Date: 20030801
Docket: T-2556-97
Citation: 2003 FC 943
Ottawa, Ontario, Friday the 1st day of August 2003
PRESENT: The Honourable Madam Justice Dawson
BETWEEN:
MAYFLOWER TRANSIT, INC.
Plaintiff
- and -
BEDWELL MANAGEMENT SYSTEMS INC.,
MAYFLOWER MOVING SYSTEMS INC.
and JAMES R. BEDWELL
Defendants
[1] This is a proceeding under Rules 466 and 467 of the Federal Court Rules, 1998 by which Bedwell Management Systems Inc. ("BMS"), Mayflower Moving Systems Inc. ("MMS") and James R. Bedwell were required by a show cause order to appear before a judge to hear proof with respect to an alleged contempt of Court, and present any defence which they might have. The corporate defendants were not represented by counsel in this proceeding and did not appear in Court to respond to the allegation of contempt contained in the show cause order. Mr. Bedwell did appear. He was not represented by counsel.
HISTORY OF THE PROCEEDING
[2] On November 25, 1997, the plaintiff commenced this action against the defendants seeking a declaration that the defendants had infringed its exclusive right to a number of registered trade-marks which involved the Mayflower name and design. The plaintiff also sought interim, interlocutory and permanent injunctions restraining the defendants from infringing those trade-marks. Subsequently, on January 19, 1998, the defendants entered into a consent order before Mr. Justice Rothstein whereby, among other things, it was ordered that:
1. The Defendants, their officers, directors, agents, employees, licensees and any person acting under the instructions or with consent or authority of or in concert with the Defendants, are hereby restrained, on an interlocutory basis until trial or further Order of this Court, from:
[...]
c) Using and/or distributing stationery, including letterhead, business forms and literature including flyers and brochures which bear the Mayflower Marks [as defined in the Notice of Motion] and the trade name Mayflower;
[...]
(e) Having the Defendants' employees wear or bear in any manner uniforms which display the Mayflower Marks [as defined in the Notice of Motion] and the trade name Mayflower.
[3] On September 15, 2000, the defendants were found by Mr. Justice McKeown to be in contempt of this Court in that they had breached paragraphs 1(c) and (e) of the consent order of January 19, 1998 by arranging to deliver a flyer bearing the Mayflower trade-mark and by permitting an employee to wear a T-shirt which referred to Mayflower. In consequence, Mr. Justice McKeown imposed a fine of $5,000.00 against each corporate defendant and a fine of $3,000.00 against Mr. Bedwell. Costs were to be paid by the defendants as they agreed, or in proportion to their liability for the fines.
[4] Thereafter, on July 26, 2001, Mr. Justice Lemieux of this Court granted summary judgment against the defendants ("judgment"). The judgment records that the defendants neither appeared on the return of the motion for summary judgment nor filed responsive materials. Of relevance to the present proceeding for contempt is paragraph 3 of the judgment. It was thereby ordered that:
3. The Defendants are hereby ordered to forthwith cause the change of Mayflower Moving Systems Inc. to a name that does not include any of the Mayflower Marks or any mark or name confusingly similar thereto.
[5] On August 2, 2002, Prothonotary Lafrenière issued the show cause order referred to above. The acts with which the defendants were charged (to use the wording of Rule 467(1)(b)) were that:
2. The material facts alleged by the Plaintiff against the Defendants, Bedwell Management Systems Inc., Mayflower Moving Systems Inc., and James R. Bedwell are:
(a) By judgment of the Honourable Mr. Justice Lemieux dated July 26, 2001, the Defendants were ordered to forthwith cause the change of the name Mayflower Moving Systems Inc. to a name that does not include any of the Mayflower Marks or any mark or name confusingly similar thereto; and
(b) As of July 2, 2002, the Defendants have failed to cause the change of the corporate name Mayflower Moving Systems Inc. to a name that does not include any of the Mayflower Marks or any mark or name that is not confusingly similar to the Mayflower Marks. The corporate name Mayflower Moving Systems Inc. is still listed in the Province of Ontario Ministry of Consumer and Commercial Relations Companies Branch directory.
