Date: 20030114
Docket: A-93-00
Neutral citation: 2003 FCA 11
CORAM: STONE J.A.
SHARLOW J.A.
MALONE J.A.
BETWEEN:
MUSADIQ PARDHAN c.o.b as UNIVERSAL EXPORTERS
1106729 ONTARIO LTD. c.o.b. as UNIVERSAL EXPORTERS and JOHN DOE and
JANE DOE and OTHER PERSONS UNKNOWN TO THE PLAINTIFFS WHO OFFER
FOR SALE, SELL, IMPORT, MANUFACTURE, ADVERTISE OR DEAL IN
TRANSSHIPPED COCA-COLA PRODUCTS
Appellants
- and -
COCA-COLA LTD. AND COCA-COLA BOTTLING LTD.
Respondents
Heard at Toronto, Ontario, on Thursday, December 12, 2002.
Judgment delivered at Ottawa, Ontario, on January 14, 2003.
REASONS FOR JUDGMENT BY: MALONE J.A.
CONCURRED IN BY: STONE J.A.
SHARLOW J.A.
Date: 20030114
Docket: A-93-00
Neutral citation: 2003 FCA 11
CORAM: STONE J.A.
SHARLOW J.A.
MALONE J.A.
BETWEEN:
MUSADIQ PARDHAN c.o.b as UNIVERSAL EXPORTERS
1106729 ONTARIO LTD. c.o.b. as UNIVERSAL EXPORTERS and JOHN DOE and
JANE DOE and OTHER PERSONS UNKNOWN TO THE PLAINTIFFS WHO OFFER
FOR SALE, SELL, IMPORT, MANUFACTURE, ADVERTISE OR DEAL IN
TRANSSHIPPED COCA-COLA PRODUCTS
Appellants
- and -
COCA-COLA LTD. AND COCA-COLA BOTTLING LTD.
Respondents
REASONS FOR JUDGMENT
MALONE J.A.
[1] On December 19, 1995, Coca-Cola Ltd. and Coca-Cola Bottling Ltd. (collectively CCL) commenced an action against Musadiq Pardhan and 1106972 Ontario Limited (said to be carrying on business as "Universal Exporters") and others, claiming that they were infringing Coca-Cola's trademark and depreciating its goodwill by distributing, storing, trans-shipping and exporting Coca-Cola products. In this appeal, the appellants seek to set aside three orders made by Lutfy A.C.J. A brief procedural history is necessary in order to put the current issues in context.
[2] On December 19, 1995, the same day as the action was commenced, Joyal J. made an Anton Piller order on the ex parte application of CCL. That order required the appellants to permit CCL and its agents to enter the appellants' business premises at two locations in Ontario to search for and remove products and documents to be held by the Court for the purposes of the action.
[3] On January 8, 1996, MacKay J. made an order dealing with a review of the Anton Piller order made by Joyal J. He ordered, among other things, that Mustafa Pardhan would be added as a defendant in the action. He also issued an interlocutory injunction intended to preclude the defendants from exporting Coca-Cola products.
[4] CCL subsequently came to the conclusion that the appellants were exporting Coca-Cola products in breach of the injunction, and they commenced contempt proceedings. On July 29, 1997, Jerome A.C.J. (as he then was) made two orders on the ex parte application of CCL, supported by an affidavit from their counsel, as well as the affidavit of Michael Cowan, which provided surveillance and investigative evidence relating to the activities of Musadiq and Mustafa Pardhan. One was an order that Musadiq Pardhan and Mustafa Pardhan appear before the court to show cause why they should not be held in contempt of the injunction.
[5] The other order made by Jerome A.C.J. on July 29, 1997 was a second Anton Piller order, which required the appellants to permit CCL and its agents to enter the appellants' business premises and the Pardhan family home to search for and take away evidence to be held by the Court relating to the alleged exports. The order also required certain third parties to preserve any evidence that might be relevant to the allegations. Among the documents seized at the Pardhan residence pursuant to his order were three documents which the appellants contend were central to the finding of contempt by Lutfy A.C.J.
