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.
Judge
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-898-05
STYLE OF CAUSE: HYUNDAI AUTO CANADA, a division of HYUNDAI MOTOR AMERICA, Plaintiff
CROSS CANADA AUTO BODY SUPPLY (WEST) LIMITED, CROSS CANADA AUTO BODY SUPPLY (WINDSOR) LIMITED and AT PAC WEST AUTO PARTS ENTERPRISE LTD., Defendants
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: JANUARY 15, 2007
APPEARANCES:
JEFFREY BROWN FOR THE PLAINTIFF
ABIGAIL BROWNE FOR THE DEFENDANTS
SOLICITORS OF RECORD:
THEALL GROUP LLP FOR THE PLAINTIFF
BARRISTERS & SOLICITORS
TORONTO, ONTARIO
SIM, LOWMAN, ASHTON & McKAY LLP. FOR THE DEFENDANTS
BARRISTERS AND SOLICITORS
TORONTO, ONTARIO