[6] The show cause order required that it be served upon the defendants by personal service on James R. Bedwell, on his own behalf and as a director of the corporate defendants, and set October 7, 2002 as the date on which the matter would be heard by the Court.
[7] On October 7, 2002, Mr. Bedwell appeared in Court representing himself. The Court file records that he had previously in May 2000, unsuccessfully sought leave to represent the corporate defendants in this action pursuant to Rule 120. On October 7, 2002, the Court heard the viva voce testimony of three witnesses called on the plaintiff's behalf and received certain documents as exhibits. Mr. Bedwell did not cross-examine any witness and, as was his right under Rule 470(2), he did not testify. He made certain remarks, not under oath, and tendered three documents into evidence, including a copy of articles of amendment issued by the Ontario Ministry of Consumer and Business Services, certified to be effective on October 3, 2002. Those articles record that effective that date MMS changed its name to 1180181 Ontario Limited. Also filed was a copy of correspondence from the Ontario Ministry of Finance dated October 28, 1999 which provided information with respect to the possible dissolution of BMS.
[8] On October 7, 2002, during the course of oral argument it appeared that counsel for the plaintiff had failed to adduce proof of service of the show cause order upon Mr. Bedwell and MMS. As a result, and because the time allotted for the hearing of the matter had expired, the proceedings were adjourned at the request of the plaintiff to permit it to bring a motion to re-open its case.
[9] Such motion was heard on July 4, 2003, at which time leave was given for the plaintiff to re-open its case. Leave was also given to prove service by way of an affidavit of service sworn by a process server, and not by viva voce evidence as generally required by Rule 470(1). The reasons given orally for such decision were that Rule 60 provides:
| 60. At any time before judgment is given in a proceeding, the Court may draw the attention of a party to any gap in the proof of its case or to any non-compliance with these Rules and permit the party to remedy it on such conditions as the Court considers just.
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60. La Cour peut, à tout moment avant de rendre jugement dans une instance, signaler à une partie les lacunes que comporte sa preuve ou les règles qui n'ont pas été observées, le cas échéant, et lui permettre d'y remédier selon les modalités qu'elle juge équitables.
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[10] I was satisfied that the two affidavits of service sworn by a process service were not filed due to the inadvertence of counsel (not counsel who appeared on July 4, 2003), because the affidavits were present in Court on October 7, 2002 and an affidavit of service was filed in respect of BMS. Justice should not be defeated by the inadvertence of counsel where remedying such inadvertence will not prejudice or impose an unfair consequence upon the opposite party. I was satisfied that no prejudice or unfairness would result to Mr. Bedwell or MMS if the plaintiff was permitted to open its case because Mr. Bedwell was present in Court for the return of the show cause order, and Exhibit P-1, a Corporation Profile Report issued by the Province of Ontario Ministry of Consumer and Commercial Relations in respect of MMS, showed Mr. Bedwell to be its sole director, president and secretary.
[11] As a result, I concluded that the interests of justice were best served by permitting the plaintiff to re-open its case pursuant to Rule 60 in order to tender the two affidavits of service. Leave was also granted pursuant to Rule 470(1) to prove service by way of the two affidavits of service, and not by oral evidence, because Rule 146(1)(a) generally permits service to be proven by an affidavit, and because Mr. Bedwell had appeared in response to the show cause order thereby evidencing his actual knowledge of the show cause order.
APPLICABLE LEGAL PRINCIPLES
[12] Rule 466(c) provides that a person is guilty of contempt of Court who "acts in such a way as to interfere with the orderly administration of justice, or to impair the authority or dignity of the Court".
[13] Relevant and applicable principles are:
- The party alleging contempt has the burden of proving such contempt, and the defendant or respondent need not present evidence to the Court.
- The constituent elements of contempt must be proved beyond a reasonable doubt.
- Mens rea and the presence of good faith are relevant only as mitigating factors relative to the penalties that are to be imposed.