[6] On November 18, 1997, Jerome A.C.J. reviewed the second Anton Piller order and confirmed it, "without prejudice to the Defendant's ability to make any and all arguments with respect to the admissibility of evidence obtained during the execution of the Anton Piller order as against Musadiq Pardhan at the hearing of the contempt trial."
[7] Meanwhile, the appellants had moved to strike portions of the statement of claim that described the two primary claims. That motion was granted by Wetston J. (as he then was) on November 11, 1997, ((1997) 139 F.T.R. 223, (1997), 77 C.P.R. (3d) 501 ). On January 8, 1996, MacKay J. dismissed the action and dissolved the injunction issued on May 22,1998 ((1998), 149 F.T.R. 139, (1998), 81 C.P.R. (3d) 244). CCL appealed the decisions of Wetston J. and MacKay J. Those appeals were dismissed ((1999), 172 D.L.R. (4th) 31, (1999), 85 C.P.R. (3d) 489). The Supreme Court of Canada denied leave to appeal ([1999] S.C.C.A. No. 338).
[8] The contempt trial was scheduled to commence on April 27, 1998. By that date, the appellants were in possession of copies of the documents obtained under the second Anton Piller order. By letter dated March 2, 1998, the appellants requested further disclosure of the documents relating to the contempt allegations. By letter dated April 13, 1998, the appellants sent a more detailed request, which included a request that CCL produce all investigation notes relating to the contempt trial. The investigation notes were provided on April 23, 1998.
[9] On April 27, 1998, at the commencement of trial, the appellants filed and argued a formal motion which sought an order to stay the contempt hearing, or, alternatively, to exclude the evidence of the investigators, or, alternatively, for an adjournment. They alleged that their right to make full answer and defence had been prejudiced by the respondent's failure to disclose in a timely fashion the notes, reports and findings of their investigators. The motion was dismissed by Lutfy A.C.J. on April 30, 1998. He noted that CCL did not then intend to rely upon the investigation notes delivered April 23, 1998. He does not say whether he considered the possibility of exculpatory information being found in those notes, but he said, "If circumstances develop during the course of this hearing concerning timely disclosure, which are not presently known to the defendants, this decision will be without prejudice to whatever rights the defendants may have at that time."
[10] The contempt trial proceeded. Evidence was presented over several days in April and August, 1998. Oral argument was adjourned in August of 1998 to be completed during the week of December 15-18, 1998. On December 3, 1998, before submissions on the merits were made, the appellants filed a notice of motion for an order rescinding the two ex parte orders made by Jerome, A.C.J. on July 29, 1997, on the basis that CCL had obtained these orders without providing full and frank disclosure of all material facts to the Court. By order dated January 12, 1999, Lutfy A.C.J. rejected those motions. He found no inconsistencies or material omissions in the respondents' materials. He also found no intention on the part of CCL to mislead the Court, characterizing the relevance of the alleged material omissions, identified by the appellants, as being questionable at best. Taking into consideration all of the additions or corrections suggested by the appellants, he concluded that the two ex parte orders of Jerome A.C.J. should stand.
[11] Submissions on the contempt matter were rescheduled to April of 1999. The appellants made no further objections to the admission of any evidence. Nor did they argue before Lutfy A.C.J. that the execution of the second Anton Piller violated their rights under section 8 of the Canadian Charter of Rights and Freedoms, or that evidence from the execution of that Anton Piller order should have been excluded from the contempt trial under subsection 24(2) of the Charter.
