Date:
20090119
Docket:
A-327-08
Citation:
2009 FCA 11
CORAM: LÉTOURNEAU
J.A.
EVANS
J.A.
TRUDEL
J.A.
BETWEEN:
PLUS MEDIA (CANADA) INC.
And
CALVIN XU (a.k.a. XI XU)
Appellants
and
CANADIAN
PRIVATE COPYING COLLECTIVE
Respondent
REASONS FOR JUDGMENT OF THE
COURT
(Delivered
from the Bench at Toronto, Ontario, on January 19, 2009)
TRUDEL J.A.
[1]
This is an
appeal arising from a decision by Mr. Justice O’Reilly (the Judge) dated June
9, 2008 [2008 FC 718].
[2]
The
respondent, Canadian Private Copying Collective (CPCC), is a non-profit
corporation whose mandate [deriving from the Copyright Act, R.S.C. 1985 c. C-30]
(Act) is to collect and distribute levies imposed on the importation and sale
of blank recording media, such as compact disks. The levies are established by
the Copyright Board and are set out in the Private Copying Tariff, 2005-2007, Supplement, Canada Gazette,
Part I, May 12, 2007
(Tariff).
[3]
In the
discharge of its mandate, CPCC began an action against Calvin
Xu (Mr. Xu), Plus
Media Inc. (PM) and Plus Media (Canada)
Inc. (PMC) [collectively the defendants in the Federal Court], in
order to collect levies allegedly owed by virtue of PM’s sale of blank CDs, as
well as interest, penalties, and costs. CPCC also sought an order requiring
PM, PMC and Mr. Xu to submit to an audit in order to quantify the amount owed
under the Tariff. The facts that follow are the
genesis of CPCC’s action against the defendants in the Federal Court.
[4]
In 2003,
acting upon information received previously from a third party, CPCC inquired
about PM’s enterprises by contacting Mr. Xu, PM’s sole shareholder. Mr. Xu
initially stated that PM had not been importing CD-Rs and eventually changed
his statement by saying the exact opposite two years later. Having admitted
that PM’s activities were caught by the Tariff, PM sent to CPCC a period report
and payment levy for the years 2004 and 2005.
[5]
Nevertheless,
as PM was still in default of its obligations under the Tariff, CPCC made
several requests in order to receive revised by-monthly reports from PM, none
of which were acknowledged by it.
[6]
Faced with
PM’s silence, CPCC set an audit of the company for October 18, 2005. This
audit was postponed twice at PM’s request for reasons which were later found to
be untrue or deceitful.
[7]
The audit
was finally scheduled for December 14th, but in vain. Upon their
arrival at PM’s headquarters, CPCC’s auditors were informed that PM was no
longer in business and that the premises were now those of PMC. Mr. Xu’s wife
was the only shareholder and sole director of PMC, which employed Mr. Xu. At
the hearing, we learned that PMC had since ceased doing business although it
has not been dissolved.
[8]
In the
Court below, the respondent sought several conclusions. However, the Judge
stated, "There is only one issue that is ripe for determination by the
Court; that is, should the Court order an audit and, if so, against whom?"
(at paragraph 16 of the reasons for judgment).
[9]
Having
examined the facts, the statutory framework, and the position of the parties,
the Judge concluded that an audit was required. He ordered PM, PMC and Mr. Xu
to "procure and make available to [CPCC]’s auditors (…) all of the
business, accounting and financial records of PM and PMC (…)" (at
paragraph 1 of the judgment).
[10]
Hence, the
present appeal instituted by PMC and Mr. Xu. PM, against which an order had
also been made, is not a party to this appeal as it was dissolved on May 8,
2006.
[11]
The
appellants argue that the Judge erred when making an order against PMC. PMC is
a separate corporation from PM. Unlike PM, it does not import or manufacture
blank recording media.
[12]
The
appellants also challenge the Judge’s conclusion on costs.
[13]
This
appeal will be dismissed on both grounds.
[14]
Given the
circumstances surrounding the dissolution of PM and the creation of PMC, the
absence of a clear distinction between the undertakings of the two corporations,
and the disappearance of PM’s business records while on the premises of PMC,
the Judge made no reviewable error in concluding that the evidence on record
was “strikingly similar” to the case of Canadian Private Copying Collective
v. Fuzion Technology Corp., 2006 FC 1284; affirmed 2007 FCA 335, and thus,
in issuing an order against PMC.
[15]
Similarly,
the Judge made no reviewable error in issuing an order against Mr. Xu. There
was evidence on record justifying his findings on Mr. Xu’s involvement in PM
and on his many misrepresentations and those of PMC’s employees to circumvent
CPCC’s efforts to verify PM’s compliance under the Act and the Tariff.
[16]
As for costs, the Judge exercised his discretion
and awarded costs against the defendants in the Federal Court. The appellants
argue that the Judge did not hear the defendants’ submissions before doing so.
However, we note that all parties were seeking their costs in the proceedings
below. Therefore, it was incumbent upon the defendants in the Federal Court to
expose their position in their pleadings if they felt that an award of costs
would be inappropriate under the circumstances. There is no reason to disturb
the Judge’s conclusion.
[17]
Therefore, this appeal will be dismissed with
costs.
"Johanne
Trudel"
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-327-08
APPEAL FROM A DECISION BY JUSTICE
O’REILLY OF THE FEDERAL COURT, DATED JUNE 9, 2008, (2008 FC 718) IN DOCKET
T-697-06.
STYLE OF CAUSE: PLUS
MEDIA (CANADA)
INC. v. CANADIAN PRIVATE COPYING COLLECTIVE
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: JANUARY 19, 2009
REASONS FOR JUDGMENT OF THE COURT BY: LÉTOURNEAU, EVANS, TRUDEL JJ.A.
DELIVERED FROM THE BENCH BY: TRUDEL J.A.
APPEARANCES:
|
Sammy Lee
Daniel Lawson
|
FOR THE APPELLANTS
|
|
David
Collier
|
FOR THE RESPONDENT
|
SOLICITORS OF RECORD:
|
Metcalfe, Blainey
& Burns, LLP
Markham, Ontario
|
FOR THE
APPELLANTS
|
|
Ogilvy Renault
LLP
Montréal, Quebec
|
FOR THE
RESPONDENT
|
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