[14] See: Rules 469 and 470, and Tele-Direct (Publications) Inc. v. Canadian Business Online Inc. (1998), 161 F.T.R. 246.
[15] Contempt proceedings are a very serious matter. The fundamental purpose of the Court's contempt power is to ensure respect for the judicial process so as to, in turn, secure the proper and effective functioning of the judicial system.
FINDINGS OF FACT
[16] I find, first, that the defendants were properly served with the show cause order of Prothonotary Lafrenière. I am satisfied of this, beyond a reasonable doubt, on the basis of the following evidence:
1. Mr. Bedwell was present in Court on October 7, 2002;
2. In the course of making his submission on October 7, 2002, Mr. Bedwell stated that "I was told when to be here and I'm here" and made no objection to the adequacy of service;
3. The show cause order specified service upon all of the defendants was to be by way of service upon Mr. Bedwell.
4. Additionally, the affidavits of service of the process server established service upon the two corporate defendants.
[17] With respect to the knowledge of the defendants of the existence of the judgment, I find that Mr. Bedwell had actual knowledge of the judgment at least as of on or about March 28, 2002. I am so satisfied, beyond a reasonable doubt, on the basis of the following evidence:
1. Ms. Cheng, a lawyer with the firm of solicitors representing the plaintiff, testified and identified a file copy of a letter dated January 7, 2002 which she wrote to Mr. Bedwell and BMS and which stated that in order to comply with the judgment "it is imperative that you change the name or cancel the registration of Mayflower Moving Systems Inc.". The letter advised that in order to avoid further contempt proceedings the corporate name Mayflower Moving Systems Inc. should be cancelled. Ms. Cheng testified that the letter was sent by fax and by registered mail, and that it is the practice of her firm to advise the responsible lawyer if a fax confirmation is not received, and to return to the responsible lawyer directly registered mail which is not accepted. Ms. Cheng testified nothing was returned to her in respect of this letter.
2. Mr. Yim, a fax room operator with the plaintiff's solicitors, testified that on January 7, 2002 he served a copy of the judgment by sending a copy to the defendants by facsimile. He identified a fax confirmation notice that resulted from the successful transmission. The fax number reflected on such confirmation notice is the same number as that appearing in the records of the Court for the defendants.
3. Ms. Cheng identified a further letter dated March 28, 2002 which she sent to Mr. Bedwell and BMS, again by facsimile and registered mail. This letter enclosed what was described as "a further copy of the Judgment of Mr. Justice Lemieux". This letter was not returned to Ms. Cheng and she testified she would have received a copy of the confirmation of facsimile transmission.
4. Most importantly, the March 28, 2002 letter asked that dates be provided with respect to a reference hearing also provided for in the judgment. Ms. Cheng testified that there was a response to this letter by Mr. Bedwell's assistant, who provided dates of availability for the reference hearing. This is clear evidence, in my view, of actual knowledge of the judgment.
[18] As to the knowledge of the corporate defendants of the judgment, it is not necessary to prove service of the judgment upon them. Service is simply a method of proof of knowledge. See: Apple Computer, Inc. v. Minitronics of Canada Ltd., [1988] 2 F.C. 265 (T.D.) at paragraph 10.
[19] The Corporation Profile Report produced on October 2, 2002 showed Mr. Bedwell to be the sole director and officer of MMS. On that evidence I am satisfied, beyond a reasonable doubt, that Mr. Bedwell's knowledge of the judgment established MMS' knowledge of the judgment, at least as of on or about March 28, 2002.
[20] Unfortunately, no evidence was adduced with respect to the corporate structure of BMS. In the absence of any such evidence, I am most suspicious but not satisfied beyond a reasonable doubt that BMS had actual knowledge of the judgment through Mr. Bedwell's knowledge.