[12] Lutfy A.C.J. made an order dated November 16, 1999, finding Musadiq Pardhan guilty of contempt of the injunction for participating in the export of Coca-Cola products. Lutfy A.C.J. provided a detailed review of the evidence at trial, and, in his analysis, the evidence established beyond any reasonable doubt Mr. Pardhan's role in a scheme to circumvent the injunction by using fictitious names and other family members to carry on the export business. By order dated January 20, 2000, Lutfy A.C.J. imposed on Musadiq Pardhan a penalty of $4,000 plus costs of $95,000. Mustafa Pardhan was acquitted.
[13] The respondents in the action, except Mustafa Pardhan, appealed all three orders of Lutfy A.C.J. That is the appeal now before this Court.
[14] Two errors of law are now advanced in support of the current appeal, namely:
a) The failure of Lutfy J. to set aside the Anton Pillar order dated July 29, 1997, which was based on material non-disclosure of facts and misleading evidence, as well as a finding that the original material in support of the Anton Piller order used in the contempt trial was accurate and complete. (The Evidence Argument)
b) The determination that the respondents' search pursuant to the Anton Piller order was not in breach of the appellants' s. 8 Charter rights to be free from unlawful search and seizure (Canadian Charter of Rights and Freedom, Constitution Act, 1982), including the failure to properly consider all relevant circumstances required under Section 24 of the Charter in connection with the respondents' search. (The Charter Argument)
[15] The appellant's overall theory is that the second Anton Piller order was illegally obtained, and accordingly three particular documents seized from the Pardhan residence should be returned to Mr. Pardhan, thereby destroying the respondent's circumstantial case and the basis for the contempt finding.
THE EVIDENCE ARGUMENT
[16] The appellants argue that the second Anton Piller order should have been set aside. The principal deficiency advanced is that the affidavits upon which these orders were granted did not provide the full and frank disclosure which is required in ex parte motions, particularly in the case of an Anton Piller application.
[17] The affidavit of Michael Cowan, a senior investigator at Amera International, a firm hired by CCL, relied on information taken from the reports of other investigators at that company. While his affidavit placed Mr. Musadiq Pardhan at a Price Club office location on May 30, 1997, the typed investigation notes, replete with handwritten additions, suggest that only Mr. Pardhan's vehicle was observed at the Price Club on that date. The appellants also note that another statement in the investigation notes was not included in the Cowan affidavit; that statement being to the effect that at no time was Mr. Pardhan seen tendering payment for any purchases of Coca Cola products at the Price Club.
[18] The appellants also complain that the Cowan affidavit amounted to "double hearsay," since Mr. Cowan based his disposition on a report prepared by his supervisor, Ed Reiken, which summarized the notes of the actual field investigators. It is argued that this "double hearsay" should have been clearly identified in the Cowan affidavit and was not.
[19] Their final argument is in connection with the essential requirements upon which an Anton Piller order must be founded; that is a very strong prima facie case must exist against the named defendants (see Anton Piller K. G. v. Mfg. Processes Ltd., [1976] Ch.55, [1976] 2. W.L.R. 162; Nintendo of America Inc. v. Coinex Video Games Inc., [1983] 2 F.C. 189). In this case the respondents failed to disclose that its case was novel and unknown in Canadian trademark law; a failure said by the appellants to be a sufficient basis upon which to vacate the Anton Piller order.
[20] CCL argues that the appellant's submissions on this evidence argument are without merit and, in any event, that they are out of time to appeal; this being an appeal from an interlocutory order. I will deal with the timeliness argument first.
[21] By notice of appeal dated February 17, 2000, the appellants appealed all three orders issued by the Judge. According to the respondents, it is improper to characterize the January 12, 1999 order refusing to rescind the second Anton Piller order as if it were part of the contempt trial or as a ruling on the admissibility of evidence during the contempt trial. Section 27 of the Federal Court Act, R.S., 1985, c. F-7, as amended, gives this Court its jurisdiction to hear appeals from judgments and orders of the Trial Division, whether final or interlocutory. However, the interlocutory order should have been appealed in compliance with subsection 27(2) within ten days. It was not. Accordingly, CCL argues that only the Trial Division has jurisdiction to extend that time period (see Vojic v. Canada (Attorney General of Canada) (1989) 96 N.R. 390 (FC.A.)).
