Date: 20000120
Docket: T-2685-95
BETWEEN:
COCA-COLA LTD. and COCA-COLA BOTTLING LTD.
Plaintiffs
- and -
MUSADIQ PARDHAN c.o.b. as UNIVERSAL EXPORTERS,
1106972 ONTARIO LIMITED c.o.b. as UNIVERSAL EXPORTERS, and
JOHN DOE and JANE DOE and OTHER PERSONS UNKNOWN TO THE
PLAINTIFFS WHO OFFER FOR SALE, SELL, EXPORT,
OR DEAL IN TRANSSHIPPING COCA-COLA PRODUCTS
Defendants
REASONS FOR ORDER
(Paragraphs 1 through 19 of these reasons for order
were delivered orally on January 19, 2000 in Toronto, Ontario)
LUTFY A.C.J.:
INTRODUCTION
[1] In reasons for order issued on November 16, 1999, I found that the defendant Musadiq Pardhan was guilty of contempt of court for breaching the interlocutory injunction of MacKay J. dated January 8, 1996. The order restrained Mr. Pardhan and other persons from exporting Coca-Cola products from Canada.
[2] In particular, I held the defendant Musadiq Pardhan in contempt of court as charged in paragraph 2 of the show cause order issued on July 29, 1997 by Jerome A.C.J., which stated:
| 2. AND THIS COURT ORDERS that the Defendants MUSADIQ PARDHAN and MUSTAFA PARDHAN shall appear before this Court ... to answer if they can, why they should not be held in contempt of court for: |
| (a) breaching the Interlocutory Injunction Order rendered January 8, 1996 by The Honourable Justice MacKay ("the Order"), in that, in direct and blatant contravention of the express terms of the Order, they have, directly or indirectly through 1184268 Ontario Limited: |
| i. direct, participated in and made unauthorized exports and transhipments of Canada COCA-COLA branded products; |
| ii. distributed, exported, sold or offered for sale the Plaintiffs" COCA-COLA branded products to third parties outside Canada, via export from Canada, or to a third party within Canada for export to a party outside Canada; |
| iii. transported, shipped, distributed, marketed, promoted or sold the Plaintiffs" COCA-COLA branded products in a territory in which the Defendants are not licensed to distribute market, promote or sell these products; and |
| iv. aided and abetted other parties in transhipping activities which contravene the terms of the Order; |
[3] I also found that the defendant Mustafa Pardhan was not guilty of any of the charges in the show cause order.
[4] These reasons address the issues of penalty and costs.
PENALTY
[5] The contumacious acts, with respect to which Musadiq Pardhan was found guilty, were committed prior to the coming into force of the Federal Court Rules, 1998, SOR/98-106. Accordingly, both parties acknowledge that the applicable penalty is set out in Rule 355 of the former Federal Court Rules, C.R.C. 1978, c. 663. Rule 355(2) stated:
| 355.(2) Except where otherwise provided, anyone who is guilty of contempt of court is liable to a fine, which in the case of an individual shall not exceed $5,000, or to imprisonment for a period not exceeding one year. Imprisonment, and in the case of a corporation, a fine, for refusal to obey any process or order may be repeatedly inflicted until the person condemned obeys. |
355.(2) Sauf disposition contraire, quiconque est coupable d"outrage au tribunal est passible d"une amende qui, dans le cas d"un particulier ne doit pas dépasser 5 000 $ ou d"un emprisonnement d"un an au plus. L"emprisonnement et, dans le cas d"une corporation, une amende, pour refus d"obéissance à un bref ou une ordonnance, peuvent être renouvelés jusqu"à ce que la personne condamnée obéisse. |
In this case, therefore, Mr. Pardhan is subject to a fine not to exceed $5,000 or to imprisonment for a period not exceeding one year. Under Rule 472 of the Federal Court Rules, 1998, SOR/98-106, there is no specified limit to the fine which may be imposed and the person found to be in contempt may be imprisoned for a period of less than five (5) years.
