea
[6]
There is
no merit in this ground of appeal. The appellant pleaded guilty. A guilty plea
is an admission that the charge is well founded in fact and in law. It is an
acknowledgement that the material as well as the intentional elements of the
offence charged were present in the acts committed: see subsection 606(1.1) of
the Criminal Code. The appellant cannot at the sentencing level argue as
a mitigating factor that he did not have the required mens rea.
Whether
the judge made errors in principle, failed to consider a relevant factor or
overemphasized appropriate factors
[7]
It is not
necessary to consider all the appellant’s grounds of appeal. In his contempt
order, the judge enumerated the decisions, evidence, submissions and
jurisprudence that be considered as well as the legislation applicable in the
circumstances, namely Rule 472 of the Federal Courts Rules. The judge
proceeded to render judgment by means of a short speaking order which makes no
explicit assessment of the aggravating and mitigating factors and does not
indicate the weight that he gave them. Without ruling out entirely the
possibility of dealing with a contempt of court sentence by means of a speaking
order, it would have been much more helpful if reasons for order had been
issued or if the speaking order had been more detailed.
[8]
In any
event, all the material that was before the judge is before us and we are in a
position to determine whether it was open to the judge to pass the sentence
that he did.
[9]
As for the
appellant’s complaint that, in imposing a custodial sentence, the judge
misinterpreted the law applicable to first offender, there is no merit to the
argument. The judge did not impose a sentence of imprisonment. He imposed
fines.
[10]
In
addition, there is no firm rule that a first offender on a contempt of court
cannot receive a custodial sentence. As Harrington J., who issued the permanent
injunction pointed out, the appellant “proved himself time and time again to be
a liar and a scofflaw”. His conduct “both before and during these proceedings
has been dismissive of law and order, and [his] failure to provide appropriate
records, despite court order, demonstrates the necessity of deterring other
infringements of the copyrights in question”.
[11]
Harrington
J. also found that the appellant “had little regard for truth at discovery at
trial” and that “his behaviour was reprehensible, scandalous and outrageous”.
It was clear for Harrington J. that the appellant and his corporations
“acted in bad faith” and were “caught up in a web of deceit which amply
demonstrates their utter disregard for the process of this Court”.
[12]
That the
appellant showed a total disregard for the law and a malicious and selfish
contempt for the courts is evidenced in the following two facts.
[13]
The
appellant’s flouting of the court’s permanent injunction came after he was
condemned to pay $500,000 (jointly with corporate defendants) in statutory
damages, $100,000 in punitive damages, $1,410,000 in costs plus the Canadian
equivalent of US $175,715.23.
[14]
Obviously,
money sanctions did not amount to sufficient individual deterrence.
[15]
Moreover,
shortly after Harrington J.’s decision, the appellant transferred his
residential property to his sister for $1.00 who in turn transferred it to the
appellant’s wife for $750,000. Again, this behaviour of the appellant evidences
his intent to defeat the Court’s order to pay damages and costs to the
respondent.
[16]
All these
facts were before the judge when he considered what would be an appropriate
sentence in this case. They certainly tend to show that the appellant was not a
first offender as regards court orders.
[17]
After the
appellant’s manoeuvre to transfer his residential property so as to avoid the
payment of damages and defeat the Court’s order, I find it beyond reason that
he would now claim that the fines are too heavy and that the judge failed to
consider the appellant’s capacity to pay the fines imposed.
The fitness of the sentence
[18]
Contempt
of court is a serious offence. It is a challenge to the judicial authority
whose credibility and efficiency it undermines as well as those of the
administration of justice. It is even a more serious offence when, as in this
case, the unlawful acts are motivated by greed and, in addition to a challenge
to the judicial authority, they also amount to violations of the law, i.e. the Trade-marks
Act and the Copyright Act.
[19]
The
sentence imposed in circumstances like the present one must be such as to deter
the offender from repeating his unlawful behaviour as well as other persons who
would be tempted to commit the same kind of offences.
[20]
The
appellant has not convinced us that the sentence is demonstrably unfit.
[21]
For these
reasons, I would dismiss the appeal with costs.
“Gilles
Létourneau”
“I
agree.
Marc Noël J.A.”
“I
agree.
Johanne Trudel J.A.”
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