[22] In my analysis, the January 16, 1999 order is not interlocutory in nature when viewed in the context of the entire contempt proceeding First, one must remember the purpose of the two orders made by Jerome A.C.J. The Anton Piller order was to preserve documents, thus supporting the show cause order.
[23] Second, it is not disputed that the Judge followed a practice of accepting from the appellants formal motions to address major issues. For example, at the commencement of the trial, the appellants filed, and argued unsuccessfully, a motion to stay the contempt trial due to the respondents' failure to disclose the investigation notes in a timely way.
[24] The January 12, 1999 order also originated from a formal motion filed by the appellants. Lutfy A.C.J. was obliged to issue his order quickly so that the parties would know what case they were required to address during oral argument in April 1999. It would therefore, in my analysis, be perverse to require the appellants to file a series of notices of appeal for the various rulings made by the Judge once the taking of evidence commenced and before the final January 20, 2000 order rendered him functus. Given the manner in which the trial was conducted, the appellants were entitled to view his various orders as appealable in the normal way once the penalty order was issued. In the unusual circumstances of this case, interlocutory orders would only be those that predated the commencement of the contempt trial.
[25] I do, however, agree with CCL that the Judge did not commit any errors of law in concluding that the affidavit material provided Jerome, A.C.J. with full and frank disclosure of all relevant and material evidence known at the time. The Cowan affidavit was careful to distinguish between observed conduct and the belief of field investigators and its use was appropriate, since he was the senior investigator in charge of the surveillance operation and able to summarize the large volume of information amassed through many hours of surveillance.
[26] In any event, an inflexible application of the duty of full and frank disclosure is to be avoided and failure to make full disclosure is not always fatal. Ex parte applications are, of necessity, brought on an urgent basis with little time to prepare supporting materials, and orders should not be set aside on account of mere imperfections in the affidavits or because inconsequential facts have not been disclosed. (see Robert J. Sharpe, Injunctions and Specific Performance, Looseleaf Edition (Toronto: Canada Law Book, 2001), para. 2.45)
[27] Accordingly, even if the Judge had made a finding of material non-disclosure, such a finding would not have led automatically to the discharge of the Anton Piller order. Rather, the effect of non-disclosure would have remained as a matter within his discretion. In that context, it is clear that the learned Judge was satisfied, on a totality of the evidence before him, that the orders of Jerome A.C.J. ought to have been made. (See Ontario Realty Corp. v. P. Gabriele & Sons Ltd. (2000), 50 C.P.C. (4th) 300 at 321 to 325 (Ont. S.C.J. - Com. List); Adobe Systems Inc. v. KLJ Computer Solutions Inc. (1999), 1 C.P.R. (4th) 177 at 189 and 196 to 198 (F.C.T.D.); Capitanescue v. Universal Weld Overlays Inc. (1996), 71 C.P.R. (3d) 37 at 46 (Alta. Q.B.); Cullom Machine Tool & Die, Inc. v. Bruce Tile Inc. (1990), 34 C.P.R. (3d) 296 at 300 to 305 (F.C.T.D.); Brink's Mat Ltd. v. Elcombe, [1988] 1 W.L.R. 1350 (C.A.), per Gibson L.J. at 1357, per Balcombe L.J. at 1358 and per Slade L.J. at 1359). In my view, that conclusion was amply supported by the evidence. I see no basis for intervention by this Court.
[28] The appellants suggest that CCL, by not informing Jerome A.C.J. that its trade-mark action against the appellants was novel, committed a critical error. However, the relative strength of trade-mark action is immaterial, since it was the appellants' violation of the injunction granted by MacKay J. that was the foundation of the respondent's strong facie prima case. The second Anton Piller order was sought in support of a contempt of court show cause order and not a trade-mark infringement action.