[21] With respect to whether the judgment was complied with, I am satisfied beyond a reasonable doubt that it was not. The judgment, dated July 26, 2001, required that the defendants cause that name of MMS to be changed forthwith. The Corporation Profile Report and the articles of amendment satisfy me that the name was not changed until October 3, 2002. I note parenthetically that this is, of course, subsequent to the date referenced in the show cause order issued by Prothonotary Lafrenière. Even if Mr. Bedwell and MMS only learned of the judgment at the end of March 2002, six months transpired until the change of name was effective. That is not "forthwith" as required by the judgment.
[22] Mr. Bedwell argued that he encountered difficulty changing the name, and pointed to the fact that the plaintiff had also been unsuccessful in persuading the Ministry to change the name of MMS.
[23] I consider the plaintiff's lack a success to be irrelevant. Exhibit P-8, correspondence from the Ministry of the Attorney General of Ontario, reflects that the plaintiff was unsuccessful on the basis that the Ministry directed the plaintiff to return to this Court to enforce its judgment. No similar impediment faced Mr. Bedwell or MMS.
[24] Exhibit D-3 filed by Mr. Bedwell showed that the impediment to the dissolution of BMS (not MMS) was the need for compliance with the Corporation's Tax Act. This was consistent with Mr. Bedwell's oral submission. However, the judgment did not require dissolution of MMS. The judgment simply said that the name of MMS had to be changed so as not to infringe the plaintiff's trade-marks.
[25] Mr. Bedwell argued that it was only recently suggested to him by representatives of the Companies Branch that he could simply remove the corporate name and have MMS be identified by an Ontario corporation number. I reject that explanation as a defence to the charge of contempt. Leaving aside the fact that the explanation was not supported by sworn evidence, the terms of the judgment are clear and unequivocal. The judgment obligated the defendants to change the name of MMS forthwith. If the defendants did not know how to do this, they were obliged to find out how to do this and take the appropriate action on a timely basis. I find their attitude towards the judgment to be cavalier and to constitute a contumacious disregard for the judgment of this Court.
THE APPROPRIATE DISPOSITION
[26] There is one very significant factor which aggravates this contempt. This is the second time Mr. Bedwell and MMS have been found in contempt of the Court in this proceeding. As at October 7, 2002 the evidence establishes that the defendants have not paid the fine or costs ordered to be paid as a result of the first finding of contempt.
[27] As for mitigating factors, the name of MMS was changed, albeit four days before the contempt hearing. I have also considered that there is no evidence that MMS is an operating company, so that there is no suggestion that there was any economic incentive for delayed compliance.
[28] Neither Mr. Bedwell nor MMS has made any expression of regret or apology, or made any acknowledgment of any wrongdoing. This potential mitigating factor is, therefore, absent.
[29] Counsel for the plaintiff seeks a fine of $50,000.00 with respect to each corporate defendant, a fine of $10,000.00 against Mr. Bedwell and an award of costs on a solicitor-client basis. The higher fine in respect of the corporate defendants is said to reflect that the corporations were presumed to be able to pay a higher fine.
[30] Mr. Justice Lemieux considered the principles applicable to the assessment of a penalty for contempt in Lyons Partnership, L.P. v. MacGregor (2000), 5 C.P.R. (4th) 157 (T.D.) and wrote at paragraphs 21, 22 and 23 as follows:
21 In Cutter (Canada) Ltd., supra, Urie J.A. said in assessing the amount of the fine what was relevant was "the gravity of the contempt in the context of the particular circumstances of the case as they pertain to the administration of justice" (page 562). The Federal Court of Appeal endorsed the reasons of the trial judge that the amount of the fine should reflect "the severity of the law and yet sufficiently moderate to show the temperance of justice". The level of the fine, Urie J.A. indicated, could not be a token fine because this would "be inconsistent with the gravity of the contraventions and might serve to encourage others to flout the law if it is to their financial advantage to do so".