[6] In this proceeding, the defendants obtained the dismissal of the action and the dissolution of the injunction prior to the hearing concerning the show cause order. Neither party suggested this would provide a defence to the contempt citation. However, in Canada (Human Rights Commission) v. Canadian Liberty Net, [1996] 1 F.C. 787 (C.A.) at 801, aff"d [1998] 1 S.C.R. 626, Justice Linden noted for the majority that:
| The most important mitigating matter to consider is that the order violated has been found by this Court to be invalid. Such an order is certainly not of the type where dire consequences should result from its violation. |
In adopting this statement and applying other mitigating principles in sentencing, I agree with the parties that Mr. Pardhan ought not to be sentenced to a period of imprisonment for conduct which would have been legal were it not in breach of an order of this Court.
[7] The plaintiffs, however, seek to have imposed a fine of $2,700 for each of the thirty-nine shipments of Coca-Cola products which were exported from Canada, contrary to the terms of the injunction, by 1184268 Ontario Limited carrying on business as Sid Enterprise. The amount of $2,700 represents the plaintiffs" estimate of the average profits earned for each of the shipments. Their submission, if accepted, would result in a total fine of $105,300.
[8] A review of the principal findings of fact made concerning Musadiq Pardhan, on the evidence adduced during the contempt of court hearing, is useful in an assessment of the plaintiffs" submissions concerning the appropriate fine:
| 73. ... I find beyond a reasonable doubt that thirty-nine shipments, which included Coca-Cola products, were exported from Canada by 1184268 Ontario Limited, carrying on business under the style of Sid Enterprise, contrary to the terms of the injunction. |
...
| 109. ... Mr. Chen, acting for Bay Harbour Trading, purchased at least six shipments of canned beverages from Sid Enterprise in April and May 1997, each of which included Coca-Cola products. It is not plausible that, when writing this letter to his father, Musadiq did not know that Mr. Chen, with whom he was photographed, was receiving Coca-Cola products in the containers referred to in this correspondence and in "Sid"s" letter of May 12, 1997. [Footnote omitted.] |
...
| 132. Accordingly, I find beyond a reasonable doubt that "Sid"s" letter of May 12, 1997 was written by Musadiq Pardhan and that he participated in the sales of Coca-Cola products to Bay Harbour Trading Corporation in April and May 1997 for 1184268 Ontario Limited, carrying on business as Sid Enterprise. |
| 133. ... These important facts, when understood with the other evidence, lead me to conclude, beyond a reasonable doubt, that Musadiq Pardhan was directly involved in the exportation of Coca-Cola products contrary to the injunction of January 8, 1996. |
[9] In my view, the plaintiffs" argument that the total fine reflect a multiple of the quantity of the number of shipments of Coca-Cola product exported from Canada must be rejected for four principal reasons.
[10] First, the show cause order was cast in general terms. Neither the dates nor the quantities of the exports were specified. During his opening statement at the contempt hearing, counsel for the plaintiffs stated that particulars of 136 shipments of exported Coca-Cola products were provided to the defendants at an earlier stage of this proceeding. However, in my view, this disclosure of more specific information by the plaintiffs did not in any manner amend the wording of the show cause order.
[11] The Court"s findings of fact reflect the general terms of the show cause order. Sid Enterprise exported thirty-nine shipments which included Coca-Cola products. Musadiq Pardhan"s correspondence concerning the six shipments to Bay Harbour Trading in April and May 1997 constitutes part of the evidence of his direct involvement in the exportation of Coca-Cola products by Sid Enterprise. There is no more specific finding of fact concerning Musadiq Pardhan"s direct involvement in the total number of shipments by Sid Enterprise than there was alleged in the show cause order.
[12] Moreover, there is no more reason, in the absence of any specifics in the show cause order, to use the number of shipments as the multiple factor in the imposition of the fine than to refer to the number of skids or cases of Coca-Cola products.
[13] Second, the imposition of a fine of the magnitude suggested by the plaintiffs runs counter to the plain meaning of Rule 355(2) which provides that a person "who is guilty of contempt of court is liable to a fine, which in the case of an individual shall not exceed $5,000". There are no words in this provision which contemplate a fine in excess of $5,000 where there is one finding of guilt of contempt of court.
[14] Third, in my opinion, counsel provided no case law which supports the plaintiffs" submission that multiple fines could be imposed where, as is the case here, the single show cause order, directly linked to the single injunction, is cast in general terms.