THE CHARTER ARGUMENT
[29] The appellants also argue that their right under section 8 of the Charter to be free from unreasonable search and seizure has been breached because, given the failure to make full and frank disclosure, the second Anton Piller order was illegally obtained. The appellants urge that all evidence seized under the second Anton Piller order should be excluded from the contempt trial in accordance with subsection 24(2) of the Charter. The respondents argue that the Charter does not apply, and in any event the appellants ought not to be permitted to make this Charter argument on appeal because they failed to raise it at trial.
[30] Normally, the Charter does not apply to Court orders issued in private disputes (see Dolphin Delivery v. Retail, Wholesale and Department Store Union, W.D.S.U. Local 550, [1986] 2 S.C.R. 573). However, the appellants rely on the Supreme Court of Canada decision in Vidéotron Ltée v. Industries Microlec Produits Electroniques Inc., [1992] 2 S.C.R. 1065. There, the majority decided that under the Quebec Civil Code, when the element of civil contempt of court is also part of the proceeding, then the investigation and prosecution makes the procedure quasi-penal in nature and takes on an element of public law. Although the line between criminal and civil contempt is blurred, the majority does not go as far as to say that proceedings for civil contempt under the Quebec Civil Code attracts Charter scrutiny. In a concurring judgment, Lamer C.J. goes beyond the majority judgment, and finds that a person who is the subject of such proceedings is entitled to Charter protection. In dissent, L'Heureux-Dubé J. finds the opposite, that civil contempt under the Quebec Civil Code is rooted in private law, and this dominates any of its public law aspects.
[31] In my view, it is not necessary to decide in this case whether a person who is charged with contempt of court for disobeying a court order in a civil matter is entitled to the protection of the Charter, because I am not persuaded that this is an appropriate case to consider a Charter argument that was raised for the first time on appeal. I accept the submission of the respondents (paragraph 87 of their memorandum of fact and law) that the failure of the appellants to raise their Charter argument at trial denied the respondents the opportunity to present evidence at trial to contest the Charter argument.
[32] Two other factors support my conclusion that we should not consider the appellants' Charter argument at this stage. One is that no Charter argument was raised before Lutfy A.C.J., which means that this Court does not have the benefit of his reasoning and analysis on the point. The other is that the appellants' Charter argument is based primarily on their allegation that the respondents failed to make full and frank disclosure when seeking the second Anton Piller order. That allegation was rejected by Lutfy A.C.J. in the context of the main attack on the Anton Piller order, thus removing the factual foundation for the appellants' Charter argument.
[33] I would dismiss the appeal with one set of party and party costs payable to the respondents.
"B. Malone"
J.A.
"I agree
A.J. Stone
J.A."
"I agree
K. Sharlow
J.A."
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
DOCKET: A-93-00
STYLE OF CAUSE: MUSADIQ PARDHAN ET AL v. COCA-COLA LTD. ET AL
PLACE OF HEARING: Toronto, Ontario.
DATE OF HEARING: December 12, 2002.
REASONS FOR JUDGMENT BY:MALONE J.A.
CONCURRED IN BY: STONE J.A.
SHARLOW J.A.
DATED: January 14, 2003
APPEARANCES BY:
Mr. David A. Seed FOR THE APPELLANTS
Mr. Christopher J. Pibus/Mr. James Buchan FOR THE RESPONDENTS
SOLICITORS OF RECORD:
Mr. David A. Seed FOR THE APPELLANTS
Muir, Seed & Short
Barristers & Solicitors
468 Elizabeth Street
Burlington, Ontario.
L7R 2M2.
Mr. Christopher J. Pibus/Mr. James H. Buchan FOR THE RESPONDENTS
Gowling Lafleur Henderson LLP
Barristers & Solicitors
Suite 4900, Commerce Court West
Toronto, Ontario.
M5L 1L3
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