22 This last statement by Urie J.A. echoes the words of Justice Rouleau of this Court in Montres Rolex S.A. et al. v. Herson et al., 15 C.P.R. (3d) 368 (F.C.T.D.) "that the primary purpose of imposing sanctions is to ensure compliance with orders of the court". Dubé J. of this Court in Louis Vuitton S.A. v. Tokyo-Do Enterprises Inc. et al., 37 C.P.R. (3d) 8, (F.C.T.D.), also stressed the importance of deterrence as the principal factor in ensuring that those orders will not be breached again because "if those who get caught were to get away unscathed that would encourage such activities and consequently destroy the intended effect of the laws that have been passed" (page 13, line b). Dubé J., in assessing a fine, took into account the value of the counterfeit goods sold. He also ordered solicitor-client costs capped to a maximum.
23 To close off on the issue of first principles, other relevant factors to be taken into account are whether the contempt offence is a first offence (R. v. De L'Isle et al. (1994), 56 C.P.R. (3d) 371 (F.C.A.)) and the presence of any mitigating factors such as good faith or apology (Baxter Travenol Laboratories, supra).
[31] Applying these principles, I believe it is fair and reasonable to assess a fine against Mr. Bedwell in the amount of $10,000.00 and against MMS in the amount of $15,000.00. These amounts are approximately 3 times higher than the amounts awarded by Mr. Justice McKeown and reflect the seriousness of the fact that this is the second finding of contempt.
[32] With respect to costs, where an application for an order finding contempt of Court is successful, the normal practice is to award reasonable costs on a solicitor-client basis to the party seeking enforcement of the Court order. This reflects the policy of the Court that a person who assists the Court in the enforcement of its orders and in ensuring respect for Court orders should not be put out of pocket. See, for example, Coca-Cola Ltd. v. Pardhan (2000), 5 C.P.R. (4th) 333 (F.C.T.D.) aff'd (2003) 23 C.P.R. (4th) 173 (F.C.A.) on other grounds and the authorities reviewed therein by Associate Chief Justice Lutfy (as he then was).
[33] I am satisfied that in the present case that general practice should apply so that Mr. Bedwell and MMS should jointly and severally pay to the plaintiff its reasonable costs, to be assessed on a solicitor-client basis in respect of the show cause hearing before Prothonotary Lafrenière and the hearing on October 7, 2002. I am not prepared to cap such reasonable amount in view of the fact that this is the second finding of contempt. Given that the hearing on July 4, 2003 was largely necessitated due to be inadvertent error of counsel for the plaintiff and the consequent need for a motion to re-open the plaintiff's case, it is fair, in my view, that the plaintiff bear its own costs of such attendance.
[34] Mr. Bedwell requested as much time as possible to pay any fine and I will allow what I consider to be a reasonable amount of time for payment.
ORDER
[35] IT IS HEREBY ORDERED THAT:
1. The defendants James R. Bedwell and Mayflower Moving Systems Inc. are found to have been in contempt of the judgment of Mr. Justice Lemieux dated July 26, 2001.
2. The defendant James R. Bedwell shall pay a fine in the amount of $10,000.00, to be paid within six months of the date of this order.
3. The defendant Mayflower Moving Systems Inc. shall pay a fine in the amount of $15,000.00 within six months of the date of this order.
4. The defendants James R. Bedwell and Mayflower Moving Systems Inc. shall, jointly and severally, pay to the plaintiff its reasonable costs in respect of the show cause hearing and the proceedings before this Court on October 7, 2002. Those costs are to be assessed on a solicitor-client basis and are to be paid within nine months of the assessment of such costs.
"Eleanor R. Dawson"
________________________________
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-2556-97
STYLE OF CAUSE: Mayflower Transit, Inc. v. Bedwell Management Systems Inc. et al
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: October 7, 2002 and July 4, 2003
REASONS FOR ORDER:
AND ORDER: Hon. Madam Justice Dawson
DATED: August 1, 2003
APPEARANCES:
Ziad Katul FOR THE PLAINTIFF
(October 7, 2002)
Andrea E. Kokonis
(July 4, 2003)
James R. Bedwell ON HIS OWN BEHALF
SOLICITORS OF RECORD:
Fasken Martineau DuMoulin LLP FOR THE PLAINTIFF
Barristers and Solicitors
Toronto, Ontario
None FOR THE DEFENDANTS