[15] In Louis Vuitton S.A. v. Tokyo-Do Enterprises Inc. (1990), 37 C.P.R. (3d) 8 (F.C.T.D.), the defendant was fined $2,500 for each of two contempt of court convictions pursuant to the terms of two separate show cause orders which refer to the same injunction. The two show cause orders, one issued seven months prior to the other, specify the details of the transactions with respect to which the defendant was charged in breach of the terms of the injunction. The general terms of the show cause order in this case are substantially different from the very specific language of the corresponding orders in Louis Vuitton. In addition, the total penalty in Louis Vuitton did not exceed $5,000.
[16] In Polo Ralph Lauren Corp. v. Cato, [1990] 3 F.C. 541 (T.D.), the first defendant was fined $1,500 for each of four separate breaches of court orders. The second defendant was fined $3,000 for each of two separate breaches of court orders. The penalties were related to the existence of four separate injunctive orders which were clearly referred to in two separate show cause orders. Again, this is not a precedent upon which the plaintiffs can properly rely in support of the multiple fines they seek in this proceeding.
[17] Fourth, in their written submissions, the plaintiffs urged that:
| From a policy perspective, it makes no sense to treat a series of separate acts which violate an Order as if there was only one act of contempt. A single Order may be breached many times, each of which may support a finding of contempt and an appropriate penalty. If only one finding of contempt and one penalty can result from multiple breaches of an Order, then contemnors will be encouraged to flout the process of the Court repeatedly. |
This policy submission, which is not without merit, may find its response in Rule 472(c) of the new Federal Court Rules, 1998 which places no limitation on the quantum of the fine that can be imposed. The strength of the policy submission cannot be used to the detriment of the defendants where the former Rules specifically provided for a maximum monetary penalty of $5,000 and where the show cause order was issued in such general terms.
[18] In summary, I conclude that the maximum monetary fine that can be imposed against the defendant Musadiq Pardhan in this case is $5,000.
[19] In this case, the principal mitigating factor is the dismissal of the plaintiffs" action and the dissolution of the injunction. This factor, coupled with the subject matter of the litigation, dictates that the penalty be limited to a monetary fine. However, this is not a case of one or two isolated acts. The activities of Sid Enterprise extended over a period of some sixteen months. The conduct of Musadiq Pardhan, in the commission of the acts prohibited by the injunction, was deliberate, camouflaged through subterfuge and in blatant disregard of the Court order. The facts in this case differ substantially from those in Asian Video Movies Wholesaler Inc. v. 1126392 Ontario Inc. (c.o.b. Asian Food and Video) (1996) 68 C.P.R. (3d) 262 (F.C.T.D.). At the very end of the hearing on penalty and costs, and when asked whether he wished to make any statement, the defendant Musadiq Pardhan offered a form of apology to the Court. In view of all these circumstances, I have concluded that the appropriate penalty is a fine of $4000.
COSTS
[20] In Dimatt Investments Inc. v. Presidio Clothing Inc. (1993), 48 C.P.R. (3d) 46 (F.C.T.D.), another proceeding involving contempt of court in trade-mark litigation, Justice MacKay concluded as follows on costs:
| In addition to imposing fines, I ordered that reasonable costs, on a solicitor and client basis be awarded to the plaintiff. This accords with normal practice in a successful application for an Order finding contempt, ensuring that the role of the party acting to support compliance with an Order of the Court does not result in undue costs for the applicant. |
See also Innovation and Development Partners/IDP Inc. v. Canada (1993), 64 F.T.R. 177 (T.D.); and Tele-Direct (Publications) Inc. v. Canadian Business OnLine Inc. (1998), 85 C.P.R. (3d) 332 (F.C.T.D.).
[21] In Pfizer Canada Inc. v. Apotex Inc. (1998), 86 C.P.R. (3d) 33 (F.C.T.D.), Justice Hugessen noted that the policy underlying the practice of awarding costs on a solicitor and client basis in matters of contempt of court is clear: "... a party who assists the Court in the enforcement of its orders and in the enforcement of respect for its orders, should not, as a rule, be put out of pocket for having been put to that trouble." In that case, the costs awarded were less than 10% of the total amount owed on a solicitor and client basis. This result took into account the particular circumstances of that case and assured that the award of costs did not take the form of undue punishment.
[22] The parties in this proceeding have invited the Court to fix a lump sum for costs concerning the nine-day contempt hearing and the related interlocutory orders of July 29, 1997, November 18, 1997, May 1, 1998 and January 12, 1999. The plaintiffs have suggested that their costs on a solicitor and client basis would be approximately $125,000, not including disbursements of some $100,000 paid to their investigators and $33,000 to a solicitor for the time spent in preparation for and his actual attendance at trial to testify concerning factual issues.
[23] In addition to the proceeding in this Court, these parties have been in litigation in other jurisdictions concerning the defendants" activities in the transhipment of Coca-Cola products. The Court has been provided very little information concerning this other litigation, however, and I am conscious that the exercise of my discretion in the assessment of costs is limited to the considerations in Rule 400.
[24] From the first day of this contempt hearing, both parties were aware of the exposure to substantial costs for the unsuccessful party. The defendants" counsel, in particular, made a clear statement to this effect. Further, again from the outset of the contempt hearing, the plaintiffs understood that the former Federal Court Rules would be applicable. As a result, the parties understood that this proceeding was subject to a maximum monetary fine of $5,000. However, the plaintiffs made it clear that they would be seeking multiple fines on the basis of the number of shipments made in breach of the injunction.
[25] I am now informed, after having pronounced the penalty imposed against the defendant Musadiq Pardhan, that offers to settle were made during the contempt trial, subject to the Court"s approval.
[26] Counsel for the defendants stated orally that, after two or three days of the hearing, his clients were prepared to pay a portion of the plaintiffs" costs, without any admission of guilt on the contempt charges. This offer was open for only a short period of time.
| [27] On June 11, 1998, after all the witnesses were heard except for the testimony obtained on commission on August 24, 1998, the plaintiffs made this offer to settle: |
| 1. The Defendant, Musadiq Pardhan, shall admit to directly and indirectly breaching the terms of the interlocutory injunction Order of Mr. Justice MacKay dated January 8, 1996 and accept liability for contempt of that Order; |
| 2. The Defendant, Musadiq Pardhan, shall pay to the Federal Court of Canada a fine in the amount of $4,000.00 Cdn. (Four thousand dollars Canadian); |
| 3. The Defendant, Musadiq Pardhan, shall forthwith pay costs to the Plaintiffs on a party and party scale, in respect of the show cause hearing before Mr. Justice Lutfy and all matters and motions incidental thereto, including the motions for the Show Cause Order and the Anton Piller Order (both dated July 29, 1997), other motions relating to the Anton Piller Order and the execution thereof; and all reasonable disbursements (including investigative costs) relating to all of the above-referenced matters; |
| In addition, counsel indicated at the time of the offer that the plaintiffs would no longer seek an admission of liability for contempt of court or the payment of costs from the defendant Mustafa Pardhan. This offer was open for acceptance until July 10, 1998. |
| [28] I also note that it was open to the plaintiffs to approach the Court concerning the discontinuance of the contempt proceedings against the defendant Mustafa Pardhan where the Court could have, in the exercise of its discretion, limited the costs issue. |
| [29] Concerning the disbursements sought by the plaintiffs, I have considered the relevant importance of the investigators" work and affidavit evidence which led to the second Anton Piller order which was issued on July 29, 1997. It is my understanding that information obtained from a third party in March 1997 led to the plaintiffs" decision to involve the investigators at that time. The investigators identified the involvement of the defendants Musadiq Pardhan and Mustafa Pardhan in Sid Enterprise at its Steeles Avenue premises. Their surveillance also identified the role of Oscar Cheddi. However, the plaintiffs" success in establishing the guilt of the defendant Musadiq Pardhan was more directly related, and substantially so in my view, to the Cheddi documents and the ability to correlate this material with the information obtained under subpoena from the Price Club records. The Cheddi documents were obtained from the execution of the second Anton Piller order. This same order also resulted in the plaintiffs" obtention of useful documents from the Pardhan residence and from the Steeles Avenue premises of Sid Enterprise. The documents obtained from the second Anton Piller order were more relevant to the plaintiffs" success, in an evidentiary sense, than the extensive hours spent by the investigators in surveillance. Finally, I have concluded that it would be inappropriate to award any disbursements or fees with respect to the testimony of the solicitor. |
| [30] Although the plaintiffs" role in prosecuting this contempt proceeding serves to protect the integrity of the order issued by the Court, a balance should be struck, in awarding costs, between this public interest and the plaintiffs" private interest in the litigation. In this action, the plaintiffs sought to protect the reputation of their trade-marks. In my view, these dual interests should be kept in mind in assessing "the public interest in having the proceeding litigated", pursuant to Rule 400(3)(h ) and in the determination of reasonable costs. |
| [31] In summary, I have been guided by two principles in the assessment of costs against the defendant Musadiq Pardhan. First, in matters of contempt, the plaintiff may be awarded reasonable costs, on a solicitor and client basis. Second, the imposition of costs should not result in undue punishment and, I would add, particularly where the order violated has been found to be invalid. I have been given no evidence concerning the current financial situation of Musadiq Pardhan to appreciate better what may constitute undue punishment in this case. I have also considered the plaintiffs" offer to settle, in accordance with Rule 400(3)(e ), keeping in mind that it was not accepted during the limited period that it was open for acceptance. |
| [32] In my estimation, party and party costs would represent approximately one-third of the solicitor-client costs, excluding disbursements, being sought by the plaintiffs. Even taking into account the dissolution of the injunction, there is no reason, in my view, to limit the plaintiffs to party and party costs. In June and July 1998, the defendant Musadiq Pardhan, with the knowledge of substantially all the plaintiffs" evidence adduced in court, refused the offer to admit his liability on the contempt charge and to pay a fine of $4,000 and costs on a party and party scale. None of the reasons advanced by his counsel to justify the non-acceptance of the plaintiffs" offer to settle is legally significant. The refusal of the plaintiffs" offer unduly extended this litigation, a factor which I have considered in the determination of the reasonable costs to be paid. |
| [33] Concerning the defendant Musadiq Pardhan, I fix costs at $80,000, inclusive of all disbursements, except for an additional amount of $15,000 with respect to the investigators. |
| [34] The same counsel acted for both defendants Musadiq Pardhan and Mustafa Pardhan. This factor is relevant in the assessment of party and party costs in favour of Mustafa Pardhan which I fix at $15,000, inclusive of disbursements. |
| A.C.J. |
| Ottawa, Ontario |
| January 20, 2000 |
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
| COURT NO: T-2685-95 |
| STYLE OF CAUSE: COCA-COLA LTD. and COCA-COLA BOTTLING LTD. |
- and -
| MUSADIQ PARDHAN c.o.b. as |
UNIVERSAL EXPORTERS,
| 1106972 ONTARIO LIMITED c.o.b. as |
UNIVERSAL EXPORTERS, and
| JOHN DOE and JANE DOE and OTHER |
PERSONS UNKNOWN TO THE
| PLAINTIFFS WHO OFFER FOR SALE, |
SELL, EXPORT, OR DEAL IN
TRANSSHIPPING COCA-COLA PRODUCTS
| DATES OF HEARING: WEDNESDAY, DECEMBER 15, 1999 |
WEDNESDAY, JANUARY 19, 2000
| PLACE OF HEARING: TORONTO, ONTARIO |
| REASONS FOR ORDER BY: LUTFY A.C. J. |
| DATED: THURSDAY, JANUARY 20, 2000 |
| APPEARANCES: Mr. Christopher J. Pibus and |
Mr. James H. Buchan
| For the Plaintiffs |
| Mr. David A. Seed |
| For the Defendants |
| SOLICITORS OF RECORD: Gowling, Strathy & Henderson |
Barristers and Solicitors
4900 Commerce Court West
P.O. Box 438
Toronto, Ontario
M5L 1J3
| For the Plaintiffs |
Muir & Seed
Barristers and Solicitors
468 Elizabeth St.
Burlington, Ontario
L7R 2M2
| For the Defendants |
FEDERAL COURT OF CANADA
Date: 20000119
Docket: T-2685-95
Between:
| COCA-COLA LTD. and COCA-COLA |
BOTTLING LTD.
Plaintiffs
- and -
| MUSADIQ PARDHAN c.o.b. as UNIVERSAL EXPORTERS, 1106972 ONTARIO LIMITED c.o.b. as UNIVERSAL EXPORTERS, and |
| JOHN DOE and JANE DOE and OTHER PERSONS UNKNOWN TO THE |
| PLAINTIFFS WHO OFFER FOR SALE, SELL, EXPORT, OR DEAL IN TRANSSHIPPING COCA-COLA PRODUCTS |
Defendants
REASONS FOR ORDER
[35]